Holding

Interest income on fixed deposits is not exempt under section 10(29) of the Income Tax Act, 1961; the exemption is limited to income derived from letting out godowns or warehouses for the specified purposes.

Summary

The Orissa State Warehousing Corporation, a statutory body under the Warehousing Corporation Act, 1962, earned interest on fixed deposits placed with banks. The Income‑Tax Officer added this interest to its total income, holding that it was not covered by the exemption in section 10(29) of the Income Tax Act, 1961. The Tribunal reversed, deeming the interest exempt on the ground that the corporation’s entire income was exempt. The High Court rejected the Tribunal’s view, and the Supreme Court dismissed the appeals, holding that section 10(29) provides a narrow exemption only for income "derived from the letting out of godowns or warehouses for storage, processing or facilitating the marketing of commodities" and does not extend to interest earned on deposits. The Court emphasized that fiscal statutes must be given their plain meaning and that the word "any income" is restrictive, so the interest income is taxable. The appeals were therefore dismissed.

Issues considered

Whether interest earned on fixed deposits by a warehousing corporation falls within the exemption granted under section 10(29) of the Income Tax Act, 1961.
Whether the exemption under section 10(29) applies to all income of an authority if any part of its income is exempt (integrated activity doctrine).
How the phrase "any income derived from the letting out of godowns or warehouses for storage, processing or facilitating the marketing of commodities" should be interpreted.

Legislation cited

Income Tax Act, 1961s. 10(29), s. 2(45), s. 256(1), s. 4, s. 5
Warehousing Corporation Act, 1962s. 16, s. 24

Subjects

Income TaxSection 10(29)exemptionwarehousing corporationinterest incomestatutory interpretationfiscal statutesletting out of godownstaxability

Judgment

ORISSA STATE WAREHOUSING CORPN. ETC. A
v.
COMMISSIONER OF INCOME TAX

APRIL I, 1999

B
[M. SRINIVASAN AND UMESH C. BANERJEE, JJ.]

Income Tax Act 1961, s. 10(29)-Whether interest received from banks
on fixed deposits was incidental to business activities and not taxable under
the head 'income from other sources' and thus exempt under s. 10(29)-Held, C
no; exemption allowed only for income derived from letting out ofcommodities,
godowns and warehouses

Interpretation of Statutes-Golden rule-Fiscal Statute-Court to
ascribe natural and ordinary meaning to words and not substitute own
impression in place of legislative intent. D
The appellant-assessees were warehousing corporations established
under the Warehousing Corporation Act, 1962. Any income derived by the
corporations from the letting out of commodities and the letting out of
god owns or warehouses for storage, processing or facilitating the marketing E
of commodities was exempt from income tax under s.l 0(29) of the Income tax
Act, 1961. ('Act')

The interest received by the assessees on fixed deposits placed by them
with banks was added to their income by the Income-tax Officer (ITO), who
held that this was not 'income exempt' within the meaning ofs.10(29) of the F
Act. While the Commissioner of Income Tax (Appeals) upheld the ITO's
order, the Tribunal allowed the appeals of the assessees on the ground that
when the entire income was exempt from tax, interest earned thereon could
not be subjected to tax. The High Court answered the consequent reference
in favour of the revenue by holding that the interest received on fixed
deposits was not exempt from tax under s. 10 (29) of the Act. The assessees G
appealed to this Court.

Dismissing the appeals, this Court

HELD: 1.1. The appellant Corporation being put into funds by itself
could not be termed to be a fund to facilitate the marketing of the commodities, H
383
384 SUPREME COURT REPORTS [1999] 2 S.C.R.

A as such question of the interest income accruing therefrom being exempt
from tax did not arise. S.10 (29) of the Income tax Act was categorical in
its language and the exemption was applicable only in the circumstances
envisaged thereunder. (390-B-C; 389-H; 390-A]

1.2. The word 'any income' is restrictive in its application by reason
B of the user of the expressions 'derived from'. In the event the letting of
godowns or warehouses was for any other purpose or if income was derived
from any other source, then such an income could not possibly come within
the ambit of S.10 (29) of the Act and was thus not exempt from tax.
(398-B; 399-C-D]

C Commissioner of Income Tax, Madras v. South Arcot District Co-
operative Marketing Society Ltd., (1989) 176 ITR 117; CIT v. Ahmedabad
Maskati Cloth Dealers Co-operative Warehouses Society Ltd., (1986) 162
ITR 142; U.P. State Warehousing Corporation v. Income Tax Officer, (1974)
94ITR129; Commissioner ofIncome Tax v. P.J. Chemicals, (1994) 210 ITR
D 830; Commissioner of Income Tax v. U.P. State Warehousing Corporation
(1992) 195 ITR 273 Addi. and Commissioner of Income Tax, Karnataka v.
State Warehousing Corporation, (1980) 125 ITR 136, referred to.
Union of India v. U.P. State Warehousing Corporation, (1991) Suppl.
2 sec 730, distinguished.

