A.P. Pollution Control Board, Hyderabad V. DDIT(E)-II, Hyderabad

ITA 338/HYD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82619 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Gift; Charitable institution; Opportunity of being heard; Revised return; Revenue expenditure
• Section: 234B; 12A; 12AA; 147; 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 337, 338 & 339/HYD/2011 ASSESSMENT YEARS: 2005-06, 2006-07 & 2007-08 A.P. POLLUTION CONTROL BOARD, HYDERABAD. PAN AAAJA1610Q DY. DIRECTOR OF INCOME-TAX(E)- II, BASHEERBAGH, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI Y. RATNAKAR REVENUE BY SHRI D. SUDHAKAR RAO DATE OF HEARING 22-10-2014 DATE OF PRONOUNCEMENT 19-12-2014 O R D E R PER SAKTIJIT DEY, J.M.: THESE THREE APPEALS, ALL BY THE SAME ASSESSEE, ARE DIRECTED AGAINST SEPARATE ORDERS OF LD. CIT(A)-IV, HYDERABAD FOR THE ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08. 2. AS FACTS AND ISSUES IN ALL THESE APPEALS ARE MOR E OR LESS COMMON, FOR THE SAKE OF BREVITY, WE WILL REFER TO T HE GROUNDS AND FACTS AS INVOLVDD IN ITA NO. 337/HYD/2011. ASSESSEE HAS R AISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IV, HYD. DT. 30-12-2010 FOR THE ABOVE ASS ESSMENT YEAR IS CONTRARY TO LAW AND FACTS. 2. THE APPELLANT CONTENDS THAT ITS INCOME AMOUNTI NG TO RS.32,77,52,980 FOR THE YEAR IS NOT LIABLE TO TAX U NDER THE PROVISIONS OF THE INCOME TAX ACT.. 2 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 3. THE APPELLANT CONTENDS THAT THE INCOME DERIVED B Y IT IS THE INCOME OF THE STATE AND IS THEREFORE NOT LIABLE TO TAX UNDER ARTICLE 289( 1) OF THE CONSTITUTION OF INDIA. 4. WITHOUT PREJUDICE, IT IS CONTENDED THAT THE ACTI VITIES OF THE APPELLANT BOARD CONSTITUTE THE FUNCTIONS INCIDENTAL TO THE ORDINARY FUNCTIONS OF THE STATE AND THEREFORE, ITS INCOME IS IMMUNE FROM TAX UNDER CLAUSE (3) TO ARTICLE 289 OF THE CONSTITUTION OF INDIA. 5. THE APPELLANT CONTENDS THAT THE FUNCTIONS PERFOR MED BY THE APPELLANT BOARD FALL UNDER ARTICLE 48A OF THE CONST ITUTION OF INDIA WHICH PROVIDES FOR PROTECTION AND IMPROVEMENT OF ENVIRONMENT FALLING UNDER THE DIRECTIVE PRINCIPLES OF STATE POLICY IN PART IV OF THE CONSTITUTION OF INDIA. THE APPELL ANT THEREFORE, CONTENDS THAT ANY INCOME DERIVED IN THE EXERCISE OF FUNCTIONS PERFORMED BY THE STATE OR INCIDENTAL TO ORDINARY FU NCTIONS OF THE STATE IS NOT LIABLE TO TAX UNDER ARTICLE 289(1) OR UNDER ARTICLE 289(3) OF THE CONSTITUTION OF INDIA. 6. IT IS CONTENDED THAT THE APPELLANT IS AN AGENT O F THE STATE PERFORMING THE STATE FUNCTIONS FALLING UNDER ARTICL E 48A OF THE CONSTITUTION. HENCE, ITS INCOME IS IMMUNE FROM TAXA TION. 7. IT IS CONTENDED THAT THE DECISION OF THE HON'BLE SUPREME COURT IN ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTH ORITY VS. UNION OF INDIA & OTHERS REPORTED IN 283 ITR P.97 IS INAPPLICABLE. THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) ERRED IN MECHANICALLY IN APPLYING THE SAID DECISION , WITHOUT GOING INTO THE DISTINCTION ON THE FACTUAL ASPECTS O F THE ACTUAL FUNCTIONS EXERCISED BY THE APPELLANT BOARD AND ITS RELATIONSHIP WITH THE ORDINARY FUNCTIONS OF THE STATE. 8. WITHOUT PREJUDICE, IT IS ALSO CONTENDED THAT THE APPELLANT BOARD IS ENTITLED TO APPROVAL ULS 10(23C)(IV) OF THE LT ACT AND ITS INCOME IS ALSO EXEMPT UNDER THE SAID PROVISIONS AS THE APPELLANT BOARD FULFILLS ALL THE REQUISITE CONDITIO NS SPECIFIED FOR APPROVAL UNDER THE SAID SECTION 10(23C)(IV). 9. IT IS CONTENDED THAT THE CALCULATION OF INCOME IS NOT CORRECT. THE CORRECT FIGURE OF INCOME SHOULD BE RS. 1 9,46,5 6,4701- AGAINST RS.32,77,52,9801- MENTIONED IN THE ASSESSME NT ORDER. LIKEWISE THE CALCULATION OF TAX PAYABLE INCLUDING I NTEREST AT RS.16,87 ,27 ,233/- IS NOT CORRECT. THE CORRECT AMO UNT OF TAX INCLUDING INTEREST IS RS.IO,22,13,334/-. 10. THE APPELLANT CONTENDS THAT THE LEVY OF INTERES T U/S 234A/B OF THE IT ACT IS NOT CORRECT AND THE APPELLANT DENI ES ITS LIABILITY FOR LEVY OF SUCH INTEREST AMOUNTS. 3 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 11. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ANY OF THE AFORESAID GROUNDS AS THE OCCASION MAY REQUIRE. 12. FOR THESE AND OTHER REASONS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE INCOME OF RS. 19, 46,56,470.00 BE EXEMPT FROM TAX AND THE APPEAL BE ALLOWED. 3. IN ADDITION, ASSESSEE HAS RAISED TWO MORE ADDITI ONAL GROUNDS, WHICH ARE MORE OR LESS OFF-SHOOTS OF GROUND NO. 9. AS CAN BE SEEN FROM THE GROUNDS RAISED, GROUND NOS. 1, 2 & 11 BEIN G GENERAL IN NATURE, DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. G ROUND NO. 3 TO 7 ARE ON THE ISSUE OF IMMUNITY FROM TAXATION UNDER AR TICLE 289(1) OF THE CONSTITUTION OF INDIA, WHEREAS GROUND NO. 8 IS AGAI NST REJECTION OF EXEMPTION CLAIMED U/S 10(23C)(IV) OF THE IT ACT. IN GROUND NO. 9 ALONG WITH THE ADDITIONAL GROUND, ASSESSEE HAS CONT ESTED THE DETERMINATION OF INCOME AT RS. 32,77,52,980 AS AGAI NST RS. 19,46,56,570 AND GROUND NO. 10 IS IN RESPECT OF LEV Y OF INTEREST U/S 234A AND 234B OF THE ACT. 4. BRIEFLY THE FACTS ARE, ASSESSEE EARLIER KNOWN AS ANDHRA PRADESH STATE BOARD FOR PREVENTION AND CONTROL OF W ATER POLLUTION IS A STATUTORY AUTHORITY CREATED BY THE GOVT. OF ANDHR A PRADESH WITH EFFECT FROM 24/01/1976 IN EXERCISE OF POWER CONFERR ED BY SECTION 4(1) OF WATER (PREVENTION AND CONTROL OF POLLUTION) ACT, 1974. SUBSEQUENTLY, AFTER ENACTMENT OF AIR (PREVENTION AN D CONTROL OF POLLUTION) ACT, 1981 BY THE PARLIAMENT, THE NAME OF THE BOARD WAS CHANGED TO AP POLLUTION CONTROL BOARD. TILL AY 2002 -03, ASSESSEE CLAIMED EXEMPTION U/S 10(20) OF THE ACT, AS A LOCAL AUTHORITY. HOWEVER, AFTER AMENDMENT TO THE DEFINITION OF LOCAL AUTHORITY U/S 10(20) WITH EFFECT FROM 01/04/2003, BY FINANCE ACT, 2002, ASSESSEE BECAME LIABLE TO PAY INCOME-TAX. SINCE ASSESSEE FAI LED TO FILE ANY RETURN OF INCOME, EVEN AFTER IT BECAME LIABLE TO PA Y TAX, AO INITIATED ACTION U/S 147 OF THE ACT BY ISSUING A NOTICE U/S 1 48 ON 31/10/08 CALLING UPON ASSESSEE TO SUBMIT RETURN OF INCOME FO R AYS. 2004-05 TO 4 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 2008-09. IN RESPONSE TO THE NOTICE ISSUED U/S 148, ASSESSEE FILED ITS RETURN