The Andhra Pradesh Road Transport Corporation is subject to income taxation as it is deemed an independent legal entity and does not qualify for immunity under the Indian Income Tax Act.

1. These are a batch of four writ petitions filed by the Andhra Pradesh Road Transport Corporation for prohibiting the Income Tax Officer, B - 1, B - Ward, Hyderabad, from collecting any tax or taking any proceedings under the Indian Income Tax Act against the petitioner and seeking to quash the assessment orders of the Income Tax Officer dated 29/02/1960 for the year 1958-59 levying a tax of Rs.13,60,963-86 nP. for the period 11/01/1958 to 31/03/1958 and for the year 1959-60 levying a tax of Rs.34,44,430-48 nP, for the period 1st April 1958 to 31st March 1959.

2. It may be stated that the Andhra Pradesh Road Transport Corporation (hereinafter called the Corporation) was established under the Road Transport. Corporation Act LXIV of 1950 by a notification issued by the State Government under that Act and has been functioning with effect from 11/01/1958. Prior to the formation of the Corporation, the Road Transport was a Department of the Government of Hyderabad and subsequently after the integration that of the Government of Andhra Pradesh and during those years it was treated as being exempt from Income - tax. In response to a notice under S.22 of the Indian Income - tax Act issued by the Income - tax Officer, B - 1, B - Ward, and served on 29/01/1959, a return was furnished under protest staring that the income of the corporation does not attract liability to tax under the Indian Income - tax Act. Before the Income Tax Officer it was contended on behalf of the Corporation that its status does not fall under any of the five categories of assessees specified in S.3 of the Indian Income Tax Act ., viz., individual, Hindu Undivided family, Firm, Company or Association of persons and since there is no other category of assessee mentioned in the Act the Corporation cannot be assessed. Secondly, it was contended that inasmuch as the net income of the corporation goes ultimately to the State of Andhra Pradesh under S.30 of the Corporation Act, it is immune from Income - tax under Art.289 of the Constitution of India and thirdly, that the corporation was a local authority exempt from income - tax.

3. The Income Tax Officer discussed the status of the Corporation and held that it was not a company within the meaning of the Indian Companies Act nor does it come within the purview of S.2(5) (A) of the Indian Companies Act, but since it is an independent body carrying on the business of Road Transport and had the power to issue shares and debentures to the public if it needs further funds for its working, it is to be treated as an Association of persons for the purposes of Income - tax. On the question of immunity of the Corporation from taxation on the ground that the income belongs to the State, the officer held that since the Corporation was formed in pursuance of the Road Transport Corporations Act , it is a legal entity having its own existence and since that entity is making income by carrying on the business of Road Transport, the Income Tax Department is not concerned with how the income earned was ultimately disposed of. The contention relating to the Corporation being a local authority within the meaning of S.4(3) (iii) of the Indian Income Tax Act was negatived, in the result, after negativing the claim for exemption of the interest payable by the State Government on the capital advanced by it and making other adjustments in terms of the Income Tax Act, the assessment for t