Loading judgment…

UNIT IMPROVEMENT TRUST, BHARATPUR,BHARATPUR vs DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR, JAIPUR | BharatTax

UNIT IMPROVEMENT TRUST, BHARATPUR,BHARATPUR vs. DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR, JAIPUR

ITA 949/JPR/2025Status: DisposedITAT Jaipur15 October 2025AY 2015-16Bench: Dr. S. SEETHALAKSHMI (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)1 pages

AI SummaryAllowed

Facts

The assessee, Urban Improvement Trust, claimed exemption on its income, asserting it was a 'State' under Article 12 of the Constitution and thus exempt from Union taxation under Article 289. The Assessing Officer and CIT(A) disallowed the claim, treating certain income as taxable. The appeals are against this order.

Held

The Tribunal held that the assessee is an instrumentality of the State fulfilling the requirements of Article 12 and 289 of the Constitution of India. Consequently, the assessee's income is not chargeable to tax under the Income Tax Act.

Key Issues

Whether the Urban Improvement Trust is a 'State' under Article 12 and its income is exempt from taxation under Article 289 of the Constitution of India.

Sections Cited

250, 10(20), 11(2), 10, 12A, 10(20A), 10(46), 10(46A), 40A(3), 4, 14, 289, 289(1), 289(2), 2(24)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCH “A”, JAIPUR

Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL

For Appellant: Mr. Tarun Agarwal, CA, ld. AR

For Respondent: Mr. Rajesh Ojha, CIT, ld. DR

Hearing: 15/10/2025Pronounced: 15/10/2025

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “A”, JAIPUR BEFORE Dr. S. SEETHALAKSHMI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER & 950/JPR/2025 (A. Ys. 2015-16 & 2016-17) Urban Improvement Trust, In-front of Circuit House, Bharatpur 321 001 PAN No.: AAATU 1956F ...... Appellant Vs. DCIT, (Exemption), Jaipur …...Respondent Appellant by : Mr. Tarun Agarwal, CA, ld. AR Respondent by : Mr. Rajesh Ojha, CIT, ld. DR Date of hearing : 15/10/2025 Date of pronouncement : 15/10/2025 O R D E R PER GAGAN GOYAL, A.M:

These two appeals by assessee is directed against the order of NFAC, Delhi dated 17.09.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). In , the assessee has raised the following grounds of appeal:-

& 950/JP/2025 Urban Improvement Trust Pvt. Ltd.

1. The learned CIT (A) as well as Ld DCIT (Exemption) has erred in law as well as in fact in making addition of Rs.7,15,36,230/- merely on the ground that Form 10 could not be e-filed by the assessee while the requirement to e-file the same was introduced from the A.Y. 2016-17.

2. The Ld. CIT(A) failed to consider that the Appellant duly submitted Form-10 subsequently, and the same was available on record before the completion of assessment, thereby complying with the requirement of Section 11(2) of the Act.

3. The Ld. CIT (A) as well as Ld DCIT (Exemption) omitted to take into account the Circular no. 7/2018 dated 20.12.2018 issued by CBDT, directing the Commissioners of Income-tax to condone the delay in filing Form No.10.

4. The Ld CIT(A) as well as Ld DCIT(Exemption) erred in considering that, when Rs. 7,15,36,230/- has been actually set apart under section 11(2) and reported in form 10B, delay in uploading Form 10 cannot lead to disallowances.

9.

Constitution of Trust (1) The Trust shall consist of- (a) A Chairman, (b) Two members of the Municipal Board, if any, having authority in the urban area, x x (bb) x x x (c) such number of other persons, as may be determined by the State Government for each Trust, of whom one shall be a person belonging to scheduled tribe or scheduled caste, if no person of such caste or tribe is represented in the Trust by virtue of clause (a) or clause (b). x x x (2) The Chairman and the persons referred to in clause (c) of sub-section (1) x x x shall be appointed by the State Government by notification. (3) The members of the Municipal Board referred in clause (b) of sub-section (1) shall be elected by the said Board (4) If the said Board does not, by such date as may be fixed by the State Government, elect two of its members to be Trustees, the State Government shall appoint two members of the said Board to be Trustees and every person so appointed shall be deemed to be a Trustee as if he had been duly elected by the Municipal Board. (5) If the said Board shall have been superseded or dissolved in accordance with the provisions of the Municipal law for the time being in force, it shall be represented on the Trust by persons appointed or elected, as the case may be, by the officer or authority appointed under the said law to discharge the functions and exercise the powers of the Board during the period of its supersession or dissolution (6) Of the person referred to in clause (c) of sub-section (1) at least one shall be a person in the service of the State Government. (7) The names of all persons appointed or elected to the Trust shall be notified by the State Government in the official Gazette. 14-A. Termination of appointment and re-constitution. - Notwithstanding anything contained in section 11, 12 or 15, the State Government may, if it thinks fit in public interest so to do, terminate the appointment of Chairman or any Trustee of a Trust or re-constitute the same at any time.

