JUDGMENT R.K. Agarwal, J.
1. The Income-tax Appellate Tribunal, Delhi, has referred the following question of law Under Section 256(1) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), for the opinion of this court.
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that the income of the assessee-co-operative society from a cold storage was exempt under the provisions of Section 80P(2)(e) of the Income-tax Act, 1961 ?"
2. Briefly stated the facts giving rise to the present reference are as follows :
The respondent, namely, M/s. District Co-operative Federation, Bulandshar, is a cooperative society. The present reference relates to the year 1979-80. It had originally filed the return on June 28, 1979, showing a total income of Rs. 73,630. However, it revised its return on February 16, 1982, showing a total loss of Rs. 1,02,240. In the course of assessment proceedings it also filed a letter dated November 29, 1982, claiming deduction of Rs. 24,960 Under Section 80P(2)(a)(ii) in respect of brick kiln business claiming it to be a cottage industry thereby increasing the returned loss to Rs. 1,27,200. It may be mentioned here that along with the revised return the respondent had filed a letter claiming deduction Under Section 80P(2)(e) of the Act in respect of the income of the cold storage owned by it. The Income-tax Officer did not allow exemption Under Section 80P(2)(e) of the Act to the respondent on the income from the cold storage. Feeling aggrieved, the respondent preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) had upheld the claim made by the respondent and directed that the deduction be allowed Under Section 80P(2)(e) of the Act in respect of the income from the running of the cold storage. The Revenue's appeal before the Tribunal has failed.
3. We have heard Sri A. N. Mahajan, learned standing counsel for the Revenue, and Sri Vikram Gulati, learned counsel for the respondent.
4. Learned counsel for the Revenue submitted that Under Section 80P(2)(e) of the Act any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities is allowed as a deduction while computing its total income. According to him the running of a cold storage cannot be said to be letting of godown or warehouse for storage or for processing. He submitted that the apex court in the case of Delhi Cold Storage P. Ltd. v. CIT [1991] 191ITR 656 has held that in a cold storage processing is not done. According to him the cold storage cannot be, by any stretch of imagination, treated as a godown or a warehouse where articles are stored and, therefore, the provisions of Section 80P(2)(e) of the Act are not applicable.
5. Sri Vikram Gulati, learned counsel for the respondent, however, submitted that a liberal interpretation to the various clauses of Section 80P of the Act should be given and the provision of clause (e) of Sub-section (2) of Section 80P of the Act should be liberally construed in order to give effect to the legislative intent. According to him in a cold storage articles are stored at a given f temperature, therefore, it is a godown or warehouse for storage of goods, even if no processing is done and thus entitled for deduction. He relied upon the following decisions :
(1) Addl. CIT v. Ryots Agricultural Produce Co-operative Marketing Society Ltd. [1978] 115 ITR 709 (Karn) ;
(2) CIT v. Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 (Cal);
(3) CIT v. Ahmedabad Maskati Cloth Dealers Co-operative Warehouses Society Ltd. [1986] 162 ITR 142 (Guj) ;
(4) CIT v. South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117 (SC) ; and (5) Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814 (SC).
6. Having heard learned counsel for the parties we find that the respondent which is a co-operative society derived income during the relevant assessment year from cold storage. Section 80P(2)(e) of the Act provides for deduction of income derived by a co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities which reads as follows :
"80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in Sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in Sub-section (2), in computing the total income of the assessee.
(2) The sums referred to in Sub-section (1) shall be the following, namely :- . . .
(e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income."
7. The question is whether a cold storage can be treated as a godown or a warehouse for storage purpose or not ?
8. In the Law Lexicon, the encyclopaedic law dictionary of P. Ramanatha Aiyar, 1997 edition, at page 344 "cold storage business" has been defined as business of storing and preserving commodities in a cool place for hire or reward.
9. In Words and Phrases, Permanent Edition, Volume 7A, at page 136, "cold storage" and "cold storage business" have been described as follows :
" 'Cold storage'.-Plant operated for cold storage and curing of meat, was a 'cold storage' plant within the meaning of city's zoning ordinance, as construed and administered by city officials (Rosenthal v. City of Dallas Tex Civ. App., 211 S. W. 2d 279, 289, 290).
