COMMISSIONER OF INCOME -TAX ANDHRA PRADESH, HYDERABAD. versus ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION, HYDERABAD.

Citation: [1986] 1 S.C.R. 570 · Decided: 07-03-1986 · Supreme Court of India · Bench: V.D. TULZAPURKAR, D.P. MADON · Disposal: Dismissed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
570 
COMMISSIONER OF INCQ1E-TAX 
ANDHRA PRADESH, HYDERABAD. 
v.· 
ANDHRA PRADESH STATE ROAD TRANSPORT 
CORPORATION, HYDERABAD. 
MARCH 7 , 1986 
[V.D. TULZAPURKAR AND D.P. MADON, JJ.] 
Indian Income Tax .'\ct, 
1922 -
Section 4(3)(i) 
& 
to:' 
Explanation and Income Tax Act, 1961 - Sections 2 (15) & 11 -
Road 
Transport 
Corporation 
Whether 
engaged 
in 
the 
advancement of an object of general public utility, not 
involving carrying on of activity for profit - Whether exempt 
C 
from income tax. 
Road Transport Corporation Act, 1950. 
Sections 22, 23, 28 and 30 - Andhra Pradesh State Road 
Transport Corporation - Activities of - Whether carried on for } 
D 
profit - Income tax - Whether entitled to claim exemption. 
~ 
E 
F 
The Respondent, the Andhra Pradesh State Road Transport 
Corporation, is a Road Transport Corporation established under 
s.3 of the Road Transport Corporation Act, 1950. Prior to the 
establishment of the Respondent-Corporation, road transport ln 
the State of Andhra 
Pradesh was 
a department of the 
Government, being run by the Government of Hyder a bad prior to 
the formation of the State of Andhra and thereafter by the 
Government of Andhra Pradesh. During the whole of this period, 
the 
income 
made 
from 
road 
transport was 
exempt 
from 
income-tax. After the Respondent-corporation was formed, the 
Income-tax Department took the view that the income of the 
Respondent-Corporation was liable to income-tax and assessed 
the Respondent-corporation to income-tax for the assessment 
years 1958-59 and 1959-60. 
The Respondent-Corporation filed writ petitions in the 
G 
High Court contending that the property owned by it and the 
income earned by it were the property and income of a State .).. 
exempted from Union taxation under Article 289( 1) of the 
Constitution, but the same were disudssed by the High Court. 
Appeals filed by the Respondent-corporation in this Court were 
also disudssed. 
H 
C.I.T. v. STATE 
571 
Thereafter the Respondent-corporation filed returns in 
A 
-
respect of the assessment years 1960-61, 1961-62 and 1962-63 
_ ·showing its income as 'Nil'. In respect of the assessment 
years 1960-61 and 1961-62 it claimed exemption from income-tax 
under s.4(3)(i) of the Income-tax Act, 1922. In respect of the 
assessment year 1962-63 it claimed exemption under s.ll of 
the Income-tax Act, 1961. The Respondent-corporatio$ claim 
B 
for exemption lias rejected by the Income-tax Officer. The 
appeals filed by the Respondent-corporation were allowed by 
_ 
the Appellate Assistant Commissioner but in the appeals filed 
:;\ by the Department before the Income-tax Appellate Tribunal, 
the order of the Income-tax Officer was restored. In the 
reference, the High Court held that the Respondent-corporation 
was entitled to the exemptions claimed. 
c 
In the appeals to this Court by the Revenue, it was 
contended that the Respondent-corporation was not entitled to 
any exemption as claimed by it because its activities were 
carried on for profit as shown by sections 22, 23 and 28 of 
· 1 the Road Transport Corporation Act. 
o 
-\ 
Dismissing the appeals, 
HELD : 1. The respondent Corporation was entitled to the 
exemption claimed by it both under the Income-tax Act of 1922 
and of 1961. l584 F] 
2. The object of the activity carried on by the 
dent Corporation undisputedly was one of general 
utility. [582 GJ 
respon-
public 
.. :'-
3. A Road Transport-Corporation cannot be expected or 9e 
required to run at a loss. It is not established for the 
purpose of subsidising the public in matters of transportation 
of passengers and goods. The objects for establishing a Road 
Transport Corporation are set out in s.3 of the Road Transport 
Corporation Act. Section 18 shows that it is the duty of a 
Road Transport Corporation to provide, secure and pr~sote the 
provision of an efficient, adequate, economical and properly 
~co-ordinated system of road transport services in the S~ate. 
No activity can be carried on efficiently, properly, ade-
quately or economically unless it is carried on business prin-
ciples. If an activity is carried on business principles, it 
would usually result in profit, but it is not possible so to 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
572 
SUPREME COURT REPORTS 
[1986] 1 S.C.R. 
carry on a charitable -activity that the expenditure balances_--
the income and there is no resultant profit, for to achieve ---. 
this would not only be difficult of practical realisation but 

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