Delhi H.C : Whether, on the facts and in the circumstances of the case, the Hon’ble Tribunal is correct in law in holding that M/s Agricultural Produce Marketing Committee, Azadpur, Delhi, is a ‘local authority’ within the meaning of s. 10(20) in IT Act r/w s. 3(31) of General Clauses Act.

High Court Of Delhi

CIT vs. Agricultural Marketing Produce Committee

Sections 10(20)

Arijit Pasayat, C.J. & D.K. Jain, J.

IT Ref. Nos. 37 & 88 to 97 of 1999

18th December, 2000

Counsel Appeared

Sanjiv Khanna with Ajay Jha, for the Petitioner : G.C. Sharma with Ms. Avnish Ahlawat & J. Kathuria, for the Respondent

JUDGMENT

ARIJIT PASAYAT, C.J. :

All these references under s. 256(1) of the IT Act, 1961 (in short the Act), involve identical questions, referred at the instance of the Revenue, by the Income-tax Appellate Tribunal, Delhi Bench (in short Tribunal). As self- evident from the questions, the main issue is whether the assessee is a ‘local authority’ within the meaning of s.

10(20) of the Act and thereby making its income non-taxable under the Act. The questions are as follows :

“1. Whether, on the facts and in the circumstances of the case, the Hon’ble Tribunal is correct in law in holding that M/s Agricultural Produce Marketing Committee, Azadpur, Delhi, is a ‘local authority’ within the meaning of s. 10(20) in IT Act r/w s. 3(31) of General Clauses Act.

2. Whether, on the facts and in the circumstances of the case, the Hon’ble Tribunal is correct in law in holding the income of M/s Agricultural Produce Marketing Committee, Azadpur, Delhi, is not taxable under IT Act, 1961.”

2. For determination of the questions reference to the factual aspects, as detailed in the statements of cases are, without unnecessary details, as follows : Assessee-committee was formed under the Delhi Agricultural Market Produce Marketing Regulation Act, 1976 (in short the Marketing Act). It was entrusted with the duty of providing facilities for marketing of agricultural produce in Azadpur Subzi Mandi, Delhi, and to do other acts in relation to the superintendence, direction and control of markets for regulating marketing of agricultural produce. The AO was of the view that it was not a local authority as claimed but was an AOP. Accordingly, the claim that its income was exempt from tax was turned down. The matter was carried in appeal before the CIT(A). The said authority confirmed views of the AO. The matter was carried in appeals for various years before the Tribunal. Considering the factual aspect, highlighted by the parties the Tribunal came to hold that the assessee was local authority and, therefore, its income was exempt from tax. Various clauses of the Act were referred to for coming to such a conclusion. The conclusion was followed in respect of dispute for several years and the matter was decided in favour of the assessee. On being moved, as aforestated, references have been made.

3. Mr. Sanjiv Khanna, learned counsel for the Revenue, submitted that tests and attribute of the local authorities hwawvwe .btaexenpuhnidgiht.loigrhgt/eadbobuyt.thhtemal pex Court in sevPeargale j1udogfm1e0nts. Assessee dwoewswn.otat xfpuulfnilditth.oergre/qcuoinrteamcet.nhttsmalnd,

therefore, the conclusions of the Tribunal are untenable. Mr. G.C. Sharma, learned counsel for the assessee, on the

other hand, submitted that various Courts have considered identical provisions under various Acts dealing with similar subject and there is unanimity on the point that the committees like the assessee are local authorities.

4. In order to appreciate rival submissions, it is necessary to take note of several clauses of the Marketing Act. At this juncture, it is necessary to take note of the expression “local authority”. Said expression has not been defined under the Act but has been defined under s. 3(31) of the General Clauses Act, 1897 (in short, General Clauses Act) and reads as follows : “Local authority shall mean a Municipal Committee, District Board, Body of Port Commissioners or other authority legally entitled to or entrusted by the Government with the control and management of a municipal or local fund.”

