TaxTMI 
TaxTMI 
2003 (5) TMI 51
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.... body corporate under the Bihar Industrial, Area Development Authority Act, 1974, having perpetual succession and a common seal. The petitioner challenges annexure P-1 issued by the Deputy Commissioner of Income-tax, T.D.S. Circle, Jamshedpur, to the Central Bank of India, the petitioner's banker. Admittedly, interest was due to the petitioner from the Central Bank of India on the fixed deposits of the petitioner in the bank. In view of the amendment brought to section 10(20) of the Income-tax Act, 1961, by the Finance Act, 2002, explaining which are the local authorities whose incomes are not chargeable to tax under the Act and the deletion of section 10(20A) providing for exclusion of the income of an authority constituted under any law e....
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....nsel, since the petitioner-authority was created under the Bihar Industrial Development Authority Act, 1974, the property owned by the petitioner was the property of the State Government and the income derived by it, was the income of the State Government. It was contended that article 289(2) of the Constitution had no application and consequently the authority under the Income-tax Act could not assess the income of the petitioner-authority under the Act in view of the exemption of the income of a State contained in article 289(1) of the Constitution. This stand of the petitioner-authority was met by the respondents by pointing out that the income of the authority created under the Bihar Industrial Areas Development Authority Act was not in....
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....ion. But what is to be noted here is that the claim based on the exemption under article 289(1) of the Constitution was not pursued before the Supreme Court. On article 289(1) of the Constitution of India the Gujarat High Court held that the State is different from corporations which are created by laws enacted either by Parliament or by State Legislatures for different and distinct purposes. They are separate entities in law. They sue and they are sued in their own capacities and for any contractual liability of the Corporation no person can sue the State, because every Corporation in itself is not State but a separate legal entity. The decision of the Bombay High Court in Vidarbha Housing Board v. ITO [1973] 92 ITR 430 holding that the i....
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.... SCC 251, property of the airport authority was held to be not that of the Union. In Central Warehousing Corporation v. Municipal Corporation [1994] Suppl. 3 SCC 316, the property of the warehousing corporation was held to be not the property of the Union within the meaning of article 285(1) of the Constitution. In Western Coalfields Ltd. v. Special Area Development Authority, Korba, AIR 1982 SC 697, it was held that the property of a company incorporated under section 617 of the Companies Act, 1956, in which the entire shares were held by the Union Government, was not the property of the Union in terms of article 285(1) of the Constitution. This line of decisions, in our view, show that the properties of a statutory corporation or a Govern....
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....ncome is exclusively that of the authority, the petitioner and not that of the Government and the liabilities are also only that of the authority and not of the State Government. Therefore, nothing turns on the argument based on section 17 of the Development Authority Act or the distinction sought to be made to seek support from the decision of the Supreme Court in A.P. State Road Transport Corporation's case [1964] 52 ITR 524. The other decision relied on by learned counsel in Ramtanu Co-operative Housing Society Ltd. v. State of Maharashtra, AIR 1970 SC 1771, cannot lend any assistance to the petitioner. There, the question involved was whether the particular legislation was within the legislative competence of the Maharashtra State. It w....
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....vied by the Union. Their Lordships further observed that the contention that these two articles should be read in a restricted sense of exempting the property or income of a State in one case and the property of the Union in the other from the taxes directly either on property or on income, as the case may be, is correct. It was held that exemption did not extend to customs duty or excise duty levied by the Union. This decision, in our view, only enables the Department to contend that article 289 of the Constitution must be read strictly and its scope should not be expanded so as to include not only the properties of the State but also property held by the Corporations or companies controlled by the State, since they are not States themselv....