Income Tax Appellate Tribunal - Nagpur
Janata Sahakari Prakriya Sanstha Ltd. vs First Income-Tax Officer on 5 May, 1989
Equivalent citations: [1990]32ITD476(NAG)
ORDER
S. Kannan, Accountant Member
1. These two appeals by the assessee, which are centered on common issues, are directed against the order dt. 6-1-1984 of the learned A.A.C., relating to the assessment years 1981-82 and 1982-83. The appeals were heard together and are disposed of by a common order, for the sake of convenience.
2. The facts of the case are that theassessee, a co-operative society, runs a Ginning and Pressing Factory. For both the assessment years under consideration, the assessee filed, in the first instance, the returns of income showing positive income. Thereafter, the assessee filed nil returns for both the years, claiming that the ginning and pressing charges received by it are exempt under Section 80P(2)(e) of the Income-tax Act, 1961.
3. The circumstances in which the assessee came to make the said claim before the I.T.O. may be noted in detail. During the relevant previous years, the Government of Maharashtra had appointed the Maharashtra State Co-operative Marketing Federation (Federation in short) as their Chief Agent under Section 42 of the Maharashtra Raw Cotton (Procurement, Processing and Marketing) Act, 1971 for the purpose of purchasing, processing and selling cotton and cotton seeds in the entire state of Maharashtra. In its turn, the Federation appointed as its Sub-Agents entities such as the assessee society. Again, each year, the Federation entered into agreements with Sub-Agents for the purpose of regulating the entire matter. We will be presently noticing the salient features of the agreement. It would suffice at this stage to state that the said agreement provided, inter alia, for the payment by the Federation to its Sub-Agents of ginning and pressing charges. Under the said agreement, it is common ground, the assessee received from the Federation such charges and the assessee earned net income of Rs. 92,230 and Rs. 73,700 respectively during the previous years, relevant to the assessment years 1981-82 and 1982-83.
4. To turn now to the salient features of the agreement referred to above. As pointed out earlier, separate agreements were entered into for each season. Even so, the basic features of the agreement remained constant. After referring to the factum of the Federation having been appointed the Chief Agent of the Government of Maharashtra, the agreement proceeds to state that the Federation is appointing the .entity referred to in the agreement as its Processing Agent. The agreement thereafter goes to detail the responsibilities of the Processing Agent. Clause 4 of the agreement, which deals with the ginning and pressing charges payable by the Federation to the Processing Agent- reads as follows:
4. The ginning and pressing charges payable to the processing Agent in respect of the Raw Cotton procured by the Federation; at rates as may be fixed by the Directorate of Marketing. The pressing charges payable in respect of presses with 10 gallas and 9 gallas shall be two rupees and three rupees respectively less per bale than the one fixed for, 12 gallas. This rate is exclusive of Jari Bharai and Pala Majuri. Where the processing agent undertakes to do the Pala operations, he will be paid at a flat rate of Rs. 1.50 per bale provided, the number of labour employed shall not be less than 15 employees.
Where the Hessian & Iron Hoops are supplied by the Federation a sum of Rs. 22.00 per bale (based on costing done by the Director of Marketing) would be deducted from the pressing charges and the processing agent to whom such material is supplied shall maintain the account of the same in the manner prescribed by the Federation.
As many as three explanations are appended to the said clause 4 and These spell out what charges are included in, or as the case may be, excluded from the ginning rates and the processing charges payable under the said clause. For the purposes of matter on hand, the details of these explanations are not very material and hence they need not detain us here.
5. Clause 6 of the agreement is relevant and hence it is reproduced below:
6. The processing agent shall, from the commencement of the procurement operations, provide free of rent all open space available for storage of raw cotton/lint/F.P. Bales etc. The Federation shall however pay during the season for the godowns sheds provided by the Factory owner for storage of raw cotton/seed/F.P. Bales/lint etc. at the rates indicated as under:
