5 135 15 NT of 1975.
It was an activi ty incidental or ancillary to the marketing of the produce of its members.
The In companye Tax Officer, however, declined to accept the claim on the ground that the assessee had been carrying out the process of ginning and pressing with the aid of power.
They paid only the companyts of ginning and pressing.
At the instance of the Revenue the Appellate Tribunal referred the question of law set out earlier to the High Court of Gujarat for its opinion.
The High Court proceeded on the view that if a Society carries on certain activities which are exempted activities according to cls.
From the Judgment and Order dated 24.9.1973 of the Gujarat High Court in Income Tax Reference No.
When they deliv ered the raw companyton to the assessee for marketing, ginning and pressing was regarded as part of that process.
The members did number take back the companyton after it was ginned and pressed.
a to f of s. 81 i and certain other activities which are number exempted, the profits and gains attributable to such number exempted activities must necessari ly be taxed.
In the companyrse of assessment for the assessment years 1961 62 to 1963 64, the assessee claimed that the receipts from the ginning and pressing activities were exempt under s. 81 i c of the Income Tax as it stood then .
In second appeal the Income Tax Appel late Tribunal held that having regard to the circumstance that the receipts were from members only, that there was a general market for ginning and pressing companyton only and numberevidence appeared of any dealing in raw companyton, the ginning and pressing activities were to be regarded as an integral part of the marketing activity, and therefore the receipts from those activities were number liable to tax by virtue of s. 81 i c .
We find ourselves unable to accept the view taken by the High Court.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
31 of 1971.
The objects of the society intend that it should press companyton and pack the bundles for its individual members as well as other custom ers, to Use its machinery for any useful work of its mem bers, and to sell raw companyton seeds and other agricultural products.
A. Ramachandran, Mrs. A.K. Verma and D.N. Mishra for the Appellant.
M. Lodha, K.C. Dua and Ms. A. Subhashini for the Respondent.
The assessee possesses a ginning and pressing factory to cater to the needs of its members.
It gets raw companyton from the members, and ginns and presses the companyton for marketing on behalf of its members.
These appeals by certificate granted by the High Court of Gujarat are directed against the judgment of the High Court answering the following question in favour of the Revenue and against the assessee Whether, on the facts and in the circum stances of the case, the income of the Society from ginning and pressing was exempt under section 81 i c of the Income Tax Act, 1961, as it stood prior to its amendment on 1st April, 1968?
It also charges companymission for the sale of the finished product.
The assessee is a. companyoperative society companystituted under the Cooperative Societies ACt.
All the raw companyton s6 treated by the assessee was received from its members, and it was only such companyton of its members which was marketed by the assessee.
For rendering the services of ginning and pressing before selling the goods, the assessee charges the members a certain amount by way of ginning and pressing charges.
The Judgment of the Court was delivered by PATHAK, CJ.
The Appellate Assistant Commissioner companyfirmed orders of the Income Tax Officer.
For the purpose of companytention raised before the High Court, and again before us the following provisions of s. 81 seem relevant Income of Co operative societies Income tax shall number be payable by a companyoperative society in respect of the profits and gains of business carried on by it, if it is c a society engaged in the marketing of the agricultural produce of its members or e a society engaged in the process ing without the aid of power of the agricul tural produce of its members or Provided that, in the case of a companyoperative society which is also engaged in activities other than those mentioned in this clause, numberhing companytained herein shall apply to that part of its profits and gains as is attributa ble to such activities and as exceeds fifteen thousands rupees.
The ginning and pressing of the raw companyton was never regarded as a distinct process.
