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2023 (1) TMI 1152 - AT - Income TaxExemption u/s 11 - application for registration u/s 12AA rejected - whether assessee shall be held as “State” and thus no tax can be levied on it under the income tax act? - As per Commissioner (Exemption) appellant was carrying on activities in the nature of commerce & the object of the appellant were not to be treated as for Charitable purpose u/s 2(15) - HELD THAT:- As per the definition of “State”, if we check under which head the assessee company would fall, the probable answer is “Local or Other Authorities”. But, the definition of “Local or Other Authority” was not defined in the constitution or any other statute, however, a fundamental guidance was accorded by Som Prakash Rekhi vs Union Of India [1980 (11) TMI 113 - SUPREME COURT] wherein the Hon‟ble Apex Court has prescribed certain tests to determine as to whether an institution is “State‟ within the meaning of Article 12 of the Constitution of India or not. We have carefully perused the submissions of the assessee (supra) regarding fulfillment of the aforesaid tests/conditions carved out by the Apex court and found that the assessee company has satisfied the said tests, thus, we hold that the assessee company falls under the definition of “State” within the meaning of Article 12 of the Constitution of India and, therefore, in our considered opinion entitle for immunity from the taxation under the provisions of Income Tax Act 1961 as directed under article 289 of constitution of India 1949. WATCO, the assessee company hold the status of “State” within the meaning of Article 12 of the Constitution of India and entitle for immunity from taxation under the provisions of Income Tax Act 1961 as declared by Article 289 of the Constitution of India 1949. Consequently, the additional ground of the assessee stands allowed.
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