TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 920
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.... by the assessee was denied and total income chargeable to tax was assessed at Rs. 1,71,63,060/-. Assessee being aggrieved with the same filed an appeal before the Ld. CIT (A) -29, Mumbai, through his order Ld. CIT (A) upheld the order of AO passed u/s. 143(3) of the Act. Assessee being further aggrieved filed an appeal before the Coordinate Bench, where coordinate bench after considering the arguments of assessee restored the matter back to the file of AO for passing the order de-novo. 3. Matter of the assessee was taken up afresh on the directions of coordinate bench and assessee was asked to furnish the details again and specifically about its claim of being "State", which was being raised before the coordinate bench as additional ground. Again AO, disallowed all the claims made by assessee and assessed the income at Rs. 1,71,63,060/-. Assessee being aggrieved with this re-assessment order passed u/s. 143(3) r.w.s. 254 of the Act, preferred an appeal before the Ld. CIT (A), who in turn allowed the appeal of the assessee on the ground that assessee is eligible for exemption u/s. 11 and 12 of the Act without deciding the issue of exemption u/s. 10(23C) (iv) of the Act and additio....
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.... of the assessee as far as exemption u/s 11 and 12 are concerned. Hence, partly allowed the claim of the assessee and exempted the income of the assessee u/s 11 and 12 as assessee is eligible for the same in view of second proviso to section 12A (2) 6. In his order Ld.CIT (A) chosen not to comment on assesses claim of assessment being time barred u/s. 153(3) and status of the assessee as "State". It is found that assessee was fulfilling all the conditions as laid down for the purposes of section 11 to 13 of the act. Assessee is applying its income derived from property held under trust for the purposes approved in the registration certificate u/s 12A. The only reason for the denial of assessee claim by the AO is that such a claim has not been made in the original return filed before him hence he relied upon the judicial pronouncement on honorable supreme court in the case of M/s Goetze (India) Ltd. 284 ITR 323 (S.C) wherein it is provided that assessee cannot make any fresh claim before the assessing officer except by revising its return of income. As in this case no revised return has been filed by the assessee but the same case law doesn't stop the Ld.CIT(A) and ITAT to entertai....
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....r; Adapted and modified by the Bombay Labour Welfare Board (Reorganisation) Order, 1960. Amended by Mah. 36 of 1961 " " " 22 of 1966. " " " 16 of 1971. " " " 2 of 1978 (1-7-1977) " " " 4 of 1984. (20-2-1984) " " " 10 of 1987 (1-5-1987) " " " 24 of 2003 (7-1-2002) " " " 24 of 2012 (22-8-2012) An Act to provide for the constitution of a Fund for the financing of activities to promote welfare of labour in the State of [Maharashtra] [for conducting such activities and for certain other purposes]. WHEREAS it is expedient to constitute a Fund for the financing of activities to promote 'welfare 'of labour in the State of 2[Maharashtra] 3[for conducting such activities and for certain other purposes]; It is hereby enacted as follows:- 1. (1) This Act may be called [the Maharashtra Labour Welfare Fund Act] [(2) It extends to the whole of the State of Maharashtra.] (3) It shall come into force in such area and on such date as the State Government may, by notification in the Official Gazette, appoint in this behalf. 2. in this Act, unless the context otherwise requires- (1) "Board" means [the Maharashtra Labour Welfare Board] constituted under sect....
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....on, intimate by registered post the fact thereof to such authority as the State Government may specify in this behalf ] ; [Explanation.-For the removal of doubt, it is hereby declared that where an establishment has different branches or departments, all such branches or departments, whether situated in the same premises or different premises, shall be treated as parts of the same establishment ; ] [(5) "Factory" means a factory as defined in section 2 (m) of the Factories Act, 1948, and includes any place wherein five or more persons are employed or working, and- (i) Where in any manufacturing process is being carried on with the aid of power or is ordinarily so carried on ; (ii) Which is deemed to be a factory under section 85 of the said Act;] (6) "Fund" means the 2[Labour Welfare Fund] constituted under section 3; (7) "Independent member" means a member of the Board who is not connected with the management of any establishment or who is not an employee, and includes an officer of Government nominated as a member; (8) "Inspector" means an Inspector appointed under section 12; (9) "Prescribed" means prescribed by rules made under this Act; (10) "Unpaid accumulat....