29.

Schemes-matters to be provided therein (1) The Trust shall, on the orders of the State Government or on its own initiative or on a representation made by the Municipal Board and subject to availability of Financial resources, frame schemes for the improvement of the urban area for which the Trust is constitute & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. (2) Such schemes may provide for all or any of the following matters, namely: (a) The acquisition of any land or other property necessary for, or effected by, the execution of the scheme (b) The re-laying out of any land comprised in the scheme (c) The construction and re-construction of buildings: (d) The formation, construction and alteration of streets; (e) The closure or demolition of dwellings or portions of dwellings unfit for human habitation (f) The demolition of obstructive buildings or portions of building (g) The draining, water supply and lighting of street (h) The raising or leveling of any land which the Trust may deem expedient to raise or level (i) The forming of open spaces for the benefit of the area comprised in the scheme or any adjoining area: (j) All or any of the sanitary arrangements required for the area comprised in the scheme; (k) The establishment and construction of markets and other places of public requirement or convenience; (l) The limitation of areas within which special trades or industries may or may not be carried on or which are reserved exclusively for residential or other purposes; (m) The division of any land into plots for the erection of buildings for residential purposes; (n) the erection of buildings on any site, the restrictions and conditions in regard to the open spaces to be maintained in or around such buildings, the height and character of such buildings and the architectural features of the elevation or frontage thereof; (o) The amenities to be provided in relation to any site or building or buildings on such site whether before or after the erection of such buildings and the person or authority by whom or at whose expense such amenities are to be provided; (p) the construction of buildings for the accommodation (including shops) of the poor and the working classes or of any other class of the inhabitant of the area comprised in the scheme including such classes as are likely to be displaced by the execution of the scheme; (q) The provision of facilities for communications; & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. (r) The reclamation or reservation of land for gardens, afforestation and the provision of fuel and grass supply and other needs of the population; (s) The planting and preservation of trees and plantations (t) The sale, letting or exchange of any property or land comprised in the scheme; and (u) Any other matter for which in the opinion of the State Government it is expedient to make provision with a view to the improvement of the area comprised in the scheme or the general efficiency thereof.

74.

Power of Government to make rules (1) The State Government may make rules consistent with this Act- (a) As to the authority on which money may be paid from the Trust fund; & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. (b) For prescribing the fees payable for a copy of or extracts from the assessment list under section 35 or section 73; (bb) for prescribing standards for the sub-division or re- constitution of plots, lay-out of private streets etc., and, for provision of roads, lanes, water connections, electric connections and other amenities to be provided for by the owner at his costs; (bbb) for prescribing the particulars to be submitted under subsection (1) of section 73A, and the period during which the plan shall be sanctioned or refused under sub-section (2) of the same; (c) As to the conditions on which officers and servants of the Trust appointed to offices requiring professional skill may be appointed, suspended or dismissed (d) As to the intermediate office or offices, if any, through which correspondence between the Trust and the State Government or officers thereof shall pass (e) As to the manner and form in which the Trust shall maintain accounts and prepare an annual statement thereof including the balance sheet; (f) as to the authority by whom, the conditions subject to which and the mode in which contracts may be entered into and executed on behalf of the Trust; (g) As to the form in which and the time at which the Budget shall be prepared; (h) As to the returns, statements and reports to be submitted by the Trust; (i) As to the mutual relations to be observed between the Trust and other local authorities in any matter in which they are jointly interested; (j) For regulating the grant of leave allowances and acting allowances to the officers and servants of the Trust; (jj) for prescribing the conditions under which the officers and employees of a Trust may, under section 24A, be transferred from one Trust to another or to the Jaipur Development Authority; (k) for establishing and maintaining a pension, provident or annuity fund, for compelling all or any of the officers in the service of the Trust to contribute to such fund at such rates and subject to such conditions as may be prescribed and for supplementing such contributions out of the funds of the Trust: Provided that a Government servant employed as an officer or servant of the Trust shall not be entitled to leave or leave allowance otherwise than as may be prescribed by the conditions of his service under the State Government; & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. (l) For determining the conditions under which the officers and servants of the Trust or any of them shall, on retirement, receive pensions or gratuities or compassionate allowances and the amount of such pensions, gratuities and compassionate allowances; (m) For regulating every matter which, under this Act, may be or is required to be prescribed; x xx (n) Generally for the guidance of Trusts and public officers in all matters connected with the carrying out of the provisions of this Act; (o) For prescribing the rates of conversion charges; and (p) As to the authority to which, and the manner, in which an application for permission for change of use of land shall be made, and the manner in, and the authority by, which conversion charges, payable in respect thereof shall be fixed. (2) No rule made under sub-section (1) shall take effect until it is published in the official Gazette, and no such rule shall be made except after previous publication: Provided that any such rule may be made without previous publication if the State Government considers that it should, in public interest, be brought into force at once.

