1990 (10) TMI 4 - SC - Income Tax

Income being in respect of letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities - Whether the assessee was an authority within the meaning of section 10(29) constituted under law for marketing of commodities - assessee having fulfilled all the tests was rightly entitled to the exemption as claimed u/s 10(29)

Summary

Issues:
1. Interpretation of section 10(29) of the Income-tax Act, 1961.
2. Whether the U. P. State Warehousing Corporation qualifies for exemption under section 10(29) of the Income-tax Act, 1961.

Analysis:
The Supreme Court heard an appeal against the judgment of the Allahabad High Court granting exemption to the U. P. State Warehousing Corporation under section 10(29) of the Income-tax Act, 1961. The appellant, the Income-tax Officer, Lucknow, had demanded advance tax from the Corporation for rental income derived from its godowns and warehouses. The Corporation, established under the Warehousing Corporations Act, 1962, filed a writ petition challenging the notice, which was quashed by the High Court. The main contention revolved around whether the Corporation qualified as an "authority" under section 10(29) of the Act.

The first issue addressed was whether the Corporation was constituted under any law for the marketing of commodities, as required by section 10(29). The High Court and the Supreme Court agreed that the Corporation was established under the Warehousing Corporations Act, 1962, fulfilling the legal requirement. The Court emphasized that the entity must be a creature of law to qualify for exemption under this provision.

The second issue involved determining if the Corporation was constituted for the marketing of commodities. Section 24(d) of the Warehousing Corporations Act, 1962, mandated the Corporation to act as an agent for the purchase, sale, storage, and distribution of various agricultural products, aligning with the marketing of commodities. The Court concurred with the High Court's finding that the Corporation's activities had a business element facilitating the marketing of commodities.

The final issue examined whether the Corporation's income derived from letting godowns or warehouses for storage, processing, or facilitating the marketing of commodities. It was established that the income in question was indeed from the letting of godowns or warehouses, meeting the criteria for exemption under section 10(29).

Conclusively, the Supreme Court upheld the High Court's decision, ruling that the U. P. State Warehousing Corporation was entitled to the exemption under section 10(29) of the Income-tax Act, 1961. The Court dismissed the appeal, noting that the Corporation had fulfilled all the necessary tests for exemption. No costs were awarded due to the absence of opposition in the case.