JUDGMENT ORDER K.S. Jhaveri, J. - By way of these appeals, the appellants have challenged the judgement and order of the Tribunal whereby Tribunal has partly allowed both the appeals of the department as well as assessee. 2. This Court while admitting the ITA s No.285/2016, 286/2016, 287/2016, 288/2016 and 289/2016 on 25.04.2017 framed following substantial question of law in each of the appeals:- "Whether under the facts and circumstances of the case the ld. Tribunal was justified in not declaring the reassessment proceedings and the consequential assessment order passed thereto as nullity?" 3. However, in view of the decision of this Court in the case of D.B. Income Tax Appeal No.643/2008 dated 25.07.2017 which is binding to both the parties wherein assessee has upheld to be local authority under the Act, reads as under: " In all these appeals common questions of law and facts are involved, hence, they are decided by this common judgement. 1. By way of these appeals, the assessee as well as the department have assailed the judgement and order of the Tribunal whereby the Tribunal has allowed the appeal preferred by the department reversing the view taken by the CIT(A) and in some appeals the appeal of the department was dismissed. 2. This Court while admitting the matter has framed the following questions of law:- "D.B. ITA No. 643/2008 (i) Whether under the facts and circumstances of the case and in law the Tribunal was justified in holding that the expenditure of Rs. 11,74,15,986/- incurred by the assessee is of revenue in nature ignoring that the expenditure was incurred in bringing the inventories to the present location and condition as stipulated in the Accounting Standard-2 of ICAI and therefore are part of closing stock? (ii) Whether under the facts and circumstances of the case and in law the Tribunal was justified in deleting the disallowance made out of depreciation claimed even when it was not claimed on written down value of the asset? (iii) Whether under the facts and circumstances of the case and in law the Tribunal was justified in confirming the order of CIT(A) on the issue wherein the additions of Rs. 18,31,68,938/- made in the value of closing stock was reduced arbitrarily to Rs. 10,87,50,513/-thereby granting a whopping relied Rs. (iii) Whether under the facts and circumstances of the case and in law the Tribunal was justified in confirming the order of CIT(A) on the issue wherein the additions of Rs. 18,31,68,938/- made in the value of closing stock was reduced arbitrarily to Rs. 10,87,50,513/-thereby granting a whopping relied Rs. 7,44,18,425/- without appreciating that the value of opening stock has to be taken as closing stock of preceding year?" D.B. ITA No. 73/2011 "Whether on the facts and circumstances of the case and in law, the Ld. ITAT was right in holding that the appellant is not a ''local authority'' as contemplated under section 10(20) of the Income Tax Act, 1961 and therefore, it was not exempt from income tax?" D.B. ITA No. 706/2008 (1) Whether under the facts and circumstances of the case and in law the Tribunal was justified in holding that the expenditure of Rs. 11,74,15,986/- incurred by the assessee is of revenue in nature ignoring that the expenditure was incurred in bringing the inventories to the present location and condition as stipulated in the Accounting Standard-2 of ICAI and therefore are part of closing stock? (ii) Whether under the facts and circumstances of the case and in law the Tribunal was justified in deleting the disallowance made out of depreciation claimed even when it was not claimed on written down value of the asset? (iii) Whether under the facts and circumstances of the case and in law the Tribunal was justified in confirming the order of CIT(A) on the issue wherein the additions of Rs. 18,31,68,938/- made in the value of closing stock was reduced arbitrarily to Rs. 10,87,50,513/-thereby granting a whopping relied Rs. 7,44,18,425/- without appreciating that the value of opening stock has to be taken as closing stock of preceding year?" D.B. ITA No. 294/2009 "Whether on the facts and circumstances of the case and in law, the Ld. ITAT was right in holding that the appellant is not a ''local authority'' as contemplated under section 10(20) of the Income Tax Act, 1961 and therefore, it was not exempt from income tax?" D.B. ITA No. 326/2009 "(1) Whether on the facts and in the circumstances of the case, Hon''ble ITAT was justified in ignoring the para 6 of the Accounting Standard-2 of ICAI for valuation of inventories to be in consonance with section 145 of the Income Tax Act, 1961? (2) Whether on the law and facts of the case Hon''ble ITAT was justified in deleting the disallowance of the depreciation ignoring the Explanation 6 of Section 43(6) of I.T. Act, 1961 inserted by the Finance Act, 2008 with retrospective effect from 1.4.2003?" "(1) Whether on the facts and circumstances of the case and in law, the Ld. ITAT was right in