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TMI Blog1985 (6) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... estates of industries in the Union territory of Goa, Daman Diu and to assist generally in the organisation thereof, and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid." The text of the said Act is at pages 1 to 19 of the assessee's paper book. The main features are : "Section 3(2). The said Corporation shall be a body corporate with perpetual succession and a common seal, and may sue and be sued in its corporate name, and shall be competent to acquire, hold and dispose of property both movable and immovable, and to contract, and do all things necessary for the purpose of this Act." Sections 4 to 11 of the GIDA deal with the administrative set up of members supervising the activities. Section 12 of the GIDA deals with appointment of chief executive officer and chief accounts officer and other employees who would be public servants. (section 53 of the GIDA). Section 13 of the GIDA deals with the functions as below : (1) generally to promote and assist in the rapid and orderly establishment, growth and development of industries in the Union territory of Goa, Daman and Diu. (i) (ii) in particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 11 to 13 of the Act; (iv) the income of the corporation arises directly from a revocable transfer of funds from the Government. In view of section 63 of the Act the Government-transferor would be liable, if at all. Certain subsidiary contentions regarding computation of income, etc., were also raised. 4 In support Shri Inamdar submitted that notwithstanding section 3(2) of the GIDA providing corporate existence and permanent seal with, right to sue and be sued, in reality the corporation is nothing but the Government itself. The members are nominated by the Government. The employees are appointed by the Government and are public servants. Sweeping powers of controlling the working of the corporation coupled with power to dissolve the corporation on the strength of an executive fiat recording its satisfaction that the purposes are substantially achieved leave no doubt that the corporation is nothing but an indivisible limb of the Government---further confirmed by the provisions regarding acquisition of land by invoking the land Acquisition Act, handing over the Government lands, recovery of arrears though land recovery code, etc. The functions under section 13 of the GIDA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epithets but the true nature does not change. Section 3(1) and 3(2) of the GIDA creates an artificial juridical persons with its own capital, seal, and powers to sue and be sued. Definition of Indian company under section 2(26)(ia) of the 1961 Act includes corporation incorporated under a statute. Goa, Daman Diu Industrial Development Corporation (GIDC) is, thus, no way different from unit trust, life insurance corporation or any of the public sector undertakings, which beas a controlling and supervisory power vested in the Government in no way different from those in the present case. Such supervisory powers should not be allowed to colour the issue regarding the existence of GIDC as a statutory corporation distinct the Government itself. If the Government desired to exercise the function directly it would not have enacted the statutory provisions providing for permanent seal and separate right to be sued. Similarly the provisions regarding public servants, acquisition for a public purpose, recovery at the instance of the company as due of the land revenue etc., merely indicate the extent of interest shown by the Government in ensuring that the corporation functions smoothly. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (APSRTC) as mentioned at p. 535 was fully controlled by the Government. Their lordships observed : "... There is also no doubt that the corporation is a State controlled corporation in the same sense that at all material stages and in all material particulars, the activity of the corporation is controlled by the State;..." Shri Sathe admitted that in APSRTC there was a provision for contribution of capital by the citizens also but this is not quite relevant. The real issue is the corporate existence. 10. Regarding the case law relied upon by Shri Inamdar, Shri Sathe highlighted the context in which the judgments were given. In Shri Ramtanu Co-operative Housing Society Ltd.'s case the challenge was to the constitutional validity of the Act and not for establishing 100 per cent identity between the Government and the corporation. It was held that the State had the power to constitute the corporation for the declared purpose of developing and regulating industrial growth of the State. There are doubtless some observations regarding close identity and the promotion of the powers under the Seventh Schedule of the Constitution but there are no observations indicating 100 per c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lothed with powers of regulating and developing industries in the various places comprised in the Union territory. Location of industries necessarily involves, planning of cities, towns or villages. The GIDC has actually laid out places for industrial plots in villages and, thus, helped planning and improvement of the type envisaged under section 10(20A). The lower authorities erred in not accepting the contention. 13. In reply Shri Sathe submitted that GIDC is not an authority. It does not also plan, develop or improve the cities, towns and villages. It merely lays out industrial areas taking into consideration the needs of the State and not necessarily of the cities, towns or villages which may be located nearby. The word 'authority' indicates a power of enforcing its directors, directly and punish the breach thereof. No evidence has been produced to show the existence of such an 'authority'. 14. In his rejoinder Shri Inamdar submitted that the word 'authority' merely means a body clothed with certain powers for achievement of its object. For enforcement thereof the 'authority' has to take recourse to measures like any other person. The absence of direct powers of punishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. The Government has made available certain funds which as per balance sheet are repayable. The Government has made certain deposits and provided some subsidies. But these are not gratuitous. The provision for repayment shows that the transaction is no different from that between any creditor and debtor. The power to dissolve and appropriate the assets is not absolute and is hampered by certain constraints. The satisfaction about the achievement of the purpose for what it was floated has to be exercised objectively and may be subject to challenge in the Legislature or before the judiciary. The provision (section 45 of the Act) does not constitute power of revocable transfer contemplated in section 63. The authorities below are, therefore, correct. 18. On an examination of the facts and arguments, we uphold the view of the authorities below. The relationship between the Government and the assessee is that of creditor and debtor. Powers to regulate or dissolve the corporation does not constitute power of revocable transfer. The contention of the assessee is rejected. 19. Shri Inamdar next submitted that the object of the corporation as reflected in the preamble and the other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is low is no ground for holding that there is any charitable or eleemosynary element in its activities. The surplus, if any, may go to the Government, but this again is not a proper test. All corporations established by the Government would be for some social purpose. If the principle canvassed by Shri Inamdar is accepted, all public sector undertakings would have to be considered charitable. Without prejudice it was submitted that charity is not a beneficiary in perpetuity as the Government can dissolve the corporation as soon as it is satisfied that the object is achieved. 22. We have examined the facts and the arguments. One should see the objects for which the assessee-corporation was established. It is not doing any manufacturing business in any of the industrial areas developed by it. Although there is no statutory price control on the services rendered by the assessee, the entire scheme of the GIDA shows clearly that the activities of the assessee were not intended to be pursued as 'activities for profit'. It is possible that a private party rendering the same services as the assessee would be considered as carrying an activity for profit. The activity of the assessee, how ..... X X X X Extracts X X X X X X X X Extracts X X X X
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