ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE are a batch of four writ petitions filed by the Andhra Pradesh Road Transport Corporation, for prohibiting the ITO, B -1, B -Ward, Hyderabad, from collecting any tax or taking any proceedings under the Indian IT Act against the petitioner and seeking to quash the assessment orders of the ITO, dt. 29th Feb., 1960, for the year 1958 -59 levying a tax of Rs. 13,60,963.86 nP. for the period, 11th Jan., 1958, to 31st March, 1958, and for the year 1959 -60 levying a tax of Rs. 34,44,430.48 nP. for the period of 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 Corporations Act (LXIV of 1950), by a notification issued by the State Government under that Act and has been functioning w.e.f. 11th Jan., 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 IT Act issued by the ITO, B -1, B -Ward and served on 29th Jan., 1959, a return was furnished under protest stating that the income of the Corporation does not attract liability to tax under the Indian IT Act. Before the ITO it was contended on behalf of the Corporation that its status does not fall under any of the five categories of assesses specified in S. 3 of the Indian IT Act, viz., individual, HUF, firm, company or AOP and since there is no other category of assesses 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 Corporations 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 ITO 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) 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 AOP 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 IT 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 IT 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 IT Act, the assessment for the period, 11th Jan., 1958, to 31st March, 1958, was made on Rs. 18,03,818 and for the year 1959 -60 on Rs. 45,09,624. Before us the learned Solicitor -General raised a preliminary point as to the maintainability of these writ petitions on the ground that there was an alternative remedy under the Indian IT Act which has provided for a hierarchy of Tribunals and that the assessee had availed himself of the opportunity of filing an appeal before the AAC. While he did not contend that this Court had no jurisdiction to entertain these petitions, he has referred us to the latest decision of the Supreme Court in Abraham vs. ITO, Kottayam (1961) 41 ITR 425 ; (1961) 1 SCJ 673 ; (1961) 2 SCR 675, where Shah J., delivering the judgment of their Lordships, observed at p. 674 :