MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION, MUMBAI V. ITO 23(2)(2), MUMBAI

ITA 6248/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6811 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 21-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH; SUNIL K JHA
• Keywords: Principle of natural justice; Bonafide mistake; TDS; Set aside; Capital Gains
• Section: 40A(3); 40(a)(ia); 12A; 201; 147; 148; 144

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2203/MUM/2016 (ASSESSMENT YEAR 2010-11 ) ITA NO.6248/MUM/2016 (ASSESSMENT YEAR 2007-08 ) MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION, 49, KHERWADI, ALI YAVAR JUNG MARG, GOVT. POLYTECHNIC CAMPUS, BANDRA(E), MUMBAI-400051. PAN: AAAJM0988M VS. ITO-15 (2)(2) MATRU MANDIR, BUILDING, GRANT ROAD, MUMBAI-400007. APPELLANT RESPONDENT APPELLANT BY : SHRI GIRISH DAVE WITH SHRI TANZIL R. PADVEKAR ADVO CATES RESPONDENT BY : SHRI SUNIL K. JHA (CIT- DR) AND SH. MANISH KUMAR SINGH S R DR DATE OF HEARING : 18.01.2019 DATE OF PRONOUNCEMENT : 28.02.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO APPEAL BY ASSESSEE ARE DIRECTED AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI [LD . CIT(A)] DATED 21.01.2016 AND 01.07.2016 FOR ASSESSMENT YEAR 2010 -11 AND 2007-08 RESPECTIVELY. THE ASSESSEE HAS RAISED CERTAIN COMM ON GROUNDS OF APPEAL, THEREFORE, WITH THE CONSENT OF THE PARTIES BOTH THE APPEALS WERE CLUBBED, HEARD AND ARE DECIDED BY CONSOLIDATED ORDER. THE AP PEAL FOR AY 2010-11 IS TREATED AS LEAD CASE. THE ASSESSEE HAS RAISED FOLL OWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) AND THAT OF THE ASSESSING OFFICER IS CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IS AGAINST THE PRINCIPLES OF EQUITY AND NATURAL JUSTIC E. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE ASSESSMENT UNDER SECTION 144 OF THE INCOME-TAX ACT. ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 2 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE ASSESSMENT WHEN INFACT THE NOTICE ISSUED UNDER SECT ION 148 IS INVALID. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE ASSESSMENT WHEN INFACT THERE WAS NO REASON TO BELIE VE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND NO REASON WAS SER VED BY THE ASSESSING OFFICER TO THE APPELLANT HEREIN DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN HOLDING THAT THE APPELLANT HEREIN IS LIABLE TO TAX WHEN INFACT T HE APPELLANT IS A 'STATE' UNDER ARTICLE 289 OF THE CONSTITUTION OF INDIA AND THEREF ORE, NOT LIABLE TO TAX AT ALL. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND THE ASSESSING OFFICER HAS ERRED IN HOLDING THAT THE APPELLANT HEREIN IS A 'PERSON' FOR THE PURPOSES OF INCOME-TAX ACT AND THAT IT IS LIABLE TO FILE THE RE TURN OF INCOME. 7. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE ASSESSMENT OF SURPLUS OF THE APPELLANT HEREIN WHEN INFACT IT IS NOT LIABLE TO TAX AT ALL. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND THE ASSESSING OFFICER HAVE ERRED IN HOLDING THAT THE ASSESSEE IS LIABLE F OR TAXATION MERELY BECAUSE TAX HAS BEEN DEDUCTED BY THE PAYER OF PROFESSIONAL RECE IPTS BY THE APPELLANT WHEN INFACT THE DEDUCTION OF TAX IS NOT A DETERMINATIVE FACTOR TO DETERMINE THE WHETHER THE APPELLANT IS LIABLE FOR TAXATION OR NOT. 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AND THE ASSESSING OFFICER HAVE ERRED IN HOLDING THAT THE APPELLANT IS LIABLE FOR TAXATION AND THAT IT DOES NOT EXIST FOR PUBLIC PURPOSE ON THE GROUND THAT THE APP ELLANT IS EARNING SURPLUS FROM ITS ACTIVITIES. 10. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN UPHOLDING THAT THE PROVISIONS OF SECTION 10(46) OF THE INCOME -TAX ACT PROSPECTIVELY WHEN INFACT, THE ABSENCE OF THE PROVISION DURING THE YEA R UNDER CONSIDERATION WOULD NOT MAKE THE APPELLANT HEREIN LIABLE FOR TAXATION. 11. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE DIS ALLOWANCE UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ES TABLISHED BY THE ACT OF MAHARASHTRA LEGISLATURE/ GOVERNMENT BY ENACTING MAH ARASHTRA STATE BOARD OF TECHNICAL EDUCATION ACT 1997. THE ACT PROVIDES F OR ESTABLISHMENT OF BOARD AND TO REGULATE MATTERS PERTAINING TO LOCAL L EVEL TECHNICAL EDUCATION IN ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 3 THE STATE OF MAHARASHTRA. THEREFORE, MAHARASHTRA ST ATE BOARD OF TECHNICAL EDUCATION BOARD I.E. THE ASSESSEE BOARD WAS SET UP BY STATE GOVERNMENT. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS N OT FILED ANY RETURN OF INCOME. THE ASSESSING OFFICER ON THE BASIS OF INFO RMATION AVAILABLE IN ITD/ITS NOTED THAT ASSESSEE BOARD HAS RECEIVED PROF ESSIONAL CHARGES OF RS. 4,45,23,848/- ON WHICH TAX WAS DEDUCTED AT SOURCE ( TDS) DEDUCTOR. AS NO RETURN WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSING OFFICER RECORD REASONS FOR REOPENING AND ISSUED NOTICE UNDER SECTION 148 ON 06 TH MARCH 2013. IN RESPONSE TO THE NOTICE UNDER SECTIO N 148 THE ASSESSEE FILED ITS REPLY ON 13 TH JANUARY 2014 AND CLAIMED THAT ASSESSEE BOARD WAS CREATED UNDER THE ACT OF STATE LEGISLATUR E, THEREFORE THE ASSESSEE IS STATUTORY BOARD AND IS NOT FILING RETURN OF INCO ME. THE ASSESSEE ALSO CONTENDED THAT THE ASSESSEE BOARD WAS SET UP BY TH E STATE GOVERNMENT BY ENACTING LAW FOR THE BENEFIT OF THE PEOPLE AT LARG E AND ITS INCOME IS NOT CHARGEABLE TO TAX AS PER THE PROVISIONS OF SECTION 10(46) OF THE ACT, HENCE THE ASSESSEE BOARD IS NOT FILING RETURN OF INCOME. 3. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 1 42(1) DATED 01.01.2014 AND REQUIRED CERTAIN INFORMATION IN WRITING AND IN THE PRESCRIBED MANNER, WHICH INCLUDES RETURN OF INCOME FOR RELEVANT ASSESS MENT YEAR, PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31 ST MARCH 2010, COMPLETE DETAILS OF INCOME/ RECEIPT OF MONEY DURING FINANCIAL YEAR 2009-10 AS A PPEARING IN THE FORM NO.26AS SHOWN IN NSDL WEB SITE. THE ASSESSEE FURNIS HED THE COPIES OF THE ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 4 ACCOUNT AND FURTHER EXPLAINED THAT THE ASSESSEE BOA RD IS STATE AND BY VIRTUE OF ARTICLE 289 OF THE CONSTITUTION OF INDIA AND ITS INCOME IS EXEMPT FROM THE UNION TAXES INCLUDING INCOME TAX, THEREFOR E THE RE-ASSESSMENT PROCEEDINGS BE DROPPED. THE SUBMISSIONS OF THE ASSE SSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND ASKED TO FURNISH THE D ETAILS OF THE EXPENSES. THE ASSESSING OFFICER ALSO REQUIRED THE COPY OF THE BYL AWS OF THE ASSESSEE BOARD, COPY OF THE GAZETTE NOTIFICATION OF GOVERNMENT OF M AHARASHTRA, DETAILS OF THE BOARD/ COMMITTEE MEMBERS AND THEIR PAN NOS. THE ASSESSING OFFICER ALSO MENTIONED THAT SECTION 10(46) INTRODUCED WITH EFFECT FROM 01.06.2011, THUS NO EXEMPTION CAN BE CLAIMED FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FURNISHED THE DETAILS OF THE GOVERNING COU NCIL OF THE ASSESSEE BOARD. THE ASSESSING OFFICER ALSO ASKED THE ASSESS EE TO PROVIDE IF THE ASSESSEE HAS OBTAINED ANY NOTIFICATION OF CENTRAL G OVERNMENT UNDER SECTION 10(46) OF THE INCOME TAX ACT. THE ASSESSEE FILED ITS REPLY ON 20 TH MARCH 2014 AND REITERATED THE EARLIER SUBMISSION AND ASSE SSEE ALSO CONTENDED THAT THE OBJECTION OF THE ASSESSEE HAS NOT BEEN REJECTED EXPRESSLY. THE ASSESSING OFFICER COMMUNICATED TO THE ASSESSEE THAT THE OBJEC TION FILED BY THE ASSESSEE HAS BEEN DISPOSED OF 24 MARCH 2014. 4. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESS EE IS HAVING SURPLUS OF RS. 22,70,58,574/- AND FIXED DEPOSITS OF RS. 96,30,23, 412/-. THE ASSESSEE HAS RECEIVED VERY MEAGER GRANT FROM GOVERNMENT AND THE MAJORITY OF THE RECEIPT IS COLLECTED FROM STUDENTS AND OTHER AS FEES AND OT HER CHARGES. THE SURPLUS IS ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 5 NOT UTILIZED FOR THE PURPOSE OF BENEFITS OF GENERAL PUBLIC AND IS LYING EITHER IN FIXED DEPOSITS OR OTHER ASSET. THE ASSESSING OFFIC ER ALSO NOTED THAT THE ASSESSEE BOARD HAS PAID SALARY AND WAGES OF RS. 6,1 6,34,690/-, SECURITY EXPENSES RS. 19,50,733/- AND PROFESSIONAL SPECIAL C HARGES OF RS.10,70,617/- AND ASKED IF TDS HAS BEEN MADE. THE ASSESSEE WAS SHOW CAUSED THAT THE EXPENSES ARE NOT ALLOWABLE UNDER SE CTION 40(A)(IA) ID NO TDS IS MADE ON THE PAYMENTS OF SECURITY EXPENSES, PROFE SSIONAL EXPENSES AND ON WAGE AND SALARY EXPENSES. 5. THE ASSESSING OFFICER ALSO TOOK HIS VIEW THAT THE A SSESSEE HAS COLLECTED RECEIPT OF RS.62,78,18,482/-. AGAINST THE SAID INCO ME THE ASSESSEE HAS SHOWN EXPENSES OF RS. 34,92,38,418/- AND THUS NET S URPLUS ID RS. 27,85,80,064/-, WHICH CLEARLY INDICATES THAT THE AS SESSEE IS COLLECTING FEE WHICH IS COST PLUS 55.62%. THE NET MARGIN ON RECEIP T COLLECTED IS 44.37%, THEREFORE, THE ASSESSEE IS DERIVING PROFITS FROM IT S ACTIVITIES. THE ASSESSING OFFICER TREATED THE NET SURPLUS OF RS. 27,85,80,064 /- AS INCOME OF THE ASSESSEE, OUT OF WHICH RS. 19,41,42,060/- WAS TREAT ED AS INCOME UNDER THE HEAD INCOME FROM BUSINESS AND RS. 8,44,38,004/- EARNED BY ASSESSEE ON ACCOUNT OF INTEREST WAS TREATED AS INCOME FROM OT HER SOURCES. THE ASSESSEE HAS PAID PROFESSIONAL FEE OF RS. 10,70,71, 617/- OUT OF WHICH THE ASSESSEE BOARD DEDUCTED TDS ONLY ON THE AMOUNT OF R S. 7,09,62,719/- ONLY, AND ON REMAINING AMOUNT OF RS. 3,62,08,901/- THE AS SESSEE FAILED TO DEDUCT TAX AT SOURCE. THUS, THE SAID SUM OF RS. 3,62,08,9 01/- WAS DISALLOWED BY ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 6 ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE AC T. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER UNDER SECTION 144 OF TH E ACT ON 28.03.2014. 6. ON APPEAL BEFORE LD. CIT (A) THE ACTION OF THE ASSE SSING OFFICER WAS CONFIRMED. THE LD. CIT (A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON SIMILAR VIEW AS OF ASSESSING OFFICER. THUS, FURTHER AGGRIEVED BY THE ORDER OF THE LD. CIT (A) THE ASSESSEE HAS FILED PRESENT APPE AL BEFORE THIS TRIBUNAL. 7. WE HAVE HEARD THE SH. GIRISH DAVE ADVOCATE; ASSISTE D BY SH. TANZIL R. PADVEKAR ADVOCATE HEREINAFTER REFERRED AUTHORIZED R EPRESENTATIVE (AR) FOR ASSESSEE AND SH. SUNIL KUMAR JHA LD. CIT- DR & SH. MANISH KUMAR SINGH SR DR HEREINAFTER CALLED DEPARTMENTAL REPRESENTATIV E (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR FOR THE ASSESSEE SUBMITS THAT UNDER BONAFIDE MISTAKEN BELIEF THAT TH E ASSESSEE IS EXEMPTED FROM FILING RETURN OF INCOME, THE ASSESSEE HAS NOT FILE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. A R FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE BOARD /MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION (MSBTE) IS SET UP BY MAHARASHTRA STATE GO VERNMENT UNDER THE MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION ACT, 1997, HEREINAFTER REFERRED AS STATE ACT THE COPY OF THE ACT IS FILE D ON RECORD. THE STATE GOVERNMENT BOARD OF TECHNICAL EDUCATION IS SIMILAR TO MANY OTHER GOVERNMENT DEPARTMENTS. THE LD. AR FOR THE ASSESSE E ALSO HAS TAKEN US THROUGH VARIOUS SECTIONS OF THE STATE ACT. AS PER SECTION 5, THE BOARD CONSISTS OF THE DIRECTOR, TECHNICAL EDUCATION, MAHA RASHTRA STATE AS THE ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 7 CHAIRMAN; THE DIRECTOR MAHARASHTRA STATE BOARD OF T ECHNICAL EDUCATION AS THE MEMBER SECRETARY AND THE OTHER MEMBERS, NAMELY EX-OFFICIO MEMBERS CONSISTING OF (I) THE CHAIRMAN OF THE MAHARASHTRA S TATE BOARD OF SECONDARY AND HIGHER SECONDARY EDUCATION OR HIS NOMINEE NOT B ELOW THE RANK OF THE CHAIRMAN OF THE DIVISIONAL BOARD; (II) THE DIRECTOR OF INDUSTRIES, MAHARASHTRA STATE OR HIS NOMINEE NOT BELOW THE RANK OF JOINT DIRECTOR; (III) ONE REPRESENTATIVE OF THE STATE NODAL CENTRE OF NAT IONAL TECHNICAL MANPOWER INFORMATION SYSTEM; (IV) THE REGIONAL OFFI CER (WESTERN REGION) OF ALL INDIA COUNCIL OF TECHNICAL EDUCATION, NEW DE LHI; (V) THE DIRECTOR, BOARD OF APPRENTICESHIP TRAINING (WESTERN REGION), GOVERNMENT OF INDIA, MINISTRY OF HUMAN RESOURCES DEVELOPMENT,(VI) THE JO INT SECRETARY TO GOVERNMENT, HIGHER AND TECHNICAL EDUCATION DEPARTME NT OR HIS NOMINEE NOT BELOW THE RANK OF DEPUTY SECRETARY. NOMINATED M EMBERS (I) ONE SENIOR MOST PRINCIPAL FROM GOVERNMENT ENGINEERING COLLEGES IN THE STATE TO BE NOMINATED BY THE GOVERNMENT. (II) TWO MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM AMONGST THE PRINCIPALS AND HEADS OF INSTITUTES, ONE EACH FROM GOVERNMENT OR AIDED AND UN-AIDED POLYTECHNICS, OF WHICH AT LEAST ONE SHALL BE A WOMAN, (III) TWO MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM AMONGST THE TEACHERS, ONE EACH FROM GOVERNMENT OR AIDED AND UN- AIDED POLYTECHNICS, OF WHOM AT LEAST ONE SHALL BE F ROM BACKWARD CLASS COMMUNITY,(IV) THREE MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM THE PROFESSIONAL BODIES, ONE FROM EACH REVENUE REGI ON BY ROTATION. (V) SIX ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 8 MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM AMON GST THE ASSOCIATIONS OF INDUSTRIES, WHO ARE ENTREPRENEURS OF SMALL SCALE INDUSTRIES, INFORMATION TECHNOLOGY, BIOTECHNOLOGY, GEMS AND JEWELLERY, PHAR MACY AND HOTEL MANAGEMENT, AT LEAST TWO OF WHOM S HALL BE FROM OUT OF THE MUMBAI AND PUNE REGIONS. 8. IT WAS SUBMITTED THAT AS PER SECTION 7 A OF THE STA TE ACT, THE GOVERNMENT SHALL, BY NOTIFICATION IN THE OFFICIAL GAZETTE ESTA BLISH THE GOVERNING COUNCIL WHICH SHALL BE AN PERTAINING TO DIPLOMA LEVEL TECHN ICAL. AND AS PER THE ABOVE MENTIONED CLAUSE, THE GOVERNING COUNCIL SHALL CONSIST OF THE FOLLOWING; (I) THE MINISTER OF HIGHER AND TECHNICAL EDUCATION MAHA RASHTRA STATE AS PRESIDENT; (II) THE MINISTER OF STATE FOR HIGHER AND TECHNICAL EDUC ATION AS VICE- PRESIDENT; (III) MEMBERS OF THE GOVERNING COUNCIL. 