TMI Blog1993 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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." The Assessing Officer, however, allowed exemption in respect of income derived by the assessee-corporation from warehousing charges amounting to Rs. 3,44,57,147 under section 10(29) of the Act. However, income from other sources and under different heads amounting to Rs. 13,25,171 was disallowed from exemption on the ground that this was not an income received from letting of godowns or warehouses. The assessee had received certain interest from banks on its deposits and also hire charges of stitching machine and platform scale. Income under other heads also included GPF forfeiture, application fee and certain misc. income. 3. The ld. counsel has argued that the assessee was a statutory corporation constituted under a Central statute and was, therefore, entitled to exemption relating to income from all its activities within the meaning of section 10(29) of the Act. It has been argued that what section 10(29) requires is that it should be an authority constituted under any law and it should be constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 and the decision of the High Court was affirmed. It was observed that there were three tests for entitling an assessee under section 10(29) : first, that the assessee must be an authority constituted under a law ; second, that the authority should be constituted for marketing of commodities and the third, that it should derive income from letting of godowns or warehouses for storage, processing or facilitating the marketing commodities. Since all the three tests were satisfied by the U.P. State Warehousing Corpn., the appeal filed by the Union of India was dismissed. 5. The Id. counsel has invited our attention to clause (d) of section 24 of the Warehousing Corporations Act, which reads as under : "24. Subject to the provisions of this Act, a State Warehousing Corporation may : (d) act as an agent of the Central Warehousing Corporation or of the Government for the purposes of the purchase, sale, storage and distribution of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities." It has been argued by the ld. counsel that aforesaid clause (d) authorised and permitted the assessee-corporation to engage itself in many other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the exemption was limited only to the income arising from letting of godowns or warehouses. The observation regarding income of that corporation, is as under :-- " There is no controversy as regards the third Ingredient because the exemption is claimed only in respect of that part of the income which is in respect of letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. The controversy has only centered round the first two ingredients." As we have already seen there were three ingredients in clause (29) namely, that it should be an authority constituted under any law in force, that it should be constituted for marketing of commodities and that the income is derived from letting of godowns or warehouses. There was no controversy in that case relating to the third ingredient and the other two ingredients were found to be in favour of the assessee-corporation. 7. The Id. counsel has placed reliance on certain other decisions of the High Courts in respect of his plea that the assessee-corporation was entitled to exemption for its income from its entire activities. First case, relied upon, is of the Rajasthan High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lenged the status of the assessee-corporation as an authority or its activities as marketing, the decisions relied upon by the ld. counsel are of no avail to him. On the other hand, we notice that the decision of the Madhya Pradesh High Court is very relevant in the matter whereby interest received on deposits with the bank and commission charges for handling work of loading and unloading of agricultural commodities have been held to be not exempt. Following the said ratio, we find ourselves unable to accept the plea of the ld. counsel that the income disallowed by the Revenue authorities must be treated to be exempt within the meaning of section 10(29). The question before us is not whether the assessee should engage or not in activities other than marketing and derive income therefrom. The precise point in issue before us is whether the income other than that received from letting of godowns or warehouses could get exemption under section 10(29) of the Act? What section 24(d) of the Warehousing Corporations Act, provided was that the assessee-corporation could act as an agent of the Central Corporation or of the Government for any purpose. But the aforesaid section 24(d) would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable income. The ld. counsel has argued that no distinction could be drawn between the expenditures relating to taxable and non-taxable income. The ld. D.R. has, however, contended that since the assessee-corporation is engaged in various activities, it was natural that extra work needed extra persons and extra expenditure. He has argued that the entire expenditure could not, therefore, be allowed and had to be bifurcated. 13. The ld. counsel for the assessee has placed reliance on a decision of the Supreme Court in the case of CIT v. Maharashtra Sugar Mills Ltd. [1971] 82 ITR 452. In that case, the Assessing Officer had disallowed part of commission paid to the managing agents on the ground that it related to the act of managing sugarcane cultivation and not sugar production from which the assessee derived income. It was observed that cultivation of sugarcane and manufacturing of sugar constituted one single and indivisible business. Reliance has also been placed on a decision of the Punjab and Haryana High Court in the case of Punjab State Co-operative Supply Marketing Federation Ltd. v. CIT [1981] 128 ITR 189, wherein It has been held that if the business was indivisible ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
