Commissioner of Income Tax, Gujarat vs Gujarat State Warehousing Corporation

In the first reference the question posed by the Tribunal is as under :

Whether the Tribunal was right in law in holding that the assessee-corporation having been established under the Warehousing Corporations Act,

1962, was an authority established for marketing of commodities and was consequently entitled to exemption u/s 10(29) of the Act in respect of its

income from letting of godowns and warehousing and connected matters of storage of agricultural produce and for transport, including facilitating

marketing of commodities ?

The first reference was for the assessment years 1970-71 and 1971-72. The other references are for the years 1968-69 and 1969-70 and

1972-73, respectively, on the identical question and, therefore, they are disposed by this common order.

In the first reference, the ITO had allowed the claim of the assessee, Gujarat State Warehousing Corporation, for exemption under s. 10(29) in

respect of the income relating to the warehousing. Thereafter, the Additional Commissioner having exercised the power under s. 263 and having

disallowed the exemption on the ground that the assessee-corporation was not a making authority within the meaning of s. 10(29), the matter was

carried in appeal before the Tribunal which has allowed this exemption claim relying on the decision of the Allahabad High Court in U.P. State

Warehousing Corporation Vs. Income Tax Officer, A-Ward and Another, . The Tribunal having accordingly restored the order of the ITO, the

Commissioner has come up in this reference. The other two references are for the other assessment years, as earlier pointed out, on this identical

question.

The relevant exemption section is s. 10(29) under which, in computing total income of the assessee of a previous year, this exemption is

provided in the following words :

(29) in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from

the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities.

Therefore, the assessee-corporation would be entitled to exemption under s. 10(29) if there conditions are fulfilled :

(i) it is in authority constituted under any law in force;

(ii) it is an authority constituted for the marketing of commodities;

(iii) the exemptible income must be one derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing

commodities.

There is no controversy as regards the third ingredient because the exemption is claimed only in respect of that part of the income which was in

respect of letting of godowns or warehouses for storage, processing or facilitating the marketing commodities. The controversy has only centred

round the first two ingredients.

It is true the exemption is granted only to an authority which is constituted under any law for the time being in force and, therefore, the assessee

must be an authority which is constituted under any law in force. The assessee in the present case is the Gujarat State Warehousing Corporation

which is deemed to have been set up under the Warehousing Corporations Act, 1962. Originally this corporation was constituted under s. 28(i)

and (iii) of the earlier repealed Act, viz., Agricultural Produce (Development and Warehousing) Corporations Act, 1956, by the notification dated

December 5, 1960. But under s. 43(2)(g) (Warehousing Corporation Act, 1962), such a State Warehousing Corporation established in the

Gujarat State under the repealed Act is deemed to be a State Warehousing Corporation established for the Gujarat State under the 1962 Act. The

preamble in the Act states that it is an Act to provide for the incorporations for the purpose of warehousing of agricultural produce and certain

other commodities and for matters connected therewith. Under the earlier repealed Act, the Agricultural Produce (Development and Warehousing)

Corporations Act, 1956, two independent bodies, viz., the National Co-operation Development and Warehousing Board and the Central

Warehousing Corporation, were established and they were under the administrative control of the Ministry of Food and Agriculture. Subsequently,

as a result of reallocation of business among the Ministry of Community Development and Co-operation and the Ministry of Agriculture and Food,

in the interest of better functioning of the two bodies and for administrative convenience, it was decided that the two bodies should function

independently under separate enactments and, therefore, the 1962 Warehousing Corporations Act and National Co-operative Development

Corporations Act, 1962, had been passed. And under the present Act under the aforesaid s. 43(2)(g) a State Warehousing Corporation set up

under the old law has been deemed to be a warehousing corporation established for the respective for the respective States under the new law.

Section 2(a) defines ""agricultural produce"" and s. 2(e) defines ""notified commodities"" as commodities declared to be notified commodities by a

notification in this behalf by the Central Government. For the purposes of this Act, the later part of the condition that the commodity must be one

with respect to which Parliament has power to make laws by virtue of entry 33 under List III in the Seventh Schedule to the Constitution had been

deleted by the Warehousing Corporations Supplementary Act, 1965, so far as this Gujarat State in concerned with effect from November 29,

1965. The list of these notified commodities was a large list which, besides agricultural produce defined in s. 2(1), included iron and steel (metal)

iron and steel structurals, insecticides, fungicides and weedicides, rubber, portland cement, etc. Thereafter, in the detailed scheme of the various

provisions, the Central Warehousing Corporation and the State Warehousing Corporation have been constituted. Sections 3 and 11 deal with the

constitution and functions of the Central Warehousing Corporation while ss. 18 and 24 deal with the constitution and functions of the State

Warehousing Corporation. Under s. 18(4) in cases of such deemed State Warehousing Corporation by the fiction introduced by s. 43(2)(g) it is

not necessary to establish such a State Warehousing Corporation under s. 18. The functions laid down by this statute for the State Warehousing

Corporation in s. 24 are as under :

Functions of the State Warehousing Corporations. - Subject to the provisions of this Act, a State Warehousing Corporations may -

(a) acquired and build godowns and warehouses at such places within the State as it may, with the previous approval of the Central Warehousing

Corporation, determine;

(b) run warehouses in the State for the storage of agricultural produce, seeds, manures, fertilisers, agricultural implements and notified commodities;

(c) arrange facilities for the transport of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities to and

from warehouses;

(d) act as an agent of the Central Warehousing Corporation of the Government for the purpose of the purchase, sale, storage and distribution of

agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities; and

(e) carry out such other functions as may be prescribed.

Chapter IV deals with finance, accounts and audit. In the miscellaneous provisions in Chap. V, in s. 41 power to make rules is conferred on the

Government and under s. 42 the power of making regulations is conferred on warehousing corporations with the previous sanction of the

appropriate Government to make rules not inconsistent with the Act and the rules made thereunder; to provide for all matters for which provisions

of the Act, and, in particular, without prejudice to the generality of that power in sub-s. (2) in respect of the specified matters, including the

conditions of service and remuneration payable to the officers and other employees of a warehousing corporation; laying down their duties and

conduct of officers and employees of a warehousing corporation and in respect of the powers and duties which may be entrusted or delegated to

the managing director of a warehousing corporation, and generally, the efficient conduct of the affairs of a warehousing corporation. The

appropriate Government was also conferred power under s. 42(3) by a notification in the Official Gazette to rescind any regulation which it had

sanctioned and thereupon the regulation shall cases to have effect. It is in the context of these provisions that we have to decide whether this is an

authority constituted under any law and whether it is an authority for the marketing of commodities.

The Tribunal has relied upon the aforesaid decision of the Allahabad High Court U.P. State Warehousing Corporation Vs. Income Tax

Officer, A-Ward and Another, which has taken the view that such a State Warehousing Corporation satisfies the requirements of s. 10(29). On

the first question as to the Corporation being an authority, the Allahabad High Court at page 133 has rightly taken the wider view because the

context was not of the authority being a State Within the meaning of art. 12 of the Constitution, where it must be authoritative in the sense of the

agency of the State or a governmental or a semi-governmental instrumentality of the State or such other public authority in the State sphere. The

compelling context in s. 10(29) was a limited context of the statutory authority which is constituted under the law in only a limited sphere, viz., for

marketing and, therefore, if the authority so constituted had its jurisdiction and functions charged upon it by the law creating it in this limited sphere

is concerned would be the authority functioning within that mandated area laid down by law under which it was created and shall be to that extent

authoritative because it is created under the authority of law for exercising these enumerated functions within this mandated are laid down for its

functioning. It is the specification of this sphere in which this authority is set up by the law creating it which would make it the authority constituted

under the law. That is why at page 133 in the Allahabad decision in view of the compelling context of s. 10(29) it was held that the kind of

authority which was envisaged was one for the marketing of commodities. If, therefore, a legal entity or corporation was constituted by a law for

the purpose of marketing commodities, this specified quality of this authority would make it authoritative within the meaning of s. 10(29). Having

been set up under the Warehousing Corporations Act, 1962, itself, it was an authority constituted under the law within the meaning of s. 10(29).

Thereafter, in that decision the entire historical background was taken into account as to how warehousing corporations were established along

with the establishment of the co-operative societies for the marketing of commodities and simultaneously Parliament had begun granting incentive to

the newly created institution in the shape of exemption in respect of income derived from the letting of godowns or warehouses for storage,

processing or facilitating the marketing of commodities. The report of the First Agricultural Finance Sub-Committee in 1945 was referred to, which

had made the following observations in its summary of recommendations :

The construction of a chain of warehouses is unlikely to attract immediately sufficient private capital. Hence we recommend that the State should

itself undertake the planning and construction of warehouses at all nuclear points of trade in agricultural produce. The warehousing system should

be operated by a public corporation organised on lines similar to those of the improvement trust.

The Rural Banking Enquiry Committee [1950] also emphasised the importance of storage and warehousing in relation to rural credit and rural

banking. It had suggested the formation of a Warehousing Development Board with a large capital for the purpose of giving loans and subsidies to

those who are prepared to take up this line of activity as a business. The Committee of Direction of the All India Rural Credit Survey [1954] had

thoroughly examined these questions of warehousing and had recommended the creation of National Co-operative Development and Warehousing

Board and All India Warehousing Corporation by a statute, as a result of which the earlier 1956 Act was enacted establishing the National Co-

operative Development and Warehousing Board which was now bifurcated only in 1962. The whole faction of the Board was to prepare plans

and to promote programmes for agricultural productions, processing, marketing and storage, warehousing, exporting and importing agricultural

produce through a co-operative society or a warehousing corporation. Under the Act two types of corporations were provided. The Central

Warehousing Corporation at Delhi was established to carry out its functions at centres of all India importance, while the State Corporations were

to work at centres of State importance and above sub-divisional level. Apart from this, the co-operative societies were also set up to carry out

warehousing functions below sub-divisional level. Even though in 1962 Parliament enacted these two separate Acts, the Warehousing

Corporations Act had provided for this important aspect of warehousing not only of agricultural produce but included in its scope even other

notified commodities. The very functions, which have been set up for these corporations under ss. 11 and 24 are very wide range and included

power to act as an agent of the Government for purposes of purchase, sale, storage and distribution of agricultural produce besides notified

commodities, besides the activities of setting up godowns and warehousing at convenient places and for running these warehouses for storage of

the agricultural produce and notified commodities and for arranging even facilities for the transport of the agricultural produce, seeds, manures,

fertilizers, etc. Therefore, looking to the purpose underlying the constitution of these authorities, viz., warehousing, which may essential be needed

in the process of marketing by making this agricultural produce and other notified commodities very valuable through its efforts when they were

being transferred from the producer to the consumer, Parliament thought of granting exemption.

Therefore, coinciding with the enactment of the 1956 Act, the Indian I.T. Act, 1922, was amended by introducing s. 14(3), (4) and (5).

Section 14(3(iii) provided :

(3) The tax shall not be payable by a co-operative society...

(iii) in respect of any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of

commodities.

From April 1, 1960, it stood amended as s. 14(5) :

(5) The tax shall not be payable by an assessee, which is an authority constituted under any law for the time being in force for the marketing of

commodities, in respect of any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of

commodities.

