1986 (4) TMI 8 - HC - Income Tax

Summary

Issues:
1. Whether the assessee corporation qualifies as an authority constituted under any law for the marketing of commodities.
2. Whether the income of the corporation from letting of godowns and/or warehousing is exempt from tax under section 10(29) of the Income-tax Act, 1961.

Analysis:
The High Court of Rajasthan addressed a reference made by the Income-tax Appellate Tribunal regarding the assessment years 1969-70 and 1970-71. The Income-tax Officer initially disallowed exemption under section 10(29) of the Income-tax Act, 1961, for the income from letting of godowns and/or warehouses. However, the Appellate Assistant Commissioner allowed the exemption in favor of the assessee. Subsequently, the Income-tax Appellate Tribunal upheld the Appellate Assistant Commissioner's decision, leading to reference applications by the Revenue before the Tribunal.

The Court noted that various High Courts, including Allahabad, Punjab and Haryana, Gujarat, Karnataka, and Delhi, had held that warehousing corporations constituted under the Warehousing Corporations Act are authorities for marketing of commodities, making their income from letting of godowns and warehouses exempt under section 10(29) of the Income-tax Act. On the other hand, the Revenue relied on Calcutta High Court decisions, which were deemed distinguishable.

The central issue revolved around the interpretation of the term "authority" under section 10(29). The Court emphasized that for the provision to apply, the body must be constituted under a law and exist for marketing commodities. It concurred with the view of the aforementioned High Courts, distinguishing the Calcutta decisions based on the nature of the entities involved. The Court held that a body constituted under law for marketing commodities qualifies as an authority under section 10(29) and is entitled to exemption on income from letting of godowns and warehouses.

In conclusion, the Court ruled in favor of the assessee, affirming that the corporation was an authority constituted under the Warehousing Corporations Act for marketing commodities, and its income from letting out godowns was exempt from tax under section 10(29) of the Income-tax Act. The parties were directed to bear their own costs.