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TMI Blog2023 (5) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... here has been a consistent view on this, we find no justification to hold it otherwise when there are no changes in facts. We are inclined to hold the assessee within the meaning of state under Article 12 of the Constitution of India and, hence, will have the benefit of immunity from taxation of its income under the provision of Income Tax Act. We find no infirmity in the order of the ld. CIT(A) and, hence, the appeal filed by the Revenue is dismissed. - ITA No. 81/Mum/2023 - - - Dated:- 28-4-2023 - Shri Prashant Maharishi, AM And Ms. Kavitha Rajagopal, JM For the Assessee : Shri Tanzil Padvekar For the Revenue : Smt. Riddhi Mishra ORDER PER KAVITHA RAJAGOPAL, J M: This appeal has been filed by the Revenue, challenging the order of the learned Commissioner of Income Tax (Appeals) ( ld.CIT(A) for short), National Faceless Appeal Centre ( NFAC for short) u/s.250 of the Income Tax Act, 1961 ( the Act'), pertaining to the Assessment Year ( A.Y. for short) 2012-13. 2. The Revenue has challenged this appeal on the following grounds: 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in considering the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. issued notice u/s. 148 of the Act by recording reasons that the assessee board had surplus income over the expenses of Rs.39,71,85,769/- and also that the assessee has not deducted TDS u/s.194A, 194J and 194C on the impugned amount. The A.O. then passed the assessment order u/s. 143(3) r.w.s. 147 of the Act dated 12.03.2019, determining the total income at Rs.39,80,41,769/- by making various additions/disallowances. 4. The assessee was in appeal before the ld. CIT(A), challenging the said addition/disallowances. 5. The ld. CIT(A) deleted the said addition on the ground that the issues pertaining to the said addition/disallowances were covered by the Tribunal in assessee s case for A.Ys. 2007-08 and 2010-11 in ITA Nos. 6248/Mum/2016 and 2203/Mum/2016 respectively and also in the subsequent decision for A.Y. 2011-12 in ITA No. 508/Mum/2019. 6. The Revenue is in appeal before us, challenging the impugned order. 7. The learned Departmental Representative (ld. DR for short) for the Revenue contended that the alleged receipts of payments are not related to imparting education and the same will not be covered under the objectives of the Board. The ld. DR further contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee board has not deducted TDS and that the expenses should be disallowed u/s. 40(a)(ia) of the Act and also disallowed the interest of Rs.10,02,46,952/- on fixed deposit out of the surplus revenue as income from other sources . It is observed that all the issues raised by the Revenue in its appeal was dealt with extensively by the Tribunal vide its earlier order and has decided accordingly in favour of the assessee. The relevant extract of the said decision is cited hereunder for ease of reference: 26. We have examined the scheme of the Maharashtra State Board of Technical Education Act, 1997. The state legislature enacted the Maharashtra State Board of Technical Education Act, 1997 for the purpose for established of to regulate matter pertaining to Diploma Level Technical Education in the State of Maharashtra and for the matter connected therewith. The State Act received the assent of the Governor on 03.08.1997 and was published in State Government Gazette on 06.08.1997. 27. Section 5 of the State Act prescribed constitution of Board, which consist of the Director, Technical Education, Maharashtra State as the Chairman; the Director Maharashtra State Board of Technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t - Members (v) Director of Technical Education, Maharashtra State - Member, (i) Secretary, Maharashtra State Board of Technical Education - Member (vii) Director, Maharashtra State Board of Technical Education. The name of Persons other than the Ex-Officio Members, who have been nominated, from time to time as a Member of Council are published in official Gazette of Technical Education of State Government. The powers and duties of Board of Directors are defined under section 22 of the Act as explained by ld. AR of the assessee which we have already referred. Section 23 defined the duties of Board of Director. 