In a recent judgement, the Delhi High Court has held that the fee earned by an Agricultural Produce Marketing Committee (APMC) for regulating the poultry market is exempted under section 10(26AAB) of the Income Tax Act, 1961.
The revenue challenged the order dated 31.05.2019 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”]. It was questioned whether the income received by way of fee by the respondent/assessee, is amenable to deduction under Section 10(26AAB) of the Income Tax Act, 1961 [ “1961 Act”].
M/s Fish Poultry and Egg Marketing Committee, the respondent/assessee had filed its return on 29.09.2012 declaring a loss of Rs.2,23,585/- after excluding Rs.6,04,06,259/- from its total income by taking recourse to the provisions of Section 10(26AAB) of the 1961 Act. (ii) The respondent/assessee is an Agricultural Produce Marketing Committee.
The respondent/assessee’s return was subjected to scrutiny, whereupon an assessment order was framed under Section 143(3) of the 1961 Act. The assessed income was pegged at Rs.7,16,62,760/-, after making various disallowances. It impelled the respondent/assessee to prefer an appeal with the Commissioner of Income Tax (Appeals) [“CIT(A)”], who ruled in favour of the respondent/assessee.
Since the Income Tax Act does not define “agricultural produce”, the Court relied on the definition of agricultural produce, as contained in Section 2(1)(a) of the Delhi Agricultural Produce Marketing (Regulation) Act, 1998, read with the Schedule, is wide enough, which includes all kinds of produce, including fish, poultry, and eggs.
The bench of Justices Rajiv Shakdher and Tara Vitasta Ganju held that the fee earned by the APMC from regulating agricultural produce and the same would be excluded from its total income since it would fall within the scope of Section 10 (26AAB) of the Income Tax Act, 1961.
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