Full Judgment Text
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PETITIONER:
ORISSA STATE WAREHOUSING CORPORATION
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX
DATE OF JUDGMENT: 11/04/1999
BENCH:
Umesh C Banerjee, M.Srinivasan
JUDGMENT:
BANERJEE, J.
The core question, in these eight appeals, by the
grant of special leave against the judgments of the High
Courts of Orissa and Rajasthan, centres round the
interpretation of Section 10(29) of the Income Tax Act, 1961
(hereinafter referred to as ‘the Act’).. Before however,
proceeding further in these matters, it will be convenient
to note that hearing of these appeals was taken up together
by consent of the parties and these appeals being disposed
of by a common judgment by reason of identity of the issue
involved in these appeals. The contextual facts in Appeal
No. 3476 of 1993 depict that the Orissa State Warehousing
Corporation being the assessee herein received a sum of Rs.
1,74,383/- as interest on fixed deposits for the assessment
year 1983-84 and since during the relevant period the
assessee has had to pay the total interest of Rs.1,08,063/-
to the banks, a sum of Rs.66,320/- was added to the income
of the assessee as the Income-tax Officer was of the view
that question of resultant difference of income being Rs.
66,320/- cannot be said to be an ‘income exempt’ within the
meaning of Section 10(29) of the Act. The Commissioner of
Income Tax (Appeals), Orissa in the appeal by the assessee
upheld the order of the Income-tax Officer but the Tribunal
on a further appeal however, came to a different conclusion
to the effect that the income in question was exempt under
Section 10(29). Subsequently, however, at the instance of
the Revenue, the following two questions were referred to
the High Court for opinion under Section 256(1) of the Act :
1) "Whether on the facts and in the circumstances of the
case, the Tribunal was justified in holding that the
interest received by the assessee from the banks on fixed
deposits was exempt u/s 10(29) of the I.T.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 fixed deposits was
incidental to or consequential to the activities of the
business of the assessee and was not taxable under the head
‘income from other sources’ and, thus exempt under section
10(29) of the I.T.Act, 1961?"
The High Court in its turn, however, answered the
first question in the negative and against the assessee and
thereby affirmed the view of the Income-tax Officer and
hence the appeal. Incidentally, the High Court did not deem
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it necessary to answer the second question by reason of the
answer given to question No.1. Since the contextual facts
are at slight variation with each other in these appeals, it
would be convenient to deal with the Appeal No.3476 of 1993
at this juncture before proceeding with the factual context
pertaining to other seven appeals. Dr. V. Gauri Shankar,
the learned Senior Advocate appearing in support of the
appeal was rather emphatic in his objections as regards the
issue of interest on fixed deposits being ascribed to be
forming part of the total income and in elaboration of the
same drew our attention to some of the basic provisions of
the Act. Apart from reliance on Section 2 (45) of the Act
which defines total income as total amount of income
referred to in Section 5, strong emphasis was laid on both
Sections 4 and 5 of the Act.
We do, however, feel it expedient to record that
reliance on these basic provisions of the Act having due
regard to the facts of the matter under consideration are
totally misplaced and we ought not to detain ourselves on
this score any further. In the perspective of the Assessee
Corporation being a statutory authority, under the
Agriculture and Cooperative Department of the Government of
Orissa established under the Warehousing Corporation Act,
1962, (hereinafter referred to as ‘the Act of 1962’) Dr.V.
Gauri Shankar contended that regard being had to Sections 16
and 24 of the Act of 1962 all moneys coming in the hands of
the Corporation have to be deposited in the Bank Account
maintained by the Corporation and the same being a statutory
obligation, the question of income therefore, cannot but be
termed to be a part of the functioning of the unit and as
such exempt under Section 10 (29). In this context and
having regard to the specific submissions made by Dr. V.
Gauri Shankar in support of the appeal it would be
convenient to note the above-noted two statutory provisions
for its proper appreciation. Section 16 of the Act of 1962
reads thus: "16. (1) To the Warehousing Fund shall be
credited-
(a) all moneys and other securities transferred to the
Central Warehousing Corporation under the clause (c) of sub-
section (2) of section 43;
(b) such grants and loans as the Central government
may make for the purpose of the Warehousing Fund; and
(c) such sums of money as may, from time to time, be
realised out of the loans made from the Warehousing Fund or
from interest on loans or dividends on investments made from
that fund.
