COMMISSIONER OF INCOME TAX versus GUJARAT MARITIME BOARD

Citation: [2007] 12 S.C.R. 962 · Decided: 05-12-2007 · Supreme Court of India · Bench: S.H. KAPADIA, B. SUDERSHAN REDDY · Disposal: Dismissed
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Judgment (excerpt)

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A 
COMMISSIONER OF INCOME TAX 
1-
v. 
GUJARAT MARITIME BOARD 
DECEMBER 5, 2007 
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B 
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.J 
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Income Tax Act, 1961: 
ss. 2(15), 11 and 12-A-Expression "Charitable purpose " and 
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"advancement of any other object of general public utility" in 
s. 2(15)-Connotation of-Gujarat Maritime Board claiming 
registration under s.12-A-HELD: Jf the primary or predominant 
ubject of an institution is charitable any other object which might not 
D be charitable but which is ancillary or incidental to dominant purpose, 
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would not prevent institution from being a valid charity-On facts, 
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Gujarat Maritime Board having been established for predominant 
purpose of development of minor ports within State of Gujarat, 
management and control of Board is essential with State Government 
E and there is no profit motive, as indicated by provisions of ss. 7 3, 7 4 
and 75 of the Gujarat Maritime BoardAct-lncome earned by Board 
is deployed for development of minor ports in India-Under the 
Scheme of s.11 (I), source of income must be held under trust or under 
other legal obligation-Applying the said test, it is clear that Gujarat 
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Maritime Board is under legal obligation to apply income which arises 
directly and substantially from business held under trust for 
development of minor port in State of Gujarat-Therefore, the Board 
is entitled to be registered as "Charitable Trust" under s.12-A of 1961 
Act-Gujarat Maritime Board Act, 1981-s. 3(3). 
G 
Commissioner of Income Tax, Madras v. Andhra Chamber of 
Commerce, [196SJ SS ITR 722 (SC); Addi. Commissioner of Income 
Tax, Gujarat v. Surat Art Silk Cloth Manufacturers Assn., [1980) 221 
ITR 2 (SC) and Commissioner of Income Tax, A.P. v. Andhra Pradesh 
State Road Transport Corporation, [1986) 1S9 ITR l(SC), relied on. 
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962 
J 
COMMISSIONER OF INCOME TAX v. GUJARAT 
963 
MARITIME BOARD 
w --l. 
Commissioner of Income Tax, Gujarat-Ill Ahmedabad v. A 
Ahmedabad Rana Caste Asson., [1983] 140 ITR l(SC), referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5656 of 
2007. 
From the Judgment and Order dated 31.07.2006 of the High Court B 
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of Gujarat at Ahmedabad in Tax Appeal No. 1433 of2005. 
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Mohan Parasaran, A.S.G., D.L. Chidananda, Lakshmi Iyengar, B.V. 
Balararn Das, Krishan Mahajan, K.S. Sampath and Rani Chhabra for the 
Appellant. 
c 
Soli Sorabjee and T.R. Andhyarujina, Pritesh Kapur, Hemantika 
Wahi, Jesal and Pinky for the Respondent. 
The following Order of the Coutt was delivered 
ORDER 
D 
Leave granted. 
Gujarat Maritime Board is a statutory Authority constituted under 
Section 3(2) of Gujarat Martime Board Act, 1981. 
Before 13 .11.2002, the Board was registered as "Local Authority" E 
as defined under Section 3(31) of the General Clauses Act, 1897 which 
was a very wide definition. Prior to 2002, the Board was availing 
exemption as Local Authority under Section 10(20) of the 1961 Act. 
Accordingly, prior to 2002 the income of the Board was not exigible to 
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income-tax under Section 10(20) of the Income-tax Act, 1961. 
By Finance Act, 2002, an Explanation was added in Section 10(20) 
by which "Local Authority" was defined. It gave a restricted meaning to 
the word "Local Authority". By reason of the said Explanation, the 
expression. "Local Authority" was confined to Panchayats, municipality, G 
municipal committtee, district board and cantonment board. Thus, Maritime 
....). 
Board did not come within the definition of the expression "Local 
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Authority". 
Under the circumstance, Gujarat Maritime Board made an 
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964 
SUPREME COURT REPORTS 
[2007] 12 S.C.R. 
A application to the Commissioner for registering it (Board) as a "Charitable 
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Institution" as defined under Section 2(15) of the Income-tax Act, 
1961 (hereinafter for the sake of brevity as "1961 Act'). Accordingly, they 
claimed exemption as Charitable Institution in respect of income derived 
from their property/business under Section 11 of the 1961 Act. This has 
B been denied by the Department. 
The short controversy which we are required to decide in this case 
is: whether the Maritime Board is entitled to the status of a Charitable 
Institution under Section l l of the 1961 Act. We may clarify that in this 
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case we are concerned with registration and not with application of 
income. 
Before analyzing various provisions of the 1961 Act, we are required 
to analyse the provisions of Gujarat Maritime Board Act, 1981 (" 1981 
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