JAWAHAR LAL GUPTA, J. - (1.) IS the assessee entitled to exemption under S. 80P(2)(a)(iii) ? This is the short question that arises in these four IT references.
(2.) THE assessee is a co -operative society. It was incorporated for the manufacture of sugar from sugarcane. It purchases sugarcane from its members as well as the other growers. The assessee claimed deduction in respect of the asst. yrs. 1992 -93 to 1995 -96 under S. 80P(2)(a)(iii) of the IT Act, 1961. The AO declined the claim. It was noted that the assessee was buying sugarcane, manufacturing sugar and selling it in the market. Sugar is not an agricultural produce. It did not belong to the members. Accordingly, it was held that the assessee was not marketing 'agricultural produce of its members'. The assessee appealed. Its claim in respect of the asst. year 1992 -93 was accepted by the CIT(A), Rohtak, vide order dt. 25th July, 1995. It was held that 'marketing' included taking over the agricultural produce from the producer and handing over the marketable commodity to the consumer. The appeals relating to the asst. yrs. 1993 -94 to 1995 -96, were dismissed by the CIT(A), Shimla, vide orders dt. 25th April, 1996, and 2nd April, 1997. It was inter alia, held that sugar is not an 'agricultural produce'. Aggrieved by the order in respect of the asst. year 1992 -93, the Revenue filed an appeal. The assessee challenged the orders for the asst. yrs. 1993 -94 to 1995 -96. Ultimately, the Tribunal accepted the contention of the Revenue and restored the order passed by the AO. The assessee sought rectification under S. 254(2). The application was dismissed by the Tribunal vide its order dt. 21st Dec., 1998. The assessee filed application under S. 256(1) of the IT Act, 1961. The Tribunal on consideration of the matter has referred the following question for the opinion of this Court : "Whether in the facts and circumstances of the case, the Appellate Tribunal was justified in law in holding that income derived by assessee from sale of sugar converted out of sugarcane purchased from members who are cultivators themselves was not exempt under S. 80P(2)(a)(iii) ?" Mr. M.L. Garg contended that the petitioner is a co -operative society. It is running a sugar mill. It has 3,500 members who grow sugarcane. The assessee purchases sugarcane from the members as well as the other growers. It markets an 'agricultural produce'. Thus, it falls within the ambit of s. 80P(2)(a)(iii) and is entitled to the grant of exemption as claimed.
(3.) ON the other hand, Mr. R.P. Sawhney, learned counsel for the Revenue, submitted that the petitioner is manufacturing sugar. It is paying excise duty. It is not marketing or selling an 'agricultural produce'. Thus, it is not entitled to the grant of exemption as contemplated under s. 90P(2)(a)(iii).;