ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY Vs. UOI

JUDGEMENT

(1.) WHEN this writ petition came up for admission on the adjourned date, it was submitted by the counsel for the parties that the pleadings are complete and the writ petition itself may be heard and finally disposed of. Accordingly, we have heard the writ petition in full and the judgment is being pronounced thereon.

(2.) THE petitioner is the Adityapur Industrial Area Development Authority, a 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 as due to the petitioner from 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 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 (20A) providing for exclusion of the income of an authority constituted under any law enacted for the purpose of meeting the need for housing accommodation and for the purpose of planning, development or improvement of the cities, towns and villages, the Deputy Commissioner of Income Tax. T.D.S. Circle, Jamshedpur informed the Manager of the Central Bank of India that the bank was bound to deduct tax at source from the interest accrued on the fixed deposit of the petitioner-authority for the concerned period. It is this notice that is sought to be challenged by the petitioner on the ground that the income of the petitioner-authority is not liable to be assessed under the Indian Income Tax Act in view of Article 289(1) of the Constitution of India and consequently, the notice (Annexure P/1) was liable to be quashed. We may mention here that the petitioner-authority has not questioned the stand of the authority under the Income Tax Act that the income of the petitioner-authority was not liable to exclusion in terms of Section 10(20) of the Income Tax Act, as amended. Nor has the petitioner-authority questioned the deletion of Sub-section (20-A) of Section 10 of the Income Tax Act or questioned the stand of the department that in view of the deletion the petitioner- authority was not entitled to the exclusion of its income.

(3.) 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 then 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 lability 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. I.T.O., 1973 92 ITR 430(Bom) holding that income of the Housing Board could not be regarded as the income of the State Government and consequently immunity under Article 289(1) of the Constitution was not available to the Board was noticed.