CIT V. M/S HARYANA WAREHOUSING CORP

ITA/590/2010

AI Insights

The case involves the Commissioner of Income Tax as the appellant and M/s Haryana Warehousing Corporation as the respondent. The core issue was whether the income received by the Haryana Warehousing Corporation from the Food Corporation of India (FCI) for storage of food grains should be classified as 'storage charges' exempt under section 10(29) of the Income Tax Act, or as a 'trading receipt' which is taxable. The Income Tax Appellate Tribunal had previously ruled in favor of the assessee, which the revenue appealed against. The High Court of Punjab and Haryana, referencing a precedent, ruled in favor of the revenue, classifying the income as taxable trading receipt.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 720592 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 09-02-2011
• Assessment Year: misc
• Other Referred Cases: The Commissioner of Income Tax, Panchkula v. M/s Haryana State Coop. Supply and Marketing Federation Limited, Panchkula
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJESH GARG
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Exempt income; Income Tax; Storage Charges; Trading Receipt
• Section: 260-A; 10(29)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.590 of 2010 Date of decision: 9.2.2011 Commissioner of Income Tax. -----Appellant. Vs. M/s Haryana Warehousing Corporation. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Sr. Standing Counsel for the appellant. Mr. Rajesh Garg, Advocate for the respondent. --- ADARSH KUMAR GOEL, J. This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh in I.T.A. No.53/Chandi/2009 for the assessment year 2002-03 proposing to raise following substantial questions of law:- “(a) Whether on the facts and circumstances of the case, the ld. ITAT has erred in not taking into consideration the fact that the assessee has in fact reduced its taxable income under the head “surplus from procurement of wheat account” by notionally debiting an amount of Rs.10,90,82,220/- as “storage charges” and crediting the same to the exempt “Warehousing I.T.A. No.590 of 2010 charges” whereas it has not been controverted by assessee at any stage that no such rent/storage charges has actually been received by it from FCI and that except for the nomenclature, it also relates to the “surplus from procurement of wheat account.” (b) Whether on the facts and circumstances of the case, the ld. ITAT has erred in dismissing the appeal of the Revenue and thereby allowing the contention of the assessee that income of Rs.10,90,82,220/- claimed exempt under section 10(29), is income received from the FCI for the storage of food grains and not a trading receipt as held by the Assessing Officer whereas the Hon’ble Punjab & Haryana High Court in assessee’s own case in ITR No.120 of 1998 dated 06.09.2006 and ITR No.63 of 1998 dated 31.10.2006 has already decided that such an income is a trading receipt and hence not exempt u/s 10(29) of the Income Tax Act”. (c) Whether on the facts and circumstances of the case, the ld. ITAT was justified in not adjudicating the basic question of fact that the income of the assessee claimed to be relating to storage charges by the assessee is in the nature of trading receipt or storage income within the meaning of section 10(29) and not following the ratio laid down by the Hon’ble Punjab & Haryana High Court in assessee’s own case in ITR No.120 of 1998 dated 06.09.2006 and ITR No.63 of 1998 dated 31.10.2006 and also the ratio of the Hon’ble Supreme Court in the case of Orissa State Warehousing Corporation vs. CIT. 237 ITR 589” (d) Whether on the facts and circumstances of the case, the ld. ITAT was right in not appreciating the fact that Revenue has never deviated from its stand of denying 2 I.T.A. No.590 of 2010 exemption u/s 10(29) of the Income Tax Act, 1961 to any income not being in the nature of “storage charges” since assessment year 1992-93 except for the fact that the nature of income of Rs.10,90,82,000/- was for the first time discovered after detailed enquiry that the same was not in the nature of “storage charges” and which was accordingly denied exemption u/s 10(29) of Income tax Act, 1961 along with other income relating to procurement of wheat account.”. Learned counsel for the assessee fairly states that the matter is covered in favour of the revenue by earlier order of this Court dated 8.9.2010 in I.T.A. No.157 of 2005 The Commissioner of Income Tax, Panchkula v. M/s Haryana State Coop. Supply and Marketing Federation Limited, Panchkula. Accordingly, the questions raised in the appeal are decided in favour of the revenue and against the assessee and the appeal is allowed. (ADARSH KUMAR GOEL) JUDGE February 09, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3 "