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TMI Blog2008 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned in Civil Appeal No................ of 2008 (arising out of S.L.P. (C) No.6757 of 2007) filed by AMC, Narela, Delhi. 4. Appellant-Committee is established under the Delhi Agricultural Produce Marketing (Regulation) Act, 1998 ("1998 Act", for short). The provisions of the said 1998 Act enjoin upon the appellant to provide the facilities for marketing of agricultural produce in Narela, Delhi. This is apart from performing other functions and duties such as superintendence, direction and control of markets for regulating the marketing of agricultural produce. 5. For the assessment year 2003-04, the appellant- Committee claimed exemption from payment of tax under income earned by it on the ground that it was a "local authority" within the meaning of Section 10(20) of the said 1961 Act. It relied upon the definition of "local authority" in Section 2(l) of the said 1998 Act. The A.O. rejected the appellant's claim for exemption relying upon Circular No.8/2002 dated 27.8.02 issued by CBDT. The view taken was that the amended provisions of Section 10(20) of the 1961 Act were not attracted to "Agricultural Produce Marketing Societies" or "Agricultural Market Boards" even when they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;" 12. Mr. M.L. Verma, learned senior counsel appearing on behalf of the appellants, submitted that AMC(s) has been held to be a "local authority" under Section 10(20) of the 1961 Act falling outside the taxing net. In this connection, learned counsel placed reliance on the judgment of the Delhi High Court in the case of Commissioner of Income-tax v. Agricultural Marketing Produce Committee - [2001] 250 ITR 369 and the reasoning given by this Court in the case of Union of India and others v. R.C. Jain and others - 1981 (2) SCC 308. According to learned counsel, even after the amendment to Section 10(20) of the 1961 Act, by inserting the Explanation thereto, the AMC(s) continues to be covered by Item (iii) in the said Explanation as it is a "local authority" performing the municipal functions and is legally entitled to the control of local fund, namely, Market Fund under the said 1998 Act. In this connection, learned counsel urged that vide Finance Act, 2002, Parliament has bodily lifted the definition of the "local authority" under Section 3 (31) of the General Clauses Act, 1897 ("1897 Act", for short) and has incorporated the said definition vide Explanation inserted in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Produce Marketing Boards" and "Agricultural Marketing Societies" are not entitled to exemption after insertion of the said Explanation in Section 10 (20) of the 1961 Act. According to learned counsel AMC(s) is neither "Agricultural Produce Marketing Board" nor "Agricultural Marketing Society". Therefore, according to learned counsel even the Explanatory Note indicates that AMC (s) is covered by the Explanation and, therefore, AMC(s) is entitled to the continuance of the benefit of exemption even after Finance Act, 2002. Further, in the Explanation to Section 10(20) there are three items - Item (i) refers to "Panchayat", Item (ii) refers to "Municipalities" whereas Item (iii) refers to "Municipal Committees" and "Development Boards". According to learned counsel, there is no independent definition of "Municipal Committee". According to learned counsel, the Department is also not able to answer whether any Municipal Committee still exists so as to constitute a separate category or whether they would be covered under Item (ii) in the said Explanation which refers to "Municipality". Therefore, according to learned counsel, AMC (s) is a "local authority" of like nature and character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in on the judgment of this Court in the case of R.C. Jain (supra) was misplaced. 18. Learned counsel further submitted that the explanation/definition clause inserted by Finance Act, 2002 is exhaustive as it uses the expression "means" as contradistinct from the expression "includes". Learned counsel submitted that borrowing definition from other statutes is not a safe guide, particularly, when the explanation is a definition section, specifically designed for grant of the exemption under Section 10(20) of the 1961 Act. 19. Learned counsel next contended that in the hierarchy, mentioned in 1998 Act, the Delhi Agricultural Marketing Board, as defined under Section 5, is in complete control of the finances of AMC(s) and, therefore, according to learned counsel, the clarification, issued by CBDT, expressly states that Agricultural Marketing Societies and Agricultural Marketing Boards shall stand excluded from the said Explanation. According to learned counsel, since the said Board is the highest authority under the 1998 Act, the CBDT Circular clarifies that the exemption shall not be admissible to such Agricultural Marketing Boards and when such an exemption is not admissible to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Municipal Council, that Council; and (iii) the Delhi Cantonment Board, that Board; Explanation- It is hereby clarified that, for the purpose of this Act, the Delhi Development Authority constituted under the Delhi Development Act, 1957 and the Board and a marketing committee established under this Act, shall be deemed to be local authority; CHAPTER III CONSTITUTION AND