Law: Income Tax Act, 1961

Section: 10(20A)

(a) Income-tax-----Exemption---Development of cities, towns and villages--- "Development", meaning of---Development is not confined to non-industrial activities---State Industrial Development Corporation---Industrial development involves planning, development or improvement of cities, towns and villages---Roads, buildings, sanitation, parks, educational institutions and other amenities to be provided in a planned industrial area---State Industrial Development Corporation entitled to exemption from tax---Indian Income Tax Act, 1961, S.10(20A)---Indian Gujarat Industrial Development Act, 1962. (b) Interpretation of statutes--- Exemption to public bodies for urban and rural development--¬Interpretation to preserve object of exemption. ---[Gujarat Industrial Development Corporation v. CIT (1985) 151 ITR 255 reversed. Proper planning is absolutely necessary for creation of an industrial area. Inside roads, sub-roads, buildings, sanitation, parks and other amenities have also to be provided in a planned industrial area concept of any industrial complex. Even educational institutions may have to be provided in such complex. Therefore, development of an industrial area would have its direct impact on the development or improvement of that part of the city or town or village where such area is located. Delinking the industrial area from the scope of development of any area is, thus, without any practical sense. The word "development" in section 10(20A) of the Income Tax Act, 1961, should be understood in a wide sense. There is no warrant to exclude all development programmes relating to any industry from the purview of the word "development" in the said clause. There is no indication in the Act that development envisaged therein should be confined to non-industrial activities. Development of a place can be accelerated through varieties of schemes and establishment of industries is one of the modes of developing an area. One of the reasons for incorporating a specific provision of exemption from income-tax such as section 10(20A) is to protect public bodies created under law for achieving the purpose of developing urban or rural areas for public good. When the object is…

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