holding that, the appellant is not a ''local authority'' as contemplated under section 10(20) of the Income Tax Act, 1961 and therefore it was not exempt from income tax? (2) Whether on the facts and in circumstances of the case and in law, the Order passed by Ld. ITAT was not perverse, unjust, arbitrary and contrary to material on record? (3) Whether on the facts and circumstances of the case, the appellant is not a State as per Article 12 of the constitution of India and therefore exempt from income tax under Article 289(1) of the Constitution of India? (4) Whether on the facts and circumstances of the case, the Ld. ITAT was correct in law in holding that the appellant is liable to tax under the Income Tax Act, 1961?" D.B. ITA No. 392/2011 (1) Whether under the facts and circumstances of the case, and in law the ld. Tribunal was justified in not upholding the order of the CIT (A) whereby the rental income of Rs. 13,26,069 was treated as "Income from house property" under section 22 as against "business income"? (2) Whether under the facts and in the circumstances of the case, and law the ld. Tribunal was justified in not holding that the deficit of Rs. 1,26,07,674/- on development work in progress being not allowable under section 14A of the Act?" 3. Counsel for the appellant has taken us to the definition of local authority under the Income Tax Act and contended that in view of the proviso added to explanation of Section 10(20) of the Income Tax Act which reads as under:- "Explanation. 1,26,07,674/- on development work in progress being not allowable under section 14A of the Act?" 3. Counsel for the appellant has taken us to the definition of local authority under the Income Tax Act and contended that in view of the proviso added to explanation of Section 10(20) of the Income Tax Act which reads as under:- "Explanation. For the purpose of this clause, the expression "local authority" means (i) Panchayat as referred to in clause (d) of article 243 of the constitution; or (ii) Municipality as referred to in clause (e) of article 243P of the Constitution; or (iii) Municipal Committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or (iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)." 4. Taken into consideration local fund in view of the Section 61, 62, 63 & 64 where under the Chapter the finance authority has total control as statutory authority and they are carrying on the urban development work as foundation of the State Government and in view of Section 105 of the Act of Rajasthan Urban Improvement Act 1959, it is very clear that ultimately its fund has to be merged into local authority namely Municipal Corporation Board. 5. He has also pointed out in view of item 5 of State list which reads as under:- 5.Local government, that is to say, the constitution and powers of municipal corporations, improvement trusts, district boards, mining settlement authorities and other local authorities for the purpose of local self-government or village administration. 6. It clearly indicated that this authority will fall under explanation 3 and the benefit of local self government is to be granted. This is supported by Article 243 read with Schedule 1, Schedule 12 Item (1) of the Constitution which clearly establish that the urban planning including term plan is to be covered under the Chapter 243 and recently in view of amendment in Chapter 9. 7. He has also relied upon the decision of the Supreme Court in the case of Union of India & Ors. vs. Shri R.C. Jain & Ors. reported in AIR 1981 SC 951 wherein it has been held as under:- "3. 7. He has also relied upon the decision of the Supreme Court in the case of Union of India & Ors. vs. Shri R.C. Jain & Ors. reported in AIR 1981 SC 951 wherein it has been held as under:- "3. Let us, therefore, concentrate and confine our attention and enquiry to the definition of ''Local Authority'' in Section 3(31) of the General Clauses Act. A proper and careful scrutiny of the language of Section 3(31) suggests that 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, but, possessing 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. What then are the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority? First, the authorities must have separate legal existence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next, they 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 inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority." 8. He contended that the view taken by the Tribunal is required to be reversed and the view taken by the Assessing Officer is required to be upheld. 9. However, counsel for the respondent-assessee Mr. Jhanwar contended that in view of the definition of the person under Section 231 Sub-clause (iv) read with explanation, it is clear that the present local authority is included. 