Judgment :

S. H. Kapadia, J.

1. Leave granted.

2. The short question which arises for consideration in this civil appeal turns on the interpretation of Section 80P(2)(e) of the Income-tax Act, 1961 whose predecessor was Section 14(3)(iv) of the Income-tax Act, 1922.

Facts:

3. The facts giving rise to this civil appeal are few and undisputed and may be briefly stated as follows. Appellant-society is a co-operative society registered under Rajasthan Co-operative Societies Act, 1965. Appellant is running a consumer co-operative store at Udaipur since 1963. It has 30 branches. Appellant is dealing in non-controlled commodities through its branches. In addition, appellant is also doing the work of distribution of controlled commodities such as wheat, sugar, rice and cloth on behalf of the Government under the Public Distribution Scheme (PDS) for which it is getting commission. The distribution of the controlled commodities is regulated by the District Supply Officer (DSO-Authoriesed Officer) under Rajasthan Foodgrains & Other Essential Articles (Regulation of Distribution) Order, 1976 (for short, "1976 Order"). Appellant claims to be stockist/distributor of controlled commodities. It takes delivery from Food Corporation of India (FCI) and Rajasthan Rajya Upbhokta Sangh as per the directives of the State Government. The price, quantity and the person from whom the delivery is to be taken is fixed by the State Government under the said 1976 Order. After taking the delivery, appellant stores these goods in its godowns, both owned and rented. The storage godowns are open to checking by the concerned officers of the State Government. The stocks stored by the appellant are delivered to the Fair Price Shops (FPS-retailers) as per the directions of the State Government. The quantity, price and the FPS to whom the delivery is to be given is fixed by the State Government. According to the appellant, therefore, the above modus operandi indicates that the State Government exercises total control over the stock of controlled commodities stored in the godowns of the appellant-society. On 28.2.1977 appellant was granted licence for purchase/sale/storage for sale of goodgrains under Rajasthan Foodgrains Dealers Licensing Order, 1964.

4. It exercises the powers conferred by Section 3 of Essential Commodities Act, 1955, the Government of Rajasthan issued the 1976 Order. Following are the relevant provisions, reproduced from the 1976 Order, which read as under:

"Clause 2. Definitions. - In this Order, unless the context otherwise requires :-

.(b) "Authorisation" means an authorization issued under clause 3 of this Order;

.(c) "Authorised Fair Price Shop Keeper" means a retail dealer incharge of a shop authorized under clause 3 and shall include a person incharge of a shop where foodgrains and other essential articles are sold and is under the control of the State Government;

.(d) "Authorisation Holder" means an authorized wholesaler or an authorized Fair price shopkeeper;

.(e) "Authorised Officer" means District Supply Officer for the District Headquarter Municipal area, Executive Officer of Municipal Board for rest municipal area and Vikas Adhikari for rural area and any other officer authorized as such by the State Government;

(f) "Authorised Wholesaler" means a person, a firm, an association of persons or a cooperative society or any other institution authorized appointed as an agent under clause 3 of this Order by the State Government or the Collector.

Clause 3. Issue of Authorisation. -

.(1) The Collector or any other officer authorized by the State Government may issue an authorization to any person being an authorized wholesaler/fair price shopkeeper to obtain and supply foodgrains and other Essential Articles in the area specified therein.

.(2) No person other than an authorization holder shall sell any of the foodgrains or any other essential articles supplied by the Government for distribution under this Order or any other Order.

Clause 20 -