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....nment: Provided that both employers and employees shall have equal representation on the Board; (b) Such number of independent members as may be prescribed, nominated by the State Government; (c) Such number of independent members as may be prescribed, Nominated by the State Government to represent women; 7[(d) the Principal Secretary or Secretary (Finance) or his nominee shall be the ex-officio member; and (e) The Principal Secretary or Secretary (Labour) or his nominee shall be the ex-officio member.] (2) The members of the Board shall elect one of its independent members as the Chairman of the Board. (3) Save as otherwise expressly provided by this Act, the term of office of the members of the Board shall be three years commencing on the date on which the names are notified in the Official Gazette. (4)The allowances if any, payable to the members of the Board shall be such as may be prescribed. (5) [The Board shall be a body corporate by the name of the Maharashtra Labour Welfare Board having perpetual succession and a common seal, with power to acquire property both moveable and immovable, and shall by the said name sue and be sued. [(6) Notwithstanding anyt....
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....utive meetings of the Board. 6. (1) A member may resign his office by giving notice thereof in writing to the State Government, and on such resignation being accepted, shall be deemed to have vacated his office. (2) A causal vacancy in the office of a member shall be filled up, as soon as conveniently may be, by the authority concerned and a member so nominated shall hold office for the unexpired portion of the term of the office of his predecessor. (3) No act or proceedings of the Board shall be questioned on the ground merely of the existence of any vacancy in, or any defect in constitution of the Board. [6BB. (1) The contribution payable under this Act in respect of an employee in an establishment shall comprise contribution payable by the employer (hereinafter referred to as 'the employer's contribution'), contribution payable by such employee (hereinafter referred to as 'the employee's contribution') and the contribution payable by the State Government, and shall be paid to the Board and form part of the Fund. 2[(2) The amount of contribution payable every six months in respect of every employee and an employee for each such employee shall be at the following rates, ....
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....t was deducted. (7) An employer shall pay the employer's and the employee's contribution to the Board by cheque, money-order or in cash, and he shall bear the expenses of remitting to the Board such contributions. (8) The Welfare Commissioner shall submit to the State Government as soon as possible after the end of July and January every year in the prescribed form a statement showing the total amount of [the employer's contribution and the employees' contribution in respect of employees in each establishment]. On receipt of the statement from the Welfare Commissioner, the State-Government shall pay to the Board a contribution of [an amount equal to half the employee's contribution for the period from the 31st December 2000 to the 31st March 2003; and an amount equal to twice the employee's contribution with effect from the 1st April 2003, in respect of every employee referred to in sub-clause (i) and (ii) of clause (a) of sub-section (2).] 7. (1) The Fund shall vest in and be held and applied by the Board as Trustees subject to the provisions and for the purposes of this Act. The moneys therein shall be utilized by the Board to defray the cost of carrying out measures which ....
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....e securities specified in clauses (a) to (d) and (f) of section 20 of the Indian Trusts Act, 1882. 10. The State Government may give the Board such directions as in its opinion are necessary or expedient in connection with expenditure from the Fund or for carrying out the other purposes of the Act. It shall be the duty of the Board to comply with such directions. 11. (1) (i) The Welfare Commissioner shall be appointed by the Board with the previous approval of the State Government; (ii) The Welfare Commissioner shall be the principal executive officer of The Board; (iii) It shall be the duty of the Welfare Commissioner to ensure that the provisions of this Act and the rules made thereunder are duly carried out and for this purpose he shall have the power to issue such orders not inconsistent with the provisions of the Act and rules made thereunder as he deems fit including any order implementing the decisions taken by the Board under Act or rules made thereunder. 12. (1) The State Government may appoint Inspectors to inspect records in connection with the sums payable into Fund. 2[Inspectors appointed, whether by a local authority or the State Government under the Bombay ....
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.... may by notification in the Official Gazette supersede and reconstitute the Board 2[in the manner prescribed for constitution of the Board] : Provided that, before issuing the notification under this sub-section, the State Government will give a reasonable opportunity to the Board to show cause why it should not be superseded and shall consider the explanations and objections, if any, of the Board. (2) After the supersession of the Board and until it is reconstituted the powers, duties and functions of the Board under this Act shall be exercised or performed by the Board or by such officer or officers, as the State Government may appoint for this purpose. 19. (1) The State Government may, by notification in the Official Gazette and subject to the condition of previous publication, make rules to carry out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may be made for all or any of the following matters, namely:- 3[(a) the intervals at which or the period within which any of the sums referred to in section 3 shall be paid to the Board or into the Fund, the manner of making such payment and the agency for,....