10. He has also taken us to the provisions of Section 10(20A) and Section 10(20) which was made effective from different dates and contended that in view of this the intention of legislation was very clear and Article 289 which reads as under:-"289. Exemption of property and income of a State from Union taxation (1) The property and income of a State shall be exempt from Union taxation (2) Nothing in clause ( 1 ) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied for the purposes of such trade or business, or any income accruing or arising in connection therewith (3) Nothing in clause ( 2 ) shall apply to any trade or business, or to any class of trade or business, which Parliament may by law declare to be incidental to the ordinary functions of government" 11. He contended that benefit of exemption or any benefit under the Income Tax Act cannot be granted to the local authority. He contended that benefit of exemption or any benefit under the Income Tax Act cannot be granted to the local authority. He has also taken us to the Article 243 read with Schedule 12 and also the order of the CIT(A) has observed as under:- "During the assessment proceedings the AO noted from the Income & Expenditure Account that the appellant had treated the land available with it as stock in trade for the year under reference. He further found that opening stock of the land was shown at 112.11 crore and closing stock at 107.06 crore. He asked the appellant to provide the details of working out such valuation. In response thereof the ld. AR informed that the appellant had valued the land according to reserves price of each scheme determined in the Trust Meeting. It was also explained that during the relevant period no change in reserve price was made. In this regard the ld. AR submitted the copy of decision of the meeting of the trust held on 29-5-1999. However, the AR could not file the basis of such reserve price as determined by the Trust. The AO found that as per provision of Rule 6(2) of Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974, the reserve price was required to be worked out after adding the following amounts:- (i) Cost of undeveloped land this would be subject to change to the extent of final cost of compensation determined by the competent court, (ii) Cost of development based on the prevailing PWD Schedule of rates for the area, (iii) 30% of the items (i) and (ii), to cover administrative and establishment charges, and (iv) 20% of the items (i), (ii) and (iii), to cover maintenance cost for a period upto five years. The appellant failed to provide the basis on which the reserves prices were fixed. Further it also failed to show that it had adhered to the provision of Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974, the AO rejected the books of accounts by invoking provisions of Section 145(3) of the Act. The AO noted that the appellant during the relevant period had sold land worth Rs. 5,04 crore for an amount of Rs. 12.48 crore. He accordingly concluded that the rise in fair market price was at 147.62% of the value of stock disclosed by the appellant. The AO noted that the appellant during the relevant period had sold land worth Rs. 5,04 crore for an amount of Rs. 12.48 crore. He accordingly concluded that the rise in fair market price was at 147.62% of the value of stock disclosed by the appellant. He also added further amount as per the Rule 6(2) of Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974 as referred to above. He worked out the total value of opening stock at Rs. 432,98,69,111 and closing stock at Rs. 446,26,09,367/-. He accordingly made an addition of Rs. 18,31,68,398/- in the income of the appellant. 5.1 During the appellate proceedings the AR of the appellant objected to the aforesaid action of the AO and made the following submissions:- From the above it can be noted that the dispute is in respect of the following:- (i) Whether the AO has correctly calculated the closing stock even as per his method. (ii) Whether administrative, establishment and maintenance cost is to be included in the valuation of stock in trade. (iii) Whether closing stock is to be further increased by the addition of Rs. 11,74,15,986/- during the year. (iv) Whether the increase in the value of opening and closing stock by 147% is justified. The assessee has taken the value of opening stock of lands at Rs. 1,12,11,12,783/. The AO have increased the value of the opening stock by 147.57% and further made addition of 30% for administration & establishment charges and 20% to cover maintenance cost. Thus value of opening stock is recalculated at Rs. 4,32,98,69,111/-. Thus the value of opening stock is increased by Rs. 3,20,87,56,328/- (4,32,98,69,111-1,12,11,12,783). On the above basis the AO have reworked out the value of closing stock at Rs. 4,46,26,09,367/- Thus the value of closing stock is increased by Rs. 3,39,19,25,266/- (4,46,26,09,367-1,07,06,84,101) The above calculation made contains an error even as per method adopted by AO i.e. increase in the value of the opening stock at Rs. 3,20,87,56,328/- is included in closing stock without