TaxTMI 
TaxTMI 
2000 (12) TMI 889
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....ricultural Produce Marketing Committee, Azadpur, Delhi, is a 'local authority' within the meaning of section 10(20) of the Income-tax Act read with section 3(31) of the General Clauses Act, 1897 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding the income of Agricultural Produce Marketing Committee, Azadpur, Delhi, is not taxable under the Income-tax Act, 1961 ?" For determination of the questions reference to the factual aspects, as detailed in the statements of cases are, without unnecessary details, as follows : The assessee-committee was formed under the Delhi Agricultural Market Produce Marketing (Regulation) Act, 1976 (in short "the Marketing Act"). It was entrusted with the duty of providing facilities for marketing of agricultural produce in Azadpur, Subzi Mandi, Delhi, and to do other acts in relation to the superintendence, direction and control of markets for regulating marketing of agricultural produce. The Assessing Officer was of the view that it was not a local authority as claimed but was an association of persons. Accordin....
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....haracter as a Municipal Committee, District Board or Body of Port Commissioners, possessing, therefore, many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board or Body of Port Commissioners. (ii) It should possess one essential feature, namely, that it is legally entitled to or entrusted by the Government with, the control and management of a municipal or local fund. (iii) It must have a separate legal existence as a corporate body. (iv) It must not be a mere governmental agency but must be a legally independent entity. (v) It must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. (vi) It must enjoy a certain degree of autonomy, with freedom to decide for itself questions of policy affecting the area administered by it. &nbs....
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....hould be elected by the people and there should be an element of people's choice being represented in its Constitution. It should not consist only of persons appointed by the State Government on salary basis. (ii) It should function independently and not directly under the supervision and control of the Government. (iii) It should hold or possess a local fund. (iv) The extent of control of the Government, under which the local authority has to function should not be so prominently pervasive that it is almost destructive of its independence. The mere power to levy taxes, rents, etc., or recover them as arrears of land revenue could not be sufficient to clothe the authority with the status of a local authority." Haryana Housing Board was held not to be a local authority as : (a) it had no popular representation ; (b) it did not have a local fund ; and, (c) it did not function independently. ....
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....the Marketing Act. It is stated that the market committee is a toothless body having no control or entrustment over any fund. It does not enjoy the degree of freedom, autonomy and independence normally associated with local self-Government bodies. The board constituted under section 5 of the Marketing Act has the power to exercise superintendence and control over the market committee. The budget of the board is sanctioned by the administrator. The market committees are constituted under section 8 of the Marketing Act. Under section 9, the administrator has the power to nominate various members of the market committee. The chairman of the market committee is nominated by the administrator. Under section 25, the market committee has to provide facilities for marketing as directed by the board. The power to collect fee is provided under section 28, but is hedged with a condition that it shall not be less than the amount determined by the administrator as specified in the bye-laws under section 65 of the Marketing Act. The bye-laws require the sanction of the board which has power under the said section to amend the bye-laws. Under section 29, the marketing committee can borrow only af....
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....dent under article 239 of the Constitution ; . . . (d) 'Board' means the Delhi Agricultural Marketing Board constituted under section 5 ; . . . (h) 'director' means a person appointed as the Director of Agricultural Marketing for the Union Territory of Delhi. (i) 'local authority' means in relation to an area within the local limits of- (i) the municipal corporation of Delhi, that Corporation ; (ii) the New Delhi Municipal Committee, that Committee ; (iii) the Delhi Cantonment Board, that Board ;" Constitution of the Delhi Marketing Board is provided in Chapter II. Sections 5(7), 5(9), 5(10) and 5(14)(a)(b) read as follows : "5. (7) The administrator may remove from office any non-official member of the board who has become subject to any of the disqualifications specified in sub-....
