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TMI Blog2003 (2) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee made such a claim since under section 10(20) of the Income-tax Act, 1961 (hereinafter referred to as 'The Act') while computing the total income of a previous year of any person, any income of a local authority which is chargeable to tax under the head income from house property, capital gains, income from other sources or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area, shall not be included. 3. The term 'Local Authority' has not been defined in the Act. The term Local Authority has however been defined under the General Clauses Act, 1897. Under section 3(31) the term 'Local Authority' has been defined as follows: "'Local Authority' means a Municipal Committee, a District Board, a body of Port Commissioners, or other authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund." The Act being a Central Act, the definition contained in section 3(31) of the General Clauses Act, 1897 has to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment, roads, markets, transportation, social welfare services etc. etc. broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority. In addition to the above the Honourable Supreme Court also adopted the another test laid down in the decision of Supreme Court in Municipal Corporation of Delhi v. Birla Cotton Mills AIR 1968 SC 1232, wherein Hidayatullah, J., described some of the attributes of local bodies as subordinate branches of governmental activity. They are democratic institutions managed by the representative of the people. They function for public purposes and take away a part of the Government affairs in local areas. They are political sub-divisions and agencies which exercise a part of State functions. As they are intended to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the Assessee's case in which the Supreme Court applied the tests laid down in R.C. Jain's case in coming to the conclusion that U.P. Forest Corporation was not a Local Authority under section 10(20) of the Act, 1961. The Assessing Officer accordingly rejected the claim of the Assessee for adopting its status as a 'Local Authority'. 7. Thereafter the Assessing Officer made assessment of the income as per the Return of Income filed by the Assessee. The Assessing Officer noticed that the Assessee had claimed a sum of Rs. 1,40,31,211 as loss and the Assessee also claimed carry forward of this loss. The Assessing Officer was of the view that under section 42(2) of the VIDC Act, the net deficit, if any, in respect of any of the objects of the assessee shall be solely borne by the State Government. He was therefore of the view that the loss claimed was not Assessee's loss and therefore no carry forward of losses can be allowed. 8. Thereafter the Assessing Officer noticed that in June, 1997 the Assessee had issued bonds aggregating Rs. 100 Crores for augmenting the funds necessary for completing its projects. In connection with the said public-issue expenditure to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rojects. 11. According to the Assessing Officer this admission by the Assessee that its business has not commenced had very serious consequences. The first consequence being that no loss from business can be claimed and all expenditure whether of revenue or of capital nature should be capitalized. The Assessing Officer relied on the decision of the Honourable Supreme Court in the case of Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167 for the above proposition. The Assessing Officer therefore was of the view that the Profit & Loss Account of the Assessee can never be the basis to determine the income of the Assessee. The Assessing Officer thus in effect concluded that there could be no computation of income or loss from business, as the business had not yet commenced. The second consequence was that though the business of the Assessee had not commenced yet the Assessee was in receipt of income which can be classified under the other heads of income viz., Income from other sources and Income from House Property and these incomes will have to be determined under the respective heads of income. The further consequence was that the Assessee cannot seek to set off the income chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,458 ------------- The Assessing Officer allowed Rs. 52,19,80,681 to be capitalized as pre-commencement expenses. The total income was thus determined as follows: Income from House property: Rs. 15,11,754 Income from other sources Rs. 8,82,54,420 ----------------- Total Income Rs. 8,97,66,170 ----------------- 14. Aggrieved by the order of the Assessing Officer the Assessee preferred appeal before the CIT(A). Before the CIT(A) the following grounds were raised by the Assessee: "(i) That it was a Local Authority and that its income, if any, is exempt under section 10(20) of the Act. (ii) That where funds are borrowed for the purpose of obtaining a qualifying asset, the amount of borrowing costs should be capitalized as cost of obtaining the qualifying asset. If the borrowed funds are utilized by making temporary investments and in the process some income is earned, interest received by the Assessee on temporary investment of borrowed funds will go to reduce the borrowing cost that has to be capitalized as cost of obtaining the qualifying asset. This according to the Assessee was in keeping with Paragraphs 10 & 11 of the Accounting Standards (AS-16) issued by the Instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is a State entitled to exemption of tax on its income under Article 289(1) of the Constitution of India. (iii) Alternatively hold that the Assessee is a Trust eligible for exemption under section 11 of the Act." 15. The findings and conclusions of the CIT(A) on the various grounds raised by the Assessee in their appeal were as follows: "1. With regard to the claim of the Assessee that it is a 'Local Authority' entitled to exemption under section 10(20) of the Act, the CIT(A) considered each one of the attributes which an authority must possess to come within the definition of 'Local Authority' as laid down in the decision of the Hon'ble Supreme Court in the case of Union of India v. R.C. Jain and after elaborate discussion of the submissions of the Assessee and considering the various provisions of the VIDC Act, held as follows in paragraph 70 of her order: 'In view of the foregoing discussion, it is evident that:- 1. The Appellant Corporation cannot be treated at par with a Municipal Committee, District Board or Body of Port Commissioner and it does not handle any governmental functions and duties as are usually entrusted to Municipal bodies. 