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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.

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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: