The Venkatachaliah Commission was established to review the Constitution of India. It was not formed to review any other option mentioned in the question.

Option 1: The sharing of river waters between states is a complicated and contentious issue in India, but the Venkatachaliah Commission was not tasked with reviewing this.

Option 2: The creation of new states in India is usually a political decision made by the central government. The Venkatachaliah Commission was not involved in reviewing this aspect.

Option 4: The taxation system in India is periodically reviewed and updated by various bodies and committees, but the Venkatachaliah Commission was not responsible for reviewing this.

Therefore, the correct answer is option 3, as the Venkatachaliah Commission was indeed constituted to review the Constitution of India. It was set up in 2000 with the objective of suggesting potential amendments and changes to the Constitution to better suit the contemporary needs of the country.