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TMI Blog2024 (6) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... ers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Now, in the present case, clearly in the initial stage, the assessee had not claimed all the benefit of deduction u/s. 10(23C) nor the status of State . But the facts were very much before the Assessing Officer. SCB Medical College and Hospital and the impugned Swastyhha Bikas Samiti functions at Cuttack as one of the biggest and primary and specialist Govt. hospital doing novel work in the field of medicine. In case of any untoward incident in the State, patients are rushed to SCB Medical College Hospital. It has created a name for itself and it is also well-known as one of the best Govt. hospital in the State. When so much is known and it is also well known that it is a Government Organisation, and to deny such organization, just because it has not got registration u/s. 12A, but it is entitled to deduction under other relevant provisions of the Act, it would be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... best to get appropriate relief for condonation of delay from the Hon ble High Court of Orissa. Since the regular tax bench of the Hon ble High Court is not functioning for summer vacation, only exceptional urgent matters which cannot wait till the reopening of High Court will be moved before the Hon ble Vacation Judges for this reason appellant has been restricted to move towards the Hon ble High Court. 2. That yesterday on 5.6.2024 morning the old ailing bed ridden father of the undersigned advocate has been suddenly ill and under treatment, attend by him today. Under such constrict circumstances the undersigned advocate unable to appear personally before this Hon ble Bench today, therefore, under such personal difficulties, most humble pray for one month time for hearing of the aforesaid appeals. 3. That the present petition is made bonafide and in the interest of justice. 4. As the issues in the appeals are simple and do not require in-depth verification of facts, adjournment application filed by the ld AR, is rejected and the appeals disposed off on merits. 5. Ld Sr DR submitted that the assessee has claimed exemption u/s. 11, 12 13 of the Act. However, the assessee did not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plementation of scheme and for certain obligation attached there to as decided by the Govt. It well settled that any amount received from the Govt for any specific purpose and certain obligations were attached hereto it could not be treated as revenue receipts. In the present case the Grant-In-Aid has been received by the appellant from the Govt. for specific purpose as decided and here was no control or domain over the funds by the appellant in its own right. The appellant being a conduit pipe to channelize the amount received from the patients for certain specified objectives. The impugned receipts were therefore not in the nature of revenue receipts chargeable to tax in the hands of the appellant. The sole purpose of creation of the Assessee to better manage the equipments of the hospital which are rendering and diagnostic services to the patient people and the Assessee society charging a token fees from the patient as user fees that to the same has been fixed by the Govt of Orissa. The society being a part and parcel of the Govt Hospital that is Medical College and Hospital and collected such user fees as per the direction of the Govt of Orissa. Therefore is a part of Govt rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected by the Assessee completely fixed and guided by the Govt instructions and notifications. Presently, the Govt. of odisha has decided to give grant to the society and collection of user fees has been stopped by the govt. of Odisha. Under such circumstances, the user fees so collected earlier has been treated as grant to the society for its activities and the Gvot. Of Orisha has full domain and control over the user fees so collected on behalf of the govt. by the assessee society. Thus, under such factual background, it is established that the society is wholly financed by the Gov. of Odisha. The assessee society in order to provide medical facilities to the people of the state has no motive to earn surplus over expenditure. However, the society is solely created by the Govt of Odisha to provide better medical facilities to the people of the sate in efficient manner. 7. A perusal of statement of facts as submitted in Form 35 before the ld CIT(A) clearly shows that the assessee society was formed as per the order of Govt. of Odisha for the purpose of creating facilities for the improvement of the health sector for the general public. The society was created as per the direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hospital. It has created a name for itself and it is also well-known as one of the best Govt. hospital in the State. When so much is known and it is also well known that it is a Government Organisation, and to deny such organization, just because it has not got registration u/s. 12A, but it is entitled to deduction under other relevant provisions of the Act, it would be nothing but travesty of justice. Here, it would be worthwhile to extract the provisions of Section 10(23C)(iiiac), which reads as follows: 10(23C)(iiiac) -any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government; or 8. The assessee falls under all these conditions. It would be worthwhile to refer to the decision of the Hon ble Karnataka High court in the case of Wipro Ltd., VS DCIT, 382 ITR 179 (Karnataka) at page 221 para 72, wherein, the Hon ble High Court has gone on to hold that once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be held as a State making it not liable to pay income tax under the Income tax Act, 1961 as per the provisions of Article 12 read with Article 289 of The Constitution of India. 2. Now, in support of this additional ground, the appellant would like to present its submission in the following paragraphs. 3. Article 12 of the Constitution of India defines the term state as under: Definition In this part, unless the context otherwise requires, the State includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India 4. Article 289(1) of the Constitution of India says that The property and income of a State shall be exempt from Union taxation. 5. In the case of Som Prakash Rekhi vs Union Of India Anr 1981 AIR 212, 1981 SCR (2) 111, Hon'ble Apex Court in paragraph 97 of the judgment dated 13.11.1980 has held as under: Let us cull out from Airport Authority (supra) the indicia of other authorities.........under the control of the Government of India bringing a corporation within the definition of the State . The following factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1997, being under complete superintendence, and control of State Government financially as well as administratively fall under definition of 'State' as per Article 12 of Constitution of India and therefore, its income is not chargeable to tax.[Annexure-C; Page 22-39] 9. Recently, this Hon'ble Bench in the case of State Council for Technical Education Vocational Training v. CIT(Exemptions), Hyderabad in ITA No.414/CTK/2018 has, vide order dated 17.05.2022, held that the appellant assessee is a State under the Article 289 of the Constitution of India. [Annexure-D; Page 40-45] 10. Pertinent to mention here that CIT (Exemption), Hyderabad has refused to grant 12AA registration to State Council for Technical Education Vocational Training and against this order it has filed the aforesaid appeal bearing ITA No.414/CTK/2018. 11. Now coming back to the present case, the appellant would like to submit that if the tests as propounded in the case of Som Prakash Rekhi vs Union of India are applied to the present case then the inescapable conclusion that can be drawn in this case is that the appellant is a state . 12. The share holding pattern of the appellant is as follow and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Hon'ble Bench that the Appellant may kindly be declared as a state making it not liable to pay income-tax under the Income tax Act, 1961 as per the provisions of Article 12 read with Article 289 of The Constitution of India. 11. On the contrary, Ld DR has supported the orders of the Ld CIT(E) and submitted that the rejection order was justified, as the assessee was failed before the Ld CIT(E) to substantiate that the resolution passed for amended in objectives of the assessee company were registered with the ROC and hence the same could not be considered as valid. It is also submitted that the original objects of the company were not in the nature of charity and thus registration u/s 12AA of the Act cannot be granted. Thus, the Ld CIT(E) s order was justified and should be upheld. No arguments regarding additional ground were advanced. 12. We have considered the rival submissions, perused the material available on records and the judgments cited before us in order to prove the contentions by the Ld AR. 13. On perusal of the submission of the Ld AR with respect to additional ground taken the assessee shall be held as State and thus no tax can be levied on it under the income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifying the corporation as an instrumentality or agency of Government. 5. Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government. 15. We have carefully perused the submissions of the assessee (supra) regarding fulfillment of the aforesaid tests/conditions carved out by the Apex court and found that the assessee company has satisfied the said tests, thus, we hold that the assessee company falls under the definition of State within the meaning of Article 12 of the Constitution of India and, therefore, in our considered opinion entitle for immunity from the taxation under the provisions of Income Tax Act 1961 as directed under article 289 of constitution of India 1949, which read as under:- Article 289 in The Constitution Of India 1949 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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