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9 On the facts and in the circumstances of the case, the Id. CIT(A) has erred in allowing the deduction of Rs. 1617.59 lakhs by holding that ground rent, conversion charges, transfer fee etc. collected by the assessee also constituted the shares of State Government and Municipal Bodies and were never part of assessee's income.

10 on the facts and in the circumstances of the case, the Id. CIT (A) has erred in allowing expenses of Rs.1111.08 lakhs out of total expenses claimed at Rs.1567.79 lakhs under the head "Other miscellaneous expenses" and disallowed by the Α.Ο.

Expenditure incurred for repair and maintenance of vehicles under the head 'Machinery & Plant' amounting to Rs. 5.57 Lakhs. The expenditure incurred on account of taxes payable to various departments accounted for under head 'other misc.

6. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in allowing the deduction of Rs.791.53 lakhs (15% of Rs. 5276.86 Lakhs received under head 'receipts from sale of plots) by holding that ground rent, conversion charges, transfer fee etc. collected by the assessee also constituted the shares of State Government and Municipal Bodies and were never part of assessee's income

6 On the facts and in the circumstances of the case, the Id. CIT(A) has erred in allowing the deduction of Rs.793.79 lakhs by holding that ground rent, conversion charges, transfer fee etc. collected by the assessee also constituted the shares of State Government and Municipal Bodies and were never part of assessee's income viz: 15 percent of Rs. 1428.92 Lakhs being the amount under the head "Receipts from sale of residential plots". 15 percent of Rs. 755.92 Lakhs being the amount under the head "Receipts from sale of Commercial plots". 15 percent of Rs. 1089.95 Lakhs being the amount under the head "Receipts from sale of constructed Houses/Shops 2/3 rd of Rs.

14. The definition of the expression "the State" in Article 12 is used in the concept of the State in relation to the Fundamental Rights guaranteed by Part III of the Constitution and the Directive Principles of State as above. Policy contained in Part IV of the Constitution which principles are declared by Article 37 to be fundamental to the governance of the country and enjoins upon the State to apply making laws. The State is an abstract entity and it can, therefore only set through its agencies or instrumentalities, whether such agency or instrumentality is human or juristic. The ld. Dr further submits that so far as exemption under section 10 of the Act is concerned, it was submitted that with the omission of clause (20) of section 10, income of such local authorities was subject to tax which are engaged in the business activities or running with profit motive. However, on insertion of clause (46) to section 10 of the Act, by Finance Act 2011 w.e.f. 01.06.2011. On application made to the Board, the CBDT vide its notification published in the Gazette of India dated 29.03.2016 notified the streams of income disclosed by the Board in its return of income as exempt for the purpose of clause (46) of the section 10 of the Act, but that would not take away the status of assessee as "State" within the meaning of Article-12 r.w.s. Article 289 of the Constitution of India. The CBDT has specifically exempted certain income by way of this notification. There is no change in the activities of the assessee since inception which establishes the fact that the assessee was never into the business of commercial activities. The source of income of assessee consists of grant from State Government, various fees/conversion charges collected from public to convert land use changes, receipt from auction of land etc. and receipt from other government bodies or interest on deposits. None of these items can be said to be carrying of any activities in the nature of trade, commerce or business. The assessee is not rendering any services in the nature of trade, commerce or business for a fee or any other consideration. The assessee engaged in regulation of concerned city/district in terms of town planning and improvement of residential and commercial property needs. In support of our observations we relied upon the decision of Hon'ble Supreme Court in M/s. Novopan India Ltd. v. Collector of Central Excise and Customs [1994] Supp. (3) SCC 606, for the preposition that once the provision is found applicable to a subject, full effect i.e., liberal interpretation must be given to it and strict construction of any exemption provision should be applied only at the threshold stage. The decision of Kolkata Tribunal in Narayan Rice Mill v. CIT (ITA No. 732/Kol/2015 dated 07.06.2017, decision of Pune Tribunal in Smt. Sapna Sanjay Raisoni v. ITO [2016] 70 taxmann.com 7 also held the same on identical issue.