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....provisions of this Act, and of the rules and bye-laws made thereunder for the market area ; (ii) to provide such facilities for marketing of agricultural produce therein as the board may, from time to time direct. (iii) to do such other acts as may be required in relation to the superintendence and control of markets, or for regulating marketing of agricultural produce in any place in the market area and for purposes connected with the matter aforesaid and, for that purpose, may exercise such powers and perform such duties and discharge such functions as may be provided by or under this Act. (2) Without prejudice to the generality of the foregoing provisions, a market committee may- (a) regulate the entry of persons and of vehicular traffic into the market ; (b) supervise the conduct of those who enter the market for transacting business ; (c) grant, renew, refuse, suspend or cancel licences ; (d) provide for settling disputes arising out of any kind of transactions connected with the marketing of agricultural produce and all matter ancillary thereto ; (e) prosecute persons for violating the provisions of this Act and of the rules and bye laws made thereunde....
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....was a local authority. Reliance was placed on certain observations in R. C. Jain's case [1981] 58 FJR 284 ; AIR 1981 SC 951 to hold so. We shall deal with the corresponding provisions of the two Acts, i.e., the Maharashtra Act and the Act to show parity between the provisions. It may be noted that in the Maharashtra Act, there is a provision that it shall, for all practical purposes, be deemed as a local authority. Similar provision is there in the Gujarat Act. Only the Act and the Punjab Act do not contain such a provision. Similarly, inCIT v. Agricultural Market Committee [1983] 143 ITR 1020 (AP) and in Budha Veerinaidu v. State of Andhra Pradesh [1983] 143 ITR 1021 (AP) (Appx.), the Andhra Pradesh High Court considered the provisions in the agricultural market committee functioning under the Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966. It was held that the market committee was a local authority. Reliance was placed on R. C. Jain's case [1981] 58 FJR 284 ; AIR 1981 SC 951 for the conclusion. The Tribunal referred to a decision of the Gujarat High Court (unreported) where it was held that a market committee is a local authority, i.e., Special Civil App....
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....). (vii) Provision for expending the market fund for purposes other than those spec ified in section 40 with the previous approval of the administrator (sub-section (n) of section 40) (vii) Appointment of secretary of a market committee by the market committee with the approval of the director (sec tion 22). (viii) Supervision of market committee by the administrator (section 48) (viii) Issue of general or special directions by the director providing for performance of duties of common nature where more than one committee exists (section 24). (ix) The power of constitution of one or more Tribunals for recovery of dues to the market committee with the administrator (section 60(4). (ix) Suspension or cancellation by the director of any licence granted or renewed (section 27(4)). (x) Power of administrator to delegate power (section 61) (x) Director to hold enquiry into the affairs of a market committee (section 44). (xi) Power of administrator to make rules (section 63) (xi) Director to fix a period for performance of duties in case of default by the market committee (section 45). (xii) The r....
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....iding in the market area and holding agricultural land in the Union Territory of Delhi with the provision for nomination of 50 per cent. of such members by the administrator in certain cases. (a) Eight agriculturists to be elected by members of managing committees of co-operative societies dispensing agricultural credit in the market area . (b) Two members to be elected by the traders and commission agents holding licences to operate as such in the market area (b) Four members to be elected in the prescribed manner from amongst themselves by the traders holding general licences. (g) Two members to be nominated by the administrator of whom one shall represent the interests of consumers (f) Nomination by director in the case of where an election does not result in the return of required number of qualified persons to take office. (ii) When the market committee is constituted for the first time all the members thereof, including chairman and the vice-chairman to be nominated by the administrator (iii) The chairman of a market committee to be nominated by the administrator from among the members of the committee ....
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....s by the director (section 5). (iv) Nomination of persons by the administrator in certain circumstances (section 14) (iv) Regulation of marketing of agricultural produce (section 6). Licence to be granted by the director when a market committee has not yet started functioning (section 6). (v) Removal of members for misconduct by the administrator on the recommendation of the market committee (section 15) (v) First meeting of a market committee to be held on a date fixed by the director (section 15). (vi) The market committee to levy and collect such fee not being in excess of or less than an amount determined by the administrator by notification (vi) Provision for appointment by director of administrator after normal or extended term of office of members expires (section 15A). (vii) Provision for expending the market fund for purposes other than those specified in section 40 with the previous approval of the administrator (sub-section (n) of section 40) (vii) Nomination of members by the State Government in certain circumstances (section 16). (viii) Supervision of market committee by the administrator (sec....
