9911796707
TMI Blog1973 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 9-3-1973 - Judge(s) : V. RAMASWAMY., G. RAMANUJAM. JUDGMENT The judgment of the court was delivered by RAMANUJAM J. -The assessee in these cases is a co-operative society registered under the Madras Co-operative Societies Act. In the previous year ending June 30, 1960, the society entered into an agreement with the Government of Madras under which the assessee agreed to hold ammonium sulphate stock of the Government of Madras and to safely store them on their behalf and to maintain a true and full account for the stocks received and returned twice every month for a commission of Rs. 5 per ton on the quantity of fertiliser issued by the assessee from the stock. The assessee received a sum of Rs. 31,316 on this account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done, but, in our opinion, it would be an insignificant portion of the whole amount. We cannot accept the departmental representative's submission that the letting out should be to the members. The sub-section does not refer to members at all. " At the instance of the revenue the following two questions have been referred to this court, one in each of the above two cases : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 31,316 received by the assessee-society from the Madras Government under an agreement for stocking and distribution of ammonium sulphate was exempt under section 14(3)(iv) of the Indian Income-tax Act, 1922 ? Whether, on the construction of the agreement between the assessee and the State G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way stations after check and weighment and should transport the same to its godowns or its distribution depots at its own cost. The assessee has to maintain and render true and full particulars of fertilisers received, released and held in stock once in a fortnight. The assessee has to engage at its own cost, clerks, godown keepers, assistants or servants or watchmen at such wages and for such period as may be necessary for properly and efficiently carrying on its duties under the agreement. The assessee has to also bear the cost of all loss, deterioration and damage due to its negligence in carrying out the instructions of the Government or their officers. The assessee will get a commission of Rs. 5 per ton of the quantity of fertiliser is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instructions of the Government. One of the essential obligations undertaken by the assessee was to take delivery of the fertilisers and store them in dry godowns where the fertiliser will not be affected by dampness, until the stocks are released on the instructions of the Government. According to the learned counsel, though the assessee has undertaken the obligation of transporting the goods from the railway stations to its godowns, the main obligation undertaken is to stock them in dry godowns until they are released on the instructions of the Government. It is stated that though the amount received under the agreement has been called a commission, it is really in the nature of payment for the user of the godowns and distribution depots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's own user of the godowns for storing the goods entrusted to it by agriculturists or others for storage will attract the exemption. On a due consideration of the matter, we are inclined to agree with the said contention put forward on behalf of the assessee. As pointed out by the assessee, the clause in question will have a very restricted operation if the word " letting " is understood in the sense of " letting out ", that is, parting away with the possession of the godowns for rent, and such letting out of godowns is very rare. Normally, co-operative societies who have got storage facilities receive goods from its members, agriculturists or others for storage and charge certain fee depending upon the quantity of the goods deli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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