1. Pakkagodown. : 25 paise per bale per month.
2. Sheds closed on : 15 paise per bale per month, top and on three sides.
3. Shed. : 10 paise per bale per month.
For the purpose of determining the godown rent, the storage capacity of godown in terms of bales will be considered irrespective of the fact whether bales/lint/seed kapas etc. is stored in the godown. For calculating the capacity of the godown 200 sq. ft. area will be treated as the capacity of 100 bales. The Federation will pay rent accordingly and no special rent will be payable to any unit for storing procured stock received or transferred from other factories i.e. a ginning unit will not be entitled to get extra rent for bales stored in its godown atenhacned rate but will receive rent at the rate as would be worked out on capacity basis till the end of the season (For this purpose end of season will be the month during which processing operations were completed in a particular factory). The factory will get rent at revised rates from the following month. No godown rent will be paid if the said godown is completely vacated by the Federation.
In the event of the Federation requiring such storage facilities for the period after closure of season, the Federation shall have the prior, right to use such facilities and the rent payable, therefore, shall be at the following revised rates:
1. Pakka godown. : Rs. 0.80 ps. per bale per month.
2. Shed closed on top and on three sides. : Rs. 0.40 ps. per bale per month.
Shed closed on top and on two sides. : Rs. 0.25 ps. per bale per month.
Shed closed on top and on one side. : Rs. 0.20 ps. per bale per month. Shed covered only from top. : Rs. 0.10 ps. per bale per month. 3. (a) Storage of cotton seed in godowns. : Rs. 0.12 ps. per bag per month. (b) Storage of cotton seed in sheds. : Rs. 0.06 ps. per bag per month. (c) godown rent shall not be paid on capacity basis during off season but shall be paid at rates stipulated above for material actually stored in the godowns.
In the event of the Federation hiring the whole godown on monthly rental basis for any other purpose, the rent shall be fixed mutually. The processing agent shall ensure that the godown or shed is maintained properly and if any damage to stocks stored by the Federation occurs due to leaky roof or any other such reasons, the processing agent shall be liable to make good the losses to the Federation. No charges shall be payable even after the expiry date for open space and stone platforms in the factory used for storage.
(Emphasis supplied)
6. The rest of the terms of the agreement need not detain us here.
7. One more material fact may here be noted. It is common ground that the assessee received not only ginning and pressing charges in terms of the clause 4 of the agreement but also rent for storage under clause 6 thereof.
8. The case of the assessee before the I.T.O. was that the entire ginning and pressing charges received by it from the Federation is eligible for deduction under Section 80P(2)(e). When regard is had to the totality of the circumstances of the case, it would be seen that the ginning and pressing charges received were nothing but the charges received for storing cotton etc. This is because without, such storing, ginning and pressing will not be possible. For a fact, the entire factory premises was used for storing not only raw cotton but also ginned and pressed cotton.
9. In this connection, reliance was placed on behalf of the assessee on the I.T.A.T., Nagpur Bench's order relating to the assessment year 1978-79 in the case of Chikhali Ginning & Pressing Factory Ltd. [IT Appeal No. 429 (Nag.) of 1981, dated 21-9-1982].
10. The I.T.O. negatived the assessee's claim for more reasons than one. First, the I.T.A.T.'s order referred to and relied upon by the assessee was the subject matter of reference application which was still pending. Secondly, though specifically asked to do so, the assessee failed to give an analysis of the charges received from the Federation in terms of ginning charges, pressing charges and storing rent. In this view of the matter, therefore, the I.T.O. refused to accept the assessee's contention that the entire charges received by it were towards the storage rent. Accordingly, the I.T.O. brought to tax the amounts in question in both the assessment years.
11. The assessee took up the matter in appeal before the A.A.C. It was contended before the A.A.C. that the I.T.O. ought to have followed the decision of the I.T. A.T. referred to and relied upon by the assessee. Indeed, in the said order, the Tribunal had followed its earlier order relating to the assessment years 1970-71 to 1974-75 in the case of Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd. [IT Appeal Nos. 467 to470 (Nag.) of 1979 dated 13-10-1980]. The attention of the A.A.C. was drawn particularly to the fact that in Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd.'s case (supra), the Tribunal relied upon the decision of the Madras High Court in the case of CIT v. South Arcot District Co-operative Marketing Society Ltd. [1973] 92 ITR371.
