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1976 Supreme(P&H) 177
PUNJAB & HARYANA HIGH COURT
S.P.Goyal, J.
Commissioner Of Income-tax, Patiala-ii
Versus
Haryana Warehousing Corporation
Income tax Reference No. 30 of 1975,32 of 1975,
Decided On : DECEMBER 22, 1976
A warehousing corporation established under the Warehousing Corporations Act, 1962, is an "authority" constituted under law within the meaning of clause (29) of section 10 of the Income-tax Act, 1961, and is entitled to the exemption from income-tax on the income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities.
Headnote:
INCOME TAX - Exemption - Authority constituted for marketing of commodities - Warehousing corporation - Whether an authority - Whether constituted for marketing of commodities - Interpretation of section 10(29) of the Income-tax Act, 1961.
Fact of the Case:
The assessee-corporations, Punjab Warehousing Corporation and Haryana Warehousing Corporation, were established under section 18(1) of the Warehousing Corporations Act, 1962, by notifications of the respective Government of Punjab and Haryana. The assessee-corporations were assessed to income-tax on the income derived by them from the letting of their godowns during each year of account under consideration by the Income-tax Officer. The plea of exemption under section 10(29) of the Income-tax Act was rejected. The Appellate Tribunal, relying on U. P. State Warehousing Corporation V/s. Income-tax Officer [1974] 94 ITR 129 (All) allowed the appeals of the assessees, but referred the following question to this court at the instance of the revenue: "Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee was within the meaning of section 10(29), Income-tax Act, an authority and that that authority had been constituted for the marketing of commodities?"
Finding of the Court:
The court held that the assessee-corporations were an "authority" constituted under law within the meaning of clause (29) of section 10 of the Act and that they had been constituted for the marketing of commodities. The court also held that the word "marketing" has been used in section 10(29) of the Act in the wider sense so as to include the various activities such as storage of commodities which generally go to form the trade of marketing.
Issues: 1. Whether the assessee-corporations are an "authority" within the meaning of section 10(29) of the Income-tax Act, 1961? 2. Whether the assessee-corporations have been constituted for the marketing of commodities?
Ratio Decidendi: 1. The court held that the assessee-corporations were an "authority" constituted under law within the meaning of clause (29) of section 10 of the Act because they were statutory bodies and not companies, their entire share-capital belonged to the Central Warehousing Corporation and the State Government, their management was entirely in the control of the State Government and they could not be dissolved except by the State Government. 2. The court held that the assessee-corporations had been constituted for the marketing of commodities because clause (d) of section 24 of the Warehousing Corporations Act specifically provides that a warehousing corporation may act as an agent of the Central Warehousing Corporation or of the Government for the purpose of the purchase, sale, storage and distribution of agricultural produce and other notified commodities.
Final Decision: The court answered the question in the affirmative, holding that the assessee-corporations were entitled to the exemption under section 10(29) of the Income-tax Act, 1961.
S.P.GOYAL, J.
1. This judgment will dispose of seven Income-tax Reference Nos. 30 to 32 of 1975 and 46 to 49 of 1975 as they involve a common question. References Nos. 30 to 32 relate to the Punjab Warehousing Corporation and the remaining to the Haryana Warehousing Corporation. The assessment years in case of the Punjab Warehousing Corporation are 1969-70, 1970-71 and 1971-72 whereas in the case of the Haryana Warehousing Corporation are 1968-69 to 1971-72. These warehousing corporations were established under section 18(1) of the Warehousing Corporations Act, 1962 , by notifications of the respective Government of Punjab and Haryana. The assessee-corporations were assessed to income-tax on the income derived by them from the letting of their godowns during each year of account under consideration by the Income-tax Officer and the plea of exemption under section 10(29) of the Income-tax Act (hereinafter called "the Act") was rejected. The order of assessment was upheld on appeal by the Appellate Assistant Commissioner. However, the Appellate Tribunal, relying on U. P. State Warehousing Corporation V/s. Income-tax Officer [1974] 94 ITR 129 (All) allowed the appeals of the assessees, but referred the following question to this court at the instance of the revenue :
"Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee was within the meaning of section 10(29), Income-tax Act, an authority and that that authority had been constituted for the marketing of commodities ?"
2. The answer to the question entirely depends on the interpretation of clause (29) of section 10 of the Act which reads as under :
"10. Incomes not included in total income. - In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included - ...... (29) in the case of an authority consituted under any law for the time being 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."
3. The challenge against the applicability of the exemption contained in this clause is two-fold, viz., that the assessee-corporations are not an "authority" within the meaning of this term as used in the said clause and that they have not been constituted for the marketing of commodities.
4. As noticed above, identical matter concerning U. P. State Warehousing Corporations case [1974] 94 ITR 129, came up before a Division Bench of the Allahabad High Court and Satish Chandra J., in a very elaborate judgment, after taking into consideration the dictionary meaning of the terms and other aspects, held that any legal entity or juristic personality constituted by law for the purposes of marketing commodities would be an authority within the meaning of section 10(29) of the Act and the warehousing corporation having been established under an Act of Parliament was an "authority" constituted under a law.
5. Mr. D. N. Awasthy, learned counsel for the revenue, sought to challenge the correctness of this decision mainly on the ground that the provisions of section 39 of the Warehousing Corporations Act were not taken into consideration by the Bench while interpreting the word "authority". The said section 39 provides that for the purposes of the Income-tax Act, a warehousing corporation shall be deemed to be a company within the meaning of that Act and shall be liable to income-tax and super-tax accordingly on its income, profits and gains. The learned counsel, therefore, argued that the warehousing corporation, being a company within the meaning of the Income-tax Act, could not be taken to be an authority within the meaning of section 10(29) of the Act. Support for this contention was also sought from the fact that in various other clauses such as 10(6)(vii), 10(6)(xi) and 10(20), specific words like "local authority", "corporation