'Cold storage' is the storage of provisions, etc., in a place artificially cooled ; the storage as of provisions in a place kept cold for preservation purposes (Rosenthal v. City of Dallas, Tex Civ App. 211 S. W. 2d, 279, 289, 290).
The term 'cold storage' as used in the trade, means a warehouse or storeroom ordinarily used for the preservation of butter and eggs, where the temperature is kept at a low degree, but above freezing point (Allen v. Somers 47 A. 653, 654, 73 Conn. 355, 52LRA, 106, 84 Am. St. Representation 158).
'Cold storage business'-'doing a cold storage business' means carrying on the business of storing commodities in a cool place for hire or reward, and a packing house which used cold storage for preserving its own commodities alone, but did not receive and store for the public or any part thereof, is not 'doing a cold-storage business' within Gen. Tax Act Dec. 26, 1890, 22, imposing a tax 'on all packing houses doing a cold storage business.' (Stwart v. Atlanta Beef Co. 18 S. E. 981, 985, 93 Ga. 12, 44, Am. St. Representation 119)."
10. In the Webster's Third New International Dictionary (unabridged volume A 1966) at page 443, the expression "cold storage" has been defined as follows :
"Storage especially of food in a place kept cold often by refrigeration for preservation purposes."
11. In the Oxford English Dictionary, the word "godown" means a warehouse or store for goods. "Warehouse", according to the said dictionary, is described b as "a building or part of a building used for the storage of merchandise ; the building in which a wholesale dealer keeps his stock of goods for sale ; a building in which furniture or other property is housed, a charge being made for the accommodation : a Government building {more fully bonded warehouse) in which dutiable imported goods are kept in bond until it is convec nient to the importer to pay the duty".
12. According to Webster's New Twentieth Century Dictionary, "godown" means a warehouse and "warehouse" means a building where wares, or goods, are stored, before being distributed to retailers, a storehouse :
13. In Stroud's Judicial Dictionary (Volume 5, forth edition), we find the following observation :
"A 'warehouse', in common parlance, certainly means a place where a man stores or keeps his goods which are not immediately wanted for sale".
14. In Black's Law Dictionary (fifth edition), "warehouse" has been described as a "structure used for the reception and storage of goods and merchandise". It further states that "the term may include any structure used to hold goods, stores or wares temporarily or for a length of time".
15. Aiyar's judicial Dictionary (ninth edition), defines "godown" as a storage, or warehouse. According to that dictionary, a "warehouse" is a place licensed for the storage of goods.
16. Halsbury's Laws of England (fourth edition), Note 3 to paragraph 428, on page 204, reads as under :
" 'warehouse' means a place used for the storage of goods, even temporarily, as in a dock transit shed : A storage place which is ancillary to a business which is wholly or substantially retail is not a warehouse : room in the basement under retail sale-rooms used for storing goods temporarily until wanted in the sale-rooms was held not to be a warehouse in Burr v. William Whiteley Ltd. [1902] 19 TLR 117. These cases are not to be taken as a laying down an absolute rule of law that no building can be a warehouse if it is connected with a retail business alone ; it is possible even in a retail business to have a building which may be in the fullest sense of the term a warehouse."
17. It will appear from the above dictionary meanings of "godowns" and "warehouses" that both these terms are synonymous and interchangeable. The common parlance meaning which can be attributed to godowns or ware houses is that they must be used for the purpose of storage of goods even for a temporary period.
18. In the case of Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66, the Calcutta High Court has held that the act of cold storage was an act whereby foods or products stored in the cold storage were prevented from their natural decay.
19. In the case of Ryots Agrl. Produce Co-operative Marketing Society Ltd. [1978] 115 ITR 709, the Karnataka High Court has held that (page 713) : "the expression 'marketing' appearing in clause (c) of Section 81(i) is an expression of wide import. In order to make agricultural produce fit for marketing, it may have to be transported or processed, but still if ultimately the goods in question are sold, all the activities involved are understood as amounting to a single activity, namely, marketing and not independent activities such as transporting, processing, selling, etc., 'Marketing' generally means the performance of all business activities involved in the flow of goods and services from the point of initial agricultural production until they are in the hands of the ultimate consumer'. The marketing functions involve exchange functions such as buying and selling, physical functions such as storage, transportation, processing and other commercial functions such as standardization, financing, market intelligence, etc."