6.

The assessee has also contended that it is the arm of Government of Rajasthan and its income is not taxable, in this regards following legal positions may be noted and relied upon by us, as the Tribunal is a final fact finding authority and its Endeavour is to settle the issue in its true spirit w.r.t. Law and facts both: a) The contention of the assessee is not acceptable in view of decision of Hon'ble Supreme Court in the case of APSRTC (52 ITR 524) wherein it has been clearly bifurcated that the income of the state is different and income of the corporation is different. The relevant portion is reproduced as under "Reading the three clauses together, one consideration emerges beyond all doubt and that is that the property as well as the income in respect of which exemption is claimed clause (1) must be the property and income of the State, and so, the same question faces us again is the income derived by the appellant from its transport activities the income of the State? If a trade or business is carried on by the State departmentally and income is derived from there would no difficulty in holding that the said income is the income of the State if a trade or business is carried on by a State through its agents appointed exclusively for that purpose, and the agents carry it on entirely on behalf of the State and not on their own account there would be no difficulty in holding that the income made from such trade or business is the income of the State. But difficulties arise when we are dealing with trade or business carried on by a corporation established by a State by using a notification under the relevant provisions of the Act. The corporation, though statutory, has a personality of its own and this personality is distinct from that of the State or other shareholders. It cannot be said that a shareholder owns the property of the corporation or carries on the business with which the corporation is concerned The doctrine that a corporation has a separate legal entity of its own is so firmly rooted in our notions derived from common law that it is hardly necessary to deal with it elaborately, and so, prima facie, the income derived by the appellant from its trading activity cannot be claimed by the State which is one of the shareholders of the corporation." The Hon'ble Supreme Court after analyzing the different clauses of Article 289(1) in the context of the claim made by the assessee held as under: The main point which we are examining at this stage: is the income derived by the appellant from its trading activity, income of the State under article 289(1) In our opinion, the answer to this question must being the negative. Far from making any provision which would make the & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. income of the corporation the income of the State, all the relevant provisions emphatically bring out the separate personality of the corporation and proceed on the basis that the trading activity is run by the corporation and the profit and loss that would be made as a result of the trading activity would be the profit and loss of the corporation. There is no provision in the Act which has attempted to lift the veil from the face of the corporation and thereby enable the shareholders to claim that despite the from which the organization has taken, it is the shareholders who run the trade and who can claim the income coming from it as their own. Section 28 which provides for the payment of interest clearly brings out the duality between the corporation on the one hand and the state and Central Government on the other Take, for instance, the case of suppression of the corporation authorized by section 38. Section 38(2)(c) emphatically brings out the fact that the property really vests in the corporation, because it provides that during the period of suppression, it shall vest in the State Government Similarly section 39(2) which deals with the distribution of assets in case of liquidation, brings out the same feature: It has been urged before by the Advocate-General that section 30 contemplates that after provisions is made as required by section 28 and 29 and funds are utilized as prescribed by section 30, the balance has to be given to the State Government for the purpose of road development, and that, it is suggested, indicates that income belongs to the State Govern This argument is clearly not well-founded When we dare deciding the question as to whether the income derived by the corporation is the income of the State, the provision made by section 30 for making over to the State Government the balance that may remain as indicated therein, is of no assistance. The income is undoubtedly the income of the corporation. All that section 30 requires is that a part of that income may be entrusted to the State Government for a specific purpose of road development. It is not suggested or shown that when such income is made over to the State, it becomes a part of the general revenue of the State It is income which is impressed with an obligation and which can be utilized by the State Government only for the specific purpose for which it is entrusted to Therefore, we are satisfied that the income derived by the appellant from its trading cannot be said to be the income of the State under article 289(1), and if that is so, the facts that the trading activity carried on by the appellant may be covered by article 2892) does not really assist the appellant's case Even if a trading activity falls under clause (2) of article 289, it can sustain a claim for exemption from Union taxation only if it is shown that the income derived from the said trading activity is the income of the State. That is how ultimately, the cure of the problem is to determine whether the income in question is the income of the State and on this vital test, the appellant fails."