9. THE POWERS AND DUTIES ARE DEFINED UNDER SECTION 22 OF THE ACT, WHICH ARE AS (A) TO ADVICE THE GOVERNMENT ON MATTERS OF POLICY R ELATING TO DIPLOMA LEVEL TECHNICAL EDUCATION IN GENERAL, AND IN PARTIC ULAR NAMELY; (I) CO- ORDINATION BETWEEN NATIONAL POLICIES AND STATE POLI CIES IN DIPLOMA LEVEL TECHNICAL EDUCATION; (II) CO-ORDINATION BETWEEN SEC ONDARY, HIGHER SECONDARY, DEGREE EDUCATION AND DIPLOMA LEVEL EDUCA TION; (III) TO MAINTAIN UNIFORM STANDARD OF DIPLOMA LEVEL TECHNICA L EDUCATION, (IV) TO PROMOTE INDUSTRY INSTITUTE INTER-ACTION; ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 9 (B) TO LAY DOWN GUIDING PRINCIPLES FOR DETERMINING CURRICULA AND SYLLABI AND ALSO TO PREPARE THE DETAILED CURRICULA AND SYLLABI FOR DIPLOMA LEVEL TECHNICAL EDUCATION, FOR ALL CATEGORIES, SUCH AS, R EGULAR, SANDWICH, PART-TIME. CORRESPONDENCE COURSE, YEARLY, SEMESTER PATTERN AND THE LIKE; (C) . (D) TO PRESCRIBE AND DEVELOP ANY BOOK AS TEXT BOOK AND REFERENCE BOOK OR TO PREPARE OR CAUSE TO BE PREPARED ANY BOOK AND PRINT OR NON-PRINT MATERIAL OR TO PUBLISH DIRECTLY OR IN COLLABORATION WITH ANY OT HER AGENCY. ANY KIND OF LEARNING MATERIAL FOR DIPLOMA LEVEL COURSES. (E) TO PRESCRIBE THE GENERAL CONDITIONS GOVERNING A DMISSION OF REGULAR CANDIDATES AND EX-CANDIDATES TO THE EXAMINATIONS AN D TO SPECIFY THE CONDITIONS RELATING TO ELIGIBILITY, ATTENDANCE, TER M-WORK AND CHARACTER, ON THE FULFILLMENT OF WHICH A CANDIDATE SHALL HAVE A RIGHT TO BE ADMITTED TO AND TO APPEAR AT ANY SUCH EXAMINATION; (F).. (G).. (H) TO CALL FOR SPECIAL REPORTS AND INFORMATION FRO M THE DIRECTOR OF TECHNICAL EDUCATION OR FROM OFFICERS OF THE TECHNIC AL EDUCATION DEPARTMENT OF THE GOVERNMENT, AND TO CALL FOR ANY I NFORMATION FROM ANY DIPLOMA LEVEL INSTITUTION, RECOGNIZED BY THE. BOARD TO ENSURE MAINTENANCE AND IMPROVEMENT IN ACADEMIC STANDARD IN DIPLOMA LEV EL TECHNICAL EDUCATION; ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 10 (I) TO APPOINT SUCH COMMITTEES AS IT MAY THINK NECE SSARY FOR THE EFFICIENT DISCHARGE OF ITS FUNCTIONS UNDER THIS ACT; TO FIX D EMAND AND RECEIVE SUCH FEES AND PENALTIES AS MAY BE PRESCRIBED; (J) TO FIX DEMAND AND RECEIVE SUCH FEES AND PENALTI ES AS MAY BE PRESCRIBED, (K) TO MAKE REGULATIONS FOR THE PURPOSE OF CARRYING OUT EFFECTIVELY THE PROVISIONS OF THIS ACT; (L) TO MAKE BYE-LAWS RELATING TO MATTE .SUCH AS PRO CEDURE TO BE FOLLOWED BY THE BOARD, THEIR COMMITTEES A ANY OTHER MATTER SOLE LY CONCERNING THE BOARD AND THEIR COMMITTEES THAT ARE NOT PROVIDED FOR BY O R UNDER THIS ACT AND THE REGULATIONS MADE THERE UNDER; (M) TO EXERCISE SUCH OTHER POWERS AN CONFERRED OR I MPOSED ON IT BY OR UNIFORM SUCH OTHER DUTIES AS MAY BEER THIS ACT; (N) TO MAKE REGULATION WITH THE APPROVAL OF THE GOV ERNING COUNCIL FOR GRANTING OF ACADEMIC AUTONOMY TO INSTITUTE, REVIEWI NG OR REVOKING OF AUTONOMY GRANTED; (O) TO CARRY OUT ALL SUCH ACTS AS MAY BE NECESSARY TO ACHIEVE THE OBJECTIVE OF THIS ACT SO AS TO IMPROVE, EXISTED, EXPAND THE DIPL OMA LEVEL TECHNICAL EDUCATION IN THE STATE AND TO MAINTAIN AND IMPROVE STANDARD OF DIPLOMA LEVEL TECHNICAL EDUCATION; (P) TO MAKE REGULATION FOR GRANTING AFFILIATION, AC CREDITATION, AUTONOMOUS STATUS, EQUIVALENCE, ELIGIBILITY INSTITUTES AND REV IEWING OR REVOKING AFFILIATION OR ACCREDITATION OR EQUIVALENCE, OR AUTONOMOUS STAT US OR ELIGIBILITY; ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 11 (Q) TO CONDUCT THE EXAMINATIONS OF THE BOARD; . .. (ZB) TO ADMIT CANDIDATES FOR THE EXAMINATION ACCORD ING TO THE REGULATIONS; (ZH) TO CALL FOR ANY INFORMATION FROM ANY DIPLOMA L EVEL INSTITUTIONS RECOGNIZED BY IT TO ENSURE MAINTENANCE OF ACADEMIC STANDARD, TO CALL FOR SPECIAL REPORTS, AND INFORMATION FROM THE REGIONAL JOINT DIRECTOR OF TECHNICAL EDUCATION CONCERNED ON DIPLOMA LEVEL INST ITUTORS RECOGNIZED BY IT BUT NOT MARINATING THE REQUIRED ACADEMIC STANDAR D AND TO RECOMMEND TO THE DIRECTORATE OF TECHNICAL EDUCATION, WITHDRAWAL OF RECOGNITION GRANTED UNDER THE ADMINISTRATIVE ORDER OF THE TECHNICAL EDU CATION DEPARTMENT OF THE GOVERNMENT, IN CASES OF POOR ACADEMIC RESULTS AND G RAVE ACADEMIC IRREGULARITIES.; (ZI) TO REQUIRE INSTITUTIONS RECOGNIZED BY THE TECH NICAL EDUCATION DEPARTMENT OF THE GOVERNMENT TO EXTEND THEIR CO-OPE RATION IN THE CONDUCT OF THE EXAMINATION AND TO WITHDRAW THE PRIVILEGES OF T HE BOARD FROM ANY INSTITUTION, WHICH FAILS TO PLACE AT ITS DISPOSAL T HE FACILITIES REQUIRED TO CONDUCT EXAMINATION AFTER GIVING IT 8 REASONABLE OP PORTUNITY OF SHOWING CAUSE WHY SUCH ORDERS SHOULD NOT BE-MADE; AND (ZL) TO CREATE, OWN, HOLD OR HIRE ANY PROPERTY OR I NFRASTRUCTURE REQUIRED FOR- (I) FUNCTIONING OF BOARD OFFICE, (II) FUNCTIONING O F REGIONAL OFFICES, (III) PROVIDING RESIDENTIAL ACCOMMODATION TO OFFICERS AND STAFF OF THE BOARD; (ZK) TO PLAN AND MONITOR ACADEMIC PERFORMANCE; ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 12 (ZI) TO PROPOSE THE NEED-BASED COURSES, SPECIAL COU RSES FOR SELF-EMPLOYMENT, COURSES FOR RURAL, DEPRIVED PERSONS AND WOMEN; (ZM) TO PROPOSE TO CONFER AUTONOMY FOR DESERVING IN STITUTIONS SECTION 36 OF THE STATE ACT PROVIDES THAT ALL PROPE RTY, FUND AND OTHER ASSETS VESTING IN THE BOARD SHALL BE HELD AND APPLIED BY I T, SUBJECT TO THE PROVISIONS AND FOR THE PURPOSES OF THIS ACT. 10. SECTION 40 OF THE STATE ACT PRESCRIBED THAT THE BO ARD SHALL PAY, FROM TIME TO TIME, TO EACH REGIONAL OFFICE SUCH SUMS AS THE BOAR D MAY DETERMINE, FOR ENABLING THE REGIONAL OFFICES TO DISCHARGE THE DUTI ES AND FUNCTIONS IMPOSED ON THEM BY THE BOARD FOR COMPLETION OF WORKS OR DEV ELOPMENT SCHEME WITHIN ITS JURISDICTION, WHICH ARE NOT INCONSISTENT WITH THIS ACT. THE LD AR FOR THE ASSESSEE FURTHER SUBMITS THAT AS PER SECTIO N 51 OF THIS ACT, NO SUIT, PROSECUTION, OR OTHER LEGAL PROCEEDINGS SHALL LIE A GAINST THE GOVERNMENT, (THE GOVERNING COUNCIL) THE BOARD OR THE MEMBERS OR ANY OFFICER OR SERVANT OF THE GOVERNMENT (OR OF THE GOVERNING COUNCIL), OR OF THE BOARD FOR ANYTHING WHICH IS IN GOOD FAITH DONE OR PURPORTED OR INTENDE D TO BE DONE IN PURSUANCE OR THIS ACT OR ANY REGULATIONS OR BYE-LAWS. AS PER SECTION 52 OF STATE ACT, ALL MEMBERS, OFFICERS AND EMPLOYEES OF THE BOARD SHALL, WHEN ACTING OR PURPORTING TO ACT IN PURSUANCE ON ANY OF THE PROVIS IONS OF THIS ACT, BE DEEMED TO BE PUBLIC SERVANTS WITHIN THE MEANING OF SECTION 21 OF THE INDIAN PENAL CODE. ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 13 11. IT WAS ARGUED THAT FROM THE ABOVE CLAUSES OF THE AC T, AMONGST OTHERS AND UPON PERUSAL OF THE MAHARASHTRA STATE BOARD OF TECH NICAL EDUCATION, ACT 1997(MSBTE), IT CAN BE OBSERVED THAT ON FACTS AND I N THE CIRCUMSTANCES THAT (A) BOARD IS THE ARM OF THE MAHARASHTRA STATE GOVER NMENT, FORMED SOLELY FOR THE PURPOSE OF ADMINISTRATION OF THE TECHNICAL EXAN IMATIONS TO BE CONDUCTED BY MAHARASHTRA STATE GOVERNMENT IN THE INTEREST OF GENERAL PUBLIC IN THE STATE OF MAHARASHTRA. (B) THE BOARD IS AN AUTHORITY CONSTITUTED BY AN ENACTMENT FOR ADMINISTERING AND MANAGING THE TECHNI CAL EXAMINATIONS TO BE CONDUCTED BY MAHARASHTRA STATE GOVERNMENT THROUGH M ONITORING FUNDS AND ACTIVITIES OF ITS REGIONAL OFFICES OF THE STATE OF MAHARASHTRA. (C) BOARD HAS TO DISCHARGE THE FUNCTION ON BEHALF OF THE MAHARASHTRA STATE GOVERNMENT IN THE PUBLIC INTEREST. (D) ACTIVITY OF THE BOARD IS NOT O F BUSINESS OR OF TRADING. THE SURPLUS OF THE BOARD IS UTILIZED FOR CREATING INFRA STRUCTURE IN THE STATE AND FOR THE SMOOTH FUNCTIONING OF ITS REGIONAL OFFICES AND PAYMENTS TO REGIONAL OFFICES FOR DISCHARGING DUTIES AND FUNCTIONS BY THE BOARD. (E) ACCOUNTS OF THE BOARD (AS REQUIRED IN THE ACT GOVERNING 1HE BOA RD), ARE SUBJECT TO AUDIT AND ARE REQUIRED TO BE PLACED BEFORE THE STATE LEGI SLATURE FOR APPROVAL. (F) THE APPELLANT BOARD IS INVESTED WITH SOVEREIGN POWE R TO MAKE RULES AND REGULATIONS REGARDING HIGHER TECHNICAL EDUCATION AN D TO ADMINISTER AND ENFORCE THEM TO THE DETRIMENT OF CITIZENS AND OTHER S. 12. THE LD. AR SUBMITS THAT FROM THE ABOVE FACTS THAT T HE APPELLANT IS A 'STATE' AND IS FULLY COVERED BY THE PROVISIONS OF ARTICLE 2 89 OF THE CONSTITUTION OF ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 14 INDIA, WHICH IS THE SUPREME LAW IN INDIA. OUR ATTEN TION IS INVITED TO ARTICLE 289, UNDER PART XII UNDER THE HEADING 'FINANCE, PRO PERTY, CONTRACTS AND SUITS', CHAPTER I- FINANCE, MISCELLANEOUS FINANCIAL PROVISIONS OF THE CONSTITUTION OF INDIA- STATES THAT PROPERTY AN D IN COME OF A STATE IS EXEMPT FROM UNION TAXATION. THE LD AR FOR THE ASSESSEE AL SO TAKEN US THROUGH THE ARTICLE 289, WHICH IS REPRODUCED HEREUNDER FOR REFE RENCE: ARTICLE NO. 289 (1) THE PROPERTY AND INCOME OF A STATE SHALL BE EX EMPT FROM UNION TAXATION. (2) NOTHING IN CLAUSE (1) SHALL PREVENT THE UNION F ROM IMPOSING, OR AUTHORIZING THE IMPOSITION OF, ANY AX 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 GOVERNMENT OF A STATE, OR ANY OPERATIONS CONNECTED THEREWITH, OR ANY PROPERTY USE D OR OCCUPIED FOR TL1E PURPOSES OF SUCH TRADE OR BUSINESS, OR ANY INC OME ACCRUING OR ARISING IN CONNECTION THEREWITH. (3) NOTHING IN CLAUSE (2) SHALL APPLY TO ANY TRADE OR BUSINESS, OR TO ANY CLASS OF TRADE OR BUSINESS, WHICH PARLIAMENT MAY BY LAW D ECLARE TO BE INCIDENTAL TO THE ORDINARY FUNCTIONS OF GOVERNMENT. ' 13. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT ARTIC LE 289 EXEMPTS STATE INCOME OR PROPERTY FROM TAXATION. ON PLAIN READING OF ABOVE ARTICLE IT IS CLEAR THAT UNION CAN (I) ITSELF IMPOSE OR AUTHORIZE TO IMPOSE (II) ANY TAX TO SUCH EXTENT, AS PARLIAMENT MAY BY LAW PROVIDE (III) IN RESPECT OF A TRADE OR BUSINESS OF ANY KIND CARRIED ON OR ON BEHALF OF GOV ERNMENT OF A STATE. IN THE ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 15 CASE OF THE APPELLANT NO SUCH TAXATION IS PRESCRIBE D BY THE UNION OR AUTHORIZED BY THE UNION. 14. THE LD COUNSEL SUBMITS THAT ON PERUSAL OF THE ARTIC LE 289 (2), WHICH IS THE EXCEPTION TO 289(1), IT IS IMPORTANT TO NOTE THAT P ARLIAMENT BY LAW PROVIDE TO TAX THE PROPERTY OR INCOME IN RELATION TO ONLY TRAD E 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 USED OR OCCUPI ED FOR THE PURPOSES OF SUCH TRADE OR BUSINESS, OR ANY INCOME ACCRUING OR A RISING IN CONNECTION THEREWITH. THE NATURE OF ACTIVITY OF THE APPELLANT IS NEITHER TRADING NOR OF BUSINESS OF ANY GOODS OR SERVICES. APPELLANT IS A B ODY ENTRUSTED WITH THE RESPONSIBILITY OF ADMINISTRATION OF TECHNICAL EDUCA TION DEPARTMENT OF THE STATE OF MAHARASHTRA. THE ASSESSEE ONLY COLLECTS TH E FEES AND PENALTIES ON BEHALF OF THE GOVERNMENT HAVE DECIDED BY THE GOVERN ING COUNCIL OF THE ASSESSEE, WHICH IS CHAIRED BY MINISTER OF EDUCATION GOVT. OF MAHARASHTRA. THEREFORE, AT NO POINT OF TIME ADMINISTRATION ACTIV ITY CAN BE TREATED AS TRADE OR BUSINESS. THERE IS NO TRADE OR BUSINESS CARRIED ON BY THE APPELLANT. MERE TEMPORARY SURPLUS AROSE AS THE SAID ALLEGED SURPLUS IS NOT YET SPENT ON VARIOUS OBJECTS OF THE APPELLANT DOES NOT MEAN THE SURPLUS BECOMES FROM TRADE OR BUSINESS. THEREFORE, UNLESS IT IS SHOWN TH AT THE APPELLANT IS CARRYING ON TRADE OR BUSINESS AND PARLIAMENT BY LAW HAS PROV IDED TO TAX SUCH ACTIVITY, NO TAX CAN BE LEVIED. ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 16 15. IT WAS ARGUED THAT MEANING OF STATE AS PER CONSTITU TION OF INDIA ARTICLE 12 OF CONSTITUTION THE WORD 'STATE' HAS DIFFERENT MEANING S DEPENDING UPON THE CONTEXT IN WHICH IT IS USED. THE EXPRESSION 'THE ST ATE' WHEN USED IN PARTS III & IV OF THE CONSTITUTION IS NOT CONFINED TO ONL Y THE FEDERATING STATES OR THE UNION OF INDIA OR EVEN TO BOTH. BY THE EXPRESS TERMS OF ARTICLE 12, THE EXPRESSION 'THE STATE' INCLUDES: 1. THE GOVERNMENT AND THE PARLIAMENT OF INDIA; 2. THE GOVERNMENT AND LEGISLATURE OF EACH STATE. 3. ALL LOCAL OR OTHER AUTHORITIES WITHIN THE TERRIT ORIES OF INDIA. 4. ALL LOCAL AND OTHER AUTHORITIES UNDER THE CONTRO L OF THE GOVERNMENT OF INDIA. 16. THE TERM 'STATE' THUS INCLUDES EXECUTIVE AS WELL AS THE LEGISLATIVE ORGANS OR THE 'AUTHORITIES' OF THE UNION & STATES. FURTHER, I T MAY BE NOTED THAT ACCORDING WEBSTERS DICTIONARY 'AUTHORITY' MEANS A PERSON OR BODY EXERCISING POWER TO COMMAND. IN THE CONTEXT OF ARTI CLE 12 THE WORD 'AUTHORITY' MEANS THE POWER TO MAKE LAWS, ORDERS, R EGULATIONS, BYE-LAWS, NOTIFICATION ETC WHICH HAVE THE FORCE OF LA AND POW ER TO ENFORCE THOSE LAWS. FURTHER 'LOCAL AUTHORITIES' AS DEFINED IN SEC ION 3 (31) OF THE GENERAL CLAUSES, ACT REFERS TO AUTHORITIES LIKE MUNICIPALIT IES, DISTRICT BOARDS, PANCHAYATS, IMPROVEMENT TRUST AND MINING SETTLEMENT BOARDS. 17. IN ARTICLE 12 THE EXPRESSION 'OTHER AUTHORITIES' IS USED AFTER MENTIONING A FEW OF THEM SUCH AS, THE GOVERNMENT, PARLIAMENT OF INDI A, THE GOVERNMENT AND LEGISLATURE OF EACH OF THE STATES AND ALL LOCAL AUT HORITIES. IN ARTICLE 12 THE BODIES SPECIFICALLY NAMED ARE THE GOVERNMENT OF THE UNION AND THE STATES, ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 17 THE LEGISLATURE OF THE UNION AND THE STATES AND LOC AL AUTHORITIES. THERE IS NO COMMON GENUS RUNNING THROUGH THESE NAMED BODIES NOR CAN THESE BODIES SO PLACED IN ONE SINGLE CATEGORY ON ANY RATIONAL BASIS . 