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TMI Blog2014 (3) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the staff are concerned - as the income not being derived from the activities enumerated in Section 10(29) of the Income Tax Act, no exemption would be granted. Any income derived from the nature of activity specified in Section 10(29) of the Income Tax Act, namely, letting of godowns and warehouses for storage, processing, facilitating the marketing of commodities are qualified for exemption under Section 10(29) of the Income Tax Act – Decided partly in favor of assessee. - Tax Case (Appeal) Nos.338 to 340, 964 to 966 of 2007 and 2547 to 2553 of 2006 - - - Dated:- 11-3-2014 - Chitra Venkataraman And T. S. Sivagnanam,JJ. For the Appellant : Dr. Anitha Sumanth For the Respondent : Mr. T. Ravikumar Standing Counsel for Income Tax JUDGMENT (Judgment of the Court was delivered by Chitra Venkataraman,J.) These batch of appeals filed at the instance of the assessee relate to the assessment years 1991-92, 1992-93, 1993-94, 1996-97, 1997-98, 2000-2001, 2001-02 and 2002-03. The Tax Case (Appeals) relating to the respective years are as follows: T.C.(A)Nos.2547 2548 of 2006 - 1991-92 T.C.(A)No.254 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was filed against the order of the Tribunal in I.T.A. No.1377/Mds/93 relating to the assessment year 1991-92, which related to the claim of deduction on the entire expenditure incurred by the assessee. Except for giving I.T.A. Number, the grounds taken in T.C.(A)No.2548 of 2006 are same as in T.C.(A)No.2547 of 2006; that when the issue raised in T.C.(A)No.2548 of 2006 before the Tribunal in I.T.A.No.1377/Mds/93 are not with reference to the sustainability of the income and the claim of exemption, the grounds raised being not relevant for consideration by the Tribunal, we do not find any justifiable ground to interfere with the order passed by the Tribunal and nevertheless, we may note that the Assessing Officer had deducted proportionate expenses and granted relief thereon. 4. Considering the order that we are passing today in other appeals relating to the claim of exemption under Section 10(29) of the Income Tax Act, in any event, no serious prejudice could be caused on the claim of expenditure too. 5. The assessee is a Government of Tamil Nadu sponsored undertaking. The assessee was formed originally under the Agricultural Produce (Development and Warehousing) Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeds, manures, fertilizers, agricultural implements and notified commodities. 8. In the decision reported in (1991) 187 ITR 54 (Union of India and another V. U.P.State Warehousing Corporation), the Supreme Court held that the State Warehousing Corporation established under the Warehousing Corporations Act, 1962 is an authority constituted under the law for the purposes of the exemption under Section 10(29) of the Income-tax Act, 1961. After noting Section 24 (d) of the Warehousing Corporations Act, 1962, the Supreme Court held that the income of the assessee/Warehousing Corporation from letting of godowns and warehouses was exempt from tax under Section 10(29) of the Income-tax Act, 1961. The Supreme Court held that the marketing of commodities on behalf of the Central Warehousing Corporation as an agent for the purpose of purchase, sale, storage and distribution of agricultural produce etc., would be activities facilitating marketing of commodities. Affirming the view of the Allahabad High Court reported in (1974) 94 ITR 129 (All), the Supreme Court held that the income earned by the Warehousing Corporation would be exempt under Section 10(29) of the Income Tax Act. 9. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 (Commissioner of Income Tax V. Gujarat Warehousing Corporation Ltd.), the facts therein were that the income, on which the assessee therein claimed exemption, related to interest income. miscellaneous income, staff quarters rent and supervision charges. We find that the question raised before the Supreme Court related to rejection of an application under Section 256(2) by the High Court, filed by the Department, to direct the Tribunal to state a case before the High Court as to whether the claim of the assessee for exemption under Section 10(29) was sustainable in law. The Supreme Court pointed out that there was no conflict between the decisions reported in (1999) 237 ITR 589 (Orissa State Warehousing Corporation and Rajasthan State Warehousing Corporation V. Commissioner of Income Tax) and (1991) 187 ITR 54 (SC) (Union of India V. U.P. State Warehousing Corporation), but, however, without expressing any final opinion, the Apex Court directed the High Court to call for a statement of case on the questions raised. Thus, the Constitution Bench after expressing the view that there was no conflict between the two decisions reported in (1991) 187 ITR 54 (SC) (Union of India V. U.