5. The aforesaid definition has been examined by the apex Court in various cases. First important decision on the point is Union of India vs. R.C. Jain AIR 1981 SC 951. The tests indicated in the said judgment are as follows : “(i) An authority, in order to be a local authority, must be of like nature and character as a Municipal Committee, District Board or Body of Port Commissioner, possessing, therefore, many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board or Body of Port Commissioners. (ii) It should possess one essential feature, namely, that it is legally entitled to or entrusted by the Government with, the control and management of a municipal or local fund. (iii) It must have a separate legal existence as a corporate body. (iv) It must not be a mere governmental agency but must be a legally independent entity. (v) It must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. (vi) It must enjoy a certain degree of autonomy, with freedom to decide for itself question-policy affecting the area administered by. (vii) The autonomy may not be complete and the degree of the dependence may vary considerably but an appreciable measure of automony must be there. (viii) It must be entrusted by statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitant of the locality, like health and education services, water and sewerage, town planning and development roads, markets, transportation, social welfare services, etc. (ix) Broadly, it may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and functions. (x) It must have the power to raise funds for the furtherance of its activities and the fulfilment of its projects by levying taxes, rates, charges or fees which may be in addition to moneys provided by Government or obtained by borrowing or otherwise. (xi) The control or management of the fund most vest in the authority.” In Calcutta State Transport Corporation vs. CIT (1996) 132 CTR (SC) 283 : (1996) 219 ITR 515 (SC) : TC S32.3093, tests as indicated in R.C. Jain’s case (supra) were applied. Additionally, certain additional tests were indicated. It was held that it should have an element of popular representation in its constitution. Its powers and functions should bear relation to the powers and functions of a Municipal Committee, District Board or Body of Port Commissioners. It should have indicia of governmental power—the power to affect persons and their rights even where they do not chose to deal with it, the power of compulsion. In that background, it was held that a road transport organisation has no such power. Unless one chooses to deal with it or avail of its services it cannot affect him or his rights. Somewhat in similar terms were the observations of the apex Court in Housing Board of Haryana vs. Haryana Housing Board Employees Union AIR 1996 SC 434. It was specifically held in addition to what has been stated in R.C. Jain’s case (supra) as under : “(i) Its personnel should be elected by the people and there should be an element of people’s choice being represented in its constitution. It should not consist only of persons appointed by the State Government on salary basis. (ii) It should function independently and not directly under the supervision and control of the Government. (iii) It should hold or possess a local fund. (iv) The extent of control of the Government under which the local authority has to function should not be so prominently pervasive that it is almost destructive of its independence. The mere power to levy taxes rents, etc. or recover them as arrears of land revenue could not be sufficient to clothes the authority with the status of a local authority.” HaryanaH ousing Board was held not to be a local authority as (a) it had no popular representation; (b) it did not have a local fund; and (c) it did not function independently. Thereafter came the decision of apex Court in CIT vs. U.P. Forest Corporation (1998) 145 CTR (SC) 402 : (1998) 230 ITR 945 (SC) : TC S32.3094. Again the principles in R.C. Jain’s case (supra) were reiterated and by way of illustration certain other parameters were indicated as under : “(v) “Other authority” referred to in s. 3(31) of the General Clauses Act must be similar or akin to Municipal Committee, District Board or Body of Port Commissioners. (vi) Such an authority must have control or mwwanwa.gteamxpeunnt doift.oarmg/uanbiocuipta.hl tomr llocal fund. (vii) PTahgeem2eomfb1e0rs of the local awutwhowr.itayxsphuonudldit.boergw/choonltlyacot.rhptmarltly,

directly or indirectly, elected by the inhabitants of the area. (viii) Local authority must have functions and duties

which are usually entrusted to the municipal bodies, such as providing civic amenities to the inhabitants of the

locality like health, education, town planning, markets, transportation, etc. (ix) It must have the power to raise funds by levy of taxes, rates, charges or fees. (x) The expression “Local fund” occurring in s. 3(31) of the General Clauses Act would mean the fund of a local self-government. The fund should consist of any funds flowing directly from any taxing power vested in the local authority.”

The corporation was not held to be a local authority as several decisive ingredients were absent. They were primarily. (a) it did not have functions which are usually entrusted to municipal bodies, etc. providing civic amenities like health, education and market, etc.; (b) it did not have power to raise funds by levying taxes, rates, charge fees, etc.; and (c) members were not directly or indirectly elected by inhabitants of the area. Stand of the Revenue is that the autonomy, which is required to be present to constitute a local authority, is absent and over all dominion of power lies with the Board or the administrator. Above being the position, one of the major ingredients required to make a body a local authority is absent. Reference in this context is made to ss. 25 and 28 of the Marketing Act. It is stated that the market committee is a toothless body having no control or entrustment over any fund. It does not enjoy degree of freedom, autonomy and independence normally associated with local self- government bodies. The Board constituted under s. 5 of the Marketing Act has the power to exercise superintendence and control over the market committee. The budget of the Board is sanctioned by the administrator. Market committees are constituted under s. 8 of the Marketing Act. Under s. 9 the administrator has the power to nominate various members of the market committee. The chairman of the market committee is nominated by the administrator. Under s. 25, the market committee has to provide facilities for marketing as directed by the Board. Power to collect fee is provided under s. 28, but is hedged with a condition that it shall not be less than the amount determined by the administrator as specified in the bye-laws under s. 65 of the Marketing Act. Bye-laws require sanction of the Board which has power under the said section to amend byelaws. Under s. 29 the marketing committee can borrow only after previous sanction of the Board though it is mandatory for every market committee to have a secretary, appointment is made by the Board. His services are lent by the Board to the committee on such terms and conditions as the Board may provide. All the cheques issued by the committee require signatures of the secretary. All these are under Delhi Agricultural Produce Marketing (Regulation) General Rules, 1978 (in short the Rules). Finalisation of budget requires previous sanction of the Board for approval. Thus, according to the learned counsel for the Revenue, it is established beyond a shadow of doubt that market committee is not a local authority.

The major tests which can be carved out from the decision in R.C. Jain’s case (supra) and subsequent decisions are essentially as follows : (i) The authorities must have separate legal existence as corporate bodies and autonomous status. (ii) Must function in a defined area and must ordinarily, wholly or partly, directly or indirectly elected by the inhabitants of the area. (iii) It performs governmental functions such as running market, providing civil amenities, etc. (iv) They must have power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes/fees, this may be in addition to money provided by Government. Control and management of the fund must vest with the authority.

