A.M. Ahmadi, J.
1. The assessee is a co-operative society registered under the provisions of the Bombay Co-operative Societies Act, 1925. On the enactment of the Gujarat Co-operative Societies Act, 1961, it mist be deemed to be registered under the said Act by virtue of sub-section(2) of section 169 thereof. The bye-laws of the society show that its objects were two-fold, namely, (i) to carry on the trade of building and of buying, selling, hiring, letting and developing land in accordance with co-operative principles, with a view to providing godowns and shops for members engaged in or connected with the cloth trade; and (ii) to carry on social, recreative and educational work in connection with its members, tenants and persons using or occupying the premises built, acquired or otherwise made available or provided by the society. In pursuance of these objectives, the society built shops in the New Cloth Market owned by the society. This shops have been given on leave and license basis to its Class 'B' members on the terms and conditions set out in the license agreement, annexure 'G' (in Income-tax Reference No. 202 of 1976). The terms of the said agreement show that the shop is to be used by the licensee for the sloe purpose of carrying on business in cloth. It is specifically provided that it shall not be used for any other business not shall goods be stored therein which are prohibited by law. The income derived by way of license fee from the members to whom the shops came to be allotted by the assessee was sought to be taxed by the Income-tax Officer. The contention of the assessee is that the said income is deductible from the gross total income by virtue of section 80P(2)(e) of the Income-tax Act, 1961 (hereinafter called 'the Act'). Alternatively, the assessee contends that the income to the extent of Rs. 20,000 would be deductive under clause(c) of sub-section(2) of section 80P of the Act.
2. It appears that the assessee which follows the mercantile system of accounting submitted a return disclosing income from property. The only claim put up by the assessee before the Income-tax Officer wasjthat the income from a portion of the property which was used by the assessee for its own purpose was exempt from tax. Alternatively, it was contended by the assessee that the property should be treated as self-occupied property and statutory deduction under section 23 of the Act should be allowed to it as such. Both these contentions were rejected by the Income-tax Officer. The assessee, therefore, preferred an appeal before the Appellate Assistant Commissioner. Two contentions were raised before the Appellate Officer, namely, (i) the Income-tax Officer ought to have exempted the income of Rs. 3,922 while computing the gross income of the assessee in so far as it related to the part of the property which was utilized by the assessee itself; and (ii) the Income-tax Officer should have allowed a deduction of Rs. 20,000 under section 80P(2)(c) of the Act if the provision of section 80P(2)(e) were not attracted. The Appellate Assistant Commissioner upheld the decision of the Income-tax Officer on the first point. It also came to the conclusion that the assessee was not entitled to any statutory deduction as it did not carry on business in the portion occupied by itself. In the assessment year 1970-71, the Appellate Assistant Commissioner also came to the conclusion that the assessee was not entitled to deduction either under section 80P(2)(e) or, in the alternative, under section 80P(2)(c) of the Act. However, in the appeals relating to assessment years 1971-72 and 1972-73, and Appellate Assistant Commissioner came to the conclusion that whole of the income derived by the assessee from the rental received from the allottees of the shops would be exempt under section 80P(2)(e) as well as section 80P(2)(e) of the Act. In the appeal for the subsequent year 1974-75, the Appellate Assistant Commissioner took the view that the assessee was entitled to exemption under section 80P(2)(e) of the Act.
3. The assessee questioned the order of the Appellate Assistant Commissioner relating to the assessment year 1970-71 in appeal to the Tribunal. It was contended before the Tribunal that the full amount derived by the assessee by way of license fees from the allottees of the shops was deductible under section 80P(2)(e) of the Act. In the alternative, the assessee contended that it would be entitled to a deduction of Rs. 20,000 under section 80P(2)(c) of the Act. The Tribunal examined these contentions in the light of the decision of those court is Surat Vankar Sahakari Sangh Ltd. v. CIT : [1971]79ITR722(Guj) and concluded that the entire income was deductible under section 80P(2)(e) of the Act. This decision has given rise to Income-tax Reference No. 202 of 1976.
