Judgment

MADON, J. :- The above three appeals have been filed by certificate granted by the Andhra Pradesh High Court under S. 261 of the Income-tax Act, 1961, against the judgment of that High Court in an income-tax reference. The Respondent, the Andhra Pradesh State Road Transport Corporation, is a Road Transport Corporation established with effect from Jan. 11, 1958, by the State of Andhra Pradesh by a notification issued under section 3 of the Road Transport Corporations Act 1950 (Act No. 64 of 1950) (hereinafter referred to in short as "the RTC Act"). Prior to the establishment of the Respondent Corporation Road Transport in the State of Andhra Pradesh was a department of the Government, being run by the Government of Hyderabad prior to the formation of the State of Andhra and thereafter by the Government of Andhra Pradesh. During the whole of this period the income made from road transport was exempt from income-tax. After the Respondent Corporation was formed, the Income-tax Department took the view that the income of the Respondent Corporation was liable to income-tax and assessed the Respondent Corporation to income-tax for the assessment years 1958-59 and 1959-60. The Resp