18. THE LD COUNSEL FOR ASSESSEE SUBMITS THE DECISION O F HONBLE APEX COURT IN ELECTRICITY BOARD, RAJASTHAN V. MOHAN LAL (AIR 1967 RAJ 1857), WHEREIN THE HONBLE SUPREME COURT HELD THAT THE EXPRESSION 'OTHER AUTHORITIES' IS WIDE ENOUGH TO INCLUDE ALL AUTHORITIES CREATED BY T HE CONSTITUTION OR STATUE ON WHOM POWERS ARE CONFERRED BY LAW. IT IS NOT NECE SSARY THAT THE STATUTORY AUTHORITY SHOULD BE ENGAGED IN PERFORMING GOVERNMEN TAL OR SOVEREIGN FUNCTION. IN EFFECT THE RAJASTHAN ELECTRICITY BOARD 'S DECISION HAS OVERRULED THE DECISION OF THE MADRAS HIGH COURT IN SANTA BAI S CASE, HOLDING A UNIVERSITY NOT TO BE THE 'STATE'. AND FINALLY, THE PATNA HIGH COURT, FOLLOWING THE DECISION OF THE SUPREME COURT, HAS HELD THAT TH E PATNA UNIVERSITY IS 'A STATE'. MATHEW, J. IN A SEPARATE BUT CONCURRING JUD GMENT PREFERRED A BROADER TEST THAT IF THE FUNCTIONS OF THE CORPORATION ARE O F PUBLIC IMPORTANCE AND CLOSELY RELATED TO GOVERNMENTAL FUNCTIONS IT SHOULD BE TREATED AN AGENCY OR INSTRUMENTALITY OF GOVERNMENT AND HENCE A 'STATE' W ITHIN THE AMBIT OF ARTICLE 12 OF THE CONSTITUTION. 19. THE DEFINITION OF THE EXPRESSION 'THE STATE' IN ART ICLE 12 IS USED IN THE CONCEPT OF THE STATE IN RELATION TO THE FUNDAMENTAL RIGHTS GUARANTEED BY PART III OF THE CONSTITUTION AND THE DIRECTIVE PRINCIPLE S OF STATE AS ABOVE. POLICY CONTAINED IN PART IV OF THE CONSTITUTION WHICH PRIN CIPLES ARE DECLARED BY ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 18 ARTICLE 37 TO BE FUNDAMENTAL TO THE GOVERNANCE OF T HE COUNTRY AND ENJOINS UPON THE STATE TO APPLY MAKING LAWS. THE STATE IS A N ABSTRACT ENTITY AND IT CAN, THEREFORE ONLY SET THROUGH ITS AGENCIES OR INS TRUMENTALITIES, WHETHER SUCH AGENCY OR INSTRUMENTALITY IS HUMAN OR JURISTIC . 20. THE LD. AR FURTHER SUBMITS THAT SO FAR AS EXEMPTION UNDER SECTION 10 OF THE ACT IS CONCERNED, IT WAS SUBMITTED THAT WITH THE OM ISSION OF CLAUSE (20) OF SECTION 10, INCOME OF SUCH LOCAL AUTHORITIES WERE S UBJECT TO TAX WHICH ARE ENGAGED IN THE BUSINESS ACTIVITIES OR RUNNING WITH PROFIT MOTIVE. HOWEVER, ON INSERTION OF CLAUSE (46) TO SECTION 10 OF THE AC T BY FINANCE ACT 2011 W.E.F. 01.06.2011. ON APPLICATION MADE TO THE BOARD , THE CBDT VIDE ITS NOTIFICATION PUBLISHED IN THE GAZETTE OF INDIA DATE D 29.03.2016 NOTIFIED THE STREAMS OF INCOME DISCLOSED BY THE BOARD IN ITS RET URN OF INCOME AS EXEMPT FOR THE PURPOSE OF CLAUSE (46) OF THE SECTION 10 OF THE ACT. THE NOTIFICATION MADE BY CBDT COVERS ASSESSMENT YEARS 2015-16 TO 201 8-19 BUT THAT WOULD NOT TAKE AWAY THE STATUS OF ASSESSEE STATE WITHIN THE MEANING OF ARTICLE-12 R.W. ARTICLE 289 OF THE CONSTITUTION OF INDIA. THE CBDT HAS SPECIFICALLY EXEMPTED CERTAIN INCOME BY WAY OF THIS NOTIFICATION. THERE IS NO CHANGE IN THE ACTIVITIES OF THE ASSESSEE SINCE INCE PTION WHICH ESTABLISHES THE FACT THAT THE ASSESSEE WAS NEVER INTO THE BUSINESS OF COMMERCIAL ACTIVITIES. ONCE THE CBDT FOUND AND EXEMPTED VARIOUS STREAM OF INCOME AS EXEMPTED IN CASE OF ASSESSEE, ALL SUCH ACTIVITIES ARE COVERE D BY NOTIFICATION MUST BE TREATED AS EXEMPTED. THE SOURCE OF INCOME OF ASSESS EE CONSISTS OF GRANT FROM ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 19 STATE GOVERNMENT, FEES COLLECTED FROM CANDIDATE TO APPEAR IN VARIOUS EXAMINATIONS, RECEIPT FROM PRINTED EDUCATION MATERI AL, RECEIPT FROM OTHER GOVERNMENT BODIES FOR CONDUCTING COURSES AND EXAMS LIKE COMMON ENTRANCE TEST (CET) OR INTEREST ON DEPOSITS. NONE O F THESE ITEMS CAN BE SAID TO BE CARRYING OF ANY ACTIVITIES IN THE NATURE OF T RADE, COMMERCE OR BUSINESS. THE ASSESSEE IS NOT RENDERING ANY SERVICES IN THE N ATURE OF TRADE, COMMERCE OR BUSINESS FOR A FEES OR ANY OTHER CONSIDERATION. THE ASSESSEE ENGAGED IN REGULATION OF EDUCATIONAL ACTIVITIES. IN SUPPORT OF HIS SUBMISSION THE LD AR FOR THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN NOVOPAN INDIA LTD. VS. COLLECTOR OF CENTRAL EXCISE AND CUSTOMS HYDERABAD [1994 SUPP. (3) SCC 606], FOR THE PREPOSITION THAT ONCE THE PROVISION IS FOUND APPLICABLE TO A SUBJECT, FULL EFFECT I.E. LIB ERAL INTERPRETATION MUST BE GIVEN TO IT AND STRICT CONSTRUCTION OF ANY EXEMPTIO N PROVISION SHOULD BE APPLIED ONLY AT THE THRESHOLD STAGE. THE DECISION O F KOLKATA TRIBUNAL IN NARAYAN RICE MILL VS. CIT (ITA NO. 732/KOL/2015 DAT ED 07.06.2017, DECISION OF PUNE TRIBUNAL IN SMT. SAPNA SANJAY RAIS ONI VS. ITO [2016] 70 TAXMANN.COM 7 (PUNE-TRIB.). 21. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FURTHER SUBMITS THAT NOTHING IS ARGUED BY LD.AR ON RE-OPENING OF THE ASSESSMENT UNDER SECTION 147 OR ON THE ISSUANCE OF NOTICE UNDER SECTION 148. THEREFORE, GROUND NO.1 TO 4 SHOULD BE TREATED AS NOT PRESSED. THE ASSESSEES BOARD WAS SET UP BY THE STATE GOVERNMENT AS A ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 20 BODY CORPORATE, THE ASSESSEE MAY BE SUED OR BE SU ED BY ITS CORPORATE NAME ONLY, IT CANNOT USE THE NAME OF STATE GOVERNME NT. FURTHER, THE ASSESSEES BOARD HAS A RIGHT TO ACQUIRE, HOLD AND D ISPOSE OF PROPERTY OF ITS OWN, WHICH CLEARLY INDICATES THAT THE FUNDS ARE VES TED IN THE ASSESSEES BOARD AND IS INDEPENDENT OF STATE GOVERNMENT. THE A SSESSEES BOARD HAS A RIGHT TO DISPOSE OF MOVABLE AND IMMOVABLE PROPERTY WITHOUT ANY RESTRICTION. THE BOARD IS NOT ESTABLISHED FOR THE PURPOSE OF WEL FARE PEOPLE OF MAHARASHTRA BUT ONLY FOR LIMITED PURPOSE OF SUPERVI SING THE INSTITUTION IMPARTING DIPLOMA AND TECHNICAL EDUCATION. THE ASSE SSEE IS GENERATING HUGE SURPLUS AND KEEPING IT IN FDS AND EARNING INTEREST INCOME. THE ASSESSEES BOARD IS GIVEN EXEMPTION FROM A.Y. 2015-16 ONWARD. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NEITHER APPLIED NOR RECEIVED ANY EXEMPTION AS PROVIDED UNDER SECTION 10(23C) OR UNDER SECTION 12A OR 12AA. THE ASSESSEES BOARD MADE APPLICATION ONLY ON 18.02.201 5 FOR NOTIFICATION UNDER SECTION 10(46) CLAIMING ITS ACTIVITIES AS NON-COMME RCIAL AND FOR THE BENEFIT OF GENERAL PUBLIC. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE APEX COURT IN N EW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY VS. CCIT [2018] 95 TAXMANN.CO M 58 (SC), ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY VS. UNION OF INDIA [2006] 283 ITR 97. 22. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO DELIBERAT ED ON VARIOUS CASE LAWS ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 21 RELIED AND REFERRED BY LOWER AUTHORITIES IN THEIR O RDERS. GROUND NOS. 1 TO 4 RELATES TO RE-OPENING, VIOLATION OF NATURAL JUSTICE , INVALIDITY OF NOTICE UNDER SECTION 148. THE LD. AR OF THE ASSESSEE HAS NOT MAD E ANY SUBMISSION AGAINST THESE GROUNDS OF APPEAL. THEREFORE, GROUND NOS.1 TO 4 ARE TREATED AS NOT PRESSED AND RESULTANTLY DISMISSED BEING NOT PRESSED . 