Statutory corporation treated as a separate taxable entity; State control does not by itself create income-tax immunity.

A statutory Road Transport Corporation was treated as a separate corporate entity, not merely a department or agent of the State, because it had perpetual succession, its own funds, statutory powers, and an independent accounting framework despite governmental control. On that basis, its income was not regarded as State income and it was held to be a taxable unit within the Income-tax Act's charging provision. The claimed exemption for income allegedly derived from property held under trust or other legal obligation for charitable purposes was also not accepted in writ proceedings, as the exemption required factual examination by the taxing authority in the first instance.

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Issues: (i) whether the Road Transport Corporation could claim exemption on the footing that its income was the income of the State and that it functioned merely as an agent of the State; (ii) whether the corporation was a taxable unit within the charging provision; and (iii) whether the corporation's income was exempt as income derived from property held under trust or other legal obligation wholly for charitable purposes.

Issue (i): whether the Road Transport Corporation could claim exemption on the footing that its income was the income of the State and that it functioned merely as an agent of the State.

Analysis: The scheme of the Road Transport Corporations Act, 1950 created a body corporate with perpetual succession, power to sue and be sued, separate statutory powers, its own funds, budgetary and accounting framework, and governmental supervision. These features indicated that the corporation was not a mere department of the State and that the income earned by it was not, by that reason alone, the income of the State. The mere fact that the State had control, could appoint members, and could regulate finance and administration did not convert the corporation into an agent of the State for income-tax purposes.

Conclusion: The claim that the corporation was the State's agent and that its income was exempt as State income was rejected, against the assessee.

Issue (ii): whether the corporation was a taxable unit within the charging provision.

Analysis: The charging section of the Income-tax Act was treated as having wide amplitude, and the word 'individual' was construed in a broad sense to include a separate legal entity such as a statutory corporation. On that construction, the corporation could be assessed as a distinct taxable unit notwithstanding its public character or statutory origin.

Conclusion: The corporation was held to be a taxable unit, against the assessee.

Issue (iii): whether the corporation's income was exempt as income derived from property held under trust or other legal obligation wholly for charitable purposes.

Analysis: The corporation was not established for a religious or charitable purpose merely because a statutory provision required part of the net profits to be applied for specified public purposes or road development. The claim to exemption depended on facts and assessment-specific matters and could not be finally granted in writ jurisdiction. The appropriate taxing machinery had to examine the claim in the first instance.

Conclusion: The exemption claim under the charitable-purpose provision was not allowed in the writ proceedings, against the assessee.

Final Conclusion: The writ petition failed because the corporation was not entitled to constitutional immunity, was assessable as a taxable entity, and did not establish a writ-worthy case for charitable exemption.

Ratio Decidendi: A statutory corporation with separate corporate personality, statutory powers, and governmental supervision is not thereby the State or its mere agent for income-tax purposes, and may be assessed as a distinct taxable entity under the Income-tax Act.

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