8. A few provisions of the Act which throw some light on the controversy need to be noted. As preamble of the Act shows, it was enacted to provide for better regulation of purchase, sales, storage and processing of agricultural produce and establishment of markets for agricultural produce and for matters connected therewith or incidental thereto. A few definitions contained in s. 2 are relevant and they read as follows : 2. Definitions—(1) In this Act, unless the context otherwise requires : (a) “Administrator” means the Administrator of the Union territory of Delhi appoint by the President under Art. 239 of the Constitution. (b) xxx xxx xxx (c) xxx xxx xxx (d) “Board” means the Delhi Agricultural Marketing Board constituted under s. 5. (e) xxx xxx xxx (f) xxx xxx xxx (g) xxx xxx xxx

(h) “Director” means a person appointed as the Director of Agricultural marketing for the Union Territory of Delhi. (i) “Local Authority” means in relation to an area within the local limits of”. (i). the Municipal Corporation of Delhi, that Corporation; (ii). the New Delhi Municipal Committee, that Committee; (iii). The Delhi Cantonment Board, that Board. Constitution of Delhi Marketing Board is provided in Chapter II. Secs. 5(7), 5(9), 5(10) and

5(14) (a)(b) read as follows : “5(7) The Administrator may remove from office any non-official member of the Board who has become subject to any of the disqualifications specified in sub-s. (5) or who in his opinion, is rwewmwis.stainxpthuendiits.cohragr/gaebofuth.ihstdmulties or has ceasedPtaogreep3reosfen1t0the interest to rewpwrewse.ntat xwphuincdhith.eorwga/sconnotmacint.ahttemd.l

(9) The Administrator shall exercise superintendence and control over the Board and its officers and may, call for

such information as he may deem necessary and in the event of his being satisfied that the Board is not functioning

properly or is persistently making default in the performance of the duties imposed on it by or under this Act or is abusing its powers or is guilty of corruption or mismanagement, may suspend the Board till such time as a new Board is constituted ‘and make such arrangements for the exercise of the functions of the Board as he may think fit. (10) The Board shall exercise superintendence and control over the market committees. (14)(a) Subject to the rules made under this Act, an estimate of the annual income and expenditure of the Board for the ensuring year shall be prepared and passed by the Board and submitted every year, not later than the prescribed date to the Administrator for his sanction. (b) The administrator may sanction the budget of the Board with such alterations or modifications as he may think fit and the budget so altered or modified by the Administrator shall be the budget of the Board for the year.” Secs. 8 and 9 deal with the constitution of the market committee and composition of market committee. Sec. 10 deals with incorporation of market committee and reads as follows : “10. Incorporation of market committees.—Every market committee shall be a body corporate by such name as the Administrator may, by notification, specify and shall have perpetual succession and a common seal and may, in its corporate name, sue and be sued and shall, subject to such restrictions as are imposed by or under this Act, be competent to contract and to acquire, hold and dispose of property, both movable and immovable, and to do all other things necessary for the purposes for which it is constituted.” Clause (4) deals with powers and duties of the market committee and s. 25 reads as follows : 25. Powers and duties of market committee.—(1) Subject to the provisions of this Act, it shall be the duty of a market committee : (i) to implement the provisions of this Act, and of the rules and bye-laws made thereunder for the market area; (ii) to provide such facilities for marketing of agricultural produce therein as the Board may, from time to time direct; (iii) to do such other acts as may be required in relation to the superintendence and control of markets, or for regulating marketing of agricultural produce in any place in the market area and for purposes connected with the matter aforesaid and, for that purpose, may exercise such powers and perform such duties and discharge such functions as may be provided by or under this Act. (2) Without prejudice to the generality of the foregoing provisions, a market committee may : (a) regulate the entry of persons and of vehicular traffic into the market; (b) supervise the conduct of those who enter the market for transacting business; (c) grant renew, refuse, suspend or cancel licences; (d) provide for settling disputes arising out of any kind of transaction connected with the marketing of agricultural produce and all matters ancillary thereto; (e) prosecute persons for violating the provisions of this Act and of the rules and bye-laws made thereunder; (f) maintain and manage the market, including the regulation of admissions to, and conditions for use of, the market; (g) regulate the marketing of agricultural produce in the market area of the market, and the weighment or delivery of, or payment for, such agricultural produce, (h) xxx xxx xxx” Sec. 26 empowers it to appoint sub-committees; and under s. 27 it is empowered to open collection centres; s. 28 empowers the market committee to levy fees. Sec.

29 empowers it to borrow money required for carrying out purposes for which it is established on the security of any property vested in it and of any fees leviable by it under this Act. For the purpose of meeting expenditure of lands, buildings and equipment required for establishing the market, it can obtain loan from the administrator on such terms and conditions as he may determine. Market committee with previous approval of Board can obtain loan from other market committee subject to such conditions as may be made. Sec. 35 deals with execution of contracts. Clause 5 deals with officers and servant of the committees. Sec. 34 provides for market committee’s power to grant licences under the said provision. No person shall operate in the market without a licence. There is compulsion to obtain a licence and similarly a power to suspend a licence. Sec. 39 deals with market fund, its custody and investment. Sub-ss. (1) and (2) read as follows : “(1) All fees and other money received by a market committee under this Act. [except the amount of such fee, credited to the Election Fund under s. (12)] all sums realised by way of penalty (otherwise than by way of a fine in a criminal case), all loans raised by the Administrator to the committee shall form part of a fund to be called the market fund. (2) The amount to the credit of a market fund shall be kept or invested in such manner as may be prescribed.” Sec. 40 deals with the purpose for which the market fund may be expended.

