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TMI Blog1978 (4) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ness operations. The only income of the assessee thereafter was rent derived from letting out its godowns at Ghaziabad. In the assessment years 1971-72 and 1972-73, the corresponding previous years ending on the 31st March of 1970 and 1971, the assessee claimed exemption under s. 10(29) of the I.T. Act, 1961, in respect of its rental income as aforesaid. The ITO rejected the claim on the ground that the assessee had not been constituted under any specific enactment for marketing of commodities. Being aggrieved, the assessee preferred appeals to the AAC who upheld the decision of the ITO. A decision of the Allahabad High Court in U. P. State Warehousing Corporation v. ITO [1974] 94 ITR 129 (All) cited was distinguished on facts and it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act, 1961, has drawn up a consolidated statement of case and has referred the following question as a question of law arising from its aforesaid order : " Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the memorandum of association of the assessee-company and of section 10(29) of the Income-tax Act, 1961, the Tribunal is correct in holding that the assessee-company is not an " authority " within the meaning of the said section 10(29) and is not entitled to exemption under that statutory provision in respect of its rental income from its godowns at Ghaziabad ? " At the hearing, Mr.K. Roy, learned counsel for the assessee, drew our attention to s. 10(29) of the I.T. Act,1961, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a term used by the legislature must be understood in the sense which the context indicates. Here we find that section 10(29) specifically indicates the kind of authority, it refers to the authority as one which is constituted for the marketing of commodities. If an entity is created by statute primarily or specifically for the purpose of marketing of commodities it will, on the plain language, be an authority within the meaning of this provision. The specification of the quality of the authority to which the section applies excludes reference to any dictionary. Any legal entity or juristic personality constituted by law for the purpose of marketing commodities would be an authority within the meaning of section 10(29)--........" (p. 132). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in that case was constituted as a statutory corporation with the object of providing warehousing, an object which came within the ambit of the activities under the head " Marketing ". He relied on a decision of this court in Calcutta State Transport Corporation v. CIT [1977] 108 ITR 922 (Cal), where the meaning of the term " authority " was considered in the context of s. 10(20) which provides tax exemption in the case of a local authority. It was held that to be an " authority " an entity had to possess one or more of the following characteristics. (a) Exercise of governmental or quasi-governmental power. (b) Performance of governmental or quasi-governmental functions. (c) Power to have its directions enforced with punishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute or law having as its direct or indirect object, marketing of commodities, in our opinion, will not make the entity an " authority " within the meaning of the said sub-section. Such juristic entity or personality must have some other attributes which would entitle it to claim to be an " authority " has to satisfy the test or tests of an " authority " as has been laid down in Calcutta State Transport Corporation [1977] 108 ITR 922 (Cal), which we have noted earlier. In the case of U.P. State Warehousing Corporation [1974] 94 ITR 129 (All), the Allahabad High Court, following the " Corpus Juris Secundum ", noted that though a corporation need not have governmental powers, it must have jurisdiction in certain matters of public nature. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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