13.

The definition of the expression "the State" in Article 12 is used in the concept of the State in relation to the Fundamental Rights guaranteed by Part III of the Constitution and the Directive Principles of State as above. Policy contained in Part IV of the Constitution which principles are declared by Article 37 to be fundamental to the governance of the country and enjoins upon the State to apply making laws. The State is an abstract entity and it can, therefore only set through its agencies or instrumentalities, whether such agency or instrumentality is human or juristic. The ld. Dr further submits that so far as exemption under section 10 of the Act is concerned, it was submitted that with the omission of clause (20) of section 10, income of such local authorities was subject to tax which are engaged in the business activities or running with profit motive. However, on insertion of clause (46) to section 10 of the Act, by Finance Act 2011 w.e.f. 01.06.2011. On application made to the Board, the CBDT vide its notification published in the Gazette of India dated 29.03.2016 notified the streams of income disclosed by the Board in its return of income as exempt for the purpose of clause (46) of the section 10 of the Act, but that would not take away the status of assessee as "State" within the meaning of Article-12 r.w.s. Article 289 of the Constitution of India. The CBDT has specifically exempted certain income by way of this notification. There is no change in the activities of the assessee since inception which establishes the fact that the assessee was never into the business of commercial activities. The source of income of assessee consists of grant from State Government, various fees/conversion charges collected from public to convert land use changes, receipt from auction of land etc. and receipt from other government bodies or interest on deposits. None of these items can be said to be carrying of any activities in the nature of trade, commerce or business. The & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. assessee is not rendering any services in the nature of trade, commerce or business for a fee or any other consideration. The assessee engaged in regulation of concerned city/district in terms of town planning and improvement of residential and commercial property needs. In support of our observations we relied upon the decision of Hon'ble Supreme Court in M/s. Novopan India Ltd. v. Collector of Central Excise and Customs [1994] Supp. (3) SCC 606, for the preposition that once the provision is found applicable to a subject, full effect i.e., liberal interpretation must be given to it and strict construction of any exemption provision should be applied only at the threshold stage. The decision of Kolkata Tribunal in Narayan Rice Mill v. CIT (ITA No. 732/Kol/2015 dated 07.06.2017, decision of Pune Tribunal in Smt. Sapna Sanjay Raisoni v. ITO [2016] 70 taxmann.com 7 also held the same on identical issue.

14.

