COMMNR. OF INCOME TAX, NAGPUR vs BABA SAHEB KEDAR G.&P. COOP.SOCIETY LTD.

The Supreme Court addressed the issue of whether the rates prescribed in the Agreement between the assessee(s) and the Federation(s) for ginning and pressing charges constitute a composite charge, including godown rent. The Court held that the Department's ad-hoc attribution of fifty percent of the charges as rental income was inappropriate, as it failed to consider various factors, including the provisions of the Cotton Ginning and Pressing Factories Act, 1925. The Court directed that the Department must examine the total income of the assessee(s) and apply the principle of proportionality for future assessments, thus disposing of the appeals with no order as to costs.