Then they (the Devas) said to breath (scent): 'Do thou sing out for us.' 'Yes,' said breath, and sang. Whatever delight there is in breath (smell), that he obtained for the Devas by singing; but that he smelled well, that was for himself. The Asuras knew: 'Verily, through this singer they will overcome us.' They therefore rushed at the singer, and pierced him with evil. That evil which consists in smelling what is bad, that is that evil.

In plain words: Next the gods asked the sense of smell to sing. It also kept some of the pleasure of smelling for itself. So the demons struck it with evil, and that is why we can smell bad things.