Union of India & Anr Vs. U.P. State
Ware Housing Corporation  INSC 334 (31 October 1990)
M.M. Punchhi, M.M. Agrawal,
1991 AIR 1374 1990 SCR Supl. (2) 523 1991 SCC Supl. (2) 730 JT 1990 (4) 451
1990 SCALE (2)924
Tax Act, 1961 --Section 10(29)--Exemption--Tests--Whether rental income derived
from godowns and warehouse of U.P. State Ware Housing Corporation exempted.
Income Tax Officer required the U.P. State Ware Housing Corporation, a creature
of the Ware Housing Corpora- tions 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-homes was not exempted.
claim of exemption under section 10(29) of the Income Tax Act of the assessee
having been repeatedly re- jected by the Appellants, it filed a writ petition
in the High Court challenging the notice.
High Court quashed the notice, allowing the case of the assessee-Respondent.
appeal by the certificate the Revenue-Appellants assailed the view of the High
the appeal, this Court,
1. The assessee would be entitled to exemption, if (i) it is an authority
constituted under any law; (ii) it is an authority constituted for marketing of
commodities; (iii) the exemptable income is in respect of letting of godowns or
ware-houses for storage, processing or facilitating the marketing of
Plain reading of Section 10(29) makes it evident that the authority must he
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. [525G]
the instant case, the first test was proved that the assessee 524 was an
authority under the Ware Housing Corporations Act, 1962. [525F]
second test requiring the authority to be consti- tuted for marketing of
commodities is also fully satisfied by Section 24(d) of the Ware Housing
Corporations Act, 1962.
activities of the assessee as an agent were the activi- ties facilitating the
marketing of commodities, which have a business element and the second test was
also established. [526B-C]
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 commod-
ities presents no difficulty because it stands undisputed that the income
derived by the assessee was from letting 01' godowns or ware-houses. The assessee
having fulfilled all the tests was rightly entitled to the exemption as