OF INCOME FOR IMPUGNED AY ON 04/12/2008 ON T HE BASIS OF UNAUDITED ACCOUNTS. SUBSEQUENTLY, ASSESSEE FILED RE VISED RETURN ALONG WITH STATUTORY AUDIT REPORTS ON 04/06/09. AO OBSERVED THAT REVISED RETURN CAN ONLY BE FILED WHEN THE OMISSION WAS NOT WITHIN THE KNOWLEDGE OF ASSESSEE. AS ASSESSEE WAS WELL AWARE THAT THE ACCOUNTS WERE NOT AUDITED BY THE RESPECTIVE DUE DAT ES, THE REVISED RETURNS FILED ARE NOT VALID IN LAW, THEREFORE, AO I GNORED BOTH THE ORIGINAL AS WELL AS REVISED RETURNS OF INCOME. IN C OURSE OF ASSESSMENT PROCEEDING, AO WHILE EXAMINING THE DETAILS OF RECEI PTS AND PAYMENTS OF ASSESSEE DURING THE YEAR, OBSERVED THAT ASSESSEE HAS APPLIED VERY MEAGER AMOUNT TOWARDS THE OBJECTS FOR WHICH IT IS C REATED I.E. PREVENTION AND CONTROL OF POLLUTION AND ALMOST NO A MOUNTS WERE SPENT FOR REGULATION OR FOR PUNISHING THE CULPRITS WHO VI OLATED THE NORMS OF POLLUTION CONTROL. AO OBSERVED THAT THOUGH THE ASSE SSEE CLAIMS ITS ACTIVITIES TO BE PURE CHARITABLE NATURE BUT IN REAL ITY ASSESSEE HAS NOT UNDERTAKEN ANY SUCH ACTIVITY. AO OBSERVED THAT DURI NG THE YEAR ASSESSEE HAS SHOWN RECEIPTS OF RS. 33,23,75,784 TOG ETHER WITH OPENING BALANCE OF RS. 25,38,05,153, THUS, THE TOTA L FUNDS AVAILABLE AT THE HANDS OF ASSESSEE FOR THE YEAR UNDER CONSIDE RATION WAS ABOUT RS. 58 CRORES, OUT OF WHICH, THE AMOUNTS APPLIED FO R VARIOUS ENVIRONMENTAL SCHEMES AND THEIR PERCENTAGE TO THE A VAILABLE FUNDS WERE FOUND TO BE AS UNDER: SL.NO. PARTICULARS ACTUAL FOR 2004-05 PERCENTAGE OF AVAILABLE FUNDS 1 HAZARDOUS WASTE MANAGEMENT 0 0 2. AIR QUALITY SURVEYS AND DISPLAY/REPORTS 3,99,17 0 0.067 3. AUTOMOBILE POLLUTION CONTROL 0 0 4. NOISE SURVEY IN CITIES & INDUSTRIAL ESTATE 0 0 5. WATER QUALITY SURVEY, MONITORING & REPORTING 2,60,803 0.043 5 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 6. BIO-MEDICAL WASTE MANAGEMENT 1,12,13 0 0.019 7. CLEAN & GREEN PROGRAMME 0 0 8. ENVIRONMENTAL AWARENESS PROGRAMMES 14,84,5 54 0.247 9. ENVIRONMENTAL RESEARCH PROGRAMMES 3,25,00 0 0.054 10. IMPLEMENTATION OF SOLID WASTE MANAGEMENT 0 0 11. IMPLEMENTATION OF PLASTIC WASTE MANAGEMENT 0 0 12. MOBILE EXHIBITION 9,09,46 9 0.152 13. NAAQM & SAAQM 64,108 0.011 14. LABORATORY MAINTENANCE (GLASSWARE, CHEMICALS ETC.) 57,17,0 17 0.953 15. SEMINARS & CONFERENCES 5,46,17 8 0.091 16. WORLD ENVIRONMENT DAY 11,42,1 01 0.190 17. TRAINING PROGRAMME 1,98,54 0 0.033 18. EXHIBITION EXPENSES 58,444 0.009 19. ENVIRONMENTAL ZONING GIS 10,00,000 0.167 GRAND TOTAL 1,22,17,514 2.036 PAYMENTS CENTRAL SCHEMES SL. NO. PARTICULARS ACTUAL FOR 2004-05 PERCENTAGE OF AVAILABLE FUNDS 1 GEO-REFERENCE OF INDUSTRIES UNDER WORLD BANK IPP 69,99,266 1.67 2. HYDERABAD WASTE MANAGEMENT PROJECT TSDF II (FOR INCINERATOR) 0 0 6 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 3. CLEAN PROCESS TECHNOLOGY SCHEMES WATER CESS FUNDS 17,51,938 0.29 4. FINANCIAL ASSISTANCE TO THE MUNICIPALITIES FOR ESTABLISHMENT OF STPS/SOLID WASTE MANAGEMENT WATER CESS FUNDS 0 0 5. ECOCITY TUDA 3,18,300 0.053 6. COMMON EFFLUENT TREATMENT PLANT 0 0 7. REAL TIME QIR QUALITY MONITORING STATIONS 0 0 8. FINANCIAL ASSISTANCE WORKSHOP/ROADSHOW 5,10,819 0.085 9. NATIONAL AIR QUALITY MONITORING 31,463 0.005 10. MODEL FACILITIES MSW SURYAPET MUNICIPALITY 0 0 GRAND TOTAL 96,11,786 2,103 REVENUE EXPENDITURE SL.NO. PARTICULARS ACTUAL FOR 2004- 05 PERCENTAGE OF AVAILABLE FUNDS 1 SALARY AND ALLOWANCES 3,60,75,365 6.00 2 TO 48 OTHER EXPENDITURE 5,41,59,535 9.00 TOTAL 9,02,34,900 15.00 5. ON ANALYZING THE DATA AS APPEARING IN THE TABLES , AO OBSERVED THAT THE AMOUNT SPENT TOWARDS SALARIES IS THREE TIM ES MORE THAN THE AMOUNTS USED FOR THE SCHEMES FORMULATED BY THE BOAR D. IT WAS ALSO NOTED BY AO THAT THE TOTAL REVENUE EXPENDITURE IS 1 5% OF THE AVAILABLE FUNDS AND THE TOTAL AMOUNTS APPLIED FOR V ARIOUS SCHEMES IS ONLY 2%. ACCORDING TO THE AO, ESTABLISHMENT EXPENDI TURE IS APPROXIMATELY 8 TIMES THE AMOUNTS APPLIED FOR VARIO US SCHEMES. ON EXAMINING THE BALANCE SHEET AS ON 31/03/05, HE NOTI CED THAT THE TOTAL FDS AMOUNTED TO RS. 42.4 CRORES. THUS, ABOUT 70.67% OF THE AVAILABLE FUNDS WAS SIMPLY LYING IN THE BANKS AS FD S, INSTEAD OF BEING 7 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD UTILIZED IN REGULATORY AND ENFORCEMENT ACTIVITIES F OR WHICH ASSESSEE WAS CREATED. AO WAS OF THE VIEW THAT THE ACTIVITIES PERTAINING TO THE SCHEMES FORMULATED BY ASSESSEE AS WELL AS CENTRAL G OVT. ARE NOT EXACTLY IN TUNE WITH THE STATUTORY FUNCTIONS OF THE ASSESSEE BOARD AS CONTAINED IN SECTION 17 OF WATER (PREVENTION AND CO NTROL OF POLLUTION) ACT, 1974 AND AIR (PREVENTION AND CONTROL OF POLLUT ION) ACT, 1981, WHICH ARE MAINLY ADVISORY AND INSPECTION RELATED FU NCTIONS. AO AFTER TAKING INTO ACCOUNT CERTAIN PROVISIONS OF THE CONCE RNED ACTS, NOTED THAT THOUGH THE ASSESSEE BOARD IS VESTED WITH VARIO US POWERS TO PREVENT AND CONTROL POLLUTION OF WATER AND ENVIRONM ENT BUT IN A NUMBER OF INSTANCES, THE BOARD IS FOUND TO HAVE FAI LED IN ENFORCING/PREVENTING THE VIOLATIONS. IN THIS REGARD , AO ALSO REFERRED TO FEW INSTANCES OF VIOLATION COMMITTED BY CERTAIN INS TITUTIONS/ ESTABLISHMENTS. AO ALSO REFERRED TO THE REPORT SUBM ITTED BY C&AG WHEREIN VARIOUS LAPSES/INACTIONS OF THE BOARD IN EN FORCING THE PROVISIONS OF ACT WERE POINTED OUT. THOUGH, ASSESSE E CLAIMED THAT THE PROVISIONS OF AP CHARITABLE AND HINDU RELIGIOUS ENDOWMENTS ACT, 1987 IS NOT APPLICABLE, AS THE BOARD CANNOT BE TERM ED AS A PUBLIC CHARITABLE INSTITUTION OR ENDOWMENT, BUT, AO REJECT ED SUCH SUBMISSIONS OF ASSESSEE. FINALLY, AO HAVING NOTICED THE FACT THAT THE ASSESSEE IS NEITHER REGISTERED U/S 12AA OF THE ACT, NOR APPROVED U/S 10(23C)(IV), HELD THAT IT IS NOT ELIGIBLE FOR AVAIL ING EXEMPTION EITHER U/S 11 OR U/S 10(23C(IV). ACCORDINGLY, AO TREATED THE S URPLUS OF RS. 33,77,52,980 AS INCOME OF ASSESSEE FOR THE IMPUGNED AY. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED, ASSESS EE PREFERRED APPEAL BEFORE LD. CIT(A). 6. BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE A PART FROM CHALLENGING THE DISALLOWANCE OF EXEMPTION CLAIMED U /S 10(23C) ALSO RAISED ADDITIONAL GROUND CLAIMING IMMUNITY FROM TAX ATION UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA. AS FAR AS THE ISS UE RAISED IN ADDITIONAL GROUND IS CONCERNED, LD. CIT(A) CALLED F OR A REPORT FROM AO ON THE ISSUE. LD. CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF 8 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIALS ON RECORD, FOUND THAT AO HAS BASICALLY ASSESSED THE INCOME AT THE HA NDS OF ASSESSEE FOR THE FOLLOWING REASONS: I) THAT THE APPELLANT BOARD DOES NOT HAVE REGISTRAT ION UNDER SEC. 12A FOR THE YEAR, II) THAT THE APPELLANT BOARD DOES NOT HAVE REQUISIT E APPROVAL U/S 10(23)(VI) FOR THE YEAR, III) THAT IT HAD HUGE SURPLUS AND THE UNSPENT FUNDS WERE KEPT IN FDS, SHOWING THAT ITS INCOME WAS NOT BEING UTILIZED TOWARDS THE AVOWED CHARITABLE OBJECTS, IV) THAT THE BOARD IS NOT REGISTERED U/S 43(1) OF T HE AP CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND END OWMENTS ACT, 1987. LD. CIT(A) DID NOT APPROVE THE VIEW OF AO THAT ONLY BECAUSE ASSESSEE HAS NOT SPENT SUBSTANTIAL PART OF ITS INCO ME FOR THE OBJECTS OF PREVENTION AND CONTROL OF POLLUTION AND HAS EARN ED SURPLUS IN THE RESPECTIVE AYS, THE CHARACTER OF THE ASSESSEE IS NO N-CHARITABLE. HE ALSO OBSERVED THAT THE EXPENDITURE INCURRED TOWARDS SALARIES OF THE STAFF CANNOT BE CONSIDERED TO BE TOWARDS PURPOSES B EYOND THE AIMS AND OBJECTS OF THE BOARD. LD. CIT(A) OBSERVED THAT CONSIDERING THE NATURE OF FUNCTIONS TO BE PERFORMED BY BOARD WHICH IS OF REGULATORY, ADVISORY AND TECHNICAL IN NATURE, IT HAS TO BE PERF ORMED WITH THE HELP OF OFFICERS AND STAFF HAVING REQUISITE TECHNICAL AN D SCIENTIFIC QUALIFICATION. THEREFORE, PAYMENT OF SALARY CANNOT BE A DISQUALIFYING FACTOR AS FAR AS CLAIM OF EXEMPTION IS CONCERNED. L D. CIT(A) ALSO OBSERVED THAT THE OBSERVATIONS MADE BY C & AG BEING IN THE NATURE OF GUIDANCE COULD NOT HAVE BEEN CONSIDERED AS BASIS FOR DENYING EXEMPTION EITHER U/S 11 OR U/S 10(23C)(VI) OF THE A CT. HOWEVER, LD. CIT(A) NOTED THAT ASSESSEE IS NEITHER REGISTERED U/ S 12AA NOR APPROVED UNDER SECTION 10(23C)(VI). THEREFORE, ASSE SSEES CLAIM OF EXEMPTION EITHER U/S 11 OR U/S 10(23C) CANNOT BE EN TERTAINED. AS FAR AS ASSESSEES CLAIM OF IMMUNITY FROM TAXATION UNDE R ARTICLE 289(1) OF THE CONSTITUTION OF INDIA, LD. CIT(A) OBSERVED THAT ASSESSEE WAS NO MORE A LOCAL AUTHORITY FOR THE PURPOSE OF INCOME-TA X ACT, AFTER AMENDMENT TO SECTION 10(20) W.E.F. 01/04/2003. AT T HE SAME TIME, 9 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD ASSESSEE IS NOT A PART OF THE STATE ITSELF. LD. CIT (A) OBSERVED THAT ASSESSEE IS A DISTINCT LEGAL ENTITY. HENCE, INCOME OF ASSESSEE CANNOT BE SAID TO BE THE INCOME OF THE STATE SO AS TO PREV ENT SUCH INCOME FROM UNION TAXATION. LD. CIT(A) OBSERVED THAT THE I NCOME GENERATED BY ASSESSEE DOES NOT GO TO THE COFFERS OF THE STATE DIRECTLY AND EVEN DOES NOT REMAIN AS INCOME OF THE STATE. THOUGH, ASS ESSEES FUNDS MIGHT HAVE BEEN SPENT AS PER THE DIRECTIONS OF THE STATE GOVT. BUT THE SAME REMAIN AS THE FUND OF ASSESSEE BOARD AND NOT O F THE STATE GOVT. LD. CIT(A) ANALYZING THE PROVISIONS OF ARTICLE 289( 1) OF THE CONSTITUTION OF INDIA OBSERVED THAT WHAT IS EXEMPT FROM UNION TAXATION IS THE INCOME OF THE STATE AND NOT THE INCOME OF AN Y AUTHORITY UNDER THE STATE. LD. CIT(A) OBSERVED, IF THE GOVERNMENT E XERCISES ITS POWER TO DISSOLVE THE BOARD, THEN THE PROPERTIES, FUNDS, DEBTS, ETC. OF THE BOARD DEVOLVE THEREAFTER UPON THE STATE GOVT. TILL THE TIME OF SUCH DISSOLUTION ALL OF THOSE BELONG TO ASSESSEE ITSELF AND NOT TO THE STATE. LD. CIT(A) REFERRING TO THE DECISION OF HONBLE SUP REME COURT IN CASE OF ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY VS. UNION OF INDIA AND OTHERS, 283 ITR 97, HELD THAT EVEN IF ASSESSEE BOARD HAS BEEN CONSTITUTED BY THE STATE GOVT. WITH A VIEW TO FULF ILL THE STATE OBLIGATION UNDER ARTICLE 48A OF THE CONSTITUTION OF INDIA, THA T FACT ALONE IS NOT SUFFICIENT TO CONCLUDE THAT INCOME OF ASSESSEE IS T HE INCOME OF STATE ITSELF, SO AS TO EXEMPT IT FROM UNION TAXATION AS P ER ARTICLE 289 OF THE CONSTITUTION OF INDIA. LD. CIT(A) WAS OF THE VIEW T HAT THE ACTIVITIES CARRIED ON BY ASSESSEE CANNOT EVEN BE SAID TO BE AS BUSINESS OR TRADE OR ANY OPERATION OF THAT NATURE ON BEHALF OF THE STATE GOVT. EVEN OTHERWISE ALSO, IF THE OPERATIONS OF THE ASSESSEE W ERE TO BE TREATED TO BE IN THE NATURE OF TRADE OR BUSINESS AS THE PARLIA MENT HAS NOT MADE ANY SPECIFIC PROVISION REGARDING TAXATION OF INCOME DERIVED THERE FROM, THE INCOME EARNED BY ASSESSEE WILL NOT BE IMM UNE FROM TAXATION. LD. CIT(A) OPINED THAT ASSESSEE BEING AN INDEPENDENT LEGAL PERSONALITY DISTINCT FROM THE STATE AND TILL SUCH T IME THE INCOME EARNED BY ASSESSEE GOES TO ITS OWN FUNDS AND NOT TO THE STATE COFFERS, THE INCOME EARNED BY ASSESSEE WILL NOT BE FREE FROM TAXATION 10 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA. AC CORDINGLY, HE REJECTED ASSESSEES CLAIM OF EXEMPTION UNDER ARTICL E 289. 7. AS FAR AS ASSESSEES CLAIM OF EXEMPTION U/S 10(2 3C(VI) IS CONCERNED, LD. CIT(A) NOTED THAT THE CHIEF COMMISSI ONER OF INCOME- TAX VIDE ORDER DATED 10/12/2009 HAS REJECTED ASSESS EES CLAIM OF APPROVAL U/S 10(23C)(VI). HOWEVER, CONSIDERING THE FACT THAT ASSESSEE HAS FILED WRIT APPLICATION CHALLENGING THE ORDER OF CCIT, WHICH IS STILL PENDING IN THE JURISDICTIONAL HIGH COURT, HE DIRECT ED THE AO TO ASCERTAIN PRESENT STATUS AND DECIDE THE ISSUE IN AC CORDANCE WITH THE DIRECTIONS OF HONBLE HIGH COURT WHILE DECIDING THE WRIT APPLICATION. BEING AGGRIEVED OF THE AFORESAID ORDER OF THE LD. C IT(A), ASSESSEE IS BEFORE US. 8. THE LD. AR IN HIS WRITTEN SUBMISSION SUBMITTED B EFORE US UNDER ARTICLE 39(E) OF THE CONSTITUTION OF INDIA, STATE I S TO SECURE THE HEALTH AND STRENGTH OF WORKERS MEN AND WOMEN AND ENSURE TH AT THEY ARE NOT ABUSED. HE SUBMITTED, UNDER ARTICLE 48A THE STATE S HALL ENDEAVOUR TO PROTECT AND IMPROVE THE ENVIRONMENT AND TO SAFEGUAR D THE FOREST AND WILD LIFE OF THE COUNTRY. 8.1 IN ADDITION TO THE ABOVE, LD. AR SUBMITTED THAT THE FO LLOWING ARE ESSENTIALLY STATE FUNCTIONS. A) PREVENTION AND CONTROL OF WATER POLLUTION AND MAIN TAINING OR RESTORING THE WHOLESOMENESS OF WATER. B) PREVENTION, CONTROL AND ABATEMENT OF AIR POLLUTION AND GIVING EFFECT TO DECISIONS TAKEN AND UNITED NATIONS CONFERENCE AND HUMAN ENVIRONMENT, PRESERVATION OF NATURAL RESOURCES OF THE EARTH WHICH INCLUDES QUALI TY OF AIR AND CONTROL OF AIR POLLUTION. 