TaxTMI 
TaxTMI 
2023 (1) TMI 1152
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....r-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 production, distribution and management of water supply and sewerage services including sewa....
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.... 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 company of Govt. of Odisha. 2. According to the notification dated 09.07.2015 (supra) the Members of the Board of WATCO are government employees or nominated by the government. 3. Original and revised objectives ....
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....herein 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 rebut with supporting documents. 8. It is further submitted by the Ld AR that, Ld CIT(E) has not appreciated the facts of the case correctly and held that the object of the appellant are in the nature of business/commerce and thus not falls within the ambit of charitable activity as prescribed by section ....
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....r 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 an instrumentality or agency of Government." 5. "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference" of the corporation being an instrumentality or agency of Government." 6. Applying the aforesaid tests, as enunciated in the case of Som Prakash Rekhi vs Union of India, it has been held in the case of Smt. Sapna ....
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....resented 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 Chairperson, Bhubaneswar Development Authority Director Representative of Finance Department Director Engineer-in-Chief/Chief Engineer, Public Health Engineering Organisation Director Member Secretary, Orissa Water Supply and Sewerage Board Director Engineer-in-Chief/ Chief Engineer any professional (to be posted by Government) Managing Director 3 Nos. of Independent Directors to be nominated by the Government (at least one of whom shall be women) Ex-Officio Dire....
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....hat 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 "Local or Other Authorities". But, the definition of "Local or Other Authority" was not defined in the constitution or any other statute, however, a fundamental guidance was accorded by the Hon‟ble Apex Court in the case of Som Prakash Rekhi vs Union Of India (supra), wherein the Hon‟ble Apex Court has prescribed certain tests to determine as to whether an institution is "State‟ within the meaning of Article 12 of the Constitution of India or not. The conditions to claim eligibility of being a "State" as described in the said ord....