4. In respect of the assessment years 1971-72 and 1972-73, as pointed out earlier, the Appellate Assistant Commissioner came to the conclusion that the income derived by the assessee by way of license fees from the allottees of the shops was exempt both under section 80P(2)(c) and 80P(2)(e) of the Act. The Revenue, therefore, carried the matter in appeal to the Tribunal. The Tribunal, following its own decision relating to the assessment year 1970-71, confirmed the order of the Appellate Assistant Commissioner and dismissed the appeal of the Revenue.
5. So far as the assessment year 1974-75 is concerned, as pointed out earlier, the Appellate Assistant Commissioner came to the conclusion that the assessee was entitled to a deduction of Rs. 20,000 only under section 80P(2)(c) of the Act and that whole income derived from the letting of the shops was not exempt or deductible under section 80P(2)(e) of the Act. The assessee, therefore, preferred an appeal to the Tribunal in so far as it related to the refusal to grant exemption or deduction under section 80P(2)(e) was concerned. The Tribunal, following its earlier decision relating to the assessment year 1970-71, upheld the assessee's contention that it was entitled to deductionjunder section 80P(2)(e) of the Act.
6. In view of the above, the Revenue sought a reference on the following question :
'Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the income derived by the assessee society from letting out the shops to the licensee members who were carrying on business in cloth is clearly exempt under the provisions of section 80P(2)(e) of the Income-tax Act, 1961 ?'
7. We are called upon to answer this common question which is referred to us in all the three cases.
8. Before we proceed to answer the question on which our opinion is sought, it would be advantageous to briefly recapitulate the legislative changes leading to the enactment of section 80P of the Act. The Taxation Enquiry Committee Report (1953-54), on the basis whereof the taxation concessions to co-operative societies including co-operative banks were enlarged, recommended in paragraph 67(iii) of its report as under :
'(iii) in the scheme of agricultural organisation that is favoured by competent authorities, the extension of a system of warehouses in rural areas is deemed to be of considerable importance. Where warehouses are constructed by co-operative societies or by regulated market committees enjoying statutory recognition, the income from such property is liable in income-tax under the existing practice referred to above. In view of the usefulness of this development in our rural economy, we recommend that co-operative societies (including banks, marketing societies, etc.) and statutorily constituted market committees which provide warehousing or godowns facilities, should enjoy exemption from tax on such part of their income as is derived from godowns and warehouses, even if their yearly income exceeds Rs. 20,000.'
9. It may be recalled that while enacting the Act in 1961, original section 14(3), (4) and (5) of the 1922 Act were replaced by section 81(i), 81(iii) and 81(iv) of the Act, section 81(iv) being a verbatim reproduction of section 14(5) with the whodunit (1) 'Income of Co-operative reproduction After the amendment brought about by the Finance (No. 2) Act, 1967, with effect from April 1, 1968, section 81(iv) was replaced by section 10(29) and section 81(i) was replaced by section 80P with which we are concerned. Sub-section(1) of section 80P provides that 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 its provisions, the sums specified in sub-section(2), in computing the total income of the assessee. Clauses(c) and (e) of sub-section(2) of section 80P which are relevant for our purpose read as under :
'(2) The sums referred to in sub-section(1) shall be the following, namely : - ...
(c) in the case of a co-operative society, engaged in activities other than those specified in clause(a) or clause(b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed, -
(i) Where such co-operative society is a consumers' co-operativejsociety, forty thousand rupees; and
(ii) in any other case, twenty thousand rupees.
