Income from goods handling & bank interest not exempt under sec 10(29) of Income-tax Act.

The High Court held that income derived by the corporation from handling goods and interest from banks did not qualify for exemption under section 10(29) of the Income-tax Act, 1961. The court emphasized that only income directly related to letting of godowns or warehouses for specified purposes is exempt under this provision. The Tribunal's decision to deny exemption for commission charges and interest income was upheld. Each party was ordered to bear their own costs. Judges G. G. SOHANI and R. K. VIJAYVARGIYA delivered the judgment.

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Issues involved: Interpretation of provisions of section 10(29) of the Income-tax Act, 1961 regarding exemption of income derived from certain activities by an authority constituted for the marketing of commodities.

Commission charges and interest income: The assessee, a corporation established under the Warehousing Corporations Act, received commission charges for handling agricultural commodities and interest on deposits with banks. Claim for exemption under section 10(29) of the Act was rejected by the Income Tax Officer (ITO), which was upheld by the Appellate Authority and the Tribunal. The questions referred to the High Court were whether the commission income and interest income were exempt under section 10(29) and whether the Tribunal's decision was correct.

Interpretation of section 10(29): The High Court analyzed the language of section 10(29) which exempts income derived from letting of godowns or warehouses for storage, processing, or facilitating the marketing of commodities by an authority constituted for the marketing of commodities. The court emphasized that the income must be directly derived from the specified activities to qualify for exemption under this provision.

Reframing of the question: The High Court reframed the first question referred by the Tribunal to focus on whether the commission charges received by the assessee for handling goods were exempt under section 10(29). The court clarified that the decision in a previous case regarding the U. P. State Warehousing Corporation was not directly relevant to the present case.

Decision and reasoning: The court held that the income derived by the assessee from handling goods or interest from banks did not fall within the scope of section 10(29) as it was not directly related to the letting of godowns or warehouses for specified purposes. The court emphasized that only income derived from the specified sources is exempted under this provision, and other sources of income do not qualify for exemption. Therefore, the Tribunal's decision to deny exemption under section 10(29) for the commission charges and interest income was upheld by the High Court.

Costs: The High Court ruled that each party shall bear their own costs in relation to this reference.

Judges: The judgment was delivered by G. G. SOHANI and R. K. VIJAYVARGIYA.

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