(1) All property vested in a Nagar Panchayat or in a Council under this Act, all funds received by it in accordance with the provisions of this Act and all sums accruing to under the provisions of any law for the time being in force shall, subject to the provisions of this Act, be applied for the purposes of this Act, within the limits of the municipality.
     (2) Notwithstanding anything contained in sub-section (1), it shall be lawful for a Nagar Panchayat or a Council, as the case may be, subject to rules made under this Act:--
         (a) to incur expenditure beyond the municipal limits on the acquisition of land, or on the construction, maintenance or repair of works, for the purpose of obtaining supply of water required for inhabitants of the municipality or on establishing slaughter houses or places for the disposal of night-soil or sewage or carcasses of animals or for drainage works, or for the purpose of providing mechanically propelled transport facilities for the conveyance of the public or for the purpose of setting up dairies or farms for the supply, distribution and procuring of milk-products for the benefit of the inhabitants of the municipality or for any other purpose calculated to promote the health, safety or convenience of the inhabitants of the municipality; or
         (b) to take a contribution towards expenditure incurred by any other local authority or out of any public fund for measures affecting the health, safety or convenience of public calculated to benefit the residents within the limits of the contributing municipality; or
         (c) to create scholarship tenable outside the limits of municipality; or
         (d) to utilise the municipal fire brigade and other mechanical appliance beyond the municipal limits; or
         (e) to make with the previous sanction of the State Government any other kind of contribution as may be deemed necessary by the Nagar Panchayat or the Council:
     Provided that nothing in this section or in any other provision of this Act shall be deemed to make it unlawful for a Nagar Panchayat or a Council, when it has constructed works beyond the limits of the municipality for the supply of water or electrical energy or for drainage as aforesaid--
         (a) to supply or extend to or for the benefit of any person or building or lands in any place whether such place is not within the limits of the said municipality, any quantity of water or electrical energy not required for the purpose of this Act within the said municipality or the advantages afforded by the system of drainage works, on such terms and conditions with regard to payment and to the continuance or such supply advantages as shall be settled by agreement between the Nagar Panchayat or the Council, as the case may be, and such persons or the occupier or owner of such buildings or land; or
         (b) to incur any expenditure on such terms with regard to payment as may be settled as aforesaid for the construction, maintenance, repair or charge of any connection pipe or any electric supply lines or other works necessary for the purposes of such supply or for the extension of such supply or for the extension of such advantages.