JUDGEMENT
R.L. Sangani, Judicial Member -
(1.)THESE appeals are being decided by this common order. ITA No. 183/Pune/89
(2.)This appeal is by the assessee and it relates to asst. yr. 1983-84. Ground No. 1 is as follows:
The learned CIT(A) erred in not granting the claim for deduction of expenses of Rs. 15,36,568 in respect of earlier year expenses and particularly so when he has directed to increase the income assessed by Rs. 26,850 in respect of credits for earlier years.
There is no dispute that the expenses pertained to earlier years. The assessee was following mercantile system of accounting. Consequently, we fail to see how these expenses could be allowed in this year when they do not pertain to this year. It was brought to our notice by the learned representative of the assessee that the assessee had initiated proceedings under Section 264 of the IT Act, 1961 for obtaining relief of deduction in the years to which those expenses pertained. That was the only remedy available to the assessee on the facts and in the circumstances of the case. We reject the above mentioned ground.
Ground Nos. 2 & 3 are as follows :
The learned CIT(A) erred in not accepting the company's claim for its income being exempt under Section 10(20A).
The learned CIT(A) erred in not adopting the decision of the ITAT Jaipur Bench in respect of exemption of income of Land Development Corporation under Section 1O(20A).
Until 13th July, 1973, the Government of Maharashtra used to undertake land development and other connected agricultural engineering activities which were aimed at preserving soil erosion, maximised utilisation of irrigation potential and other allied matters. The purpose was to effect improvement of land and water resources and agriculture production. There were several schemes for these purposes and these schemes involved large scale expenses which the State Government found difficult to meet. In order to attract institutional finance for these works, the assessee-Corporation (the Maharashtra Land Development Corporation Ltd.) was established by Government resolution No. PPL/1473/69008-N, dt. 13th July, 1973, of Agriculture and Co-operation department. The assessee-Corporation is a Government undertaking and has been entrusted with the above work which till 13th July, 1973 was being performed departmentally by the Government. The objects of the assessee-Corporation are mentioned in the memorandum of Association at page 5 of the paper book and as they have been reproduced by the CIT(A) in his order, it is not necessary for us to reproduce them again in this order. Suffice it to say that the principal function of the assessee-Corporation is to implement the schemes of agriculture department of the Government falling within the purview of Bombay Land Improvement Scheme Act, 1942 and all its activites relate to improvement of land, soil conservation, improvement in water supply, improvement in farming methods, etc. The question is whether the provisions of Section 10(20A) would be attracted in respect of the income of the assesseer-Corporation.
(3.)SECTION 10(20A) of the Act which was inserted with retrospective effect from 1st April, 1962, by Finance Act, 1970, is as follows :
10. In computing the total income of the previous year of any person any income falling within any of the following clauses shall not be included :
(20A) 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 both.
The scope of this SECTION was explained by the Board in a circular in which it is stated that since several statutory housing boards set up by the States for the framing and execution of housing and other development schemes play an important role in implementing housing programmes of the Government for common good and since those Boards were serving an important public purpose and since they did not exist for private profit, Finance Act, 1970 had made a specific provision in the new Clause (20A) of SECTION 10 exempting the income of such Boards from tax altogether. According to this Circular, the said provision exempts from tax 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. The provisions of SECTION 10(20A) came up for consideration before the Gujarat High Court in Gujarat Industrial Development Corpn. v. CIT [1985] 151 ITR 255/21 Taxman 250 to which our attention has been drawn on behalf of the department. It was observed that developing any city, any town or any village would require roads, buildings, sanitation, parks, sports, educational institutions and several other amenities and such activity would be an integrated activity. Consequently any Corporation which was established for the purpose of developing a particular city, town or village would mean a body set up with larger purpose which could be achieved only if not only industry but several other requirements of that particular area were met by the Corporation. The Gujarat State Industrial Corporation was not such a Corporation and was not entitled to exemption under SECTION 10(20A) of the Act. Similar would be the case with the assessee-Corporation. The objects of the assessee-Corporation have been set out by us above. It is clear that the object is not to develop the village as such in the sense in which the Gujarat High Court has interpreted the word development of village. The object of the Legislature in inserting this provision was not to grant exemption to Corporation like the assessee-Corporation, but the object was to gram exemption to several housing boards and other development boards which are set up for planned development of city, town or village. The assessee-Corporation has not been constituted under any law enacted for the purposes mentioned in Clause (20A) of SECTION 10. Consequently, we hold that the provisions of Clause (20A) of SECTION 10 would not be attracted in the present case.
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