TaxTMI 
TaxTMI 
2014 (3) TMI 587
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.....966 of 2007 - 2002-2003 2. In all the above Tax Case (Appeals), the questions of law admitted by this Court read as under: "1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in dismissing the appellant's appeal and allowing the Revenue's appeals concerning the exemption u/s.10(29) of the Income Tax Act? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in Law in not noting that the Hon'ble Supreme Court had referred the identical issue to a larger Bench of the Hon'ble Supreme Court for its consideration on account of conflicting decisions of two benches of the Hon'ble Supreme Court? 3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in Law in not holding that the appellant is engaged in warehousing activities as a result of which, all its incomes are directly derived from the same, thus being eligible for exemption u/s.10(29) of the Income Tax Act? 4. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in Law in not holding that i....
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.... may-- (a) acquire and build godowns and warehouses at such places within the State as it may, with the previous approval of the Central Warehousing Corporation, determine; (b) run warehouses in the State for the storage of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities; (c) arrange facilities for the transport of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities to and from warehouses; (d) act as an agent of the Central Warehousing Corporation or of the Government for the purposes of the purchase, sale, storage and distribution, of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities; and (e) carry out such other functions as may be prescribed." 7. The functions of the State Corporation are almost on similar lines as that of the Central Warehousing Corporation. There is no dispute on the fact that the assessee is an authority constituted under law to satisfy one of the requirements of Section 10(29) of the Income Tax Act, 1961. As is evident from a reading of Section 24 of the Warehousing Corporations Act, the State Warehousing....
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.... from letting out of godowns or warehouses for storage, processing or facilitating marketing commodities. Having regard to the language used, the Supreme Court held that exemption would arise pertaining to that part of the income derived from the letting of godowns or the warehouses. 10. The issue raised in the above-said reported decision was with reference to interest on fixed deposits. Dismissing the assessee's appeal, the Supreme Court affirmed the view of the High Court that interest on fixed deposits was not exempt under Section 10(29) of the Income Tax Act. 11. Subsequent to this decision, the Apex Court, in the decision reported in (2000) 245 ITR 1 (Commissioner of Income Tax V. Gujarat State Warehousing Corporation Ltd.) referring to the decision reported in (1991) 187 ITR 54 (SC) (Union of India V. U.P. State Warehousing Corporation ) held that considering the different view expressed in the decision reported in (1999) 237 ITR 589 (Orissa State Warehousing Corporation and Rajasthan State Warehousing Corporation V. Commissioner of Income Tax), particularly with reference to interest income, viewed that there was an apparent conflict between these two decisions and th....
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....come earned on 'facilitating the marketing of commodities', which involved letting of warehouses, interest income dealing in agricultural produce on behalf of Food Corporation of India/State Government. We further find at page 601 of the judgment, the income considered therein related to warehousing charges, administrative overhead being surplus of recovery over cost on procurement activities on behalf of Food Corporation of India/State Government, fumigation service charges, interest and miscellaneous income. After noting the language of Section 10(29), the Supreme Court pointed out that the exemption under Section 10(29) is categorical in its language and the exemption is applicable only by the circumstances as envisaged in the Section. If the letting of godowns or warehouses was for any other purpose other than the stated purpose or the income is derived from any other source, then, the income could not possibly come within the ambit of Section 10(29) of the Income Tax Act and interest income on fixed deposits would not qualify for relief under Section 10(29) of the Income Tax Act. As regards supervision charges, fumigation service charges, miscellaneous income and admin....
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....or any other purpose other than facilitating the marketing of commodities, would not qualify for exemption as per Section 10(29) of the Income Tax Act. After referring to the Supreme Court decision, the High Court referred to the decision rendered by the Rajasthan High Court reported in (1994) 75 Taxman 66 (Raj.) (CIT V. Rajasthan State Warehousing Corpn.) and allowed the appeal filed by the Corporation. 17. We are in respectful agreement with the decision of the Karnataka High Court referred to above. We may also point out that in the decision reported in (1980) 125 ITR 136 (Addl. Commissioner of Income-tax V. Karnataka State Warehousing Corporation), the Karnataka High Court held that the State Warehousing Corporation was an authority constituted by law for the marketing of commodities and the income earned from letting of godowns or warehousing for storage, processing or facilitating of marketing of commodities was exempt under Section 10(29) of the Income Tax Act. The High Court also held that the expression "marketing of commodities" must not be construed in a narrow sense and it includes every activity of purchase, selling and distribution, as also warehousing. 18. We may a....
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....n case holding that the income derived by the assessee from house property, interest on bank deposits, interest on loans and advances made to members of staff, supervision charges, fumigation receipts, weigh bridge receipt, sale of tender forms etc. would not be exempt under Section 10(29) of the Income Tax Act. The Tribunal pointed out that the earlier decision of the Tribunal was in consonance with the decision of the Supreme Court reported in (1999) 237 ITR 589 (Orissa State Warehousing Corporation and Rajasthan State Warehousing Corporation V. Commissioner of Income Tax). 22. We may find that in respect of the appeal for the assessment year 1993-94, the assessee's appeal relating to the claim on interest on fixed deposits and dividend income was also considered and following the decision reported in (1999) 237 ITR 589 (Orissa State Warehousing Corporation and Rajasthan State Warehousing Corporation V. Commissioner of Income Tax), the assessee's appeals were rejected by the Tribunal. The decision is the same as regards the other assessment years also. Thus, the assessee is on appeal before us. 23. As far as the claim of exemption on income from house property, from ban....
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....e assessment year 1993-94, arising out of the assessee's appeal relating to interest income on fixed deposits and dividends, is concerned, we reject the assessee's appeal, thereby confirm the order of the Tribunal. Accordingly, T.C.(A)No.2552 of 2006 stands dismissed. 27. T.C.(A)Nos.2339, 340 and 965 of 2007 relate to the assessment years 2000-2001, 2001-2002 and 2002-2003 respectively. In respect of the above-said assessment years, the assessee has also preferred T.C.(A)Nos.338, 964 and 965 of 2007 as against the order of the Tribunal rejecting the assessee's appeal filed against the rejection of the petitions filed under Section 154 of the Income Tax Act. The questions of law raised in all these appeals are one and the same and are no different from the questions raised in T.C.(A)Nos.2547 of 2006 batch. 28. As far as T.C.(A)No.338 of 2006 is concerned, the assessee claimed exemption in respect of income derived from warehousing charges, supervision charges, fumigation activities, weigh bridge receipts, dess activities, interest on staff advance, interest on bank deposits, miscellaneous receipts and profit on sale of assets. The claim of the assessee was rejected by ....