POWERS OF DELHI AGRICULTURAL MARKETING BOARD 17. Powers and functions of the Board - (1) The Board shall exercise superintendence and control over the marketing committees. (2) The Government or the Chairman or the Vice-Chairman of the Board or any other official of the Board authorized in this behalf by the Board may call for from any marketing committee or any trader, godown-keeper or any other functionary operating within the market area any information or return relating to agricultural produce and shall have the power to inspect the records and accounts of such marketing committee, trader, godown-keeper or other functionary and shall also have power to seize or take into possession against proper receipt the records accounts books stocks of notified agricultural produce alongwith its contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forms as may be prescribed and get the same audited in such manner as may be prescribed; (h) to publish annually at the close of the financial year, its progress report, balance sheet and statement of assets and liabilities and send copies thereof to all the members of the Board and a copy to the Government; (i) to make necessary arrangements for dissemination of information on matters relating to regulated marketing of notified agricultural produce; (j) to provide facilities for the training of officers and members of the staff of the Board as also the Marketing Committees; (k) to prepare and adopt its budget for the ensuring year; (l) to sanction the budget of the Marketing Committees; (m) to grant subventions of loans to the Marketing Committees for the purposes of this Act on such terms and conditions as the Board may determine; (n) to arrange or organize seminars or workshops or exhibitions, etc. on subjects related to agricultural marketing; (o) to perform such other functions as may be of general interest to the Marketing Committees or considered necessary for efficient functioning of the Board or the Marketing Committees. (p) to transfer or to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, may exercise such powers and perform such duties and discharge such functions as may be provided by or under this Act. (2) Without prejudice to the generality of the foregoing provisions, a Marketing Committee may - (a) regulate the entry of the persons and of vehicular traffic into the market; (b) supervise the conduct of those who enter the market for transacting business; (c) grant, renew, refuse suspend or cancel licences; (d) provide for settling disputes arising out of any kind of transaction connected with the marketing o notified agricultural produce and all matters ancillary thereto; (e) prosecute persons for violating the provisions of this Act and to the rules regulations and bye-laws made thereunder; (f) maintain and merge the market, including the regulation of admissions to, and conditions for use of, the market; (g) regulate the marketing of notified agricultural produce in the market area and the market, and weighment, delivery of and payment for, such agricultural produce; Explanation - For the purposes of clause (g) the word `regulate' shall include - (i) making, carrying out, enforcing or cancelling of nay contract of sale of a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce in question alongwith other property of the commission agent or purchaser if no commission agent is involved in the transaction; (q) make arrangement for weighmen palledars for weighing and transporting of goods in respect of transactions held in the market yard/sub-yard; (r) recover the charges in respect of weighmen and palledars and distribute the same to weighmen and palledars if not paid by the purchaser or seller, as the case may be. 62. Power to levy and collect market fee--Every Marketing Committee shall levy and collect such fee (hereinafter referred to as the `market fee") not being in excess of, or less than, the amount determined by the Government by notification published in the official Gazette from every purchaser of notified agricultural produce sold in a market area. Provided that the amount to be determined by the Government shall not be less than one rupee per one hundred rupees of the sale price of the notified agricultural produce. 66. Assessment market fee payable by commission agent and payment thereof— (1) If no return is furnished in respect of any period by the specified date, or if the Marketing Committee is not satisfied that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary for the purposes of the market and for convenience or safety of the persons using the market yard; (iv) the maintenance of standard weights and measures; (v) the meeting of establishment charges including payment and contribution of provident fund, pension, gratuity, leave encashment on retirement or yearly basis, actual reimbursement of hospitalization expenses in the authorized hospitals or other items as may be laid down in the regulations/rules; (vi) loans and advances to the employees of the committee; (vii) the payment of interest on the loans that may be raised for the purpose of the market and provisions of sinking fund in respect of such loans; (viii) the collection and dissemination or information relating to crop statistics and marketing of agricultural produce; (ix) expenses incurred in auditing the accounts of the marketing committee; (x) payment of honorarium to Chairman travelling allowances of Chairman, Vice-Chairman