TMI Blog2003 (2) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10(20) of the Income-tax Act, 1961 (hereinafter referred to as 'The Act') while computing the total income of a previous year of any person, any income of a local authority which is chargeable to tax under the head income from house property, capital gains, income from other sources or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area, shall not be included. 3. The term 'Local Authority' has not been defined in the Act. The term Local Authority has however been defined under the General Clauses Act, 1897. Under section 3(31) the term 'Local Authority' has been defined as follows: "'Local Authority' means a Municipal Committee, a District Board, a body of Port Commissioners, or other authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund." The Act being a Central Act, the definition contained in section 3(31) of the General Clauses Act, 1897 has to be considered in coming to a conclusion whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, social welfare services etc. etc. broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority. In addition to the above the Honourable Supreme Court also adopted the another test laid down in the decision of Supreme Court in Municipal Corporation of Delhi v. Birla Cotton Mills AIR 1968 SC 1232, wherein Hidayatullah, J., described some of the attributes of local bodies as subordinate branches of governmental activity. They are democratic institutions managed by the representative of the people. They function for public purposes and take away a part of the Government affairs in local areas. They are political sub-divisions and agencies which exercise a part of State functions. As they are intended to carry on local self-government the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case in which the Supreme Court applied the tests laid down in R.C. Jain's case in coming to the conclusion that U.P. Forest Corporation was not a Local Authority under section 10(20) of the Act, 1961. The Assessing Officer accordingly rejected the claim of the Assessee for adopting its status as a 'Local Authority'. 7. Thereafter the Assessing Officer made assessment of the income as per the Return of Income filed by the Assessee. The Assessing Officer noticed that the Assessee had claimed a sum of Rs. 1,40,31,211 as loss and the Assessee also claimed carry forward of this loss. The Assessing Officer was of the view that under section 42(2) of the VIDC Act, the net deficit, if any, in respect of any of the objects of the assessee shall be solely borne by the State Government. He was therefore of the view that the loss claimed was not Assessee's loss and therefore no carry forward of losses can be allowed. 8. Thereafter the Assessing Officer noticed that in June, 1997 the Assessee had issued bonds aggregating Rs. 100 Crores for augmenting the funds necessary for completing its projects. In connection with the said public-issue expenditure to the extent of Rs. 7,95,21,198 was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer this admission by the Assessee that its business has not commenced had very serious consequences. The first consequence being that no loss from business can be claimed and all expenditure whether of revenue or of capital nature should be capitalized. The Assessing Officer relied on the decision of the Honourable Supreme Court in the case of Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 for the above proposition. The Assessing Officer therefore was of the view that the Profit Loss Account of the Assessee can never be the basis to determine the income of the Assessee. The Assessing Officer thus in effect concluded that there could be no computation of income or loss from business, as the business had not yet commenced. The second consequence was that though the business of the Assessee had not commenced yet the Assessee was in receipt of income which can be classified under the other heads of income viz., Income from other sources and Income from House Property and these incomes will have to be determined under the respective heads of income. The further consequence was that the Assessee cannot seek to set off the income chargeable under the head income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged to works 24,62,58,111 Hire Charges of machinery/equipts. 8,74,395 Fishing rights/lease rent 1,23,149 Fines/Penalties 5,25,297 Misc. receipts 36,60,055 ------------ ------------- Total 3,91,75,777 56,11,56,458 ------------- Excess of Expenditure over Income allowed to be Capitalized as pre commencement Expenses 52,19,80,681 ------------- 56,11,56,458 ------------- The Assessing Officer allowed Rs. 52,19,80,681 to be capitalized as pre-commencement expenses. The total income was thus determined as follows: Income from House property: Rs. 15,11,754 Income from other sources Rs. 8,82,54,420 ----------------- Total Income Rs. 8,97,66,170 ----------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income from exploitation of a business asset and therefore should be construed as income from business. The Assessee relied on the decision of the Honourable Supreme Court in the case of Universal Plast Ltd. v. CIT 237 ITR 454 (SC). If construed as a Business income the assessee pleaded that the expenditure incurred in the form of interest paid to bondholders (which is much more than the income received from the property) be allowed to be set off against the said income and capitalize the net expenditure." Apart from the above the Assessee raised some additional grounds before the CIT(A) and these additional grounds were as follows: "(i) That if the status of the Assessee is not held to be that of a "Local Authority", then hold that the Assessee is an Authority whose income is exempt from tax under section 10(20A) of the Act. (ii) Alternatively hold that the Assessee is a State entitled to exemption of tax on its income under Article 289(1) of the Constitution of India. (iii) Alternatively hold that the Assessee is a Trust eligible for exemption under section 11 of the Act." 15. The findings and conclusions of the CIT(A) on the various grounds raised by the Assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d liabilities of the corporation vest in the State Government. In the light of the ratio laid down by the Honourable A.P. High Court in the case of APSRTC v. CIT 47 ITR 101 (AP) affirmed by the Honourable Supreme Court in 52 ITR 524 (SC) and the decision of the Honourable Bombay High Court in the case of Vidarbha Housing Board v. ITO 92 ITR 430 (Bom.), the CIT(A) held that the Assessee cannot be a State whose income is exempt under Article 289(1) of the Constitution. 4. With regard to the claim of the Assessee that it is a trust whose income is exempt under section 11 of the Act, the CIT(A) held that to claim exemption under section 11 there must be a trust deed and an application made under section 12A to the Commissioner of Income Tax and a registration under section 12AA. The CIT(A) held that the Assessee not having raised this issue before the Assessing Officer it was not possible to give any findings in the appeal as held by the Honourable Supreme Court in the case of CIT v. U.P. Forest Corporation 230 ITR 945 (SC). She also held that the Assessee was a Company within the meaning of section 2(17) of the Act and therefore cannot be held to be a Trust whose income is exempt un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore there was no occasion for the CIT(A) to have rendered any decision on this aspect at all." 16. Aggrieved by the order of the CIT(A) the assessee has preferred the present appeal. The original grounds of appeal were not specific, were argumentative in nature and therefore we directed the Learned Counsel for the assessee to raise specific grounds of appeal. On our direction the Learned Counsel has filed specific grounds of appeal. The assessee has also requested that the following additional grounds of appeal be allowed to be raised and decided: "The Appellant Corporation started its business on the inception and the Income Expenditure Account and the Balance Sheet of the year under consideration should be read keeping in view this position. The Net Deficit after deducting all the allowable business expenditure should be allowed to be recast and worked out and then the resulting losses should be allowed to be carried forward as per the provisions of the Income-tax Act, 1961." The additional ground can be decided on the facts available on record and we are of the view that the assessee should not be denied the opportunity of putting forth his objections on mere technica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Krishna Velley Development Corporation - a statutory corporation of the State, in raising funds by floating bonds-private/public issue, has been very much encouraging- Accordingly Government of Maharashtra considers it expedient to set up a corporation called 'Vidarbha Irrigation Development Corporation' for the purpose of completion of 10 selected ongoing irrigation projects through a time bound programme. The Corporation would be a body corporate and functionary body consisting of official and non-official members including experts. The corporation would get initially funds from the State Government by way of grants, subventions, loans, advances etc. The Corporation is being empowered and entrusted with exhaustive powers and functions to complete 10 selected ongoing projects through a time bound programme. Power is also taken to the State Government to dissolve the corporation on achieving the objectives for which the corporation is established." 18. Ground No. 1: "The Assessing Officer and Learned CIT(A) erred in arriving that the decision of Honourable Supreme Court in the matter of Union of India v. R.C. Jain in Delhi Development Authority case is not applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 SC 951 has laid down the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority. The question before the Honourable Supreme Court in the said case was as to whether Delhi Development Authority was a local Authority within the meaning of Payment of Bonus Act, 1965 and if it were a Local Authority the provisions Payment of Bonus Act did not apply to it. The term Local Authority was not defined in the Payment of Bonus Act, 1965. The Court therefore applied the definition of a Local Authority as contained in section 3(31) of the General Clauses Act, 1897. The following were the attributes and characteristics which the Honourable Supreme Court has laid down in deciding the question whether an authority is a local authority: "1. First, the authorities must have separate legal existence as corporate bodies. They must not be mere governmental agencies but must be-legally independent entities. 2. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. 3. Next, they must enjoy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of R.C. Jain in the light of the rival submissions. 23. With regard to the 1st attribute laid down by the Honourable Supreme Court viz., that the authority must have separate legal existence as corporate bodies and must not be mere government agencies, it is not in dispute that under section 3(2) of the VIDC Act, the Assessee is a body corporate having perpetual succession and a common seal, with power to contract, acquire, hold and dispose of property, both movable and immovable and to do all things, necessary for the purpose of the VIDC Act, and it may sue be sued by its corporate name. Therefore the Assessee satisfies the first attribute laid down by the Honourable Supreme Court. 24. The 2nd attribute laid down by the Honourable Supreme Court is that they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly be elected by the inhabitants of the area. This attribute is in two parts, the first part refers to the area of functioning of the Authority and lays down that such area should be a defined area. The second part deals with the constitution of the authority and lays down that its members must comprise partly, directly or indirect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the geographic area of operation of the assessee from a mere perusal of the VIDC Act. Besides this we agree with the conclusion of the CIT(A) that the area administered by a local authority should be of such type and size which is clearly manageable by a municipal body and that the area administered by the Assessee extending to over 9 districts of Vidarbha cannot be said to be a defined area. This view will be in consonance with the concept of local self government for which local authorities exist. 28. Regarding the second part of the Second attribute that the members of the authority must ordinarily, wholly, or partly directly or indirectly be elected by the inhabitants of the area, section 4(1) of the VIDC Act with regard to the members of the VIDC provides as follows: "(a) The Minister of Irrigation - Ex-officio Chairman (b) One non-official member to be nominated by the State Government - Vice Chairman; (c) The Chief Secretary to the Government - Ex-officio Vice-Chairman (d) Secretary (1) to Government, Irrigation Department - Ex-officio Managing Director; (e) Secretary (Command Area Development) to Government, Irrigation Department - Ex-officio member; (f) Secre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24-10-2000 whereby for the existing section 4(1)(b) of the VIDC Act, the following clause (b) was substituted: "(b) Two non-official members from Vidarbha Region to be nominated by the State Government - Ex-offico Vice-Chairman." The amendment being clarificatory in nature should be deemed to apply retrospectively. This according to him is sufficient to hold that there are enough members who are elected by the inhabitants of Vidarbha. 29. We have considered the rival submissions. We find that the members are not either directly or indirectly chosen by the inhabitants of the Vidarbha region. Element of popular representation of the people of Vidarbha is clearly missing. Even the amendment to the VIDC Act only refers to two non-official members and such non-official members need not necessarily be elected representatives of the Vidarbha region. Besides this as a fact there was no members of the assessee who were either MLA's, MLC's from the Vidarbha region. We are therefore inclined to conclude that the Second attribute laid down by the Honourable Supreme Court in R.C. Jain's case is not fulfilled by the assessee. While dealing with the second attribute as laid down in R.C. Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l enactments. 31. The Learned Standing Counsel on the other hand submitted that under the provisions of section 2(c) of the VIDC Act and submitted that Area of operation as stated in the Schedule is 10 projects which were handed over to it by the State Government. Under section 18 the functions of the Corporation are restricted only to promote and operate the 10 projects which are mentioned in the Schedule to the VIDC Act. In other words it is a case where the assessee has to merely execute the work entrusted to it by the State Government. In the process it enjoys some powers to execute the work entrusted to it. Executing projects alone does not give any sort of autonomy to the Corporation. He referred to the letter dated 8-10-2001 of the assessee wherein the assessee had stated that they had not executed any of the projects except the 10 projects transferred to it by the State Government. He pointed out that in the said letter it has been admitted by the assessee that they have no powers to do any project without the approval of the State Government. 