E MP. Warehousing Corporation v. Commissioner ofIncome Tax, (1982)
133 ITR 158, approved.
2. A fiscal statute had to be interpreted on the basis of the language
used therein and not de hors the same. The Court has to ascribe natural and
ordinary meaning to the words used by the legislature and ought not, under
F any circumstances, to substitute its own impression and ideas in place of the
legislative intent as is available from a plain reading of the statutory provisions.
. (401-A-B)

Cooke v. Charles A. Vogehar Company, (1901) AC 102; Cape Brandy
Syndicate v. Inland Revenue Commissioners, (1921) 1 KB 64; Canadian
G Eagle Oil Company Limited v. The King, (1946) AC 119; Inland Revenue
Commissioner v. Ross & Coulter & Ors., (Bladnoch Distillery Co. Ltd. (1984)
1 All. ER 616 and Keshavji Raviji & Co. v. Commissioner ofIncome Tax, AIR
(1991) SC 1806, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3476 of J
H 1993 Etc. Etc. j
ORISSA STATE WAREHOUSING CORPN. v. C.l.T. {BANERJEE, J.] 385
From the Judgment and Order dated 8.2.93 of the Orissa High Court in A
S.J.C. No. 76of1990.

C.S. Vaidyanathan, Additional Solocitor General, Dr. V. Gauri Shanker,
Dr. D.P. Pal, S. Rajappa, Ms. Hemantika Wahi, N.L. Garg, Ms. Priya Hingorani,
Pallav Shishodia, Abhijat P Medh, C.V. Subba Rao and B.K. Prasad for the
appearing parties. B
The Judgment of the court was delivered by

BANERJEE, J. The core question, in these eight appeals, by the grant
of special leave against the judgments of the High Courts of Orissa and
Rajasthan, centres round the interpretation of Section 10(29) of the Income C
Tax Act, 1961 (hereinafter referred to as 'the Act')..

Before however, proceeding further in these matters, it will be convenient
to note that hearing of these appeals was taken up together by consent of
the parties and these appeals being disposed of by a common judgment by
reason of identity of the issue involved in these appeals. The contextual facts D
in Appeal No. 3476 of 1993 depict that' the Orissa State Warehousing
Corporation being the assessee herein received a sum of Rs. 1,74,383 as
interest on fixed deposits for the assessment year 1983-84 and since during
the relevant period the assessee has had to pay the total interest of Rs. l ,08,063/
-to the banks, a sum of Rs.66,320 was added to the income of the assessee E
as the Income-tax Officer was of the view that question of resultant difference
of income being Rs. 66,320 cannot be said to be an 'income exempt' within
the meaning of Section 10(29) of the Act. The Commissioner of Income Tax
(Appeals), Orissa in the appeal by the assessee upheld the order of the
Income-tax Officer but the Tribunal on a further appeal however, came to a
different conclusion to the effect that the income in question was exempt F
under Section 10(29). Subsequently, however, at the instance of the Revenue,
the following two questions were referred to the High Court for opinion under
Section 256(1) of the Act :

(1) "Whether on the facts and in the circumstances of the case, the
Tribunal was justified in holding that the interest received by the G
assessee from the banks on fixed deposits was exempt u/s 10(29)
ofthe LT.Act, 1961?

(2) Whether on the facts and in the circumstances of the case, the
TribunaTwas justified in holding that the interest received from
the banks on fixed deposits was incidental to or consequential H
386 SUPREME COURT REPORTS [1999] 2 S.C.R.

to the activities of the business of the assessee and was not
taxable under the head 'income from other sources' and, thus
exempt under section 10(29) of the LT.Act, 1961?"
The High Court in its turn, however, answered the first question in the
negative and against the assessee and thereby affirmed the view of the
B Income-tax Officer and hence the appeal. Incidentally, the High.Court did not
deem it necessary to answer the second question by reason of the answer
given to question No. I.
Since the contextual facts are at slight variation with each other in these
appeals, it would be convenient to deal with the Appeal No.3476 of 1993 at
C this juncture before proceeding with the factual context pertaining to other
seven appeals.
Dr. V. Gauri Shankar, the learned Senior Advocate appearing in support
of the appeal was rather emphatic in his objections as regards the issue of
interest on fixed deposits being ascribed to be forming part of the total income
D and in elaboratfon of the same drew our attention to some of the basic
provisions of the Act. Apart from reliance on Section 2 (45) of the Act which
defines total income as total amount of income referred to in Section 5, strong
emphasis was laid on both Sections 4 and 5 of the Act.
We do, however, feel it expedient to record that reliance on these basic
E provisions of the Act having due regard to the facts of the matter under
consideration are totally misplaced and we ought not to detain ourselves on
this score any further. In the perspective of the Assessee Corporation being
a statutory authority, under the Agriculture and Cooperative Department of
the Government of Orissa established under the Warehousing Corporation
Act, 1962, (hereinafter referred to as 'the Act of 1962') Dr. V. Gauri Shankar
F contended that regard being had to Sections 16 and 24 of the Act of 1962
all moneys coming in the hands of the Corporation have to be deposited in
the Bank Account maintained by the Corporation and the same being a
statutory obligation, the question of income therefore, cannot but be termed
to be a part of the functioning of the uriit and as such exempt under Section
G I 0 (29). In this context and having regard to the specific submissions made
by Dr. V. Gauri Shankar in support of the appeal it would be convenient to
note the above-noted two statutory provisions for its propt:r appreciation.
Section 16 of the Act of 1962 reads thus: .
"16. (I) To the Warehousing Fund shall be credited-
1/11

