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Udupi Taluk Agricultural Produce Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Bangalore
Decided On
Judge
Reported in(1984)8ITD887(Bang.)
AppellantUdupi Taluk Agricultural Produce
Respondentincome-tax Officer
Excerpt:
.....no part of its income represents earning from letting of godowns or warehouses for the purpose of storage, processing or facilitating the marketing of commodities and, therefore, exemption under section 80p(2)(e) is not available to the assessee in respect of its income from procurement, etc. thus, he disallowed the claim. on apppeal, the commissioner (appeals) upheld the same. against the same the assessee has preferred this appeal.2. the learned counsel for the assessee strongly urged that under section 80p(2)(e) even in respect of income received from processing or facilitating the marketing of commodities exemption is available.hence, the assessee is entitled for the exemption claimed. the learned departmental representative strongly urged that only in respect of income from letting.....
Judgment:
1. The assessee is a co-operative society. It claimed exemption under Section 80P(2)(e) of the Income-tax Act, 1961 ('the Act') in respect of its income of Rs. 1,20,206. This represents commission received from the Karnataka Food and Civil Supplies Corporation for procurement of paddy and rice and reimbursement of transport charges. The ITO held that no part of its income represents earning from letting of godowns or warehouses for the purpose of storage, processing or facilitating the marketing of commodities and, therefore, exemption under Section 80P(2)(e) is not available to the assessee in respect of its income from procurement, etc. Thus, he disallowed the claim. On apppeal, the Commissioner (Appeals) upheld the same. Against the same the assessee has preferred this appeal.

2. The learned counsel for the assessee strongly urged that under Section 80P(2)(e) even in respect of income received from processing or facilitating the marketing of commodities exemption is available.

Hence, the assessee is entitled for the exemption claimed. The learned departmental representative strongly urged that only in respect of income from letting of godowns for storage, processing or facilitating the marketing of commodities is exempt under Section 80P(2)(e). Thus he supported the orders of the lower authorities.

3. We have considered the rival submissions. Section 80P(1)and 80P(2)(e) read as under: 80P. Deduction in respect of income of co-operative societies.--(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:--(a)to(d)***** (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; What is exempted under the above provision is the income derived from letting of godowns or warehouses if they are let out for 'storage', 'processing' or 'facilitating the marketing of commodities'. The word 'for' used in the above provision clearly indicates the purpose for which the godowns or warehouses are let out from which income is derived to be eligible for exemption. After the word 'storage' there is a comma. Thus, the word 'for' applies for 'processing' as well as 'facilitating the marketing of commodities'. If the intention was otherwise, the Legislature would have used the word 'from' before 'processing'. The very fact that the word 'for' is used would indicate that the letting of godowns or warehouses should be for storage, processing or facilitating the marketing of commodities and the income derived from letting of godowns or warehouses for those purposes alone is exempt under the above provision. In coming to the above conclusion, we derive support from the decision of the Gujarat High Court in Surat Vankar Sahakari Sangh Ltd. v. CIT [1971] 79 ITR 722. In that case Section 81(iv) of the Act, which is in identical terms with Section 80P(2)(e), was considered. It was held therein that exemption is available only in respect of income derived from letting of godowns or warehouses where the purpose of letting is storage, processing or facilitating the marketing of commodities. It was held as under: ... As a matter of fact, if we read the clause as a whole, there is no doubt that the words 'storage, processing or facilitating the marketing of commodities' constitute one single composite clause governed by the preposition 'for' signifying that the letting of godowns or warehouses contemplated by the section is letting for any of the three purposes, namely, storage, processing or facilitating the marketing of commodities....

The ratio laid down in the above case squarely applies to the instant case.

4. In the instant case the assessee does not derive any income from letting of godown or warehouse for the purpose of storage, processing or marketing the commodities. The assessee only derives income by way of commission for procurement of paddy and rice from the Karnataka Food and Civil Supplies Corporation and reimbursement of transport charges.

That commission was described as processing or storage charges. Thus, the income derived by the assessee from the above activity is not exempt under Section 80P(2)(e).

5. The decision of the Karnataka High Court in CIT v. 'Coorg Coffee Growers' C.S. Ltd. [ITRC No. 55 of 1973 dated 28-7-1975], relied on by the assessee's counsel, is clearly distinguishable. In that case the finding of the Tribunal was that the commission is derived from letting of its godowns for storage of commodities with a view to facilitate marketing of the same. The Hon'ble High Court held that on the facts found by the Tribunal there can be no doubt that the claim for exemption made by the assessee and upheld by the Tribunal is justified in law. The facts in the instant case are different as no income is earned by the assessee from letting of godowns or warehouses for the purpose of storage, processing or facilitating the marketing of commodities. Thus, in our view, the assessee is not entitled for the exemption under Section 80P(2)(e). The lower authorities were justified in rejecting the claim of the assessee. We uphold the order of the Commissioner (Appeals).


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