In the I.T. Act, 1961, these provisions were re-enacted as ss. 81, 82 and 83 by way of providing these deductions. By the Finance (No. 2)

Act of 1967, with effect from April 1, 1968, ss. 81 and 82 were substituted so far as they were concerned by ss. 80P and 80Q, while s. 83 which

dealt with the particular provision, by styling it as income of marketing societies, is now re-enacted as s. 10(29). Section 10(29), except for this

material change in the whole grouping by changing the character of this exemption or deduction by giving complete immunity to this income in the

computation of the total income under s. 10, is otherwise in identical terms with s. 14(5) of the 1922 Act. In view of this coincidental measure of

exemption introduced by Parliament for giving incentive to these newly created business institution in these vital fields of warehousing and marketing

through co-operative societies and by granting exemption in respect of this particular income derived from letting of godowns or warehouses for

storage, processing or facilitating the marketing of commodities, the legislative intention was rightly found to be to encourage the warehousing

industry, which was set up by creating this specified authority by making it eligible for such substantial tax exemptions. There was complete

absence of any warehousing industry in the country and when private business was so hesitant to enter this unexplored field, Parliament has

remedied the situation by creating the necessary statutory authority in this special field of marketing which had such vital place in our rural economy

by entrusting it with the authority to carry on these essential functions specified in ss. 11 and 24. These incentives by way to tax exemption having

been granted and being limited only to income arising from letting of godowns or warehouses for storage, processing or facilitating the marketing of

commodities, the intention of the legislature was obvious to make this statutory authority eligible for this exemption. That is why looking to the

benevolent purpose of this exemption scheme so as to encourage this vital national activity in the interest of the rural economy, the term ""marketing

has to be construed in a manner which would achieve this benevolent purpose of exemption rather than defeat the said purpose as per the settled

rules of construction.

In that context, thereafter, the term ""marketing"" is examined, in the context of various meanings given to that term in various dictionaries and

authorities. In the passage in Corpus Juris Secundum, Vol. 55, p. 785, the terms ""marketing"" has been defined as follows :

''Marketing'' signifies a bringing or sending to market, and includes buying as well as selling.

This would show that buying and selling was an activity which is included in the term ""marketing"". Therefore, buying and selling was one of the

activities in this field of marketing which did not exhaust its whole content. The passage from the ""Principle and Practice of Marketing in India"" by

Dr. C. B. Mamoria and B. L. Joshi, is very important and instructive in this context.

''Marketing'' includes all activities involved in the creation of place, time and possession utilities. Place utility is created when goods and services

are available at the places they are needed, time utility when they are needed, and possession utility when they are transferred to those who need

them. The process of marketing makes goods and services much more valuable when they are wanted and transferred to the people and place

who want them.

These authors have made the following classification of the marketing functions :

(1) Activities involving transfer of ownership :

(a) buying; (b) selling;

(2) Activities involving physical supply :

(a) transportation; (b) storage;

(3) Activities facilitating the foregoing functions :

(a) standardisation and grading; (b) financing; (c) risk taking; (d) market research.

The storage faction was explained as the marketing faction involving holding and preserving goods between the time of prediction and their use.

It was, therefore, pointed out that the marketing process consisted of processes of concentrating and dispersing all goods between the producer

and consumers. In both these processes, storage and warehousing form important activities. Therefore, warehousing or storage was clearly an

essential element of the process of marketing. Encyclopedia Britannica, 1960 Edn., Vol. 14, p. 915, says that marketing consists of those activities

which effect transfers in the ownership of goods and services and provide for their physical distribution. Similarly, the Encyclopaedia of Social

Science, 1959, Edn., Vol. 10, p. 133, says that as an economic concept the term ""marketing"" is susceptible of various interpretations. It was

pointed out that a common but fallacious theory was that it was concerned chiefly, if not wholly, with finished goods and was the activity of

specialised class of middlemen or that it was limited to adding time, place and possibly possession utilities to completed goods. The marketing

process was infinitely far-reaching than the transfer of goods from manufacturers to final consumers.

Therefore, the learned judges had rightly found that ""marketing"" includes all business activities directed towards the flow of goods and services

from producer to consumer, and they were within the concept of ""marketing"", and the term could not be restricted only to buying and selling

activity. If the narrow meaning was accepted, the whole purpose of the legislature would be frustrated. That is why, looking to the larger concept

of modern marketing, when Parliament set up this statutory authority charging it with this vital faction for the nation for proper development of our

rural economy, this tax exemption which was intended for this statutory authority could not by any process of construction be denied as that would

be repugnant to the settled principles of construction of this benevolent measure whose whole object is to encourage such statutory authorities,

which carry out the mandate charged on them by remaining within the sphere of marketing. We are in complete agreement with the Allahabad High

Court in that conclusion.

