DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION)-2(1), MUMBAI, MUMBAI V. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY, MUMBAI

ITA 3936/MUM/2023

AI Insights

The case involves four appeals by the Deputy Commissioner of Income Tax (Exemption) against the MMRDA concerning the denial of tax exemptions under Section 11 of the Income Tax Act, 1961, for the assessment years 2016-17 to 2018-19. The primary legal issues revolved around whether MMRDA qualifies as a charitable entity under the Act, whether it acts as an agent of the State Government, and the treatment of income from lease premiums and TDRs. The Tribunal considered previous rulings, the statutory framework of the MMRDA Act and MRTP Act, and the specific roles and functions of MMRDA as a development authority.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396540 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Other Referred Cases: City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) v. ACIT, Mumbai Metropolitan Region Development Authority v. DCIT (Exemption) -2(1), Mumbai
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Capital asset; Opportunity of being heard; Question of law; Source of fund; Notional interest; Charitable institution; Cancellation of registration; Revision of order; Benefit of exemption; Maximum Marginal Rate; CHAPTER IV
• Section: 143(3); 154; 263; 32; 11; 12AA; 12A; 12; 10B; 260A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, HON'BLE VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos. 3791 and 3936/MUM/2023 Assessment Year: 2018-19 ITA Nos. 3794 and 3795/MUM/2023 Assessment Years: 2017-18 and 2016-17 Deputy Commissioner of Income Tax (Exemption) -2(1), Mumbai Vs. Mumbai Metropolitan Region Development Authority Plot C 14 and C 15, MMRDA, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051 (PAN : AAATM7106R) (Appellant) (Respondent) Present for: Assessee : Shri Saurabh Soparkar, Sr. Advocate Mr. Chaitanya Joshi, Ms. Vrushti Galani, and Mr. Ronak Doshi, CAs Revenue : Shri Bhangepatil Pushkaraj Ramesh, Sr. DR Date of Hearing : 25.04.2025 Date of Pronouncement : 28.05.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These four appeals filed by the Revenue are against the orders of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order nos. 2 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 i) ITBA/NFAC/S/250/2023-24/1055491511(1), dated 28.08.2023 passed against the assessment order by National Faceless Assessment Centre, Delhi, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 18.06.2021 for Assessment Year 2018-19 ii) ITBA/NFAC/S/250/2023-24/1056135160(1), dated 15.09.2023 passed against the assessment order by DCIT, Exemptions-2(1), Mumbai, u/s.154 of the Act, dated 16.02.2023 for Assessment Year 2018-19. iii) ITBA/NFAC/S/250/2023-24/1055488789(1), dated 28.08.2023 passed against the assessment order by DCIT Exem. Circle 2, Mumbai, u/s. 143(3) of the Act, dated 23.12.2019 for Assessment Year 2017-18 iv) ITBA/NFAC/S/250/2023-24/1055539505(1), dated 29.08.2023 passed against the assessment order by National Faceless Assessment Centre, Delhi, u/s. 143(3) of the Act, dated 06.12.2018 for Assessment Year 2016-17. 2. Out of the four appeals, there appeals, i.e., ITA No. 3791, 3794 and 3795/Mum/2023 have identical grounds except for one additional issue in respect of transferable development rights (TDRs) raised in ground number 4 for Assessment Year 2017-18 and 2018-19. The fourth appeal in ITA No. 3936/Mum/2023 for Assessment Year 2018- 19 will have a direct bearing from the outcome of appeal in ITA No. 3791/Mum/2023 since it is against order u/s 154. We take up appeal for AY 2016-17 as the lead case and observations and findings for this shall apply mutatis mutandis to the other two appeals for AY 2017-18 and AY 2018-19. Grounds raised by the Revenue in appeal for Assessment Year 2016-17 are reproduced as under: 3 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 1. Whether on the point of law and on the facts and circumstances of the case, the Ld. CIT(A) is justified in allowing the appeal of the basis of the decision in the assessee own case for the earlier assessment years namely 2010-11 to 2015-16, bearing ITA No, 4391, 4392, 4393, 4394 & 4395/MUM/2019 and ITA Nos. 34 & 35/MUM/2020, order dated 03.01.2022 without appreciating the fact that the revenue has not accepted the decision of tribunal in all these assessment years and filed appeals before Hon'ble Bombay High Court vide ITXAL 31460 2022, ITXAL 31466 2022, ITXAL 31471 2022, ITXAL 31485 2022, ITXAL 31496 2022 and ITXAL 38006 2022 and the same are pending for adjudication? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in stating that the assessee acts on behalf of and as an agent of the State Government without considering the decision of MIDC [relied upon by the Ld. CIT(A)] wherein the Hon High Court has held that the decision in the case of CIDCO was per incuriam? 3. Whether on the point of law and on the facts and circumstances of the case, the Ld. CIT(A) is justified in allowing the benefit of exemption u/s 11 of the Income Tax Act, to the assessee merely on the basis of its orders for the preceding assessment years without appreciating that in the assessment year under consideration, the activities of the assessee are in the nature of advancement of any other object of general public utility, undertaken for a consideration and hence, hit by the mischief of the proviso to section 2(15) of the Income Tax Act, introduced w.e.f 01.04.2009, and the amended provision applies to the assessment year under consideration, even if registration u/s 12A of the Act is valid Ground? 