Important Points
1. Pre-requisite element for the entitlement as regards the claim for exemption u/s 10(29) of the Income Tax Act is the income which is derived from letting out of godowns or warehousing for storage, processing or facilitating marketing of commodities; income from letting out for any other purpose does not qualify for exemption.
2. Interest income earned on fixed deposits from bank does not fall within Section 10(29) of the Income-Tax Act, so as to qualify for exemption.

Headnote:Income-Tax Act, 1961-Section 10(29) - Exemptions - Income of authorities marketing commodities -Whether interest earned on fixed deposits from bank qualify for exemptions?-No - Exemption restricted to income relating to letting out of godowns or warehousing, storage, processing or facilitating same -Letting out should be for marketing of commodities-Income from letting out for any other purpose does not qualify for exemption-Word ‘any income’ is restricted in its application by reason of expression ‘derived from’-Interest on fixed deposit not incidental or consequential to activities of letting out.
       Held : On a plain reading of Section 10(29) of the Act as above, it appears that the pre-requisite element for the entitlement as regards the claim for exemption is the income which is derived from letting out of godowns or warehouses for storage, processing or facilitating marketing of commodities and not otherwise. The legislature has been careful enough to introduce in the Section itself, a clarification by using the words ‘any income derived therefrom’, meaning thereby obviously for marketing of commodities by letting out of godowns or warehouses for storage, processing or facilitating the same. If the letting out of godowns or warehouses is for any other purpose, question of exemption would not arise. (Para 12)
       While it is true that in the event of there being any doubt in the matter of interpretation of a fiscal statute, the same goes in favour of the assessee, but the fact remains and the law is well settled on this score that in the matter of interpretation of the taxing statutes the law courts would not be justified in introducing some other expressions which the legislature thought fit to omit. (Para 13)
       In the present context, there is no doubt as to the meaning of the words used in the Section by reason of the language used, neither there is any difficulty in ascertaining the statutory intent. Incidentally, it cannot but be said that an exemption is an exception to the general rule and since the same is opposed to the natural tenor of the statute, the entitlement for exemption, therefore, ought not to be read with any latitude to the tax-payer or even with a wider conotation. (Para 13)
       The Tribunal has proceeded on the basis, as if the deposits are totally exempt in terms of Section 10(29) of the Act but unfortunately there is neither any factual support nor any sanction in law. Section 10(29) is categorical in its language and this exemption is applicable only in the circumstances as envisaged under the Section as noticed herein before. Needless to say that the word ‘any income’ as appearing in the body of the statute is restrictive in its application by reason of the user of the expressions ‘derived from’. In the event the intent of the legislature was otherwise, there was no embargo or restraint to use and express in clear and unequivocal language as has been so expressed in Sections 10(20A) or 10(21) or 10(22B) or 10(20BB) or Section 27. These statutory provisions go to show that wherever as a matter of fact the legislature wanted an unrestrictive exemption the same has used ‘any income’ without any restriction so as to make it explicit that the entire income of the assessee would be exempt. The factum of the Corporation being put into funds by itself cannot be termed to be a fund to facilitate the marketing of the commodities, as such question of the interest income accruing therefrom being exempt from tax as has been held by the Tribunal does not and cannot arise. (Para 15)
       Having due regard to the language used, question of exemption would arise pertaining to that part of the income only which arises or is derived from the letting of godowns or the warehouses and for the purposes specified in Section 10(29) of the Act-as noticed above. The statute has been rather categorical and restrictive in the matter of grant of exemption: storage, processing or facilitating the marketing of the commodities are definitely regarded as three different forms of activities which are entitled to exemption in the event of their being any income therefrom. We do lend our concurrence to the view expressed by the Madhya Pradesh High Court and record that in the event the letting of godowns or warehouses is for any other purpose or if income is derived from any other source, then and in that event such an income cannot possibly come within the ambit of Section 10(29) of the Act and is thus not exempt from tax. The facts in issue pertaining to the interest income on fixed deposit or ascribing the activities of the assessee being termed to be one integrated activity does not and cannot arise. The language being clear and there being no ambiguity, question of there being any integrated activity and reading the same in to the statute would be a violent departure from the intent of the legislature. (Para 28)
       (ii) Interpretation of Statutes-Fiscal Statutes-Law courts would not be justified in introducing some other expressions which legislature thought fit to omit-Fiscal statute shall have to be interpreted on basis of language used therein and not de hors the same.
       Held : While it is true that in the event of there being any doubt in the matter of interpretation of a fiscal statute, the same goes in favour of the assessee, but the fact remains and the law is well settled on this score that in the matter of interpretation of the taxing statutes the law courts would not be justified in introducing some other expressions which the legislature thought fit to omit. (Para 13)
       Individual cases of hardship and injustice do not and cannot have any bearing for rejecting the natural construction by attributing normal meanings to the words used since “hard cases do not make bad laws”. A fiscal statute shall have to be interpreted on the basis of the language used therein and not de hors the same. No words ought to be added and only the language used ought to be considered so as to ascertain the proper meaning and intent of the legislation. The Court is to ascribe natural and ordinary meaning to the words used by the legislature and the Court ought not, under any circumstances, to substitute its own impression and ideas in place of the legislative intent as is available from a plain reading of the statutory provisions. (Paras 32 & 33)

