1961 (7) TMI 77 - HC - Income Tax

Summary

Issues Involved:
1. Maintainability of the writ petitions.
2. Status of the Corporation under the Indian Income-tax Act.
3. Constitutional immunity from taxation.
4. Repugnancy and inconsistency between the Road Transport Corporations Act and the Indian Income-tax Act.
5. Deduction of interest payable to the Government on the capital.

Detailed Analysis:

1. Maintainability of the Writ Petitions:
The preliminary issue raised by the learned Solicitor-General was the maintainability of the writ petitions due to the existence of an alternative remedy under the Indian Income-tax Act. It was argued that the petitioner had already filed an appeal before the Appellate Assistant Commissioner and thus should not have invoked the jurisdiction of the High Court under Article 226 of the Constitution. However, the court held that the existence of an alternative remedy does not bar the High Courts from issuing a writ in an appropriate case, especially when the tribunal or authority is totally devoid of jurisdiction. The court cited the Supreme Court's judgment in Calcutta Discount Co. Ltd. v. Income-tax Officer to support this view.

2. Status of the Corporation under the Indian Income-tax Act:
The court examined whether the Andhra Pradesh Road Transport Corporation could be classified under any of the categories specified in section 3 of the Indian Income-tax Act, such as an individual, Hindu undivided family, firm, company, or association of persons. The Income-tax Officer had classified the Corporation as an "association of persons." However, the court disagreed, stating that a corporation, even if it has the power to issue shares and debentures, cannot be considered an association of persons. The court referred to authoritative pronouncements and concluded that the Corporation should be considered an "individual" within the meaning of section 3 of the Indian Income-tax Act.

3. Constitutional Immunity from Taxation:
The main contention was whether the Corporation, being State-owned and State-controlled, was immune from taxation under Article 289 of the Constitution. The court analyzed various provisions of the Road Transport Corporations Act and concluded that the Corporation is an independent legal entity and not entirely State-owned. The court observed that the Corporation could raise capital by issuing shares to the public and that its income does not belong to the State. Therefore, the Corporation is not immune from taxation under Article 289.

4. Repugnancy and Inconsistency between the Acts:
The petitioner argued that the Road Transport Corporations Act, being a later Act, should prevail over the Indian Income-tax Act due to repugnancy. The court rejected this argument, stating that the doctrine of repugnancy applies only when laws made by different legislative authorities conflict. Since both the Income-tax Act and the Road Transport Corporations Act are Central laws, the court held that there is no repugnancy. The court further stated that the provisions of both Acts could stand side by side and be harmonized.

5. Deduction of Interest Payable to the Government on the Capital:
The issue of whether the interest payable to the Government on the capital should be deducted under the Income-tax Act was left to the income-tax appellate authorities to determine based on the facts and materials on record. The court did not make a definitive ruling on this matter.

Conclusion:
The court dismissed the writ petitions, holding that the Andhra Pradesh Road Transport Corporation is liable to pay income tax under the Indian Income-tax Act. The petitions were dismissed with costs, and the issue of deduction of interest payable to the Government on the capital was left to the appellate authorities for determination.