The learned standing counsel, however, vehemently relied upon the decision in Sukhdev Singh, Oil and Natural Gas Commission, Life

Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal,

Industrial Finance Corporation, . It was in the context of the definition of the term ""State"" under art. 12 where, in the context of that article, the

term ""other authority"" was interpreted by their Lordships. At page 1342, it was pointed out that the State undertook commercial functions in

combination with governmental functions in a welfare State. Governmental faction must be authoritative. It must be able to impose decisions by or

under law with authority. The element of authority was the binding character. The rules and regulations were authoritative because these rules and

regulations direct and control not only the exercise of powers by the corporation but also all persons who deal with these corporations.

The ratio in the case of Rajasthan State Electricity Board, Jaipur Vs. Mohan Lal and Others, , was examined where the authority in the limited

context of art. 12 must be a public administrative agency or corporation having quasi-governmental powers and authorised to administer a revenue

producing public enterprise. The expression ""other authorities"" was interpreted and it was held to include within it every authority created by a

statute and functioning within the territory of India and also all constitutional or statutory authorities on whom powers are conferred by the law.

Even in commercial or trading activities if the authority had power to make rules and regulations and to administer the Act, it would be clear that

sovereign posers were delegated to the said authority. A public authority was a body which had public or statutory duties to perform and which

performs those duties and carries out its transactions for the benefit of the public and not for private profit. It is in this context that in order to

decide whether the authority was a State within the meaning of art. 12 that these tests were laid down of such public or statutory authority, which

was authoritative in that wider sense. Possession of such lawmaking power by way of lying down rules and regulations was held to be one of such

attributes of the sovereign power which would make such a statutory or public authority carrying on even such commercial functions the State

within the meaning of art. 12. Even his Lordship, Mathew J., in Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation,

Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance

Corporation, , had in his judgment evolved in that the context the doctrine of instrumentality of State or State agency under which despite the fact

that there were no provisions for issuing binding directions to third parties, the disobedience of which would entail penal consequences, the

corporations set up under statutes to carry on a business of public importance and which was fundamental to the life of the State would come

within the concept of State. Various decisions were examined in the context for finding out what was the State action which made these

instrumentalities or agencies, State agencies. It should also be noted that at page 1340, even the decision in Executive Committee, U.P.

Warehousing Corporation Vs. Chandra Kiran Tyagi, , was in terms referred to as the corporations had power to make statutory regulations, to

which we have already referred. Therefore, it was held at page 1341 that earlier decision in Executive Committee, U.P. Warehousing Corporation

Vs. Chandra Kiran Tyagi, , was indirect conflict with the decision in Mafatlal Naraindas Barot Vs. Divisional Controller, State Transport

Corporation and Another, , which was decided by the Constitution Bench. Therefore, so far as the State Warehousing Corporation is concerned,

which has under statute power to make even binding regulations having the force of law, as per this settled legal position, even this wider test of

instrumentality of a State or authoritativeness as such a Governmental authority would be satisfied. We are, however, not inclined to accept the

argument of the learned standing counsel because it would be proceeding on a totally irrelevant test, which was evolved in a totally different context

of what is a State within the meaning of art. 12 and where such authoritativeness has to be found as to make the action of the authority a State

action. That is why the sphere of that action had to be that wider sphere of some kind of governmental action or governmental administrative

function. What we are concerned with is, however, a totally different context of s. 10(29) where the authority must be a statutory authority

constituted under the law which is charged with only the limited administration, one which is specified in the law creating it, viz., functions laid down

in s. 24. It is the specification of these functions in s. 24 which lays down the mandated area or sphere or jurisdiction of this authority, within which

sphere it is completely authoritative because of the law which has created it to exercise its functions within that field.