H (a) all moneys and other securities transferred to the Central
'
ORISSA STATE WAREHOUSING CORPN. v. C.I.T. {BANERJEE, J.] 387
Warehousing Corporation under the clause (c) of sub-section (2) A
of section 43;
(b) such grants and loans as the Central government may make for
the purpose of the Warehousing Fund; and
(c) such sums of money as may, from time to time, be realised out
of the loans made from the Warehousing Fund or from interest B
on loans or dividends on investments made from that fund.
(2) The Warehousing Fund shall be applied-

(a) for advancing loans to State Governments on such terms and
conditions as the central Warehousing Corporation may deem fit C
for tlie purpose of enabling them to subscribe to the share
capital of State Warehousing Corporations;

(b) for advancing loans and granting subsidies to State Warehousing
Corporations or to State Governments on such terms and
conditions as the Central Warehousing Corporation may deem D
fit for the purpose of promoting the warehousing and storage of
agricultural produce and notified commodities otherwise than
through co-operative societies;
(c) for meeting the expenses incurred in relation to the training of
personnel, or publicity and propaganda, for the purpose of E
promoting warehousing and storage of agricultural produce and
notified commodities;

(d) for meeting the expenses, including the salary, allowances and
other remuneration of the officers and other employees, incurred
in relation to the administration of the Warehousing Fund. F
Section 24 of the Act of 1962 is reproduced herein below:-

24. Subject to the provisions of this Act, a State Warehousing
Corporation may-

(a) acquire and build godowns and warehouses at such places G
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, fertilizers, agricultural implements and
notified commodities; H
388 SUPREME COURT REPORTS [l 999] 2 S.C.R.

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

(d) act as an agent of the Central Warehousing Corporation or of
the Government for the purposes of the purchase, sale, storage
B and distribution of agricultural produce, seeds, manures, fertilizers,
agricultural implements and notified commodities; and

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

A plain reading of the above-noted ·statu~rovisions, does not
C however lend any support to the contention of Dr: V. Gauri Shankar though,
however, Rule 16 of the Rules fram~d under the said Act may have some
bearing in regard thereto. In any event the factum of deposit of moneys with
the bank does not take the matter any further by reason of the specific
language and the expression used in Section 10 (29) of the Act which reads
as below:-
D
"10. In computing the total income of a previous year of any person,
any income falling within any of the following clauses shall not be
included ..

(29) In the case of an authority constituted under any law, for the
E time being in force for the marketing of commodities, any income
derived from the letting out of commodities, any income derived from
the letting out of godowns or warehouses for storage, processing or
facilitating the marketing of commodities."

On a plain reading of Section 10(29) of the Act as above, it appears that
F the pre-requisite element for the entitlement as regards the claim for exemption
is the income which is derived from letting out of godowns or warehouses
for storage, processing or facilitating marketing of commodities and not
otherwise. The legislature has been careful enough to introduce in the Section
itself, a clarification by using the words 'any income derived therefrom',
G meaning thereby obviously for marketing of commodities by letting out of
godowns or warehouses for storage, processing or facilitating the same. If the
letting out of godowns or warehouses is for any other purpose, question of
exemption would not arise.

In continuation of his submissions, Dr. V.Gauri Shankar contended further
H that a taxing statute ought not to be interpreted with a narrow and restrictive
ORISSA STATE WAREHOUSING CORPN. v. C.I.T. {BANERJEE, J.] 389
meaning attached to the words used therein but a liberalised meaning ought A
to be attributed so as to give full play to the statutory intent. While it is true
that in the event of there being any doubt in the matter of interpretation of
a fiscal statute, the same goes in favour of the assessee, but the fact remains
and the law is well settled on this score that in the matter of interpretation
of the taxing statutes the law courts would not be justified in introducing B
some other expressions which the legislature thought fit to omit. In the
present context, there is no doubt as to the meaning of the words used in
the Section by reason of the language used, neither there is any difficulty in
ascertaining the statutory intent. Incidentally, it cannot but be said that an
exemption is an exception to the general rule and since the same is opposed
to the natural tenor of the statute, the entitlement for exemption, therefore, C
ought not to be read with any latitude to the tax-payer or even with a wider
conotation as is being suggested by Dr. V. Gauri Shankar but to restrict its
application to the specific language used depicting the intent of the legislature.

In fine, on behalf of the assessee, it has been contended that interest
on fixed deposit is incidental to the business income and when the business D
income is not taxable then and in that event, it would be incorrect to include
the interest income earned on that within the purview of tax. Similar however,
was the submission before the Tribunal and the Tribunal accepting the same
recorded the following in its order pertaining to the same as below:
"It is a surprising proposition that when the income itself is not E
taxable how the interest earned on such income becomes taxable.
There is no doubt that the income earned on any income is taxable
but what is required to look into is the circumstances and incidental
activity of the appellant. The incidental activity of the appellant taxes
me to consider that the interest earned by it is not taxable. Moreover
I am fortified in my view with the decision of the Jaipur Bench of the F
Tribunal.