2. It does not have a defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to give any findings in the appeal as held by the Honourable Supreme Court in the case of CIT v. U.P. Forest Corporation 230 ITR 945 (SC). She also held that the Assessee was a Company within the meaning of section 2(17) of the Act and therefore cannot be held to be a Trust whose income is exempt under section 11 of the Act. 5. With regard to the claim of the Assessee that Interest income and Income from House property has to be treated as business income and allowed to be capitalized, the CIT(A) held that the Assessee having not commenced business, no income under the head 'Profits & Gains of Business' can be earned by it. But the company having earned income from other sources, viz., interest from investments and interest from house property, the same is required to be taxed under those respective heads. The CIT(A) in holding as above relied on the decision of Honourable Supreme Court in the following cases: Challapalli Sugars Ltd v. CIT 98 ITR 167 Tuticorin Alkali Chemicals & Fertilizers v. CIT 141 CTR (SC) 387. CIT v. Bokaro Steel Ltd 151 CTR (SC) 276. 6. With regard to the claim for the assessee that if interest income is held to be income from other sources, then the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es should be allowed to be carried forward as per the provisions of the Income-tax Act, 1961." The additional ground can be decided on the facts available on record and we are of the view that the assessee should not be denied the opportunity of putting forth his objections on mere technicalities. We therefore deem it proper to permit him to raise the additional ground. We shall deal with the various grounds of appeal and the additional ground at the appropriate place. 17. Before we deal with the various grounds of appeal of the assessee, we deem it proper to narrate the circumstances under which the assessee came to be established. The statement of objects and reasons for enacting the VIDC Act under which the assessee was created describes the reason and the circumstances under which the assessee came to be established. Some of the extracts from the same are as follows: "The irrigation potential in the Vidarbha Region of Maharashtra State comprising 2 Revenue divisions and 9 districts is about 2 lac. ha. Out of this about 7 Lac. ha. irrigation potential has been created by June, 1995. Thus an additional about 15 lac. ha. potential is yet to be created through development of ong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objectives for which the corporation is established." 18. Ground No. 1: "The Assessing Officer and Learned CIT(A) erred in arriving that the decision of Honourable Supreme Court in the matter of Union of India v. R.C. Jain in Delhi Development Authority case is not applicable to the Appellant Corporation and the Corporation is not 'Local Authority' within the meaning and scope as enumerated by the Supreme Court decision in the aforesaid order and therefore deprived the Appellant of its legitimate claim of exemption under section 10(20) of the I.T. Act." Under section 10(20) of the Act, while computing the total income of a previous year of any person, any income of a local authority which is chargeable to tax under the head income from house property, capital gains, income from other sources or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area, shall not be included. The term 'Local Authority' has not been defined in the Act. The term Local Authority has however bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate bodies. They must not be mere governmental agencies but must be-legally independent entities. 2. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. 3. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administrated by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. 4. Next, they must be entrusted by statute with such governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. etc. broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and functions. 5. Finally, they must have the power to raise funds for the furtherance of their activities and fulfilment of their pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in two parts, the first part refers to the area of functioning of the Authority and lays down that such area should be a defined area. The second part deals with the constitution of the authority and lays down that its members must comprise partly, directly or indirectly be elected by the inhabitants of the area. 25. Regarding the area of functioning of the Assessee the VIDC Act lays down in section 1 that it shall extend to the area of Godvarai and Tapi Rivers Valley in Vidarbha Region of the State of Maharashtra, specified in the Schedule and such other area or areas as the State Government may, by notification in the Official Gazette, specify. Section 2(d) defines 'Area of operation of the Corporation' as the area of the Godavari and Tapi Rivers Valley specified in the Schedule and any other area or areas to which the provisions of the VIDC Act are extended by the State Government, by notification in the Official Gazette, under sub-section (2) of section 1. 