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M.P. State Warehousing Corporation Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 76 of 1981
Judge
Reported in[1984]145ITR420(MP)
ActsIncome Tax Act, 1961 - Sections 10(29)
AppellantM.P. State Warehousing Corporation
RespondentCommissioner of Income-tax
Appellant AdvocateA.K. Chitale, Adv.
Respondent AdvocateS.R. Joshi, Adv.
Excerpt:
.....of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - the appeals preferred by the assessee to the commissioner (appeals) and the income-tax appellate tribunal were unsuccessful. this contention was also rejected by the ito as well as the commissioner (appeals). the tribunal also upheld the order of the ito holding that the assessee was not entitled to any set-off of interest paid against the income derived from interest......or facilitating the marketing of commodities, it has also derived income from interest and agency commission. the assessee claimed that the income received by it by way of agency commission and interest on fixed and call deposits with the banks was exempt under the provisions of section 10(29) of the act. the ito rejected the contention of the assessee and held that only warehousing receipts were exempt under the provisions of section 10(29) of the act. the ito, therefore, subjected the entire income from interest and agency commission to tax. the appeals preferred by the assessee to the commissioner (appeals) and the income-tax appellate tribunal were unsuccessful. 3. the assessee also claimed that the payments made by the assessee as interest should be allowed to be deducted against.....
Judgment:

Vijayvargiya, J.

1. By this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following question of law for the opinion of this court :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal correctly stated the ratio of the decisions in : [1974]94ITR129(All) (U.P. State Warehousing Corporation v. ITO and (CIT v. Haryana Warehousing Corporation) and was justified in holding that the commission received for handling the goods is not business income and was not exempt under Section 10(29) of the Income-tax Act, 1961

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest received from the banks on the deposits of monies held in the course of its business was not incidental or consequential to the activities of the business and was taxable under the head 'Income from other sources' and, thus, was not exempt under Section 10(29)?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not allowing deduction of interest payment against the income derived from interest on fixed deposits ?'

2. The material facts giving rise to this reference as set out in the statement of the case are as follows : The assessee is a warehousing corporation and besides income from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, it has also derived income from interest and agency commission. The assessee claimed that the income received by it by way of agency commission and interest on fixed and call deposits with the banks was exempt under the provisions of Section 10(29) of the Act. The ITO rejected the contention of the assessee and held that only warehousing receipts were exempt under the provisions of Section 10(29) of the Act. The ITO, therefore, subjected the entire income from interest and agency commission to tax. The appeals preferred by the assessee to the Commissioner (Appeals) and the Income-tax Appellate Tribunal were unsuccessful.

3. The assessee also claimed that the payments made by the assessee as interest should be allowed to be deducted against the income earned by itfrom interest. This contention was also rejected by the ITO as well as the Commissioner (Appeals). The Tribunal also upheld the order of the ITO holding that the assessee was not entitled to any set-off of interest paid against the income derived from interest. At the instance of the assessee the Appellate Tribunal has referred the aforesaid questions of law for the opinion of this court.

4. As regards questions Nos. 1 and 2 similar questions were referred by the Appellate Tribunal for the opinion of this court in respect of the assessment of the assessee for the years 1972-73 and 1973-74.

5. In M.C.C. No. 28 of 1978 (M. P. Warehousing Corporation v. CIT) decided on 28-1-1981 : [1982]133ITR158(MP) , this court reframed question No. 1 as follows (p. 160):

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the commission charges received by the assessee for handling the goods was not exempt under Section 10(29) of the Income-tax Act, 1961 ?'

6. This court, after considering the contention raised by the assessee, answered question No. 1 as reframed by this court and question No. 2 in the affirmative and against the assessee. Agreeing with the aforesaid decision of this court in this case also, we reframed question No. 1 as follows:

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the commission charges received by the assessee for handling the goods was not exempt under Section 10(29) of the Income-tax Act, 1961 ?'

7. Our answer to the aforesaid question No. 1 as reframed by us and question No. 2 above are in the affirmative and against the assessee.

8. As regards question No. 3, the Tribunal held that there was no nexus between the amount of interest paid by the assessee and the income derived by the assessee from interest and, therefore, the assessee was not entitled to claim a set-off of interest paid by it. The learned counsel for the appellant was unable to point out any error of law committed by the Tribunal in doing so. Our answer, therefore, to question No. 3 is also in the affirmative and against the assessee.

9. The reference is answered accordingly. In the circumstances, the parties shall bear their own costs of this reference.


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