7. I have also considered the facts on record. I have heard both the
parties. I have taken into consideration the case law relied on by the
learned counsel for the assessee. After examining everything the
cumulative effect which comes to indicate is the interest income earned G
by the appellant on the exempted income cannot be brought to tax."

The above excerpts go to show that the Tribunal has proceeded on the
basis, as if the deposits are totally exempt in terms of Section I0(29) of the
Act but unfortunately there is neither any factual support nor any sanction
in law. Section 10(29) is categorical in its language and this exemption is H
390 SUPREME COURT REPORTS [I 999] 2 S.C.R.

A applicable only in the circumstances as envisaged under the Section as
noticed herein before. Needless to say that the word 'any income' as appearing
in the body of the statute is restrictive in its application by reason of the user
of the expressions 'derived from'. In the event the intent of the legislature was
otherwise, there was no embargo or restraint to use and express in clear and
B unequiyocal language as has been so expressed in Sections 10(20A) or 10(21)
or 10(22B) or 10(20BB) or Section 27. These statutory provisions go to show
that wherever as a matter of fact the legislature wanted an unrestrictive
exemption the same has used 'any income' without any restriction so as to
make it explicit that the entire income of the assessee would be exempt. The
factum of the Corporation being put into funds by itself cannot be termed to
C be a fund to facilitate the marketing of the commodities, as such question of l
the interest income accruing therefrom being exempt from tax as has been held
by the Tribunal does not and cannot arise.
Mr. C.S Vaidyanathan, Addi. Solicitor General, appearing for the Revenue
contended that as a matter of fact the Tribunal has not been able to assess
D the situation in its proper perspective and the High Court was right in
answering the reference in favour of the Revenue. It has been contended that
deposit of all sums in the bank account does not by itself clothe the assessee
to claim exemption irrespective of the factum of there being a statutory
obligation to do so, unless such claim for exemption falls squarely and evenly
within the four comers of the statutory requirement and we do feel it expedient
E to record our concurrence on this score as noticed above.

At this juncture, however, it would be convenient to tum attention on
to the contextual facts in Appeal Nos. 4042-4048 of 1994 where from it appears
that more or less under similar situation the Income-tax Officer. came to a
conclusion that the income from other than the warehousing activities is not .
F exempt, and therefore, exemption was not allowed. The Commissioner of
Income-tax being of the same view, the matter went before the Tribunal
wherein the Tribunal did set aside the order of the Commissioner of Income
Tax and came to a conclusion that the items ought to be treated as exempt
under Section 10(29) since they do come within the purview of exemption by
G way of facilitating the marketing of the commodities as envisaged under
Section 10(29). The Tribunal, however, at the instance of the Revenue referred
the following question under Section 256(1) of the Income-tax Act for the
assessment year 1974-75 to 1982-83 to the High Court- the question being:-

"Whether on the facts and circumstances of the case the Income Tax
H Appellate Tribunal was justified in holding in law that the entire gross
ORISSA STATE WAREHOUSING CORPN. v. C.I.T. IBANERJEE, J.} 391
receipt of the assessee were eligible for exemption under Section A
10(29)?"

The Rajasthan High Court upon consideration of the facts however by
reason of the identity of the issue disposed of the references by one single
order and answered the reference in favour of the Revenue in one common
order with, however, a further observation as below: B
"it would however, be open for the Tribunal to consider the income
which has been derived from different sources other than those which
have been considered above, and to go into the details of them and
then to come to a finding that whether such income could be said to
be the income out of letting out godowns for the three purposes C
mentioned in Section 10(29) of the Act."

Be it noted that the Tribunal in these Civil Appeals (4042-4048of1994)
has interpreted the words "facilitating the marketing of the commodities" as
one integrated activity since assessee derives its income from the following D
three sources:

(1) from letting out of warehouses
(TI) interest
(111) from any agricultural produce on behalf of Food Corporation of E
India and the State Government.

The Tribunal as a matter of fact did accept the submissions on behalf
of the assessee that the activity is single, indivisible and integrated and that
all the activities are aimed at facilitating the marketing of the goods. The
Tribunal held :
F
" ....that the activity of the assessee is integrated one and that the
entire activity is aimed at facilitating the marketing of all the goods.

The assessee owns warehouses where the agricultural produce are
stored. For storage food grains, the assessee constructs new
warehouses also. Maintenance of the warehouses is also done by the G
assessee.

Procurement of good grain was done by the assessee at the instance
of the State Government and FCI.

In the nature of the activity being carried on by the assessee, it H
392 SUPREME COURT REPORTS [1999] 2 S.C.R.