32. We have considered the rival submissions. We are of the view that the purpose for which the corporation was established as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this behalf. Under Chapter VI the Assessee has financial autonomy in the sense that under section 35 it has power to spend such sums as it thinks fit for the purposes authorized under the Act from and out of the fund of the Corporation referred to in section 30 or from the reserve and other funds referred to in section 38. Under section 33 it has power to borrow upto Rs. 1,000 crores subject to such conditions as may be prescribed in this behalf. But there is rider to all these powers under section 46 which provides that the Corporation shall in each financial year-prepare and submit to the State Government for approval an annual financial statement and the programme of work for succeeding financial year and the State Government may approve such financial statement and the programme of work of the Corporation as submitted by the Corporation or with such variations as the State Government may think fit. Considering the various provisions of the VIDC Act we are of the view that degree of autonomy enjoyed by the Assessee is negligible and there is no occasion for it to make any decision on questions of policy affecting the area administered by it. The 3rd attribute is therefore clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sewerage, town planning and development, roads, markets, transportation, social welfare services etc. 35. The Learned Standing Counsel referred to the provisions of section 18 of the VIDC Act and submitted that a perusal of the various functions performed by the Assessee would show that these functions are not functions which are entrusted to municipal bodies like provision of amenities to the local inhabitants. According to him irrigation is not a function which municipal bodies normally undertake and it is not a civic duty. Generally no municipality is given the job of ensuring proper irrigation facilities. His next submission on the provisions of section 18 and the VIDC Act as a whole is that nowhere the Assessee is cast a duty to supply water. The various provisions only enable the Assessee to complete the irrigation projects entrusted to it. On the provisions of section 20 which enable the Assessee to collect water charges for domestic, industrial and agricultural use, he submitted that the Act nowhere empowers supply of water directly to the inhabitants. Section 20 only enables the Assessee to supply to the State Government, Local Authority, Governmental agencies, cultivat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessee has to rehabilitate persons affected by any of the irrigation projects and in the process they perform the function of health, education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. is a far fetched argument. The person affected by the irrigation project of the Assessee cannot be said to be inhabitants of the area where the Assessee operates. They are only a part of the inhabitants. These provisions are merely provisions providing for compensation to the affected persons to ensure that he is put in the same position as he was before his displacement by reason of the irrigation project. We do not think that the Assessee is entrusted with any duties of provision of health, education services, town planning etc. We are of the view that the Assessee does not fulfil 4th attribute laid down by the Honourable Supreme Court in R.C. Jain's case. 38. The 5th and last attribute laid down by the Honourable Supreme Court in R.C. Jain's case is that the authority must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation facility provided by the Assessee at 50% of the charges paid by the persons who use the irrigation facility, by itself is not enough to conclude that there is compulsory exaction by the Assessee. He submitted that the occupiers of land in the command area whether they use the facility of irrigation or not are bound to get the facility of water due the fact that they would get the water facility due to the natural water stream as well as seepage of water owing to its closeness with the natural stream of water. This is the reason why they are asked to pay 50% of the water charges leviable. He next submitted that even as per the provisions of section 59 of the Maharashtra Irrigation Act, 1976, the water charges supply rates are determined by the Zilla Parishad and not by the State Government and therefore it cannot be said that Assessee has any powers of compulsory exaction. 