8.2 THUS, HE SUBMITTED THAT THE APPELLANT BOARD IS CONSTITUTED TO DISCHARGE THE ABOVE FUNCTIONS. IT WAS SUBMITTED THA T THE ABOVE 11 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD FUNCTIONS ARE NOT THOSE WHICH NON-STATE OR PRIVATE BODIES CAN TAKE UP. THE STATE CANNOT ALLOW THE ABOVE FUNCTIONS TO BE DI SCHARGED BY ANY PRIVATE ENTITY. THESE FUNCTIONS CAN ONLY BE DISCHAR GED BY THE STATE OR ANY ONE APPOINTED BY IT ON ITS BEHALF TO DISCHARGE THE ABOVE STATE FUNCTIONS. 8.3 IT WAS SUBMITTED THAT THE ABOVE STATE FUNCTIONS SHOULD BE DISTINGUISHED FROM ANY COMMERCIAL ACTIVITY WHICH A STATE CAN TAKE UP ON ITS OWN OR EVEN A PRIVATE BODY CAN ALSO TAKE UP. THEREFORE WHETHER THE FUNCTION DISCHARGED IS A PURE STATE FUN CTION OR NOT, OR IS A COMMERCIAL ACTIVITY, DEPENDS UPON THE FUNCTION THAT IS SOUGHT TO BE DISCHARGED. 8.4 REFERRING TO THE EFFECT OF ARTICLE 289 OF THE CONSTITUTION OF INDIA, LD. AR SUBMITTED AS UNDER: I) LEVY OF TAX ON THE STATE INCOME IS GOVERNED BY A RTICLE 289 OF THE CONSTITUTION OF INDIA. AN ANALYSIS OF THE ABOVE ARTICLE REVEALS THE FOLLOWING POSITION. II) ALL INCOME DERIVED BY THE STATE IS EXEMPT. THE INCOME COULD BE FROM AN ACTIVITY WHICH IS TOTALLY NON-COMM ERCIAL PURELY TO BE DISCHARGED BY THE STATE OR A COMMERCIAL ACTIV ITY WHICH A STATE CAN CARRY ON JUST AS ANY PRIVATE ENTITY CAN D ISCHARGE;. III) ON SEVERAL OCCASIONS, A STATE TAKES UP A COMME RCIAL ACTIVITY JUST AS ANY PRIVATE ENTITY CAN ALSO TAKE UP. THERE IS NO BAR UNDER THE STATUTE FROM STATE TAKING UP ANY COMMERCI AL ACTIVITY. IF A STATE TAKES UP A COMMERCIAL ACTIVITY AND DERIV ES ANY INCOME, THE INCOME SO DERIVED IS IMMUNE FROM UNION TAXATION UNDER ARTICLE 289( 1 ) OF THE CONSTITUTION OF INDIA . IV) AT THE SAME TIME IT IS OPEN TO THE UNION TO IM POSE ANY TAX IN RESPECT OF ANY PROFIT DERIVED IN ANY SUCH TRADE OR BUSINESS, IF 12 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD THE PARLIAMENT BY LAW SO PROVIDES. EVEN IN THE CASE OF ANY SUCH INCOME DERIVED FROM TRADE OR BUSINESS RUN BY THE ST ATE, IF THE PARLIAMENT BY LAW DECLARES THAT IT IS INCIDENTAL TO AN ORDINARY FUNCTION OF THE GOVERNMENT, IT WILL NOT BE LIABLE F OR TAXATION. THE EFFECT OF ARTICLE 289 OF THE CONSTITUTION OF INDIA CAN BE SUMMARIZED AS UNDER: A) ALL INCOME OF THE STATE BE IT FROM A COMMERCIAL OR A NON- COMMERCIAL OR A WELFARE ACTIVITY OF A STATE IS EXEM PT FROM UNION TAXATION; B) IN RESPECT OF ANY INCOME DERIVED FROM TRADE OR BUS INESS CARRIED ON BY THE STATE, THE PARLIAMENT MAY BY LAW, IMPOSE ANY TAX; C) IF THE PARLIAMENT DECLARES THAT ANY TRADE OR BUSINESS CARRIED ON BY THE STATE TO BE INCIDENTAL TO THE ORD INARY FUNCTIONS OF THE GOVERNMENT, THEN ALSO TAX CANNOT B E IMPOSED FROM SUCH ACTIVITY OF TRADE; 8.5. IT IS SUBMITTED THAT THE TAXABILITY OF ANY IN COME DERIVED BY THE STATE DEPENDS UPON THE FOLLOWING FACTORS: A) IS IT A PURE STATE FUNCTION; B) IS IT A COMMERCIAL ACTIVITY TAKEN UP BY THE STATE; C) IS IT A PURE STATE FUNCTION ENTRUSTED TO A STATUTO RY BODY UNDER ITS CONTROL (NOT BEING A COMMERCIAL ACTIVITY) ; AND D) IS IT A FUNCTION ENTRUSTED TO A STATUTORY BODY UND ER ITS CONTROL AND WHICH CAN ALSO BE TAKEN UP BY ANY NON-S TATE ENTITY (OR PRIVATE ENTITY); IT IS SUBMITTED THAT THE LEGAL POSITION OF TAXABILI TY CHANGES WITH REFERENCE TO THE CATEGORY INTO WHICH THE FUNCTION D ISCHARGED BY THE STATE FALLS. 8.6 IN THIS CONTEXT, LD. AR REFERRED TO THE FUNCTIO NS DISCHARGED BY THE APPELLANT BOARD, WHICH ARE AS UNDER: 13 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD A) THE APPELLANT BOARD DOES NOT CARRY ON ANY BUSINESS . B) THE APPELLANT BOARD DOES NOT INDULGE IN ANY COMMERCIAL ACTIVITY. IT IS ONLY A REGULATORY BODY. C) THE FUNCTIONS DISCHARGED BY THE APPELLANT BOARD CA N ONLY BE DISCHARGED BY THE STATE AND BY NO ONE ELSE. D) THE PERSONS ULTIMATELY ACCOUNTABLE FOR THE APPELLA NT BOARD'S FUNCTIONING IS THE STATE ITSELF, THOUGH FOR THE PURPOSE OF FORMALITY THE BOARD IS RUN BY THE MEMBER S APPOINTED BY THE GOVERNMENT. E) THE APPELLANT BOARD IS VESTED WITH POWERS WHICH ON LY A STATE CAN DISCHARGE AND NOT ANY PRIVATE ENTITY OR A PRIVATE ORGANIZATION. F) THE FUNCTIONS TO BE DISCHARGED BY THE BOARD ARE SET OUT IN THE WATER (PREVENTION AND CONTROL OF POLLUTION) ACT , 1974 AND THE AIR (PREVENTION AND CONTROL OF POLLUTION) A CT, 1981. G) IT IS NOT AS IF ANYONE CAN DISCHARGE THESE FUNCT IONS. THE STATE IS NOT ACTING AS A COMPLIMENTARY BODY TO ANY NON-STATE OR PRIVATE ENTITY OR ORGANIZATION DISCHARGING SIMILAR FUNCTIONS. 8.7. LD. AR OBJECTING TO RELIANCE PLACED BY CIT(A) ON TH E DECISION OF ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY (SU PRA), SUBMITTED THAT THERE IS A DISTINCTION BETWEEN THE APPELLANT B ODY AND THE CASE RELIED ON BY THE COMMISSIONER OF INCOME TAX(APPEALS ). 8.8. IT WAS SUBMITTED, IN ADITYAPUR INDUSTRIAL ARE A DEV. AUTHORITY, A BODY CORPORATE WAS CONSTITUTED UNDER THE BIHAR INDU STRIAL AREA DEV. AUTHORITY ACT, 1974 TO PROVIDE FOR PLANNED DEVELOPM ENT OF INDUSTRIAL AREA FOR PROMOTION OF INDUSTRIES AND CONNECTED MATT ERS. THIS IS ESSENTIALLY A COMMERCIAL ACTIVITY. THIS ACTIVITY CA N ALSO BE UNDERTAKEN BY ANY NON-STATE OR PRIVATE ORGANIZATION, PROVIDING PLANNED DEVELOPMENT OF INDUSTRIAL AREA AND TO PROMOTE INDUS TRIES. THIS IS A SUBJECT WHICH IS NOT EXCLUSIVELY A STATE FUNCTION. IT IS ONE THING TO 14 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD STATE, THAT A STATE CAN CARRY ON THE ACTIVITY, BUT ALTOGETHER DIFFERENT TO STATE EXCEPT THE STATE NO ONE CAN ELSE CARRY ON THE ACTIVITY. THIS IS ALSO NOT AN ACTIVITY MANDATED TO BE DONE ONLY BY TH E STATE UNDER THE CONSTITUTION OF INDIA OR BY STATUTE. THE DEVELOPMEN T AUTHORITY IS NOT CL REGULATORY BODY. THE DEVELOPMENT AUTHORITY IS MEREL Y ACTING AS A COMPLIMENTARY BODY TO THE ACTIVITY OF PROMOTION OF INDUSTRIES WHICH IS ALSO UNDERTAKEN BY PRIVATE PLAYERS. THEREFORE, THE JUDGMENT OF THE HON 'BLE SUPREME COURT SHOULD BE UNDERSTOOD IN THE LIGHT OF THE NATURE OF ACTIVITY THAT IS SOUGHT TO BE DISCHARGED BY THE DEVELOPMENT AUTHORITY CONSTITUTED UNDER THE BIHAR STATE ACT WHI CH IS A COMMERCIAL ACTIVITY, THOUGH BY ITSELF THE AUTHORITY MAY NOT BE CARRYING ON ANY TRADE. 