A cannot be said that the assessee's activity of warehousing is different
from the other activities. The Gujarat High Court in 124 ITR 282 in the
case of Gujarat State Warehousing Corporation, held that marketing
c· includes all business activities directed towards the flow of goods
and services from producer to consumer. Similar view has been taken
by other High courts also. Relying on this authority, we hold that
B whole activity being carried on by the assessee is integrated one and
that the activities of the assessee cannot be split up. The issue arising
out of this case is not re integra and the question whether the
chruges being received from State Govt./FCI for procurement of grains
qualify for exemption or not u/s 10(29) was already discussed by
c Allahabad Bench 'B' of the Appellate Tribunal in the case of U.P.
State Warehousing Corporation pertaining to the assessment year
1973-74 and 1974-75. Copy of such order is on pages 10 & 11 of the
paper book.

The U.P. State Warehousing Corporation, Lucknow also received
D commission from Food Corporation of India for procuring and storing
wheat and other food articles on its behalf. The question arose whether
the said commission income was exempt u/s I 0(29). Allahabad Bench
'B' having accepted the contention of the assessee allowed exemption
u/s 10(29). When commission received from FCI on the procurement
of grains is exempt u/s I 0(29), we do not see any reason why the
E income received from the State Govt. for the procurement of grains is
not covered by Section I 0(29). Such income, we think, is fully covered
by the expression "facilitating the marketing of commodities", occurring
in Section I 0(29).

Relying on the decision dated 8.11.77 of Allahabad Bench 'B' supra,
F
we hold that the assessee is entitled to exemption in respect of
Rs.11,06,034.33 representing Administrative Overheads Charges.

The interest income amounting to Rs.11,41,350.23, is also fully covered
by the decision of Allahabad Bench 'A' of Appellate Tribunal. The
copy of the said order is on pages I to 5. This case also pertain to
G
Mis. U.P.State Warehousing Corporation. The said Corpbration earned
interest on short-term fixed deposits. Idle money belonging to the
Corporation was deposited and the interest was earned. The question
arose whether such interest income qualifies for exemption u/s I 0(29).
Allahabad Bench 'A' answered the said question in affirmative and in
H favour of the assessee. Following the said decision dated 31.7.76,
ORISSA STATE WAREHOUSING CORPN. v. C.l.T. {BANERJEE, J.) 393
page 1 to 5 of the paper Book, we hold that the assessee is entitled A
to claim exemption in respect of interest income amounting to
Rs.11,41,350.25.

Then, we take up the supervision charges, fumigation service charges
and Misc. income amounting to Rs.23,790.67. Rs.6538.85 and
Rs.48,253.49 respectively for consideration. The assessee having carried B
on the single and indivisible activity, we hold these items qualify for
exemption u/s 10(29) as they are fully covered by the expression
"facilitating the marketing of commodities", as occurred u/s 10(29)".

In the reference, however the High court observed:
c
" ........ The income which is exempt under this clause must be derived
from 'letting of godowns', for facilitating the marketing of commodities.
The words 'facilitating the marketing of commodities' cannot be
considered independently and, therefore, the exemption which has
been granted is for the income which has been derived from letting D
of the godowns, the source of income which has been exempted i~
this clause. The assessee may have different source of income, but
the exemption is not given to the assessee on its entire income, but
only that part of the income which arises from letting of the godowns
for facilitating the marketing of commodities.
E
...... .It is only the specific purpose which has been given for letting
"I-- of the godowns and such three purposes are: (I) Storage; (2)
Processing; and (3) facilitating the marketing of commodities. The
godowns can be let out for storage of the commodities. Similarly, the
godown can be let out for processing of commodities and the godown
can be let out for facilitating the marketing of commodities. The letting F
of godown in all the three circumstances is inevitable and if the main
act of letting of godown is absent, then the benefit from facilitating
the marketing of commodities can not be claimed exempted. The income
which has been derived by the assessee from procurement of grains
for the State Government/Food Corporation of India is an independent G
activity, other than the letting of godown, even though letting of
godown is encouraged by such an activity it could not be said that
the income which has been derived from the receipts from the State
Government or Food Corporation of India, could be considered as
income from letting out of godowns. The starting point for letting out
is receipt of the goods in the godown/warehouses. If the income is H
394 SUPREME COURT REPORTS [1999] 2 S.C.R.

A not related ir1 respect of the activities which pertains from the stage
of receipt of the goods to the despatch of the goods in the godown/
warehouses it could not be said to be income related to letting out
of the godown."

The High Court went on to record ....... .
B
" ..... The income which has been derived from administrative overheads
being surplus of recovery over cost of procurement is an independent
activity. The State Government or Food Corporation of India could
have appointed any other agency for the work of procurement of
goods of that person would not have been available. The assessee
c is not restricted under law to carry on any other business and if the
business for acting as an agent has been carried on by him, that
activity cannot be considered as letting out of godowns or warehouse
for facilitating the marketing of commodities."

Dr. D. Pal, the learned Senior Advocate, appearing in support of these
D
Civil Appeals relied strongly on the decision of this Court in the case of
Commissioner of Income Tax, Madras v. South Arco! District Co-operative
Marketing Society Ltd, (1989) 176 ITR 117 Dr. Pal contended that this
exemption under Section 10(29) is for the purpose of developing the economy
so as to achieve social upliftment considering the area in question and since
E law courts exists for the society, the effort of the law court ought always to
be to give the widest possible interpretation so that the society would benefit
and exemption be made available to achieve the intent and purposes for which
the law makers introduced the same in the statute book.

