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TMI Blog1988 (3) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... paddy. Clause 12 of the contract states what are the services the assessee should carry out. These are reproduced below : " 12. Charges and Remuneration.---The operations, services and supplies required of the sub-agent which are enumerated in brief hereunder shall be paid for by the party of the first part : (a) Transportation from collection point to storage point including all incidental operations, such as testing the quality of foodgrains, weighing, bagging, loading, unloading, payment of octroi, market cess and all other incidentals, etc. (b) Providing gunnies of approved quality for bagging foodgrains when so required by the Sole Agent and using the same gunny (keeping it in the same condition for bagging rice) in case where pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be converted into boiled rice, a charge of Rs. 2 per quintal of paddy shall be paid for the par-boiling operations. Whenever paddy is required to be converted into rice, either raw or boiled, the sub-agent shall retain for himself the bran and brokens and the gunny rendered surplus on milling of paddy and bagging the resultant rice. The service charges payable by the party of the first part shall be paid on bills presented by the sub-agent in the form prescribed therefor and in accordance with financial rules and other procedure laid down by the party of the first part in this behalf. " It will be seen from the above that the assessee should arrange for the collection of the paddy, transport it from the collection point, pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Asstt. Commissioner heard the matter again. He gave a finding that the activity of the assessee was akin to the activity of the Coorg Coffee Growers' Co-operative Society Ltd. That co-operative society was also acting as the agent of the Coffee Board and was in receipt of commission from them. The Karnataka High Court held in their case that the assessee therein was entitled to the exemption under section 80P(2)(e). The Appellate Asstt. Commissioner felt that this case will govern the facts of the assessee's case and, therefore, the assessee is entitled to the deduction. 5. Against this order for both the years the department has now come on appeal. Shri Sreedhar for the department submitted that the question whether the recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocessing or storaging charges. Thus, the income derived by the assessee from the above activity is not exempt under section 80P(2)(e). " It will be seen that the Tribunal had found as a fact that the assessee was not deriving any income from letting of godowns or warehouses. In the statement of the case again the Tribunal highlighted this fact and stated that the income received by the co-operative society had nothing to do with letting out of godowns or warehouses. It is on these facts that the High Court has given an answer against the assessee. They had specifically stated that the Tribunal has found that no income has been earned by the assessee from the letting out of godowns or warehouses and, therefore, the claim of the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dities. In this case godowns had been let out to the Corporation for the purpose of storage of paddy and rice. It is only for facilitating the marketing of these commodities later. Therefore, the income arising from such letting out of godowns or warehouses will be exempt. 9. However, clause, 12 clearly states that Rs. 3 per quintal of paddy paid by the Corporation is not merely for the service of letting out of godowns. It is also for several other services like transportation of goods from collection point to storage point, insuring of the stocks and filling the bags with rice, stitching, weighing and stencilling. A part of the amount paid by the Corporation is also for these services. These services cannot be equated with the income de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , most of the activity of the society consists in taking custody of the goods of others and storing the same in their godowns or warehouses. It must be taken that the Legislature when it introduced the above provision was quite aware of the usual activities of the co-operative society which maintained the godowns and warehouses for storage purposes. It cannot be taken to be the intention of the Legislature to exempt only the rents received from letting out of the godowns and not the amounts received by the co-operative society for permitting the user of the godowns for storage by its members, agriculturists and others. We are, therefore, of the view that in the setting in which the word 'letting' occurs, it should be understood as having a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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