Dipak Kumar Sen, J.
1. M/s. Singhal Brothers Private Ltd., the asses-see, is a private limited company. It was incorporated in 1939 under the Indian Companies Act, 1913. Till 1967, it was carrying on business of manufacture and sale of edible oils and owned a factory and godowns at Ghaziabad in U.P.
2. In 1967, the directors of the assessee decided to discontinue manufacture and to cease all ancillary business operations. The only income of the assessee thereafter was rent derived from letting out its godowns atGhaziabad. In the assessment years 1971-72 and 1972-73, the corresponding previous years ending on the 31st March of 1970 and 1971, the assessee claimed exemption under s. 10(29) of the I.T. Act, 1961, in respect of its rental income as aforesaid. The ITO rejected the claim on the ground that the assessee had not been constituted under any specific enactment for marketing of commodities.
3. Being aggrieved, the assessee preferred appeals to the AAC who upheld the decision of the ITO. A decision of the Allahabad High Court in U. P. State Warehousing Corporation v, ITO : 94ITR129(All) cited was distinguished on facts and it was held that, even if the assessee was accepted to be an authority constituted under the Companies Act, it was not so constituted for marketing of commodities. Its main object was to carry on the business of manufacture of oil and its other objects in its memorandum were incidental to this main object.
4. There were further appeals by the assessee to the Tribunal. It was contended in the appeals that the assessee was a company constituted under the Companies Act, a law for the time being in force, and in view of the specific objects of the assessee contained in its memorandum, viz., 'to act as contractor, commission agent.........warehousing and godown-keeperand general suppliers', the assessee should be held to be an authority constituted for the marketing of commodities within the meaning of Section 10(29). U.P. State Warehousing Corporation : 94ITR129(All) was cited before the Tribunal in support of such contentions. It was further contended that the expression 'marketing' would not be limited to the activity of mere buying and selling of commodities but would include a wide range of activities beginning from the holding and preserving of goods after production up to their ultimate distribution to the consumers. On behalf of the revenue, the findings of the AAC were reiterated. The Tribunal after considering the respective submissions accepted the contentions of the revenue and dismissed the appeals.
5. At the instance of the assessee, the Tribunal under Section 256(1) of the I.T. Act, 1961, has drawn up a consolidated statement of case and has referred the following question as a question of law arising from its aforesaid order I
'Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the memorandum of association of the asses-see-company and of Section 10(29) of the Income-tax Act, 1961, the Tribunal is correct in holding that the assessee-company is not an 'authority' within the meaning of the said Section 10(29) and is not entitled to exemption under that statutory provision in respect of its rental income from its godowns at Ghaziabad ?'
6. At the hearing, Mr. K. Roy, learned counsel for the assessee, drew our attention to s. 10(29) of the I.T. Act, 1961, which reads as follows :
'10. Incomes not included in total income.--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 the commodities ;'
7. He also cited U. P. State Warehousing Corporation : 94ITR129(All) . In that case, the U.P. State Warehousing Corporation had instituted proceedings under article 226 of the Constitution challenging a notice issued by the ITO, Lucknow, whereby it was called upon to pay a sum as advance tax for the assessment year 1974-75. The only contention of the Corporation was that its income was exempt under the said s. 10(29). The High Court considered the said section and laid down, inter alia, as follows:
(a) The term 'authority' as defined in 'Corpus Juris Secundum' denotes a body having jurisdiction in certain matters of public nature but which need not include governmental power.
(b) If possession of quasi-governmental power was an essential ingredient of an authority so as to exclude purely business enterprises even though they have been constituted by a statute, Section 10(29) would become redundant.
8. The High Court further observed as follows : (at pp. 132 and 138 of the report).
'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)--......' (p. 132).
'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.........The marketing process is infinitely far-reaching than the transfer of goods from manufacturers to final consumers.
It is thus evident that all business activities directed towards the flow of goods and services from producer to consumer are within the concept of 'marketing'.' (p. 138).
9. On the authority of the above, Mr. Roy contended that the assessee in the instant case also came within the four corners of the said section. It was constituted under the Companies Act, a law in force at the relevant time. Its objects were, inter alia, marketing of commodities. The fact that it had other objects as well would in no way detract from the relevant object and the assessee's income arose from letting out its godowns.