Before proceeding further in the matter, it would be convenient, however,
F to note the observations in the last noted decision (176) ITR wherein this
Court observed:

"We have considered the matter carefully and to our mind, it seems
clear that the Appellate Tribunal and the High Court are right in the
view adopted by them. As was observed by the Gujarat High Court
G
in C/Tv. Ahmedabad Maskati Cloth Dealers Co-operative Warehouses
Society Ltd., (1986) 162 ITR 142, while considering the analogous
provision of section 80P(2)(e) ofthe Income-tax Act, 1961, the provision
for exemption was intended to encourage co-operative societies to
construct warehouses which were likely to be useful in the development
H of rural economy and exemption was granted from income-tax in respect
ORISSA STATE WAREHOUSING CORPN. v. C.l.T. !BANERJEE, J.] 395
~- of income derived from the letting of such warehouses for the storage A
of fertilisers and other related commodities concerned with co-operative
marketing. Having regard to the object with which the provision has
been enacted, it is apparent that a liberal construction should be
given to the language of the provision and that, therefore, in the
circumstances of the present case, it must be regarded that what the B
·asssessee did was to let out its godowns for the purpose of storing
the ammonium sulphate handed over to it by the State Government.
The remaining services performed by the assessee were merely
incidental to the essential responsibility of using the godowns for the
storage of that stock. It is true that a certain sum was paid to the
assessee and described as ccmmission for the services performed by C
it, but having regard t<? the totality of the circumstances and to the
true substance of the agreement, it seems to us plain that the amount
was paid merely by way of remuneration for the use of the godowns.
In the result, the assessee is entitled to the exemption claimed by it.
(Emphasis supplied)
D
Dr. Pal relying upon the said decision very strongly contended that this
Court was considering Section 14(3 )(IV) of the Income Tax Act 1922 which
is in pari materia with Section l 0(29) of the Act and the decision of this Court
can be treated to be a direct authority for the proposition that widest possible
interpretation ought to be afforded to such an exemption and the expressions E
"letting out its godowns for the purpose of storage, processing or facilitating
the marketing of commodities", cannot but be termed to be one integrated
activity and as such is entitled to exemption. While at the first blush, the
submissions of Dr. Pal in this perspective seemed to be rather attractive, but
on a closer scrutiny the same loses its efficacy. Reliance on the last-noted
decision is totally misplaced, since the decision is based mainly on the basis F
of an agreement which however, has not seen the light of the day in the
instant matter under consideration and it is only by reason of the substance
of the agreement that this Court came to the conclusion that the assessee is
entitled to exemption claimed by it. With greatest of deference, the decision
of this Court in 176 ITR cannot be said to have expressed any independent G
view apart from reliance on the decision of the Gujarat High Court in CIT
v. Ahmedabad Maskati Cloth Dealers Co- operative Warehouses Society
Ltd., (1986) 162 ITR 142. In any event by reason of factual situation, the
decision is clearly distinguishable and we are thus unable to record our
concurrence with the submission of Dr. Pal that the same is a clear authority
in favour of the assessee in the matter of grant of exemption under Section H
\.
-
396 SUPREME COURT REPORTS [1999] 2 S.C.R.

A 10(29) of the Act of 1961. It was next contended that as a matter of fact, the
Tribunal has arrived at a clear finding of fact and as such this Court in
exercise of jurisdiction under Article 136 of the Constitution ought not to
question the same and in the event however, the Court feels it expedient by
reason of the overriding powers, as conferred by the Constitution, the Court
should issue a directive to the Tribunal so as to state the case afresh. We
B are however, unable to record our concurrence to the submission since the
order of the Tribunal as noted above cannot but be attributed to an expression
of opinion on a legal issue which•is however, not in accordance with the law.
For convenience sake, the finding of the Tribunal in this regard is noted as
below:
c "It is argued that the income shown under the heads: procurement of
grains for the State Govt./FCI, Interest, supervision charges, fumigation
service charges and miscellaneous income are covered by the
expression "facilitating the marketing of commodities" occurring in
sub- section (29) of Section 10 and, therefore, th~ assessee is entitled
D to exemption in respect of the entire income. So, the question for
consideration is whether the assessee is entitled to exemption u/s
10(29) in respect of the income derived from the State Government/FCI
for procurement of grains, interest, supervision charges, fumigation
service charges and misc. incomes, we find substance in the
submissions of Shri Ranka......
E
Incidentally, the Statement of Accounts of the assessee depicts that
the assessee derived incomes during the period under consideration as below:

I. Warehousing charges Rs. 51,06,433.65

F 2. Administrative overhead being surplus of
recovery over cost on procurement activities
on behalf of FCl/State Govt. Rs. 11,06,034.33

3. Fumigation service charges Rs. 6,538.85

G 4. Interest Rs.11,41,350.23

5. Misc. Income Rs. 48,253.49

It is against these items of income that exemption has been sought
under Section 10(29) of the Act which was negated by the Income-tax Officer
H as also the Commissioner of Income Tax but the Tribunal reversed the same
.-,