26. According to the Learned Counsel for the Assessee the area of functioning of the Assessee is clearly defined. According to the Learned Standing Counsel the Area is not properly defined. He drew our attention to the Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Chief Secretary to the Government - Ex-officio Vice-Chairman (d) Secretary (1) to Government, Irrigation Department - Ex-officio Managing Director; (e) Secretary (Command Area Development) to Government, Irrigation Department - Ex-officio member; (f) Secretary to Government, Planning Department - Ex-officio Member; (g) Secretary to Government, Finance Department - Ex-officio Member; (h) Secretary (Forest) to Government, Revenue and Forest Department - Ex-officio member; (i) Secretary (Relief and rehabilitation) to Government, Revenue and Forests Department - Ex-officio Member; (j) Secretary to Government, Agriculture Department - Ex-officio member; (k) Three non-official members representing reputed and recognized financial institutions, to be nominated by the State Government; (l) Five members to be nominated by the State Government, from amongst the members of the Maharashtra State Legislative Assembly; (m) Three members to be nominated by the State Government, from among the members of the Maharashtra State Legislative Council; (n) Two non-official qualified members to be nominated by the State Government having graduation and special knowledge and practical experie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the Vidarbha region. We are therefore inclined to conclude that the Second attribute laid down by the Honourable Supreme Court in R.C. Jain's case is not fulfilled by the assessee. While dealing with the second attribute as laid down in R.C. Jain's case by the Hon'ble Supreme Court, we have to keep in mind that the local bodies or subordinate branches of government activity, they are democratic institutions managed by the representative of the people. They function for public purposes and take away a part of the government affairs in local areas. They are intended to carry on local self government. 30. The 3rd attribute laid down by the Honourable Supreme Court in R.C. Jain's case is that the authority must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but an appreciable measure of autonomy must be there. The Learned Counsel for the assessee in this regard submitted that the following powers vested in the assessee by the VIDC Act clearly show that the assessee is an autonomous body. Under section 18 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n admitted by the assessee that they have no powers to do any project without the approval of the State Government. 32. We have considered the rival submissions. We are of the view that the purpose for which the corporation was established as stated in the statement of objects and reasons as well as from the preamble of the Act is to mobilize resources for completion of 10 pending irrigation projects in a time bound manner. From a perusal of section 2(a) and 2(c) read with section 18 it is clear that any irrigation project or hydro-electrical energy project within the area of operation of the corporation shall be decided only by the State Government. The assessee cannot embark upon any new irrigation project or hydro-electrical energy project on its own other than those mentioned in the Schedule to the Act. The General powers of the Corporation under section 19 are restricted only to carrying out its functions under the Act which itself is subject to the area of operation determined by the State Government. Under section 2(e) 'Irrigation project' means the planning, construction, maintenance and management of major, medium and minor irrigation projects and shall include command ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the VIDC Act we are of the view that degree of autonomy enjoyed by the Assessee is negligible and there is no occasion for it to make any decision on questions of policy affecting the area administered by it. The 3rd attribute is therefore clearly missing in the case of the Assessee. 33. The 4th attribute laid down by the Honourable Supreme Court in R.C. Jain's case is that the Authority must be entrusted by statute with such governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. etc. broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and functions. 34. The Learned Counsel for the Assessee submitted that under section 17 of the Act the employees of the State Government are deputed to the Corporation. The Irrigation Projects which were undertaken by the State Government have been transferred to the Assessee. Under section 20 the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial and agricultural use, he submitted that the Act nowhere empowers supply of water directly to the inhabitants. Section 20 only enables the Assessee to supply to the State Government, Local Authority, Governmental agencies, cultivators and water user's association. According to him even on a reading of section 20 it is clear that the Assessee does not supply water directly to the inhabitants and consequently there is no duty casl on the Assessee to supply water to inhabitants of the locality. 36. We have considered the rival submissions. We are of the view that providing Irrigation facility can be said to be a governmental function. But they are not governmental functions and duties which are usually entrusted to municipal bodies. According to the attribute laid down by the Supreme Court, the functions and duties entrusted to an authority are further qualified by the words that the functions should be normally one entrusted to the municipal bodies and are restricted to the inhabitants of the locality and that they should be in relation to providing health and education services, water and sewerage, town planning and development, roads, markets, transportation, social wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d last attribute laid down by the Honourable Supreme Court in R.C. Jain's case is that the authority must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority. 