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....i), (ix). (ii) Grant of allowance for regulation of marketing produce by the director who is ex-officio secretary of the board when a market committee has not been constituted or has not started functioning (section 33(a)) (ii) Inspection of construction works undertaken by market committees (section 34K). (iii) Suspension or cancellation of licence by the director (section 35(2)) (iii) Payment of contribution to the board by every market committee (section 34M). (iv) Appeal to the board (section 36(a)) payment of contribution to the board by a market committee out of the market fund (section 39(3)(a)) (iv) The board to make regulations with the previous app roval of the State Govern-ment (section 59A). (v) Inspection enquiry by the board and submission of statements to the board (section 43) (vi) Duty of officers, servants and members of market committee to furnish information to the board (section 44). (vii) Board to call for proceed ings of the market committee and to pass orders thereon (section 46) (viii) Compounding of offences with the previous ap....
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....istant Cotton Extension Officer with no right to vote. (ii) When the market committee is constituted for the first time all the members thereof, including chairman and the vice-chairman to be nominated by the administrator (b) When a market committee is constituted for the first time all the members thereof and the chairman and vice-chairman shall be nominated by the State Government. (iii) The chairman of a market committee to be nominated by the administrator from among the members of the committee (c) On the failure to elect members within the stipulated period by the co-operative society, panchayat samiti local authority etc. the director shall appoint on behalf of such persons the required number of persons qualified to be elected (section 13). (iv) The market committee to elect one of its elected members to be its vice-chairman (section 9) The Delhi Agricultural Produce Marketing (Regulation) Act, 1976 The Punjab Agricultural Produce Marketing Act, 1961 (1) (2) (3) 1. The functions of administrator/ director/the State Government by way of control, etc. (i) Admin....
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....s by the market committee (section 65) (xii) Power to make rules lies with the State Government (section 43). (xiii) Power of administrator to amend the schedule (section 66) (xiv) Power of administrator to transfer assets etc. in certain cases (section 67) (xv) Approval by the administrator for write off of irrecoverable fees, etc., in certain cases (section 68) 2. Control by the board (i) Money to be borrowed by a market committee with the previous sanction of the board (section 29) (i) Removal of any office-bearer by a majority of two-thirds of the total members of the committee subject to confirmation by the board (section 16(2)) (ii) Grant of allowance for regulation of marketing produce by the director who is ex-officio secretary of the board when a market committee has not been constituted or has not started functioning (section 33(a)) (ii) Powers of the committee if delegated to one member by the market committee, the resolution shall operate only after its approval by the Board (section 19, proviso) (iii) Suspension or cancellation of licence by the director (secti....
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....by the traders and commission agents holding licences to operate as such in the market area. (a) Where the committee is to consist of nine members : (i) five members to be elected from producers of the notified area by the panchayat and sarpanches of the gram panchayats situated within the notified area ; (ii) two members from persons hold ing licences under section 10 in the market area and (iii) one member to be elected from persons holding licence under section 13. (c) The chairman of the co-operative society engaged in the business of processing on marketing of agricultural produce in the market area with the provision that in the absence of such co-operative society the administrator to nominate a member to represent the persons doing the business of processing of marketing of agricultural produce in the market area (b) Where the committee consists of 16 members : (i) nine members from the producers; (ii) four members from licensees under section 10. (d) One member to be elected by the members of other local authority within the local limits of whose jurisdiction the principal market in relation to that market committee is constituted (iii) T....
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....rea in which all the trade is to be carried on exclusively by the Government by or under law for the time being in force or arrange for the collection of such other agricultural produce in the market area as the administrator may notify in the official gazette. It is also empowered to take all possible steps to prevent adulteration and to promote grading and standardisation of such agricultural produce as may be prescribed by rules. It is further empowered to enforce the provisions of the said Act. The said committee is further empowered under section 28 of the said Act to levy and collect market fees, as may be determined by the administrator from every purchaser of agricultural produce sold in the market area. A conspectus of various provisions of the Delhi Development Act, which formed the foundation of R. C. Jain's case [1981] 58 FJR 284 ; AIR 1981 SC 951 will provide an answer to the question of parity between that case and the issue under examination in this case. A synopsis of the provisions is as follows : The Delhi Development Act (i) Rule means a rule made under this Act by the Central Government (section 2(1)); (ii) The Central Government shall appoint ....