23. GROUND NOS.5 TO 10 RELATES TO IF THE ASSESSEE IS NO T LIABLE TO TAX BEING AS STATE UNDER ARTICLE 289 OF THE CONSTITUTION OF INDI A AND ENGAGED IN PUBLIC UTILITY SERVICES. THE ASSESSING OFFICER AFTER RE-OP ENING OF THE ASSESSMENT COMPLETED THE ASSESSMENT UNDER SECTION 144. THE ASS ESSING OFFICER TOOK THE VIEW THAT ASSESSEE IS A BODY CORPORATE HAVING PER PETUAL SUCCESSOR AND A COMMON SEAL. THE ASSESSEE IS AN ARTIFICIAL JURIDICA L PERSON AS DEFINED IN SECTION 2(31). THE ASSESSEE RECEIVED HIS MAJOR PORT ION OF ITS INCOME ON ACCOUNT OF MSIT EXAM FEES, ENGINEERING CET PROJECT FEES AND INTEREST ACCRUED ON FDS AND NONE OF THE RECEIPT CAN BE SAI D TO HAVE ANY CONNECTION WITH IMPARTING EDUCATION OR HAVE INTEREST OF GENERA L PUBLIC. THE ASSESSEES BOARD IS EARNING PROFESSIONAL INCOME ON THIS AMOUNT /RECEIPT ON WHICH TDS IS DEDUCTED BY PERSON WHO HAVE PAID SUCH AMOUNT. TH E ASSESSING OFFICER TAXED THE RECEIPT OF ASSESSEE BOARD AS BUSINESS INC OME AND INTEREST ON FIXED DEPOSITS AS INCOME FROM OTHER SOURCES AS WE HAVE RE FERRED ABOVE. 24. BEFORE THE LD. CIT(A) THE ASSESSEE FILED DETAILED S UBMISSION EXPLAINING ENTIRE SCHEME OF THE STATE ACT UNDER WHICH THE ASSE SSEE BOARD WAS ESTABLISHED. THE SUBMISSION OF ASSESSEE ARE RECORDE D IN PARA-23 BY LD. ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 22 CIT(A) IN THE IMPUGNED ORDER. THE LD. CIT(A) CONCUR RED WITH THE FINDING OF ASSESSING OFFICER HOLDING THAT ASSESSEE IS AN ARTIF ICIAL JURIDICAL PERSONA AND LIABLE FOR FILING RETURN OF INCOME AND SURPLUS OF V ARIOUS RECEIPT OVER EXPENDITURE IS TO BE RECOGNIZED AS THE INCOME OF TH E ASSESSEE BOARD. THE LD. CIT(A) FURTHER CONCLUDED THAT THE SPECIFIED INCOME OF PUBLIC INSTITUTIONS, TRUST, AUTHORITIES OR COMMISSION ARE NOT LIABLE FOR INCLUDING IN COMPUTING THE TOTAL INCOME OF PREVIOUS YEAR PROVIDED THEY ARE COV ERED UNDER THE PROVISION OF SECTION 10(23C). SUCH TRUST OR INSTITUTIONS OR A UTHORITIES ARE REQUIRED TO MAKE AN APPLICATION IN THE PRESCRIBED FORM BEFORE P RESCRIBED AUTHORITY FOR THE PURPOSE OF SEEKING EXEMPTION OF SPECIFIED INCOM E. THE ASSESSEE HAS NOT APPLIED FOR SUCH EXEMPTION. THE ASSESSEE APPLIED SU CH EXEMPTION ONLY ON 18.02.2015. 25. THE LD. CIT(A) FURTHER CONCLUDED THAT ASSESSEE BOAR D IS NOT ESTABLISHED FOR THE LARGER AND BROAD PURPOSE OF WELFARE OF PEOPLE O F STATE OF MAHARASHTRA BUT ONLY FOR THE LIMITED PURPOSE OF SUPERVISING THE INSTITUTIONS IMPARTING DIPLOMA IN TECHNICAL EDUCATION. THE ASSESSEE IS HAV ING SUPERVISORY ROLE ON VARIOUS INSTITUTIONS AND COLLECTING SUBSTANTIAL SUM OF MONEY FROM STUDENTS AND INSTITUTIONS IN THE FORM OF FEES, CHARGES, PENA LTIES AND ACCUMULATED HUGE SURPLUS YEAR AFTER THE YEAR KEPT IN FIXED DEPOSIT F OR EARNING INTEREST. 26. WE HAVE EXAMINED THE SCHEME OF THE MAHARASHTRA STAT E BOARD OF TECHNICAL EDUCATION ACT, 1997. THE STATE LEGISLATURE ENACTED THE MAHARASHTRA STATE BOARD OF TECHNICAL EDUCATION ACT, 1997 FOR THE PURP OSE FOR ESTABLISHED OF ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 23 STATE BOARD TO REGULATE MATTER PERTAINING TO DIPLOM A LEVEL TECHNICAL EDUCATION IN THE STATE OF MAHARASHTRA AND FOR THE M ATTER 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 CONSTITUTIO N OF BOARD, WHICH CONSIST OF THE DIRECTOR, TECHNICAL EDUCATION, MAHARASHTRA S TATE AS THE CHAIRMAN; THE DIRECTOR MAHARASHTRA STATE BOARD OF TECHNICAL E DUCATION AS THE MEMBER SECRETARY AND THE OTHER MEMBERS, NAMELY EX-OFFICIO MEMBERS CONSISTING OF (I) THE CHAIRMAN OF THE MAHARASHTRA STATE BOARD OF SECONDARY AND HIGHER SECONDARY EDUCATION OR HIS NOMINEE NOT BELOW THE RA NK OF THE CHAIRMAN OF THE DIVISIONAL BOARD; (II) THE DIRECTOR OF INDUSTRI ES, MAHARASHTRA STATE OR HIS NOMINEE NOT BELOW THE RANK OF JOINT DIRECTOR; ( III) ONE REPRESENTATIVE OF THE STATE NODAL CENTRE OF NATIONAL TECHNICAL MANPOW ER INFORMATION SYSTEM; (IV) THE REGIONAL OFFICER (WESTERN REGION) OF ALL INDIA COUNCIL OF TECHNICAL EDUCATION, NEW DELHI; (V) THE DIRECTOR, B OARD OF APPRENTICESHIP TRAINING (WESTERN REGION), GOVERNMENT OF INDIA, MIN ISTRY OF HUMAN RESOURCES DEVELOPMENT,(VI) THE JOINT SECRETARY TO G OVERNMENT, HIGHER AND TECHNICAL EDUCATION DEPARTMENT OR HIS NOMINEE NOT B ELOW THE RANK OF DEPUTY SECRETARY. NOMINATED MEMBERS (I) ONE SENIOR MOST PRINCIPAL FROM GOVERNMENT ENGINEERING COLLEGES IN THE STATE TO BE NOMINATED BY THE GOVERNMENT. (II) TWO MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM AMONGST THE PRINCIPALS AND HEADS OF INSTITUTES, ONE EACH FROM GOVERNMENT ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 24 OR AIDED AND UN-AIDED POLYTECHNICS, OF WHICH AT LEA ST ONE SHALL BE A WOMAN, (III) TWO MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM AMONGST THE TEACHERS, ONE EACH FROM GOVERNMENT OR AIDED AND UN- AIDED POLYTECHNICS, OF WHOM AT LEAST ONE SHALL BE FROM BACKWARD CLASS COMM UNITY,(IV) THREE MEMBERS TO BE NOMINATED BY THE GOVERNMENT FROM THE PROFESSIONAL BODIES, ONE FROM EACH REVENUE REGION BY ROTATION. (V) SIX M EMBERS TO BE NOMINATED BY THE GOVERNMENT FROM AMONGST THE ASSOCIATIONS OF INDUSTRIES, WHO ARE ENTREPRENEURS OF SMALL SCALE INDUSTRIES, INFORMATIO N TECHNOLOGY, BIOTECHNOLOGY, GEMS AND JEWELLERY, PHARMACY AND HOT EL MANAGEMENT, AT LEAST TWO OF WHOM S HALL BE FROM OUT OF THE MUMBAI AND PUNE REGIONS. 28. SECTION 7A PRESCRIBED ESTABLISHMENT OF GOVERNING CO UNCIL WHICH SHALL BE AN APEX BODY TO CONTROL AND MONITOR MATTER PERTAINI NG TO DIPLOMA LEVEL TECHNICAL EDUCATION AT THE STATE LEVEL. THE GOVERNI NG COUNCIL SHALL CONSIST OF THE FOLLOWING; (I) THE MINISTER OF HIGHER AND TE CHNICAL EDUCATION MAHARASHTRA STATE AS PRESIDENT; ((II) THE MINISTER OF STATE FOR HIGHER AND TECHNICAL EDUCATION AS VICE- PRESIDENT; ((III) STAT E SECRETARY TECHNICAL EDUCATION - MEMBER (IV) THREE INDUSTRIALIST NOMINAT ED BY THE GOVERNMENT - MEMBERS (V) DIRECTOR OF TECHNICAL EDUCATION, MAHARA SHTRA STATE MEMBER, (I) SECRETARY, MAHARASHTRA STATE BOARD OF TECHNICA L EDUCATION - MEMBER (VII) DIRECTOR, MAHARASHTRA STATE BOARD OF TECHNIC AL EDUCATION. THE NAME OF PERSONS OTHER THAN THE EX-OFFICIO MEMBERS, WHO H AVE BEEN NOMINATED, FROM TIME TO TIME AS A MEMBER OF COUNCIL ARE PUBLIS HED IN OFFICIAL GAZETTE ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 25 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 ADVI CE 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 VIE W. 