TMI Blog2018 (7) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub clause (d) expression used is established under the Unit Trust of India Act . The Section thus uses both the expressions by or under . The expression established by or under an Act have come for consideration before this Court on several occasions. As we revert back to the provisions of 1976, Act. The very preamble of that Act reads an Act to provide for the Constitution of an Authority for the development of certain areas in the State into industrial and urban township and for masses connected through with . Thus, the Act itself provides for constitution of an authority. Section 2(b) of the 1976 Act defines Authority as authority constituted under Section 3 of the Act. This Court having already laid down in Dalco Engineering (2010 (3) TMI 912 - SUPREME COURT OF INDIA) that establishment of various financial corporations under State Financial Corporation Act, 1951 is establishment of a Corporation by an Act or under an Act. We are of the view that the above ratio fully covers the present case and we have no doubt that the Authority have been established by the 1976 Act and it is clearly covered by the Notification dated 22.10.1970. It is further relevant to note th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( C ) No . 36158 / 2016 ( XI ) , SLP ( C ) No . 35438 / 2016 ( XI ) , SLP ( C ) No . 35436 / 2016 ( XI ), SLP ( C ) No . 36200 / 2016 ( XI ) , SLP ( C ) No . 37683 / 2016 ( XI ) , SLP ( C ) No . 35440 / 2016 ( XI ) , SLP ( C ) No . 34533 / 2016 ( XI ) , SLP ( C ) No . 37681 / 2016 ( XI ) , Diary No ( s ). 9866 / 2017 ( XI ) , SLP ( C ) No . 8116 / 2018 ( XI ) , SLP ( C ) No . 26496 / 2017 ( XI ) And Diary No ( s ). 14969 / 2017 ( XI ), For The Petitioner : Mr. K. Radhakrishnan, Sr. Adv., Mr. M.R. Rao, Adv., Mr. D.L. Chidanand, Adv., Mr. Arjit Prasad, Adv., Mr. Shekhar Vyash, Adv., Mr. Deepak Parkash, Adv. And Mrs. Anil Katiyar, AOR For The Respondent(s) Mr. Balbir Singh, SR. Adv., Mr. Jasmeet Singh, AOR, Mr. Naman Joshi, Adv., Ms. Ruhsheet J. Saluja, Adv., Mr. Hemant Jain, Adv., Mr. S.N. Tayag Rajan, Adv., Mr. Mahinder Singh, Adv., Mr. Nitesh Shrivastava, Adv., Mr. R.S. Saluja, Adv., Ms. Rubal Maini, Adv., Mr. Sandeep Chilana, Adv., Mr. Mohd. Raiz, Adv., Mr. Prbhu Dayal Chilana, Adv., Ms. Seema Jos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority held that the respondent Bank is assessee in default. The default was computed and demand notice as per Section 156 of the IT Act, 1961 was issued. Penalty proceeding was also separately initiated. The Canara Bank aggrieved by the order of the Assessing Officer dated 28.02.2013 filed an appeal before the Commissioner of Income Tax (Appeals). Before the Commissioner, the bank relied on Notification dated 22.10.1970 issued under Section 194A(3) (iii)(f) of the IT Act, 1961. The Appellate Authority vide its judgment dated 02.12.2013 allowed the appeal setting aside the order of the Assessing Officer. The Revenue aggrieved by the judgment of the Appellate Authority filed an appeal before the Income Tax Appellate Tribunal. The Tribunal also held that payment of interests by the banks to the State Industrial Development Authority does not require any deduction at source in terms of Section 194A(3)(iii)(f). 6. The Revenue aggrieved by the order of the Tribunal filed an appeal under Section 260A of the Act before the High Court. The Division Bench of the High Court vide its judgment dated 04.04.2016 has dismissed the appeal. The Division Bench came to the following conclusions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and are not entitled for exemption. He has submitted that CIT Appeals, Income Tax Tribunal as well as High Court erred in not correctly construing the Notification dated 22.10.1970 and had wrongly extended benefit under Section 194(3)(iii)(f). 8. Learned senior counsel appearing for the different banks have refuted the above submissions of learned senior counsel for the appellants. It is submitted that Section 3 of 1976 Act provides that the State Government may by notification, constitute for the purpose of this Act, an authority to be called (Name of the area) Industrial Development Authority, for any Industrial Development Area . It is submitted that Authority is established under the 1976 Act. Referring to provisions of State Bank of India Act, 1955, Life Insurance Corporation of India Act, 1956, it is submitted that statute provides for establishing of the corporation by virtue of a notification by the Central Government. It is submitted that in similar manners Authority has been established by issuing a notification, hence, Authority has to be treated as established by the 1976 Act. Alternatively, it is submitted that the legislature has used the words by and under i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any cooperative society engaged in carrying on the business of banking (including a cooperative land mortgage bank), or ( b) any financial corporation established by or under a Central, State or Provincial Act, or ( c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or ( d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or ( e) any company or cooperative society carrying on the business of insurance, or ( f) such other institution, association or body [or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; 11. In the present case notification on which reliance has been placed by the respondent is Notification dated 22.10.1970 issued under Section 194A(3)(iii)(f), hence, it is necessary to refer to the entire Notification dated 22.10.1970 which is to the following effect: Notification No. S.O. 3489 [No. 170 (F.No.12/164/68ITCC/ ITJ).], Dated 22.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty, of contracting obligations and of suing and being sued, of enjoying privileges and immunities in common and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred on it, either at the time of its creation or at any subsequent period of its existence. 