MSBTE is ‘state’ under Article 12 and exempted from Income Tax: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the Maharashtra State Board of Technical Education (MSBTE) would be state under the purview of Article 12 of the Indian Constitution and is exempted from income tax.

The assessee Maharashtra State Board of Technical Education (MSBTE) was constituted by Maharashtra State Government and was an authority for regulating technical matters pertaining to diploma level education. The assessee board came into existence in 1991 and was set up as an authority to regulate matters related to diploma level technical education in the state of Maharashtra.

It was found that observed that the assessee had not filed its return of income for the impugned year and that the assessee was in receipt of a sum and deposit. The A.O sought for the details relating to the assessee’s financials. The A.O recorded reasons that the assessee board had surplus income over the expenses and also that the assessee has not deducted Tax Deducted at Source (TDS) under Section 194A, 194J and 194C of the Income Tax Act 1961.

Tanzil Padvekar, on behalf of the assessee referred to the decision in Maharashtra State Road Transport Co. vs. Divakar MadhukarraoMalkapureand others in which it was held the assessee board would fall under the definition of ‘state’ as per Article 12 of the Constitution of India.

Riddhi Mishra, on behalf of the revenue submitted that, the alleged receipts of payments were not related to imparting education and the same would not be covered under the objectives of the Board. He further contended that the surplus amount of the Board was through commercial activity and also stated that the assessee board would not come under the purview of “state” and was only a “Body Corporate” which would come under the purview of artificial juridical person

The Two-member Bench of Prashant Maharishi (Accountant Member) and Kavitha Rajagopal (Judicial Member)  dismissed the appeal filed by the revenue holding that, “The objectives of the assessee board were evident to categories it to be a ‘state’ under Article 12 of the Constitution of India and the assessee would fall within the term ‘state’ as the assessee was controlled by either the Central or State Government completely and they would also become instrumentality of the Government.”

To Read the full text of the Order CLICK HERE

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