COMMISSIONER OF INCOME TAX Vs. JAMMU AND KASHMIR CO OPERATIVE SUPPLY AND MARKETING

JUDGEMENT

(1.) BY this reference under Section 256(1) of the Income-tax Act, 1961 ("the Act"), at the instance of the Revenue, the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar ("the Tribunal"), has referred the following question of law to this court for opinion :

(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 February 19, 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 the rail head up to the distribution centres, etc. In its assessment for the assessment year 1974-75, the assessee claimed deduction under Section 80P of the Income-tax Act, 1961 ("the 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 80P(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 assessee's own appeals in respect of the assessment years 1967-68 and 1968-69. THE Revenue's 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 assessee's own case in respect of the earlier assessment years. Hence this reference at the instance of the Revenue.

(3.) THE above decision of this court squarely applies to the present case. It may be pertinent to observe that under Section 80P(2)(e) of the Act, the assessee, being a co-operative society, is entitled to deduction of the whole of the income derived by it from "the letting of godowns or warehouses or facilitating the marketing of the commodities". As is evident from the decision of this court cited above, the income of the assessee from the handling of fertilizers under the agreement dated February 19, 1967, was not only for storage of fertilizers in its godowns, but also for activities which did not fall within the purview of Section 80P(2)(e) of the Act. It was a composite payment by the Government of Jammu and Kashmir to the asses-see-society for various services rendered by it, including storage of fertilizers in its godowns. In that view of the matter, if the assessee wants to claim deduction under Section 80P(2)(e) of the Act, it is for the assessee to bifurcate the income derived by it from execution of the above agreement and to determine what part of the income can be attributed to the storage of the fertilizers in the godowns and restrict its claim to that part of the income only. If the assessee can satisfy the income-tax authorities that any part of the income received by it from the Government of Jammu and Kashmir is attributable to the activity of storage of fertilizers in its godowns, that part of the income would be eligible for deduction under Section 80P(2)(e) of the Act.