2000 JTR(SC) 420
2000 163 CTR 390 ; 2000 245 ITR 1 ; 2001 9 SCC 365 ; 2001 116 Taxman 5
SUPREME COURT OF INDIA
D.P.Wadhwa : M.B.Shah
Commissioner Of Income Tax, Gujarat
Versus
Gujarat State Warehousing Corporation Limited
Case No. : 6650 of 1995
Date of Decision : 2/23/00
Advocates Appeared: Chowdhary Siddharth : Desai B.V. : Kaushik K.C. : Sharma Arvind Kr : Shukla K.N.
Due to conflicting judicial precedents regarding the exemption of interest income for warehousing corporations under Section 10(29) of the Income Tax Act, 1961, the matter was referred to a larger Bench for resolution.
Act
Referred
:INCOME TAX ACT
: S.10(2)(9)
(A) Income Tax Act, 1961 - Section 10(29) - Exemption of income - Income derived from sources other than primary functions, specifically interest income, staff quarters rent, miscellaneous income, and supervision charges - Whether such income is exempt under Section 10(29). (Paras 1, 4)
(B) Conflict of judicial decisions - Where there is a contradiction between different decisions of the Court regarding the taxability of interest income of a warehousing corporation, the matter requires adjudication by a larger Bench. (Para 4)
Facts of the case:
The Revenue challenged the exemption granted to the assessee under Section 10(29) of the Income Tax Act, 1961, in respect of interest income, staff quarters rent, miscellaneous income, and supervision charges. The claim for exemption had been accepted by the CIT (A) and confirmed by the Tribunal, leading the Revenue to seek a reference from the High Court, which was subsequently dismissed.
Findings of Court:
The Court noted a conflict between previous decisions on which earlier special leave petitions had been dismissed and a later decision that took a different view, particularly regarding the treatment of interest income.
Issues: Whether the income received by the assessee from any source other than from the letting of godowns or warehouses is exempt under Section 10(29) of the Income Tax Act, 1961.
Ratio Decidendi: In the presence of conflicting judicial precedents concerning the exemption of interest income for warehousing corporations under the statutory provisions, the matter must be placed before a larger Bench for a final decision.
Result: Matter referred to a larger Bench.
(B) Conflict of judicial decisions - Where there is a contradiction between different decisions of the Court regarding the taxability of interest income of a warehousing corporation, the matter requires adjudication by a larger Bench. (Para 4)
Facts of the case:
The Revenue challenged the exemption granted to the assessee under Section 10(29) of the Income Tax Act, 1961, in respect of interest income, staff quarters rent, miscellaneous income, and supervision charges. The claim for exemption had been accepted by the CIT (A) and confirmed by the Tribunal, leading the Revenue to seek a reference from the High Court, which was subsequently dismissed.
Findings of Court:
The Court noted a conflict between previous decisions on which earlier special leave petitions had been dismissed and a later decision that took a different view, particularly regarding the treatment of interest income.
Issues: Whether the income received by the assessee from any source other than from the letting of godowns or warehouses is exempt under Section 10(29) of the Income Tax Act, 1961.
Ratio Decidendi: In the presence of conflicting judicial precedents concerning the exemption of interest income for warehousing corporations under the statutory provisions, the matter must be placed before a larger Bench for a final decision.
Result: Matter referred to a larger Bench.
Exemption - An Allahabad High Court judgment that was affirmed by the Supreme Court.
Conflict - A decision that took a different view specifically regarding interest income, creating a conflict with prior decisions.
Exemption - A Supreme Court judgment used as a basis to dismiss previous special leave petitions regarding warehousing corporation exemptions.
(1) THE Revenue sought reference on the following questions of law for opinion of the High Court:
"1. Whether the claim of the assessee for exemption under Section 10(29) of the Income Tax Act, 1961, in respect of interest income of Rs 6,03,374, staff quarters rent of Rs5147, miscellaneous income of Rs 5647 and supervision charges of Rs 79,081 was rightly accepted by the CIT (A) and confirmed by the Tribunal? 2. Whether the income received by the assessee from any source other than from letting of godowns or warehouses is exempt under Section 10(29) of the IT Act, 1961?"
(2) APPLICATIONS under Sections 256(1) and 256(2) by the Revenue were dismissed.
(3) AGGRIEVED, the Revenue came to this Court. The assessment year involved is 1981-82. We find that on similar questions for the two assessment years viz. 1979-80 and 1983-84 this Court dismissed the special leave petitions filed by the Revenue by the following order: SLPs (C) Nos. 8701 of 1993 and 8808 of 1986
"DELAY condoned. In view of the judgment of this Court in Union of India v. U.P. State Warehousing Corpn. wherein the judgment of the Allahabad High Court in U.P. State Warehousing Corpn. v. ITO has been affirmed, the special leave petitions are dismissed."
(4) OUR attention has been drawn to a decision of this Court in Orissa State Warehousing Corpn. v. CIT which has taken somewhat a different view, particularly, with regard to the interest income. We find a conflict between decisions on which earlier SLPs were dismissed and 237 ITR 589. Accordingly, this matter may be placed before the Honble the Chief Justice for directions for placing the matter before a larger Bench for decision.