2011 (1) TMI 887 - HC - Income Tax

Exemption - Under Section 10(29) - income from letting of godown - In terms of judgment of this Court in Haryana Warehousing Corporation (1976 -TMI - 38394 - PUNJAB AND HARYANA High Court) and in view of the judgment of the Hon ble Supreme Court in Rajasthan State Warehousing Corporation (1999 -TMI - 5742 - SUPREME Court) as well as the provision of Section 10(29), the income other than the income from letting of godown etc. was not exempt - There was no earlier judgment taking the view that such income was exempt - decided against of assessee.

Summary

Issues:
1. Interpretation of exemption under Section 10(29) of the Income Tax Act, 1961 for a statutory body under the Warehousing Corporation Act, 1962.
2. Eligibility for waiver of interest on taxable income based on circulars issued by CBDT.
3. Applicability of earlier judgments by the High Court and Supreme Court in determining tax liability.

Analysis:
1. The petitioner, a statutory body under the Warehousing Corporation Act, claimed exemption under Section 10(29) of the Income Tax Act, which was initially accepted by the Assessing Officer. However, the Commissioner set aside the assessment under Section 263, ruling that only income derived from letting out of godowns was eligible for exemption, making the remaining income taxable. The petitioner sought waiver of interest based on circulars from CBDT, citing a High Court judgment. The High Court noted that the judgment only confirmed the petitioner's eligibility under Section 10(29) but did not exempt the income now taxed, as per Supreme Court decisions.

2. The High Court considered the petitioner's argument for waiver of interest based on circulars from CBDT, which allowed waiver if income tax exemption was granted based on a High Court order. However, the court found that since there was no earlier view that the income in question was exempt, the circular providing for waiver was not applicable. The court referred to Supreme Court judgments to establish that income other than that from letting out of storage was taxable, thus denying the waiver of interest.

3. The court emphasized that based on the judgments of the High Court and Supreme Court, as well as Section 10(29) of the Income Tax Act, income other than that derived from letting out godowns was not exempt. Since there was no prior judgment supporting exemption for such income, the petitioner was not entitled to waiver as per the circulars cited. Therefore, the court dismissed the petitions, concluding that no interference was warranted in the matter.