8.9. LD. AR SUBMITTED, IT MAY BE TRUE THAT THE ADI TYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY IN CARRYING OUT ITS FUNC TIONS MAY NOT BE CARRYING ON ANY TRADE OR BUSINESS. YET THE FACT REM AINS EVEN A PRIVATE ENTITY CAN TAKE UP SIMILAR ACTIVITY. THIS IS NOT TH E CASE IN THE A.P.POLLUTION CONTROL BOARD. 8.10. REFERRING TO THE DECISION OF THE HON'BLE SUPR EME COURT IN A.P. STATE ROAD TRANSPORT CORPN.LTD. VS. ITO (52 ITR 524 ). HERE AGAIN CARRYING ON TRANSPORT BUSINESS IS NOT THE PREROGATI VE OF THE STATE ALONE. IT WAS SUBMITTED, IN ADITYAPUR INDUSTRIAL AR EA DEV. AUTHORITY AS WELL AS THE A.P.STATE ROAD TRANSPORT CORPN. LTD. TH E ACTIVITY CARRIED ON IS AN ACTIVITY WHICH EVEN A PRIVATE OR NON STAT E ENTITY CAN CARRY ON AND UNLIKE THE PRESENT CASE DOES NOT FALL WITHIN TH E EXCLUSIVE DOMAIN OF THE STATE ACTIVITY. 8.11 LD. AR SUBMITTED, A RATIO OF A DECISION CANNOT BE APPLIED WITHOUT LOOKING INTO THE FACTUAL ASPECT. IN THIS CO NTEXT, HE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN COMMIS SIONER OF CENTRAL EXCISE, BANGALORE V.SRIKUMAR AGENCIES (2009 ) 1 SCC 469 (SC) AND A NUMBER OF OTHER DECISIONS AS REFERRED TO IN THE WRITTEN 15 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD SUBMISSION. 8.12. IT WAS SUBMITTED THAT ASSESSEE IS ONLY AN AG ENT APPOINTED EXCLUSIVELY FOR CARRYING OUT THE STATE FUNCTION OR THE STATE OBLIGATION MANDATED BY THE CONSTITUTION OF INDIA AS WELL AS BY THE STATUTE. IF THE VEIL OF THE ASSESSEE BOARD IS LIFTED, IT WOULD BE S EEN THAT THE STATE IS THE PERSON RUNNING AND CONTROLLING THE BOARD. IT IS STATE WHICH PERFORMS THE OBLIGATION THROUGH AN AGENT APPOINTED EXCLUSIVELY FOR THE PURPOSE. TO SUBSTANTIATE THE AFORESAID CONTENTION, LD. AR REFERRED TO VARIOUS PROVISIONS OF THE WATER (PREVENTION AND CONTROL OF POLLUTION) ACT, 1974 AND AIR (PREVENTION AND CONTROL OF POLLUT ION) ACT, 1981, 8.13. LD. AR SUBMITTED, THE FACT THAT ASSESSEE BOA RD SHALL HAVE ITS OWN FUNDS, DOES NOT MAKE ANY DIFFERENCE IF IT IS AC TING AS AN EXCLUSIVE AGENT OF THE STATE FOR PERFORMING A STATE FUNCTION OR A STATE OBLIGATION WHICH FALLS WHOLLY IN THE REALM OF STATE DOMAIN. TH IS DISTINCTION MAY BE RELEVANT IN ALL CASES WHERE THE FUNCTIONS PERFOR MED BY THE STATE CAN ALSO BE PERFORMED BY A NON STATE AGENT AS THE F UNCTIONS DO NOT FALL EXCLUSIVELY WITHIN THE STATE DOMAIN. THIS DIST INCTION IS VITAL AND MAKES ALL THE DIFFERENCE IN DETERMINING WHETHER THE INCOME DERIVED BY THE APPELLANT BOARD CAN BE SAID TO BE A STATE INCOM E FALLING WITHIN THE PROVISIONS OF ARTICLE 289( 1) OF THE CONSTITUTION OF INDIA. 9. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTING THE FINDING OF THE LD. CIT(A) ON THE ISSUE SUBMITTED THAT ASSESSEE BEING A DISTINCT LEGAL ENTITY SEPARATE FROM THE STATE GOVT., THE INC OME DERIVED BY ASSESSEE CANNOT BE CONSIDERED TO BE THE INCOME OF S TATE GOVT. THEREBY MAKING IT IMMUNE FROM TAXATION UNDER ARTICL E 289(1) OF THE CONSTITUTION OF INDIA. LD. DR SUBMITTED THAT NEITHE R THE FUNDS OF ASSESSEE ARE THE FUNDS OF THE STATE GOVT. OR THE FE ES RECEIVED BY IT IS THE INCOME OF THE STATE. HE SUBMITTED THAT AS THE I NCOME DERIVED BY ASSESSEE GOES TO ENHANCE ITS OWN FUNDS AND NOT TO T HE STATE GOVT. THE INCOME GENERATED WILL NOT BE THE INCOME OF THE STAT E GOVT. TO 16 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD SUBSTANTIATE SUCH CONTENTION, LD. DR BROUGHT TO OUR NOTICE THE PROVISIONS CONTAINED UNDER CHAPTER VI OF WATER (PRE VENTION AND CONTROL OF POLLUTION) ACT, 1974. THUS, IN SUM AND S UBSTANCE, LD. DR SUBMITTED THAT AS ASSESSEE IS A DISTINCT LEGAL ENTI TY SEPARATE FROM THE STATE GOVT. AND INCOME OF ASSESSEE ALSO GOES TO ITS OWN KITTY NOT TO THE STATE, IT CANNOT BE SAID THAT THE INCOME EARNED BY ASSESSEE BEING THE INCOME OF STATE GOVT. IS EXEMPT FROM TAXATION U NDER ARTICLE 289(1) OF THE CONSTITUTION OF INDIA. IN SUPPORT OF SUCH CO NTENTION, LD. DR RELIED UPON THE FOLLOWING DECISIONS: 1. AP STATE ROAD TRANSPORT CORPORATION VS. CIT, 52 ITR 524 (SC) 2. ADITYAPUR INDUSTRIAL DEVELOPMENT AUTHORITY, 283 ITR 97 3. AP HOUSING BOARD VS. DCIT, ITA NO. 717/H/12 AND OTHERS, DT. 31/05/13 10. IN REJOINDER, LD. AR SUBMITTED THAT THE PRINCIP LE DECIDED BY THE ITAT, HYDERABAD BENCH IN CASE OF AP HOUSING BOARD ( SUPRA) WILL NOT APPLY TO THE FACTS OF ASSESSEES CASE BECAUSE THE A CT PERFORMED BY THE PRESENT ASSESSEE CAN ONLY BE PERFORMED BY THE S TATE ALONE AND NOT BY ANYONE ELSE. IT WAS SUBMITTED THAT AP HOUSIN G BOARD IS A COMMERCIAL ORGANIZATION AS IT IS ENGAGED IN THE ACT IVITY OF PURCHASE AND SALE OF LAND, CONSTRUCTION OF HOUSES AND SALE O F THE SAME. IT RECEIVES MONEY FOR THE SERVICES RENDERED LIKE ANY O THER BUSINESS UNDERTAKING. IT WAS SUBMITTED, THE ACTIVITY CARRIED ON BY HOUSING BOARD CAN ALSO BE CARRIED ON BY ANY OTHER PERSON AN D THE NATURE OF ACTIVITY IS ALSO NOT SOMETHING WHICH ONLY A STATE C AN ALONE TAKE UP AND NO ONE ELSE. FURTHER, THE ACTIVITY IS CARRIED O N BY A SEPARATE ENTITY CREATED AND CONTROLLED BY THE STATE BUT NOT BY THE STATE ITSELF. LD. AR EXPLAINING THE EXACT NATURE OF ACTIVITIES CA RRIED ON BY THE BOARD AND THE FEE RECEIVED SUBMITTED THAT THE ACTIV ITIES CARRIED ON BY ASSESSEE CAN ONLY BE CARRIED ON BY THE STATE OR ITS AGENT AND NOT BY ANYONE ELSE. IT WAS SUBMITTED, THE NATURE OF RECEIP T ALSO WILL SHOW THAT THE FUNCTIONS PERFORMED BY THE BOARD ARE ONLY STATE FUNCTIONS AND 17 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD NO PRIVATE PLAYER IS ENTITLED TO CHARGE SUCH FEE FR OM INDUSTRIES. THE BOARD DOES NOT RENDER ANY SERVICES TO THE PERSONS P AYING SUCH FEE. THEREFORE, THE CHARACTER AND NATURE OF RECEIPTS OF THE BOARD INDICATE THAT IT IS WORKING ONLY AS AN AGENT OR AN EXTENDED ARM OF THE STATE AND NOT LIKE ANY CORPORATION ESTABLISHED FOR CARRYI NG OUT THE ACTIVITIES WHICH EVEN A NON-STATE ACTOR OR ANY PRIVATE INSTITU TION CAN CARRYOUT. IT WAS SUBMITTED THAT THE BOARD DOES NOT OWE ANY OBLIG ATION TO ANY PERSON OR INSTITUTION OR INDUSTRY FOR RECEIVING ANY MONEY. THE BENEFICIARIES