TaxTMI 
TaxTMI 
1996 (2) TMI 7
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....-tax Act. They are (page 925) : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is not a 'local authority' as contemplated by section 2(31)(vi) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee is not entitled to an allowance for its contribution to the employees' provident and gratuity funds ? " The High Court answered both the questions in the affirmative i.e., against the assessee and in favour of the Revenue. In this appeal, however, Sri Tapas Ray, argued only one question, viz., question No. 1. The assessee, the Calcutta State Transport Corporation, is a statutor....
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....efined in the Income-tax Act. Its definition is, however, contained in the General Clauses Act in clause (31) of section 3. It reads : " 'local authority' shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund." The contention of Sri Ray is that inasmuch as the assessee is entrusted by the Government with the control or management of a "local fund", it is a local authority within the meaning of the said definition. Sri Ray placed strong reliance upon the judgment of this court in Union of India v. R. C. Jain, AIR 1981 SC 951 ; [1981] 2 SCC 308. The question in the said decision was w....
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.... bodies such as those connected with providing amenities to the inhabitants of the locality like health and education, water and sewerage, town planning and development, roads, markets, transportation, social welfare services, etc. Finally--it was observed--such a body must have the power to raise funds for furtherance of its activities and fulfilment of its objects by levying taxes, rates, charges or fees. Applying the said tests, it was held that the Delhi Development Authority is a "local authority". In particular, it was pointed out that section 37 of the Delhi Development Act empowers the Delhi Development Authority to levy betterment charges on the owners of the properties and that other provisions provide for its assessment and colle....
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....Its powers and functions bear no relation to the powers and functions of a municipal committee, district board or body of port commissioners. It is more in the nature of a trading organisation. Merely because it has a fund or for that matter merely because it is constituted to provide a public service and to employ persons in that connection, it cannot be said that its functions are similar to those of municipal council, district board or body of port commissioners. The assessee-Corporation stands no comparison with the Delhi Development Authority which has, inter alia, power to prepare a Master Plan for Delhi specifying the zones (zonalisation), specifying the use to which each zone can be put to, power to order demolition of buildings, wh....