Income from commission earned by a cooperative society as a wholesale dealer of controlled commodities is not eligible for deduction under Section 80P(2)(e) of the Income Tax Act, 1961, if the income is not derived from letting out godowns or warehouses for storage, processing, or facilitating the marketing of commodities.

1. - In all these appeals relating to different assessment years from 1991-1992 to 1996-97, the following common question has been raised. Since the matter has been decided by the Tribunal by common order, all the appeals are decided by this common order.

"Whether on the facts & in the circumstances of the case the tribunal was justified in holding that the assessee Society is entitled to deductions u/s 80P (2) (e) of the Income Tax Act in respect of the income derived from Commission/margin without letting out godown of warehouse contrary to the income derived from letting of godown or warehouse and such income being deductible u/s 80P (2) (e) of the act?"

2. The respondent - assessee is an Cooperative Society and engaged in running a Consumer Co-operative Store and having 30 branches in the city of Udaipur itself. It is dealing in non-controlled commodities as well as in controlled commodities. In the present case, we are concerned with amount included in the computation of taxable income arising from commission earned by the Assessee Society as wholesale dealer of the controlled commodities viz. wheat, rice and sugar. The commodities in questions were declared as essential commodities and became part of regulated trade through public distribution system in terms of Orders issued by Appropriate Govt. under Essential Commodities Act.

3. The assessee has its own godowns as well as hired godowns for the purpose of his business including dealing in the essential commodities. The food grains Wheat and Rice are included in Schedule I of the Rajasthan Food Grains and Other Essential Articles (Regulation of Distribution) Order, 1976 and other commodity viz 'Sugar' is also included in Schedule II of the said order.

4. The assessee held the licence of 'authorized wholesaler' under the provisions of the aforesaid Order of 1976. In respect of the essential commodities in question the price at which the commodity concern was to be made available to consumer was fixed by the competent authority under the provisions of the Order 1976 and such price included commission to be charged by an authorised wholesale dealer as part of consideration at which he were to sell such commodities to retail authorised dealer at fair price shop.

5. The present dispute had arisen out of this commission retained by the Assessee Cooperative Society in respect of essential commodity viz wheat, rice & sugar sold by it to the retailers. There is no dispute that the commodities were to be supplied by the Food Corporation of India to the respondents assessee. He was to pay the price of the essential commodities received by him and he was entitled to earn profit at fixed rate as part of the price at which he was required to sell the said commodities to the retailer, as per directions of the Govt. Apparently, since the goods were received as essential commodities by the assessee, it was to be stored in the godown until the same was transported to the retailer on the basis of the authorisation issued by the competent authority. The supply was to be distributed ultimately as an essential commodity in a particular area during the particular period through Authorised retailer as fair price shopkeeper.

6. Initially, the assessee has claimed the commission, part of the price fixation, to be retained by him as its income arising from business of sale and purchase of the commodities. However, subsequently the revised return was filed claiming that entire amount of the commission received by the assessee as exempted under Section 80P (2)(e) of the Income Tax Act, 1961 as income arising from leasing out godowns. It was claimed that the assessee was only acting as agent of the State Government for storing the essential commodities for facilitating the public distribution of such commodities by the State Government and commission was paid to the assessee only for the purpose of storage of the essential commodities at its godowns. The receiving of essential commodities was on