OF THE ACTIVITIES OF THE BOARD ARE PU BLIC AT LARGE OR THE CITIZENS OF THE STATE. IT WAS SUBMITTED THAT THE AC TIVITY UNDERTAKEN BY THE BOARD IS A WELFARE ACTIVITY WHICH A WELFARE STA TE UNDERTAKES IN DISCHARGE OF ITS DUTIES TOWARDS ITS OBJECTS. THE BO ARD DOES NOT CARRY OUT ANY BUSINESS OR COMMERCIAL ACTIVITY. THUS, IT W AS SUBMITTED THAT AS THE ACTIVITY CARRIED ON BY THE BOARD IS OF SUCH A NATURE WHICH THE STATE ALONE CAN CARRY ON THE INCOME GENERATED/DERIV ED FROM SUCH ACTIVITY HAS TO BE TREATED AS INCOME OF THE STATE G OVT. 11. WE HAVE CONSIDERED THE ELABORATE SUBMISSIONS MA DE FROM BOTH SIDES AND PERUSED THE ORDERS OF THE DEPARTMENTAL AU THORITIES AS WELL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO CAREFULL Y APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES BEFORE US. AT THE OUTSET, WE NEED TO OBSERVE THAT THOUGH THE ASSESSEE BOARD W AS CREATED WITH EFFECT FROM 24/01/1976 AS ANDHRA PRADESH STATE BOAR D FOR THE PREVENTION AND CONTROL OF WATER POLLUTION AND SUBSE QUENTLY RECHRISTENED AS ANDHRA PRADESH POLLUTION CONTROL BO ARD AFTER ENACTMENT OF THE AIR (PREVENTION AND CONTROL OF POL LUTION) ACT, 1981, BUT, THE ASSESSEE BOARD NEVER CLAIMED IMMUNITY FROM PAYMENT OF INCOME-TAX UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA. ONLY AFTER ASSESSEE LOST THE CLAIM OF EXEMPTION U/S 10(20) OF THE ACT, BY VIRTUE OF AMENDMENT TO THE DEFINITION OF THE EXPRESSION LO CAL AUTHORITY W.E.F. 01/04/2003 AND IT FAILED IN ITS ATTEMPT, EITHER IN GETTING APPROVAL U/S 10(23C)(VI) OR BEING REGISTERED U/S 12AA OF THE ACT FOR THE IMPUGNED AY, AS A LAST RESORT IT STAKED ITS CLAIM OF IMMUNIT Y FROM PAYMENT OF 18 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD INCOME-TAX UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA, THAT TOO AT THE STAGE OF PROCEEDING BEFORE THE FIRST APPELLATE AUTHORITY. IT IS A FACT ON RECORD THAT DURING THE ASSESSMENT PROCEEDING ALS O FOR THE IMPUGNED AY, ASSESSEE NEVER CLAIMED THAT ITS INCOME IS EXEMPT FROM TAXATION BY VIRTUE OF ARTICLE 289(1) OF THE CONSTIT UTION OF INDIA. BE THAT AS IT MAY, THE ISSUE BEFORE US IS WHETHER THE INCOM E OF THE ASSESSEE BOARD CAN BE SAID TO BE THE INCOME OF THE STATE GOV T. SO AS TO GET IMMUNITY FROM TAXATION UNDER ARTICLE 289(1) OF THE CONSTITUTION OF INDIA. IN THIS REGARD, IT IS THE SUBMISSION OF ASSE SSEE THAT AS THE ACTIVITIES CARRIED ON BY ASSESSEE IS OF SUCH A NATU RE WHICH THE STATE ALONE CAN CARRY ON AND NO OTHER PERSON OR ORGANIZA TION CAN CARRY ON SUCH ACTIVITY, THE INCOME DERIVED BY ASSESSEE WHILE CARRYING OUT SUCH ACTIVITY HAS TO BE TREATED AS THE INCOME OF THE STA TE. IN THIS CONTEXT, LD. AR HAS TAKEN US THROUGH VARIOUS PROVISIONS OF T HE WATER (PREVENTION AND POLLUTION CONTROL) ACT, 1974 AND AI R (PREVENTION AND CONTROL OF POLLUTION) ACT, 1981, TO SUBMIT THAT THE ACTIVITY CARRIED ON BY ASSESSEE BOARD UNDER THE SAID PROVISIONS IS ONLY AS AN AGENT OR EXTENDED ARM OF THE STATE. HENCE, THE INCOME OF THE BOARD HAS TO BE TREATED AS INCOME OF THE STATE GOVT. BEFORE DECIDIN G THE VALIDITY OF THE AFORESAID CLAIM OF ASSESSEE, IT IS NECESSARY TO LOO K INTO THE PROVISION CONTAINED UNDER ARTICLE 289(1) OF THE CONSTITUTION OF INDIA, WHICH IS EXTRACTED HEREUNDER FOR THE SAKE OF CONVENIENCE: EXEMPTION OF PROPERTY AND INCOME OF A STATE FROM UN ION TAXATION (1) THE PROPERTY AND INCOME OF A STATE SHALL BE EXEMPT FROM UNION TAXATION (2) NOTHING IN CLAUSE ( 1 ) SHALL PREVENT THE UNION FR OM IMPOSING, OR AUTHORISING THE IMPOSITION OF, ANY TAX TO SUCH EXTENT, IF ANY, AS PARLIAMENT MAY BY LAW PROVIDE IN RESPECT OF A TRADE OR BUSINESS OF ANY KIND CARRIED ON BY, OR ON BEHALF OF, THE GOVERNMENT OF A STATE, OR ANY OPERATIONS CONNECTED THEREWITH, OR ANY PROPERTY USE D OR OCCUPIED FOR THE PURPOSES OF SUCH TRADE OR BUSINESS , OR ANY INCOME ACCRUING OR ARISING IN CONNECTION THEREW ITH (3) NOTHING IN CLAUSE ( 2 ) SHALL APPLY TO ANY TRADE O R BUSINESS, OR TO ANY CLASS OF TRADE OR BUSINESS, WHI CH PARLIAMENT MAY BY LAW DECLARE TO BE INCIDENTAL TO T HE ORDINARY FUNCTIONS OF GOVERNMENT. 19 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 12. ON CAREFUL ANALYSIS OF ARTICLE 289, EXTRACTED A BOVE, IT IS TO BE OBSERVED, THE SAID ARTICLE IS DIVIDED INTO THREE PA RTS. CLAUSE (1) OF ARTICLE 289 SAYS THAT THE PROPERTY AND INCOME OF ST ATE SHALL BE EXEMPT FROM UNION TAXATION. ARTICLE 289(2) HOWEVER PROVIDES THAT NOTHING IN CLAUSE(1) SHALL PREVENT THE UNION FROM I MPOSING AND AUTHORIZING THE IMPOSITION OF ANY TAX TO SUCH EXTEN T, IF ANY, AS PARLIAMENT MAY BY LAW PROVIDE IN RESPECT OF A TRADE OR BUSINESS OF ANY KIND CARRIED ON BY, OR ON BEHALF OF THE GOVERNM ENT OR STATE, OR ANY OPERATION CONNECTED THEREWITH, OR ANY PROPERTY USED OR OCCUPIED FOR THE PURPOSE OF SUCH TRADE OR BUSINESS, OR ANY I NCOME ACCRUING OR ARISING IN CONNECTION THEREWITH. ARTICLE 289(3) PRO VIDES THAT NOTHING IN CLAUSE(2) SHALL APPLY TO ANY TRADE OR BUSINESS OR T O ANY CLASS OF TRADE OR BUSINESS, WHICH PARLIAMENT MAY BY LAW TO BE INCI DENTAL TO THE ORDINARY FUNCTIONS OF GOVERNMENT. THUS, A PLAIN REA DING OF THE AFORESAID CLAUSES OF ARTICLE 289 MAKES IT CLEAR THA T THEY ARE INDEPENDENT OF EACH OTHER AND SPEAKS OF THREE DIFF ERENT SITUATIONS. 13. ON A PERUSAL OF THE WATER (PREVENTION AND CONTR OL OF POLLUTION) ACT, 1974, IT IS TO BE NOTICED THAT SECTION 4 OF TH E SAID ACT EMPOWERS THE STATE GOVT. TO CONSTITUTE A STATE POLLUTION CON TROL BOARD THROUGH A NOTIFICATION PUBLISHED IN THE OFFICIAL GAZETTE FOR EXERCISING SUCH POWERS AND FUNCTIONS AS MAY BE ASSIGNED TO THE BOAR D UNDER THE ACT. SIMILARLY, SECTION 4 OF THE AIR (PREVENTION AND CON TROL OF POLLUTION) ACT, 1981, PROVIDES THAT STATE POLLUTION CONTROL BO ARDS CONSTITUTED UNDER SECTION 4 OF THE WATER (PREVENTION AND CONTRO L OF POLLUTION) ACT, 1974 SHALL BE DEEMED TO BE THE STATE BOARD FOR THE PREVENTION AND CONTROL OF AIR POLLUTION. FURTHER, OTHER PROVISION S OF BOTH THE AFORESAID ACTS DOES NOT LEAVE ANY ROOM FOR DOUBT THAT THE STA TE GOVT. EXERCISES CONTROL OVER THE FUNCTIONING OF THE BOARD, BUT AT T HE SAME TIME, SECTION 37 OF THE WATER(PREVENTION AND CONTROL OF P OLLUTION) ACT, 1974 MAKES IT CLEAR THAT THE BOARD