COMMISSIONER OF INCOME TAX vs PUNJAB STATE CO-OPERATIVE SUPPLY and MARKETING FEDERATION LTD.

N. K. AGRAWAL, J:

The following questions are sought to be referred under s. 256(2) of the IT Act, 1961 (for short, "the Act) :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the income of Rs. 9,866 derived by the assessee from the marketing of cotton not produced by the members of the concerned co-operative societies was exempt from Income Tax under s. 81(i)(c) of the IT Act, 1961?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the profit of Rs. 30,182 arising to the assessee from trading in insecticides was exempted from IT Act, 1961?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no apportionment between the taxable and non-taxable income be done and the entire expenses including those relatable to non-taxable income be allowed for the purpose of determination of taxable income of the assessee-federation?"

Shri R.P. Sawhney, learned counsel for the Department has argued that benefit under s. 81(i)(c) of the Act was available to a co-operative society z ?A engaged in the marketing of the agricultural produce of its members only. If the members did not actually produce an agricultural commodity, the benefit would not be available. Similarly, the benefit is available to a society engaged in the purchase to agricultural implements, seeds, live-stock or other articles intended for agriculture. Shri Sawhney has argued that the assessee- society had not purchased insecticides for supply to the members of the co-operative societies but for trading, and, therefore, the assessee-society was not entitled to the benefit under s. 81(i)(d) of the Act. As regards question No. 3, the apportionment of the expenditure is the subject of controversy.

Looking to the nature of the controversy, we find it appropriate, after hearing the learned counsel for the Department and for the assessee, that the questions need consideration.

The Tribunal, Chandigarh, is directed to state the case and to refer the questions set out in Para 1 above to this Court for opinion within a period of 3 months from the date of the receipt of a copy of this order.

OPEN