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 FUR NISHED AN EXPLANATION, IF IT FAILS TO TAKE ACTION. IF THE BOARD DOES NOT T AKE ACTION WITHIN A REASONABLE TIME TO THE SATISFACTION OF THE GOVERNMENT, THE GOV ERNMENT MAY AFTER CONSIDERING ANY EXPLANATION OR REPRESENTATION OF TH E BOARD IN CONSISTENCE WITH THE PROVISION OF THE ACT AND BOARD SHALL COMPL Y SUCH DIRECTION. FURTHER, THE GOVERNMENT MAY, BY ORDER IN WRITING SP ECIFYING THE REASONS THEREOF, SUSPEND THE EXECUTION OF ANY RESOLUTION OR ORDER OF BOARD AND PROHIBIT THE ACTION ORDER TO BE PURPORTING TO BE OR DERED TO BE DONE BY THE BOARD, IF THE GOVERNMENT IS OF OPINION THAT SUCH RE SOLUTION, ORDER OR ACT, IS A NEXUS OF THE POWER CONFERRED BY OR UNDER THE ACT UPON THE BOARD. IN OUR VIEW, AS PER SECTION 24 OF THE STATE ACT, THE STATE GOVERNMENT HAVE FULL CONTROL OVER THE BOARD IN ITS DAY TO DAY AFFAIR IN REGULATION OR BUSINESS OF THE ASSESSEES BOARD. ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 26 30. SECTIONS 25 TO 35 OF THE ACT DEALS WITH THE PERMISS ION, AFFILIATION, CONFERENCE AND AUTONOMOUS STATUS OF THE ASSESSEE. F URTHER, SECTIONS 36 TO 44 OF THE ACT ARE PRESCRIBED ABOUT FUNDS, FINANCE, ACC OUNTS AND AUDIT. THE ASSESSEES BOARD IS UNDER OBLIGATION TO FURNISH THE REPORT AND RETURN AND STATEMENT RELATING TO ANY MATTER CONNECTED WITH ITS WORK AS THE GOVERNMENT MAY CALL FOR. SECTIONS 45 TO 53 DEALS WITH SUPPLEME NTARY AND MISCELLANEOUS PROVISIONS OF THE STATE ACT WITH REGARD TO MANNER O F EXERCISE OF POWER DELEGATED TO COMMITTEE, POWER OF BOARD TO MAKE REGU LATION WITH REGARD TO EXAMINATION, CONDITION GOVERNING ADMISSION, PASSING MARKS IN ANY SUBJECT AND EXAMINATION AS HOLD INCLUDING CREDIT AND DISTIN CTION IN ANY SUBJECT, FEES FOR ADMISSION TO THE EXAMINATION, OTHER FEES, CHARG ES PAYABLE IN RESPECT OF OTHER MATTERS TO THE EXAMINATION. ARRANGEMENT OF CO NDUCT OF EXAMINATION, APPOINTMENT OF EXAMINERS INCLUDING QUALIFICATION DI SQUALIFICATION, AWARD OF CERTIFICATE, APPOINTMENT OF OFFICERS AND SERVANTS O F THE BOARD IN ITS OWN OFFICE INCLUDING CONDITION OF THEIR SERVICES, CONTR OL ADMINISTRATION, SAFE CUSTODY AND MANAGEMENT OF FINANCE OF THE BOARD OR A NY OTHER MATTER WHICH MAY BE PRESCRIBED. AS PER SECTION 46, THE REGULATIO N MADE BY BOARD REQUIRES SANCTION OF THE STATE GOVERNMENT. INITIALL Y, REGULATION WAS PREPARED BY GOVERNMENT SHALL CONTINUE IN FORCE, UNT IL NEW REGULATION ARE MADE BY BOARD. FURTHER, IF ANY QUESTIONS ARISE REGA RDING THE INTERPRETATION OR DOUBT ARISING OF THE BY-LAWS THE SAME IS LIABLE TO BE DECIDED BY THE STATE GOVERNMENT AND SUCH DECISION ARE FINAL. SECTION 51 PROVIDES THE IMMUNITY ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 27 AGAINST ANY SUIT, PROSECUTION OR LEGAL PROCEEDING A GAINST THE GOVERNMENT, GOVERNING COUNCIL, BOARD OR MEMBERS OR SERVANT OF T HE 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 STAT E GOVERNMENT OVER THE AFFAIR OF ASSESSEE BOARD. THE POWER AND DUTIES OF T HE BOARD ACTIVITIES AS PRESCRIBED UNDER SECTION 22, WHICH WE HAVE MENTIONE D 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 CON SISTS OF GRANT FROM STATE GOVERNMENT, FEES COLLECTED FROM CANDIDATE, WHO APPE ARS IN VARIOUS EXAMINATIONS, RECEIPT FROM PRINTED EDUCATION MATERI AL, 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 IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. FURTHER, AT THE COST OF REPETITION, WE MAY CONCLUDE THAT THE ASSESSEE IS NOT RENDERING ANY SERVICES IN THE NATUR E OF TRADE, COMMERCE OR BUSINESS FOR A FEES OR ANY OTHER CONSIDERATION, RAT HER, THE ASSESSEE ENGAGED IN REGULATION OF EDUCATIONAL ACTIVITIES AS PER THE STA TUTORY OBLIGATION CONFERRED ON THE ASSESSEE BOARD. EVEN OTHERWISE AS WE HAVE NO TED EARLIER EVERY ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 28 ACTIVITIES OF THE ASSESSEE BOARD IS SUBJECT TO SUPE RINTENDENCE, INSTRUCTION AND CONTROL OF THE STATE GOVERNMENT. IN OUR VIEW, THE A SSESSEE BOARD IS COMPLETELY CONTROLLED FINANCIALLY AS WELL AS ADMINI STRATIVELY BY THE GOVERNMENT, THUS, FALLS UNDER THE DEFINITION OF ST ATE AS PER ARTICLE 12 OF THE CONSTITUTION OF INDIA. 31. THE CO-ORDINATE BENCH OF TRIBUNAL IN SMT. SAPNA SAN JAY ROISONI (SUPRA) WHILE CONSIDERING THE SCOPE OF ARTICLE 12 OF THE CO NSTITUTION OF INDIA GAVE THE FOLLOWING FINDING; 11. THE DEFINITION OF THE STATE UNDER ARTICLE 12 HA S COME FOR THE CONSIDERATION ON NUMBER OF OCCASIONS BEFORE THE HON'BLE SUPREME COUR T. THE STATE CONSISTS OF THREE DEPARTMENTS, THE LEGISLATURE, THE EXECUTIVE A ND THE JUDICIARY. WE NEED NOT GO INTO ALL THE LIMBS OF THE STATE AS ONLY THE LIMI TED ISSUE BEFORE US IS WHETHER THE TERM GOVERNMENT USED IN CLAUSE (B) TO RULE 6DD INCL UDES EVEN THE AUTONOMOUS BODIES WHICH PARTAKES THE CHARACTER OF INSTRUMENTAL ITIES OF THE GOVERNMENT. THE CORE TEST TO BE APPLIED WHETHER A PARTICULAR CORPOR ATION WHICH IS AUTONOMOUS BODY IS A PART OF GOVERNMENT, TO BE SEEN IN THE CON TEXT OF DEGREE OF CONTROL OVER MANAGEMENT AND POLICY DECISIONS. WE FIND THAT IN TH E CASE OF MSRTC AS PER THE CERTIFICATE OF THE SHARE CAPITAL FILED BEFORE US, T HE ENTIRE SHARE CAPITAL IS CONTRIBUTED BY THE STATE GOVERNMENT AND THE CENTRAL GOVERNMENT AND THERE IS NO PRIVATE PARTICIPATION. WE FURTHER FIND THAT MSRTC I S INCORPORATED UNDER SPECIAL LEGISLATION I.E., ROAD TRANSPORT CORPORATION ACT, 1 950. WE HAVE EXAMINED THE PROVISIONS OF THE SAID ENACTMENT. AS PER SECTION 5 OF THE SAID ACT, THE STATE GOVERNMENT IS ONLY HAVING POWER TO APPOINT THE CHAI RMAN AND OTHER MEMBERS IN THE MANAGING BODY. THERE IS A FULL CONTROL OF THE S TATE GOVERNMENT ON THE POLICY DECISIONS AS WELL AS MANAGEMENT. IN OUR OPINION, IF WE APPLY THE TEST OF THE CONTROL AND MANAGEMENT AS WELL AS THE EQUITY PARTIC IPATION, MSRTC IS A STATE WITHIN ARTICLE 12 OF THE CONSTITUTION. APPLYING THE ABOVE TEST, THE HON'BLE SUPREME COURT HAS HELD, AS DISCUSSED HEREINABOVE, T HAT THE AUTONOMOUS BODIES LIKE STATE ROAD TRANSPORT CORPORATION OR WAREHOUSIN G 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 LO CAL GOVERNMENT WHICH IS ENVISAGED BY OUR CONSTITUTION, LIKE ZILLA PARISHAD, MUNICIPAL CORPORATIONS, MUNICIPAL COUNCILS, PANCHAYAT SAMITHIS, ETC. THE PU BLIC 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 ASSE SSEES NEED RECONSIDERATION BY THE ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 29 LD. CIT(APPEALS). WE, THEREFORE, SET ASIDE THE ISSU E IN RESPECT OF THE DISALLOWANCE MADE U/S.40A(3) TO THE FILE OF THE LD. CIT(A) TO DE CIDE THE SAME DE NOVO IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND DISCUSSION. ACC ORDINGLY, THE RELEVANT GROUNDS TAKEN BY THE ASSESSEES IN ALL THESE APPEALS ARE ALL OWED FOR STATISTICAL PURPOSES. NEEDLESS TO SAY THE CIT(A) IS DIRECTED TO GIVE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEES AS PER THE PRINCIPLES OF NATURAL JUSTICE. ' 10. A BARE PERUSAL OF ARTICLE 12 SHOWS THAT THE DEFINI TION OF 'THE STATE' GIVEN IN ARTICLE IS INCLUSIVE AND NOT EXHAUSTIVE. 