The only question which we have, therefore, to examine is the other question as to whether this limited sphere which has been set out by the

legislature for this statutory authority by its functions specified in s. 24, is such a sphere which makes it the authority ""for marketing"". The legislature

has advisedly used the words ""authority for marketing"" by emphasising the object and purpose or the sphere of the statutory authority. So far as s.

24 is concerned, the function are all of such wide nature, as earlier pointed out, which includes specifically marketing besides setting up godowns

or warehouses and running these warehouses for storage of agricultural produce, seeds, manures, fertilisers, agricultural implements and notified

commodities and arranging facilities for the transport thereof to and from warehouses. The important function which is contemplated as being

charged to this authority is the one specified in s. 24(b) of being an agent of the Central Warehousing Corporation or of the Government for the

purpose of the purchase, sale, storage and distribution of agricultural produce, seeds, manures, fertilisers, agricultural implements and notified

commodities. When on has to find out what this authority or the administration is meant for, one has to look to its statutory objects and functions,

irrespective of the fact whether is a particular case all these intended objects are actually undertaken or not. Looking to s. 24(d) which covers even

purchases and sale, besides storage and distribution, it is obvious that even the narrow test propounded by the learned standing counsel of

marketing in the narrow sense is fulfilled by this authority. We, however, do not rest our decision on s. 24(d) alone because looking to the whole

context of the sphere of marketing even these activities of warehousing and storage or transport are so essential in the whole process of marketing

that an authority charged with these statutory functions would clearly fulfil this test. As pointed out by Dr. C. B.Mamoria and Shri B. L. Joshi in the

aforesaid instructive passage marketing must include all activities involved in the creation of place, time and possession utilities. The goods must be

available at the place where they are needed, at the time when they are needed, so as to serve even the possession utility for being transferred to

those who need them. The process of marketing could be duly organised only when it serves these utilities, and, therefore, the importance of these

functions of warehousing, storage or transport or concentrating and dispersing the goods between the purchaser and consumers by making them

available at the proper place and time to persons who needed them by fulfilling the real object of marketing. The warehousing would help to adjust

conditions of seasonal consumption to year round production. Enough surplus stocks would be properly warehoused during off-season so that the

peak season demand might be met without the need for overtime operation. Proper use of warehousing facilities would enable a producer to store

the seasonal surplus so that it could be marketed long after the production season or harvest has ended. The same would be true of the

manufacturer. In our country, when even foodgrains have to be imported, the importance of the functions of the warehousing and storage could

never be lost sight of as furnishing a vital link in the flow of the goods of the ultimate consumer even when the grains have to be imported from

outside. Therefore, the marketing must be interpreted in the wider concept as it is now understood as per the modern principles and practices of

marketing and it would embrace within its reach all the business activities which help the flow of the goods from the producer to the consumer and

it could never be restricted to mere simple buying and selling of the commodities in question.

The learned standing counsel vehemently tried to rely upon the Taxation Enquiry Committee Report, 1953-54, at page 126, which was the

basis for enlarging the existing taxation concessions to co-operative societies including State co-operative banks. Under para. 67(3) it is stated as

under :

To this end we make the following recommendations.....

(iii) in the scheme of agricultural organisation that is favoured by competent authorities the extension of a system of warehouses in rural areas is

deemed to be of considerable importance. Where warehouses are constructed by co-operative societies or by regulated market committees

enjoying statutory recognition, the income from such property is liable to Income Tax under the existing practice referred to above. In view of the

usefulness of this development in our rural economy, we recommend that co-operative societies (including banks, marketing societies, etc.,) and

statutory constituted market committees which provides warehousing or godowns facilities, should enjoy exemption from tax on such part of their

income as is derived from godowns and warehouses, even if their yearly income exceeds Rs. 20,000.

