AGRICULTURAL PRODUCE MARKET COMMITTEE, NARELA, DELHI versus COMMISSIONER OF INCOME TAX & ANR.

Citation: [2008] 12 S.C.R. 387 · Decided: 21-08-2008 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 12 S.C.R. 387 
AGRICULTURAL PRODUCE MARKET COMMITTEE, 
NARELA, DELHI 
v. 
COMMISSIONER OF INCOME TAX & ANR. 
(Civil Appeal No. 5180 of 2008) 
AUGUST 21, 2008 
A 
B 
-\' 
[S.H. KAPADIA AND 8. SUDERSHAN REDDY, JJ] 
~ 
Income Tax Act, 1961: 
s. 10(20), Explanation - 'local authority' - Agricultural · C 
Prduce Market Committee (AMC) claiming exemption from 
income tax - HELD: Definition of 'local authority' given in 
the Explanation to s. 10(20) is an exhaustive definition and 
words "other authority" do not find place therein - Therefore, 
AMC is not entitled to exemption uls 10(20) after insertion 
D 
of the Explanation by Finance Act 2002 - General Clauses 
Act, 1897 - s. 3(31) - Constitution of India, 1950 - Articles 
243(d) and 243-P(e) - Delhi Agricultural Produce Marketing 
(Regulation) Act, 1998 - ss. 2(1) and 5. 
The appellant in CA No. 5180 of 2008, an Agricultural E 
Produce Market Committee (AMC), was availing 
exemption benefit under s.10(20) of the Income Tax Act, 
1961, prior to its amendment by Finance Act, 2002. By 
the said amendment the Explanation was added to sub-
section (20) of s.10 of the 1961 Act, defining the term 
F 
'local authority'. The words 'other authority' as occurring 
in s.3(31) of the General Clauses Act, 1897, did not find 
place in the said Explanation. Accordingly, the Revenue 
rejected appellant's claim for exemption from payment 
of tax on incom~ earned by it, for the assessment year G 
2003-04. The appellant having failed before the 
Commissioner of Income Tax (Appeals), the Income Tax 
Appellate .Tribunal and the High Court, filed the instant 
appeal. The other appeals were filed on similar facts. 
387 
H 
A 
388 
SUPREME COURT REPORTS 
[2008] 12 S.C.R. 
On the strength of the decision in R. C. Jain's 1 case, 
it was contended for the appellants that the Parliament, 
by way of Explanation to s.10(20), bodily lifted the 
definition of 'local authority' u/s 3(31) of the General 
Clauses Act, 1897 and, as such, the AMC continued to 
B be a 'local authority' even after the said amendment; 
that even otherwise, Item (iii) of the Explanation to 
s.10(20) of the 1961 Act, referred to "Municipal 
Committees" and "District Boards", and as no Municipal 
Committees were in existence, nor the term "Municipal 
c Committee" was defined and, as such, AMC, though not 
a Municipal Committee, would still be a 'local authority' 
of like nature and character to that of a 'Municipal 
Cc:>mmittee' performing muni~ipal functions. 
For the respondents it was contended, that after 
D the insertion of the Explanation to s.10 (20) of the 1961 
Act, the term 'local authority' stood exhaustively defined-
and since AMC was not mentioned in the said 
Explanation, the appellant was no more enti~led to the 
exemption benefit. It was submitted that the clarification 
E issued by CBDT expressly stated that Agricultural 
· Marketing Societies and Agricultural Marketing Boards 
would stand excluded from the Explanation to s.10 (20) 
of the 1961 Act. 
- The question for consideration before the Court 
F was: "whether Agricultural Marketing Committee 
[AMC(s)] is 'a "local authority", so as to be entitled to the 
benefit under Section 10 of the 1961 Act after insertion 
of the Explanation in Section 10(20) vide Finance Act, 
2002 w.e.f. 1.4.2003?" 
G 
D~smissing the appeals, the Court 
HELD: 1.1 The Explanation to Section 10(20) of the 
Income Tax Act, 1961 provides a definition to the word 
"local authority". It is an exhaustive, and not an inclusive, 
H definition. The words "other authority" do not find place 
-
-f 
• 
--.{ 
AGRI. PRODUCE MARKET COMMT., NARELA, 
DELHJ v. COMM!. OF INCOME TAX & ANR. 
389 
in the said Explanation. Even. according to the A 
_appellants, Agricultural Produce Market Committee is 
neither a Municipal Committee nor a District Board nor 
a Municipality nor a Panchayat. Therefore, the functional 
test and the test of incorporation as laid down in the 
case of R. C. Jain* is no more applicable to the B 
Explanation to Section 10(20) of the 1961 Act. Therefore, 
the judgment in R. C. Jain followed by judgments of 
various High Courts on the status and character of AMC 
is no more applicable to the provisions of s.10(20) after 
the insertion of the Explanation/definition clause to that c 
sub-section by Finance Act, 2002. [para 29] [416,E-H] 
*Union of India and others v. R. C. Jain and others -
1981 ( 2 ) SCR 854=1981 (2) SCC 308 - held inapplicable. 
1.2 Under Section 3(31) of the 

Excerpt shown. Read the full judgment & AI analysis in Lexace.