The income of the Gujarat Industrial Development Corporation is not exempt from income-tax under article 289(1) of the Constitution of India or under section 10(20A) of the Income-tax Act, 1961.

JUDGMENT :

S.L. Talati, J.

The question which is required to be decided in this reference is as to whether the income of the Gujarat Industrial Development Corporation, Ahmedabad, is exempt either under article 289(1) of the Constitution of India or is exempt from payment of income-tax under the provisions of section 10(20A) of the I.T. Act, 1961. These questions arose because the Corporation, in the assessment years 1967-68, 1968-69 and 1969-70, filed three returns disclosing their income as nil, claiming to be exempt under section 10(20A) of the I.T. Act, 1961, and also under article 289(1) of the Constitution of India.

2. The ITO considered the matter and both the (grounds of) claim were rejected. The matter was carried in appeal and the AAC came to the conclusion that the Corporation was an agent of the State Government and, therefore, in view of the provisions contained in article 289(1) of the Constitution of India, the Corporation was entitled to exemption. It was further held that the assessee-Corporation was exempt also under section 10(20A) of the I.T. Act, 1961. Thus, the assessee-Corporation's appeal was allowed. The Revenue preferred an appeal before the Income-tax Appellate Tribunal, and the view taken by the AAC of Income-tax was reversed, and the Income-tax Appellate Tribunal came to the conclusion that the income of the assessee-Corporation was not exempt under article 289(1) of the Constitution of India, and it was also not exempt under the provisions of section 10(20A) of the I.T. Act, 1961.

3. Thereafter, the following questions of law are referred for the opinion of this court :

"1. Whether the Tribunal was right is holding that the income of the assessee-Corporation was not exempt under article 289(1) of the Constitution of India?

2. Whether the Tribunal was right in holding that the income of the assessee-Corporation was not exempt from payment of income-tax under the provisions of section 10(20A) of the Income-tax Act, 1961?"

4. We may refer to article 289(1) of the Constitution of India which reads as under :

"289. Exemption of property and income of a State from Union taxation.-(1) The property and income of a State shall be exempt from Union taxation."

5. Income-tax is a Union taxation. The question which is required to be determined is whether the income of this particular Corporation is the income of a State. Now, this Corporation is a creation of a statute, viz., the Gujarat Industrial Development Act, 1962. It is established for certain purposes and certain objects. When we examine question No. 2, we will refer in detail to various provisions of this particular Act. But, suffice it to say, for the present that it is a separate legal entity created under the Act, and its properties would vest in this particular Corporation. The Corporation will sue and would be sued in its own name and a mere reading of the Act would show that it is not a State.

6. The learned Advocate-General, for canvassing this argument, referred to certain authorities ; the first being the case of Ramtanu Co-operative Housing Society Ltd. v. State of Maharashtra, AIR 1970 SC 1771. The provisions of the Maharashtra Industrial Development Act were considered in that case for the purpose of deciding as to whether that Act was a valid enactment and it was held that it was a valid enactment. It was argued that there was a procedural discrimination between the Maharashtra Industrial Development Act and the Land Acquisition Act and that argument was negatived. Incidentally, it was observed that, it was created under a statute and was not a trading corporation. It was examined with regard to the entries in the State list and the Union list and the Act was considered to be valid. The question as to whether the authority constituted under the Maharashtra Industrial Development Act, 1961, was or was not a State was never before the Supreme Court and it was not required to be considered and it was not considered. It was vehemently urged that this C