(2) The Warehousing Fund shall be applied-
(a) for advancing loans to State Governments on such
terms and conditions as the central Warehousing Corporation
may deem fit for the purpose of enabling them to subscribe
to the share capital of State Warehousing Corporations;
(b) for advancing loans and granting subsidies to
State Warehousing Corporations or to State Governments on
such terms and conditions as the Central Warehousing
Corporation may deem fit for the purpose of promoting the
warehousing and storage of agricultural produce and notified
commodities otherwise than through co-operative societies;
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[(c)] for meeting the expenses incurred in relation to
the training of personnel, or publicity and propaganda, for
the purpose of promoting warehousing and storage of
agricultural produce and notified commodities;
(d) for meeting the expenses, including the salary,
allowances and other remuneration of the officers and other
employees, incurred in relation to the administration of the
Warehousing Fund.]
Section 24 of the Act of 1962 is reproduced herein
below:-
24. Subject to the provisions of this Act, a State
Warehousing Corporation may-
(a) acquire and build godowns and warehouses at such
places within the State as it may, with the previous
approval of the central Warehousing Corporation, determine;
(b) run warehouses in the State for the storage of
agricultural produce, seeds, manures, fertilizers,
agricultural implements and notified commodities;
(c) arrange facilities for the transport of
agricultural produce, seeds, manures, fertilizers,
agricultural implements and notified commodities to and from
warehouse;
(d) act as an agent of the Central Warehousing
Corporation or of the Government for the purposes of the
purchase, sale, storage and distribution of agricultural
produce, seeds, manures, fertilizers, agricultural
implements and notified commodities; and
(e) carry out such other functions as may be
prescribed."
A plain reading of the above-noted statutory
provisions, does not however lend any support to the
contention of Dr. V. Gauri Shankar though, however, Rule
16 of the Rules framed under the said Act may have some
bearing in regard thereto. In any event the factum of
deposit of moneys with the bank does not take the matter any
further by reason of the specific language and the
expression used in Section 10 (29) of the Act which reads as
below:- "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 out of
commodities, any income derived from the letting out of
godowns or warehouses for storage, processing or
facilitating the marketing of commodities."
On a plain reading of Section 10(29) of the Act as
above, it appears that the pre-requisite element for the
entitlement as regards the claim for exemption is the income
which is derived from letting out of godowns or warehouses
for storage, processing or facilitating marketing of
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commodities and not otherwise. The legislature has been
careful enough to introduce in the Section itself, a
clarification by using the words ‘any income derived
therefrom’, meaning thereby obviously for marketing of
commodities by letting out of godowns or warehouses for
storage, processing or facilitating the same. If the
letting out of godowns or warehouses is for any other
purpose, question of exemption would not arise. In
continuation of his submissions, Dr. V.Gauri Shankar
contended further that a taxing statute ought not to be
interpreted with a narrow and restrictive meaning attached
to the words used therein but a liberalised meaning ought to
be attributed so as to give full play to the statutory
intent. While it is true that in the event of there being
any doubt in the matter of interpretation of a fiscal
statute, the same goes in favour of the assessee, but the
fact remains and the law is well settled on this score that
in the matter of interpretation of the taxing statutes the
law courts would not be justified in introducing some other
expressions which the legislature thought fit to omit. In
the present context, there is no doubt as to the meaning of
the words used in the Section by reason of the language
used, neither there is any difficulty in ascertaining the
statutory intent. Incidentally, it cannot but be said that
an exemption is an exception to the general rule and since
the same is opposed to the natural tenor of the statute, the
entitlement for exemption, therefore, ought not to be read
with any latitude to the tax-payer or even with a wider
conotation as is being suggested by Dr. V. Gauri Shankar
but to restrict its application to the specific language
used depicting the intent of the legislature. In fine, on
behalf of the assessee, it has been contended that interest
on fixed deposit is incidental to the business income and
when the business income is not taxable then and in that
event, it would be incorrect to include the interest income
earned on that within the purview of tax. Similar however,
was the submission before the Tribunal and the Tribunal
accepting the same recorded the following in its order
pertaining to the same as below: "It is a surprising
proposition that when the income itself is not taxable how
the interest earned on such income becomes taxable. There
is no doubt that the income earned on any income is taxable
but what is required to look into is the circumstances and
incidental activity of the appellant. The incidental
activity of the appellant taxes me to consider that the
interest earned by it is not taxable. Moreover I am
fortified in my view with the decision of the Jaipur Bench
of the Tribunal.
