TMI Blog1984 (6) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(1) of the Constitution of India, the Corporation was entitled to exemption. It was further held that the assessee-Corporation was exempt also under s. 10(20A) of the I.T. Act, 1961. Thus, the assessee-Corporation's appeal was allowed. The Revenue preferred an appeal before the Income-tax Appellate Tribunal, and the view taken by the AAC of Income-tax was reversed, and the Income-tax Appellate Tribunal came to the conclusion that the income of the assessee-Corporation was not exempt under article 289(1) of the Constitution of India, and it was also not exempt under the provisions of s. 10(20A) of the I.T. Act, 1961. Thereafter, the following questions of law are referred for the opinion of this court 1. Whether the Tribunal was right is holding that the income of the assessee-Corporation was not exempt under article 289(1) of the Constitution of India ? 2. Whether the Tribunal was right in holding that the income of the assessee-Corporation was not exempt from payment of income-tax under the provisions of section 10(20A) of the Income-tax Act, 1961 ? " We may refer to article 289(1) of the Constitution of India which reads as under : " 289. Exemption of property and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds stated was that 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 of the Constitution of India. This ruling does not lay down the proposition that if the Andhra Pradesh State Road Transport Corporation did not carry on any trading activities, it would automatically become the State as contemplated by article 289 of the Constitution of India. Trading activities done by a Corporation or some other activities done by a Corporation apart, the question whether the Corporation was a State would depend upon for what purpose that Corporation was created by a statute and what are the objects and functions of that Corporation. It is never to be forgotten that a Corporation is created by statute for different and distinct purposes and it is not a department of the State. It may be that the State may have some or other form of control over it, it may be by way of contribution to share capital, it may be control or supervision or audit but that would not mean that a particular Corporation over which the State has control would become the State. Otherwise many Corporations and many other bodies over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Development Corporation, Ahmedabad is entitled or is not entitled to exclude its income from liability under the Indian I.T. Act, we are clearly of the opinion that from their total income, no exclusion could be made on the ground that it is a State as contemplated by article 289(1) of the Constitution of India. The State is entirely different from the Corporations which are created by laws which are enacted either by Parliament or by State Legislatures for different and distinct purposes. They are separate entities in law. They sue and are sued in their own capacities and for any contractual liability of the Corporation, no person can sue the State because every Corporation in itself is not the State but a separate legal entity. Under these circumstances, our opinion on the first question would be in the affirmative, and we hold that the decision of the Tribunal is right. Therefore, this point is decided in favour of the Revenue and against the assessee. So far as the second question is concerned, exclusion of income is claimed under s. 10(20A) of the Income-tax Act which runs as under: "10. In computing the total income of a previous year of any person, any income fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omote and assist in the rapid and orderly establishment, growth and development of industries in the State of Gujarat, and (ii) in particular and without prejudice to the generality of clause (i) to (a) establish and manage industrial estates at places selected by the State Government; (b) develop industrial areas selected by the State Government for the purpose and make them available for undertakings to establish them-selves; (c) develop land on its own account or for the State Government for the purpose of facilitating the location of industries thereon; (d) assist financially by loans industries to move their factories into such estates or areas ; (e) undertake schemes or works, either jointly with other corporate bodies or institutions, or with Government or local authorities, or on an agency basis in furtherance of the purposes for which the Corporation is established and all matters connected therewith. " Section 14 deals with general powers of the Corporation. Section 17 lays down that the State Government may from time to time issue to the Corporation such general or special directions of policy as it thinks necessary or expedient for the purpose of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or improvement of cities, towns and villages or for both. Now, therefore, what we have to determine is whether the Gujarat Industrial Development Corporation is a Corporation established for the purpose of planning, development or improvement of cities, towns and villages in the Gujarat State. The answer would determine the fate of this case. Several other provisions were read before us and they are s. 10(23BB), s. 10(23BBA), s. 10(26B) and s. 10(29). Now, these provisions are independent provisions and by those provisions exclusion from the total income is provided in respect of certain bodies. Before we give the final meaning to the section in question, we would consider decisions as the learned Advocate-General desired that certain authorities which were cited before us may be considered. The first authority cited is the case of CIT v. Simpson and Co. [1980] 122 ITR 283 (Mad). There, the meaning of s. 84 of the I.T. Act, 1961, was considered. Particularly, the words which were required to be interpreted were " six per cent. per annum ". While construing that provision what was observed was as under (headnote): It is a well-settled principle of construction that in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sphere