Law: Income Tax Act, 1922

Section: 3,4,2(9)

Law: Thal Development Act, 1949

Section: 45

Income-tax Act (XI of 1922)---Ss. 3 & 4 read with S. 2(9) read with West Pakistan Thal Develop­ment Act (XV of 1949), S. 45-Thal Development Authority-Held, a "local authority" and not liable for income-tax-Issue of notices of demand to such Authority-Held, illegal. Deputy Managing Director, National Bank of Pakistan and others v. Ataul Haq P L D 1965 S C 201 ref. ORDER DORAB PATEL, J.-The Thal Development Authority (hereinafter called the said Authority) was set up as a body corporate under the West Pakistan Thal Development Act XV of 1949 (hereinafter called the said Act). But, although the said authority was a body corporate, it had been conferred powers at least as wide as those of any local authority. It was empowered under sections 42 and 43 to levy taxes and to maintain an authority fund. It was empowered under section 21 to frame schemes for development by the acquisition of land under the Land Acquisition Act and the powers conferred by this section, expressly included powers to lay out towns, mandis, market places, villages, roads, break up land for cultivation, etc. Now, in the exercise of the very wide powers conferred on it, it had set upon sugar mill at Leiah, which was run by a public company known as the Thal Industrial Corporation Ltd. But the said Authority acted as the managing agent of this company and had received remuneration for its services. The terms of the remuneration are not relevant and it is sufficient to state that by a notification dated 31-5-4969, in the exercise of its powers under section 81 of lie said Act, the Provincial Government dissolved the said Authority and appointed its Chief Secretary as Administrator it place of the said authority. And all the founds, assets and liabilities of the said Authority vested in the administrator. The said Authority had never submitted any returns of income for the managing agency commission earned by it from the Thal Industrial Corporation Ltd., nor did the Administrator, who had succeeded to the said Authority submit any returns. Therefore, the Income-tax Officer, Companies Circle II, Lahore, issued notices to the said Authority and/or the Administrator under section 34 of the…

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