UNION OF INDIA AND ANR. versus U.P. STATE WARE HOUSING CORPORATION

Citation: [1990] SUPP. 2 S.C.R. 523 · Decided: 31-10-1990 · Supreme Court of India · Bench: M.M. PUNCHHI, S.C. AGRAWAL · Disposal: Dismissed

Judgment (excerpt)

UNION OF INDIA A!~m_ ANR. 
v. 
U.P. STATE WARE HOUSING CORPORATION 
OCTOBER 31, 1990 
[M.M. PUNCHHI AND S.C. AGRAWAL, JJ.] 
Income Tax Act, 1961-Section 10(29)-Exemption-Tests-
Whether rental income derived from godowns and ware-house· of U. P. 
State Ware Housing Corporation exempted. 
The Income Tax Officer required the U-P. State Ware Housing 
Corporation, a creature of the Ware Housing Corporations 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-houses was not exempted. 
The claim of exemption under secton 10(29) of the Income Tax Act 
of the assessee having been repeatedly rejected by the Appellants, it 
tiled 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, 
A 
B 
c 
D 
E 
HELD: 1. The assessee would be entitled to exemption, if (I) it is 
F 
an authority constituted under any law; (ii) it is an authority constituted 
for marketing of commodities; (iii) the exeinptable income is in respect 
of letting of godowns or ware-houses for storage, processing or facilitat-
ing the marketing of commodities. [S2SD-E] 
2. Plain reading of Section 10(29) makes it evident that the autOO-
G 
rity must be 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:(S2SG] 
' 
3. In the in'stant case, the f'lt'St test was proved that the assessee 
H 
523 
524 
SUPREME COURT REPORTS 
[ 1990] Supp. 2 S.C.R. 
A 
was an authority under the Ware Rousing Corporations Act, 1962. [525Fj 
4. The second test requiring the authority to be constituted for 
marketing of commodities is also fully satisfied by Section 24( d) of 
the Ware Housing Corporations Act, 1962. The activities of the as-
sessee as an agent wer" the activities facilitating the marketing of com-
B 
modities, which have i1 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 commodities presents no difficulty becauk 
C it stands undisputed that the Income derived by the assessee was from 
letting of godowns or •ware-houses. The assessee having fulfilled all the 
tests was rightly entitled to the exemption as claimed. [5260-E] 
D 
E 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 455 
of 1976. 
From the Judgment and Order dated 30th November, 1973 of 
the Allahabad High Court in Civil Misc. Writ No. 6122of 1973. 
· B.B. Ahuja and Ms. A. Subhashini for the Appellants. 
Sheil Sethi for the Respondent. 
1 The following Order oHhe Court was delivered: 
' ''This appeal by certificate is directed against the judgment and 
F order dated 30.11.1973 of Allahabad High Court at Allahabad· in 
Ci vi!' Miscellaneous Writ· Petition No. 6122 of 1973 whereby U.P.· 
State Ware Housing Corporation, the respondent herein, was granted 
exemption as envisaged under Section 10(29) of the Income Tax Act, 
1961. 
G 
·The U.P. State Ware Housing Corporation is a creature if the 
Ware Housing Corporations Act, 1962. The Income Tax Officer, 
• 
•• 
Lucknow, reqmred the respondent to pay a sum of money as advance 
tax for the Assessment Year 1974-75. The view of the Income Tax 
Officer throughout in the previous years was that rentral ·income 
derived by the assessee from its godowns and warehouses was not 
H exempt from income tax. The claim of the assessee having repeatedly 
•. 
U.0.1. v. U.P. STATE 
.525 
been _rejected it thought it proper and did file a writ petition in. the 
High Court of Allahabad. challenging the notice. The High Court 
quashed the notice. The view of the High Court has been assailed here 
by the R.evenue. 
The ~!aim of the assessee is based ·o~ .Section IO (29) ·of the 
A 
Income Tax Act, 1961. It provides:· . 
B 
Section 10 "Fo.~ computing the total income of previous year.of 
. any person,' any income falling wi.thin any of the following 
clauses shall not be included. 
. 
(29) In the . case of an authority constituted under any law 
for 'the time being i'n. force for the marketing of commodities, 
an

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