TaxTMI 
TaxTMI 
1973 (11) TMI 1
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....-tax Officer who has issued the impugned notice of demand. The petitioner prays that the question of law whether the petitioner is entitled to exemption under section 10(29) of the Income-tax Act, 1961, be decided this court. Section 10(29) of the Act of 1961 provides : "10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included ....... (29) in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. Under this provision, an assessee would be entitled to exemption if- (1) it is an authority constituted under any law (2) it is an authority constituted for the marketing of commodities ; and (3) the exemptible income is in respect of letting of godowns or ware-houses for storage, processing or facilitating the marketing of commodities. Section 28 of the Agricultural Produce (Development and Warehousing) Corporation Act, No. 28 of 1956, provided that the State Governments may, with the approval of the Central ....
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....ring in section 10(29) cannot possibly be construed as referring to an authority having quasi-governmental powers. It is trite that a term used by the legislature must be understood in the sense which the context indicates. Here we find that section 10(29) specifically indicates the kind of authority, it refers to the authority as one which is constituted for the marketing of commodities. If an entity is created by statute primarily or specifically for the purpose of marketing of commodities, it will, on the plain language, be an authority within the meaning of this provision. The specification of the quality of the authority to which the section applies excludes reference to any dictionary. Any legal entity or juristic personality constituted by law for the purpose of marketing commodities would be an authority within the meaning of section 10(29). The petitioner has been established under the Warehousing Corporations Act, 1962. It is an "authority" constituted under a law within the meaning of section 10(29). We have now to consider it the petitioner has been constituted for the marketing of commodities. Section 24 of the Warehousing Corporations Act, 1962, lays, down the func....
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....any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities". The expression "for facilitating the marketing of commodities" cannot possibly refer to the functions of buying and selling on one's own behalf because when a person buys or sell she, according to the definition propounded by the revenue, indulges in marketing. He cannot be said to facilitate marketing. The use of the word "facilitating" seems to refer to functions like gradation or standardisation in the warehouses or giving of facilities by way of distribution by the authorities running the warehouses of goods or commodities belonging to others. Intrinsically, the term "marketing of commodities" as used in this clause excludes an activity done by the assessee for its own benefit because it refers to income from letting of godowns or warehouses, for purposes, inter alia, of facilitating the marketing of commodities. Obviously, if the owner of the warehouse does the activity of facilitating for his own benefit, he will not earn any income from letting of the warehouse. He will earn income from letting of his warehouse only if the activity of facilitati....
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....e the making of the Act ; 2nd. What was the mischief and defect for which the common law did not provide ; 3rd. What remedy Parliament has resolved and appointed to cure the disease of the Commonwealth ; and 4th. The true reason and the remedy ; and then the office of judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief and to add force and life to the cure and remedy, according to the true intent of the makers of the Act. Let us consider the legislative history. The Agricultural Finance Sub-Committee (1945) remarked : " The construction of a chain of warehouses is unlikely to attract immediately sufficient private capital. Hence, we recommend that the State should itself undertake the planning and construction of warehouses at all nuclear points of trade in agricultural produce. The warehousing system should be operated by a public corporation organised on lines similar to those of the improvement trust." The Rural Banking Enquiry Committee, 1950, also emphasised the importance of storage and warehousing in relation to the rural credit and rural, bank....
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....the Indian Income-tax Act, 1922, by the Finance Act of 1955. It introduced subsections (3), (4) and (5) to section 14 of that Act. By these provisions exemptions were granted from income-tax. These provisions provided (3) The tax shall not be payable by a co-operative society .... (iii) in respect of any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities ..... (5) The tax shall not be payable by an assessee, which is an authority constituted under any law, for the time being in force for the marketing of commodities, in respect of any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities." The Income-tax Act, 1961, re-enacted these, provisions as sections 81, 82 and 83. The Finance (No. 2) Act of 1967 deleted these sections but the provisions of these sections were incorporated, by the same Finance Act in sections 80P, 80Q and 10(29) respectively. In spite of this change in the placing of the provisions in the Act, there was no material change in the language of the provisions. Section 10(29) is in identical terms as section 14(5) of....
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....ility is created when goods and services are available at the places they are needed, time utility when they are needed, and possession utility when they are transferred to those who need them. The process of marketing makes goods and services much more valuable when they are wanted and transferred to the people and place who want them. These authors have made the following classification of the marketing functions : (1) Activities involving transfer of ownership : (a) buying ; (b) selling ; (2) Activities involving physical, supply : (a) transportation ; (b) storage ; (3) Activities facilitating the foregoing functions : (a) standardisation and grading ; (b) financing ; (c) risk taking ; (d) market research. It has been explained that "storage" is the marketing function which involves holding and preserving goods between the time of production and their use. It will thus be seen that the marketing process consists of process of concentrating and dispersing all goods between the producers and the consumers. In both these processes, storage and warehousing form important activities. Warehousing or storage is, therefore, an essential element of the process of marketing. ....