Judgment

Banerjee, J.-The core question, in these eight appeals, by the grant of special leave against the judgments of the High Courts of Orissa and Rajasthan, centres round the interpretation of Section 10(29) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2. Before however, proceeding further in these matters, it will be convenient to note that hearing of these appeals was taken up together by consent of the parties and these appeals being disposed of by a common judgment by reason of identity of the issue involved in these appeals.

3. The contextual facts in Appeal No. 3476 of 1993 depict that the Orissa State Warehousing Corporation being the assessee herein received a sum of Rs. 1,74,383/- as interest on fixed deposits for the assessment year 1983-84 and since during the relevant period the assessee has had to pay the total interest of Rs. 1,08,063/- to the banks, a sum of Rs. 66,320/- was added to the income of the assessee as the Income-tax Officer was of the view that question of resultant difference of income being Rs. 66,320/- cannot be said to be an ‘income exempt’ within the meaning of Section 10(29) of the Act.

4. The Commissioner of Income Tax (Appeals), Orissa in the appeal by the assessee upheld the order of the Income-tax Officer but the Tribunal on a further appeal however, came to a different conclusion to the effect that the income in question was exempt under Section 10(29). Subsequently, however, at the instance of the Revenue, the following two questions were referred to the High Court for opinion under Section 256(1) of the Act :

(1) “Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest received by the assessee from the banks on fixed deposits was exempt u/s 10(29) of the I.A. Act, 1961?

(2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest received from the banks on fixed deposits was incidental to or consequential to the activities of the business of the assessee and was not taxable under the head ‘income from other sources’ and, thus exempt under Section 10(29) of the I.T. Act, 1961?”

5. The High Court in its turn, however, answered the first question in the negative and against the assessee and thereby affirmed the view of the Income-tax Officer and hence the appeal. Incidentally, the High Court did not deem it necessary to answer the second question by reason of the answer given to question No. 1.

6. Since the contextual facts are at slight variation with each other in these appeals, it would be convenient to deal with the Appeal No. 3476 of 1993 at this juncture before proceeding with the factual context pertaining to other seven appeals.

7. Dr. V. Gauri Shankar, the learned Senior Advocate appearing in support of the appeal was rather emphatic in his objections as regards the issue of interest on fixed deposits being ascribed to be forming part of the total income and in elaboration of the same drew our attention to some of the basic provisions of the Act. Apart from reliance on Section 2(45) of the Act which defines total income as total amount of income referred to in Section 5, strong emphasis was laid on both Sections 4 and 5 of the Act.

8. We do, however, feel it expedient to record that reliance on these basic provisions of the Act having due regard to the facts of the matter under consideration are totally misplaced and we ought not to detain ourselves on this score any further.

9. In the perspective of the Assessee Corporation being a statutory authority, under the Agricultural and Cooperative Department of the Government of Orissa established under the Warehousing Corporation Act, 1962, (hereinafter referred to as ‘the Act of 1962’) Dr. V. Gauri Shankar contended that regard being had to Sections 16 and 24 of the Act of 1962 all moneys coming in the hands of the Corporation have to be deposited in the Bank Account

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1999 Supreme(SC) 419

Cases Referred (5)