9. It may be noted that in Krishi Utpanna Bazar Samiti vs. ITO & Ors. (1986) 158 ITR 742 (Bom) : TC 32R.679, Bombay High Court examined the question whether the market committee constituted under the Maharashtra Agricultural Produce Committee Regulation Act, 1963, to which reference has been made, was a local authority. After examining various clauses of the Act, it was held that the committee was a local authority. Reliance was placed on certain observations in R.C. Jain’s case (supra) to hold so. We shall deal with the corresponding pwrwovwi.stiaoxnps uonfdtihte.otrwg/oaAbocutst,.hi.tem., lthe Maharashtra APacgt ean4d othf e10Act to show pariwtywbwe.ttwaexepnunthdeitp.ororgv/iscioonntsa.cItt.hmtmayl be

noted that in the Maharashtra Act, there is a provision that it shall, for all practical purposes, be deemed as a local

authority. Similar provision is there in the Gujarat Act. Only the Act and the Punjab Act do not contain such a

provision. Similarly, in CIT vs. Agricultural Market Committee (1983) 143 ITR 1020 (AP) : TC 32R.678 and in Budha Veerinaidu vs. State of Andhra Pradesh & Anr. (1983) 143 ITR 1021 (AP) : TC 32R.677, Andhra Pradesh High Court considered the provisions in the agricultural market committee functioning under Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966. It was held that market committee was a local authority. Reliance was placed on R.C. Jain’s case (supra) for the conclusion. Tribunal referred to a decision of the Gujarat High Court (unreported) where it was held that a market committee is a local authority, i.e., Special Civil Application No. 1070/1983 disposed of by judgment dt. 1st July, 1994.

10. At this juncture, it is also necessary to take note of the decision in Patel Premji Jiva vs. State of Gujarat 1971 (3) SCC 815. Examining the provisions of the Land Acquisition Act, 1894, it was held that the market committee constituted under Gujarat Agricultural Produce Markets Act, 1963, was a local authority. As the expression “local authority” is not defined in the Land Acquisition Act, reference was made to General Clauses Act. We shall also make a comparison of various provisions of Gujarat Act with the Act to show the parity.

11. As indicated above, it may be fruitful to compare the provisions of the Act with similar Acts of Punjab, Gujarat and Maharashtra. The relevant provisions of the Act vis-a-vis those contained in Maharashtra, Gujarat and Punjab Acts can be summarised as follows : The Delhi Agricultural Produce The Gujarat Agricultural Produce Marketing (Regulation) Act, 1976 Markets Act, 1963 1. The (i) Administrator by notification to (i) Declaration of intention by functions of declare has intention of regulating notification for regulating purchase Administrator/ marketing of agricultural produce in and sale of agricultural produce by Director/ the specified area [s. 3(1)]. the Director [s. 5]. State Govt. by way of control, etc. (ii) Establishment of markets by the (ii) Declaration of market areas by director [s. 6]. the director [s. 6]. (iii) Constitution of market (iii) Director to declare market, committees by the Administrator [s. market yards and market proper 8]. [s. 7].(iv) Nomination of persons by the (iv) Director to establish a market Administrator in certain circumstances committee for every market area [s. 14]. [s. 9]. (v) Removal of members for (v) Acceptance of resignation of 2. Control by the Board misconduct by the Administrator on the recommendation of the market committee [s. 15]. (vi) The market committee to levy and collect such fee not being in excess or less than an amount determined by the Administrator by notification. (vii) Provision for expending the market fund for purposes other than those specified in s. 40 with the previous approval of the Administrator [sub-s. (n) of s. 40]. (viii) Supervision of market committee by the Administrator [s. 48]. (ix) The power of constitution of one or more Tribunals for recovery of dues to the market committee with the Administrator [s. 60(4)]. (x) Power of Administrator to delegate power [s. 61]. (xi) Power of Administrator to make rules [s. 63] (xii) The role of the Administrator with regard to the bye-laws by the market committee [s. 65]. (xiii) Power of Administrator to amend the schedule [s. 66]. (xiv) Power of Administrator to transfer assets, etc. in certain cases [s. 67]. (xv) Approval by the Administrator for write off of irrecoverable fees, etc. in certain cases [s.

68]. (i) Money to be borrowed by a market committee with the previous sanction of the Board [s. 29]. (ii) Grant of allowance for regulation of marketing produce by the director who is ex officio secretary of the Board when a market committee has members of the market committee [s.12]. (vi) Removal of any member of the market committee by the director on the recommendation of the market committee [s. 13). (vii) Appointment of Secretary of a market committee by the market committee with the approval of the Director [s. 22]. (viii) Issue of general or special directions by the director providing for performance of duties of common nature where more than one committee exists [s. 24]. (ix) Suspension or cancellation by the director of any licence granted or renewed [s.