'THE STATE ' INCLUDES : ( A ) THE GOVERNMENT AND PARLIAMENT OF INDIA; ( B ) THE GOVERNMENT AND THE LEGISLATURE OF EACH OF THE S TATES; ( C ) ALL LOCAL AND OTHER AUTHORITIES WITHIN THE TERRITOR Y OF INDIA; AND ( D ) ALL LOCAL AND OTHER AUTHORITIES UNDER THE CONTROL O F THE GOVERNMENT OF INDIA. 11. THE EXPRESSION 'OTHER AUTHORITIES' USED IN ARTICLE 12 IS NEITHER DEFINED IN THE CONSTITUTION OF INDIA NOR IN ANY OTHER STATUTE. THE REFORE, THE HON'BLE SUPREME COURT OF INDIA AND THE HON'BLE HIGH COURT HAVE INTE RPRETED THIS EXPRESSION IN VARIOUS JUDGEMENTS. THE HON'BLE SUPREME COURT OF IN DIA WHILE INTERPRETING THE EXPRESSION 'OTHER AUTHORITIES' IN THE CASE OF SOM PRAKASH REKHI V. UNION OF INDIA REPORTED AS AIR 1981 SC 212 HAVE CULLED OUT CERTAIN TESTS TO DETERMINE AS TO WHEN A CORPORATION SHOULD BE SAID TO BE AN INSTRUMENTALI TY OR AGENCY OF THE GOVERNMENT. THE TESTS LAID DOWN BY THE HON'BLE APEX COURT ARE SUMMARIZED AS UNDER : '1. IF THE ENTIRE SHARE CAPITAL OF THE CORPORATION IS H ELD BY THE GOVERNMENT, IT WOULD GO A LONG WAY TOWARDS INDICATING THAT THE COR PORATION IS AN INSTRUMENTALITY OR AGENCY OF THE GOVERNMENT. 2. EXISTENCE OF DEEP AND PERVASIVE STATE CONTROL MAY AFFORD AN INDICATION THAT THE CORPORATION IS A STATE AGENCY OR INSTRUMEN TALITY. 3. WHETHER THE CORPORATION ENJOYS MONOPOL Y STATUS WHICH IS STATE CONFERRED OR STATE PROTECTED. 4. IF THE FUNCTIONS OF THE CORPORATION ARE OF PUBLIC I MPORTANCE AND CLOSELY RELATED TO GOVERNMENTAL FUNCTIONS. IT WOULD BE A RE LEVANT FACTOR IN CLASSIFYING THE CORPORATION AS AN INSTRUMENTALITY O R AGENCY OF THE GOVERNMENT. 5. IF A DEPARTMENT OF A GOVERNMENT IS TRANSFERRED TO A CORPORATION, IT WOULD BE A STRONG FACTOR SUPPORTING THIS INFERENCE OF THE CORPORATION BEING AN INSTRUMENTALITY OR AGENCY OF THE GOVERNMENT.' AFTER APPLYING THE CUMULATIVE EFFECT OF ALL THE REL EVANT FACTORS MENTIONED ABOVE, IF THE BODY IS FOUND TO BE AN INSTRUMENTALITY OF THE A GENCY OF THE GOVERNMENT, IT WOULD BE AN AUTHORITY INCLUDED IN TERM 'STATE' UNDE R 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 ORGAN ISATION FALLS WITHIN THE CRITERIA AS LAID DOWN BY THE HON'BLE APEX COURT IT CAN BE CO NSIDERED THAT IT FALLS WITHIN THE TERM 'STATE'. 12. IF THESE TESTS ARE APPLIED ON THE MSRTC, WE OBSERV E THAT THE CORPORATION SATISFIES MAJORITY OF THE CONDITIONS. THE ENTIRE SH ARE CAPITAL OF MSRTC IS OWNED BY STATE AND CENTRAL GOVERNMENT. THE STATE HAS FULL CONTROL OVER THE WORKING, ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 30 POLICIES AND THE FRAMEWORK OF THE CORPORATION. THE CORPORATION IS PROVIDING PUBLIC TRANSPORT FACILITY TO THE SUBJECTS OF THE ST ATE, EVEN IN FOR REMOTE AREAS, WHERE SOMETIMES IT IS NOT ECONOMICALLY VIABLE TO PR OVIDE 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 D EALING WITH AN ISSUE RELATING TO PAYMENT OF COMPENSATION TO ONE OF THE E MPLOYEE OF MSRTC HAS OBSERVED AS UNDER : 'THE PETITIONER EMPLOYER IS A BODY CORPORATE AND IS STATE WITHIN THE MEANING OF ARTICLE 12 OF THE CONSTITUTION OF INDIA AND THER EFORE IT HAS TO ACT AS A MODEL EMPLOYER.' 14. THUS, IN VIEW OF THE FACTS OF THE CASE AND IN THE LIGHT OF OBSERVATIONS OF THE HON'BLE BOMBAY HIGH COURT, WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) HAS ERRED IN HOLDING THAT MSRTC IS NOT A 'STATE' AN D CASH PAYMENTS MADE TO MSRTC ARE HIT BY THE PROVISIONS OF SECTION 40A(3) O F THE ACT. 32. SIMILAR VIEW WAS TAKEN BY KOLKATA TRIBUNAL IN NARAY AN RICE MILL (SUPRA). 33. WE HAVE FURTHER NOTED THAT THE ASSESSEE BOARD MADE AN APPLICATION UNDER CLAUSE (46) OF SECTION 10 FOR EXEMPTION OF SPECIFIE D INCOME TO THE ASSESSEE AND CBDT VIDE ITS NOTIFICATION DATED 29.03.2016 EXE MPTED THE INCOME OF ASSESSEE BOARD ARISING FROM: (A) FEES, FINES AND PENALTIES; (B) RECEIPTS FROM PRINTED EDUCATIONAL MATERIAL; (C) RECEIPTS FROM SCRAP OR WASTE PAPER; (D) RECEIPTS FROM OTHER GOVERNMENT BODIES; (E) INTEREST INCOME FROM SURPLUS FUNDS KEPT IN BANK ACC OUNTS AND FIXED DEPOSITS; (F) RENT RECEIVED FROM LET OUT OF PROPERTIES; (G) ROYALTY OR LICENSE FEES FOR PROVIDING TECHNICAL KNO WLEDGE AND INFRASTRUCTURE; (H) DIVIDEND EARNED FROM MAHARASHTRA KNOWLEDGE CORPORAT ION LTD; (I) CAPITAL GAINS, IF ANY, FROM DISPOSAL OF ASSETS AS P ER GOVERNMENT FINANCIAL GUIDELINE AND RULES OF GOVERNMENT OF MAHARASHTRA. ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 31 34. THE EXEMPTION IN THE CBDT NOTIFICATION DATED 29.03. 2016 IS VALID FOR FINANCIAL YEAR 2015-16 TO 2018-19. ADMITTEDLY NO R ETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. AR INITIALLY ARGUED THAT UNDER BONAFIDE MISTAKEN BELIE F THAT THE ASSESSEE IS BEING INSTRUMENT OF STATE IS EXEMPTED FROM FILING RETURN OF INCOME, THE ASSESSEE HAS NOT FILE RETURN OF INCOME FOR THE ASSESSMENT YE AR UNDER CONSIDERATION. CONSIDERING THE FACTS THAT THE ASSESSEE BOARD IS UN DER COMPLETE SUPERINTENDENCE, AND CONTROL OF THE STATE GOVERNMEN T FINANCIALLY AS WELL AS ADMINISTRATIVELY FALLS UNDER THE DEFINITION OF STA TE AS PER ARTICLE 12 OF THE CONSTITUTION OF INDIA. AND IN OUR VIEW IS ENTITLED FOR IMMUNITY FROM THE TAXATION OF ITS INCOME UNDER THE PROVISIONS OF INCO ME TAX ACT. OUR VIEW IS FURTHER GOT THE SUPPORT THAT CBDT VIDE ITS NOTIFI CATION 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 ALLOWE D. 35. GROUND NO. 11 RELATES TO DISALLOWANCE UNDER SECTIO N 40(A)(IA) OF THE ACT. CONSIDERING THE FACTS THAT WE HAVE ALLOWED GROUND N O. 5 TO 10 OF THE APPEAL HOLDING THAT THE INCOME OF THE ASSESSEE ARE NOT LIA BLE FOR TAXATION, THEREFORE, DISCUSSION ON THIS GROUND OF APPEAL HAS BECOME ACAD EMIC. 36. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 6248/MUM/2016 FOR AY 2007-08 ITA NO. 2203 MUM 2016-MAHARASHTRA STATE BOARD OF TE CHNICAL EDUCATION 32 37. WE HAVE NOTED THAT GROUND NO. 1 TO 4 OF THIS APPE AL ARE IDENTICAL TO THE APPEAL FOR AY 2010-11, WHICH WE HAVE DISMISSED. CON SIDERING THE CONSISTENCY THESE GROUNDS OF APPEAL ARE DISMISSED. 38. GROUND NO. 5 TO 10 OF THE APPEAL RAISED BY ASSESSE E ARE IDENTICAL TO THE GROUND NO. 5 TO 10 IN APPEAL FOR AY 2010-11, WHICH WE HAVE ALREADY. CONSIDERING THE CONSISTENCY THESE GROUNDS OF APPEAL ARE ALLOWED WITH SIMILAR DIRECTIONS. 39. IN THE RESULT, APPEAL OF THE ASSESSEE FOR AY 2007-0 8 AND 2010-11 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N 28.02.2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 28.02.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT(A) 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI