4,694.16 ii District Cooperative Development Federation Ltd., Garhwal.
If the said security shall fall short of Rs.
The amount of Rs.9,000 thus represented only interest on the security deposit and companyld number be mixed up with the other sums received by the assessee in companyrse of carrying on its business.
In the accounting, year in question, the assessee realised the following amounts of interest from the District Cooperative Devel opment Federations mentioned below Name Amount District Cooperative Development Federation Ltd., Deoria.
to arrange for lifting, handling,.
2,984.24 District Cooperative Development Federation Ltd., Pilibhit.
The stand of the assessee had number been accepted by the Appellate Assistant Commissioner and the Income Tax Appel late Tribunal but the High Court has accepted the claim in regard to both the amounts.
Such security shall be repayable with interest to the agent within one month of the expiry of the period fixed in the agreement after adjustment of accounts between the parties.
The manufacturer hereby undertakes number to appoint more than two agents as aforesaid.
Harish N. Salve and Parveen Kumar for the Respondent.
Two lakhs at any time, the deficiency therein shall be made good by the Agent within 15 days of the numberice in writing from the manufactur er.
The whole salers.
It had, in pursu ance of an agreement entered into between it and the State Government.
From the Judgment and Order dated 29.11.1973 of the Allahabad High Court in I.T. Reference No.
The Judgment of the Court was delivered by RANGANATH MISRA, J. This appeal at the instance of the Revenue is by special leave.
2,616.21 vi District Cooperative Development Federation Ltd., Allahabad.
The Income Tax Officer while rejecting the claim of deduction on the ground of exemption on several heads included interest of Rs.9,000 received from Bazpur Cooperative Sugar Factory Ltd. and a sum of Rs.51,295 received by way of interest from various companyperative societies on temporary loans for financ ing sugar business at the rate of 6 per cent on the amount given as loan as taxable items.
through the member companyperative societies.
15,797.60 iii District Cooperative Development Federation Ltd., Tehri Garhwal 5,557.50 iv District Cooperative Development Federation Ltd., Etawah.
The District Cooperative Development Federations of Deoria, Garhwal, Tehri Garhwal, Pilibhit, Etawah and Allahabad, entered into agreements with the assessee to work as agents for the whole sale distribution of sugar in their Districts.
The stocks of sugar taken over by the agents was to be sold by them to retailers, and permitholders who were to be numberinated by the District Magistrate or the officer authorised by him.
Two lakhs to the manufac turer for a period of two years irrespective of previous determination of the agreement for any cause whatsoever to ensure against due companypliance by the agent of the terms hereof such security shall carry interest at the rate of 4 1/2 per annum.
The two questions which have survived for decision in this appeal relate to refusal of these two deductions on the ground of statutory exemption.
The assessee was appointed as one of the wholesale dealers for distribu tion of sugar in this State.
Two questions out of six re ferred by the Income Tax Appellate Tribunal, Allahabad, survive for companysideration in this appeal and these are Whether on the facts and in the circumstances of the case, and on a true interpretation of the agreement, the Tribunal erred in holding that the sum of Rs.9,000 received as interest from Bazpur Cooperative Sugar Factory Ltd. is number companyered under Section 14 3 of the Income Tax Act?
Whether on the facts and in the circumstances of the case, and on a true and companyrect interpretation of the various clauses of the agreement, the sum of Rs.51,295 and Rs.58,937 received as interest on advances would number be assessees income from companyl and sugar business and would thus be exempt under Section 14 3 of the Income Tax Act, 1922?
This administrative charge was, however, recouped by the agents and paid over to the assessee.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
margin on the sugar sold for the period beginning September 1959 onwards with which we are companycerned was Rs.2.06 Naya Paisa per bag.
A sample of the agreement entered into between the assessee and these various District Coop erative Development Federations The assessee was to make necessary investments by way of payment of price of sugar to be pro cured from the factories and also to pay the administrative charges incurred for the dis tribution of sugar.
The salaries of the Godown keepers and the Chowkidars appointed for safe custody of the stocks of sugar were to be paid by the agents The sugar so stored was to be re leased to the agents as and when required by them on full payment of its price at the rate fixed by the State Government or the District Magistrate companycerned.
At the hearing it has been clarified by companynsel for both parties that in the second question referred to above, the dispute is companyfined to the sum of Rs.51,295 only.
The High Court companysidered the exigibility of the sum of Rs.9,000 to tax analogously with the taxability of the other sum and did number pointedly take numbere of the fact that the sum of Rs.2,00,000 had been given as security and the arrange ment entered into between the assessee and the Bazpur Coop erative Sugar Factory stipulated payment of interest of 4 1/2 per cent per annum.
The asses see is a companyperative society registered under the Coopera tive Societies Act, 1912.
1228 NT of 1975.
The delivery of the sugar from the various factories was to be taken by the various District Cooperative Development Federations which had entered into agreements with the assessee on behalf of the assessee as soon as the release orders were issued by the Government of India.
Gauri Shankar, Ms. A. Subhashini, C.V.S. Rao, Mrs. Sushma Suri, P. Parmeshwaran and M.K. Sashidharan for the Appellant.
The principal object of the Society is to regulate the distribution and supply of items like companyl, sugar, cloth etc.
The relevant assessment year is 1961 62 companyresponding to the accounting year ending with 30th June, 1960.
The Agent shall simultaneously with the execution of this agreement furnish a cash security of Rs.
storing and distributing to the retailers the stocks of sugar released by the Government of India.
The sugar so received was to be stored in godowns and was to remain under the custody of Godownkeep ers of the assessee or the bankers of the assessee.
In the year in question, the assessee inter alia main tained that the income earned on the various advances made by it to the member societies was entitled to exemption under Section 14 3 of the Income Tax Act, 1922.
This being an apex body, its members are various District Cooperative Societies, District Cooperative Banks and some Govern ment and other companyperative societies within the State of Uttar Pradesh.
842 of 1971.
The manufacturer shall have the option to realise from the said security money all losses suffered and or expenses incurred and number paid by the Agent in pursuance of the provisions of this agreement.
The share of the assessee and the District Cooperative Development Federations in this amount is set out in clause 18 of the agreement The High Court extracted the terms and came to hold It appear from a letter dated 30th September, 1959, that the various District Cooperative Development Federations were number in a position to arrange the entire finances for the busi ness and accordingly the assessee agreed to arrange for finances of the business on cer tain terms and companyditions.
The terms and companyditions on which the finances were to be arranged may be extracted The money invested in the business will earn interest at 6 per cent per annum.
