IMPORTANT POINT
Word "development" in Section 10(20A) of I.T. Act should be understood in its wide sense.

JUDGMENT

Thomas, J.-The question raised, in its broad parameters, is whether industrial development could be enveloped within the expression "planning, development or improvement of cities, towns and villages or for both" in Section 10(20A) of the Income-tax Act, (for short the I.T. Act ).

2. Appellant, Gujarat Industrial Development Corporation, (for short the Corporation ) claimed exemption from taxation under the I.T. Act on two alternative premises, one under Article 289 (1) of the Constitution and the other under clause (20A) of Section 10 of the I.T. Act. A Division Bench of High Court of Gujarat disallowed the claim under both. Hence the Corporation has filed this appeal by special leave.

3. Corporation has been created under the Gujarat Industrial Development Act, 1962, (for short the Gujarat Act ) with the right to hold properties and the right to sue and be sued in its own name. The Income-tax Officer concerned repelled the claim of the Corporation for exemption from tax on both grounds, but the Appellate Assistant Commissioner (AAC), on appeal, upheld their claim on both counts. When the Revenue challenged the said decision in second appeal the Income Tax Appellate Tribunal reversed the view taken by the AAC on both counts. Two questions were thereupon formulated to be answered by the High Court, one relating to Article 289(1) of the Constitution and the other relating to Section 10(20A) of the I.T. Act. Answers were given by the High Court, as mentioned above, against the Corporation.

4. Learned counsel for the appellant Corporation stated, at the outset, that he does not press the claim under question under Article 289(1) of the Constitution. His arguments were confined entirely to the scope of Section 10(20A) of the I.T. Act. Therefore, we need not vex our mind with the former question.

Section 10(20A) of the I.T. Act reads thus :

"Any income of an authority `constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both."

5. Any income falling within the ambit of said sub-section would automatically slip out of exigibility under I.T. Act. The sub-section pertains to any income of an authority constituted by or under any enacted law. The first limb of the sub-section is squarely available to the Corporation as it has been constituted under the Gujarat Act.

6. The second limb of the sub-section consists of two alternatives, of which the first is that the authority constituted by law should be for dealing with the need to provide housing accommodation. That alternative is obviously not available to the appellant Corporation as nobody has a case that appellant Corporation has anything to do with the obligation to provide housing accommodation. It is the second alternative in the sub-section under which appellant seeks shelter to be absolved from the liability to pay income tax. As per that alternative, if the Authority is constituted for the purpose of planning or development of improvement of any city or town or village or a combination of them, the income of such Authority is not exigible to income tax.

7. The Division Bench of the High Court while agreeing that "indistrial activity is one of the facets of general development" adopted a reasoning that since development of an area would require roads, buildings, sanitation, parks, sports, educational institutions and several other amenities "a city or town or village could be well developed without any industry". The Division Bench posed a question and answered it in the following manner :

"The question, therefore, is whether when a particular Corporation is established for the purpose of developing or establishing industries in any particular area, can any one say that it is for the purpose of planning, developing or improving a particular city, town or village or a particular area? One may establ