ORISSA STATE WAREHOUSING CORPN. v. C.I.T. !BANERJEE, J.] 397
and thereafter stated the case under 256(1) before the High Court as noticed A
above. Cost of procurement activity on behalf of FCI or State Government,
fumigation service charges; interest; miscellaneous income are termed to be
within the ambit of Section 10(29) of the Act. We are however for the reasons
noted above and more particularly because of the language of the Section,
not in a position to record our concurrence therewith. Further reliance was B
also placed on the decision. of the Allahabad High Court in the case of U.P.
State Warehousing Corporation v. Income-tax Officer, (1974) 94 ITR 129. We,
however, are not in a position to obtain support in any form whatsoever by
reason of the fact that the said matter pertains to the issue as to whether the
assessee was an authority within the meaning of Section 10(29) of the Act
and the High Court's judgment pertains to the same. This decision was C
how~ver subject to scrutiny before this Court as well and while it is true that
there is concurrence of views but the same was however by reason of the
factual status and not by reason of any interpretation of law as such, as
would be evident from the observations in Union of India v. UP. State
Warehousing Corporation, [1991] Suppl. 2 SCC 730, as below:- D
"The third test with regard to the exemptable income being in respect
of letting of godowns or warehouses for storage, processing or
facilitating the marketing of commodities presents no difficulty because
it stands undipsuted that the income derived by the assessee was
from letting of godowns or warehouses. (emphasis supplied) E
In view of the observations of this Court as regards the undisputed
facts, question of drawing any inspiration or obtaining support from the
decision does not and cannot arise and the same is thus clearly distinguishable.

- Further reliance was also placed on the decision of the Karnataka High
Court in the case of Addi. Commissioner of Income Tax, Karnataka v. State F
Warehousing Corporation, (1980) 125 ITR 136 wherein the Kamataka High
Court came to a conclusion that Section 10(29) of the I.T. Act ought not to
be construed in a narrow sense and the same includes every activity of
purchase, selling and distribution as· also warehousing. This decision also
does not, in fact, lend any assistance ~o the assessee, since the case cited G
is an authority for the proposition that Kamataka State Warehousing
Corporation is an authority constituted by law for marketing of commodities
and is more or less plac.!d in similar circumstances as that of the UP. State
Warehousing Corporation's case (supra). The decision of the Madhya Pradesh
High Court in the case of MP. Warehousing Corporation v. Commissioner
of Income Tax, ( 1982) 133 ITR 158 however runs counter to the submission H
398 SUPREME COURT REPORTS . (1999] 2 S.C.R.

A of Dr. Gauri Shankar as also of Dr. Pal in support of the claim for exemption.
Madhya Pradesh High Court having regard to the provisions of Section
10(20A), (21) and (22) (since omitted from the statute book) observed as
below: ,

"It is significant to note that the words "any income" occurring in
B Section 10(29) of the Act are qualified by the words "derived from the
letting of gqdowns or warehouses for storage, processing or facilitating
the marketing of commodities." Learned counsel for the assessee
contended that the clause should be read as follows:

c
•
"any income derived from the letting of godowns or warehouses for
storage, any income derived from processing and any income derived
from facilitating the marketing of commodities." ·
-
.;'

In our opinion, it would not be permissible to introduce words in the
provisions of clause (29). To do so will be to read in the aforesaid
clause words which do not occur there. Moreover, all the activities of
D a body constituted for the marketing of commodities are such which
ultimately may be found to facilitate the mfu.keting of commodities. If
income derived from every activity of an authority constituted for the
marketing of commodities was meant to be exempted under clause
(29), the said provision would have been enacted as follows:
E "any income derived by an authority constituted under any law
for the time being in force for the marketing of commodities."

Such a provision would be found in clauses (20A), (21) and (22) of
Section 10 of the Act. A perusal of these clauses would show that

F
only such income as is derived from a particular source is exempted
by clause (29) of Section 10 of the Act. Therefore, to claim exemption,
it must be proved that the income derived by an authority constituted
for the marketing of commodities is income which is derived from the
-
letting of godowns or warehouses for the purposes specified in
s.10(29), which ard storage, processing or facilitating the marketing of
G commodities. If the letting of gQdowns or warehouses is for any other
purpose, or if income is derived from any other source, then such
income is not exempt under that clause."

Further reliance was placed on the decision of this Court in the case of
Commissioner of Income Tax v. P.J. Chemicals, (1994) 210 ITR 830. In our '
H view, however, reliance thereon is totally misplaced and the same has no
ORISSA STATE WAREHOW~ING CORPN. v. C.l.T. {BANERJEE, J.] 399
relevance whatsoever. The decision of the Allahabad High Court in the case A
of Commissioner of Income Tax v. UP. State Warehousing Corporation,
(1992) 195 ITR 273 in a similar vein also does not advance the case of the
assessee any further, as such we need not dilate much on this excepting
however recording that the same does not lend any assistance to the
submissions of assessee-appellants.