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f commodities are qualified for exemption under Section 10(29) of the Income Tax Act. 14. Section 10(29) of the Income Tax Act reads as under: Incomes not included in total income 10. In computing the total income of the previous year of any person, any income falling within any of the following clauses shall not be included ..... (29) in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. 15. Going by the above-said decisions and provisions, if any income earned by the assessee is not one derived from the letting of godowns for the stated purpose of storage, processing or facilitating of marketing of commodities and has no direct nexus to the activities, then the question of granting exemption in respect of those income does not arise. Income earned incidental to the storage, processing or facilitating of marketing of commodities, hence, as per the decisions referred to above, would qualify for exemption under the provisions of the Income Tax Act. 16. In the decision re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Warehousing Corporation, that these institutions are entrusted with the task of building of and providing scientific storage facilities in different parts of the Country. Considering the difficulties envisaged in the earlier enactment, the Warehousing Corporations Act, 1962 (Central Act 58 of 1962) was made. Thus, going by the purpose of the constitution of the Warehousing Corporations, the activities of marketing as envisaged in Section 10(29) of the Income Tax Act has to be read in consonance with the object of the 1962 enactment. 19. Keeping this object and in the background of the above-said decisions, if we look into the order of the Assessing Officer, we find that the assessee, for the assessment year 1991-92, claimed the income earned from warehousing charges, supervision charges, fumigation charges, interest on advances to staff and other miscellaneous receipts, such as, tender form sales, contract registration fees, disposal of waster paper etc., dividend on shares, profit on sale of care and Dess receipts, as exempt under the Income Tax Act. 20. The Assessing Officer, however, held that other than the income earned on warehousing charges, the rest of income we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation), as the income not being derived from the activities enumerated in Section 10(29) of the Income Tax Act, no exemption would be granted. 24. Even though learned counsel appearing for the appellant strenuously contended that being a Warehousing Corporation and an authority constituted in law, the phrase 'any income derived' should not be limited or restricted in its scope, yet, in the light of the decision of the Supreme Court, we have no hesitation in holding that income from house property, income on bank deposits, income on loans and advances made to the members of the staff, not being derived as income from letting of godowns or warehouses for storage, processing and facilitating the marketing of commodities, the question of granting exemption under Section 10(29) of the Income Tax Act does not arise. To that extent, we agree with the decision of the Tribunal. So too, the interest on bank deposits and dividend income. However, as regards the supervision charges, fumigation service charges, weigh bridge receipt, income from sale of tender forms and interest collected on belated refund of advances are concerned, we find that these are income derived from such inci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act and consequently, prayed for rectification. The Assessing Officer, however, rejected the said plea holding that the issue being a debatable one, the petition under Section 154 was not maintainable. Further, the assessee had not given the break-up of the warehousing charges and that the issue concerned in Section 143(3) were already subject matter of appeal before the Commissioner of Income Tax (Appeals); thus the rectification petition was dismissed. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals). Thus the assessment under Section 143 as well as the order under Section 154 were subject matter of appeals before the Commissioner of Income Tax (Appeals) for the assessment years, 2000-01, 2001-02 and 2002-03. The Commissioner of Income Tax (Appeals) held that the income arising from the receipts of warehousing, supervision, fumigation and weigh bridge were exempted under Section 10(29) of the Income Tax Act. Based on the earlier year orders, the Commissioner of Income Tax (Appeals) disposed of the appeals in favour of the assessee. 29. Aggrieved by this, the Revenue went on appeal before the Income Tax Appellate Tribunal, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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