Law:

Section:

Section 10(20) (as amended by the Finance Act, 2002) of the Income-tax Act, 1961, read with articles 285 and 289(1) of the Constitution of India - Exemptions - Local authority - Whether properties of a statutory corporation or a Government owned company or other authority established by Govern-ment are not properties of Government for purpose of article 285 or article 289 - Held, yes - Whether, therefore, income of an authority constituted under any law enacted for purpose of satisfying need of housing accommodation or for purpose of planning, development or improvement of cities, towns and villages is liable to be taxed - Held, yes FACTS The Deputy Commissioner in view of the amendment brought in section 10(20) by the Finance Act, 2002 and the deletion of section 10(20A), issued a notice to the manager of the petitioner's banker to deduct tax at source from the interest accrued on the fixed deposit of the petitioner-authority for the concerned period. The petitioner filed a writ petition challenging the notice of the Deputy Commissioner on the ground that its income was not liable to be assessed under the Act in view of article 289(1) of the Constitution and, consequently, the notice was liable to be quashed. HELD While article 285 of the Constitution exempts the property of Union from State Taxation, article 289 exempts the property of the State from Union Taxation. To that extent, the provisions are similar and the claim for exemption should stand on the same footing. However, from the various decisions of the Supreme Court, it is clear that the properties of a statutory Corporation or a Government owned company or the other authority established by the Government are not the properties of the Government for the purpose of article 285 or article 289.[Para 6] In support of its claim the petitioner relied on section 17 of the Bihar Industrial Area Development Authority Act to point out that the State Government, by a notification, could dissolve the authority, and from the date of dissolution of the authority, its properties, funds and dues realizable by the authority along with its liabilities shall devolve upon the State Government. This section only…

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