1983 (10) TMI 77 - AT - Income Tax

Summary

Issues: Interpretation of section 80P for income derived from letting of cold storage plant.

In this judgment by the Appellate Tribunal ITAT Bangalore, the primary issue revolved around the interpretation of section 80P of the Income-tax Act, 1961, concerning the exemption of income derived from letting a cold storage plant. The assessee, a cooperative society engaged in marketing garden produce and letting a cold storage plant, claimed exemption under section 80P, which the Income Tax Officer (ITO) denied, asserting that the exemption applied only to income from letting godowns or warehouses, not cold storage plants. The Assistant Commissioner of Income Tax (Appeals) supported the ITO's decision, albeit reducing the estimation of receipts from non-members. The assessee appealed these decisions.

The crux of the dispute was whether a cold storage plant could be considered a 'warehouse' under section 80P. The assessee argued that the cold storage plant functioned as a warehouse for storing vegetables, thus qualifying for the exemption. Conversely, the departmental representative contended that a cold storage plant, primarily for refrigerating commodities, did not meet the definition of a warehouse. The Tribunal delved into the definitions of 'warehouse' and 'cold storage,' emphasizing that a warehouse is a place for storing goods, which includes artificially cooled places for preserving commodities. Citing legal precedents, notably a Bombay High Court case, the Tribunal concluded that a cold storage plant, serving as a storage facility to prevent decay, falls within the ambit of a warehouse. Consequently, income from letting the cold storage plant qualifies for the section 80P deduction, while proceeds from selling ice do not meet the criteria. The Tribunal directed the ITO to allow the deduction for income derived from letting the cold storage plant but disallow it for ice sales.

The judgment highlighted the distinction between a warehouse and a cold storage plant, clarifying that the latter, despite refrigeration, retains its essential function as a storage facility. By referencing legal definitions and precedents, the Tribunal established that a cold storage plant qualifies as a warehouse under section 80P, entitling the assessee to the deduction for income from letting the facility.