12. On an examination of the decision of the Madras High Court (supra), as also the orders of the Tribunal referred to above, the A.A.C. opined that the I.T.A.T.'s order in Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd.'s case (supra) was not in conformity with the ratio laid down by the Gujarat High Court in the case of Surat Vankar Sahakari Sangh Ltd. v. CIT [1971] 79ITR 722.
As for the I.T.A.T.'s decision in Chikhali Ginning & Pressing Factory Ltd.'s case (supra), the line taken by the Tribunal was unices the cotton is ginned and pressed, it cannot be stored and, therefore, the assessee's main and primary activity was storing, secondary activity being ginning and pressing. According to the A.A.C., the said decision also went counter to the Gujarat High Court's decision referred to above.
As for the decision of the Madras High Court, the A.A.C. considered that all that the Hon'ble High Court has stated therein is that the term "letting" should be understood in a wide and comprehensive sense so as to include even the mere use of the godowns either by the society or others. According to the A.A.C., this cannot avail the assessee.
13. Turning next to the terms of the relevant agreement, the A.A.C. found that the assessee was obligated to provide free of rent all the available open space to the Federation for storage of raw cotton, ginned cotton, pressed bales etc. In this view of the matter, therefore, the pressing and ginning charges cannot be treated as rent or fee for storage.
14. The A.A.C. also found that the agreement in question specifically provided for the payment of rent by the Federation to the assessee society in certain circumstances. The exemption is available under Section 80P(2)(e) only to such rent received under the agreement.
15. The A.A.C. concluded that, read as a whole, the agreement made it clear that the main purpose was that the cotton procured by the Federation was to be got ginned and pressed by the Processing Agent and for this purpose, separate charges were paid. Storing of cotton etc. was an activity incidental to the main activity of ginning and pressing the cotton. Therefore, no deduction is available under said section to the ginning and pressing charges. The deduction is available only in respect of rent which is specifically provided for in the agreement.
16. In this view of the matter, therefore, the A.A.C. partly allowed the assessee's appeals.
17. It is in these circumstances that the assessee society is now before us.
18. Before us, Shri C.P. Fattepuria, the learned Counsel for the assessee, reiterated the arguments that he had earlier advanced before the lower authorities. According him, the entire premises of the assessee was used for the purpose of storage, in the course of ginning and pressing of cotton procured by the Federation. In this connection, he drew our attention to the scale-plan of the assessee's factory premises and contended that storage of the procured cotton, ginned cotton and pressed cotton bales was the main activity. He vehemently contended that, under the agreement in question, the assessee has virtually handed over to the Federation the factory premises and that, therefore, it should be held that the ginning and pressing charges received by the assessee is nothing but rent received for storage which is eligible for deduction under Section 80P(2)(e).
19. In this connection, he referred to and relied upon the following:
(i) I.T.A.T., Nagpur Bench's order relating to the assessment year 1970-71 to 1974-75 in the case of Bhandara Zilla Sahakari Kharedi Viler i Sangh Ltd. (supra)
(ii) I.T.A.T., Nagpur Bench's order relating to the assessment year 1978-79 in the case of Chikhali Ginning & Pressing Factory Ltd. (supra)
(iii) I.T.A.T., Nagpur Bench's order all relating to the assessment years 1981-82 and 1982-83 in the case of Akola Ginning & Pressing Co-op. Factory Ltd. [IT Appeal Nos. 332,333,524 and 525 (Nag.) of 1984 dated 15-10-1987]
(iv) CIT v. Gujarat State Warehousing Corporation [1980] 124ITR 282 (Guj.)
(v) CIT v. Akmedabad Maskati Cloth Dealers Co-operative Warehouses Society Ltd. [1986] 162 ITR 142 (Guj.).
20. In this connection, he also drew our attention to the fact that the learned C.I.T. (Appeals), Nasik, by his common order dt. 8-3-1989 in the appeals filed by the assessee for the assessment years 1983-84 and 1984-85 has allowed the assessee's claim.
21. Shri A.H. Khan, the learned Departmental Representative, fully supported the order of the A.A.C. In this connection, he referred to and relied upon the decision of the Gujarat High Court in Surat Vankar Sahakari Sangh Ltd's case (supra).