4. Whether on the point of law and on the facts and circumstances of the case, the Ld. CIT(A) is justified in not considering the lease premium of Rs.1191.87 crore received by the assessee against property from different parties as income of the Assessee holding that the property belongs to the Government of Maharashtra, relying on the entry in the Balance sheet, without appreciating the fact that the assessee is a separate entity and, therefore, the income of the Assessee cannot be regarded as income of the State, the same is held in the case of Andhra Pradesh State Road Transport Corporation vs. Income Tax Officer - 52 1TR 524, further Section 3 of the MMRDA Act and Section 126 of the MRTP Act also states that the land is vested in the authority and, therefore, the authority cannot be an agent of this State? 5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee is not a valid Trust in terms of section 11 to 13 of the Act, and its activities are not charitable in nature and the proviso to section 2(15) is applicable in the facts of the present case? 6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in allowing the appeal on the issue of addition on account of interest, on account basis, on deposits kept with the public section undertaking and government of Maharashtra, even though in view of section 5 of Income - tax Act, 1961 the income is chargeable to tax on accrual basis? 4 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 7. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not deciding the issue of expenditure on merits in a situation where deduction u/s 11 is not allowed? 8. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not deciding on merits the issue of deemed application of income towards objects? 2.1. The most clinching fact to be borne in mind is that assessee continues to have its registration u/s 12AA of the Act and it is not revoked by the Revenue, entitling it to claim exemption u/s 11 and 12 of the Act. Assessee filed its return of income on 14.10.2016 reporting total income at NIL after claiming exemption u/s. 11 of the Act. Assessee is established under a special statute enacted by Maharashtra State Legislature, namely, the Mumbai Metropolitan Region Development Authority Act, 1974 (The MMRDA Act). Assessee is also registered u/s. 12A, r.w.s. 12AA of the Act, with the Director of Income Tax (Exemption), Mumbai. Assessee was set up for development of Mumbai Metropolitan Region. Preamble to MMRDA Act lays down the object of development of the Metropolitan Region. Section 12 of the MMRDA Act lays down the objects for which assessee is formed. Section 17 of the MMRDA Act provides that assessee may in consultation with the Municipal Commissioner of the Brihan Mumbai Municipal Corporation (BMC) prepare any project or scheme with a view to provide an infrastructure within the territorial limits of BMC and execute the same. The development functions carried out by the assessee for the entire Mumbai Metropolitan Region falls within the ambit of the term 'advancement of general public utility’ i.e. charitable purpose as contained in section 2(15) of the Act. 5 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 2.2. In recent times, assessee had undertaken several projects in accordance with the objectives for which it was established. Out of many, some of the following projects as listed below: ● Mumbai Urban Transport Project (MUTP), ● Mumbai Urban Infrastructure Project (MUI)-Roads, Bridges, Flyovers, ● Mumbai Metro Rail (MMR), ● Mithi River Clean-up project, ● Nariman Point Beautification; ● Solid Waste Management, ● Water Supply Resource, ● Multi Modal Corridor (Virar to Alibaug). ● The Mumbai Trans Harbour Link (MTHL) Project, ● Mumbai Mono Rail Project, ● Nirmal MMR Abhiyan Projects, ● Development of the Bandra-Kurla Complex/Wadala Truck Terminal, ● Construction of Skywalks. 2.3. The aforesaid projects are for the benefit of the general public or for advancement of general public utility and falls within the ambit of \"charitable purpose' as defined in section 2(15) of the Act. Further, the activities conducted by assessee constitute \"general public utility\" which is covered as \"charitable purpose”. Assessee has utilized the income for the purpose of the general public utility, i.e., charitable purpose as per provisions of the Act. Assessee has also furnished Form No. 10B along with the return of income. Ld. Assessing Officer has not pointed out many anomalies in the application of funds by the assessee 6 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 for non-charitable purposes, being not in accordance with the objects for which the assessee was set up under a special statute. 2.4. Ld. Assessing Officer after relying on the assessment order for AY 2010-11, denied exemption u/s. 11 by stating that assessee is not a valid trust. Ld. Assessing Officer by resorting to proviso to Section 2(15), denied exemption u/s. 11 claimed by the assessee. 