of marketing." The third case to which reference was made is the case of CIT v. Satellite Engineering Ltd. [1978] 113 ITR 208 (Guj). The observations which were read before us are to be found at page 215. It was also a case under s. 84 of the I.T. Act and the question was in regard to tax holiday to a newly established undertaking. What was observed is as under: " It hardly needs to be stated that it is a recognised rule of interpretation of statutes that the expressions used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statute and which effectuate the object of the legislature. In interpreting a statute, the court cannot ignore its aim and object. " Now, therefore, what is important is to find out the object behind the statute. Now that object is required to be gathered from the section itself which requires liberal interpretation and if two interpretations are possible, the one beneficial to the assessee is to be adopted. Two things are required to be remembered: (1) the object must be clearly borne in mind, and (2) violence should not be made to the language used in the section. Here, the object is for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration is established for the purpose of planning, development or improvement of cities, towns and villages in Gujarat State. If it is not and it is established only for the purpose of one particular facet of development, it would not fall within s. 10(20A) of the Act. Now, therefore, it is more than clear from the preamble and from the whole reading of the Act that the whole Act is intended to establish a Corporation for the purpose of establishing industries in towns, villages and other places in the Gujarat State. It has no object whatsoever to plan, develop or improve any city, any town or any village in the Gujarat State. When this Corporation is not established for that purpose, trying to read liberally would not carry us anywhere. It is not capable of two meanings unless we make violence to the language of the section itself and add something which does not exist in that section which we cannot do. We may mention here that if that was the purpose which was intended, so many other exclusions of different Corporations was hardly necessary because this one would be sufficient for every situation. But Parliament thought that they would exempt certain Corporations only and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, green belts, natural reserves and sanctuaries; (d) transport and communications such as roads, highways, pathways, railways, waterways, canals and airport, including their extension and development; (e) proposals for water supply, drainage, sewage disposal, other public utility amenities and services including supply of electricity and gas; (f) reservation of land for community facilities and services; (g) proposals for designation of sites for service industries, industrial estates and any other industrial development on an extensive scale; (h) preservation, conservation and development of areas of natural scenary and landscape ; (i) preservation of features, structures or places of historical, natural, architectural or scientific interest and of educational value; (j) proposals for flood control and prevention of river pollution (k) proposals for the reservation of land for the purpose of Union, any State, local authority or any other authority or body established by or under any law for the time being in force (1) the filling up or reclamation of low lying, swampy or unhealthy areas or levelling up of land; (m) provision for controlling and regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 Comp Cas 285; 47 FJR 214; AIR 1975 SC 1331, was the foundation for later decisions which expressed the broader view as to the scope of the term " State " in article 12 of the Constitution of India. The narrower test laid down in Rajasthan Electricity Board's case, AIR 1967 SC 1857 ; 3 SCR 377 and adopted by the majority in Sukhdev's case was not followed in Airport case (Ramana Dayaram Shetty v. International Airport Authority of India), AIR 1979 SC 1628 ; 3 SCC 489. The line of reasoning adopted by justice Mathew in Sukhdev's case was adopted by justice Bhagwati for himself, justice Tulzapurkar and justice Pathak in Airport case. As pointed out by Seervai in his book " Constitutional Law of India ", Third edition, Vol. 1, page 223, the subsequent decision in Hasia's case marks the culmination of the process which Mathew J. initiated as to examination of the meaning of the term " other authorities " in article 12. Justice Bhagwati formulated in that case the tests relevant for determining whether Corporation was an agency or instrumentality of the government. It may not be necessary to refer to them for the purpose of this case. In dealing with the question, at page 496 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strial development, particularly in the underdeveloped regions, requires to be quickened appreciably so as to achieve progressive decentralization of industries. Constituting Corporations by statutes and investing them with powers of autonomy would facilitate expeditious development under the schemes framed for that purpose. The preamble of the Gujarat Industrial Development Act indicates that it is intended to make special provision for securing the orderly establishment of industries in industrial areas and industrial estates in the State of Gujarat. This Act does not purport to be an enactment intended to plan or develop or improve cities, towns or villages. The plain meaning of s. 10(20A) of the I.T. Act is that the purpose of constituting the authorities must be for planning, development or improvement of cities, towns or villages. It is not sufficient if its functions contribute to development or improvement. What is the avowed object of the enactment is material, as rightly referred by my learned brother Talati J. Even assuming that industrial development also would develop a city, town or village, if the Act is not intended for that purpose, but intended for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