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....oceedings shall lie against any person for anything which is in good faith done or intended to be done under this Act. *** Regarding Disbursement of Government contribution as per the Maharashtra Labour Welfare Act 1953. Government of Maharashtra Industries, Energy and Labour Department Government Resolution Makak- 02/2017/pra.kra.64/kamgar:10 Mantralay, Mumbai-400032. As per Maharashtra Labour Welfare Fund 1953, as per section 6 88(8) of act, Maharashtra Labour welfare Board bound to get government contribution In the ratio of receipt of Fund as received from employer and employee. Maharashtra labour welfare board has submitted its proposal of government contribution for the period from 01.04.2016 of Rs. 10, 48, 09,964/- for approval. Approval is provided to the Maharashtra Labour Welfare board for Government Contribution of Rs. 10.80 Crore (Rupees Ten Crore Eighty Lakh only) Now out of this contribution 90 % amount is disbursed i.e. Rs. 9.72/- as per Government Resolution dated 06.03.2017. Remaining 10% Le Rs. 1.08 will be disbursed as per the terms and conditions as mentioned below. a) As per the Government resolution of Industries, Energy and Labour Dept. No....
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....this, the salaries of each staff shall be within the limit of 60% 3) Out of the Rs. 25 crore outstanding amounts board has Rs. 19 crore with them, board shall pay from it. 4) Remaining Rs. 6 crore outstanding amounts shall be paid as board receives its fund. 5) Government will not bear any financial burden by making this payment. While making payment to the permanent & retired staff, Government will not disburse any grant. Board shall take necessary care to meet its administrative expending within the limit of 60% as mentioned in the resolution dated 14/08/2016. Board shall submit this Government resolution before the board meeting, after that make the payments. This government resolution is issued with reference to the approved government resolution: Anoupchart & sandarbha 131/ seva 9 dated 29/04/2017 This government resolution is available on www.maharashtra gov on this website. Its code is 201707191142509210. This is digitally signed, this does not required signature. As per the order of Maharashtra Governor and in their name. Sd/- (Pravin B. Gaikwad) Desk Officer, Maharashtra Government Copy 1- 1. Hon'ble Minister (finance) Maharashtra State, Mantralaya....
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....n respect of which exemption is claimed clause (1) must be the property and income of the State, and so, the same question faces us again is the income derived by the appellant from its transport activities the income of the State? If a trade or business is carried on by the State departmentally and income is derived from there would no difficulty in holding that the said income is the income of the State if a trade or business is carried on by a State through its agents appointed exclusively for that purpose, and the agents carry it on entirely on behalf of the State and not on their own account there would be no difficulty in holding that the income made from such trade or business is the income of the State. But difficulties arise when we are dealing with trade or business carried on by a corporation established by a State by using a notification under the relevant provisions of the Act. The corporation, though statutory, has a personality of its own and this personality is distinct from that of the State or other shareholders. It cannot be said that a shareholder owns the property of the corporation or carries on the business with which the corporation is concerned The doctrine....
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....t well-founded When we dare deciding the question as to whether the income derived by the corporation is the income of the State, the provision made by section 30 for making over to the State Government the balance that may remain as indicated therein, is of no assistance. The income is undoubtedly the income of the corporation. All that section 30 requires is that a part of that income may be entrusted to the State Government for a specific purpose of road development. It is not suggested or shown that when such income is made over to the State, it becomes a part of the general revenue of the State It is income which is impressed with an obligation and which can be utilized by the State Government only for the specific purpose for which it is entrusted to Therefore, we are satisfied that the income derived by the appellant from its trading cannot be said to be the income of the State under article 289(1), and if that is so, the facts that the trading activity carried on by the appellant may be covered by article 2892) does not really assist the appellant's case Even if a trading activity falls under clause (2) of article 289, it can sustain a claim for exemption from Union tax....
