1993 (2) TMI 8

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....r concerned herein is 1962-63, the first assessment year under the Income-tax Act, 1961. During the accounting year relevant to the said assessment year, the appellant, the Assam Co-operative Apex Marketing Society Ltd., Assam, was appointed as the procuring agent for paddy by the Government under a scheme evolved by the Government of Assam and contained in its proceeding dated November 23, 1962. The assessee is a society registered under the Assam Co-operative Societies Act, 1949. The objects of the society are : (i) to arrange for the sale of produce of the members of affiliated societies and other members to the best advantage ; (ii) to purchase and sell agricultural produce and farm and farmers requisites including seeds, manures, fert....

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....aund. This one rupee commission was divided between the three co-operative societies. The apex society took 19 paise, the village service co-operative society was entitled to 19 paise and the remaining 62 paise went to the primary marketing society. In the assessment proceedings, the assessee claimed exemption of its income from the said activity under section 81(i)(c), as it then stood. This plea was negatived by the Income-tax Officer but, on appeal, the Appellate Assistant Commissioner agreed with the assessee. The Revenue went up in appeal to the Tribunal. The appeal was allowed, whereupon the assessee obtained the reference aforesaid. Section 81(i) read thus : "81.Income of co-operative societies.-Income-tax shall not be payable by ....

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.... counsel submits that the High Court was not right in holding that for obtaining the benefit of the said sub-clause, the agricultural produce by such members [sic.]. Such an interpretation, according to the learned counsel, amounts to, adding words to the said clause which are not there. We find it difficult to agree with the learned counsel. A reading of clause (i) of section 81 shows that the idea and intention behind the said clause was to encourage basic level societies engaged in cottage industries, marketing agricultural produce of its members and those engaged in purchasing and supplying agricultural implements, seeds etc. to their members an so on. The words " agricultural produce of its members " must be understood consistent with ....