SHALL HAVE ITS OWN FU ND CONSTITUTED BY THE SUMS PAID BY THE STATE GOVT. AND ALL OTHER RECE IPTS BY WAY GIFTS, 20 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD GRANTS, DONATIONS, BENEFACTIONS, FEE OR OTHER WISE SHALL BE CARRIED TO THE FUND OF THE BOARD AND ALL PAYMENTS BY THE BOARD SHALL BE MADE THERE FROM. IT FURTHER PROVIDES THAT THE BOARD MAY EXPEND SUCH SUMS AS IT THINKS FIT FOR PERFORMING ITS FUNCTIONS UNDER THE ACT AND SUCH SUMS SHALL BE TREATED AS EXPENDITURE PAYABLE OUT OF THE FUND OF THE BOARD. SECTION 37A ALSO EMPOWERS THE BOARD TO BORRO W MONEY FROM ANY SOURCE BY WAY OF LOANS OR ISSUE OF BONDS DEBENT URES OR SUCH OTHER INSTRUMENTS AS IT MAY DEEM FIT FOR THE PERFOR MANCE OF ANY OF ITS FUNCTIONS UNDER THE ACT, BUT, OF COURSE WITH THE CO NSENT OF THE OR THE AUTHORITY GIVEN BY THE CENTRAL OR STATE GOVT. SECTI ON 38 PROVIDES THAT THE BOARD FOR EACH FINANCIAL YEAR SHALL PREPARE ITS OWN BUDGET SHOWING ESTIMATED RECEIPT AND EXPENDITURE FOR THE N EXT FY AND COPY OF THE SAID BUDGET SHALL BE FORWARDED TO THE CENTRA L/STATE GOVT. FROM THE AFORESAID PROVISIONS, IT BECOMES ABUNDANTLY CLE AR THAT THE INCOME GENERATED BY THE BOARD WHICH GOES TO CONSTITUTE ITS OWN FUND DOES NOT GO TO THE CONSOLIDATED FUND OF THE STATE AND IS DIS TINCT AND SEPARATE FROM THE FUND OF THE STATE GOVT. SECTION 62 OF THE WATER (PREVENTION AND CONTROL OF POLLUTION) ACT, 1974 EMPOWERS THE ST ATE GOVT. TO SUPERSEDE THE STATE POLLUTION CONTROL BOARD, IF IT IS OF THE OPINION THAT THE STATE BOARD HAS PERSISTENTLY MADE DEFAULTS IN T HE PERFORMANCE OF THE FUNCTIONS IMPOSED ON IT BY OR UNDER THE ACT OR CIRCUMSTANCES EXIST WHICH RENDER IT NECESSARY IN THE PUBLIC INTEREST TO DO SO. ONLY UPON SUPERSESSION OF THE STATE BOARD THE STATE GOVT. TAK ES OVER ALL THE POWERS AND FUNCTIONS AND DUTIES PERFORMED BY THE ST ATE BOARD AND ALSO PROPERTY OWNED OR CONTROLLED BY THE BOARD SHAL L VEST IN THE STATE GOVT. THEREFORE, FROM THE AFORESAID PROVISION, IT B ECOMES CLEAR THAT UNTIL SUPERSESSION OF THE STATE BOARD, NOT ONLY IT RETAINS ITS DISTINCT AND INDEPENDENT IDENTITY BUT ALSO THE FUNDS AND PRO PERTY OF THE BOARD ALSO REMAINS IN ITS POSSESSION. 14. THEREFORE, EXAMINING THE AFORESAID FACTS VIS-- VIS THE PROVISIONS CONTAINED UNDER ARTICLE 289 OF THE CONST ITUTION OF INDIA, IT IS EVIDENT THAT THE POWERS/FUNCTIONS EXERCISED BY T HE BOARD CANNOT BE 21 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD CONSIDERED TO BE IN THE NATURE OF TRADE OR BUSINESS . THEREFORE, CLAUSE (2) AND (3) OF ARTICLE 289 MAY NOT BE APPLICABLE TO THE FACTS OF ASSESSEES CASE. THE ONLY PROVISION UNDER WHICH ASS ESSEE CAN POSSIBLY CLAIM IMMUNITY FROM TAXATION IS CLAUSE (1) OF ARTICLE 289. ON A PLAIN READING OF THE SAID CLAUSE, IT IS CLEAR THA T ONLY PROPERTY OR INCOME OF STATE IS EXEMPT FROM UNION TAXATION. THE EXPRESSION INCOME OF A STATE AS INCORPORATED UNDER ARTICLE 2 89(1) HAS TO BE INTERPRETED TO MEAN, THE INCOME OF THE STATE GOVT. ITSELF AND NOT THE INCOME OF SOME AUTHORITY OTHER THAN THE STATE, SUCH AS STATUTORY AUTHORITY OR BOARD WHICH IS A INDEPENDENT/SEPARATE JURISTIC ENTITY, EVEN THOUGH IT MAY BE OWNED OR CONTROLLED BY THE ST ATE GOVT. AS WE HAVE STATED EARLIER, PROVISIONS OF BOTH THE WATER ( PREVENTION AND CONTROL OF POLLUTION) ACT, 1974 AND AIR (PREVENTION AND CONTROL OF POLLUTION) ACT, 1981, MAKE IT CLEAR THAT THE FUNDS OF THE BOARD ARE ITS OWN FUNDS AND DOES NOT BELONG TO THE STATE GOVT. ON LY IN CASE OF SUPERSESSION OF THE BOARD, THE PROPERTY OF THE BOAR D VESTS WITH THE STATE GOVT. THEREFORE, UNTIL SUCH SUPERSESSION THE FUND OF THE BOARD IS DISTINCT FROM THE FUND OF STATE GOVT. CONSIDERED IN THE AFORESAID PERSPECTIVE, THE INCOME/RECEIPTS OF THE BOARD CANNO T BE CONSIDERED TO BE THE INCOME/RECEIPTS OF THE STATE GOVT. IT ALSO CANNOT BE DISPUTED THAT ASSESSEE IS AN INDEPENDENT/SEPARATE JURISTIC ENTITY DISTINCT FROM THE STATE GOVT., THOUGH, THE STATE MAY BE EXERCISIN G CONTROL OVER THE BOARD. FURTHER, THE FACTS AND MATERIALS ON RECORD A LSO MAKE IT CLEAR THAT THE INCOME/RECEIPTS OF THE BOARD REMAIN AS ITS OWN FUNDS AND NOT TRANSFERRED TO THE COFFERS OF THE STATE GOVT. IN TH E AFORESAID FACTS AND CIRCUMSTANCES WHEN THE INCOME/RECEIPTS OF THE BOARD REMAIN WITH THE BOARD ITSELF AND NOT TRANSFERRED TO THE STATE GOVT. SUCH INCOME/RECEIPT HAS TO BE CONSIDERED AS INCOME/RECEIPT OF THE BOARD AND NOT OF THE STATE GOVT. THEREFORE, SUCH INCOME/RECEIPT CANNOT B E IMMUNE FROM TAXATION UNDER ARTICLE 289(1) OF THE CONSTITUTION O F INDIA. 15. THE HONBLE SUPREME COURT IN CASE OF ADITYAPUR INDUSTRIAL (SUPRA) WHILE EXAMINING PROVISIONS UNDER BIHAR IND USTRIAL AREA 22 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD DEVELOPMENT AUTHORITY, 1974 WHICH ARE AKIN TO SECTI ON 37 AND 62 OF THE WATER (PREVENTION AND CONTROL OF POLLUTION) ACT , 1974 OBSERVED AS UNDER: HAVING REGARD TO THE PROVISIONS OF THE BIHAR INDUST RIAL AREAS DEVELOPMENT AUTHORITY ACT, 1974, PARTICULARLY S. 17 THEREOF, WE HAVE NO MANNER OF DOUBT THAT THE INCOME OF THE APPELLANT/AUTHORITY CONSTITUTED UNDER THE SAID ACT IS ITS OWN INCOME AND THAT THE APPELLANT/AUTHORITY MANAGES ITS OWN FUNDS. IT HAS ITS OWN ASSETS AND LIABILITIES. IT CAN SUE OR B E SUED IN ITS OWN NAME. EVEN THOUGH, IT DOES NOT CARRY ON ANY TRADE O R BUSINESS WITHIN THE CONTEMPLATION OF CL. (2) OF ART. 289, IT STILL IS AN AUTHORITY CONSTITUTED UNDER AN ACT OF THE LEGISLATU RE OF THE STATE HAVING A DISTINCT LEGAL PERSONALITY, BEING A BODY C ORPORATE, AS DISTINCT FROM THE STATE. SEC. 17 OF THE ACT FURTHER CLARIFIES THAT ONLY UPON ITS DISSOLUTION ITS ASSETS, FUNDS AND LIA BILITIES DEVOLVE UPON THE STATE GOVERNMENT. NECESSARILY THEREFORE, B EFORE ITS DISSOLUTION, ITS ASSETS, FUNDS AND LIABILITIES ARE ITS OWN. IT IS, THEREFORE, FUTILE TO CONTEND THAT THE INCOME OF THE APPELLANT/AUTHORITY IS THE INCOME OF STATE GOVERNME NT, EVEN THOUGH THE AUTHORITY IS CONSTITUTED UNDER AN ACT EN ACTED BY THE STATE LEGISLATURE BY ISSUANCE OF A NOTIFICATION BY THE GOVERNMENT THEREUNDER. 