Local authority exemption narrowed under Section 10(20); Agricultural Market Committee excluded after the 2002 amendment.

The Explanation inserted into Section 10(20) of the Income-tax Act, 1961 gives an exhaustive definition of "local authority" and limits the exemption to Panchayat, Municipality, Municipal Committee, District Board and Cantonment Board. The earlier broader functional and incorporation tests under Section 3(31) of the General Clauses Act, 1897 cannot be imported after the 2002 amendment because the omission of "other authority" was treated as deliberate. An Agricultural Market Committee does not fall within any of the expressly named categories and is therefore not entitled to exemption under Section 10(20) after the amendment.

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Issues: Whether an Agricultural Market Committee is a "local authority" entitled to exemption under Section 10(20) of the Income-tax Act, 1961 after insertion of the Explanation by the Finance Act, 2002.

Analysis: The Explanation inserted into Section 10(20) provides an exhaustive definition of "local authority" and expressly names only Panchayat, Municipality, Municipal Committee, District Board and Cantonment Board. The omission of the words "other authority" from Section 3(31) of the General Clauses Act, 1897 was treated as deliberate, so the broader functional and incorporation tests applied earlier under the General Clauses Act could no longer be imported. The committee was found to be neither a Panchayat, Municipality, Municipal Committee nor District Board within the amended clause.

Conclusion: The Agricultural Market Committee is not entitled to exemption under Section 10(20) of the Income-tax Act, 1961 after the 2002 amendment.

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