TaxTMI 
TaxTMI 
2018 (1) TMI 668
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd circumstances of the case in law, the Ld.CIT(A) erred in holding that the assessee is an agent of the Government of Maharashtra, without appreciating the facts that there is no evidence/documents substantiating that the Principal-Agent- Relationship exists between the assessee and the government of Maharashtra. 2. The appellant prays that the order of the Ld.CIT(A) on the above ground be set-aside and that of the Assessing Officer be restored. 3. The appellant craves leave to add, amend or alter any grounds or add a new ground which may be necessary." 2. The Ld. Counsel for the assessee at the outset submits that the issue in appeal is squarely covered by the Coordinate Bench of the Tribunal in assessee's own case fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come generated and earned by the principle i.e. the State Government of Maharashtra is liable to be taxed in the hands of the CIDCO as its business income and the Coordinate Bench held as under: - "37. We have heard the arguments advanced from either side at length and have also perused the material brought and placed before us for consideration. 38. Coming to the arguments of the Senior Counsel that the assessee must be treated as Government or surrogate or an agent, has to be considered and adjudicated at first. To consider the taxation point of view, we have to refer to Article 289 of the Constitution, wherein Article 289(1) says, "The property and income of a State shall be exempt from Union Taxation". Article 289(2) r....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., "....the facts that the trading activity carried on by the appellant may be covered by article 289(2) of the Constitution does not really assist the appellant's case. Even if a trading activity falls under clause (2) of article 289 of the Constitution, it can sustain a claim for exemption from Union taxation only if it is shown that the income derived from the said trading activity is the income of the State". Therefore, whenever, there is an activity in the nature of trade or business, clause (2) shall come to life, which according to clause, shall be applicable towards the State i.e. if an activity which is in the nature of trade or business, conducted by the State itself, the liability for tax shall emerge, a typi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....State. It may be that the statute under which a notification has been issued constituting the appellant corporation may provide expressly or by necessary implication that the income derived by the corporation from its trading activity would be the income of the State". This observation read together with section 113(3A) of MR & TP Act, 1966, shall emerge that the activity so performed by the assessee is nothing but an act of State without any profit or commercial motive attached with it. The only clause left for our consideration then would be clause (3), which shall come into play once clause (2) is disbanded and as soon as it become disbanded, clause (3) come to life, which operates only if, "Parliament may by Law declare to be i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Government and all funds receivable shall be in compliance and with intimations to : To The Managing Director, State Industrial and Investment Corporation of Maharashtra Ltd. Bombay. The Industries Commissioner, Bombay The Accountant General, Maharashtra, Bombay The Pay & Accounts Officer, Bombay The Resident Audit Officer, Pay and Accounts Officer, Bombay The Senior Deputy Accountant General, Nagpur All Departments of Secretariat The Divisional Commissioner, Bombay Division, Bombay The Budget Branch, Industries & Labour Department, Bombay The Director of Publicity, Bombay 42. We find that according to MR&TP Act, 1966, the machinery....