1947 (12) TMI 10

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....r, 1944. That judgment upheld a decision dated 10th May, 1944, of the Board of Appeal constituted by the New South Wales Income Tax Management Act, 1941, which disallowed the appellant's claim to exemption from income tax under Section 19(O), Income Tax Management Act, 1941, of New South Wales. The point raised has a considerable practical importance. It is also one of some difficulty as appears from the fact that Jordan, C.J., in the Full Court and Rich and Starke, JJ., in the High Court expressed dissenting opinions. The appellant is a rural society registered as such under the Co-operation Act, 1923-1941, of the State of New South Wales. Its members are some 9,500 in number. Most of the members are individual farmers but nearly 100 c....

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....al society registered as such under the Co-operation Act, 1941, if the principal business of that rural society is the manufacture, treatment or disposal of the agricultural products (as defined in that Act) or livestock of its members." The incorporated definition contained in the Co-operation Act, 1923-1941, is in the following terms:- "Unless the context or subject matter otherwise indicates or requires-'Agricultural products' means 'products of any rural industry.' 'Rural industry' means the cultivation or use of land for any agricultural pastoral dairying or rural purpose." Agricultural products means therefore the products of the cultivation or use of land for any agricultural, pastoral, dairying....

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.... feature common to all factory operations as the feature marking out the origin of the products of a particular factory operation. The first contention of the appellant cannot be disposed of so easily. In connexion with it the appellant sought to draw from a detailed examination of the substantive provisions of the Co-operation Act an inference as to the meaning proper to be attributed to the definition of agricultural products as that definition is incorporated in the Income Tax Act. Upon the legitimacy of such an examination and its effect, if it be admissible, their Lordships agree with the opinion expressed by Latham, C.J. To interpret the incorporated definition in the second Act by an analysis of its exact meaning in the substantiv....

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.... defined. The definition demands that the facts bearing on the production of the particular article under consideration are to be taken into account. The treatment to which the raw material is subjected and the circumstances in which it is accorded that treatment may be such that the finished article cannot be fairly regarded as a product of the use of the land to which the raw material owes its origin. In this case the relevant land is exclusively the farmer's land. The use to which the land is put is the production of milk and cream and, stating the case at its highest in favour of the appellant, production with a view to the subsequent conversion of cream into butter. Their Lordships are prepared to assume that, did the farmer him....