A liberal interpretation of the provisions of Section 80p (2) (e) and the definition of 'cold storage' and 'warehouse' influenced the court's decision.

( 1 ) THE Income-tax Appellate Tribunal, Delhi, has referred the following question of law Under section 256 (1) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), for the opinion of this court.

"whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that the income of the assessee-co-operative society from a cold storage was exempt under the provisions of Section 80p (2) (e) of the Income-tax Act, 1961 ?"

( 2 ) BRIEFLY stated the facts giving rise to the present reference are as follows : the respondent, namely, M/s. District Co-operative Federation, Bulandshar, is a cooperative society. The present reference relates to the year 1979-80. It had originally filed the return on june 28, 1979, showing a total income of Rs. 73,630. However, it revised its return on February 16, 1982, showing a total loss of Rs. 1,02,240. In the course of assessment proceedings it also filed a letter dated November 29, 1982, claiming deduction of Rs. 24,960 Under Section 80p (2) (a) (ii) in respect of brick kiln business claiming it to be a cottage industry thereby increasing the returned loss to Rs. 1,27,200. It may be mentioned here that along with the revised return the respondent had filed a letter claiming deduction Under Section 80p (2) (e) of the Act in respect of the income of the cold storage owned by it. The Income-tax Officer did not allow exemption Under Section 80p (2) (e) of the Act to the respondent on the income from the cold storage. Feeling aggrieved, the respondent preferred an appeal before the Commissioner of income-tax (Appeals ). The Commissioner of Income-tax (Appeals) had upheld the claim made by the respondent and directed that the deduction be allowed Under Section 80p (2) (e) of the Act in respect of the income from the running of the cold storage. The Revenues appeal before the tribunal has failed.

( 3 ) WE have heard Sri A. N. Mahajan, learned standing counsel for the Revenue, and Sri Vikram gulati, learned counsel for the respondent.

( 4 ) LEARNED counsel for the Revenue submitted that Under Section 80p (2) (e) of the Act any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities is allowed as a deduction while computing its total income. According to him the running of a cold storage cannot be said to be letting of godown or warehouse for storage or for processing. He submitted that the apex court in the case of Delhi Cold Storage P. Ltd. v. CIT [1991] 191itr 656 has held that in a cold storage processing is not done. According to him the cold storage cannot be, by any stretch of imagination, treated as a godown or a warehouse where articles are stored and, therefore, the provisions of Section 80p (2) (e) of the Act are not applicable.

( 5 ) SRI Vikram Gulati, learned counsel for the respondent, however, submitted that a liberal interpretation to the various clauses of Section 80p of the Act should be given and the provision of clause (e) of Sub-section (2) of Section 80p of the Act should be liberally construed in order to give effect to the legislative intent. According to him in a cold storage articles are stored at a given f temperature, therefore, it is a godown or warehouse for storage of goods, even if no processing is done and thus entitled for deduction. He relied upon the following decisions : (1) Addl. CIT v. Ryots Agricultural Produce Co-operative Marketing Society Ltd. [1978] 115 itr 709 (Karn) ; (2) CIT v. Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 (Cal); (3) CIT v. Ahmedabad Maskati Cloth Dealers Co-operative Warehouses Society Ltd. [1986] 162 itr 142 (Guj) ; (4) CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117 (SC) ; and (5) Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814 (SC ).

( 6 ) HAVING heard learned counsel for the parties we find