3. The issue arising for consideration before the Tribunal is whether the proviso to Section 2(15) of the Act disentitles the Assessee from availing exemption u/s. 11 and 12, despite it being registered u/s. 12A r.w.s. 12AA. Another broader issue contested in these appeals is in respect of considering the assessee as an agent of the State Government, who acts on behalf of the State Government. Vide ground No.1, Revenue has argued that decisions by the Coordinate Bench of ITAT, Mumbai in assessee’s own case for past several Assessment years from Assessment Year 2010-11 to Assessment Year 2015-16 have been followed by ld. CIT(A) even though they are not acceptable and Revenue has contested the same before the Hon'ble Jurisdictional High Court of Bombay, where the appeals are pending for adjudication. A specific query was raised by the Bench to the ld. CIT DR to affirm the present status of the appeals filed by the Revenue before the Hon'ble High Court. It was stated that the appeals are at the stage of admission and are pending for adjudication. Further, there is no stay granted by the Hon'ble Court on the operation, execution and implementation of the orders of the Coordinate Bench. Ld. Counsel for the assessee also affirmed the said status update. Considering these facts as submitted before us, there being no stay on the orders of the Coordinate Bench for the past several assessment years from Assessment Year 2010-11 to 7 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 2015-16, the issues dealt therein shall apply mutatis mutandis in the present appeal subject to there being no change in the facts and circumstances. Ld. Counsel for the assessee affirmed that there is no change in the facts and circumstances of the assessee when compared with those preceding years and also no change in the applicable provisions of the Act to have any otherwise bearing on the applicability of the precedence laid down in those appeals on the grounds raised in the present appeal. For giving our finding on the issue in hand, we refer to the decision of Hon'ble Supreme Court in the case of Union of India & Others v. Kamlakshi Finance Corporation Ltd. 1992 Supp (1) SC cases 648 wherein it held as under: “6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion,by-passed two appellate orders in regard to the same issue which were placed before them,one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws.” [emphasis supplied by us by underline] 3.1. Accordingly, considering the above, ground no.1 raised by the Revenue is dismissed. 8 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 4. Assessee has a litigation history which is narrated briefly. Mumbai Metropolitan Region Development Authority primarily known as MMRDA is a local authority created by the Govt. of Maharashtra by enacting MMRDA Act, 1974. Being Local Authority in terms of MMRDA Act as well as falling within the meaning of Section 10(20) and 10(20A) of the Act, it enjoyed blanket exemption under the Act up to A.Y. 2002- 03 as per the then provisions of Section 10(20) & 10(20A). The Finance Act, 2002 deleted the provision of Section 10(20A) along with other provisions and introduced a new definition of Local Authorities u/s. 10(20) wherein Panchayat, Municipality, Municipal Committee and District Boards and Cantonment Boards only are included. In view of the deletion of Section 10(20A) and insertion of new definition of local authority, the authorities like MMRDA were not part of the above definition and the tax authorities considered these authorities as taxable entities. After the amendment, assessee applied registration u/s 12A and got registered u/s. 12AA with the DIT (E), Mumbai. 5. In Assessment Year 2009-10, DIT(E) had withdrawn the registration granted u/s.12A on the ground that activities of the assessee are not for charitable purposes by invoking the proviso to section 2(15) of the Act. Matter went up before the Coordinate Bench of ITAT in appeal in ITA No. 625/Mum/2012, order dated 05.04.2017. After detailed deliberation on the issue raised in the appeal, the Coordinate Bench, quashed the order of DIT(E) and restored the registration u/s. 12 r.w.s.12AA of the assessee. The findings, given by the Coordinate Bench on this aspect, in para-8 are reproduced below: “8. We have gone through the order of DIT(E) and could not find anything in the order which terms that the assessee was undertaking any activity which is not genuine or trust or institution is not genuine. We could not lay our hand on any material in the order of DIT(E) which explains that the assessee or its affairs are 9 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 not being carry out in accordance with the object of the institution. Accordingly, we quash the order of DIT(E) and restore the registration of the Institution. This issue of assessee's appeal is allowed. 9. Since, the registration is already allowed consequently no disallowance can be made in respect to interest income and leasing activity income i.e. the rent and other fees, because these falls under the objects of the assessee's institution and hence on merits also the assessee has a case. Accordingly, we need not to elaborate on the merits of the case, since we have already allowed registration. 