Section 10(20)

Section 10(20) — the law in short

What the courts have decided on section 10(20), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Agricultural Produce Market Committee, Narela v CIT Supreme CourtHelps department
  Our market committee was always treated as a local authority and exempt under s.10(20). The Assessing Officer now says the Explanation inserted in 2002 has taken that away. Is he right?
  Yes. The Supreme Court held that the Explanation to s.10(20) inserted by the Finance Act 2002 with effect from 1 April 2003 is an exhaustive definition, not an inclusive one, and that an Agricultural Produce Market Committee is not within it. Parliament deliberately left out the words 'other authority' that appear in s.3(31) of the General Clauses Act, so the functional test built on R.C. Jain no longer decides who is a local authority for s.10(20).
• CIT v Gujarat Maritime Board Supreme CourtHelps taxpayer
  My body is a statutory authority, not a trust under any public trust law. Can it still be registered as a charitable institution under section 12A?
  Yes. The Supreme Court dismissed the Revenue's appeal and held that the Gujarat Maritime Board was entitled to registration under section 12A. Its predominant purpose is the development of minor ports in Gujarat, its management and control lie essentially with the State Government, and sections 73 to 75 of its own statute show it has no profit motive and must apply its income to that purpose. That is an object of general public utility within section 2(15). Section 10(20) and section 11 operate in different spheres, so ceasing to be a local authority after the 2002 amendment did not preclude the claim. The Court was concerned with registration, not application of income.
• Adityapur Industrial Area Development Authority v Union of India Supreme CourtHelps department
  Section 10(20A) has been omitted and we are outside the new s.10(20) Explanation. Can we still say our income is the State's income and immune under Article 289?
  No. The Supreme Court held that where a development authority is constituted under a State Act with its own funds, its own assets and its own liabilities, the income is the authority's own income and not the income of the State, so Article 289(1) does not help. The withdrawal of s.10(20A) by the Finance Act 2002 and the narrowing of s.10(20) by the Explanation from 1 April 2003 were deliberate, and a benefit expressly taken away cannot be recovered through the Constitution.
• Statutory position — s.206C(1G): TCS on LRS remittances and overseas tour packages as the sub-section stands from 1 April 2025 CBDT Circulars & InstructionsCuts both ways
  My bank has collected TCS on the money I sent abroad for my daughter's university fees, and my travel agent has collected on the tour package. What does s.206C(1G) actually require, and at what rate and threshold?
  Section 206C(1G) puts the collection duty on two people: an authorised dealer who receives an amount for remittance from a buyer remitting under the Reserve Bank's Liberalised Remittance Scheme, and a seller of an overseas tour programme package who receives any amount from the buyer of the package. The main charge is five per cent, collected at the time of debiting the amount payable by the buyer or at the time of receipt, whichever is earlier; the first proviso disapplies collection by an authorised dealer where the amount or aggregate of amounts remitted by a buyer in a financial year is less than ten lakh rupees, and the second proviso raises the rate to twenty per cent on the amount in excess of ten lakh rupees where the remittance is for purposes other than education or medical treatment.
• Statutory position — the meaning of 'scrap' in the Explanation to s.206C, and the s.206C(1) table as it stands from 1 April 2025 CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer says everything I sold as waste was 'scrap' and wants one per cent. What does the Act actually define as scrap, and what else is in the s.206C(1) table now?
  Explanation clause (b) to s.206C defines 'scrap' as 'waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons'. The definition has two limbs that must both be satisfied — an origin limb (waste and scrap from the manufacture or mechanical working of materials) and a condition limb (definitely not usable as such) — and it is the second limb that decides most disputes, because material which the buyer takes and uses as raw material is on its face usable as such.
• Statutory position — s.206C(1F): one per cent on a motor vehicle above ten lakh rupees, extended to other notified goods CBDT Circulars & InstructionsCuts both ways
  I sell cars. When must I collect one per cent under s.206C(1F), and does it now catch anything besides motor vehicles?
  Sub-section (1F) requires every person being a seller who receives any amount as consideration for the sale of (i) a motor vehicle, or (ii) any other goods as may be specified by the Central Government by notification in the Official Gazette, of the value exceeding ten lakh rupees, to collect one per cent of the sale consideration from the buyer at the time of receipt of such amount. The second limb — 'any other goods, as may be specified by the Central Government by notification' — was brought in by Act No. 15 of 2024 with effect from 1 January 2025, as the section's own amendment footnote records.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.