9911796707
TMI Blog1997 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial Development Corporation (for short "the Corporation"), claimed exemption from taxation under the Income-tax Act on two alternative premises, one under article 289(1) of the Constitution and the other clause (20A) of section 10 of the Income-tax Act. A Division Bench of the High Court of Gujarat (see [1985] 151 ITR 255) disallowed the claim under both. Hence, the Corporation has filed this appeal by special leave. The Corporation has been created under the Gujarat Industrial Development Act, 1962 (for short "the Gujarat Act"), with the right to hold properties and the right to sue and be sued in its own name. The Income-tax Officer concerned repelled the claim of the Corporation for exemption from tax on both grounds, but the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rat Act. The second limb of the clause consists of two alternatives, of which the first is that the authority constituted by law should be for dealing with the need to provide housing accommodation. That alternative is obviously not available to the appellant-Corporation as nobody has a case that the appellant-Corporation has anything to do with the obligation to provide housing accommodation. It is the second alternative in the clause under which the appellant seeks shelter to be absolved from the liability to pay income-tax. As per that alternative, if the authority is constituted for the purpose of planning or development or improvement of any city or town or village or a combination of them, the income of such authority is not exigible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Gujarat Act was enacted "to make special provision for securing the orderly establishment of industries in industrial areas and industrial estates in the State of Gujarat, 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" as can be discerned from the preamble thereof. Section 2(g) of the Act defines "industrial area" as any area declared to be an industrial area by the State Government by notification in the Official Gazette which is to be developed and where industries are to be accommodated. Section 2(h) defines "industrial estate" as any site selected by the State Government where the Corporation build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings, It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of the sole purpose of establishment, growth and development of industries. The Corporation has to provide amenities and facilities in industrial estates and industrial areas. Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76] 1 SCR 38]. This court has reiterated the said principle in Calcutta Jute Manufacturing Co. v. CTO [1997] 106 STC 433 ; [1997] 5 JT 690 (SC). The position is, therefore, clear that authorities constituted by law for facilitating all kinds of development of cities, towns and villages for public purposes shall not be subjected to the liability to pay income-tax. The Division Bench of the High Court seems to have interpreted the exemption clause too rigidly and narrowly which resulted in the anomaly of bringing authorities like the appellant-Corporation within the tentacles of income-tax liability while the authorities dealing with housing schemes which provide houses to private individuals would stand outside the taxing sphere. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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