1983 (5) TMI 67 - AT - Income Tax

Summary

Issues:
- Whether the income of the assessee-udyog is exempt under section 10(20A) of the Income-tax Act, 1961.
- Whether the conditions for exemption under section 10(20A) are satisfied in the present case.

Analysis:
1. The assessee, Hawalbagh Panchayat Udyog, claimed exemption under section 10(20A) of the Income-tax Act, 1961, as an authority constituted under the UP Panchayat Raj Act, 1947, for planning and development of villages. However, this claim was rejected by the tax authorities.

2. The Tribunal considered the provisions of the 1947 Act, specifically sections 2, 3, 15, 16, 17, 18, 19, 19A, 20, and 30, along with the bye-laws of the assessee-udyog. The assessee argued that it was constituted under the 1947 Act for planned development of villages and thus qualified for exemption under section 10(20A).

3. Section 10(20A) requires that the income must be of an authority constituted in India under any law for the purpose of planning, development, or improvement of cities, towns, or villages. The Tribunal analyzed whether the conditions for exemption were met in the present case, focusing on the authority's constitution under the 1947 Act and its purpose.

4. The Tribunal noted that the assessee-udyog was established by 31 gaon sabhas under section 30 of the 1947 Act, indicating its constitution under the law. The aims and objects of the udyog included all-round development of the block area, aligning with the Act's objectives for planning and development of villages.

5. By examining the bye-laws, the Tribunal concluded that the assessee-udyog was constituted under the 1947 Act for planning, development, or improvement of villages within its block area. Considering the Act's preamble, powers of the gaon panchayat, and the objectives of the udyog, the Tribunal held that the income qualified for exemption under section 10(20A).

6. Consequently, the Tribunal allowed the appeal by the assessee, determining that the income of the assessee-udyog was exempt from tax under section 10(20A) of the Income-tax Act, 1961.