- (1.) THE Punjab State Co-operative Supply and Marketing Federation Ltd. , a co-operative society (hereinafter called "the assessee") carried on business in purchase and sale of wheat, paddy and other agricultural produce from its members. During the year relevant to the assessment year 1967-68, the assessee had income of Rs. 40,44,844. Since the aforesaid income was derived from the marketing of the agricultural produce of its members, it was claimed that under Section 81 (i)c of the Income-tax Act, 1961 (for short "the Act"), which provision stands omitted with effect from April 1, 1968, and is incorporated in Section 80p (2) (a) (iii) with effect from the same date, the same had to be deducted in computing the income.
(2.) THE Income-tax Officer did not allow the deduction on the ground that the agricultural produce was not raised by the members of the society.
(3.) ON appeal, the Appellate Assistant Commissioner allowed the deduction in view of the majority decision of the Appellate Tribunal, Delhi Bench, in the case of National Agricultural Co-operative Marketing Federation Ltd. , wherein it was held that the words "agricultural produce of" means agricultural produce belonging to the members and not agricultural produce raised by the members. The Tribunal confirmed the decision of the Appellate Assistant Commissioner.;