41. We have considered the rival submissions. In R.C. Jain's case the Honourable Supreme Court has observed as follows: "In the first place when it is said that one of the attributes of a local authority is the power to raise funds by the method of taxation, taxation is to be understood not in any fine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government agencies, cultivators and water users associations. Thirdly, the water charges are payable in proportion to the consumption. The features are more like recovering cost for supply of an amenity. Therefore the assessee cannot be said to have any powers of compulsory exaction of taxes. Under section 24 of the VIDC Act, the assessee can exercise all powers of the State Government under the Maharashtra Irrigation Act, 1976. Even the tax on non users which the assessee can claim to levy under section 46 the Maharashtra Irrigation Act, 1976 can be levied only on occupiers of lands within the irrigable command of a canal. Even these occupiers if they have a well through which they irrigate the land, no water charges can be levied. As rightly contended by the Learned Standing Counsel, the occupiers of lands situate in a irrigable command of a canal will certainly benefit by the natural stream or seepage of water owing to nearness of the location of their land near the irrigation project. Under section 59 of the Maharashtra Irrigation Act, 1976 water rates are determined by the appropriate authority, which is the Zilla Parishad under section 59 of the said Act and not by the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e various case laws relied upon by the learned Counsel for the assessee with regard to the 1st Ground of appeal. In R.C Jain's case, the Hon'ble Supreme Court was dealing with the Delhi Development Authority (DDA) constituted under the Delhi Development Act, 1957. It is clear from the perusal of the decision in R.C. Jain's case that the DDA functions in a defined area and they had ascertained degree of autonomy in decision making relating to the policies and the were entrusted with the management of civic duties which are wholly performed by the Municipality. It was also found that they were under the control of local fund and had power of levy of taxes. We have already found in the present case that the assessee did not fulfil many of the attributes as laid down by the Hon'ble Supreme Court in R.C. Jain's case. In coming to this conclusion, we have analyzed the provisions of the VIDC Act also. We find that the provisions of the VIDC Act and DDA Act, 1957 are not in pari materia the same. The provisions are made in a different context keeping in view the objectives sought to be achieved by the Delhi Development Authority. In the case of Kashi Vidyapith v. Motila AIR 1996 SC 2705, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case relied upon by the learned counsel for the assessee the authority created has substituted the functions of a local authority. Such feature is not in the present in the case of the assessee. 45. Apart from the above we find from a perusal of the various provisions of the Income-tax Act, 1961, that a corporation established by the Central or State Act is assessable only in the status of a company as defined in section 2(7) of the Income-tax Act. Section 2(7) defines an assessee as follows: "'Assessee' means a person by whom any tax or any other sum of money is payable tinder this Act, and includes:- (a) every person in respect of whom any proceedings under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed to be an assessee in default under any provision of this Act. (c) Every person who is deemed to be an assessee in default under any provision of this Act" Section 2(17) defines Company as follows: "'company' means- (i) any Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or judicial person was formed or established or incorporated with the object of deriving income, profits or gains," The assessee corporation clearly fits in the definition of a company and was rightly assessed in the status of a company by the revenue authorities. From the definition of a person under section 2(31), it is clear that the company and local authority are two different assessable entities. Once a person falls in the definition of a company, it can never fall under the category of local authority. Even on reading the plain provisions of the Income-tax Act, it is not possible to accept the contention of the assessee that the assessee is assessable as a local authority and not as a company. 46. For the reasons stated above, we uphold the order of the CIT(A) insofar as her conclusions that the assessee is not a 'Local Authority'. Ground No. 1 is accordingly dismissed. 47. Ground No. 2: "It is submitted that the CIT(A) wrongly arrived at the conclusion that the Appellant Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen referred to the decision of the Hon'ble Supreme Court in the case of Gujarat Industrial Development Corpn. v. CIT [1997] 227 ITR 414 wherein the Hon'ble Supreme Court had laid down that the expressions "planning, development or improvement of cities, towns and villages or for both" appearing in section 10(20A) of the Income-tax Act, 1961 should be understood in a wide sense and not in a narrow sense. Thus, according to the assessee, even if indirectly, the functions mentioned in section 10(20A) of the Act are performed by the assessee, the assessee is entitled to claim the exemption of its income. He also relied on the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Rajasthan Land Development Corpn. [2002] 121 Taxman 573 wherein it was held that the pre-dominant activities of the corporation were related to agricultural and development activity of the same for the purpose of planned development; and the agricultural land could not be isolated