20. In the case of Ahmedabad Maskati Cloth Dealers Co-operative Warehouses Society Ltd. [1986] 162 ITR 142, the Gujarat High Court has held that in order to earn the benefit under clause (e) of Sub-section (2) of Section 80P of the Act, the following conditions must be satisfied, namely, (i) the assessee must be a co-operative society ; (ii) the co-operative society must have income from letting of godowns or warehouses; and (iii) the godowns or warehouses must be let for any one or more of the three purposes, namely, storage, processing or facilitating the marketing of commodities. The Legislature advisedly used the words "godowns or warehouses" because the intention was to encourage co-operative societies to construct godowns and warehouses which would prove useful for the rural economy. Literal interpretation of the words "godowns or warehouses" will not lead to any absurdity or produce any manifestly unjust result. The dictionary meanings of "godowns and warehouses" show that both these terms are synonymous and interchangeable. The common parlance meaning which can be attributed to "godowns or warehouses" is that they must be used for the purpose of storage of goods even for a temporary period. The expression "facilitating the marketing of commodities" would suggest a stage anterior to the actual sale of the commodity.
21. In the case of South Arcot District Co-operative Marketing Society Ltd. [1989] 176 ITR 117, the apex court has held that the provisions for exemption Under Section 14(3)(iv) of the Indian Income-tax Act, 1922, which is analogous to Section 80P(2)(e) of the Act was intended to encourage co-operative societies Income Tax Reports 22-11-2004 36 to construct warehouses which were likely to be useful in the development of A rural economy and exemption was granted from income-tax in respect of income derived from the letting of such warehouses for the storage of fertilizers and other related commodities concerned with co-operative marketing. The apex court has further held that having regard to the object with which the provision has been enacted, it is apparent that a liberal construction b 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 assessee did was to let out its godowns for the purpose of storing the ammonium sulphate handed over to it by the State Government and the remaining services performed by the assessee were merely incidental to the essential responsibility c of using the godowns for the storage of that stock. The assessee was held to be entitled for the exemption claimed by it.
22. In the case of Kerala State Co-operative Marketing Federation Ltd, [1998] 231 ITR 814, the apex court has held that the provision is introduced with a view to encouraging and promoting the growth of the co-operative sector in the economic life of the country and in pursuance of the declared policy of the Government, the correct way of reading the different heads of exemption enumerated in the section would be to treat each as a separate and distinct head of exemption. Whenever a question arises as to whether any particular category of an income of a co-operative society is exempt from tax what has to be seen is whether the income fell within any of the several heads of exemption. If it fell within any one of head of exemption, it would be free from tax notwithstanding that the conditions of another head of exemption are not satisfied and such income is not free from tax under that head of exemption.
23. In the case of Delhi Cold Storage P. ltd. [1991] 191 ITR 656, the apex court has held that in a cold storage, vegetables, fruits and several other articles which require preservation by refrigeration are stored and while as a result of long storage, scientific examination might indicate loss of moisture content, that is not sufficient for holding that the stored articles have undergone "process" within the meaning of Section 2(7)(c) of the Finance Act, 1973. The apex court has overruled the decision of this court in the case of Addl. CIT v. Farrukhabad Cold Storage P. Ltd. [1977] 107 ITR 816 and that of the Calcutta High Court in the case of Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 which had held that processing takes place in a cold storage. Thus from the dictionary meaning as also from the decisions of the Calcutta High Court in Radha Nagar Cold Storage (P.) Ltd. [1980] 126 ITR 66 and the apex court in Delhi Cold Storage P. Ltd. [1991] 191 ITR 656 it is established that in a cold storage, vegetables, fruits and several other articles are stored. Giving a liberal interpretation to the provisions of Section 80P(2)(e) of the Act, it can be treated as a warehouse or godown where fixed temperature is maintained. Thus giving a liberal interpretation of the words "godowns and warehouses" A mentioned in Section 80P(2)(e) of the Act, a cold storage can be said to be warehouse or godown where goods are stored and thus it falls under the aforesaid section. In this view of the matter, the income from cold storage would be exempt.
24. In view of the foregoing discussions, we answer the question referred to us B in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall order as to costs.