Government company exemption under section 10(26B) sustained; additions for bank deposits and interest income were deleted.

A company incorporated by the Government of Uttarakhand, with director control vesting in the Governor and incorporation documents showing formation under section 617 of the Companies Act, 1956, was treated as a Government company eligible for exemption under section 10(26B) of the Income-tax Act, 1961. The coordinate bench had already accepted the same factual position in an earlier year, and the Revenue did not dislodge those findings. On that basis, the additions relating to bank deposits and interest income were deleted and the deletions were sustained.

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Issues: Whether the assessee was a Government company eligible for exemption under section 10(26B) of the Income-tax Act, 1961, and whether the additions made on account of bank deposits and interest income were liable to be deleted.

Analysis: The assessee was incorporated by the Government of Uttarakhand, with the Governor having the power to appoint and remove its directors. The incorporation documents and memorandum and articles of association showed that the company had been formed under section 617 of the Companies Act, 1956. In the assessee's own earlier year, the coordinate bench had already held that it was established by the State of Uttarakhand and was a Government company entitled to exemption under section 10(26B) of the Income-tax Act, 1961. On the same factual foundation, the appellate authority's view was found consistent with the earlier order, and the Revenue did not dislodge those findings.

Conclusion: The assessee was held entitled to exemption under section 10(26B) of the Income-tax Act, 1961, and the deletions of the additions were sustained.

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