S. H. KAPADIA, J. - (1.) LEAVE granted.
(2.) THE short question which arises for consideration in this civil appeal turns on the interpretation of Section 80P(2)(e) of the Income-tax Act, 1961 whose predecessor was Section 14(3)(iv) of the Income-tax Act, 1922. FACTS The facts giving rise to this civil appeal are few and undisputed and may be briefly stated as follows. Appellant-society is a co-operative society registered under Rajasthan Co-operative Societies Act, 1965. Appellant is running a consumer co-operative store at Udaipur since 1963. It has 30 branches. Appellant is dealing in non-controlled commodities through its branches. In addition, appellant is also doing the work of distribution of controlled commodities such as wheat, sugar, rice and cloth on behalf of the Government under the Public Distribution Scheme (PDS) for which it is getting commission. The distribution of the controlled commodities is regulated by the District Supply Officer (DSO-Authoriesed Officer) under Rajasthan Foodgrains and Other Essential Articles (Regulation of Distribution) Order, 1976 (for short, "1976 Order"). Appellant claims to be stockist/distributor of controlled commodities. It takes delivery from Food Corporation of India (FCI) and Rajasthan Rajya Upbhokta Sangh as per the directives of the State Government. The price, quantity and the person from whom the delivery is to be taken is fixed by the State Government under the said 1976 Order. After taking the delivery, appellant stores these goods in its godowns, both owned and rented. The storage godowns are open to checking by the concerned officers of the State Government. The stocks stored by the appellant are delivered to the Fair Price Shops (FPS-retailers) as per the directions of the State Government. The quantity, price and the FPS to whom the delivery is to be given is fixed by the State Government. According to the appellant, therefore, the above modus operandi indicates that the State Government exercises total control over the stock of controlled commodities stored in the godowns of the appellant-society. On 28.2.1977 appellant was granted licence for purchase/sale/storage for sale of goodgrains under Rajasthan Foodgrains Dealers Licensing Order, 1964. It exercises the powers conferred by Section 3 of Essential Commodities Act, 1955, the Government of Rajasthan issued the 1976 Order. Following are the relevant provisions, reproduced from the 1976 Order, which read as under: "Clause 2. Definitions. - In this Order, unless the context otherwise requires :- (b) "Authorisation" means an authorization issued under clause 3 of this Order; (c) "Authorised Fair Price Shop Keeper" means a retail dealer incharge of a shop authorized under clause 3 and shall include a person incharge of a shop where foodgrains and other essential articles are sold and is under the control of the State Government; (d) "Authorisation Holder" means an authorized wholesaler or an authorized Fair price shopkeeper; (e) "Authorised Officer" means District Supply Officer for the District Headquarter Municipal area, Executive Officer of Municipal Board for rest municipal area and Vikas Adhikari for rural area and any other officer authorized as such by the State Government; (f) "Authorised Wholesaler" means a person, a firm, an association of persons or a co-operative society or any other institution authorized appointed as an agent under clause 3 of this Order by the State Government or the Collector. Clause 3. Issue of Authorisation. - (1) The Collector or any other officer authorized by the State Government may issue an authorization to any person being an authorized wholesaler/fair price shopkeeper to obtain and supply foodgrains and other Essential Articles in the area specified therein. (2) No person other than an authorization holder shall sell any of the foodgrains or any other essential articles supplied by the Government for distribution under this Order or any other Order. Clause 20 - Power to issue directions regarding purchase/sale/distribution of foodgrains and other essential articles. - Every authorisation holder shall comply with all general or special directions given in writing, from time to time by the State Government or the Collector in regard to purchase, sale, storage for sale, distribution and disposal of foodgrains and other essential articles on permits or ration cards or otherwise and the manner in which the accounts thereof shall be maintained and returns submitted. 4. We also quote hereinbelow the Terms and Conditions annexed to the said 1976 Order which read as under: "Terms and Conditions - General Clause (1) No authorization holder shall store Foodgrains and other essential articles at any place other than those specified in this authorization without prior permission in writing of the Collector. Clause (2) No authorization holder shall refuse to sell Foodgrains and other essential articles during business hours on the presentation to him of a valid permit/indent/ration card to the extent of the amount of Foodgrains or other essential articles due on the permit/indent/ration card. Clause (3) No authorization holder shall sell Foodgrains at a price in excess of that fixed by the State Government or the Collector or shall sell any other essential articles at a price in excess of that fixed by the Central Government or the State Government or any authority or Officer of such Government or the manufacturer, as the case maybe, in that behalf. Clause (5) The authorization holder shall maintain a stock register in Form 'C' showing correctly, the daily receipt and sale of the each Foodgrains and other essential articles. A daily sale register shall also be maintained in Form 'D' by the authorized wholesaler and in Form 'E' by the authorized fair price shopkeeper. All books of accounts, permits, voucher etc. shall be kept at the business premises specified in the authorization and shall be made available for inspection whenever required. Clause (6) Every authorization holder shall submit a true monthly stock and sale return in Form 'F' to the Collector so as to reach him within five days after the close of the month to which it relates. Clause (8) The authorization holder shall display the opening balance and prices of each variety of Foodgrains and other essential articles at a conspicuous place at his business premises in bold letters."
(3.) ON 31.8.1990, appellant filed its returns for assessment year 1989-90 claiming deduction under Section 80P(2)(e) of the 1961 Act on the income of commission received by it from the Government for storage of controlled commodities. On 31.10.1990 appellant filed its returns of income for subsequent assessment years 1990- 91, 1991-92, 1992-93, 1993-94, 1994-95, 1995-96 inter alia claiming deduction on the income of commission received by it from the State Government for storage of controlled commodities. Vide Order dated 26.3.92, the A.O. disallowed the claim on the ground that the appellant-society is a wholesaler of foodgrains and it is not a mere stockist as claimed and consequently it was not entitled to deduction under Section 80P(2)(e) of the 1961 Act. This order was applied for assessment years in question. Aggrieved by the assessment order(s), appellant filed appeals before CIT (A), on 18.4.92. By order dated 28.10.93, CIT(A) held that the appellant was entitled to deduction under Section 80P(2)(e) of the 1961 Act on the income of commission received from the State Government for stocking and storing the above foodgrains. This decision was affirmed by the Tribunal vide its decision dated 20.10.2000 dismissing the Department's appeal by a common order holding that the appellant was entitled to deduction under the said Section. This view of the Tribunal, however, was overruled by the impugned decision dated 2.11.06 by the Rajasthan High Court which took the view that the appellant-society was storing the said controlled commodities in its godowns as part of its own trading stocks; that the appellant acted as a trader in the essential commodities in question and consequently the appellant was not entitled to deduction under Section 80P(2)(e) of the 1961 Act. Against the impugned decision, appellant has come to this Court by way of petition for special leave. The issue which arises for determination in this civil appeal is: whether, on the facts and the circumstances of this case, "commission" received by the appellant from the State Government was really in the nature of payment for the letting of the godowns maintained by the appellant for storage?;