COMMISSIONER OF INCOME-TAX, AMRITSAR Vs. CO-OPERATIVE SUPPLY & MARKETING

JUDGEMENT

(1.) BY this reference under section 256(1) of the Income -tax Act, 1961 ("Act"), at the instance of the revenue, the Income -tax Appellate Tribunal, Amritsar Bench, Amritsar ("Tribunal") has referred the following question of law to this Court for opinion: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the income of the assessee from commission -cum -incidental charges for handling of chemical fertilizers as the sole agent of the J&K State Govt. is exempted from the charge of tax under the provisions of section 80 P (2)(e) of the Income -tax Act, 1961 -

(2.) THE assessee is a co -operative society. It was appointed by the Government of Jammu and Kashmir its sole agent for the import and distribution of chemical fertilizers allotted to it by the Central Government or purchased by it from the approved manufacturers. Under the terms of the agreement dated 19th February, 1967 entered into between the assessee -society and the Government of Jammu and Kashmir, the assessee - society was to receive commission -cum -incidental charges on account of freight, handling and other charges on fertilizers to be shifted from rail head up to the distribution centres etc. In its assessment for the assessment year 1974 -75, the assessee claimed deduction under section 80 P of the Income -tax Act, 1961 ("Act") in respect of the profits from the above activity. The Income -tax Officer did not allow the claim of the assessee as he was of the opinion that the income of the assessee from handling of the fertilizers was not covered by section 80 P (2)(e) of the Act. The assessee appealed to the Commissioner of Income - tax (Appeals). The Commissioner (Appeals) accepted the claim of the assessee for deduction under section 80P(2)(e) of the Act in view of the decision of the Income -tax Appellate Tribunal in the assessees own appeals in respect of assessment years 1967 -68 and 1968 -69. Revenues appeal to the Income -tax Appellate Tribunal against the above order of the Commissioner (Appeals) was rejected by the Tribunal by following its decision in the assessees own case in respect of earlier assessment years. Hence this reference at the instance of the revenue.

(3.) WE have heard Mr. Anil Bhan, learned counsel for the revenue and perused the facts of the case. We find that identical question of law arising out of the order of the Tribunal, referred to this Court by the Tribunal in the assessees own case for the assessment years 1967 -68 and 1968 -69, has already been decided by this Court. The said decision is reported in (1993) 204ITR 289 (CIT v J. K. Coop. Supply & Mktg. Fedn.). In that case, this Court, on perusal of the various terms and conditions of the agreement dated 19th February, 1967, ob -served as follows: "In the cases before us, however, as will be seen from the various terms and conditions of the agreement executed on February 19th, 1967, the main activity which the assessee was to perform was in respect of the import, carriage and distribution of the chemical fertilizers to various places in the State. Because the main activity of the assessee was not relatable to the storage of the fertilizers in the godowns, which activity could not be construed as letting out of godowns by the assessee, the assessee was not entitled to the exemption from the payment of income -tax. It goes without saying that the terms and conditions of the agreement stipulated various activities on the part of the assessee in dealing with the fertilizers including taking of the delivery, their carriage, their onward transportation and distribution at such places and in such manner as was to be specified by the Government. The agreement also provided for sale of the fertilizers by the assessee. The agreement clearly stipulated that the assessee would be allowed commission -cum -incidental charges for meeting the transport, handling, storage, distribution and other activities."