considering that, part of the land was sold during the year. The correct calculation of the value of closing stock by applying method adopted by AO would be at 4,31,82,76,563/- Thus amount to be increased for value of opening stock remaining in closing stock is Rs. 3,06,44,23,524/- & not of Rs. 3,20,87,56,328/-. The value of closing stock accordingly, works out to Rs. 4,31,82,76,563/- as against Rs. The correct calculation of the value of closing stock by applying method adopted by AO would be at 4,31,82,76,563/- Thus amount to be increased for value of opening stock remaining in closing stock is Rs. 3,06,44,23,524/- & not of Rs. 3,20,87,56,328/-. The value of closing stock accordingly, works out to Rs. 4,31,82,76,563/- as against Rs. 4,46,26,09,367/-worked out by the AO resulted in the year valuation of closing stock by Rs. 14,43,32,804/- (4462609367-4318276563). (i) Similarly when opening stock of Rs. 1,12,12,783/- is revalued at Rs. 4,32,98,69,111/- i.e. increased by 286.21% the closing stock of Rs. 1,07,06,84,101/- also needs to be increased by same percentage which works out to Rs. 3,06,44,23,524/- as against Rs. 3,20,87,56,328/- considered by the AO. The closing stock is thus overvalued by Rs. 14,43,32,804/- (3,20,87,56,3283,06,44,23,524). (ii) As per the generally accepted accounting principles and Accounting standard the stock is to be valued at cost or marker price which ever is less. Administrative, establishment and maintenance cost should not form part of the valuation of the inventories. The AO without any basis increased the valuation of the stock by Rs. 6,57,52,952/- (3,52,24,706+3,05,25,156) on account of administrative and maintenance expenses. The valuation of the above closing stock is incorrect. (i) The valuation of the stock is governed by Accounting Standard provides the following basis for valuation of inventories:- Para 5 - Inventories should be valued at the lower of cost and net realisable value. Para 6 - The cost of inventories should comprise all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Para 13 - In determining the cost of inventories in accordance with Para 6, it is appropriate to exclude certain costs and recognise them as expenses in the period in which they are incurred. Examples of such costs are: (a) Abnormal amounts of wasted materials, labour or other production costs. (b) Storage cost, unless those costs are necessary in the productions process prior to a further production stage. (c) Administrative overheads that do not contribute to bringing the inventories to their present location and condition. (d) Selling & distribution costs. From the above it is clear that the administrative, establishment and maintenance cost does not form part of the closing stock. The same has to be charged to profit & loss account in the year in which it is incurred. Therefore the addition of Rs. (d) Selling & distribution costs. From the above it is clear that the administrative, establishment and maintenance cost does not form part of the closing stock. The same has to be charged to profit & loss account in the year in which it is incurred. Therefore the addition of Rs. 6,57,52,952/- (3,52,24,796+3,05,28,156) made by the AO in the valuation of closing stock in trade as well as Rs. 1,48,43,97,609/-(79,52,13,005+68,91,84,604) in opening stock is incorrect and be deleted. In the regard the ld. AR placed reliance on the following decisions:- (i) A.L.A. Firm vs. Commissioner of Income Tax 189 ITR 285 (SC) (ii) Sanjeev Woolen Mills vs. Commissioner of Income Tax [2005] 149 Taxman 431/279 ITR 434(SC) (iii) Investment Ltd. vs. Commissioner of Income Tax 77 ITR 533(SC)" 12. He contended that the CIT(A) has seriously committed an error in passing the order and the department has taken a contrary stand to what has been taken before Assessing Officer. He has also strongly relied upon the decision of the Supreme Court in the case of Adityapur Industrial Area Development Authority vs. Union of India & Ors. reported in 2006 (5) SCC 100 wherein it has been held as under:- Similarly, the decision in New Delhi Municipal Council vs. State of Punjab and Ors. (supra) does not advance the case of the appellant. It was held that the property/ municipal taxes levied by the New Delhi Municipal Council under the relevant Act constituted Union taxation within the meaning of Clause (1) of Article 289 of the Constitution of India. The levy of property taxes under the aforesaid enactments on lands or buildings belonging to the State Government was invalid and incompetent by virtue of the mandate contained in Clause (1) of Article 289. However, if any land or building is used or occupied for the purpose of any trade or business, meaning thereby a trade or business carried on with profit motive, by or on behalf of the State Government, such land or building shall be subject to the levy of the property taxes levied by the said enactments. In other words, State property exempted under Clause (1) means