29. Further as per section 24, the State Government has controlled and power to issue various directions after considering the advice of the Board for various matters as specified in section 22, for conducting anything or intense to conduct or do into communicate to the Board its view. The Board is under obligation to report to the Government such action, if any, as it propose to take and has taken upon communication and shall furnished an explanation, if it fails to take action. If the Board does not take action within a reasonable time to the satisfaction of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution or legal proceeding against the Government, Governing Council, Board or Members or servant of the Government for anything which is done or purported or intended to be done in pursuance of this Act in good faith. From the perusal of various statutory provisions, we may conclude that there is complete control of State Government over the affair of assessee Board. The power and duties of the Board activities as prescribed under section 22, which we have mentioned in para 9 supra and are not repeated here for the sake of brevity shows that none of the activity under taken or entrusted to the assessee board are in the nature of trade commerce or business. In our view, the assessee is engaged in advancement of object of General Public Utility Services as set up by State Government. The receipt/income/source of income of assessee consists of grant from State Government, fees collected from candidate, who appears in various examinations, receipt from printed education material, receipt from other government bodies for conducting courses and exams like Common Entrance Test (CET) or interest on deposits. In our view, none of these items can be said to be carrying of any activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test, the Hon'ble Supreme Court has held, as discussed hereinabove, that the autonomous bodies like State Road Transport Corporation or Warehousing Corporation where there is a full control by the Government, either Central or State, these are the instrumentalities of the Government only. 12. The term Government is very much wide under the constitutional set up. Government may be Central or State, or it may be Local Government which is envisaged by our Constitution, like Zilla Parishad, Municipal Corporations, Municipal Councils, Panchayat Samithis, etc. The Public Works Department is part of the Government. In our opinion, this aspect has not been considered by the authorities below and they have closed door to the assessees to make out the case for examination under Rule 6DD. We are, therefore, of the opinion that in the light of our above discussion, the plea of the assessees need reconsideration by the ITA No. 2203 Mum 2016-Maharashtra State Board of Technical Education Ld. CIT(Appeals). We, therefore, set aside the issue in respect of the disallowance made u/s.40A(3) to the file of the Ld. CIT(A) to decide the same de novo in the light of our above observations and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority included in term State under Article 12 of the Constitution of India. However, the tests indicated by the Hon'ble Apex Court in the case of Som Prakash Rekhi are merely indicative and not absolute and thus, have to be applied discretely. If any body or organisation falls within the criteria as laid down by the Hon'ble Apex Court it can be considered that it falls within the term State . 12. If these tests are applied on the MSRTC, we observe that the Corporation satisfies majority of the conditions. The entire share capital of MSRTC is owned by State and Central Government. The State has full control over the working, policies and the framework of the Corporation. The Corporation is providing public transport facility to the subjects of the State, even in for remote areas, where sometimes it is not economically viable to provide transport service. Thus, it is providing vital function of public importance. 13. The Hon'ble Bombay High Court in the case of Maharashtra State Road Transport Corpn. v. Diwakar Madhukarrao Malkapure and Others in Writ Petition No.2762/2012 decided on 12-11-2013 while dealing with an issue relating to payment of compensati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the support that CBDT vide its notification date 29.03.2016 has granted exemption of taxation to the assessee board. Thus, the grounds No. 5 to 10 of appeal raised by the assessee are allowed. 10. From the above decision and also on considering the subsequent decisions of the Tribunal, we are of the view that the objectives of the assessee board are evident to categories it to be a state under Article 12 of the Constitution of India and also from the criteria laid down by the Hon'ble Supreme Court, no doubt assessee would fall within the term state when the assessee is controlled by either the Central or State Government completely then they become instrumentality of the Government. As there has been a consistent view on this, we find no justification to hold it otherwise when there are no changes in facts. 11. By respectfully following the above said decision, we are inclined to hold the assessee within the meaning of state under Article 12 of the Constitution of India and, hence, will have the benefit of immunity from taxation of its income under the provision of Income Tax Act. We find no infirmity in the order of the ld. CIT(A) and, hence, the appeal filed b ..... 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