Explanation. -In this clause, 'consumers' co-operative society' means a society for the benefit of the consumers;
(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;'
10. The Short question which we are, therefore, called upon to decide in the facts of the present references is, whether the assessee, a co-operative society, is entitled to a deduction of the whole of the income derived from the letting of the shops to its 'B' class members by virtue of clause(e) of sub-section(2) of section 80P of the Act. The Revenue contends that income from letting of 'godowns or warehouses' used for any one of the three purposes, namely, storage, processing or facilitating the marketing of commodities alone is deductible under clause(e) of sub-section(2) of section 80P of the Act and not income derived from letting of shops wherein business in cloth is carried on by the allottee members of the society. In other words, according to the Revenue, income derived from the letting of godowns or warehouses alone is deductible under the said clause and not income derived from the letting of shops use for business in cloth. The learned counsel for the assessee on the other hand contends that the expression 'godowns or warehouses' must not be understood in their strict dictionary sense because that would defeat the very purpose of encouraging co-operative societies to build godowns and warehouses for the purpose of storage, processing or facilitating the marketing of commodities. According to him, the expression 'godowns or warehouses' must take colour from the purposes for which they are expected to be let, one of them being facilitating the marketing of commodities which would include sale and purchase of commodities. According to him, the words 'godowns or warehouses' must receive liberal interpretation bearing in mind the fact that the premises are to used for facilitating the marketing of commodities which would include every business activity directed towards the flow of goods and services from the producer to the consumer. He submitted that if such a broad meaning is not given to the expression 'godowns or warehouses', the object of the enactment would be defeated. We will consider these rival contentions immediately.
11. Under sub-section(1) of section 80P, the assessee must be a co-operative society. Under clause(e) of sub-section(2) of section 80P, a co-operative society must have income derived from the letting of godowns or warehouses and these godowns or warehouse must be let for the purpose of storage, processing or facilitating the marketing of commodities. In other words, if the godowns or warehouses are let for a purpose other than any of the aforesaid three purposes, the benefit of deduction under the said clause would not be available to the society. Therefore, in order to earn the benefit under clause(e) of sub-section(2) of section 80P, 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. This court, while interpreting section 14(3)(iv) of the 1922 Act and section 81(iv) of the Act before it came to be deleted by the Finance (No. 2) Act, 1967, held in Surat Vankar Sahakari Sangh Ltd. v. CIT : [1971]79ITR722(Guj) , that the exemption is available only in respect of incomejderived from letting of godowns or warehouses where the purpose of letting is storage, processing or facilitating the marketing of commodities. It is, therefore clear that if the godowns or warehouses is let for a purpose other than storage, processing or facilitating the marketing of commodities, the income derived therefrom by a co-operative society would not be deductible under clause(e) of sub-section(2) of section 80P of the Act which is the same as the repealed section 81(iv) of the Act. What is, therefore, exempt is income from the letting of godowns or warehouses used for any one of the three purposes. In the cases before us, it is not in dispute that the income in respect of which deduction is sought is derived from the letting of shops used for business in cloth. The question then is, whether income from shops in which either wholesale or sub-section(2) of section 80P of the Act.
12. In the Oxford English Dictionary, the word, 'godowns' means a warehouses or store for goods.'Warehouses', according to the said dictionary, is described; 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 warehouses) in which dutiable to pay the duty'. According to Webster's New Twentieth Century Dictionary, 'godown' means a warehouses and 'warehouse' means 'a building where wares, or goods, are stored, before being distributed to retailers : a storehouse'. In Stroud's Judicial Dictionary (Volume 5, fourth edition), we find the following observation :
'A 'warehouses', in common parlance, certainly means as place where a man stores or keeps his goods which are not immediately wanted for sale'.
13. Reliance was placed on behalf of the assessee on the observations immediately following :
'In 1751, on Clerks of Assize Act. 1698 (10 Will, 3, c. 12), it was held that 'warehouses' meant not mere repositories for goods but such places where merchants and other traders keep their goods for sale in the nature of shops, and whither customers of to view them.'
14. It must immediately be mentioned that this is not a common parlance meaning but a meaning given to a warehouses referred to in Clerks of Assize Act, 1698. In Black's Law Dictionary (fifth edition), 'warehouses' 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'. 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, Halsbury's Laws of England (forth 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 : A 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 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 ajwarehouse.'