27(4)]. (x) Director to hold enquiry into the affairs of a market committee [s. 44]. (xi) Director to fix a period for performance of duties in case of default by the market committee [s. 45]. (xii) The State Government to supersede market committee [s. 46]. (xiii) Director to call for proceedings, etc. [s. 47]. (xiv) State Government to dissolve and constitute a market committee [s. 54]. (xv) State Government to make rules [s. 59]. (xvi) Director to register or refuse registration of bye-laws made by a market committee [s. 60]. (xvii) Director to call upon the market committee to make byelaws, or amend or rescind existing bye-laws [s. 61]. (xviii) State Government to amend the schedule [s. 62]. (i) Co-ordinating the functioning of the market committees [s. 39J(i)]. 3. The measure of popular representation in a market committee not been constituted or has not started functioning [s. 33(a)]. (iii) Suspension or cancellation of licence by the director [s. 35(2)]. (iv) Appeal to the Board [s. 36(a)], payment of contribution to the Board by a market committee out of the market fund [s. 39(3)(a)]. (v) Inspection, enquiry by the Board and

swuwbmw.itsasxiopnunodf istt.aotregm/aebnotsutto.htthme lBoard [s. 43]. (viP) aDguety5 ooff o1f0ficers, servants awndwwm.etmaxbpeursndoift.moragr/kceotnctoamctm.hitmteel to

furnish information to the Board [s. 44]. (vii) Board to call for proceedings of the market committee and to pass

orders thereon [s. 16]. (viii) Compounding of offences with the previous approval of the chairman of the Board [s.

70]. (i) Composition of market committee (ii) Six members to be elected by the agriculturists residing in the market area and holding agricultural land in the Union Territory of Delhi with the provision for nomination of 50 per cent of such members by the Administrator in certain cases. (b) Two members to be elected by the traders and commission agents holding licences to operate as such in the market area. (c) The chairman of the co-operative society engaged in the business of processing or marketing of agricultural produce in the market area with the provision that in the absence of such co-operative society the administrator to nominate a member to represent the persons doing the business of processing of marketing of agricultural produce in the market area. (d) One member to be elected by the members of other local authority within the local limits of whose jurisdiction the principal market in relation to that market committee is constituted. (e) One member to be elected by the licensed weigh- men and measurers. (i) Every market committee shall consist of the following: (a) Eight agriculturists to be elected by members of managing committees of co-operative societies dispensing agricultural credit in the market area

(b) Four members to be elected in the prescribed’ manner from amongst themselves by the traders holding general licences. (c) Two representatives of the cooperative marketing societies situated in the market committee by election. (d) One member to be nominated by other, local authority in the event of vacancy of members, etc. one member to be nominated by the Administrator. (e) Two members to be nominated by the State Government (f) One member of the Metropolitan Council of Delhi to be elected by that Council from amongst its members to represent the interests of consumers. (g) Two members to be nominated by the administrator of whom one shall represent the interest of consumers. (ii) When the market committee is constituted for the first time all the members thereof, including chairman and vice-chairman to be nominated by the administrator. (iii) The chairman of a market committee to be nominated by the Administrator from among the members of the committee. (iv) The market committee to elect one of its elected members to be its vice-chairman [s. 9]. The Delhi Agricultural Produce Marketing (Regulation) Act, 1976 1. The functions of (i) “Administrator by notification to Administrator/Director/ declare his intention of regulating the State Govt. by way mark-eting of agricultural produce of control, etc. in specified area [s. 3(1)]. (ii) Establishment of markets by the director [s. 6]. (iii) Constitution of market committees by the Administrator [s. 8]. (iv) Nomination of persons by the Administrator in certain circumstances [s. 14]. (v) Removal of members for misconduct by the Administrator on the recommendation of the market committee [s. 15]. (vi) The market committee to levy and collect such fee not being in excess or less than an amount determined by the Administrator by notification. (vii) Provision for expending the market fund for purposes other (f) In case of there being no election of a market committee, the director to nominate members of the respective class qualified to be elected as members of the respective class, with the previous approval of the State Government. (g) Nomination by director in the case where an election does not result in the return of required member of qualified persons to take office.

The Maharashtra Agricultural Produce Markets (Regulation) Act, 1963 (i) Notification of intention by the State Government to regulate the marketing of agricultural produce in such area as may be specified in the notification [s. 3]. (ii) Declaration by the State Government by notification of regulation of marketing of specified agricultural produce and market area [s. 4]. (iii) Establishment of markets by the director [s. 5]. (iv) Regulation of marketing of agricultural produce [s. 6]. Licence to be granted by the director when a market committee has not yet started functioning [s. 6]. (v) First meeting of a market committee to be held on a date fixed by the director [s. 15]. (vi) Provision for appointment by director of administrator after normal or extended term of office of members expires [s. 15A]. (vii) Nomination of members by the State Government in than those specified in s. 40 with the previous approval of the Administrator [sub-s. (n) of s. 40]. (viii) Supervision of market committee by the Administrator [s.18]. (ix) The power of constitution of one or more Tribunals for recovery of dues to the market committee with the Administrator [s. 60(4)]. (x) Power of Administrator to delegate power [s. 61]. (xi) Power of Administrator to make rules [s. 63]. (xii) The role of the Administrator with regard to the bye-laws by the market committee [s. 65]. (xiii) Power of Administrator to amend the schedule [s. 66]. (xiv) Power of Administrator to transfer assets, etc. in certain cases [s. 67]. (xv) Approval by the Administrator for write off of irrecoverable fees, etc. in certain cases [s.

68]. certain circumstances [s. 16]. (viii) Removal of member by the State Government for misconduct [s. 17].

(ix) Procedure for election of chairman and vice-chairman and the role of the director therein [s. 22].