7. I have also considered the facts on record. I
have heard both the parties. I have taken into
consideration the case law relied on by the learned counsel
for the assessee. After examining everything the cumulative
effect which comes to indicate is the interest income earned
by the appellant on the exempted income cannot be brought to
tax."
The above excerpts go to show that the Tribunal has
proceeded on the basis, as if the deposits are totally
exempt in terms of Section 10(29) of the Act but
unfortunately there is neither any factual support nor any
sanction in law. Section 10(29) is categorical in its
language and this exemption is applicable only in the
circumstances as envisaged under the Section as noticed
herein before. Needless to say that the word ‘any income’
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as appearing in the body of the statute is restrictive in
its application by reason of the user of the expressions
‘derived from’. In the event the intent of the legislature
was otherwise, there was no embargo or restraint to use and
express in clear and unequivocal language as has been so
expressed in Sections 10(20A) or 10(21) or 10(22B) or
10(20BB) or Section 27. These statutory provisions go to
show that wherever as a matter of fact the legislature
wanted an unrestrictive exemption the same has used ‘any
income’ without any restriction so as to make it explicit
that the entire income of the assessee would be exempt. The
factum of the Corporation being put into funds by itself
cannot be termed to be a fund to facilitate the marketing of
the commodities, as such question of the interest income
accruing therefrom being exempt from tax as has been held by
the Tribunal does not and cannot arise. Mr. C.S
Vaidyanathan, Addl. Solicitor General, appearing for the
Revenue contended that as a matter of fact the Tribunal has
not been able to assess the situation in its proper
perspective and the High Court was right in answering the
reference in favour of the Revenue. It has been contended
that deposit of all sums in the bank account does not by
itself clothe the assessee to claim exemption irrespective
of the factum of there being a statutory obligation to do
so, unless such claim for exemption falls squarely and
evenly within the four corners of the statutory requirement
and we do feel it expedient to record our concurrence on
this score as noticed above. At this juncture, however, it
would be convenient to turn attention on to the contextual
facts in Appeal Nos. 4042-4048 of 1994 where from it
appears that more or less under similar situation the
Income-tax Officer came to a conclusion that the income
other than the warehousing activities is not exempt, and
therefore, exemption was not allowed. The Commissioner of
Income-tax being of the same view, the matter went before
the Tribunal wherein the Tribunal did set aside the order of
the Commissioner of Income Tax and came to a conclusion that
the items ought to be treated as exempt under Section 10(29)
since they do come within the purview of exemption by way of
facilitating the marketing of the commodities as envisaged
under Section 10(29). The Tribunal, however, at the
instance of the Revenue referred the following question
under Section 256(1) of the Income-tax Act for the
assessment year 1974-75 to 1982-83 to the High Court- the
question being:-
"Whether on the facts and circumstances of the case
the Income Tax Appellate Tribunal was justified in holding
in law that the entire gross receipt of the assessee were
eligible for exemption under Section 10(29)?"
The Rajasthan High Court upon consideration of the
facts however by reason of the identity of the issue
disposed of the references by one single order and answered
the reference in favour of the Revenue in one common order
with, however, a further observation as below:
"it would however, be open for the Tribunal to
consider the income which has been derived from different
sources other than those which have been considered above,
and to go into the details of them and then to come to a
finding that whether such income could be said to be the
income out of letting out godowns for the three purposes
mentioned in Section 10(29) of the Act."