such property as is used for the purpose of the Government and not for the purpose of trade or business. In other words, State property exempted under Clause (1) means such property as is used for the purpose of the Government and not for the purpose of trade or business. That was a case where the question arose in relation to the levy of property tax on lands and buildings owned by the State Governments which was "property of the State Government". In the instant case, we are concerned with the income of the appellant/Authority and the same principles apply. The exemption can be claimed only if the income can be said to be the income of the State Government. In the facts of this case, it is not possible to hold that the income of the appellant/Authority is the income of the State Government. Learned counsel for the Union of India also relied upon two decisions reported in : AIR 1999 SC 2573 Food Corporation of India vs. Municipal Committee, Jalalabad and Anr. and: AIR 1999 SC 2552 Board of Trustees for the Visakhapatnam Port Trust vs. State of A.P. and Ors. and submitted that this Court has consistently taken the view that a Corporation having the attributes of a Company must be held to be distinct from the Central Government, and not eligible for exemption from taxation under Article 285. The High Court also in its impugned judgement and order has referred to several decisions of this Court wherein this Court dealing with cases arising under Article 285 of the Constitution of India, which exempts properties of the Union from State taxation, took a similar view. We may usefully refer to the cases reported in: : AIR 1999 SC 2573 Food Corporation of India vs. Municipal Committee, Jalalabad and Anr., : (1995) 5 SCC 251 Municipal Commissioner of Dum Dum Municipality and Ors. vs. Indian Tourism Development Corporation and Ors., Central Warehousing Corporation vs. Municipal Corporation and : [1982] 2 SCR 1 Western Coalfields Ltd. vs. Special Area Development Authority, Korba and Anr. and Bharat Aluminium Company Ltd. vs. Special Area Development Authority, Korba and Ors. Having considered all aspects of the matter we hold that the High Court is right in concluding that the appellant/Authority could not claim exemption from Union taxation under Article 289(1) of the Constitution of India. The impugned notice issued by the Income Tax Authorities was, therefore, valid and legal and could not be successfully challenged in the writ petition. Having considered all aspects of the matter we hold that the High Court is right in concluding that the appellant/Authority could not claim exemption from Union taxation under Article 289(1) of the Constitution of India. The impugned notice issued by the Income Tax Authorities was, therefore, valid and legal and could not be successfully challenged in the writ petition. Accordingly, this appeal is dismissed but without any order as to costs." 13. Therefore, he contended that the exemption cannot be claimed only in the income of the State Government. 14. Taking into consideration he has also taken us to the different part of the judgement and contention raised by the parties and ultimately that the issue is squarely covered against the assessee. He has also relied upon the decision of the Tribunal in M/s Jammu Development Authority, Jammu vs. Commissioner of Income Tax ITA No. 30 (Asr)/2011 decided on 14th June, 2012. wherein it has been held as under:-"It would thus be seen that the income of a local Authority chargeable under the head "income from house property", "Capital gains" or "Income from other sources" or from a trade or business carried on by it was earlier excluded in computing the total income of the Authority of a previous year. However, in view of the amendment with effect from April 1, 2003, the Explanation "Local Authority" was defined to include only the Authorities enumerated in the Explanation, which does not include an Authority such as the Jammu Development Authority. At the same time section 10(20A) which related to income of an Authority constituted in India by or under any law enacted for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, which before the amendment was not included in computing the total income, was omitted. Consequently, the benefit conferred by clause (20A) on such an Authority was taken away. Thus, in view of the fact that section 10(20A) was omitted and an Explanation was added to section 10(20A) of the Act, enumerating the "Local Authorities" contemplated by section 10 (20A), the assessee i.e. Jammu Development Authority could not claim any benefit under those provisions after April 1, 203. Thus, in view of the fact that section 10(20A) was omitted and an Explanation was added to section 10(20A) of the Act, enumerating the "Local Authorities" contemplated by section 10 (20A), the assessee i.e. Jammu Development Authority could not claim any benefit under those provisions after April 1, 203. The benefit conferred by section 