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Issues Involved:
1. Whether the Agricultural Produce Marketing Committee, Azadpur, Delhi, is a "local authority" u/s 10(20) of the Income-tax Act, 1961. 2. Whether the income of the Agricultural Produce Marketing Committee, Azadpur, Delhi, is not taxable under the Income-tax Act, 1961. Summary: Issue 1: Whether the Agricultural Produce Marketing Committee, Azadpur, Delhi, is a "local authority" u/s 10(20) of the Income-tax Act, 1961. The primary issue was to determine if the Agricultural Produce Marketing Committee (APMC), Azadpur, Delhi, qualifies as a "local authority" under section 10(20) of the Income-tax Act, 1961, read with section 3(31) of the General Clauses Act, 1897. The Assessing Officer initially denied this status, considering APMC as an association of persons. However, the Tribunal, after examining various clauses and factual aspects, concluded that APMC is a local authority. The Tribunal's decision was challenged by the Revenue, arguing that APMC did not meet the tests and attributes of local authorities as highlighted by the apex court in several judgments, including Union of India v. R.C. Jain [1981] and CIT v. U.P. Forest Corporation [1998]. The court examined the definition of "local authority" and the criteria established by the apex court, which include possessing a separate legal existence, autonomy, governmental functions, and the power to raise funds. The court compared the provisions of the Delhi Agricultural Produce Marketing (Regulation) Act, 1976, with similar acts in Maharashtra, Gujarat, and Punjab, and found substantial parity. The court concluded that APMC met the criteria of a local authority, having a defined operational area, elected office bearers, and performing functions akin to municipal bodies, including providing civic amenities and managing funds. Issue 2: Whether the income of the Agricultural Produce Marketing Committee, Azadpur, Delhi, is not taxable under the Income-tax Act, 1961. Given the conclusion that APMC is a local authority, its income is exempt from tax under section 10(20) of the Income-tax Act, 1961. The court noted that APMC's functions, autonomy, and legal status aligned with the attributes of a local authority as defined in legal precedents. Therefore, the Tribunal's decision that APMC's income is not taxable was upheld. Conclusion: The court held that the Agricultural Produce Marketing Committee, Azadpur, Delhi, qualifies as a "local authority" under section 10(20) of the Income-tax Act, 1961, and its income is consequently not taxable under the Act. The Tribunal's conclusions were affirmed, and the questions referred were answered in the affirmative, in favor of the assessee and against the Revenue.
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