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Be it noted that the Tribunal in these Civil Appeals
(4042-4048 of 1994) has interpreted the words "facilitating
the marketing of the commodities" as one integrated activity
since assessee derives its income from the following three
sources: (I) from letting out of warehouses (II) interest
(III) from any agricultural produce on behalf of Food
Corporation of India and the State Government.
The Tribunal as a matter of fact did accept the
submissions on behalf of the assessee that the activity is
single, indivisible and integrated and that all the
activities are aimed at facilitating the marketing of the
goods. The Tribunal held :
"....that the activity of the assessee is integrated
one and that the entire activity is aimed at facilitating
the marketing of all the goods.
The assessee owns warehouses where the agricultural
produce are stored. For storage food grains, the assessee
constructs new warehouses also. Maintenance of the
warehouses is also done by the assessee.
Procurement of good grain was done by the assessee at
the instance of the State Government and FCI.
In the nature of the activity being carried on by the
assessee, it cannot be said that the assessee’s activity of
warehousing is different from the other activities. The
Gujarat High Court in 124 ITR 282 in the case of Gujarat
State Warehousing Corporation, held that marketing includes
all business activities directed towards the flow of goods
and services from producer to consumer. Similar view has
been taken by other High courts also. Relying on this
authority, we hold that whole activity being carried on by
the assessee is integrated one and that the activities of
the assessee cannot be split up. The issue arising out of
this case is not re integra and the question whether the
charges being received from State Govt./FCI for procurement
of grains qualify for exemption or not u/s 10(29) was
already discussed by Allahabad Bench ‘B’ of the Appellate
Tribunal in the case of U.P. State Warehousing Corporation
pertaining to the assessment year 1973-74 and 1974-75. Copy
of such order is on pages 10 & 11 of the paper book.
The U.P. State Warehousing Corporation, Lucknow also
received commission from Food Corporation of India for
procuring and storing wheat and other food articles on its
behalf. The question arose whether the said commission
income was exempt u/s 10(29). Allahabad Bench ‘B’ having
accepted the contention of the assessee allowed exemption
u/s 10(29). When commission received from FCI on the
procurement of grains is exempt u/s 10(29), we do not see
any reason why the income received from the State Govt. for
the procurement of grains is not covered by Section 10(29).
Such income, we think, is fully covered by the expression
"facilitating the marketing of commodities", occurring in
Section 10(29).
Relying of the decision dated 8.11.77 of Allahabad
Bench ‘B’ supra, we hold that the assessee is entitled to
exemption in respect of Rs.11,06,034.33 representing
Administrative Overheads Charges.
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The interest income amounting to Rs.11,41,350.23, is
also fully covered by the decision of Allahabad Bench ‘A’ of
Appellate Tribunal. The copy of the said order is on pages
1 to 5. This case also pertain to M/s. U.P.State
Warehousing Corporation. The said Corporation earned
interest on short-term fixed deposits. Idle money belonging
to the Corporation was deposited and the interest was
earned. The question arose whether such interest income
qualifies for exemption u/s 10(29). Allahabad Bench ‘A’
answered the said question in affirmative and in favour of
the assessee. Following the said decision dated 31.7.76,
page 1 to 5 of the paper Book, we hold that the assessee is
entitled to claim exemption in respect of interest income
amounting to Rs.11,41,350.25.
Then, we take up the supervision charges, fumigation
service charges and Misc. income amounting to Rs.23,790.67,
Rs.6538.85 and Rs.48,253.49 respectively for consideration.
The assessee having carried on the single and indivisible
activity, we hold these items qualify for exemption u/s
10(29) as they are fully covered by the expression
"facilitating the marketing of commodities", as occurred u/s
10(29)".
In the reference, however the High court observed:
"........The income which is exempt under this clause must
be derived from ‘letting of godowns’, for facilitating the
marketing of commodities. The words ‘facilitating the
marketing of commodities’ cannot be considered independently
and, therefore, the exemption which has been granted is for
the income which has been derived from letting of the
godowns, the source of income which has been exempted in
this clause. The assessee may have different source of
income, but the exemption is not given to the assessee on
its entire income, but only that part of the income which
arises from letting of the godowns for facilitating the
marketing of commodities.