14. This Court in S.S. Dhanoa vs. Municipal Corporation, Delhi and Others (1981) 3 SCC 431 had elaborately considered the concept of Corporation. This Court referred and relied the definition of Corporation as given by Chief Justice Marshall in celebrated case of Dartmouth College v. Woodward, NH 4 Wheat 518, 636:4 L Ed 629 . It is useful to extract paragraph Nos. 8 and 9 of the judgment which are as follows: 8. A corporation is an artificial being created by law having a legal entity entirely separate and distinct from the individuals who compose it with the capacity of continuous existence and succession, notwithstanding changes in its membership. In addition, it possesses the capacity as such legal entity of taking, holding and conveying property, entering into contracts, suing and being sued, and exercising such other power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Authority is not a Corporation. It is also not contended before us that Authority is not a statutory corporation. What is contended before us is that Authority having not been established by a Central, State or Provincial Act is not covered by Notification dated 22.10.1970 hence, not eligible for the benefit. The provision of Section 194A and the notification issued by Central Government under 194A(3)(iii)(f) falls for consideration. We may beneficially notice a principle of statutory interpretation which needs to be applied while interpreting the above provisions of IT Act, 1961. This Court in RBI vs Peerless General Finance Investment Co. Ltd., (1987) 1 SCC 424, laid down the following in paragraph No. 33: 33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is a legal entity established normally by Parliament and always under legal authority, usually in the form of a special statute, charged with the duty of carrying out specified governmental functions in the national interest, those functions being confined to a comparatively restricted field, and subjected to control by the Executive, while the corporation remains juristically an independent entity not directly responsible to Parliament. A public corporation is not generally a multipurpose authority but a functional organisation created for a specific purpose. It has generally no shares or shareholders. Its responsibility generally is to Government. Its administration is in the hands of a Board appointed by the competent Minister. The employees of public corporation are not civil servants. It is, in fact, likely that in due course a special type of training for specialized form of public service will be developed and the status of the personnel of public corporation may more and more closely approximate to that of civil service without forming part of it. Insofar as public corporations fulfil public tasks on behalf of Government, they are public authorities and as such subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the statute. It is a body created in accordance with the provisions of the statute. 20. Mathew J., writing concurrent opinion while discussing the public corporation held that such corporations are created by State. In Executive Committee of Vaish Degree College, Shamli and Others vs. Lakshmi Narain and Others, (1976) 2 SCC 58, the question for consideration fell as to whether the Executive Committee of a degree college is a statutory body. Contention before the Court was that the Executive Committee was the statutory body since it was affiliated to the Agra University which was established by the statute. The Executive Committee was further covered by the statute framed by the Agra University. In the above context, this Court held that there is a clear distinction between a body which is created by the Statute and a body which having been come into existence is governed in accordance with the provisions of the statute. In paragraph No. 10 following was held: 10..........It is, therefore, clear that there is a well marked distinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in Dalco Engineering Private Limited vs. Satish Prabhakar Padhye and Others (2010) 4 SCC 378 . The Court had occasion to examine the provision of Section 2k, of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, specifically expression establishment means a Corporation established by or under Central, Provincial or State Act. This Court held that the phrase established by or under the Act is a standard term used in several enactments to denote a statutory corporation established or brought into existence by or under the statute. On Company it was held that the company is not established under the Companies Act and an incorporated company does not owe its existence to the Companies Act. In paragraph No. 20 following has been laid down: 20. A company is not established under the Companies Act. An incorporated company does not owe its existence to the Companies Act. An incorporated company is formed by the act of any seven or more persons (or two or more persons for a private company) associated for any lawful purpose subscribing their names to a memorandum of association and by complying with the req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation means a Financial Corporation established under Section 3 and includes a Joint Financial Corporation established under Section 3A; 26. Section 3 deals with establishment of State Financial Corporation which provides as follows: 3. Establishment of State Financial Corporations.: (1) The State Government may, by notification in the Official Gazette, establish a Financial Corporation for the State under such name as may be specified in the notification. ( 2) The Financial Corporation shall be a body corporate by the name notified under subsection (1), having perpetual succession and a common seal, with power, subject to the provisions of this Act, to [acquire, hold and dispose of] property and shall by the said name sue and be sued. 27. This Court clearly in above case, Dalco Engineering (supra) has held that such Financial Corporations are established by an Act or under an Act. In paragraph No. 23 of the judgment following has been held: 23. We may next refer to The State Financial Corporations Act, 1951 which provides for establishment of various financial corporations under that Act. Section 3 of that Act relates to establishment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector, U.P. State Industrial Member ( f) Five members to be nominated by the State Government by notification. Member ( g) Chief Executive Officer. Member Secretary ( 4) The headquarters of the Authority shall be at such place as may be notified by the State Government. ( 5) The procedure for the conduct of the meetings for the Authority shall be such as may be prescribed. ( 6) No act or proceedings of the Authority shall be invalid by reason of the existence of any vacancy in or defect in the constitution of the Authority. 30. When we compare the provisions of Section 3 of 1976 Act with those of The State Financial Corporations Act, 1951, it is clear that the establishment of Corporation in both the enactments is by a notification by State Government. In the present case, notification has been issued in exercise of power of Section 3, the Authority has been constituted. It is useful to extract paragraph No. 2 of the Notification dated 12.04.1976: 2. The Governor is hereby further pleased, in exercise of the powers under Section 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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