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2020 ] KARNATAKA INDUSTRIAL AREAS DEV. BOARD v. COMMR. OF CENTRAL TAX 47
Act, 1966. The Bombay High Court in the above case has relied upon the decision
of the Apex Court in the case of Ramtanu Co-Operative Housing Ltd. and Anr. and
quoted paras 15 & 16 from the Apex Court judgment, where the Apex Court held
as under :-
15. The pith and substance of the Act is establishment, growth and Organ-
isation of Industries, acquisition of land in that behalf and carrying out the
purposes of the Act by setting up the Corporation as one of the limbs or
agencies of the Government. The powers and functions of the Corporation
show in no uncertain terms that these are all in aid of the principal and
predominant purpose of establishment, growth and establishment of indus-
tries. The Corporation is established for that purpose. When the Govern-
ment is satisfied that the Corporation has substantially achieved the pur-
pose for which the Corporation is established, the Corporation will be dis-
solved because the raison d’etre is gone. We, therefore, hold that the Act is a
valid piece of legislation.
16. The petitioners contended that the Corporation was a trading one. The
reasons given were that the Corporation could sell property, namely, trans-
fer land; that the Corporation had borrowing powers; and that the Corpora-
tion was entitled to moneys by way of rents and profits. Reliance was
placed on the report of the Corporation and in particular on the income and
expenditure of the Corporation to show that it was making profits. These
features of transfer of land or borrowing of moneys or receipt of rents and
profits will by themselves neither be the indicia nor the decisive attributes
of the trading character of the Corporation. Ordinarily, a Corporation is es-
tablished by shareholders with their capital. The shareholders have their
Directors for the regulation and management of the Corporation. Such a
Corporation set up by the shareholders carries on business and is intended
for making profits. When profits are earned by such a Corporation they are
distributed to shareholders by way of dividends or kept in reserve funds. In
the present case, these attributes of a trading Corporation are absent. The
Corporation is established by the Act for carrying out the purposes of the
Act. The purposes of the Act are development of industries in the State. The
Corporation consists of nominees of the State Government, State Electricity
Board and the Housing Board. The functions and powers of the Corpora-
tion indicate that the Corporation is acting as a wing of the State Govern-
ment in establishing industrial estates and developing industrial areas, ac-
quiring property for those purposes, constructing buildings, allotting build-
ings, factory sheds to industrialists or industrial undertakings. It is obvious
that the Corporation will receive moneys for disposal of land, buildings and
other properties and also that the Corporation would receive rents and
profits in appropriate cases. Receipts of these moneys arise not out of any
business or trade but out of sole purpose of establishment, growth and de-
velopment of industries.”
Further the Hon’ble Bombay High Court has held in MIDC case as under :-
11. The Apex Court categorically held that functions and powers of MIDC
indicate that the said Corporation is acting as a wing of the Government. In
the case of Managing Director, Haryana State Industrial Development Cor-
poration, the Apex Court was considering the role played by Haryana State
Industrial Development Corporation. The Apex Court held that the said
Corporation discharges sovereign functions. The Apex Court also held that
considering the objects and purport for which the said Corporation of Har-

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