R.K. Agrawal J. - (1.) R.K. Agrawal J. The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law undeAIR 1997 SC 3011r Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for the opinion of this Court : Whether, on the facts and in the circumstances of the case, the status of the assessee-corporation was that of a local authority and as such the income derived by it from house property, capital gains and the business of supply of goods and services was exempt to the extent provided in Section 10(20) of the Income-tax Act, 1961, for the assessment years 1976-77 and 1977-78 ?
(2.) The present reference relates to the assessment years 1976-77 and 1977-78.
(3.) Briefly stated the facts giving rise to the present reference are as follows : The assessee is a company. It is a road transport corporation constituted under the State Road Transport Corporations Act, 1950, vide notification dated May 31, 1972 of the Governor of U.P. The assessment years involved are 1976-77 and 1977-78 for which the relevant previous years ended on March 31, 1976, and March 31, 1977, respectively. The Income-tax Officer did not accept the assessee's submission that it was entitled to exemption under Section 10(20) of the Act as a local authority. Accordingly, assessment was completed for both the assessment years. For the assessment year 1976-77 the net income of Rs. 1,54,60,869 was given set off against the unabsorbed depreciation of Rs. 3,38,08,559 for the assessment year 1973-74 resulting in nil income for taxation. For the assessment year 1977-78 the total income of Rs. 1,17,11,031 was set off against the unabsorbed depreciation of 1973-74. For the assessment year 1977-78 the assessee also claimed exemption under Section 11 of the Act on the basis that the corporation had been formed for the advancement of an object of general public utility not involving the carrying on of any activity for profit. However, the Income-tax Officer did not accept the submission and completed the assessment as aforesaid.;