JANATA SAHAKARI PRAKRIYA SANSTHA LTD Vs. FIRST INCOME TAX OFFICER
LAWS(IT)-1989-5-14
INCOME TAX APPELLATE TRIBUNAL
Decided on May 05,1989

Appellant
VERSUS
Respondents

JUDGEMENT

S. Kannan, Accountant Member - (1.)THESE two appeals by the assessee, which are centered on common issues, are directed against the order dt. 6-1-1984 of the learned A.A.C., relating to the assessment years 1981-82 and 1982-83. The appeals were heard together and are disposed of by a common order, for the sake of convenience.
(2.)The facts of the case are that theassessee, a co-operative society, runs a Ginning and Pressing Factory. For both the assessment years under consideration, the assessee filed, in the first instance, the returns of income showing positive income. Thereafter, the assessee filed nil returns for both the years, claiming that the ginning and pressing charges received by it are exempt under Section 80P(2)(e) of the Income-tax Act, 1961.
The circumstances in which the assessee came to make the said claim before the I.T.O. may be noted in detail. During the relevant previous years, the Government of Maharashtra had appointed the Maharashtra State Co-operative Marketing Federation (Federation in short) as their Chief Agent under Section 42 of the Maharashtra Raw Cotton (Procurement, Processing and Marketing) Act, 1971 for the purpose of purchasing, processing and selling cotton and cotton seeds in the entire state of Maharashtra. In its turn, the Federation appointed as its Sub-Agents entities such as the assessee society. Again, each year, the Federation entered into agreements with Sub-Agents for the purpose of regulating the entire matter. We will be presently noticing the salient features of the agreement. It would suffice at this stage to state that the said agreement provided, inter alia, for the payment by the Federation to its Sub-Agents of ginning and pressing charges. Under the said agreement, it is common ground, the assessee received from the Federation such charges and the assessee earned net income of Rs. 92,230 and Rs. 73,700 respectively during the previous years, relevant to the assessment years 1981-82 and 1982-83.

(3.)TO turn now to the salient features of the agreement referred to above. As pointed out earlier, separate agreements were entered into for each season. Even so, the basic features of the agreement remained constant. After referring to the factum of the Federation having been appointed the Chief Agent of the Government of Maharashtra, the agreement proceeds to state that the Federation is appointing the .entity referred to in the agreement as its Processing Agent. The agreement thereafter goes to detail the responsibilities of the Processing Agent. Clause 4 of the agreement, which deals with the ginning and pressing charges payable by the Federation to the Processing Agent- reads as follows:
4. The ginning and pressing charges payable to the processing Agent in respect of the Raw Cotton procured by the Federation; at rates as may be fixed by the Directorate of Marketing. The pressing charges payable in respect of presses with 10 gallas and 9 gallas shall be two rupees and three rupees respectively less per bale than the one fixed for, 12 gallas. This rate is exclusive of Jari Bharai and Pala Majuri. Where the processing agent undertakes to do the Pala operations, he will be paid at a flat rate of Rs. 1.50 per bale provided, the number of labour employed shall not be less than 15 employees.

Where the Hessian & Iron Hoops are supplied by the Federation a sum of Rs. 22.00 per bale (based on costing done by the Director of Marketing) would be deducted from the pressing charges and the processing agent to whom such material is supplied shall maintain the account of the same in the manner prescribed by the Federation.

As many as three explanations are appended to the said clause 4 and These spell out what charges are included in, or as the case may be, excluded from the ginning rates and the processing charges payable under the said clause. For the purposes of matter on hand, the details of these explanations are not very material and hence they need not detain us here.



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