Supreme Court of India
Union Of India And Anr vs U.P. State Ware Housing Corporation on 31 October, 1990
Equivalent citations: 1991 AIR 1374, 1990 SCR SUPL. (2) 523, AIR 1991 SUPREME COURT 1374, (1990) 4 JT 451 (SC), (1990) 53 TAXMAN 581, 1991 (1) UPTC 137, 1991 UPTC 1 137, (1990) 3 COMLJ 301, 1991 (1) UJ (SC) 119, 1991 ALL TAXJ 221, 1991 UJ(SC) 1 119, (1991) 187 ITR 54, 1991 (2) SCC(SUPP) 730, 1990 (4) JT 451, (1990) 90 CURTAXREP 19
Author: M.M. Punchhi
Bench: M.M. Punchhi, S.C. Agrawal
PETITIONER:
UNION OF INDIA AND ANR.
Vs.
RESPONDENT:
U.P. STATE WARE HOUSING CORPORATION
DATE OF JUDGMENT31/10/1990
BENCH:
PUNCHHI, M.M.
BENCH:
PUNCHHI, M.M.
AGRAWAL, S.C. (J)
CITATION:
1991 AIR 1374 1990 SCR Supl. (2) 523
1991 SCC Supl. (2) 730 JT 1990 (4) 451
1990 SCALE (2)924
ACT:
Income Tax Act, 1961 --Section
10(29)--Exemption--Tests--Whether rental income derived from
godowns and warehouse of U.P. State Ware Housing Corporation
exempted.
HEADNOTE:
The Income Tax Officer required the U.P. State Ware
Housing Corporation, a creature of the Ware Housing Corpora-
tions Act, 1962, to pay a sum of money as advance tax for
the Assessment Year 1974-75, taking the view that rental
income derived by the assessee-Respondent from its godown
and ware-homes was not exempted.
The claim of exemption under section 10(29) of the
Income Tax Act of the assessee having been repeatedly re-
jected by the Appellants, it filed a writ petition in the
High Court challenging the notice.
The High Court quashed the notice, allowing the case of
the assessee-Respondent.
In the appeal by the certificate the Revenue-Appellants
assailed the view of the High Court.
Dismissing the appeal, this Court,
HELD: 1. The assessee would be entitled to exemption, if
(i) it is an authority constituted under any law; (ii) it is
an authority constituted for marketing of commodities; (iii)
the exemptable income is in respect of letting of godowns or
ware-houses for storage, processing or facilitating the
marketing of commodities. [525D-E]
2. Plain reading of Section 10(29) makes it evident that
the authority must he constituted under any law for the time
being in force, which in other words means that it should be
a creature of law. As an artificial person, it should be
clothed with a personality ordained by law. [525G]
3. In the instant case, the first test was proved that the
assessee
524
was an authority under the Ware Housing Corporations Act,
1962. [525F]
4. The second test requiring the authority to be consti-
tuted for marketing of commodities is also fully satisfied
by Section 24(d) of the Ware Housing Corporations Act, 1962.
The activities of the assessee as an agent were the activi-
ties facilitating the marketing of commodities, which have a
business element and the second test was also established.
[526B-C]
5. The third test with regard to the exemptable income
being in respect of letting of godowns or ware-houses for
storage, processing or facilitating the marketing of commod-
ities presents no difficulty because it stands undisputed
that the income derived by the assessee was from letting 01'
godowns or ware-houses. The assessee having fulfilled all
the tests was rightly entitled to the exemption as claimed.
[526D-E]
JUDGMENT: