- (1.) THE Tribunal, Allahabad has referred the following question of law pursuant to the direction given by the Hon'ble ITA Nos. 1872 and 1856/All)/1980 for the asst. yr. 1977 -78 for opinion of this Court : "Whether on the facts and circumstances of the case the interest income earned by the assessee on short -term deposits as well as the interest income earned by the assessee under s. 214 of the IT Act, 1961, is exempt under s. 10(29) of the IT Act, 1961 -
(2.) BRIEFLY stated the facts giving rise to the present reference are as follows : The respondent -assessee is a company, which derives income from warehousing charges, interest on deposits, bank for the asst. yr. 1977 -78, besides having income from letting out of godowns or warehouses, etc., the respondent earned the following incomes also : (a) Deposits with bank Rs. 1,80,837 (b) Current account Rs. 1,247 (c) Savings bank Rs. 27,942 (d) On advance loans Rs. 6,891 (e) From IT Department Rs. 1,38,641 The ITO considered that all the income of the respondent except interest on advance tax was exempt from tax under s. 10(29) of the IT Act, 1961 (hereinafter referred to as the Act). As far as the interest on advance tax, the ITO held that the same could not be said to be the income from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, etc. The ITO therefore assessed such interest income of Rs. 1,38,641. In held that the above interest income was exempt under s. 10(29) of the Act. Subsequently, the CIT passed an order under s. 263(1) of the Act, cancelled the assessment made by the ITO. The CIT considered that the assessment order of the ITO excluding interest income and various other items which were not falling under s. 10(29) of the Act, from respondent's total income was erroneous as the same was prejudicial to the interest of the Revenue. The assessment tax all income of the respondent -Corporation other than the income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing commodities. Feeling aggrieved, the respondent and the Department came up before the Tribunal and the Tribunal after considering Department holding that the learned CIT(A) was justified in considering the income as exempt. As regards the appeal filed by the respondent, the Tribunal held that the learned CIT (Central), Kanpur could not have assumed jurisdiction the appeal filed by the respondent was allowed.
(3.) WE have heard Sri Shambhoo Chopra, learned standing counsel appearing on behalf of the Revenue. Nobody has appeared on behalf of the respondent -assessee. The question referred for opinion to this Court does not admit of any detailed discussion as we find that the issue is squarely covered by the decision of the apex Court in the case of Orissa State Warehousing Corpn. & Anr. vs. CIT (1999) 153 CTR (SC) 177 : (1999) 237 ITR 589 (SC) in which the apex Court has held as follows : "On a plain reading of s. 10(29) of the IT Act, 1961, 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 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, the question of exemption would not arise. Sec. 10(29) is categorical in its language and this exemption is applicable only in the circumstances as envisaged under the section. The word 'any income' as appearing in the body of the statute is restrictive in its application by reason of the user of the expression 'derived from'. Secs. 10(20A), 10(21), 10(22B), and s. 10(27) 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. Having due regard to the language used, the 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 s. 10(29). 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 there being any income therefrom. In the event of 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 of s. 10(29) of the Act and is thus not exempt from tax." The apex Court has held that any interest income earned from the bank, etc. is not exempt under s. 10(29) of the Act.;