from the development of villages and therefore, the lands feel within the ambit of corporation engaged into the activities of planning, development and improvement of agricultural lands which related to planning, develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted by or under any law for the purpose of satisfying housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages or for both, for the following reasons: Firstly, the object of the Act as spelt out in the Preamble is for the purpose of completing certain irrigation projects. Therefore, it cannot be said that the assessee has been established with the objective of satisfying the need for housing accommodation as laid down in the first part of section 10(20A) of the Income-tax Act, 1961. Secondly, the second part of section 10(20A), deals with corporation established for the purpose of planning, development or improvement of cities, towns and villages. It cannot be disputed that the main purpose of the VIDC Act is for completion of the irrigation projects which are handed over to the assessee for completion by the State Government. There is no planning development or improvement of cities, towns and villages in carrying out the purposes for which the assessee has been formed. Thirdly, as rightly contended by the learned Standing Counsel, we find that under section 50 of the VIDC Act, the rehabilitation is to be carried out on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see reads as follows: "That the CIT(A) has erred in holding that the Appellant Corporation is not an instrumentality of State and is not 'State' within the meaning of Article 289 of the Constitution of India and thereby deprived the Appellant Corporation from the benefit of immunity from Income-tax." 53. We have considered the contentions of the learned counsel for the assessee as well as the Standing Counsel for the revenue. This ground was not raised before the Assessing Officer. Under section 11 of the Income-tax Act, 1961, the income derived from the property held under the trust wholly for charitable or religious purposes to the extent to which such income is applied for such purposes or accumulated or set apart to the extent permitted under section 11 shall not be included in the total income of the previous year. Under section 12A, an assessee should make an application for registration of the trust before the Commissioner of Income-tax. Section 12AA lays down the procedure for registration of the trust. It is only after the registration under section 12AA is granted, the assessee can seek to claim the exemption under section 11 of the Income-tax Act. The procedure for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigated and examined by a proper forum under the Act. These proceedings arise out of the writ petitions which have been filed challenging the correctness of the decision of the Tribunal in respect of the assessment years 1977-78 and 1980-81 and that of the assessing authority for the assessment year 1984-85. In our opinion, the proper course to adopt, while allowing these appeals, would be to require the assessing authority to examine the question as to whether the respondent is entitled to the benefit under section 11(1) of the Act. Before concluding, we would like to observe that the High Court ought not to have entertained the writ petitions when adequate alternative remedy was available to the respondent. Under the peculiar facts and circumstances of the present case and inasmuch as the litigation between the parties has been going on for a number of years, we do not think it will be appropriate to dismiss these appeals on this ground at this late stage. We, however, emphasise that petitioners should not normally short-circuit the procedure provided by the taxing statute and seek the redress by filing a petition under article 226 of the Constitution of India. For the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State Government. In the case of Andhra Pradesh State Road Transport Corpn. v. ITO [1964] 52 ITR 524, the Hon'ble Supreme Court affirmed the decision of the Hon'ble High Court holding as follows: "The Andhra Pradesh State Road Transport Corporation constituted under the Road Transport Act, 1950 by a notification issued by the Andhra Pradesh Government, is not immune from liability to income-tax on income derived from its trading activities, under article 289 of the Constitution of India, on the ground that its trading activities were carried on by or on behalf of the government of the State. Though the majority of its shares are owned by the Andhra Pradesh Government and its activities are controlled by the State, the Corporation has a separate personality of its own, the trading activities are the trading activities of the Corporation and the profit and loss arising therefrom are the profit and loss of the Corporation. The income derived by the Corporation from its trading activities cannot be said to be the income of the Andhra Pradesh State under article 289." The statutory corporation is a separate juristic entity. Whatever may be the control exercised by the State G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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