.......It is only the specific purpose which has been
given for letting of the godowns and such three purposes
are: (1) Storage; (2) Processing; and (3) facilitating
the marketing of commodities. The godowns can be let out
for storage of the commodities. Similarly, the godown can
be let out for processing of commodities and the godown can
be let out for facilitating the marketing of commodities.
The letting of godown in all the three circumstances is
inevitable and if the main act of letting of godown is
absent, then the benefit from facilitating the marketing of
commodities can not be claimed exempted. The income which
has been derived by the assessee from procurement of grains
for the State Government/Food Corporation of India is an
independent activity, other than the letting of godown, even
though letting of godown is encouraged by such an activity
it could not be said that the income which has been derived
from the receipts from the State Government or Food
Corporation of India, could be considered as income from
letting out of godowns. The starting point for letting out
is receipt of the goods in the godown/warehouses. If the
income is not related in respect of the activities which
pertains from the stage of receipt of the goods to the
despatch of the goods in the godown/warehouses it could not
be said to be income related to letting out of the godown."
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The High Court went on to record........
".....The income which has been derived from
administrative overheads being surplus of recovery over cost
of procurement is an independent activity. The State
Government or Food Corporation of India could have appointed
any other agency for the work of procurement of goods of
that person would not have been available. The assessee is
not restricted under law to carry on any other business and
if the business for acting as an agent has been carried on
by him, that activity cannot be considered as letting out of
godowns or warehouse for facilitating the marketing of
commodities."
Dr. D. Pal, the learned Senior Advocate, appearing
in support of these Civil Appeals relied strongly on the
decision of this Court in the case of Commissioner of Income
Tax, Madras Vs. South Arcot District Co-operative Marketing
Society Ltd. (1989 (176) ITR 117) Dr. Pal contended that
this exemption under Section 10(29) is for the purpose of
developing the economy so as to achieve social upliftment
considering the area in question and since law courts exists
for the society, the effort of the law court ought always to
be to give the widest possible interpretation so that the
society would benefit and exemption be made available to
achieve the intent and purposes for which the law makers
introduced the same in the statute book. Before proceeding
further in the matter, it would be convenient, however, to
note the observations in the last noted decision (176) ITR
wherein this Court observed:
"We have considered the matter carefully and to our
mind, it seems clear that the Appellate Tribunal and the
High Court are right in the view adopted by them. As was
observed by the Gujarat High Court in CIT v. Ahmedabad
Maskati Cloth Dealers Co-operative Warehouses Society Ltd.
[1986] 162 ITR 142, while considering the analogous
provision of section 80P(2)(e) of the Income-tax Act, 1961,
the provision for exemption was intended to encourage
co-operative societies to construct warehouses which were
likely to be useful in the development of rural economy and
exemption was granted from income-tax in respect of income
derived from the letting of such warehouses for the storage
of fertilisers and other related commodities concerned with
co-operative marketing. Having regard to the object with
which the provision has been enacted, it is apparent that a
liberal construction should be given to the language of the
provision and that, therefore, in the circumstances of the
present case, it must be regarded that what the asssessee
did was to let out its godowns for the purpose of storing
the ammonium sulphate handed over to it by the State
Government. The remaining services performed by the
assessee were merely incidental to the essential
responsibility of using the godowns for the storage of that
stock. It is true that a certain sum was paid to the
assessee and described as commission for the services
performed by it, but having regard to the totality of the
circumstances and to the true substance of the agreement, it
seems to us plain that the amount was paid merely by way of
remuneration for the use of the godowns. In the result, the
assessee is entitled to the exemption claimed by it.
(Emphasis supplied)
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Dr. Pal relying upon the said decision very strongly
contended that this Court was considering Section 14(3)(IV)
of the Income Tax Act 1922 which is in pari materia with
Section 10(29) of the Act and the decision of this Court can
be treated to be a direct authority for the proposition that
widest possible interpretation ought to be afforded to such
an exemption and the expressions "letting out its godowns
for the purpose of storage, processing or facilitating the
marketing of commodities", cannot but be termed to be one
integrated activity and as such is entitled to exemption.
