Arijit Pasayat ( 1 ) ALL these references under Section 256 (1) of the Income- tax 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 Section 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 Section 10 (20) in I. T. Act read with Section 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 I. T. 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. Assessing Officer was of the view that it was not a local Authority as claimed but was an association of persons. Accordingly, the claim that its income was exempt from tax was turned down. The matter was carried in appeal before the commissioner of Income-tax (Appeals) [in short CIT (A)]. The said Authority confirmed views of the Assessing Officer. 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. 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 have been highlighted by the Apex Court in several judgments. Assessee does not fulfill the requirements and, 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 Committee 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 Section 3 (31) of the General Clauses Act, 1887 (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 UOI v. 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 Commissioners, 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 of local fund. (iii) It must have a separate legal existence as a corporate body. (iv) It must hot be a mere Governmental agency but must be a legally independent entity. (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 of local fund. (iii) It must have a separate legal existence as a corporate body. (iv) It must hot 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 questions of policy affecting the area administered by it. (vii) The autonomy may not be complete and the degree of the dependence may vary considerably but an appreciable measure of autonomy 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 fulfillment 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 must vest in the authority. "in Calcutta State Transport Corporation v. Commissioner of Income Tax, (1996) 219 ITR 515, tests as indicated in R. C. Jain s case 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 would 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. 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 v. 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 tile 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 clothe the Authority with the status of a local Authority. "haryana Hosing 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 Commissioner of Income Tax v. U. P. Forest Corporation, (1998) 230 ITR 945. Again the principles in R. C. Jain s case were reiterated and by way of illustration certain other parameters were indicated as under: " (V) "other Authority" referred to in Section 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 management of a municipal or local fund. (vii) The members of the local Authority should be wholly or partly, 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. (vii) The members of the local Authority should be wholly or partly, 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 Section 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, e. g. , 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. ( 6 ) 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 of 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 Sections 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 Section 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 Section 8 of the Marketing Act. Under Section 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 Section 25, the Market Committee has to provide facilities for marketing as directed by the Board. Market Committees are constituted under Section 8 of the Marketing Act. Under Section 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 Section 25, the Market Committee has to provide facilities for marketing as directed by the Board. Power to collect fee is provided under Section 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 Section 65 of the Marketing Act. Bye-laws require sanction of the Board which has power under the said section to amend bye-laws. Under Section 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 require previous sanction of the Board for approval. Thus, according to the learned Counsel for Revenue, it is established beyond a shadow of doubt that Market Committee is not a local Authority. ( 7 ) 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. 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, sale, 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 Section 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 appointed by the President under Article 239 of the Constitution (b)XXX XXX XXX XXX (c) xxx xxx xxx xxx (d) "board" means the Delhi Agricultural Marketing Board constituted under Section 5; (e) xxx xxx xxx xxx (f) xxx xxx xxx xxx (g) XXX 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, Sections 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-section (5) or who in his opinion, is remiss in the discharge of his duties or has ceased to represent the interest to represent which he was nominated. (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. (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. "sections 8 and 9 deal with the Constitution of the Market Committee and composition of Market Committee. Section 10 deals with incorporation of Market Committee and reads as follows: "10. Incorporation of Market Committees Every Market Committee shall be a 253 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 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 Section 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 transactions connected with the marketing of agricultural produce and all matter 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, suchagricultural produce; (h) xxx xxx xxx Section 26 empowers it to appoint such Committees and under Section 27 it is empowered to open collection centres; Section 28 empowers the Market Committee to levy fees. Section 29 empowers it to borrow money required for carrying out 254 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. Section 35 deals with execution of contracts Clause 5 deals with officers and servants of the Committees. Section 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. Section 39 deals with market fund, its custody and investment. Sub-sections (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 Section (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. "section 40 deals with the purpose for which the market fund may be expended. ( 9 ) IT may be noted that in Krishi Utpanna Bazar Samiti v. ITO and Ors. , (1986) 158 ITR 742, 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 provisions of the two Acts i. e. , the Maharashtra Act and the Act to show parity between the provisions. It maybe 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 is the Gujarat Act. Only the Act and the Punjab Act do not contain such a provision. Similarly, in CIT v. Agricultural Market Committee, (1983) 143 ITR 1020, and in Budha Veerinaidu v. State of Andhra Pradesh and Anr. , (1983) 143 ITR 1021, Andhra Pradesh High Court considered the provisions in the Agricultural Market Committee functioning under Andhra Pradesh (Agriculture 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. 4070/1983 disposed of by judgment dated 1/07/1994. ( 10 ) AT this juncture, it is also necessary to take note of the decision in Patel Premji Jiva v. State of Gujarat, 1971 (3) SCC 815 . Examining the provisions of the Land Acquisition Act, 1894, it was held that the Market Committee constituted 255 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. 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 Act can be summarised as follows: ( 11 ). Under Section 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 Section 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 standarisation of such agricultural produce as may be prescribed by rules. It is further empowered to enforce the provisions of the said Act. It is also empowered to take all possible steps to prevent adulteration and to promote grading and standarisation 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 Section 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. ( 12 ). 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 : (I) Rule means a rule made under this Act by Central Government [section 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 and Accounts Member; An Engineer all to be appointed by the Central Government [section 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 [section 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 [section 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 [section 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 [section 24 and Section 26]. (vii) If any development in an area other than the development area has been commenced in contravention of the provisions of the Act. It shall also prepare for each year of its activities and submit the report to the Central Government [section 24 and Section 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 [section 30]. (viii) The Authorities vested with the power of levy of betterment charges [section 37]. (ix) The Administrator of the Union Territory of Delhi is authorised to delegate his power to any other officer [section 52]. (x) The Central Government in consultation with the Authority is empowered to make rule to carry out the purpose of the rule [section 56]. (xi) The Central Government has the power to dissolve the Authority when it is satisfied that it has fulfilled the purpose [section 59]. ( 14 ). On examination of various provisions referred to above inevitable conclusion is that the assessee is a body 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.