AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 158
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....18 with certain conditions. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in considering the activity of the assessee board as imparting education or having interest of general public. The Ld.CIT(A) has failed to appreciate that major portion of income is received on account of MS-IT Exam Fees, Engg. CET project fees and interest accrued on FDs. None of the receipts can be said to have any connection with imparting education of having interest in general public. 4. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating that grant from government is negligible in respect of entire receipt of the Boards. The board is carrying out its activity in systematic manner which is yielding revenue and the said revenue is nearly 30-40% above cost, and the surplus amount is held by the Board which is commercial activity. 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in considering the assessee board as State whereas as per section 4 of the MSBTE Act, the assessee board is "Body Corporate" and the assessee board is an Artificial Juridical Person as define....
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....n. The ld. DR relied on the order of the A.O. 8. The learned Authorised Representative (ld. AR for short) for the assessee, on the other hand, controverted the facts stated by the ld. DR and contended that the Tribunal in assessee's case for A.Ys. 2007-08, 2010-11 and 2011-12 has decided these issues at length and has decided all these issues in favour of the assessee. The ld. AR further stated that the Tribunal has considered the decision of the Hon'ble Bombay High Court in the case of Maharashtra State Road Transport Co. vs. Divakar Madhukarrao Malkapure and others WP 2762//2012 on similar issue and has held the assessee board would fall under the definition of 'state' as per Article 12 of the Constitution of India. The ld. AR relied on the decision of the Tribunal and the order of the ld. CIT(A). 9. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee board was constituted by the State Government with the object of promoting diploma level technical education and for allied purposes. It is a regulatory authority set up by the State Government to advice and co-ordinate, promote activities relating to diploma ....
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....f 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 National Technical Manpower information System; (iv) The Regional Officer (Western Region) of All India Council of Technical Education, New Delhi; (v) The Director, Board of Apprenticeship Training (Western Region), Government of India, Ministry of Human Resources Development, (vi) The Joint Secretary to Government, Higher and Technical Education Department or his nominee not below 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 of Technical Education 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 ....
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....vernment may, by order in writing specifying the reasons thereof, suspend the execution of any Resolution or order of Board and prohibit the action order to be purporting to be ordered to be done by the Board, if the Government is of opinion that such Resolution, 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 assessee's Board. 30. Sections 25 to 35 of the Act deals with the permission, affiliation, conference and autonomous status of the assessee. Further, sections 36 to 44 of the Act are prescribed about funds, finance, accounts and audit. The assessee's 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 supplementary and miscellaneous provisions of the State Act with regard to manner of exercise of power delegated to Committee, power of Board to make Regulation with regard to examination, condition governing admission, passing marks in any s....
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....s for a fees or any other consideration, rather, the assessee engaged in regulation of educational activities as per the statutory obligation conferred on the assessee Board. Even otherwise as we have noted earlier every activities of the assessee Board is subject to superintendence, instruction and control of the State Government. In our view, the assessee Board is completely controlled financially as well as administratively by the Government, thus, falls under the definition of "State" as per Article 12 of the Constitution of India. 31. The co-ordinate bench of Tribunal in Smt. Sapna Sanjay Roisoni (supra) while considering the scope of Article 12 of the Constitution of India gave the following finding; 11. The definition of the State under Article 12 has come for the consideration on number of occasions before the Hon'ble Supreme Court. The State consists of three departments, the Legislature, the Executive and the Judiciary. We need not go into all the limbs of the State as only the limited issue before us is whether the term Government used in clause (b) to Rule 6DD includes even the autonomous bodies which partakes the character of instrumentalities of ....
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....rtunity of being heard to the assessees as per the principles of natural justice.' 10. A bare perusal of Article 12 shows that the definition 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 States; (c) all local and other authorities within the territory of India; and (d) all local and other authorities under the control of 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. Therefore, the Hon'ble Supreme Court of India and the Hon'ble High Court have interpreted this expression in various judgements. The Hon'ble Supreme Court of India 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 instrumentality or Agency of the Government. The tests laid down by the Hon'ble Apex Court are summarized as under :....
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....ate within the meaning of Article 12 of the Constitution of India and therefore 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" and cash payments made to MSRTC are hit by the provisions of section 40A(3) of the Act. 32. Similar view was taken by Kolkata Tribunal in Narayan Rice Mill (supra). 33. We have further noted that the assessee Board made an application under clause (46) of section 10 for exemption of specified income to the assessee and CBDT vide its notification dated 29.03.2016 exempted 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 accounts and fixed deposits; (f) rent received from let out of properties'; (g) royalty or License fees for providing technical knowledge and infra....