1984 (2) TMI 122 - AT - Income Tax

Summary

Issues:
- Interpretation of s. 80P(2)(e) of the IT Act, 1961 for exemption claimed by a Cooperative society.
- Whether income derived from commission for procurement of paddy and rice qualifies for exemption under s. 80P(2)(e).

Analysis:
The judgment revolves around the interpretation of s. 80P(2)(e) of the IT Act, 1961, concerning the exemption claimed by a Cooperative society. The assessee, a Cooperative society, claimed exemption under s. 80P(2)(e) for its income of Rs. 1,20,206, representing commission received for procurement of paddy and rice and reimbursement of transport charges. The Income Tax Officer (ITO) disallowed the claim, stating that the income did not qualify as earning from letting of godowns or warehouses for storage, processing, or facilitating the marketing of commodities, thus making the exemption unavailable. The Commissioner (A) upheld this decision, leading to the assessee's appeal.

The crux of the matter lies in the interpretation of s. 80P(2)(e). The assessee argued that exemption is available even for income received from processing or facilitating the marketing of commodities under this provision. Conversely, the Departmental representative contended that only income from letting of godowns for storage, processing, or marketing of commodities is exempt under s. 80P(2)(e). The tribunal analyzed the language of the provision, emphasizing that the income exempted is derived from letting of godowns or warehouses specifically for storage, processing, or facilitating the marketing of commodities. The use of the word 'for' indicates the purpose for which the godowns or warehouses are let out, making income derived from such activities eligible for exemption.

The tribunal drew support from a decision of the Gujarat High Court in a similar case, highlighting that the purpose of letting godowns or warehouses must be for storage, processing, or facilitating the marketing of commodities for the income to qualify for exemption. Applying this principle to the present case, the tribunal found that the assessee did not derive income from letting godowns for the specified purposes but earned commission for procurement of paddy and rice and transport charges reimbursement. As a result, the income derived by the assessee did not fall under the exemption provided by s. 80P(2)(e).

Additionally, the tribunal distinguished a previous decision of the Karnataka High Court, emphasizing that in the current case, the assessee did not earn income from letting godowns for storage, processing, or marketing of commodities. Consequently, the tribunal upheld the orders of the lower authorities, denying the assessee's claim for exemption under s. 80P(2)(e). Ultimately, the appeal was dismissed, affirming the decision against the assessee.