22. We have looked into the facts of the case. We have also heard the rival submissions. For the reasons detailed in the following paragraphs, we hold that the impugned order of the A.A.C. does not invite any interference.
23. For three decades and more, the Income-tax Act has been extending concessional treatment to co-operative societies engaged in certain specified activities. These specified activities are no doubt selected as a matter of State Policy. Thus, earlier, we had Section 81 of the Income-tax Act, 1961 which granted a rebate on certain types of income of co-operative societies. Later on Section 81 was deleted and Section 80P introduced in its stead, which provides for a deduction in respect of certain incomes of co-operative societies.
24. The scheme of the Income-tax Act, 1961, in so far as it relates to income of co-operative societies, is to give a special treatment to profit and gains of cooperative societies arising from the business activities specified by the statute. There is a long catena of cases which have laid down that Section 81/80P must be construed strictly and that unless there was direct and proximate nexus between the specified activities and the income earned by the society, the benefit of special treatment will not be available. For example, the Gujarat High Court in the case of CIT v. Broach District Co-operative Cotton Sales, Ginning & Pressing Society Ltd. [1974] 97 ITR 575 held that under Section 81(i) read with the proviso thereto exemption is granted to such activities and profits and gains arising from such business activities of a co-operative society as may fall within Clauses (a) to (f) of Section 8 l(i). If a society carries on certain activities which are not exempted, the profits and gains attributable to such non-exempted activities must necessarily be taxed. In that case, the assessee society was engaged mainly in marketing of cotton. It also carried on ginning and pressing of cotton with the aid of power. The High Court has held that the income of the assessee from ginning and pressing of cotton with the aid of power was not exempt under Section 81(i)(c) of the Income-tax Act, 1961.
25. In the case of CIT v. Sabarkantha Zilla Kharid Vechan Sangh Ltd. [1977] 107 ITR 447, the Gujarat High Court carried the theme further and held that in a case where the assessee society engaged in both exempted and not exempted activities, apportionment of expenditure has to be resorted to in order to give effect to the scheme of the Income-tax Act. The High Court went on to specify the mode and mechanics of such apportionment
26. In the case of Andhra Pradesh Co-operative Central Land Mortgage Bank Ltd. v. CIT [1975] 100 ITR 472, the Andhra Pradesh High Court held that in order to earn exemption under Section 81(i)(a), a co-operative society must prove that it has engaged itself in carrying on the business of banking or providing credit facilities to its members and that the profits and gains sought to be exempted are earned or made in the business carried on by it. Where the society has earned any profits or gains not pertaining to its business but by mere investment in Government securities or in any other manner such categories of income are not exempt from income-tax under that section. The business of the assessee must have a direct or proximate connection with or nexus to the earnings in order to attract the provisions of Section 81(i). Otherwise, its claim to exemption must be rejected.
27. In the case of Addl. CIT. U.P. Co-operative Cane Union [1978] 114ITR70, the Allahabad High Court held that supply of goods on credit does not amount to provision of credit facilities within the meaning of Section 81. In that case, the assessee was also running a printing press in order to supply to its members printed registers and forms. These articles were supplied to members on credit. The Tribunal held that the supply to the members of printed stationery on credit amounts to providing credit facilities to its members inasmuch as, credit facilities can be provided also by supplying goods on credit and that, therefore, the income from printing press is exempt under Section 8 l(i)(a). The High Court reversed the order of the I.T.A.T. holding mat supply of goods on credit does not amount to provision of credit facilities.
28. In the case of M.P. State Co-operative Bank Ltd. v. AM. CIT [1979] 119 ITR 327, the M.P. High Court held that the income earned by the assessee by investing its reserve fund is not entitled to exemption under Section 81(i)(a) because such investment does not amount to banking business.
29. In the case of CIT v. U.P. Co-operative Cane Union Federation Ltd. [1980] 122 ITR 913, the Allahabad High Court, following its earlier decision in U.P. Cooperative Cane Union's case (supra), held that sale of goods on credit does not amount to providing of credit facilities. It further held that the income earned by the assessee by providing facilities not to its members but to the members of its members is not exempt under Section 80P(2)(a)(i) of the Act.
