In ITA No. 81/Mum/2023- ITAT - Maharashtra State Board of Technical Education qualifies as 'State' and is entitled to Tax immunity: ITAT (Mumbai)
Members Prashant Maharishi (Accountant) & Kavitha Rajagopal (Judicial) [28-04-2023]

Read Order: ITO v. Maharashtra State Board of Technical Education

LE Correspondent

Mumbai, May 20, 2023:  The Mumbai bench of the Income Tax Appellate Tribunal has held that the Maharashtra State Board of Technical Education (MSBTE) qualifies as a ‘State’ within the meaning of Article 12 of the Constitution of India, and as a result, is entitled to the benefit of immunity from taxation on its income under the provisions of the Income Tax Act.

The brief facts of the case were that the MSBTE (assessee) was constituted by Maharashtra State Government and was an authority for regulating technical matters pertaining to diploma level education. The Revenue contended that the payments received by the assessee were not related to imparting education and therefore did not fall within the objectives of the Board. The Revenue also claimed that the surplus amount generated by the assessee was a result of commercial activity. Additionally, the Revenue contended that the assessee should be classified as a ‘Body Corporate’ rather than a ‘State’ and should be considered an artificial juridical person.

The two-member bench of Prashant Maharishi (Accountant) and Kavitha Rajagopal (Judicial) noted that all the issues raised by the Revenue in its appeal had already been addressed and decided in favor of the assessee in a previous order, wherein it has been held that the assessee was not rendering any services in the nature of trade, commerce or business for a fees or any other consideration, rather, the assessee was engaged in regulation of educational activities as per the statutory obligation conferred on the assessee. Even otherwise, every activity of the assessee was subject to superintendence, instruction and control of the State Government. Therefore, the assessee was completely controlled financially as well as administratively by the Government, thus, falls under the definition of ‘State’. Additionally, CBDT vide its notification date 29.03.2016 has granted exemption of taxation to the assessee.

The bench concluded that the objectives of the assessee indicated its categorization as a 'State' under Article 12 of the Constitution of India. The Tribunal referred to the criteria established by the Hon'ble Supreme Court, observing that when an entity is completely controlled by either the Central or State Government, it becomes an instrumentality of the Government, and in such cases, it falls within the definition of 'State.'