AI Drafter 
TaxTMI 
TaxTMI 
2023 (1) TMI 1152
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....f facts of the case are that the assessee, a wholly owned not-for-profit company set up by Government of Odisha vide notification No. 17402-HUD-13-REFM-65-SCH-17-0065/2014/HUD dated 09.07.2015 in the name of Water Corporation of Odisha Limited (In short "WATCO‟). WATCO was incorporated on 24.11.2015 to oversee the ring-fenced operation of water supply production & distribution system, operation & maintenance of sewage collection, treatment and operation & maintenance of sewerage network, sewage treatment & disposal. Notification No. 17402-HUD-13-REFM-65-SCH-17-0065/2014/HUD dated 09.07.2015 is extracted as under:- 3. The initial authorized and paid-up capital of the Company shall be Rs. 100 Lakh divided into 1,00.000 equity shares of Rs. 100 each. 4. The Registered Office of the Company will be in Bhubaneswar, Odisha. 5. The main objectives of the Company will be - (i) To take over from the PHEO, the functions in regard to Operation & Maintenance of water supply and sewerage services at present being handled by it together with assets and liabilities pertaining to such activities; (ii) To carry on the function of Operation & Maintenance of productio....
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.... Municipalities area and any other Urban Local Body so assigned through Gazette Notification in Housings Urban Development Department from time to time. By Order of the Governor G. MATHI VATHANAN Commissioner-o/m-Secretary to Government 3. Subsequently, on 16.08.2017, the assessee has filed an application in Form 10A for seeking registration u/s 12A of the Income Tax Act, 1961 ("the Act‟ in short) on 30.06.2019. The said application was rejected by Commissioner of Income Tax (Exemption), Hyderabad with certain observations, vide order u/s 12A dated 06.12.2019. 4. Aggrieved by the said order of CIT(E) the assessee is in appeal before us. 5. At the outset, the Ld AR of the assessee had explained the facts of the case. The main facts and submissions of the Ld AR, relevant for adjudicating the issue, are as under:- 1. Auhtorised and paid up share capital of the WATCO was Rs. 100 Lakh divided into 1,00,000/- shares of the Rs. 100/- each. Regarding share capital, it is submitted by the Ld AR that the share holder of the WATCO are consisting of either Government of Odisha or associated institutions run by Government of Odisha, thus WATCO is a wholly owned ....
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....age service charges from time to time. (xi) To outsource parts of its activities in the achievement of its business goals". 3.1 During the present proceedings, the assessee has submitted that they have carried the amendments to the MoA and filed a copy of Resolution- dated 28.11.2018, wherein certain amendments were carried out to the objects. However, the said Resolution has not been registered before the RoC. Hence, the objects as appearing in the original MoA are valid as on date. Further, the application of the assessee has been rejected based on such objects. Hence, there is no change in the facts of the case. Therefore, the application of the assessee filed in Form 10A for registration u/s. 12A of the Act is rejected. 7. On observation of the Ld CIT(E) in his order that ―Copy of Resolution dated 28.11.2018 wherein certain amendments were carried out to the objects. However, the said Resolution has not been registered before ROC. Hence, the objects as appearing in the original MOA are valid as on date.‖ Ld AR submitted that such an bald observation made by the Ld CIT(E) was without providing an opportunity of being heard to the assessee or to r....
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....pra) the indicia of "other authorities.........under the control of the Government of India" bringing a corporation within the definition of "the State". The following factors have been emphasised in that ruling as telling, though not clinching. These characteristics convert a statutory corporation, a government company, a cooperative society and other registered society or body into a State and they are not confined to statutory corporations alone. We may decoct the tests for ready reference: 1. "One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government." 2. "Existence of "deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality." 3. "It may also be a relevant factor........whether the corporation enjoys monopoly status which is the State conferred or State protected." 4. "If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor - in classifying the corporation as a....
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....ike to submit that if the tests as propounded in the case of Som Prakash Rekhi vs Union of India are applied to the present case then the inescapable conclusion that can be drawn in this case is that the appellant is a "state". 12. The share holding pattern of the appellant is as follow and therefore it fulfils the 1st test as per the aforesaid Hon'ble Apex Court order: Name No of shares to be subscribed Governor of Odisha represented by Secretary, Housing & Urban Development Department, Government of Odisha 51,000 Bhubaneswar Municipal Corporation 26,000 Public Health Engineering Organization 5,000 Water Supply Sewerage Board 5,000 Khurda Municipality 5,000 Jatni Municipality 2,000 [Refer Page-24 of original paper book dated 27.05.2022] 13. Members of the Board of WATCO are as follows and as the majority of Board of Directors are government employees, the 2nd test regarding deep and pervasive State control is also fulfilled. ACS/Pr. Secretary/Commissioner-cum-Secretary, Housing & Urban Development Department. Chairperson Commissioner, Bhubaneswar Municipal Corporation Director Vice Chairp....
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....he Act cannot be granted. Thus, the Ld CIT(E)‟s order was justified and should be upheld. No arguments regarding additional ground were advanced. 12. We have considered the rival submissions, perused the material available on records and the judgments cited before us in order to prove the contentions by the Ld AR. 13. On perusal of the submission of the Ld AR with respect to additional ground taken the assessee shall be held as "State" and thus no tax can be levied on it under the income tax act. To examine on the facts that whether the claim of the assessee that it holds the status of "State" is correct or not, definition of the "State" under Article 12 of the Constitution of India, is drawn out as under: Article 12 states : "In this Part, unless the context otherwise requires, ―the state‖ includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India." 14. As per the above definition of "State", if we check under which head the assessee company would fall, the probable answer is ....
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....definition of "State" within the meaning of Article 12 of the Constitution of India and, therefore, in our considered opinion entitle for immunity from the taxation under the provisions of Income Tax Act 1961 as directed under article 289 of constitution of India 1949, which read as under:- Article 289 in The Constitution Of India 1949 289. Exemption of property and income of a State from Union taxation (1) The property and income of a State shall be exempt from Union taxation (2) Nothing in clause (1) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide 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 used or occupied for the purposes of such trade or business, or any income 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 declare to be incidental to the ordinary functions of government. 16. After thoughtful analysis o....