39. The learned counsel for the Assessee submitted that this attribute viz., power of taxation it should be understood that the power referred to in this attribute has to be understood not in the strict sense of a tax but should be so construed as inclusive of a fee. The only requirement is that there should be compulsory exaction. In this regard he drew out attention to similar observations by the Honourable Supreme Court in R.C. Jain's case. He submitted that under section 20 of the Act the corporation is empowered to collect water charges and under section 24 the Assessee has been given all the powers of a State Government under the Maharashtra Irrigation Act, 1976 and the Bombay Canal Rules, 1934 to collect water charges from users as well non-u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Honourable Supreme Court has observed as follows: "In the first place when it is said that one of the attributes of a local authority is the power to raise funds by the method of taxation, taxation is to be understood not in any fine and narrow sense as to include only those compulsory exactions of money imposed for public purpose and requiring no consideration to sustain it, but in a broad generic sense as to also to include fees levied essentially for services rendered. It is now well recognized that there is no generic difference between a tax and a fee; both are compulsory exactions of money by public authority. In deciding the question whether an authority is a local authority, our concern is only to find out whether the public authority is authorized by statute to make a compulsory exaction of money and not with the further question whether the money so exacted is to be utilized for specific or general purposes. In the second place the Delhi Development Authority is constituted for the sole purpose of the planned development of Delhi and no other purpose and there is a merger, as it were, of specific and general purpose. The statutory situation is such that the distinction b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r land near the irrigation project. Under section 59 of the Maharashtra Irrigation Act, 1976 water rates are determined by the appropriate authority, which is the Zilla Parishad under section 59 of the said Act and not by the State Government. Thus the assessee will not have the power to determine the supply rates even if the powers under the Maharashtra Irrigation Act, 1976 are sought to be exercised by the assessee. We are therefore of the view that the assessee does not fulfil the 5th attribute viz., compulsory exaction of taxes, fees, charges etc. 43. Apart from the above, the Learned Counsel for the assessee submitted that the assessee is vested with the control and management of a local fund under section 30 of the VIDC Act. We have perused the relevant provisions of the VIDC Act. It is no doubt true that under section 30 of the VIDC Act, the assessee shall have and maintain its own fund in which the moneys received by the assessee from the State Government, all fees, costs and charges received by the assessee under the Act, all moneys received by way of water charges, moneys received from disposal of land, buildings and other properties and other receipts are credited in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not in pari materia the same. The provisions are made in a different context keeping in view the objectives sought to be achieved by the Delhi Development Authority. In the case of Kashi Vidyapith v. Motila AIR 1996 SC 2705, the Hon'ble Supreme Court no doubt held that the university established under the Universities Act was to be considered as a local authority. The decision came to be rendered in the context of Land Acquisition Act. The question before the court was as to whether in the matter of acquiring land for the purpose of university, the fact that the fund for paying the compensation to the land owners came out of the state exchequer or not was to be decided. If the funds came from a local fund, the provisions of Chapter 7 of the Land Acquisition Act were not applicable. In that context, the Hon'ble Supreme Court held that since the funds of the University under the Universities Act were controlled by the State, it was held that the payment of compensation came from a local fund. We are of the view that in Kashi Vidyapith's case the narrow question came for consideration before the Hon'ble Supreme Court and the same cannot be applied in the context of the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in default under any provision of this Act. (c) Every person who is deemed to be an assessee in default under any provision of this Act" Section 2(17) defines Company as follows: "'company' means- (i) any Indian company, or (ii) any body corporate incorporated by or under the laws of a country outside India, or (iii) any institution, association or body which is or was assessable or was assessed as a company for any assessment year under the Indian Income-tax Act, 1922 (11 of 1922), or which is or was assessable or was assessed under this Act as a company for any assessment year commencing on or before the 1st day of April, 1970, or (iv) any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by general or special order of the Board to be a company: Provided that such institution, association or body shall be deemed to be a company only for such assessment year or assessment years (whether commencing before the 1st day of April, 1971 or on or after that date) as may be specified in the declaration;" Section 2(26) defines an Indian company as follows: "Indian company' means a company formed and registered u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee is not a 'Local Authority'. Ground No. 1 is accordingly dismissed. 