10. Mr. Suhas Sen, learned counsel for the revenue, contended on the other hand, that the assessee could not be said to have been constituted for the purpose of marketing of commodities. All that could be said was that the assessee was incorporated under the Companies Act, i.e., its existence was permissive under the said statute and nothing more. He distinguished U.P. State Warehousing Corporation : 94ITR129(All) on the fact that the assessee in that case was constituted as a statutory corporation with the object of providing warehousing, an object which came within the ambit of the activities under the head 'Marketing'. He relied on a decision of this court in Calcutta State Transport Corporation v. CIT : 108ITR922(Cal) , where the meaning of the term 'authority' was considered in the context of s. 10(20) which provides tax exemption in the case of a local authority. It was held that to be an 'authority' an entity had to possess one or more of the following characteristics.
(a) Exercise of governmental or quasi-governmental power,
(b) Performance of governmental or quasi-governmental functions.
(c) Power to have its directions enforced with punishment, i.e., having a right to command and to be obeyed.
(d) Exercise of general or particular statutory power.
(e) Power to make regulations, rules or bye-laws having the force of law.
11. In resolving the controversy, which has been raised in these proceedings we have to keep in mind the scheme of the sections concerned. Section 10 provides tax relief in certain cases. The section generally applies to all persons, but the categories of relief do not, ex facie, apply to all persons, i.e., to all assessees generally. For example, Sub-sections (4) to (10) relate to tax reliefs given to non-residents and persons who are not citizens of India. Sub-sections (18A) and (19A) provide relief to ex-rulers of the Native States of India. Sub-sections (21), (22), (22A), (23) and (23B) apply to associations and institutions including universities, hospitals and other educational institutions. We have already noted that Sub-section (20) relates to local authorities. Sub-sections (20A) and (29) specifically relate to 'authority'. Sub-section (20A) speaks of an authority 'constituted in India by or under any law enactedeither for the purpose of dealing with and satisfying the need for housing accommodation or for the purposes of planning, development or improvement of cities, towns and villages or for both'.
12. Keeping in view the aforesaid scheme, in our opinion, the expression 'authority' used in Sub-section (29) has got to be given a meaning. The mere fact that a juristic personality is created under any particular statute or law having as its direct or indirect object, marketing of commodities, in our opinion, will not make the entity an 'authority' within the meaning of the said sub-section. Such juristic entity or personality must have some other attributes which would entitle it to claim to be an 'authority'. It has to satisfy the test or tests of an 'authority' as has been laid down in Calcutta State Transport Corporation : 108ITR922(Cal) , which we have noted earlier.
13. In the case of U.P. State Warehousing Corporation : 94ITR129(All) , the Allahabad High Court, following the 'Corpus Juris Secundum', noted that though a corporation need not have governmental powers, it must have jurisdiction in certain matters of public nature. The High Court went on to lay down further that if an entity is created by a statute, primarily or specifically for the purpose of marketing of commodities, it will be, on the plain language, 'an authority' within the meaning of this provision. We have to record our respectful disagreement with the said further proposition laid down by and/or the said observations of the Allahabad High Court.
14. A joint stock company, incorporated primarily for carrying on ordinary business or commercial activities, in our opinion, cannot come within the definition of 'authority' under the said sub-section. It does not even fulfil the test laid down by the 'Corpus Juris Secundum', relied on by the Allahabad High Court inasmuch as it cannot be said that such a company has jurisdiction in any matter of public nature.
15. In this view of the matter, it is not necessary for us to consider whether the activities of the assessee in the instant case come within the activities relevant or pertaining to 'marketing of commodities'. We also do not propose to discuss further the other aspect of the section, i.e., whether the constitution of the entity should be for the purpose of marketing of commodities or whether the law mentioned in this section should relate to marketing of commodities. In our view, the assessee fails to satisfy the primary test of this section, that is, it cannot be held to be an 'authority'.
16. For the above reasons, we answer the question referred in the affirmative and in favour of the revenue. There will be no order as to costs.
17. I agree.