(x) Provision for issue of directions by the director to the market committee from time to time [s. 29].

(xi) Co-option of any person on the sub-committee with the approval of the director [s. 30].

(xii) Fees to be levied by the market cwowmwm.tiattxepeuantdmit.ionrigm/uambouatn.dhtmal ximum rates to bPeagfeix6edofb1y0the state Goverwnmwwen.ta[xsp. u3n1d].it.(oxrigii/)cPonowtaecrt.htotmral ise money by market committee with the previous sanction of the director [s. 32(1)]. (xiv) Inspection and enquiry by

the director and submission of statements to the director [s. 40]. (xv) Furnishing of information to director/State

Government [s. 41]. (xvi) Seizure of account books and other documents on the orders of the director [s. 42]. (xvii) Power of State Government to call for proceedings of market committee to pass orders thereon [s. 43]. (xviii) Supersession of market committee by State Government [s. 45]. (xix) State Government to make rules [s. 60]. (xx) The market committee to make bye-laws with the previous sanction of the director [s. 61]. (xxi) State Government to amend the schedule [s. 62]. 2. Control by the (i) Money to be borrowed by a (i) Powers and functions of Board market committee with the Board [s. 34, s. 34(i), (ii), 3. The measure of popular representation in a market committee. previous sanction of the Board [s. 29]. (ii) Grant of allowance for regulation of marketing produce by the director who is ex-officio secretary of the Board when a market committee has not been constituted or has not started functioning [s. 33(a)]. (iii) Suspension or cancellation of licence by the director [s. 35(2)]. (iv) Appeal to the Board [s. 36 (a)]. payment of contribution to the Board by a market committee out of the market fund [s. 39(3) (a)]. (v) Inspection, enquiry by the Board and submission of statements to the Board [s. 43]. (vi) Duty of officers, servants and members of market committee to furnish information to the Board [s. 44]. (vii) Board to call for proceedings of the market committee and to pass orders thereon [s. 16]. (viii) Compounding of offences with the previous approval of the chairman of the Board [s. 70]. (i) Composition of market committee : (a) Six members to be elected by the agriculturists residing in the market area and holding agricultural land in the Union Territory of Delhi with the provisions for nomination of 50 per cent of such members by the Administrator in certain cases.

(b) Two members to be elected by the traders and commission agents holding licences to operate as such in the market area. (c) The Chairman of the cooperative society engaged in the business of processing or marketing of agricultural produce in the market area with the provision that in the absence of such co-operative society the administrator to nominate a member to represent the persons doing the business of processing of marketing of agricultural produce (iv), (v), (vi), (viii), (ix)] (ii) Inspection of construction works undertaken by market committee [s. 34K]. (iii) Payment of contribution to the Board by every market committee [s. 34M]. (iv) The Board to make regulations with the previous approval of the State Government [s. 59A]. (a) Every market committee shall consist of following 18 members (19 members) (19 members in respect of Bombay market area).

(i) Ten agriculturists residing in the market area 7, of whom shall be elected by members of the managing committees of the agricultural committees of the agricultural credit societies and multipurpose co-operative society. (ii) There shall be elected by traders and commission agents holding licences to operate as such in the market area. (iii) One shall be the chairman of the co-operative society doing business of processing or marketing of agricultural produce. 1. The functions in the market area. (d) One member to be elected by the members of other local authority within the local limits of whose jurisdiction the principal market in relation to that market committee is constituted. (e) One member to be elected by the licensed weigh-men and measurers. (f) One member of the Metropolitan Council of Delhi to be elected by that Council from amongst its members to represent the interests of consumers. (g) Two members to be nominated by the administrator of whom one shall represent the interests of consumers. (ii) When the market committee is constituted for the first time all the members thereof, including chairman and the vice-chairman to be nominated by the Administrator. (iii) The chairman of a market committee to be nominated by the Administrator from among the members of the committee. (iv) The market committee to elect one of its elected members to be its vice-chairman [s. 9]. The Delhi Agricultural Produce Marketing (Regulation) Act, 1976 of (i) Administrator by notification (iv) One shall be chairman of the Panchayat Samiti within whose jurisdiction the marketing area is situated. (v) One shall be the President or Sarpanch of local authority within whose jurisdiction the principal market is situated. (vi) The Dy Registrar of cooperative societies- with no right to vote. (vii) The Assistant Cotton Extension Officer with no right to vote. (b) When a market committee is constituted for the first time all the members thereof and the chairman and vice chairman shall be nominated by the State Government. (c) On the failure to elect members within the stipulated period by the co- operative society, Panchayat Samiti local authority, etc. the director shall appoint on behalf of such persons the required member of persons qualified to be elected. [s. 13].

The Punjab Agricultural Produce Marketing Act, 1961 (i) Notification of intention of exercising control over purchase. sale, storage and processing of agricultural produce in specified area, by the State Government [s. 5].

(ii) Declaration of notified market area by the State Government [s. 6]. (iii) Declaration of market yards by the State Government [s. 7]. (iv) Market committees to be established by the State Government [s. 11]. Administrator/Director/the State Government by way of control, etc. to declare his intention of regulating mwwarwke.ttainxgpuonfdiatg.orircgu/latubroault.phrtomdul ce in specified aPraegae [7s. o3f (110)].