30. In the case of CIT v. Karjan Co-op. Cotton Sale, Ginning & Pressing Society Ltd. [1981] 129 ITR 821, the Gujarat High Court reiterated the proposition that income earned by the society not from its members but from outsiders who purchased cotton from the society was not exempt under Section 80P(2)(i)(a). However, the court held that such income was exempt because it was received by the assessee-society as part of its marketing activity. This case also will go to show that unless there is direct and close nexus between the specified activities and the income in question, exemption will not be available.
31. The following principles emerge from the foregoing analysis:
(a) Deduction under Section 80P is available only to the income arising out of the activities specified in that section. Income from non-specified activities is not eligible for the deduction.
(b) To decide whether income arises out of the specified activities, one has to see whether there is direct and proximate nexus between the income and the specified activities. Absent such direct and close nexus, the deduction is not available.
(c) Where the income arises out of both specified and non-specified activities taken together, that part of the income which can reasonably be attributable to specified activities must be computed on a reasdnable basis. Here, the mere fact that non-specified activities are taking place along with specified activities will not render the income from non-specified activities eligible for deduction.
32. The validity of the assessee's claim may be examined in the light of the foregoing principles. In the case before us, the assessee received from the Federation (a) ginning and pressing charges, and (b) rent for godown. The relevant agreement clearly stipulates that the assessee will place at the disposal of the Federation, free of cost, the open space available in its factory. Under the agreement, rent is payable to the assessee only in respect of godowns/warehouses, Kucha or Pacca. In should, therefore, follow that the ginning and pressing charges received by the assessee are what they are, viz., ginning and pressing charges. That is to say, they are charges for the ginning and pressing work done by the assessee for the Federation. They do not include any element of rent at all. Unless one resorts to some strange alchemy or legerdemain, one cannot say that the ginning and pressing charges received by the assessee partake, whether partly or wholly, the character of rent or charges for storage.
33. Having this given the finding that the income received by the assessee society as and by way of ginning and pressing charges arose out of the activities of ginning and pressing cotton, we may now see whether the said activity of ginning and pressing is specified in Section 80P(2)(e). It will be ex facie clear from the clause that ginning and pressing does not find a mention therein. What is referred to therein is income derived from letting of godowns and warehouses for three specified purposes, namely, (i) storage, (ii) processing, and (iii) facilitating marketing of commodities. It should, therefore, follow that ginning and pressing charges are not eligible for the protective umbrella of that clause.
34. Yet, it is argued that the assessee is entitled to its claim because the income earned by the assessee as and by way of ginning and pressing charges is essentially rent because ginning and pressing cannot be done without storing cotton. Further, the assessee, by processing cotton, was facilitating marketing of processed cotton bales. Hence the deduction under Section 80P(2)(e) is available to the assessee.
35. We are unable to agree. As pointed out earlier, Section 80P(2)(e) deals with any income derived by a co-operative society from letting of godowns or warehouses for the following purposes:
(i) Storage;
(ii) Processing;
(iii) Facilitating marketing of commodities.
The emphasis is obviously on the activity of letting of godowns or warehouses and the income derived therefrom. Such letting must be for the purpose of storage, or for the purpose of processing of goods, or for the purpose of marketing of commodities. There is nothing in section to indicate to the contrary.
