Producers' Co-Operative Distributing Society Limited v Commissioner of Taxation (NSW) [1944] HCA 39

Bey i Atay

ApplAA 7.

am tse,

Australian 1302 Bair Comp &

.R.] OF AUSTRALIA.

{HIGH COURT OF AUSTRALIA]

r PRODUCERS' CO-OPERATIVE DIS- \ ae _ TRIBUTING SOCIETY LIMITED. a " :

AND

COMMISSIONER OF TAXATION (N.S.W.) Responpenr.

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Tax (N.8.W.)—Assessable income —Exemption—Co-operative rural. society — Manufacture, treatment or disposal of " agricultural products of its members »— | Principal business of rural society—Sale on commission of butter manufactured by member co-operative societies—Products "of its members" —Income Tax Management Act 1941 (N.S.W.) (No. 48 of 1941), s. 19 (0)—Co-operation Act 1923-1941 (N.S.W.) (No. 1 of 1924—No. 44 of 1941), ss. 5, 7.

Section 19 (a) of the Income Tax Management Act 1941 (N.S.W.) provides that "'the income of a rural society registered as such under the Co-operation Act, 1923-1941 . . . if the principal business of that rural society is the _ manufacture, treatment or disposal of the agricultural products (as defined in

_ that Act) or livestock of its members" shall be exempt from income tax.

Section 5 of the Co-operation Act 1923-1941 (N.S.W.) defines " Agricultural products" as the "products of any rural industry" and "Rural industry " as "the cultivation or use of land for" inter alia "any . . . dairying, or rural purpose."

The principal business of the appellant, a rural society registered as such under the Co-operation Act 1923-1941, was the sale on commission on behalf _ of members, which were also registered co-operative societies, of butter _ 'Manufactured by such last-mentioned co-operative societies from cream sent - to them by their members, being dairy farmers,

Held, by Latham ©.5., Dixon and Williams JJ. (Rich and Starke JJ. dissent- _ ing), that the butter thus disposed of by the appellant was not "the agricul- tural products . . . of its members" within the meaning of s. 19 (0) of the Income Tax Management Act 1941 and accordingly the appellant was not entitled to the exemption conferred by that section.