While at the first blush, the submissions of Dr. Pal in
this perspective seemed to be rather attractive, but on a
closer scrutiny the same loses its efficacy. Reliance on
the last-noted decision is totally misplaced, since the
decision is based mainly on the basis of an agreement which
however, has not seen the light of the day in the instant
matter under consideration and it is only by reason of the
substance of the agreement that this Court came to the
conclusion that the assessee is entitled to exemption
claimed by it. With greatest of deference, the decision of
this Court in 176 ITR cannot be said to have expressed any
independent view apart from reliance on the decision of the
Gujarat High Court in CIT V. Ahmedabad Maskati Cloth
Dealers Co- operative Warehouses Society Ltd. [1986] 162
ITR 142. In any event by reason of factual situation, the
decision is clearly distinguishable and we are thus unable
to record our concurrence with the submission of Dr. Pal
that the same is a clear authority in favour of the assessee
in the matter of grant of exemption under Section 10(29) of
the Act of 1961. It was next contended that as a matter of
fact, the Tribunal has arrived at a clear finding of fact
and as such this Court in exercise of jurisdiction under
Article 136 of the Constitution ought not to question the
same and in the event however, the Court feels it expedient
by reason of the overriding powers, as conferred by the
Constitution, the Court should issue a directive to the
Tribunal so as to state the case afresh. We are however,
unable to record our concurrence to the submission since the
order of the Tribunal as noted above cannot but be
attributed to an expression of opinion on a legal issue
which is however, not in accordance with the law. For
convenience sake, the finding of the Tribunal in this regard
is noted as below: "It is argued that the income shown
under the heads: procurement of grains for the State
Govt./FCI, Interest, supervision charges, fumigation service
charges and miscellaneous income are covered by the
expression "facilitating the marketing of commodities"
occurring in sub- section (29) of Section 10 and, therefore,
the assessee is entitled to exemption in respect of the
entire income. So, the question for consideration is
whether the assessee is entitled to exemption u/s 10(29) in
respect of the income derived from the State Government/FCI
for procurement of grains, interest, supervision charges,
fumigation service charges and misc. incomes, we find
substance in the submissions of Shri Ranka......
Incidentally, the Statement of Accounts of the
assessee depicts that the assessee derived incomes during
the period under consideration as below: 1. Warehousing
charges Rs.51,06,433.65 2. Administrative overhead being
surplus of recovery over cost on procurement activities on
behalf of FCI/State Govt. Rs.11,06,034.33 3. Fumigation
service charges Rs. 6,538.85 4. Interest Rs.11,41,350.23
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5. Misc. Income Rs. 48,253.49
It is against these items of income that exemption has
been sought under Section 10(29) of the Act which was
negated by the Income-tax Officer as also the Commissioner
of Income Tax but the Tribunal reversed the same and
thereafter stated the case under 256(1) before the High
Court as noticed above. Cost of procurement activity on
behalf of FCI or State Government, fumigation service
charges; interest; miscellaneous income are termed to be
within the ambit of Section 10(29) of the Act. We are
however for the reasons noted above and more particularly
because of the language of the Section, not in a position to
record our concurrence therewith. Further reliance was also
placed on the decision of the Allahabad High Court in the
case of U.P. State Warehousing Corporation v. Income-tax
Officer (1974 (94) ITR 129). We, however, are not in a
position to obtain support in any form whatsoever by reason
of the fact that the said matter pertains to the issue as to
whether the assessee was an authority within the meaning of
Section 10(29) of the Act and the High Court’s judgment
pertains to the same. This decision was however subject to
scrutiny before this Court as well and while it is true that
there is concurrence of views but the same was however by
reason of the factual status and not by reason of any
interpretation of law as such, as would be evident from the
observations as below:-
"The third test with regard to the exemptable income
being in respect of letting of godowns or warehouses for
storage, processing or facilitating the marketing of
commodities presents no difficulty because it stands
undipsuted that the income derived by the assessee was from
letting of godowns or warehouses. (emphasis supplied)
In view of the observations of this Court as regards
the undisputed facts, question of drawing any inspiration or
obtaining support from the decision does not and cannot
arise and the same is thus clearly distinguishable. Further
reliance was also placed on the decision of the Karnataka
High Court in the case of Addl. Commissioner of Income Tax,
Karnataka v. State Warehousing Corporation (1980 (125) ITR
136)- wherein the Karnataka High Court came to a conclusion
