COMMISSIONER OF INCOME TAX Vs. J AND K CO OPERATIVE SUPPLY AND MARKETING FEDERATION LIMITED

JUDGEMENT

(1.) BY this common judgment, we shall dispose of two references made to this court by the Income-tax Appellate Tribunal, Amritsar Bench, under Section 256 of the Income-tax Act, 1961. Because the parties are the same in both these references, the facts are identical and the question of law formulated for our advisory opinion is the same, this common judgment shall deal with both the references and dispose of them together.

(2.) IT will be advantageous to reproduce the questions of law formulated in the two references. In Reference No. 9 of 1976, the following question of law has been formulated :

(3.) IN the statement of the case referred by the INcome-tax Appellate Tribunal in both the references it has been stated that the assessee, i.e., the respondent herein, is a co-operative society registered under the Cooperative Societies Act. On February 19, 1967, the assessee was appointed by the Government of Jammu and Kashmir as its sole agent for the import and distribution of chemical fertilizers allotted to the Jammu and Kashmir Government by the Central Government or purchased from the approved manufacturers. Under the terms of the agreement entered into with the Government of Jammu and Kashmir, the assessee 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. During the accounting periods relevant to the assessment years, the assessee disclosed income in respect of the handling of the fertilizers and claimed that the said income was exempt from payment of income-tax under the relevant sections for the relevant assessment years (section 81 or Section 80P, as the case was). The INcome-tax Officer and the Appellate Assistant Commissioner rejected the claims of the assessee for such exemption and aggrieved by the orders passed by the Appellate Assistant Commissioner in appeals, the assessee filed appeals before the Tribunal. The Tribunal, after hearing the contention raised by the parties and after going through the records, came to the conclusion that the commission-cum-incidental charges received by the assessee represented income derived by the assessee from the services rendered in "facilitating the marketing of commodities", i.e., chemical fertilizers. The Tribunal thus held that the assessee's case was covered by the provisions of the relevant section in respect of the relevant year for the grant of exemption. Aggrieved by the aforesaid finding of the Tribunal, this reference was made to us.