LexORISSA STATE WAREHOUSING CORPN. ETC. versus COMMISSIONER OF INCOME TAX
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ORISSA STATE WAREHOUSING CORPN. ETC.
v.
COMMISSIONER OF INCOME TAX
APRIL I, 1999
[M. SRINIVASAN AND UMESH C. BANERJEE, JJ.]
Income Tax Act 1961, s. 10(29)-Whether interest received from banks
on fixed deposits was incidental to business activities and not taxable under
A
B
the head 'income from other sources' and thus exempt under s. 10(29)-Held, C
no; exemption allowed only for income derived from letting out of commodities,
godowns and warehouses
Interpretation of Statutes-Golden rule-Fiscal Statute-Court to
ascribe natural and ordinary meaning to words and not substitute own
impression in place of legislative intent.
D
The appellant-assessees were warehousing corporations established
under the Warehousing Corporation Act, 1962. Any income derived by the
corporations from the letting out of commodities and the letting out of
god owns or warehouses for storage, processing or facilitating the marketing E
of commodities was exempt from income tax under s.l 0(29) of the Income tax
Act, 1961. ('Act')
The interest received by the assessees on fixed deposits placed by them
with banks was added to their income by the Income-tax Officer (ITO), who
held that this was not 'income exempt' within the meaning ofs.10(29) of the F
Act. While the Commissioner of Income Tax (Appeals) upheld the ITO's
order, the Tribunal allowed the appeals of the assessees on the ground that
when the entire income was exempt from tax, interest earned thereon could
not be subjected to tax. The High Court answered the consequent reference
in favour of the revenue by holding that the interest received on fixed
deposits was not exempt from tax under s. 10 (29) of the Act. The assessees G
appealed to this Court.
Dismissing the appeals, this Court
HELD: 1.1. The appellant Corporation being put into funds by itself
could not be termed to be a fund to facilitate the marketing of the commodities, H
383
384
SUPREME COURT REPORTS
[1999] 2 S.C.R.
A as such question of the interest income accruing therefrom being exempt
from tax did not arise. S.10 (29) of the Income tax Act was categorical in
its language and the exemption was applicable only in the circumstances
envisaged thereunder. (390-B-C; 389-H; 390-A]
1.2. The word 'any income' is restrictive in its application by reason
B of the user of the expressions 'derived from'. In the event the letting of
godowns or warehouses was for any other purpose or if income was derived
from any other source, then such an income could not possibly come within
the ambit of S.10 (29) of the Act and was thus not exempt from tax.
(398-B; 399-C-D]
C
Commissioner of Income Tax, Madras v. South Arcot District Co-
operative Marketing Society Ltd., (1989) 176 ITR 117; CIT v. Ahmedabad
Maskati Cloth Dealers Co-operative Warehouses Society Ltd., (1986) 162
ITR 142; U.P. State Warehousing Corporation v. Income Tax Officer, (1974)
94ITR129; Commissioner of Income Tax v. P.J. Chemicals, (1994) 210 ITR
D 830; Commissioner of Income Tax v. U.P. State Warehousing Corporation
(1992) 195 ITR 273 Addi. and Commissioner of Income Tax, Karnataka v.
State Warehousing Corporation, (1980) 125 ITR 136, referred to.
Union of India v. U.P. State Warehousing Corporation, (1991) Suppl.
2 sec 730, distinguished.
E
MP. Warehousing Corporation v. Commissioner of Income Tax, (1982)
133 ITR 158, approved.
2. A fiscal statute had to be interpreted on the basis of the language
used therein and not de hors the same. The Court has to ascribe natural and
ordinary meaning to the words used by the legislature and ought not, under
F any circumstances, to substitute its own impression and ideas in place of the
legislative intent as is available from a plain reading of the statutory provisions.
.
(401-A-B)
Cooke v. Charles A. Vogehar Company, (1901) AC 102; Cape Brandy
Syndicate v. Inland Revenue Commissioners, (1921) 1 KB 64; Canadian
G Eagle Oil Company Limited v. The King, (1946) AC 119; Inland Revenue
Commissioner v. Ross & Coulter & Ors., (Bladnoch Distillery Co. Ltd. (1984)
1 All. ER 616 and Keshavji Raviji & Co. v. Commissioner of Income Tax, AIR
(1991) SC 1806, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3476 of
J
H 1993 Etc. Etc.
j
ORISSA STATE WAREHOUSING CORPN. v. C.l.T. {BANERJEE, J.] 385
From the Judgment and Order dated 8.2.93 of the Orissa High Court in A
S.J.C. No. 76of1990.
C.S. Vaidyanathan, Additional Solocitor General, Dr. V. Gauri Shanker,
Dr. D.P. PExcerpt shown. Read the full judgment & AI analysis in Lexace.