that Section 10(29) of the I.T. Act ought not to be
construed in a narrow sense and the same includes every
activity of purchase, selling and distribution as also
warehousing. This decision also does not, in fact, lend any
assistance to the assessee, since the case cited is an
authority for the proposition that Karnataka State
Warehousing Corporation is an authority constituted by law
for marketing of commodities and is more or less placed in
similar circumstances as that of the U.P. State Warehousing
Corporation’s case (supra). The decision of the Madhya
Pradesh High Court in the case of M.P. Warehousing
Corporation v. Commissioner of Income Tax, (1982 (133) ITR
158) however runs counter to the submission of Dr. Gauri
Shankar as also of Dr. Pal in support of the claim for
exemption. Madhya Pradesh High Court having regard to the
provisions of Section 10(20A), (21) and (22) (since omitted
from the statute book) observed as below:
"It is significant to note that the words "any income"
occurring in Section 10(29) of the Act are qualified by the
words "derived from the letting of godowns or warehouses for
storage, processing or facilitating the marketing of
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commodities." Learned counsel for the assessee contended
that the clause should be read as follows:
"any income derived from the letting of godowns or
warehouses for storage, any income derived from processing
and any income derived from facilitating the marketing of
commodities."
In our opinion, it would not be permissible to
introduce words in the provisions of clause (29). To do so
will be to read in the aforesaid clause words which do not
occur there. Moreover, all the activities of a body
constituted for the marketing of commodities are such which
ultimately may be found to facilitate the marketing of
commodities. If income derived from every activity of an
authority constituted for the marketing of commodities was
meant to be exempted under clause (29), the said provision
would have been enacted as follows:
"any income derived by an authority constituted under
any law for the time being in force for the marketing of
commodities."
Such a provision would be found in clauses (20A), (21)
and (22) of Section 10 of the Act. A perusal of these
clauses would show that only such income as is derived from
a particular source is exempted by clause (29) of Section 10
of the Act. Therefore, to claim exemption, it must be
proved that the income derived by an authority constituted
for the marketing of commodities is income which is derived
from the letting of godowns or warehouses for the purposes
specified in s.10(29), which are storage, processing or
facilitating the marketing of commodities. If the letting
of godowns or warehouses is for any other purpose, or if
income is derived from any other source, then such income is
not exempt under that clause."
Further reliance was placed on the decision of this
Court in the case of Commissioner of Income Tax v. P.J.
Chemicals (1994 (210) ITR 830. In our view, however,
reliance thereon is totally misplaced and the same has no
relevance whatsoever. The decision of the Allahabad High
Court in the case of Commissioner of Income Tax v. U.P.
State Warehousing Corporation [1992 (195) ITR 273] in a
similar vein also does not advance the case of the assessee
any further, as such we need not dilate much on this
excepting however recording that the same does not lend any
assistance to the submissions of assessee-appellants.
Having due regard to the language used, question of
exemption would arise pertaining to that part of the income
only which arises or is derived from the letting of godowns
or the warehouses and for the purposes specified in Section
10(29) of the Act - as noticed above. The statute has been
rather categorical and restrictive in the matter of grant of
exemption: storage, processing or facilitating the
marketing of the commodities are definitely regarded as
three different forms of activities which are entitled to
exemption in the event of their being any income therefrom.
We do lend our concurrence to the view expressed by the
Madhya Pradesh High Court and record that in the event the
letting of godowns or warehouses is for any other purpose or
if income is derived from any other source, then and in that
event such an income cannot possibly come within the ambit
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of Section 10(29) of the Act and is thus not exempt from
tax. The facts in issue pertaining to the interest income
on fixed deposit or ascribing the activities of the assessee
being termed to be one integrated activity does not and
cannot arise. Mr. C. S. Vaidyanathan, Addl. Solicitor
General rightly contended that the language being clear and
there being no ambiguity, question of there being any
integrated activity and reading the same in to the statue
would be a violent departure from the intent of the
legislature. Let us however at this juncture consider some
of the oft cited decisions pertaining to the interpretation
of fiscal statutes being the focal point of consideration in
these appeals. Lord Halsbury as early as 1901, in Cooke v.