and other members of the Marketing Committee and sitting fees payable to number for attending the meeting; (xi) contribution to the Board as prescribed and Consolidated fund of the National Capital Territory of Delhi to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housand rupees, on the first Rs.10,000 Ten per cent on the next Rs.5,000 Fifteen percent on the remaining income Twenty percent (b) to the Government, the cost of any special or additional staff employed by the Government, in consultation with the marketing committee, for giving effect to the provisions of this Act in the market area. (3) The Government shall determine the cost of the special or additional staff referred to in clause (b) of sub- section (2) and shall, where the staff is employed for the purposes of more than one marketing committee, apportion such cost among the marketing committees concerned in such manner as it things fit and the decision of the Government determining the amount payable by any marketing committee shall be final. CHAPTER XI BUDGET AND ACCOUNTS 91. Budget and Account of a Marketing Committee- (1) Everything marketing committee shall prepare and pass the budget on its income and expenditure for the ensuing year in the prescribed Form and shall submit it to the Board for sanction before the prescribed date. The Board shall sanction the budget with or without modification within three months from the date of receipt thereof. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he control or management of a Municipal or local fund; or (iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924); Section 3(31) of the 1897 Act 3. DEFINITIONS.- In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context, - (31). "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. 26. At the outset, it may be noted that prior to Finance Act, 2002, the said 1961 Act did not contain the definition of the word "local authority". That word came to be defined for the first time by Finance Act, 2002 vide the said Explanation/definition clause. 27. Certain glaring features can be deciphered from the above comparative chart. Under Section 3(31) of the General Clauses Act, 1897, "local authority" was defined to mean "a municipal committee, district board, body of port commissioners or other authority legally entitled to the control or management of a municipal or local fund. The wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable measure of autonomy there must be. 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. 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." 28. As stated above, it has been argued on behalf of the appellants that AMC(s) is not a Municipal Committee. The words "Municipal Committee" finds place in Item (iii) of the said Explanation. According to the appellants, although AMC (s) is not a Municipal Committee still it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee, District Board or Body of Port commissioners". This is how the functional test is evolved in the case of R.C. Jain (supra). However, as stated, earlier Parliament in its legislative wisdom has omitted the words "other authority" from the said Explanation to Section 10(20) of the 1961 Act. The said Explanation to Section 10(20) provides a definition to the word "local authority". It is an exhaustive definition. It is not an inclusive definition. The words "other authority" do not find place in the said Explanation. Even, according to the appellant(s), AMC(s) is neither a Municipal Committee nor a District Board nor a Municipal Committee nor a Panchayat. Therefore, in our view functional test and the test of incorporation as laid down in the case of R.C. Jain (supra) is no more applicable to the Explanation to Section 10(20) of the 1961 Act. Therefore, in our view the judgment of this Court in the case of R.C. Jain (supra) followed by judgments of various High Courts on the status and character of AMC(s) is no more applicable to the provisions of Section 10(20) after the insertion of the Explanation/definition clause to that sub- section vide Finance Act, 2002. 30. The q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our view, Article 243N and Article 243ZF indicates that there could be enactments which still retain the entities like Municipal Committees and District Boards and if they exist, Parliament intends to give exemption to their income under Section 10 (20) of the 1961 Act. 31. Before concluding we quote hereinbelow an important principle of law enunciated by this Court in the case of R.C. Jain (supra) which reads as under: "...it is not a sound rule of interpretation to seek the meaning of words used in an Act, in the definition clause of other statutes." 32. Since we are of the view that AMC(s) is neither a Municipal Committee nor a District Board under the said Explanation to Section 10(20) of the 1961 Act, we refrain from going into the question : whether the AMC(s) is legally entitled to the control of the local fund, namely, Market Fund, under the said 1998 Act. There is one more reason why we do not wish to express any opinion on the said question. Vide Finance Act, 2008, income of AMC(s) is exempt. Sub-section 26AAB of Section 10 comes into force with effect from 1.4.2009. Therefore, we do not wish to express any opinion on the question as to whether AMC(s) is legally en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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