State/Sovereign is exempt from taxation - Is the assessee part of the state thus exempt from taxation?

Facts :

Assessee was a government company which was floated exclusively for the Bangalore Metro rail project and was a 50/50 shareholding of Union and Karnataka government. Besides funding all decisions were also government controlled and was also a non-profit motive entity. Thus being creature of the State; assessee claimed that they were an extended arm of the state and thus they too be granted/were entitled to the exemption from tax like the Sovereign as per Articles 285 and 289 (more so on this clause) of the Constitution of India. AO/CIT(A) did not accept this proposition and made normal corporate assessment of the assessee with certain disallowances. On appeal to ITAT -

Held against the assessee that they were not part of the State but were only an instrumentality of the State. Sovereign exemption from tax cannot apply to them.

Ed. Note : The decision its arguments are worth reading especially on points how someone can be read as an extended arm of the State etc.

The disallowances made their counter points none of these were out of the box however in this case. Most points were remanded to lower authorities to re-examine reassess facts.

Case: Bangalore Metro Rail Corporation Ltd. v. Dy. CIT 2023 TaxPub(DT) 2282 (Bang-Trib)