15. It will appear from the above dictionary meanings of 'godowns' and 'warehouses' that both these terms are synonymous and interchange able. 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. Shops in which wholesale or retail business in cloth is carried on cannot, therefore, come within the meaning of 'godowns' or 'warehouse'. Realising that shops used for the purpose of cloth business would not be covered within the ordinary meaning of 'godowns' or 'warehouse', the learned counsel for the assessee submitted that in interpreting the relevant clause of section 80P, the court should not hold the dictionary in one hand and the statute in the other and assign a literal dictionary meaning to the words 'godowns' or 'warehouse'. In this connection, he invited our attention to the observations of the Supreme Court in CGT v. N. S. Getti Chettiar : [1971]82ITR599(SC) of the said judgment, the Supreme Court has observed as under :
'Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purposes that they are intended to serve.'
16. In our view, these observations only mean that the dictionary meaning of a word or expression used in statute is relevant but not sacrosanct and the court will not hesitate to depart from the dictionary meaning if the context and the setting in which the word or expression is used so suggests or demands. Therefore, unless we are satisfied that the context and setting in which the words 'godowns' and 'warehouse' are used require a wider meaning than the dictionary meaning to be given, there would be no justification in including shops let for cloth business within the meaning of the expression 'godowns or Warehouse'. We would also be justified in departing from the literal meaning to be given to these expressions if we are satisfied that the literal interpretations is likely to produce a manifestly unjust result which could not have been intended by the Legislature. We shall presently point out that if a literal meaning is given to the expression 'godowns or warehouses' used in clause(e) of sub-section(2) of section 80P, it is not likely to produce any absurd or manifestly unjust result nor would such an interpretation run counter to the legislative intent.
17. It will appear from the recommendation made by the Taxation Enquiry Committee that it considered the extension of a system of warehouses in rural areas of importance and with a view to encouraging co-operative societies to contract warehouses which are likely to prove useful in the development of rural economy, it was thought that such co-operative societies should enjoy exemption from tax on such part of their income as is derived from the letting of godowns and warehouses. In other words, the Committee was of the view that unless total exemption is granted so far as income derived from letting of godowns and warehouses are concerned, co-operative societies will not be encouraged to construct godowns and warehouse and that would in the long run prove detrimental to rural economy. This would be so because unless provision is made for storage of agricultural produce, etc., Through co-operative endeavor, the producers who do not have storing capacity would be required to dispose of their produce at unremunerative prices for want of storage capacity. It is for this reason that the Committee though that the co-operative sector must be encouraged to construct godowns and warehouses to provide storagejfacilities for the development of rural economy. It was, therefore, though that even if the annual income exceeds Rs. 20,000, the same should be deductive if it is derived from the letting of godowns or warehouse belonging to a co-operative society and used for the purpose of storage, processing or facilitating the marketing of commodities. Viewed in this background, there cannot be any doubt that the Legislature desired to extend the benefit of exemption of the whole income to co-operative societies if derived from the letting of godowns and warehouse needed for the development of rural economy. It is for that reason that the Legislature limited the benefit to income from godowns and warehouses, for, if it was the intention of the Legislature to extend the benefit to income derived by the letting of shops, etc., nothing would have been easier than to substitute the words 'any premises' for the words 'godowns or warehouse'. The Legislature advisedly used the words 'godowns or warehouse' because the intention was to encourage co-operative societies to construct godowns and warehouses which would prove useful to the rural economy. If we limit the benefit of income derived by a co-operative society from letting of godowns or warehouse, it will meet with the legislative intent rather than defeat it as was urged on behalf of the assessee. Literal interpretation of the words 'godowns or warehouse' will not lead to any absurdity or produce any manifestly unjust result. In fact, if the words 'godowns or warehouse' are not given their literal meaning and if the benefit is extended to shops or any other premises used for the purpose of carrying on business in textiles, etc., unintended benefit would be derived by such co-operative societies. The intention is not to encourage construction of shops or other premises by co-operative societies but the legislative intent is to encourage construction of godowns and warehouses with a view to providing storage and other facilities to those who are otherwise unable to afford storing facilities for themselves.
