1976 (12) TMI 23 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of section 10(29) of the Income-tax Act regarding the exemption for income derived from letting godowns by warehousing corporations established under the Warehousing Corporations Act, 1962. The main issues are whether the warehousing corporations qualify as an "authority" u/s 10(29) and whether they have been constituted for the marketing of commodities.

Interpretation of Section 10(29) - "Authority":
The court considered the definition of "authority" under section 10(29) of the Act and whether the warehousing corporations fall within this definition. The court referred to a previous case concerning the U.P. State Warehousing Corporation, where it was held that any legal entity constituted by law for marketing commodities qualifies as an authority u/s 10(29). The court rejected the argument that the warehousing corporations being deemed as companies under section 39 of the Warehousing Corporations Act cannot be considered authorities. It emphasized that the scope of section 10(29) is not controlled by section 39 and highlighted a Supreme Court case where a similar entity was considered an authority.

Interpretation of Section 10(29) - "Marketing of Commodities":
The court analyzed whether the warehousing corporations were established for the marketing of commodities. It was argued that since their primary function was to acquire and build godowns for storage, they do not qualify as entities established for marketing commodities. However, the court disagreed, citing section 24(d) which allows warehousing corporations to act as agents for the purchase, sale, and distribution of agricultural produce. It also referenced the U.P. State Warehousing Corporation case, where the term "marketing" was interpreted broadly to include activities like storage that are part of the trade of marketing.

Conclusion:
The court, in line with the decision of the Allahabad High Court in the U.P. State Warehousing Corporation case, held that the warehousing corporations qualify as authorities u/s 10(29) and have been constituted for the marketing of commodities. The court answered the question posed by the revenue in the affirmative, affirming the applicability of the exemption under section 10(29) of the Income-tax Act to the warehousing corporations.