Charles A Vogehar Company (1901 A.C. 102) stated the law in
the manner following: "a court of law, has nothing to do
with the reasonableness or unreasonableness of a provision
of a statute except so far as it may held it in interpreting
what the legislature has said. If the language of a statute
be plain, admitting of only one meaning, the legislature
must be taken to have meant and intended what it has plainly
expressed, and whatever it has in clear terms enacted must
be enforced though it should lead to absurd or mischievous
results. If the language of this sub- section be not
controlled by some of the other provisions of the statute,
it must, since, its language is plain and unambiguous, be
enforced, and your Lordships’ House sitting judicially is
not concerned with the question whether the policy it
embodies is wise and unwise, or whether it leads to
consequences just or unjust, beneficial or mischievous."
The oft-quoted observations of Rowlatt,J. in the case
of Cape Brandy Syndicate v. Inland Revenue Commissioners
[1921 (1) KB 64] ought also to be noticed at this juncture.
The learned Judge observed: "In a taxing statute one has to
look at what is clearly said. There is no equity about a
tax. There is no intendment. There is no presumption as to
a tax. Nothing is to be read in, nothing is to be implied.
One can only look fairly on the language used."
The observations of Rowlatt,J. as above stand
accepted and approved by the House of Lords in a later
decision, in the case of Canadian Eagle Oil Company Limited
V. The King (1946 AC 119). Lord Thankerton also in a
manner similar in England Revenue Commissioner v. Ross &
Coulter & Ors. [Bladnoch Distillery Co. Ltd. (1948) 1 AE
LR 616] observed: "That if the meaning of the provision is
reasonably clear, the courts have no jurisdiction to
mitigate any harshness in the event the word ‘penor’ is to
be read having an in built meaning of harshness. The
English Courts as a matter of fact has been consistent in
their approach that consideration of hardship, injustice or
absurdity pertaining to an interpretation ought to be had
with utmost care and caution."
The decision of this Court in Keshavji Raviji & Co.
v. Commissioner of Income Tax (AIR 1991 SC 1806) also lends
concurrence to the views expressed above. This Court
observed: "As long as there is no ambiguity in the
statutory language resort to any interpretative process to
unfold the legislative intent becomes impermissible. The
supposed intention of the legislation cannot then appealed
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to whittle down the statutory language which is otherwise
unambiguous. If the intendment is not in the words used it
is nowhere else. The need for interpretation arises when
the words used in the statute are, on their terms,
ambivalent and do not manifest the intent of the
legislature....
Artificial and unduly latitudinarian rules of
construction which, with their general tendency to ‘give the
tax-payer the breaks’ are out of place where the legislation
has a fiscal mission.
Be it noted that individual cases of hardship and
injustice do not and cannot have any bearing for rejecting
the natural construction by attributing normal meanings to
the words used since "hard cases do not make bad laws".
In fine thus, a fiscal statute shall have to be
interpreted on the basis of the language used therein and
not de hors the same. No words ought to be added and only
the language used ought to be considered so as to ascertain
the proper meaning and intent of the legislation. The Court
is to ascribe natural and ordinary meaning to the words used
by the legislature and the Court ought not, under any
circumstances, to substitute its own impression and ideas in
place of the legislative intent as is available from a plain
reading of the statutory provisions.
In the premises, we do feel it expedient to record
that by reason of the clarity of expression, question of
there being any integrated activity being exempt within the
meaning of Section 10(29) of the Act does not and cannot
arise. The Madhya Pradesh High Court has correctly applied
the law and the comparison effected with other provisions
are pointers to the distinction and the same cannot but be
termed to be in accordance with the golden rule of
construction in the matter of interpretation of statutes.
We do herein record our acceptance of the same and
observe that Section 10(29) is singularly singular in its
application with its scope restrictive as is evident from
the intent of the legislature and as evidenced from the
language used therein. In that view of the matter, there is
no merit in the appeals, the appeals therefore fail and are
dismissed. No order as to costs.