10(20A) of the Act on the assessee up to the A.Y. 2002-03 has been expressly taken away and the explanation added to section 10(20) enumerates the "Local Authority" which do not cover the Authority. The assessee i.e. Jammu Development Authority subsequently claimed that its objects falls under the provisions of section 2(15) of the Act and has complied with all the eligibility criteria for grant of registration under section 12A of the Act, which was allowed vide property which make the Authority a commercial organisation. Therefore, the objects pursued by the Authority cannot be said to be charitable in view of the fact that the authority being a commercial organisation with no restriction as to the application of the assets on dissolution or winding up of for charitable purposes. In order to find out whether organisation is a charitable one, tests have been laid down by the B Hon''ble Supreme Court in the case of Commissioner of Income Tax vs. Surat Art Silk Cloth Manufacturers Association (1997) 121 ITR and Commissioner of Income Tax vs. Andhra Pradesh State Road Transport Corp. (1986) 159 ITR 1. In the case of Surat Art Silk Cloth Manufacturers Association, it was held as under:- "Since the income and property of the assessee were liable to be applied solely and exclusively for the promotion of the objects set out in the Memorandum and no part of such income or property could be distributed amongst the Members in any form or utilised for their benefit either during its operational existence or on its winding up or dissolution as such the object was a charitable one." 15. It is true that the functions which are carried out by the assessee are statutory functions and carry on for the benefit of the State Government for urban development therefore, in our considered opinion, the functions carried out by the authority is a supreme function and fall within the activity of the State Government. 16. It is true that the functions which are carried out by the assessee are statutory functions and carry on for the benefit of the State Government for urban development therefore, in our considered opinion, the functions carried out by the authority is a supreme function and fall within the activity of the State Government. 16. In that view of the matter, the judgements which are strongly relied upon by counsel for the department are of no help in the facts of the case as the case relied upon by the department was in respect of industrial corporation which was under the statute for the purpose of making profit. The fees and other charges which are covered are statutorily for the development of the urban area. In that view of the matter, the judgement which sought to be relied upon by the counsel for the respondents, in our considered opinion, would be of importance and the functions which are carried out by the assessee is statutory function. In our considered opinion, under clause-10 (20) & Sub-clause (3) Municipal Committee and District Board are legal entity entrusted by the function of the Government within the control or management of the municipal or local authority and will try to help the assessee. 17. In that view of the matter, the reliance placed by counsel for the department regarding 10(20) and explanation A will not make any difference. Taking into consideration income of authority is under constitution of India vide order enacted either for the purpose of dealing with or setting up the housing scheme for the purpose of planning and development of the improvement of the cities, town and villages or both for which the authority are created to carry out the function of State which are sovereign whereas the urban development and calculation of development charges will fall under the development charges. 18. In that view of the matter, deletion of 20A will not make difference in case of assessee. In our considered opinion, Clause-3 will come in the help of the assessee. In that view of the matter, we are considered opinion, that the authority assessee is a local authority for the purpose of carrying out of the improvement and development function of the State. 19. In that view of the matter, the issue is required to be answered in favour of the assess against the department. In that view of the matter, we are considered opinion, that the authority assessee is a local authority for the purpose of carrying out of the improvement and development function of the State. 19. In that view of the matter, the issue is required to be answered in favour of the assess against the department. In view of the answer, other issues are become academic, therefore, we are not deciding those issue. 20. The appeals filed by the department are dismissed and that of assessee are allowed." 4. In that view of the matter, AO will be bound by this judgement and follow the same. Other questions kept open. 5. With the above observations, all the five appeals are answered accordingly. 6. All the five appeals are allowed.