- (1.) These appeals, by special leave, are directed against the judgment of the Allahabad High Court whereby the following question which was referred to it for opinion by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') has been answered against the assessee and in favour of the Revenue :- "Whether on the facts and in the circumstances of the case, the assessee was entitled for exemption under S. 80-P (2)(a)(i) of the Income Tax Act, 1961 from income from press and income from supply of pumping sets -
(2.) These appeals relate to the assessment years 1971-72 and 1972-73. The U. P. Co-operative Cane Union Federation Ltd. (hereinafter referred to as 'the Federation') is a co-operative society registered under the U. P. Co-operative Societies Act, 1965 (hereinafter referred to as 'the Co-operative Societies Act'). The members of the Federation are cane unions which are also co-operatives societies and the members of these cane unions are the individual cane growers. No individual cane grower is a member of the Federation. The Federation had sponsored an irrigation scheme for small farmers whereunder loan applications of the cane growers were forwarded to the State Bank and the Central Bank for India for purchase of pumping sets. In that connection, the Federation had entered into an agreement on March 5, 1970 with M/s. Southern Engineering Works for supply of pumping sets to the cane growers and had agreed to undertake to provide the loan either of its own or through any financial institution for the members of the cane unions for the purchase of pumping sets. The loan was to be provided to the extent of 75% of the purchase price and the balance 25% and other expenses were to be met by the cane grower and was repayable in instalments and the Federation agreed to undertake the entire responsibility of making prompt payment within seven days from the date of invoice of the distributors or dealers for the sale of pumping sets. In consideration of these services the suppliers paid 5% of the price of the pumping sets to the Federation.
(3.) During the assessment year 1971-72, the Federation received Rs. 55,098/- as 5% service charges from the supplier of the pumping sets and the Federation claimed exemption from tax on the said amount under Section 80-P (2)(a)(i) and (iv) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). In respect of the assessment year 1972-73, the amount received as 5% service charges was Rs. 23,374/- for which similar exemption was claimed. The said claim of the Federation was rejected by the Income Tax Officer and the said order was affirmed, in appeal, by the Appellate Assistant Commissioner. But on further appeal, the Tribunal has upheld the claim of the Federation for exemption under Section 80-P (2)(a)(i) on the view that the individual cane growers can be regarded as members of the Federation and that the Federation was providing credit facility to its members. The Tribunal was, however, of the view that Section 80-P (2)(a)(iv) could not be invoked by the Federation because it had not purchased any pumping set nor had it supplied such sets to the cane growers. On being moved by the Revenue, the Tribunal referred the above mentioned question for the opinion of the High Court.;