Orissa Pollution Control Board is ‘State’ Under Article 12; Entitled to Immunity From Income Tax Under Article 289 | ITAT

Case Details: State Pollution Control Board vs. ITO - [2025] 172 taxmann.com 12 (Cuttack-Trib.)

Judiciary and Counsel Details

• George Mathan, Judicial Member & Manish Agarwal, Accountant Member
• S.K. Agrawalla Sanjay Kumar, CIT DR for the Respondent.

Facts of the Case

The assessee was a Board constituted under the Orissa Water (Prevention and Control of Pollution) (Amendment) Act, 1974. It filed an appeal against the order of CIT(A) claiming it was considered to be a ”State” within the meaning of Article 12 of the Constitution of India and its income was not liable for taxation as per the provisions of Article 289(1) of the Constitution of India.

ITAT Held

The Tribunal held that in the case of the assessee, it has no control over the finance insofar as the fees and charges are also fixed by the Government of Odisha and published in the State Gazette Notification. If the assessee winds up, the funds would be returned to the state government.

It was submitted by the assessee at the time of hearing that the assessee cannot even open a bank account without specific permission of the State Government. The assessee has not done anything to dislodge itself from the protection granted to the State or a Constituent of the State, of immunity from taxation under Article 289 of the Constitution of India. In the case of the assessee, all the tests are in the affirmative, and it is held to be a ‘State’.

The assessee-Board is completely controlled financially and administratively by the government. Consequently, it is held that the assessee herein falls within the definition of ‘State’ under Article 12 of the Constitution of India. Accordingly, additional ground raised by the assessee stands allowed.

List of Cases Reviewed

• Som Prakash Rekhi v. Union Of India & Anr 1981 AIR 212, 1981 SCR (2) 111 (Para 12)
• Maharashtra State Board of Technical Education v. ITO, 176 ITD 47 (Mumbai) (Para 13) followed.
• A.P. State Road Transport Corporation v. ITO, 52 ITR 524 (SC) (Para 11) distinguished.

List of Cases Referred to

• A.P. Pollution Control Board, Hyderabad v. DDIT (Exemption) (para 10)
• Andhra Pradesh State Road Transport Corpn. v. ITO 1. Bihar State Road Transport Corpn. 2. North Bengal State Transport Corpn. And 3. Calcutta State Transport Corpn.: Interveners. [1964] 52 ITR 524 (SC) (para 11)
• Maharashtra State Board of Technical Education v. ITO 176 ITD 47 (Mumbai) (para 13).