The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has recently held that the Maharashtra State Board Technical Education comes within the meaning of “State” under Article 289 of the Constitution of India.
For the assessment year 2011-12, the department has initiated assessment proceedings under section 143 r.w.s. 147 of the Income Tax Act, 1961 against the assessee, an autonomous board of education in the state of Maharashtra.
The assessee contended that they are “State” within the meaning of Article 289 of the Constitution and in support of their arguments, they relied on the earlier orders of the Tribunal wherein the Tribunal observed that if the body is found to be an instrumentality of the agency of the Government, it would be an authority included in term “State” under Article 12 of the Constitution of India.
“However, the tests indicated by the Hon’ble Apex Court in the case of Som Prakash Rekhi are merely indicative and not absolute and thus, have to be applied discretely. If anybody or organization falls within the criteria as laid down by the Hon’ble Apex Court it can be considered that it falls within the term “State”,” the Tribunal said in its earlier order.
Citing the above order, the Tribunal quashed the assessment proceedings for the relevant year and held that “We see no reasons to take any other view of the matter our esteemed colleagues. Respectfully following the same, we hold that the assessee is “State” under Article 289 of the constitution of India and is entitled to immunity from taxation under the Income Tax Act 1961. The plea of the assessee is thus sustained.”
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