-- Having due regard to the language used, question of exemption would
arise pertaining to that part of the income only which arises or is derived from
B

the letting of godowns or the warehouses and for the purposes specified in
Section l 0(29) of the Act - as noticed above. The statute has been rather
categorical and restrictive in the matter of grant of exemption: storage, C
processing or facilitating the marketing of the commodities are definitely
regarded as three different forms of activities which are entitled to exemption
in the event of their being any income therefrom. We do lend our concurrence
to the view expressed by the Madhya Pradesh High Court and record that in
the event the letting of godowns or warehouses is for any other purpose or
if income is derived from any other source, then and in that event such an D
income cannot possibly come within the ambit of Section I 0(29) of the Act
" and is thus not exempt from tax. The facts in issue pertaining to the interest
income on fixed deposit or ascribing the activities of the assessee being
termed to be one integrated activity does not and cannot arise. Mr. C. S.
Vaidyanathan, Addi. Solicitor General rightly contended that the language E
being clear and there being no ambiguity, question of there being any integrated
activity and reading the same in to the statue would be a violent departure
from the intent of the legislature.

Let us however at this juncture consider some of the oft cited decisions
pertaining to the interpretation of fiscal statutes being the focal point of F
consideration in these appeals. Lord Halsbury as early as 1901, in Cooke v.
Charles A Vogehar Company, (1901) A.C. 102 stated the law in the manner
following:

"a court of law, has nothing to do with the reasonableness or
unreasonableness of a provision of a statute except so far as it may G
held it in interpreting what the legislature has said. If the language of
a statute be plain, admitting of only one meaning, the legislature must
-- be taken to have meant and intended what it has plainly expressed,
and whatever it has in clear terms enacted must be enforced though
it should lead to absurd or mischievous results. If the language of this
sub- section be not controlled by some of the other provisions of the H
400 SUPREME COURT REPORTS [1999] 2 S.C.R.

A statute, it must, since, its language is plain and unambiguous, be .
enforced, and your Lordships' House sitting judicially is not concerned
with the question whether the policy it embodies is wise and unwise,
or whether it leads to consequences just or unjust, beneficial or
mischievous."

B The oft-quoted observations of Rowlatt, J. in the case of Cape Brandy
Syndicate v. Inland Revenue Commissioners, (1921) 1 KB 64 ought also to
be noticed at this juncture. The learned Judge observed:
-
"In a taxing statute one has to look at what is clearly said. There is
no equity about a tax. There is no intendment. There is no presumption
c as to a tax. Nothing is to be read in, nothing is to be implied. One can
only look fairly on the language used."

The observations of Rowlatt, J. as above stand accepted and approved
by the House of Lords in a later decision, in the case of Canadian Eagle Oil
D Company Limited v. The King, (1946) AC 119. Lord Thankerton also in a
manner similar in Inland Revenue Commissioner v. Ross & Coulter & Ors.,
Bladnoch Distillery Co. Ltd, (1948) 1 ALL ER 616 at 625 observed:

"If the meaning of the provision is reasonably clear, the courts have
no jurisdiction to mitigate such harshness."
E The decision of this Court in Keshavji Raviji & Co. v. Commissioner
of Income Tax, AIR (1991) SC 1806 also lends concurrence to the views
expressed above. This Court observed:

"As long as there is no ambiguity in the statutory language resort
F to any interpretative process to unfold the legislative intent becomes
impermissible. The supposed intention of the legislation cannot then
appealed to whittle down the statutory language which is otherwise
unambiguous. If the intendment is not in the words used it is nowhere ._
else. The need for interpretation arises when the words used in the
statute are, on their terms, ambivalent and do not manifest the intent
G of the legislature ....

Artificial and unduly latitudinarian rules of construction which,
with their general tendency to 'give the tax-payer the breaks' are out
of place where the legislation has a fiscal mission.
--
H Be it noted that individual cases of hardship and injustice do not and
ORISSA STATE WAREHOUSING CORPN. v. C.I.T. {BANERJEE, J.] 401
cannot have any bearing for rejecting the natural construction by attributing A
nonnal meanings to the words used since "hard cases do not make bad laws".

In fine thus, a fiscal statute shall have to be interpreted on the basis
of the language used therein and not de hors the same. No words ought to
be added and only the language used ought to be considered so as to
ascertain the proper meaning and intent of the legislation. The Court is to B
ascribe natural and ordinary meaning to the words used by the legislature and
the Court ought not, under any circumstances, to substitute its own impression
and ideas in place of the legislative intent as is available from a plain reading
of the statutory provisions.

In the premises, we do feel it expedient to record that by reason of the C
clarity of expression, question of there being any integrated activity being
exempt within the meaning of Section 10(29) of the Act does not and cannot
arise. The Madhya Pradesh High Court has correctly applied the law and the
comparison effected with other provisions are pointers to the distinction and
the same cannot but be tenned to be in accordance with the golden rule of D
construction in the matter of interpretation of statutes.

We do herein record our acceptance of the same and observe that
Section I 0(29) is singularly singular in its application with its scope restrictive
as is evident from the intent of the legislature and as evidenced from the
language used therein. E
In that view of the matter, there is no merit in the appeals, the appeals
therefore fail and are dismissed. No order as to costs.

S.M. Appeals dismissed.
F