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TMI Blog1996 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... B. P. JEEVAN REDDY J.-- This appeal is preferred on the basis of a certificate of fitness granted by the Calcutta High Court (see [1977] 108 ITR 922) under section 261 of the Income-tax Act, 1961. Two questions were referred for the opinion of the High Court under section 256(1) of the Income-tax Act. They are (page 925) : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not a 'local authority' as contemplated by section 2(31)(vi) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee is not entitled to an allowance for its contribution to the employees' provident and gratuity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r outside its own jurisdictional area ;" The Income-tax Officer rejected the assessee's contention which was affirmed on appeal by the Appellate Assistant Commissioner. On further appeal, the Tribunal also agreed with the Income-tax Officer. The expression "local authority" is not defined in the Income-tax Act. Its definition is, however, contained in the General Clauses Act in clause (31) of section 3. It reads : " 'local authority' shall mean a municipal committee, district board, 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 contention of Sri Ray is that inasmuch as the assessee is entrusted by the Government wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. It must also enjoy a certain degree of autonomy either complete or partial, 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, water and sewerage, town planning and development, roads, markets, transportation, social welfare services, etc. Finally--it was observed--such a body must have the power to raise funds for furtherance of its activities and fulfilment of its objects by levying taxes, rates, charges or fees. Applying the said tests, it was held that the Delhi De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the corporation is meant mainly and only for the purpose of providing an efficient, adequate, economical and properly coordinated system of road transport services in the State or part of it, as the case may be. It has no element of popular representation in its constitution. Its powers and functions bear no relation to the powers and functions of a municipal committee, district board or body of port commissioners. It is more in the nature of a trading organisation. Merely because it has a fund or for that matter merely because it is constituted to provide a public service and to employ persons in that connection, it cannot be said that its functions are similar to those of municipal council, district board or body of port commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts employees only. In view of the above, it is not necessary to go into the question whether the assessee is an "authority" within the meaning of article 12 of the Constitution, a question which appears to have attracted a good amount of attention before the High Court. Even if it is an "authority" within the meaning of article 12, it would not be enough to attract the exemption in section 10(20) of the Income-tax Act. It must be a "local authority". The decision of this court in R. C. Jain's case, AIR 1981 SC 951 was not available to the High Court when it decided the present matter and hence, it did not have the guidance provided by the said decision. Even so, the conclusion arrived at by it is the correct one in law. Dr. Gauri Shanka ..... X X X X Extracts X X X X X X X X Extracts X X X X
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