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....ection therewith. The nature of activity of the appellant is neither trading nor of business of any goods or services. Appellant is a body entrusted with the responsibility of administration of technical education department of the state of Maharashtra. The assessee only collects the fees and penalties on behalf of the Government have decided by the Governing Council of the assessee, which is chaired by Minister of Education Govt. of Maharashtra. Therefore, at no point of time administration activity 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 that the appellant is carrying on trade or business and parliament by law has provided to tax such activity, no tax can be levied. 14. It was argued that meaning of State as per Constitution of India Article 12 of Constitution the word "State" has different meanings depending upon the context in which it is used. The expression "The State" when used in Parts III & IV of the Constitution is not co....
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....ing judgment preferred a broader test that if the functions of the Corporation are of public importance and closely related to governmental functions It should be treated an agency or instrumentality of government and hence a 'State' within the ambit of Article 12 of the Constitution. 18. The definition of the expression "the State" in Article 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 Principles of State as above. Policy contained in Part IV of the Constitution which principles are declared by Article 37 to be fundamental to the governance of the country and enjoins upon the State to apply making laws. The State is an abstract entity and it can, therefore only set through its agencies or instrumentalities, whether such agency or instrumentality is human or juristic. 19. The ld. AR further submits that so far as exemption under section 10 of the Act is concerned, it was submitted that with the omission of clause (20) of section 10, income of such local authorities was subject to tax which are engaged in the business activities or running with profit motive. However, on insertion....
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....ture, 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 the Government. The core test, to be applied whether a particular corporation which is autonomous body is a part of Government, to be seen in the context of degree of control over management and policy decisions. We find that in the case of MSRTC as per the certificate of the share capital filed before us, the entire share capital is contributed by the State Government and the Central Government and there is no private participation. We further find that MSRTC is incorporated under special legislation i.e., Road Transport Corporation Act, 1950. 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 Chairman and other Members in the Managing body. There is a full control of the State 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 equi....
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....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: "1. If the entire share capital of the corporation is held by the Government, it would go a long way towards indicating that the corporation 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 instrumentality. 3. Whether the Corporation enjoys monopoly status which is 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 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." 24. After applying the cumulative effect of all the relevant factors mentioned above, if the body is found to be an instrumentality of the agency of the Government, it would be an authori....
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....e Tribunal, the Department/Revenue preferred an appeal before the High Court. The High Court held that the interest accrued on bank deposits cannot be treated as an income of the assessee as the interest is earned out of the money given by the Government of India for the purpose of implementation of Mega-city scheme. The pertinent observation of the High Court read as follows: Quote; 4. The material on record shows that the very purpose of constitution of the assessee was to act as a nodal agency for implementation of Mega-city scheme worked out by the Planning Commission. Both the Central and the State Governments are expected to provide requisite finances for implementation of the said project. The funds from the Central and State Governments will flow directly to the specialised institutions/nodal agencies as grant and the nodal agency will constitute a revolving fund with the help of Central and state shares out of which finance could be provided to various agencies such as water, sewerage boards, municipal corporations, etc. The objective is to create and maintain a fund for the development of infrastructural assets on a continuing basis and, therefore, the assessee is a nod....
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....s of Article 289 of the Constitution of India assume significance and importance, which read as under: Exemption of property and income of a State from Union taxation. 289. (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. 27. Article 289 of the Constitution of India supplants the charging section i.e., Section 4 of the Act in as much as the income of the State Government is exempt from Union Taxation. Neither Section 4 and/or Section 2(24) of the Act i.e., chargeability provision and provision defining income lays down....
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....terference that the corporation is the agent of the Government may be drawn where it is performing in substance governmental and non commercial functions. (cf London County Territorial and Auxiliary forces Association v. Nichlos) [1948] 2 All E.R. 432." (Emphasis supplied) 29. However, there is a thin line of demarcation between bodies of the State to whom for implementation of Government projects, work in relation thereto is assigned and as a result thereof, during the performance of such activity on behalf of the State, income is earned though utilised for the same purpose and instrumentalities carrying on trade and/or business activity of the State Government earning income. In both the cases aforesaid there is existence of deep and pervasive State Control. In the former case, the body to whom work has been entrusted and income is earned acts as a nodal agency of the State whereas in the latter case it is not so as the instrumentality having independent identity has income arising from its trading and/or business activity and conduct of such activity not being attributable to State in any manner. The aforesaid distinction is discernible from various cases decided by the Hon'....