36. In the case of Surat Vankar Sahakari Sangh Ltd. (supra), the Gujarat High Court had an occasion to interpret the provisions of the old Section 81 (iv). While construing the provisions, the Hon'ble High Court observed as follows:
Turning first to the language of Section 81(iv), it exempts a co-operative society from tax in respect of income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. Two possible constructions of this provision were suggested before us in the course of the argument, one by the assessee and the other by therevenue. The construction put forward by the assessee was that the words "letting of godowns and warehouses for storage", "processing" and "facilitating the marketing of commodities" constituted different alternatives and income derived from three different sources was, therefore, sought to be exempted under Section 81(iv), namely,(l) income derived from the letting of godowns and warehouses for storage; (2) income derived from processing; (3) income derived from facilitating the marketing of commodities. The revenue on the other hand urged that income which was sought to be exempted was only income derived from the letting of godowns or warehouses if they were let for any of the three purposes, namely, storage, processing or facilitating the marketing commodities. The words "processing or facilitating the marketing of commodities", according to the revenue, were governed by the preposition "for" and they denoted the purposes for which godowns or warehouses should be let in order that the income derived from such letting should be exempt from tax. Now, on the plain grammatical construction of the language used by the legislature, it appears that the construction suggested on behalf of the revenue is more commendable than that canvassed on behalf of the assessee. As we read the words of the clause, it is apparent that there is no break in the continuity of idea after the word "storage" the idea flows on into the words "processing or facilitating the marketing of commodities". 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. If the intention of the legislature was that "letting of godowns or warehouses for storage", "processing and facilitating the marketing of commodities" should be read disjunctively as constituting different alternative sources of income, the legislature would have, according to the dictates of plain grammar, used the word "income derived from processing of from facilitating the marketing of commodities". The introduction of the words "or from" before "Processing and facilitating the marketing of commodities" would have brought about the disjunctive effect so as to relate the three alternative to the words "income derived from". But the legislature instead used words which clearly go to suggest that the words "storage, processing or facilitating the marketing of commodities" are merely purposes for which godowns or warehouses should be let to attract the exemption under Section 81 (iv). The presence of the definite article "the" before letting and its absence before the words "processing" and "facilitating the marketing of commodities" considerably reinforces this conclusion. It is again difficult to see why the legislature should have indiscriminately mixed up in Section 81(iv) widely different sources of income such as "letting of godowns or warehouses for storage, processing and facilitating the marketing of commodities." The conclusion appears to be clear on a plain natural construction of the language used in Section 81(iv) that what is exempted under that section is income derived from the letting of godowns or warehouses provided the letting is for any of the three purposes namely, "storage", "processing" or "facilitating the marketing of commodities.
37. The provisions of Section 80P(2)(e) being analogous to those of the old Section 81 (iv), the ratio laid down by the Gujarat High Court is equally applicable to Section 80P(2)(e).
38. In view of the foregoings, therefore, the assessee is not entitled to any deduction in respect of ginning and pressing charges under Section 80P(2)(e).
39. Of course, the assessee is entitled to a deduction under the said section in respect of the rent received by it under the relevant agreement and we find that the A.A.C. has rightly directed the I.T.O. to allow to the assessee the benefit of deduction under that section in respect of the rent received by it.
40. We may now deal with the orders of the I.T.A.T. in the cases referred to and relied upon by the learned counsel for the assessee.
41. In Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd.'s case (supra), the Tribunal was concerned with the commission income earned by the assessee under:
(a) Monopoly Purchase Procurement Scheme for Paddy and Rice under the Maharashtra Scheduled Foodgrains Order of 1966.
(b) The Fertilizers (Control) Order, 1957.
(c) Inorganic Fertilizer (Movement & Control) Order of 1960.
From the order of the I.T.A.T. in that case, it is clear that the commission earned by the assessee society under the Scheme referred to at (a) above was inclusive of ground rent. As respects, the Schemes referred to at (b) and (c) above, it is not clear from the order of the I.T.A.T. whether the commission or remuneration earned by the assessee under the said Schemes included an element of rent or not; but the I.T. A.T. decided the matter in favour of the assessee by proceeding on the basis that all the activities undertaken by the assessee under the said three Schemes were attributable to - (a) storage, (b) processing and, (c) marketing. But the point to be noted is that, as laid down by the Gujarat High Court in Surat Vankar Sahakari Sangh Ltd.'s case (supra), the focus and thrust of Section 80P(2)(e) is on the income received by the co-operative society from the letting of godowns or warehouses. It is clear from the said order of the I.T.A.T. that the attention of the Tribunal was not drawn to the said decision of the Gujarat High Court
42. In the circumstances, therefore, the decision of the I.T.A.T. in Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd.'s case (supra) cannot avail the assessee.
43. The Chikhali Ginning & Pressing Factory Ltd.'s case (supra) decided on September 21,1982 and the Akola Ginning & Pressing Co-op. Factory Ltd.'s case (supra) on 15-10-1987 cannot help the assessee because those were decided by following the Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd.'s case (supra). Further, the Gujarat High Court decision in Surat Vankar Sahakari Sangh Ltd.'s case (supra) was not brought to the notice of the Tribunal in those cases.
44. The Madras in South Arcot District Co-operative Marketing Society Ltd.'s case (supra) cannot help the assessee either. This is because there the High Court held that in the setting in which the word 'letting' occurred, it should be understood as having a wide and comprehensive sense so as to include even the mere user of the godowns either by the society or by others and cannot be construed to have application only when the letting out is to members. There is nothing in the said decision to suggest that the ginning and pressing charges must somehow be treated as rent or charges for storage.
45. As regards the Gujarat High Court decision in the case of Ahmedabad Maskati Cloth Dealers Co-operative Warehouses Society Ltd. (supra),\ which was referred to and relied upon by the assessee's counsel, we fail to see, how it can be called to the aid and assistance of the assessee. There, the High Cournvas concerned with the interpretation of the words "godowns" or "warehouses". What is significant, is that the High Court referred to its earlier decision in Surat Vankar Sahakari Sangh Ltd.'s case (supra) and said what is exempt is the income from letting from the godowns and warehouses used for any one of the three purposes mentioned in Section 81 (iv)/80 P (2)(e).
46. In the case of Gujarat State Warehousing Corporation (supra), the Gujarat High Court was examining the question whether the assessee therein was entitled to exemption under Section 10(29) of the Income-tax Act, 1961. The learned Counsel for the assessee relied on certain observations made by the High Court at page 296 of the report. We have perused the report in that case. We do not find anything therein to support the assessee's case. There the Court was concerned with the provisions of Section 10(29) and it was in that context, it made certain observations about storage etc. Hence that case cannot help the assessee.
47. The learned Counsel for the assessee also relied on the Bombay High Court decision in the case of Siemens India Ltd. v. K. Subramanian, ITO [1983] 143ITR 120 in support of the proposition that the I.T.O. was bound by the decisions of the I.T.A.T. referred to and relied upon by the assessee. It is well settled that the lower authorities are bound to follow the decision of the higher authorities. It should, however, be remembered that each case is an authority only for the issue decided by it. We have earlier shown, how the I.T.A.T.'s decisions referred to and relied upon by the assessee are distinguishable on facts, and how, in those cases, the attention of the I.T.A.T. was not drawn to the Gujarat High Court decision in Surat Vankar Sahakari Sangh Ltd.'s case (supra). In the circumstances, therefore, we reject this contention.
48. As pointed out earlier, the Department had relied upon the I.T.A.T., Nagpur Bench's order relating to the assessment year 1980-81 in the case of Chikhali Tahsil Co-op. Agricultural Pur chase & Sale Society Ltd. [IT Appeal No. 793 (Nag.) of 1984 dated 13-10-1987], In that case also, the Tribunal was considering the fees received by the assessee under Maharashtra Raw Cotton (Procurement) Purchase Act, 1971. In that case also, reliance was placed on behalf of the assessee, on the I.T.A.T.'s order in Bhandara Zilla Sahakari Kharedi Vikri Sangh Ltd.'s case (supra). On an examination of the facts and circumstances of the case, the Tribunal held that what was received by the assessee society was processing and ginning charges which could not be equated with rent or fee for storage. It was on that basis, the Tribunal dismissed the assessee's appeal.
49. In view of the foregoing, therefore, we hold that the assessee is not eligible for any deduction in respect of the ginning and pressing charges received by it from the Federation. It is entitled to such deduction only in respect of the rent or fee for storage received by it under the relevant agreement. In this view of the matter, therefore, we decline to interfere with the order of the A.A.C.
50. Before taking leave of this matter, we may point out that the assessee, it would appear, had earlier sought to raise some additional grounds before the Tribunal. There is nothing in the records to indicate that the Tribunal permitted the assessee to do so. Further, even before us, no permission was sought to raise the additional grounds: For a fact, the learned Counsel for the assessee did not press them. In the circumstances, we ignore the said additional grounds.
51. In the result, the assessee's appeals are dismissed.