The definition of the State under Article 12 has come for the consideration on number of occasions before the Hon'ble Supreme Court. The State consists of three departments, the Legislature, the Executive and the Judiciary. We need not go into all the limbs of the State as only the limited issue before us is whether the term Government used in clause (b) to Rule 6DD includes even the autonomous bodies which partakes the character of instrumentalities of the Government. The core test to be applied, whether a particular corporation which is autonomous body is a part of Government, to be seen in the context of degree of control over management and policy decisions. The issue of Maharashtra State Road Transport Corporation (MSRTC) was also examined and observed “As per the certificate of the share capital filed before us, the entire share capital is contributed by the State Government and the Central Government and there is no private participation. We further find that MSRTC is incorporated under special & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. legislation i.e., Road Transport Corporation Act, 1950. We have examined the provisions of the said enactment. As per section 5 of the said Act, the State Government is only having power to appoint the Chairman and other Members in the Managing body. There is a full control of the State Government on the policy decisions as well as management. In our opinion, if we apply the test of the control and management as well as the equity participation, MSRTC is a State within Article 12 of the Constitution.” Applying the above test, the Hon'ble Supreme Court has held, as discussed hereinabove that the autonomous bodies like State Road Transport Corporation or Warehousing Corporation where there is a full control by the Government, either Central or State, these are the instrumentalities of the Government only. The term Government is very much wide under the constitutional set up. Government may be central or State or it may be Local Government which is envisaged by our Constitution, like Zilla Parishad, Municipal Corporations, Municipal Councils, and Panchayat Samithi’s, etc. The Public Works Department is part of the Government. In our opinion, this aspect has not been considered by the authorities below and they have closed door to the assessee to make out the case for examination under Rule 6DD. We are, therefore, of the opinion, that in the light of our above discussion, the plea of the assessee needs reconsideration by the Ld. CIT (Appeals). We, therefore, set aside the issue in respect of the disallowance made u/s.40A (3) to the file of the Ld. CIT (A) to decide the same de novo in the light of our above observations and discussion. Accordingly, the relevant Grounds taken by the assessee in all these appeals are allowed for statistical purposes. Needless to say, the Ld. CIT (A) is directed to give opportunity of being heard to the assessee as per the principles of natural justice.'

17.

In CIT vs. Karnataka Urban Infrastructure Development & Finance Corpn., decided by the Hon'ble High Court of Karnataka, the assessee - corporation, a fully owned State Government company was appointed as a nodal agency for the implementation of the Mega-city scheme worked out by the Planning Commission of Ministry of Urban and Employment for Development of Urban Infrastructure to Bangalore city, for which purpose the Central Government provided the money to the assessee for implementing the said scheme. The money so received from the Government of India was parked by the assessee in various bank deposits during the unutilised period. The interests earned during the year on these deposits were transferred to the Mega-city scheme account directly with an appropriate disclosure in the notes to the accounts. The assessee also performed the other projects of development of infrastructure apart from the activity as a nodal agency for the implementation of the Mega-city scheme undertaken by the Government of India from time to time. The Assessing Officer treated the interest earned and received by the assessee out of the amount which it had received from the Central and State Governments and deposited in various banks, as income of the assessee and brought the & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. aforesaid amounts to tax. The aforesaid view of the Assessing Officer was upheld by the Commissioner of Income-tax (Appeals). The assessee preferred an appeal before the Tribunal. The Tribunal looked into the guidelines which provided the background of the scheme. The Tribunal while setting aside the Orders of the Assessing Officer and Commissioner of Income-tax (Appeals) held that the assessee in fact acted as an agent of the Governments of both the Central and the State for implementing the scheme of the Government. This being the factual position, the lower authorities’, committed serious error in treating the interest as income of the assessee and bringing the same to tax. Aggrieved by the Order of the Tribunal, the Department/Revenue preferred an appeal before the High Court. The High Court held that the interest accrued on bank deposits cannot be treated as an income of the assessee as the interest is earned out of the money given by the Government of India for the purpose of implementation of Mega-city scheme. The pertinent observation of the High Court read as follows: Quote; 4. The material on record shows that the very purpose of constitution of the assessee was to act as a nodal agency for implementation of Mega-city scheme worked out by the Planning Commission. Both the Central and the State Governments are expected to provide requisite finances for implementation of the said project. The funds from the Central and State Governments will flow directly to the specialised institutions/nodal agencies as grant and the nodal agency will constitute a revolving fund with the help of Central and state shares out of which finance could be provided to various agencies such as water, sewerage boards, municipal corporations, etc. The objective is to create and maintain a fund for the development of infrastructural assets on a continuing basis and, therefore, the assessee is a nodal agency formed/created by the Government of Karnataka as per the guidelines; there is no profit motive as the entire fund entrusted and the interest accrued there from on deposits in bank though in the name of the assessee has to be applied only for the purpose of welfare of the Nation/States as provided in the guidelines; the whole of the fund belongs to the State Exchequer and the assessee has to channelise them to the objects of centrally sponsored scheme of infrastructural development for Mega-city of Bangalore. Funds of one wing of the Government are distributed to the other wing of the Government for public purpose as per the guidelines issued. The monies & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. so received, till it is utilised, is parked in a bank. The finding recorded by the Tribunal clearly shows that the entire money in question is received for implementation of the scheme which is for a public purpose and the said scheme is implemented as per the guidelines of the Central Government and, therefore, the assessee is only acting as a nodal agency of Central Government for implementation of these projects. It is not the case of the revenue that the assessee was carrying on any business or activities of its own while implementing the scheme in question. The unutilised money, during which the project could not be fully implemented, is deposited in a bank to earn interest. That interest earned is also again utilised for the implementation of the Mega-city scheme which is also permitted under the scheme. Therefore, in computing the total income of the assessee for any previous year the interest accrued on bank deposits cannot be treated as an income of the assessee as the interest is earned out of the money given by the Government of India for the purpose of implementation of Mega-city scheme."