47. Ground No. 2: "It is submitted that the CIT(A) wrongly arrived at the conclusion that the Appellant Corporation is not 'Development Authority' within the meaning of section 10(20A) of the Income-tax Act, 1961 and deprived the Corporation of its legitimate claim of exemption available under the said section, despite strong plea put up by the Corporation." 48. Before we deal with the rival contentions we shall first extract the provisions of section 10(20A) of the Act which reads as follows: "Section 10: Income not included in Total income: In computing the total income of a previous year of any person, any income failling within any of the following clauses shall not be included - (20A) any income of an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both." 49. The learned counsel for the assessee submitted that under the provisions of the VIDC Act, the assessee was to construct hydro-electric power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the lands feel within the ambit of corporation engaged into the activities of planning, development and improvement of agricultural lands which related to planning, development and improvement of villages. 50. The learned Standing Counsel for the revenue, in reply, submitted that under section 10(20A), an authority should be constituted under an enactment and the enactment should be for the purpose of dealing with and satisfying the needs for (i) housing accommodation (ii) for the purpose of planning, development of cities, towns and villages or for both. Referring to the provisions or improvement of section VIDC Act (sic), he submitted that the Act has been passed for the purpose of mobilizing resources for completing some of the going irrigation projects in Vidarbha area in time bound manner and to promote and operate the said irrigation projects. According to the Standing Counsel for the revenue, the Act was not passed for the purpose of enabling the assessee to perform any of the functions set out in section 10(20A) of the Income-tax Act. With regard to the rehabilitation of the affected persons by the projects, he pointed out that, as per section 50 of the VID ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the assessee has been formed. Thirdly, as rightly contended by the learned Standing Counsel, we find that under section 50 of the VIDC Act, the rehabilitation is to be carried out only by the State Government and not by the assessee. Whatever planning, development or improvement of cities, towns and villages are done in the process of rehabilitation are done by the State Government and not by the assessee. Fourthly, the rehabilitation of the displaced persons consequent to any action in performance of any functions of the assessee is too remote and is not incidental to the main purpose for which the assessee was established. We have perused the decision of the Hon'ble Supreme Court in the case of Gujarat Industrial Development Corpn. v. CIT [1997] 227 ITR 414. In the said case, it was found that for the purpose of carrying out the development of an industrial area and industrial estate, the element of planning and development of such area was necessary for development of industries and therefore development of industrial area or industrial estate was held to be development of a place. It was further held in the said case that the developmental activity contemplated in section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the trust. It is only after the registration under section 12AA is granted, the assessee can seek to claim the exemption under section 11 of the Income-tax Act. The procedure for registration contemplates scrutiny of several requirements as laid down in section 11 of the Act. A trust deed is one of the basic requirement contemplated under the provisions of section 12AA. We fail to understand as to how the assessee can make any claim that it is a trust. The assessee has not come into existence by way of virtue of any trust deed. The assessee has been formed under the provisions of VIDC Act. Under the provisions of section 2(17) read with section 2(26) of the Income-tax Act, the assessee would be a company established by or under the said Act. We shall refer to the observations of the Hon'ble Supreme Court in the case of U.P. Forest Corpn. which are as follows: "Coming to the question whether the income of the respondent is held for charitable purposes and, therefore, exempt from tax by virtue of section 11(1) of the Act, we find no such contention was raised by the respondent before the income-tax authorities. In order to take advantage of the provisions of section 11 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not normally short-circuit the procedure provided by the taxing statute and seek the redress by filing a petition under article 226 of the Constitution of India. For the aforesaid reasons, these appeals are allowed and the decision of the High Court is set aside. While holding that the respondent is not a local authority whose income is exempted from tax under section 10(20) of the Act, we, however, direct the assessing authority to consider the claim of the respondent that its income is not liable to be taxed in view of the provisions of section 11(1)(a) of the Act. This question should be decided by the assessing authority within six months from today and the liability of the respondent to pay tax would be subject to the outcome of that decision. There shall be no order as to costs." 54. The learned counsel for the assessee relied on the decision of the Supreme Court in the case of CIT v. Andhra Pradesh State Road Transport Corpn. AIR 1986 SC 1054, we are of the view that the said decision will not be applicable in the present case. The said case arose out of a reference under section 256(1) of the Income-tax Act, 1961. The question of eligibility to exemption under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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