1. The assessee is a co-operative society engaged in the marketing of the garden produce of its members. It derives income from letting of a cold storage plant also. The assessee urged that the income from cold storage was exempt under Section 80P of the Income-tax Act, 1961 ('the Act') as it is a warehouse for storing goods. The ITO did not accept this contention. He held that exemption under Section 80P is allowable in respect of income derived by the society from letting of godowns or warehouse and not cold storage plant. Thus, he brought to tax the income from the cold storage plant. He also treated 20 per cent of the commission as receipts from non-members and taxed it. The assessee appealed to the AAC. He agreed with the ITO in disallowing the claim for exemption under Section 80P and taxing the income from cold storage. He directed that receipts from non-member should not be estimated at more than 10 per cent. Against the said order, the assessee has preferred these appeals.
2. The learned counsel for the assessee submitted that the cold storage plant is only a warehouse where vegetables are stored. The cold storage does not cease to be a storage merely because it is a refrigerating chamber. He urged that the claim of the assessee under Section 80P should have been allowed. The learned departmental representative urged that cold srorage plant is a building with refrigeration equipment for storing commodities and it cannot be treated as a warehouse. Hence, the assessee is not entitled for the deduction under Section 80P. On facts he pointed out that the profit and loss account clearly indicates sale of ice which is not eligible for exemption under Section 80P.3. We have considered the rival submissions. We will first consider the claim under Section 80P. The relevant portion of Section 80P, to the extent it is necessary for our purpose, reads as under : (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in Sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in Sub-section (2), in computing the total income of the assessee.
(2) The sums referred to in Sub-section (1) shall be the following, namely :- (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income ; The expression used in Clause (e) of Sub-section (2) is 'godown or warehouse'. The question for consideration is whether cold storage can be called 'warehouse'. The meaning of 'warehouse' as per the Oxford Dictionary is as follows : According to Stroud's Judicial Dictionary, the meaning of warehouse is : a place where a man stowes or keeps his goods which are not immediately wanted for sale.
The meaning of 'cold storage' as per Chambers Twentieth Century Dictionary is as under : The word 'storage' has been defined in Oxford English Dictionary as capacity or space for storing, place where something is stored. Cold storage is also put under this heading and means the storing of provisions in refrigerating chambers as a means of preserving them from decay. The ordinary meaning of storage is that it is a place for storing. From the above it is clear that the meaning of warehouse is a building or room for storing goods or merchandise. In respect of certain commodities in order to preserve them for long period from decaying, they are kept in an artificially cooled place, i.e., cold storage. Thus, the cold storage is used for storing the goods. Merely because it has a refrigerating chamber, it does not lose the character of storing place, i.e., warehouse. It is nonetheless a warehouse. All that is to be seen is whether it is a place of storage of commodities.
It is immaterial whether the place of storage is ordinary place of storing or artificially cooled refrigerating chamber. In either case it is only a place for storage of commodities. Once it is a place of storing, it comes within the meaning of warehouse. Hence, the cold storage where the commodities are stored for longer period without decaying would come within the meaning of 'warehouse'. This view of ours is supported by the decision of the Bombay High Court, in Central Hindustan Orange & Cold Storage Co. Ltd. v. Prafullachandra Ramachandra Oza AIR 1967 Bom. 126, wherein it was held that the cold storage does not cease to be a. storage. It was observed as under : ...The ordinary meaning that would be given to the word 'storage' is a place for storing. That means any place where the goods can be stored. It may be that, for different commodities different conditions of storage may be necessary. For a commodity like cotton seed a particular kind of storage or store-house would be advisable.
For kerosene oil and other articles different conditions may be necessary, but still all these places are the places for storing the various commodities and irrespective of the conditions which may be obtaining in each of these places, they would all be called storages because what is done there is that actually the goods or commodities are stored or kept for a length of time. Just as in a commodity like, say cotton seed, certain precautions have got to be taken, similarly in commodities like potatoes in order that they may not decay early and may remain useful for a pretty long time, it is necessary to store them in certain cool places. There are certain medicines to which nothing will happen if they are placed in ordinary atmosphere. There are other medicines which will decay or deteriorate or lose their efficacy if they are stored or placed in an ordinary atmosphere and need to be stored in a cool place-may be a natural cool place or an artificially cooled placed, but still such a place will remain a storage and nothing but a storage. In this case we find that potatoes, in order to keep them marketable for a long period, are required to be placed in a cool place having a temperature between 34 to 38 or 40 degrees F. For this purpose chambers are constructed and arrangement is made to keep these chambers at those low temperatures and by bringing the potatoes inside such chambers they are in fact stored in those chambers as long as they are not required for immediate use. The cold storage thereby does not cease to be a storage... (p. 135) The above ratio squarely applies to the instant case. Thus, the cold storage has to be treated as a warehouse within the meaning of Clause (e) of Sub-section (2) of Section 80P. Thus, |the income derived from letting of the cold storage which is a warehouse is entitled for deduction under Section 80P. But the receipts from sale of ice are not entitled for deduction under Section 80P. Accordingly, we direct the ITO to allow deduction under Section 80P in respect of the income derived from letting of the cold storage and disallow the claim for deduction in respect of the receipts from the sale of ice in all these years.
5. In the result, the appeals are treated as partly allowed for statistical purposes.