20.

To perform the functions, the Government has its various departments and to facilitate its working, the Government itself may be divided into various Sections. To carry out the commercial activities by the State, the Corporations have been established by enactment of Statutes and the "power to charter Corporations is incidental to or in aid of Governmental functions." Such Corporations would ex-hypothesis be agencies of the Government. Thus, until and unless the statute, under which the instrumentality has been brought into existence, provides that such an instrumentality shall be the agent of the State, the instrumentality shall not be a State. The pertinent observation in regard thereto, made by the Supreme Court in the case of Heavy Engg. Mazdoor Union vs. State of Bihar reads as under: "The question whether a corporation is an agent of the State must depend on the facts of each case. Where a statute setting up a corporation so provides, such a corporation can easily be identified as the agent of the State as in Graham v. Public Works Commissioners, [1901] 2 KB 781 where Phillimore, J. said that the Crown does in certain cases establish with the consent of & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. Parliament certain officials or bodies who are to be treated as agents of the Crown even though they have the power of contracting as principals. In the absence of a statutory provision, however, a commercial corporation acting on its own behalf, even though it is controlled wholly or partially by a Government department, will be ordinarily presumed not to be a servant or agent of the State. The fact that a minister appoints the members or directors of a corporation and he is entitled to call for information, to give directions which are binding on the directors and to supervise over the conduct of the business of the corporation does not render the corporation an agent of the Government. (See: The State Trading Corporation of India Ltd v. The Commercial Tax Officer, Visakhapatnam, [1964] 4 SCR 99 at 188, and Tamlin v. Hannaford [1950] 1 KB 18 at 25, 26. Such interference that the corporation is the agent of the Government may be drawn where it is performing in substance governmental and non commercial functions. (of London County Territorial and Auxiliary forces Association v. Nichlos) [1948] 2 All E.R. 432." (Emphasis supplied) 21. However, there is a thin line of demarcation between bodies of the State to whom for implementation of Government projects, work in relation thereto is assigned and as a result thereof, during the performance of such activity on behalf of the State, income is earned though utilised for the same purpose and instrumentalities carrying on trade and/or business activity of the State Government earning income. In both the cases aforesaid there is existence of deep and pervasive State Control. In the former case, the body to whom work has been entrusted and income is earned acts as a nodal agency of the State whereas in the latter case it is not so as the instrumentality having independent identity has income arising from its trading and/or business activity and conduct of such activity not being attributable to State in any manner. The aforesaid distinction is discernible from various cases decided by the Hon'ble Supreme Court as well as the High Courts. In the case of Andhra Pradesh State Road Transport Corporation v. CIT, the Andhra Pradesh State Road Transport Corporation constituted under the Road Transport Corporations Act, 1950, by a notification issued by the Andhra Pradesh Government, was held not be immune from liability & 950/JP/2025 Urban Improvement Trust Pvt. Ltd. to income-tax on income derived from its trading activities, under article 289 of the Constitution of India for the reason that though the majority of its shares are owned by the Andhra Pradesh Government and its activities are controlled by the State, the Corporation has a separate personality of its own, the trading activities are the trading activities of the Corporation and the profit and loss arising there from are the profit and loss of the Corporation and therefore, the income derived by the Corporation from its trading activities cannot be said to be the income of the Andhra Pradesh State under Article 289 of the Constitution of India. The Supreme Court for reaching the aforesaid conclusion referred to the following observations which had been made by Lord Denning in the case of Tamlin v. Hannaford [1950] 1 KB 18: "The corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government." Thus, on the basis of the aforesaid observations, that a trading activity carried on by the corporation is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through its agents appointed in that behalf, the Hon'ble Supreme Court held that the income derived by the Corporation from its trading activities cannot be said to be the income of the Andhra Pradesh State under Article 289(1) of the Constitution of India.