UDAIPUR SAHAKARI UPBHOKTA THOK BHANDAR LTD. versus COMMISSIONER OF INCOME-TAX

Citation: [2009] 11 S.C.R. 90 · Decided: 16-07-2009 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2009] 11 S.CR. 90 
A 
UOAIPUR SAHAKARI UPBHOKTA THOK BHAN DAR LTD. 
v. 
8 
COMMISSIONER Of INQOM!;=TAX 
{Q!vi! ApP-§81 NP, 4~~9 gf 4QOa) 
JULY 16, 2Q09 
[S.H. KAPADIA ANO AFTA6 Al-AM, JJ.] 
Income Tax Act, 1961 - s.80P(2)(e) - Exemption from 
income tax - On the income of commission for storage of 
C controlled commodities under Rajasthan Foodgrains and 
Other Essential Articles (Regulation of Distribution) Order, 
1976- Held: The assessee was not entitled to the exf3.mptfgn 
as the assessee was storing the commodities as p~rt of it$ own 
D 
trading stock. 
Appellant a Cooperative society was dealing in a 
composite business. It was a dealer in non-controlled 
commodities and it was also an authorised holder in 
respect of controlled commodities under Rajasthan 
E Foodgrains and Other Essential Articles (Re91:Jlqt,iQ!1 gf 
Distribution) Order, 1976. It owned godowns as well i~ 
hired godowns for storing the goods. Appellant e~rned. 
commission on the principle of 'netting' i.e. it set off 'issue 
price' against 'sale price' and retained fixed commission. 
F 
Appellant filed its return for the relevant assessment 
years claiming deduction on the income of commission 
for storage of the controlled commodities uls. 80P(2)(e) 
of Income Tax Act, 1961. Assessing Officer disallowed the 
claim. Appellate Authority as well as the Tribunal held the 
G appellant entitled to the deduction, High Court took the 
vi"ew that the appellant was storing the CQritrolled 
commodities as part of its own trading stocks; and that 
the appellant acted as a trader In the essential 
commodities in question. Therefore, he was not entitled 
H 
90 
•f 
i 
l:JPAlfJW~ ~AHf\KARI UPBHOKTA THOK BHANDAR LTD. 
91 
V: ~QMMNR. qf INCOM~-TAX 
•. 
to dQdY~tign~ Ht!n§~ th@ p,r@§@n! app~CJI. 
A 
Dismissing the appe~I, the Court 
HELD! 1 ~ Migh Court was right jn ~pming tq th~ 
concl1..1sion that the assessee was storing· the 
commodities in qu~st!g11 jn its godown~ as part of its own 8 
trading stock, hence it w~s not entitled to claim deduction 
for such margin under Section 80P(2){e) of the Income Tax 
Act,1961. [Para 17] [114-E-F] 
2. Under Section 80P(2)(e) of Income Tax Act, 1961, c 
an assessee is entitled to claim special deduction from 
Its gross total income to arrive at total taxable income. It 
i~ a §f}C~i~I ~ecjµction. It is not a charging. section. The 
burden is on the assessee to establish that the income 
comes within the four corners of Section 80P(2)(e) of the 0 
Act. The burden is on the assessee to establish that 
exemption is available in respect of income derived from 
the letting of godowns or warehouses, only where the 
purpose of letting is storage, processing or facilitating the· 
fTl~rt<eting of commodities. If the godown is let out E 
(hrnh.1~inQ user) for any purpose besides storing, 
proee:ifiing or fflcilit~ting tht:!' marketing of commodities, 
then, the a$SQS&ee i~ not entitled to such exemption. 
[Para 13] [106·E ... H] 
A. Venkata Subbarao, etc. v. The State of Andhra F 
Pradesh, etc. AIR 1965 SC 1773, relied on. 
Commissioner of Income-tax, Madras v. South Arcot 
District Co-operative Marketing Society Ltd. (1989) 176 ITR 
117 (SC),-distinguish~d. 
G 
Surat Vankar Sahakari Sangh Ltd. vs. Commissioner of 
Income Tax, Gujarat II (1971) 79 ITR 722 (Guj); Ramchandra 
Rathore and Bros. v. Commissioner of Sales Tax, Madhya 
Pradesh, Nagur (1957) 8 STC 845 (MP); Udupi Taluk 
H 
92 
SUPREME COURT REPORTS 
[2009] 11 S.C.R. 
A 
Agricultural Produce Co-operativeMarketing Society Ltd. v. 
i 
Commissioner of Income-tax (1987) 166 ITR 365 (Kar.); Ml 
s. Vishnu Agencies (Pvt.) Ltd. etc. v. CommercialTax Officer 
and Ors. AIR 1978 SC 449, referred to. 
B 
Law and Practice of Income-tax by Kanga & Palkhivala, 
Eighth Edition, referred to. 
Case Law Reference: 
(1971) 79 ITR 722 (Guj) referred to. 
Para 11 
c 
(1957) 8 STC 845 (MP) referred to. 
Para 14 
(1987) 166 ITR 365(Kar.) referred to. 
Para 14 
AIR 1978 SC 449 
referred to. 
Para 14 
D 
AIR 1965 SC 1773 
relied on. 
Para 15 
~ 
(1989) 176 ITR 117 ,(SC) distinguished. 
Para 1·3 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
4399 of 2009. 
E 
From the Judgment & Order dated 02.11.2006 of the High 
Court of Rajasthan at Jodhpur in DB Income Tax Appeal No. 
53 of 2002. 
... 
N.M. Ranka, J.K. Ranka, Sushil Kumar Jain, Puneet Jain 
F 
and.Archana Tiwari for the Appellants. 
K. Radhakrishnan, Raghavendra Rao, Y.P. Mahajan and 
B.V. Balaram Das for the Respondents. 
G 
The Judgment of th

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