Warehousing exemption is limited to godown income, while inseparable common business expenditure cannot be split for disallowance.

Exemption under section 10(29) was confined to income derived from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, so bank interest, application fees, hire charges and similar miscellaneous receipts were taxable and not covered by the provision. The scope of the exemption was not enlarged by section 24(d) of the Warehousing Corporations Act, 1962. On expenditure, the assessee's activities were treated as an inseparable common business structure, so the related expenditure could not be bifurcated between exempt and taxable streams; the full expenditure was allowable and the proposed disallowance failed.

---

---

Issues: (i) Whether income other than warehousing charges, such as bank interest, application fee, hire charges and similar receipts, was exempt under section 10(29) of the Income-tax Act, 1961; (ii) Whether the expenditure attributable to the assessee's activities could be bifurcated and disallowed as relating to taxable income.

Issue (i): Whether income other than warehousing charges, such as bank interest, application fee, hire charges and similar receipts, was exempt under section 10(29) of the Income-tax Act, 1961.

Analysis: The exemption under section 10(29) was held to be confined to income derived from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. The assessee's status as an authority constituted for marketing of commodities was not in dispute, but that did not extend the exemption to all receipts from other activities. Income from bank deposits and other miscellaneous sources was not income from letting of godowns or warehouses, and section 24(d) of the Warehousing Corporations Act, 1962 could not enlarge the scope of the exemption under the Income-tax Act.

Conclusion: The additional receipts were not exempt and were taxable; this issue was decided against the assessee.

Issue (ii): Whether the expenditure attributable to the assessee's activities could be bifurcated and disallowed as relating to taxable income.

Analysis: The activities of the assessee were treated as inseparable and part of a common business structure. On that footing, the expenditure could not be split up between exempt and taxable streams, and the entire expenditure was held to be for the purposes of the business. The disallowance was therefore unsustainable.

Conclusion: The expenditure could not be bifurcated and the entire expenditure was allowable; this issue was decided in favour of the assessee.

Final Conclusion: The exemption under section 10(29) was restricted to warehousing income, but the assessee succeeded on the allowability of the common expenditure.

Ratio Decidendi: Exemption for a warehousing corporation under section 10(29) is limited to income from letting of godowns or warehouses, while common business expenditure on an inseparable activity stream cannot be bifurcated and disallowed merely because some receipts are taxable.

---