18. Placing strong reliance on the decision of this court in CIT v. Gujarat State Warehousing Corporation : [1980]124ITR282(Guj) , the learned counsel for the assessee argued that the words 'facilitating the marketing of commodities' used in clause(e) of sub-section(2) of section 80P which include all activities including buying and selling should give colour to the words 'godown or warehouses' and wherever such activity is carried on, it should be understood to be a godowns or warehouse for the purposes of this clause. In the decision on which reliance is placed, the court was concerned with the interpretation of section 10(29) of the Act. According to that provision, in the case of an authority constituted under any law for the time being in force for the marketing of commodities, any income derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities would be exempt and not includible in computing the total income of the assessee. Under section 10(29), therefore, the assessee would be entitled to exemption if (i) it is an authority constituted under any law for the time being in force; (ii) it is an authority constituted for the marketing of commodities; and (iii) the exemptible income is derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. The first two requirements of section 10(29) are not to be found in clause(e) of sub-section(2) of section 80P with which we are concerned. The third requirement of section 10(29) which is also the requirement of the clause with which we are concerned was never in controversy in the case on which reliance is placed. In that case the court was required to consider the first two question only, namely, whether the Gujarat State Warehousing Corporation was an authority constituted under any law in force and whether it was constituted for the 'marketing of Commodities', and the court observed that marketing includes all business activities directed towards thejflow of goods and services from producer to consumer. It refused to restrict the meaning of the term to mere buying and selling activity as was urged by the Revenue. Now, the expression 'marketing of commodities' used in the first part of section 10(29) undoubtedly connotes a wider meaning having regard to the context and setting in which it appears whereas the expression 'facilitating the marketing of commodity. In taking the view that the expression 'marketing' includes all the business activities directed towards the flow of goods and services from producer to consumer, this court placed strong reliance on the observations of the Allahabad High Court in U. P. State Warehousing Corporation v. ITO : [1974]94ITR129(All) . If we turn to that decision, we find that after interpreting the expression 'marketing of commodities' found in the first part of section 10(29) of the Act. Satish Chandra J., speaking for the Division Bench, proceeded to observe as under (at p. 134) :
'The expression 'for facilitating the marketing of commodities' cannot possibly refer to the function of buying and selling on one's own behalf because when a person buys or sells; he, according to the definition propounded by the revenue, indulges in marketing. He cannot be said to facilitate marketing. The use of the word 'facilitating' seems to refer to functions like gradation or standardization in the the warehouses or giving of facilities by way of distribution by the authorities running the warehouses of goods or commodities belonging to others.'
19. These observations do support the contention canvassed on behalf of the Revenue that the expression 'facilitating the marketing of commodities' would suggest a stage prior to the stage of sale of the commodity. We need not examine this contention in detail because we are of the opinion that it order to earn the benefit of total exemption under clause(e) of sub-section(2) of section 80P, the assessee society must show that it has derived income from the letting of godowns or warehouses. It is only after the assessee has succeeded in establishing that the income is derived from the letting of godowns or warehouse, that the court would be concerned in considering the next question whether the godowns or warehouse were let for any one or more of the three purposes set out in the clause. We have already come to the conclusion that the rental income derived from the letting of shops used for business in cloth cannot be said to be income derived from the letting of godowns or warehouses. Once this requirement is not satisfied, it is not necessary to consider whether the godowns or warehouses were in fact used for one or more of the purpose set out in clause(e) of sub-section(2) of section 80P of the Act. However, we are inclined to think that the words 'facilitating the marketing of commodities' would not include the sale of cloth or other finished products in premises used purely for business purposes. We are, however, not impressed by the argument that the words 'facilitating the marketing of commodities' would lend colour to the words 'godowns of warehouses' so as to enlarge their meaning beyond their literal meaning.
20. For the reason stated above, we are of the opinion that the Tribunal was in error in holding that the assessee-society was entitled to exemption of the entire rental income derived from the letting of the shops in question under section 80P(2)(e) of the Act. In the view that we have taken, we answer the question referred to us for our opinion in the negative, that is, in favour of the Revenue and against the assessee. The references are disposed of accordingly with no order as to costs.
21. In view of the above, the matters will go back to the Tribunal injthose cases where the Tribunal has left certain alternative contentions raised by the assessee undecided.