16. THE HONBLE SUPREME COURT AFTER ANALYZING THE P ROVISIONS CONTAINED UNDER ARTICLE 289 AS A WHOLE AND TAKING N OTE OF THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT I N CASE OF AP STATE ROAD TRANSPORT CORPN. VS. ITO (52 ITR 524) OB SERVED AS UNDER: CONSIDERABLE RELIANCE WAS PLACED ON THE PRINCIPLES LAID DOWN IN THE AFORESAID DECISION BY LEARNED COUNSEL APPEARING FOR THE UNION OF INDIA. HE SUBMITTED THAT HAVING REGARD TO THE PR OVISIONS OF THE ACT UNDER WHICH THE APPELLANT/AUTHORITY IS ESTABLIS HED, THE SAME CONCLUSION MAY BE REACHED. IN PARTICULAR, EMPHASIZI NG THE FACT THAT AS IN ANDHRA PRADESH STATE ROAD TRANSPORT CORP ORATION CASE (SUPRA), SO IN THE INSTANT CASE AS WELL, S. 17 OF T HE ACT PROVIDES THAT UPON DISSOLUTION OF THE APPELLANT/AUTHORITY, T HE PROPERTIES, FUNDS AND DUES REALIZABLE BY THE AUTHORITY ALONG WI TH ITS LIABILITIES SHALL DEVOLVE UPON THE STATE GOVERNMENT. IMPLIEDLY, THEREFORE, SUCH PROPERTIES, FUNDS AND DUES VEST IN THE AUTHORI TY TILL ITS DISSOLUTION, AND ONLY THEREAFTER IT VESTS IN THE ST ATE GOVERNMENT. HE ALSO REFERRED TO VARIOUS OTHER PROVISIONS OF THE ACT AND SUBMITTED THAT THERE WAS NOTHING IN THE ACT WHICH A TTEMPTED TO LIFT THE VEIL FROM THE FACE OF THE CORPORATION. EVE N THOUGH THE AUTHORITY WAS CREATED UNDER AN ACT OF THE LEGISLATU RE, IT WAS STILL AN AUTHORITY WHICH HAD A DISTINCT PERSONALITY OF IT S OWN, HAVING PERPETUAL SUCCESSION AND A COMMON SEAL, WITH POWERS TO ACQUIRE, HOLD AND DISPOSE OF PROPERTY, AND TO CONTRACT, AND COULD SUE AND BE SUED IN ITS OWN NAME. SHRI VENUGOPAL, ON THE OTH ER HAND, TRIED TO DISTINGUISH THE JUDGMENT ON THE GROUND THAT THE ANDHRA 23 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD PRADESH ROAD TRANSPORT CORPORATION IS BEING RUN ON BUSINESS LINES, AND A CORPORATION THAT RUNS ON BUSINESS LINE S IS DISTINGUISHABLE AND DIFFERENT FROM A CORPORATION WH ICH IS NOT RUN ON THOSE LINES. EVEN IF SUCH A DISTINCTION IS DRAWN , THAT WILL NOT HAVE THE EFFECT OF MAKING THE INCOME OF THE CORPORA TION THE INCOME OF THE STATE GOVERNMENT HAVING REGARD TO THE OTHER FEATURES NOTICED ABOVE. THE HONBLE SUPREME COURT FINALLY HELD THAT EXEMPTI ON CAN BE CLAIMED UNDER ARTICLE 289(1) OF THE CONSTITUTION OF INDIA ONLY IF THE INCOME CAN BE SAID TO BE THE INCOME OF THE STATE GO VT. 17. CONSIDERED IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT AS AFORESAID AND FACTS INVOLVED IN TH E PRESENT APPEAL, UNDER NO CIRCUMSTANCES IT CAN BE HELD THAT THE INCO ME/RECEIPTS OF THE ASSESSEE IS THAT OF THE STATE GOVT.. THIS IS BECAUS E, NOT ONLY ASSESSEE IS A DISTINCT AND SEPARATE LEGAL/JURISTIC ENTITY BUT FUNDS OF THE ASSESSEE ALSO BELONG TO ASSESSEE. THOUGH, THE L EARNED AR HAS TRIED TO IMPRESS UPON US THAT THE PRINCIPLES LAID D OWN IN CASE OF ADITYAPUR INDUSTRIA. (SUPRA) WILL NOT BE APPLICABLE TO ASSESSEE, BUT, WE ARE UNABLE TO AGREE WITH THE SAME. IN OUR VIEW, THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT SQUARELY APPLIES TO THE FACTS OF THE CASE OF ASSESSEE. WHILE DEALING WITH IDENTICAL ISSUE IN CASE OF AP HOUSING BOARD (SUPRA), A COORDINATE BENCH OF THIS T RIBUNAL HAS HELD THAT HOUSING BOARD BEING A SEPARATE JURISTIC ENTITY , INCOME DERIVED BY IT CANNOT BE CONSIDERED TO BE THE INCOME OF THE STA TE UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA. 18. THE ENTIRE ISSUE CAN ALSO BE LOOKED INTO FROM A NOTHER ANGLE. AS CAN BE SEEN TILL AY 2002-03, ASSESSEE HAD BEEN CLAI MING EXEMPTION U/S 10(20) BY TREATING ITSELF TO BE A LOCAL AUTHORI TY. MOREOVER, ASSESSEE HAS ALSO APPLIED FOR REGISTRATION U/S 12AA OF THE ACT AS A CHARITABLE INSTITUTION AND HAS ALSO BEEN GRANTED SU CH REGISTRATION IN PURSUANCE TO THE DIRECTIONS OF THE ITAT. FURTHERMOR E, IT IS A FACT ON RECORD THAT ASSESSEE HAS ALSO APPLIED FOR APPROVAL U/S 10(23C)(IV) OF THE IT ACT, AND APPROVAL HAS ALSO BEEN GRANTED TO A SSESSEE FROM AY 24 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 2009-10 ONWARDS. FROM THE AFORESAID FACTS, IT BECOM ES CLEAR THAT ASSESSEE BY ITS OWN ACTIONS CONSIDERS ITSELF TO BE A SEPARATE LEGAL ENTITY DISTINCT FROM THE STATE GOVT. THAT BEING THE CASE, THE INCOME/RECEIPTS OF THE BOARD HAS TO BE TREATED AS I TS OWN INCOME AND NOT OF THE STATE GOVT. IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE AGREE WITH THE LD. CIT(A) THAT ASSESSEE CANNOT GET IMMUNITY FROM TAXATION UNDER ARTICLE 289 OF THE CONSTITUTION OF I NDIA. 19. AS FAR AS THE NEXT ISSUE RELATING TO CLAIM OF E XEMPTION U/S 10(23C)(IV) OF THE ACT IS CONCERNED, CONSIDERING TH E FACT THAT ASSESSEES WRIT APPLICATION IS PENDING BEFORE THE H ONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE DIRECTIONS OF THE LD. CIT(A). 20. NOW COMING TO THE ISSUE RAISED IN GROUND NO. 9 READ WITH ADDITIONAL GROUNDS, LD. AR HAS SUBMITTED BEFORE US THAT THE ACTUAL RECEIPTS AS PER THE REVISED RETURN IS RS. 19,46,56, 470 AS AGAINST RS. 32,77,52,980 CONSIDERED BY AO. AFTER CONSIDERING TH E SUBMISSIONS OF ASSESSEE VIS--VIS THE FACTS AND MATERIALS ON RECOR D, WE DIRECT THE AO TO VERIFY THIS ASPECT AND ADOPT THE CORRECT FIGURE AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE I N THE MATTER. 21. AS FAR AS LEVY OF INTEREST U/S 234A AND 234B IS CONCERNED, SUCH INTERESTS BEING AUTOMATIC AND MANDATORY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. 22. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 23. AS THE GROUNDS, FACTS AND CIRCUMSTANCES RELATIN G TO CLAIM OF EXEMPTION UNDER ARTICLE 289(1) OF CONSTITUTION OF I NDIA OR U/S 10(23C) OF THE ACT ARE MATERIALLY IDENTICAL IN ITA NOS. 338 & 339/HYD/2011 FOR AYS. 2006-08 AND 2007-08 RESPECTIVELY TO THAT OF IT A NO. 25 ITA NOS. 337, 338, 339/HYD/2011 A.P. POLLUTION CONTROL BOARD 337/HYD/2011 (SUPRA), FOLLOWING THE DECISION THEREI N, WE UPHOLD THE ORDERS OF LD. CIT(A). 24. TO SUM UP, ALL THREE APPEAL OF ASSESSEE IN ITA NO. 337/HYD/2011 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES AND IN ITA NOS. 338 & 339/HYD/2011 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19/12/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 19 TH DECEMBER, 2014 KV COPY TO:- 1) A.P. POLLUTION CONTROL BOARD, PARIAYAVARAN BHAVA N, A3, INDL. ESTATE, SANATNAGAR, HYDERABAD 2) DDIT(E)-II, BASHEERBAGH, HYDERABAD 500 004 3) CIT(A)-IV, HYDERABAD 4) DIT(E), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.