As the Finance Minister had implemented fully these recommendations it was argued that only those authorities which under the various State

laws were empowered to act as marketing committees themselves were intended to be eligible for this exemption. In this argument, the learned

standing counsel ignores that the recommendations included besides co-operative societies even banks, which would have this exemptible income

by way of warehousing. The learned standing counsel also ignores how the law has taken rapid strides thereafter. The original s. 14(3). (4) and (5)

at the time of the 1961 Act had been re-enacted in ss. 81 to 83 and s. 83 was in identical terms with s. 14(5) and it had the headnote ""Income of

marketing societies"". After the 1967 amendment, the sections dealing with co-operative societies are re-enacted as ss. 80P and 80Q and s. 83is

row replaced by s. 10(29). The change is very substantial as now it is not a scheme of more deduction or exemption but this type of exemptible

income if not to be computed at all as income for the computation of total income under s. 10 and is not to be returned at all and has complete

immunity like agricultural income. The warehousing activity has also not stood confined as in 1956 to the warehousing of agricultural commodities

alone but has been extended from time to time. Therefore, reliance on this extrinsic aid was totally misplaced for construing the plain language of

this benevolent exemption in s. 10(29). If any such restricted meaning is given we would be rewriting the phraseology advisedly used by the

legislature by putting down the addition qualification that the authority for marketing will be exemptible if it undertakes activity of trading or all the

activities of marketing. The whole exemption provision would then be self-defeating. The exemptible income is contemplated from the letting of

godowns and warehouse for storage, transport or facilitating the marketing of commodities and if such warehousing authority whose substantial

income is only from these activities is to be denied this exemption on the ground that if does not carry on the actual trading activity the income from

which is not made exemptible, the legislative intention would be completely frustrated.

The learned standing counsel also tried to urge that the adjectival clause ""for the marketing"" is attached to the law and not to the authority. This

distinction or even the use of the term ""marketing"" again in s. 10(29) would hardly be material to illumine the point under discussion as to whether

the term ""marketing"" has a narrow or wider meaning.

The whole crux of the matter is that Parliament in its wisdom has used the expression ""authority for the marketing of commodities"". The

expression ""for"" would show the purpose, the ultimate object to be served by this authority. The authority must promote marketing by its service in

the mandated area of its functioning and the legislature while constituting this statutory authority and laying down its function or jurisdiction has

delimited its area by setting the field for its activity so that it serves or better promotes this purpose or object of marketing the commodities.

Whatever enhances the utilities value, clearly enhances the real worth of the commodities in question and looking at the matter from this crucial

angle there could be no doubt that warehousing or storage is such an essential step in the whole process of marketing that it enhances the utility of

the commodities in question by making them more valuable. Therefore, it has a direct impact on the very trading activities by enhancing their real

value. The same is true of the other activities of processing their real value. The same is true of the other activities of processing of these

commodities and even facilitating the distribution by transport to and from the warehouses. Even storage would have to be looked at by way of

preservation from ravages of natural causes and even from being eaten away by rodents and insect life. If all these essential aspects of the

warehousing activities are borne in mind the wisdom of the legislature is too apparent in using this phrase ""authority for marketing"", so that

warehousing corporations on the plain tenor of s. 10(29) earn this exemption. As earlier pointed out, in the present case., even clause (d) of s. 24

itself clinches this issue, but we are resting this decision on a much wider ground of the warehousing activity itself. If should also be borne in mind

that so far as co-operatives are concerned, including the co-operative banks, similar exemption is to be found right from the beginning in s. 80P(ii)

(e) where such co-operative societies are given deduction in respect of similar income derived by the co-operative society from the letting of

godowns or warehouses for storage, processing of facilitating the marketing of commodities, to the extent of the whole of such income. And even

under the earlier corresponding section as well as this section, the co-operation banks would earn that exemption without any trading activity as

such.

In that view of the matter, the Tribunal was right in holding that this assessee-corporation fulfilled all the three requisites for earning exemption

under s. 10(29). In that view of the matter, this reference must be answered in the affirmative, i.e., in favour of the assessee and against the

revenue. This reference is accordingly disposed of and the revenue shall pay the costs of the assessee. The other references are accordingly

answered and the revenue shall pay the costs of the assessee in each reference.