Commissioner of Income Tax vs RA363, Virudhunagar Co-operative Marketing Society Ltd.

R. Jayasimha Babu, J.—The assessee is a co-operative society. The assessment year is 1987-88.

The question referred is ""whether the Tribunal was right in holding that the assessee-marketing society which is engaged in the business of

purchase and sale of lint is entitled to the benefit of Section 80P(2)(a)(iii) of the Income Tax Act, 1961 ?

After this reference came to be made, that provision, Section 80P(2)(a)(iii), was amended retrospectively, with effect from April 1,1968, by the

Income Tax (Second Amendment) Act, 1998. Prior to the amendment, that Clause (iii) of Section 80P(2)(a) read thus :

the marketing of the agricultural produce of its members

After the amendment, that Sub-clause (iii) reads thus :

the marketing of agricultural produce grown by its members.

Thus, while prior to the amendment, there was no requirement that the agricultural produce marketed by the co-operative society should have

been grown by its members, such a requirement was spelt out in the statute retrospectively from April 1, 1968.

In this case, it is admitted that the agricultural produce marketed by the society is not grown by its members, the item marketed being lint, was

obtained in the process of manufacture and was not grown by the members of the society.

Having regard to the fact that the amendment has been given retrospective effect from April 1, 1968, that law, as amended, would apply to the

assessment year 1987-88 as well.

The question referred to us must, therefore, be and is answered against the assessee and in favour of the Revenue.