(ii) Establishwmwenwt.toafxpmuanrdkiet.tocrgo/mcmonitaecets.hbtmy lthe Administrator [s. 8]. (iii) Constitution of market committees by the Administrator [s. 8]. (iv) Nomination of persons by the Administrator in certain circumstances [s. 14]. (v) Removal of members for misconduct by the Administrator on the recommendation of the market committee [s. 15]. (vi) The market committee to levy and collect such fee not being in excess or less than an amount determined by the Administrator by notification. (vii) Provision for expending the market fund for purposes other than those specified in s. 40 with the previous approval of the Administrator [sub-s. (n) of s. 40]. (viii) Supervision of market committee by the Administrator [s. 48]. (ix) The power of constitution of more Tribunals for recovery of dues to the market committee with the Administrator [s. 60 (4)]. (x) Power of Administrator to delegate power [s. 61]. (xi) Power of Administrator to make rules [s. 63]. (xii) The role of the Administrator with regard to the bye-laws by the market committee [s. 65]. (xiii) Power of Administrator to amend the schedule [s. 66]. (xiv) Power of Administrator to transfer assets, etc. in certain cases [s.

67]. (xv) Approval by the Administrator for write off of irrecoverable fees, etc. in certain cases [s. 68]. 2. Control by the Board (i) Money to be borrowed by a market committee with the previous sanction of the Board [s. 29].

(ii) Grant of allowance for regulation of marketing produce by the director who is ex-officio secretary of the Board when a market committee has not been constituted or has not started functioning [s. 33(a)]. (v) Secretary of the Board shall be the authority for granting licences required under s. 6 [s. 9]. (vi) Removal of members of a market committee by the State Government [s. 15]. (vii) Filling of vacancies by the State Government [s. 17]. (viii) Fees to be levied by the market committee subject to such rules as may be made by the State Government [s. 23]. (ix) Surplus of market committee fund to be invested in such manner as may be prescribed [s. 27]. (x) Supersession of market committee by the State Government [s. 35]. (xi) Emergency power to be exercised by the State Government [s. 36]. (xii) Power to make rules lie with the State Government [s. 43]. (i) Removal of any office- bearer by a majority of two-thirds of the total members of the committee subject to confirmation by the Board [s. 16(2)]. (ii) Powers of the committee if delegated to one member by the market committee. The resolution shall operate only after its approval by the Board [s. 19 proviso] (iii) Suspension or cancellation of (iii) Every committee shall 3. The measure of popular representation in a market committee licence by the Director [s. 35 (2)]. (iv) Appeal to the Board [s. 36 (a)] payment of contribution to the Board by the market committee out of the market fund [s. 39(3)(a)]. (v) Inspection, enquiry by the Board and submission of statements to the Board [s. 43]. (vi) Duty of officers, servants and meamobnegrss ofitms arket committee to furnish information to the Board [s. 44]. (vii) Board to call for proceedings of the tmarket commmiettmebeerasndt to pass order thereon [s. 46]. (viii) Compounding of offences

o

with the previous approval of the chairman of the Board [s. 70]. (i) Composition of market committee : (a) Six members to be elected by the agriculturists residing in the market area and holding agricultural land in the Union Territory of Delhi with the provision for nomination of 50 per cent of such members by the Administrator in certain cases. have its secretary who is appointed by the Board as servant and is lent to the committee. The committee to employ other officers and servants with the previous approval of the secretary of the Board [s. 27(20)]. (iv) Every market committee to pay its contribution to the Board out of the market committee fund [s. 27(2)]. (v) If market committee fund to be expended for any purpose other than those enumerated in s. 28, the previous sanction of the Board to be obtained [s. 28 (xii)]. (vi) Power to call for information, inspect and enforce attendance to suspend action, etc. of committee with the chairman or the secretary of the Board [s. 33A]. (vii) Power to order production of accounts and power of entry inspection and seizure with the Board [s. 33A]. (viii) In case the committee fails to make bye-laws within specified period, byelaws to be made by the Board [s. 44(2)]. (ix) Amendment, alteration, rescission of an existing bye-law or adoption of a new bye law at the instance of the Board and in the event of committee failure to do the needful, the Board to register the amendment, alternation, etc. [s.44(3)]. (x) Offences to be compounded by the market committee with the previous approval of the chairman of the Board [s. 46]. (1) A market committee shall consist of 9 or 16 members as the State Government may be in each case determine out of whom one may be appointed by the State Government from amongst its officials [s. 12]. Remaining members to be elected in the following manner : (b) Two members to be elected by the traders and commission agents holding licences to operate as such in the market area. (c) The chairman of the cooperative society engaged in the business of processing or marketing of agricultural produce in the market area with the provision that in the absence of such co-operative society the Administrator to nominate a member to represent the persons doing the business of processing of marketing of agricultural produce in the market area. (d) One member to be elected by the members of other local authority within the local limits of whose jurisdiction the principal market in relation to that market committee is constituted. (e) One member to be elected by the licensed weigh- men and measurers. (f) One member of the Metropolitan Council of Delhi to be elected by that Council from

(g) Two members to be nominated by the Administrator of whom one shall represent the interests of consumers.

