Allahabad High Court
U.P. State Road Transport Corporation vs Commissioner Of Income-Tax on 17 August, 2006
Equivalent citations: (2006)206CTR(ALL)424, [2006]286ITR350(ALL)
Author: R.K. Agrawal
Bench: R.K. Agrawal, Vikram Nath
JUDGMENT
R.K. Agrawal J.
1. The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law undeAIR 1997 SC 3011r Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for the opinion of this Court :
Whether, on the facts and in the circumstances of the case, the status of the assessee-corporation was that of a local authority and as such the income derived by it from house property, capital gains and the business of supply of goods and services was exempt to the extent provided in Section 10(20) of the Income-tax Act, 1961, for the assessment years 1976-77 and 1977-78 ?
2. The present reference relates to the assessment years 1976-77 and 1977-78.
3. Briefly stated the facts giving rise to the present reference are as follows :
The assessee is a company. It is a road transport corporation constituted under the State Road Transport Corporations Act, 1950, vide notification dated May 31, 1972 of the Governor of U.P. The assessment years involved are 1976-77 and 1977-78 for which the relevant previous years ended on March 31, 1976, and March 31, 1977, respectively. The Income-tax Officer did not accept the assessee's submission that it was entitled to exemption under Section 10(20) of the Act as a local authority. Accordingly, assessment was completed for both the assessment years. For the assessment year 1976-77 the net income of Rs. 1,54,60,869 was given set off against the unabsorbed depreciation of Rs. 3,38,08,559 for the assessment year 1973-74 resulting in nil income for taxation. For the assessment year 1977-78 the total income of Rs. 1,17,11,031 was set off against the unabsorbed depreciation of 1973-74. For the assessment year 1977-78 the assessee also claimed exemption under Section 11 of the Act on the basis that the corporation had been formed for the advancement of an object of general public utility not involving the carrying on of any activity for profit. However, the Income-tax Officer did not accept the submission and completed the assessment as aforesaid.
4. The assessee, being aggrieved, went up in appeal before the Commissioner of Income-tax (Appeals). Relying upon the consolidated order dated September 17, 1980, of the Appellate Tribunal in I. T. A. Nos. 1254/Alld./ 78-79 and 34 and 35/Alld/1979 for the assessment years 1973-74, 1974-75 and 1975-76. He held that the assessee-corporation could not be treated as a local authority within the meaning of Section 10(20) of the Act. Accordingly, the appeal filed for the assessment year 1976-77 was dismissed. The same view was held by the learned Commissioner of Income-tax (Appeals) for the assessment year 1977-78. However, the Commissioner of Income-tax (Appeals) did not give any decision for the assessment year 1977-78 on the question of claimability of exemption by the assessee under Section 11 of the Act.
5. The assessee, being aggrieved, came up in appeals before the Appellate Tribunal. The Appellate Tribunal following its own order for the earlier assessment years as referred to above, upheld the order of the first appellate authority holding that the assessee-corporation was not entitled to exemption under Section 10(20) of the Act. So far as the other question is concerned, since that question had not been agitated by the assessee for the assessment year 1976-77, the Appellate Tribunal upheld the submission made on behalf of the Revenue that the assessee should not be allowed to agitate that ground. As regards the assessment year 1977-78, however, the Appellate Tribunal restored the matter to the file of the learned Commissioner of Income-tax (Appeals) with the direction to give his decision on the submissions made on behalf of the assessee on this limited issue of the claimability of exemption under Section 11 of the Act after giving an opportunity of being heard to both the parties.
6. We have heard Sri Samir Sharma, learned Counsel appearing for the assessee, and Sri R.K. Upadhyay, learned standing counsel appearing for the Revenue.
7. The question in the present reference need not detain us any longer in view of the decision of the apex court in the case of Calcutta State Transport Corporation v. CIT , wherein the apex court has held that the Calcutta State Transport Corporation, even if it is treated as an "authority" within the meaning of Article 12 of the Constitution of India it is not a "local authority" under Section 10(20) of the Act as it does not possess the nature and characteristics of a municipal committee, district board or a body of port commissioners. The aforesaid view has again been reiterated by the apex court in the case of CIT v. U.P. Forest Corporation .
8. Respectfully following the aforesaid decisions, we are of the considered opinion that as the applicant-corporation is not "local authority" within the meaning of Section 10(20) of the Act the income earned by it from house property, capital gains, etc., is not exempted.
9. We accordingly, answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessee. There shall be no order as to costs.