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Issues Involved:
1. Deduction of income u/s 80P(2)(e) of the Income-tax Act, 1961. 2. Alternative deduction of Rs. 20,000 u/s 80P(2)(c) of the Income-tax Act, 1961. 3. Interpretation of the terms "godowns" and "warehouses" in the context of section 80P(2)(e). Summary: Issue 1: Deduction of income u/s 80P(2)(e) of the Income-tax Act, 1961 The primary issue was whether the income derived by the assessee co-operative society from letting out shops to licensee members carrying on business in cloth is exempt under section 80P(2)(e) of the Income-tax Act, 1961. The court examined the legislative history and the specific language of section 80P(2)(e), which provides deductions for income derived from letting "godowns or warehouses" for storage, processing, or facilitating the marketing of commodities. The court concluded that shops used for business in cloth do not fall within the ordinary meaning of "godowns or warehouses." Therefore, the income from such shops is not deductible under section 80P(2)(e). Issue 2: Alternative deduction of Rs. 20,000 u/s 80P(2)(c) of the Income-tax Act, 1961 The assessee alternatively contended that it should be allowed a deduction of Rs. 20,000 u/s 80P(2)(c) if section 80P(2)(e) was not applicable. The court noted that the Appellate Assistant Commissioner had allowed this deduction for certain assessment years but had not done so consistently. The Tribunal upheld the assessee's contention for the assessment year 1974-75 but did not decide on the alternative contentions for other years. Consequently, the matters were remanded to the Tribunal to address these undecided contentions. Issue 3: Interpretation of the terms "godowns" and "warehouses" in the context of section 80P(2)(e) The court analyzed the dictionary meanings and judicial interpretations of the terms "godowns" and "warehouses." It concluded that these terms refer to structures used for the storage of goods, even temporarily, and do not include shops used for retail or wholesale business. The court emphasized that the legislative intent behind section 80P(2)(e) was to encourage the construction of storage facilities beneficial to rural economy, not to extend tax benefits to commercial shops. Conclusion: The court held that the Tribunal erred in granting the exemption under section 80P(2)(e) for income derived from letting out shops. The question referred was answered in the negative, in favor of the Revenue and against the assessee. The matters were remanded to the Tribunal to decide on the alternative contentions raised by the assessee.
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