(wiiw) wW.thaexnputhnedimt.aorrkge/tabc omutm.hittmteel is constituted foPratghe 8firosft 1ti0me all the membwewrswt.htearxepouf,nidnitc.lourdgin /cgonchtaacirtm.hatnmal nd

the vice-chairman to be nominated by the Administrator. (iii) The chairman of a market committee to be nominated by the Administrator from among the members of the committee. (iv) The market committee to elect

one of its elected members to be vice-chairman [s.9]. (a) Where the committee is to consist of 9 members: (i) 5 member to be elected from producers of the notified area by the Panchayat and Sarpanches of the Gram- Panchayats situated within the notified area; (ii) two members from persons holding licences under s. 10 if the market area; and (iii) one member to be elected from persons holding licence under s. 13. (b) Where the committee consists of 16 members : (i) 9 members, from the producers; (ii) 4 members from licensees under s. 10. (iii) Two members from licensees under s. 13. During the period of supersession of the Committee all powers, duties of the committee to be exercised and performed as such by the Gazetted officers as the Government may appoint. Constitution of committees by nomination for a period by the State Government [s. 12B].

12. Under s. 25 of the Act, a local body, constituted under it, is entrusted with certain duties, which are as follows : (a) To implement the provisions of the said Act and of the rules and bye-laws made thereunder for the market area; (b) To provide such facilities for marketing of agricultural produce therein as the Delhi Agricultural Marketing Board constituted under s. 5 of that Act may, from time to time direct; (c) To do such other acts in relation to the superintendence, direction and control produce, in for regulating marketing of agricultural produce, in any place in the market area and for purposes connected therewith as may be required and for that purpose it may exercise such powers and perform such duties and discharge such functions as are provided by or under that Act. Additionally, market committee may regulate entries of persons and vehicular traffic into the market, supervise the conduct of persons who enter the market for transacting business, grant, renew, refuse, suspend or cancel licences, prosecute persons for violating the provisions of that Act and the rules and bye-laws made thereunder, arrange for collection of such agricultural produce in the market area in which all the trade is to be carried on exclusively by the Government by or under law for the time being in force or arrange for the collection of such other agricultural produce in the market area as the Administrator may notify in the Official Gazette. It is also empowered to take all possible steps to prevent adulteration and to promote grading and standardisation of such agricultural produce as may be prescribed by rules. It is further empowered to enforce the provisions of the said Act. The said committee is further empowered under s. 28 of the said Act to levy and collect market fees, as may be determined by the administrator from every purchaser of agricultural produce sold in the market area.

13. A conspectus of various provisions of the Delhi Development Act, which formed the foundation of R.C. Jain’s case (supra) will provide an answer to the question of parity between that case and the issue under examination in this case. A synopsis of the provisions is as follows : The Delhi Development Act (i) Rule means a rule made under this Act by Central Government [s. 2(1)]. (ii) The Central Government shall appoint the DDA which shall consist inter alia of the following : A chairman who shall be the Administrator of the Union Territory of Delhi. A vice-chairman; a Finance & Accounts Member; an engineer—all to be appointed by the Central Government (s. 3); two representatives of Municipal Corporation of Delhi; three representatives of Metropolitan Council for the Delhi Government, etc. (iii) The Central Government may appoint two suitable persons, as secretary and Chief Accounts Officer of the authority [s. 4]. (iv) Advisory Council of the authority shall consist inter alia of the Chairman of the authority and representatives having knowledge of Town Planning and Architect to be nominated by the Central Government representative of the Health Services of Delhi Administration to be appointed by the Central Government [s. 5]. (v) The authority shall have its own fund to which shall be credited all monies received from the Central Government of all monies borrowed by the authority and all fees and charges received by the authority under the Act [s. 23]. (vi) The authority shall prepare a budget in respect of every financial year and shall forward the same to the Central Government. It shall also prepare for each year of its activities and submit the report to the Central Government [s. 24 & s. 26]. (vii) If any development in an area other than the development area has been commenced in contravention of the provisions of the Act, the Administrator may direct demolishing of such development and appeal against such order of the Administrator will lie to the Central Government whereupon the decision of the chairman of the Central Government shall be final [s. 30]. (viii) The authorities vested with the power of levy of betterment charges [s. 37]. (ix) The Administrator of the Union Territory of Delhi is authorised to delegate his power to any other officer [s. 52]. (x) The Central Government in consultation with the authority is empowered to make rule to carry out the purpose of the rule [s. 56]. (xi) The Central Government has the power to dissolve the authority when it is satisfied that it has fulfilled the purpose [s. 59].

1w4w. wO.ntaxexpaumndinita.toirogn/aobf ovuatr.ihotums l provisions referrePdagteo 9aboofv1e0inevitable conclwuwsiown.taisxpthuantdtiht.eorags/sceossneteacits.hatmbol dy corporate having separate autonomous status. Its operational area is defined, its office-bearers are elected and are free to take their own decision. The committee runs market, providing civic amenities in the market and performs judicial, legislative and executive as well as fiscal functions. It can raise funds, control and manage funds. Therefore, the ratio laid down in R.C. Jain’s case (supra) as chiselled and honed by other decisions referred to above squarely applies to the facts of the case. As the indicated criteria are fulfilled, we have no hesitation in holding that the assessee is a local authority. Mere absence of a provision on the lines of Maharashtra and Gujarat Acts would not be the decisive criteria in view of the analysis made supra. That being the position, the Tribunal’s conclusions are irreversible. Question referred is answered in the affirmative, in favour of the assessee and against the Revenue.

 

[Citation : 250 ITR 369]

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