Broad construction of godown letting exemption covers co-operative society receipts mainly attributable to storage use.

Income received by a co-operative society for storing and distributing fertilisers under a Government agreement was held to fall within the exemption for income derived from the letting of godowns or warehouses under section 14(3)(iv) of the Indian Income-tax Act, 1922. The expression "letting" was construed broadly to include permitting the use of godowns for storage, and not narrowly as a lease-like transfer of possession. The servicing obligations were treated as incidental, with the receipts mainly attributable to storage use. The exemption was therefore applied, and the Tribunal's view was upheld in favour of the assessee.

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Issues: Whether income received by a co-operative society for storing and distributing fertilisers under an agreement with the Government fell within the exemption for income derived from the letting of godowns or warehouses under section 14(3)(iv) of the Indian Income-tax Act, 1922.

Analysis: The agreement required the society to receive, store, safeguard and distribute the fertilisers in its godowns under Government instructions, and the commission was held to relate mainly to the use of the godowns for storage. The expression "letting" in the exemption provision was construed in its setting as not confined to a narrow lease-like transfer of possession, but as extending to permitting the use of godowns for storage, whether by the society itself or by others. The provision was treated as general in scope and not limited to letting in favour of members alone. The servicing element was found to be insignificant compared with the storage component of the receipts.

Conclusion: The receipts were exempt under section 14(3)(iv), and the finding of the Tribunal was upheld in favour of the assessee.

Final Conclusion: The exemption provision was interpreted broadly to cover income substantially attributable to the use of godowns for storage, and the reference was answered against the revenue.

Ratio Decidendi: For a co-operative society, income substantially earned for permitting the use of its godowns for storage falls within the exemption for income derived from the letting of godowns or warehouses, and "letting" in the provision is not confined to a strict lease of possession.

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