10. In the result, the appeal of assessee is allowed.” [emphasis supplied by us by underline] 5.1. Based on the cancellation of registration of the assessee u/s. 12A, and during the pendency of the appeal before the Coordinate Bench, until the pronouncement of order on 05.04.2017, claim of exemption u/s.11 by the assessee was continuously denied. Assessee contested such denial in appeals before the Coordinate Bench, for which the following orders are to be taken note of- i) For Assessment Year 2010-11 to 2015-16 bearing ITA Nos. 4391, 4392, 4393, 4394 and 4395/Mum/2019 and ITA Nos. 34 and 35/Mum/2020, order dated 03.01.2022. ii) For Assessment Year 2009-10 in ITA No. 173/Mum/2013, order dated 01.04.2019 iii) For Assessment Years 2003-04, 2004-05, 2005-06, 2007-08 and 2008-09 in ITA Nos. 5576, 5580/Mum/2007, 4177/Mum/2008, 5761/Mum/2010 and 6756/Mum/2011, order dated 13.07.2016. 6. In appeals for Assessment Year 2010-11 to Assessment Year 2015-16 vide order dated 03.01.2022 in para 22, the Coordinate Bench observed that assessee is registered u/s. 12AA along with observing certain other preliminary facts about the assessee. The said para is reproduced as under: 10 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 “22. Considered the rival submissions and material placed on record, we observe from the record that the assessee is still registered u/s 12AA of the Act and it is not revoked. Further the assessee is established under the MMRDA Act, 1974. As per which the assessee is established to function, activity of development as set out in the section 2 of the MMRDA Act and it is extended arm of the Government Maharashtra in the activity of development as set out in Section 12 to 16 of the Act. We also observe that the assessee is appointed as special planning authority for development of certain regions as per the government notification like Bandra Kurla Complex region etc. under the Maharashtra Region and Town Planning Act (MRTP Act). As per the section 113(3A) of the Act, it is acting as an agent of the Government of Maharashtra. By considering the above facts on record, Ld DIT(E) granted the registration u/s 12A on 22.07.2002.” [emphasis supplied by us by underline] 6.1. For rejecting the contentions of ld. CIT(A) and ld. Assessing Officer it was observed that issue of applicability of section 2(15) has already been considered by ITAT and the issue is well settled in favour of the assessee. The observations and findings in this respect, as contained in para 25 are reproduced. “25. Therefore, from the above decision of the coordinate bench, the assessee is continue to be duly registered as charitable trust u/s 12AA, this is due to subsequent development, hence the contention of the Ld.CIT(A) and Assessing Officer is not correct. In our considered view, the issue of applicability of section 2(15) of the Act is already considered by the ITAT and issue is well settle in favour of the assessee. The courts have held the activities of the assessee are charitable and we observe that the activities of the assessee, which acts on behalf of the Government of Maharashtra, irrespective of nature of transactions, the assessee acts on behalf of and as an agent of the State Government. The development work and relevant activities in the line of development are carried by the assessee on behalf of the State Government and it is only an authority appointed under the MMRDA Act and MRTP Act to carry on the functions on behalf of State Government. All the revenues are belong to State Government and it is only an entity created to functions for the benefit of the common interest of people of the State.” 7. In the order for Assessment Year 2003-04 to Assessment Year 2005-6, Assessment Year 2007-08 and 2008-09, dated 13.07.2016 on the issue raised by assessee, it being an agent of the state and acting on behalf of the state, the Coordinate Bench left the issue open for 11 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 consideration in an appropriate case as and when required, since the issue of denial of exemption u/s.11 was held in favour of the assessee. Relevant paras from the said order are reproduced below: “………..the issues raised by the assessee in its appeals are the alternative contentions and will be relevant only if the issue of denial of exemption under section 11 of the Act would have been decided against the assessee. He has further submitted that similar grounds taken by the assessee in its appeal bearing ITA No.5062/Mum/2009 relating to AY 2006-07 have been dismissed by the Tribunal being rendered academic in nature. The relevant part of the order of the Tribunal is reproduced as under: \"16. Briefly stated, AO while denying the benefit of section 11 to assessee held that assessee is not a local authority and further also held that assessee has not accounted for the amount of Z124.24 crores of interest on loans given and deposits made with various public sector undertakings/ Govt. of Maharashtra. After considering the submissions of assessee, the CIT (A) considered that as assessee is entitled for exemption of income, the ground of bringing to tax notional interest becomes infructuous. However, he on the issue of assessee being local authority, after discussion in the order, held that assessee is not a local authority for the purpose of section 10(20). In doing so he relied on the decision of the Hon'ble Supreme Court in the case of Adityapur Industrial Area Development Authority, 283 ITR 97 (SC), U.P. State Road Transport Corporation vs. CIT, 286 ITR 350, CALCUTTA STATE TRANSPORT CORPORATION VS CIT 219 ITR 515 (SC) and CIT vs. U.P. Forest Corporation, 230 ITR 945 (SC) wherein it has been held that institutions set up for the specific purposes, does not amount to 'local authority' for the purpose of section 10(20) of the I.T. Act. 17. In the course of arguments the learned Counsel squarely admitted that these issues became academic in nature and can be left open for adjudication at the relevant point of time in view of the granting benefits of section 11 to assessee. He fairly admitted that in case the Revenue appeal is dismissed, there is no need for adjudication of the grounds raised by assessee. Since we have dismissed the Revenue appeal and upheld the order of the CIT (A) granting benefit of section 11 to assessee, this issue becomes academic in nature and so not adjudicated. Issues are left open for consideration in an appropriate case as and when required. The grounds are, therefore considered rejected. 18. In the result, both the appeals filed by Revenue and Assessee are dismissed.\" 11. The Ld. Counsel for the assessee has stated that following the similar line, there is no need for adjudication of the grounds raised by the assessee as they being rendered academic in nature and can be left open for adjudication. Since we have dismissed the appeals of the Revenue and upheld the order of the Ld. CIT(A) granting benefit of section 11 to the assessee, the issues raised by the 12 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 assessee having become academic in nature hence, following the co-ordinate bench decision, on the similar line, the same are not adjudicated at this stage and are left open for consideration in an appropriate case as and when required. The appeals of the assessee are therefore dismissed having become infructuous.” [emphasis supplied by us by underline] 8. In the present appeal, vide ground no. 2, Revenue is contesting that ld. CIT(A) is not justified in stating that the assessee acts on behalf of and as an agent of the State Government. On this issue, the observations and finding of ld. CIT(A) held in favour of the assessee by following the decision of Coordinate Bench in assessee’s own case for Assessment Years 2010-11 to 2015-16 (supra) are taken note of which is reproduced below: “7.3 The appellant in its Grounds of Appeal No. IV & V assailed the AO for not considering appellant as an agent of the state government'& denial of exemption u/s 10(20) holding that the appellant is not a local authority. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2010-11 to 2015-16, bearing ITA No.s 4391, 4392, 4393, 4394 & 4395/MUM/2019 and ITA Nos. 34 & 35/MUM/2020, order dated 03.01.2022 at para no 25 at page no. 70 has adjudicated this issue in detail, the same is reproduced as below :- “25. Therefore, from the above decision of the coordinate bench, the assessee is continue to be duly registered as charitable trust u/s 12AA, this is due to subsequent development, hence the contention of the Ed.CIT(A) and Assessing Officer is not correct. In our considered view, the issue of applicability of section 2(15) of the Act is already considered by the ITAT and issue is well settled in favour of the assessee. The courts have held the activities of the assessee are charitable and we observe that the activities of the assessee, which acts on behalf of the Government of Maharashtra, irrespective of nature of transactions, the assessee acts on behalf of and as an agent of the State Government. The development work and relevant activities in the line of development are carried by the assessee on behalf of the State Government and it is only an authority appointed under the MMRDA Act and MRTP Act to carry on the functions on behalf of State Government. All the revenues are belong to State Government and it is only an entity created to functions for the benefit of the common interest of people of the State.\" 13 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 7.3.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that the issue is settled in favour of the assessee. Thus, following the order of the higher authorities the grounds of appeal IV & V are allowed.” [emphasis supplied by us by underline] 9. Before the ld. Assessing Officer, on this issue of assessee being an agent of the State and acting on behalf of the State, assessee had made an elaborate submission by referring to the provisions of MMRDA Act and Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). The submissions made before the ld. Assessing Officer and as reproduced in the impugned assessment order are extracted below: “X) As per the MRTP Act, while acting as SPA, the assessee is acting as an agent of the Government. The assessee is established to carry out legal obligations as specified in various provisions of the MMRDA Act and MRTP Act. In this regard, attention is invited to section 40(1)(b)/(c) of the MRTP Act which reads as under: \"Sec 40 (1) The State Government may, by notification in the Official Gazette for any undeveloped area specified in the notification in this Act referred to as \"the notified area\" either:- (a)……………………………………………………………………………………….; (b) appoint any Development Authority declared under sub-section (3A) of section 113;\" (c) appoint the Mumbai Metropolitan Region Development Authority established under the Mumbai Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area.\" Further, the assessee would like to invite Your Goodself's attention to the provisions of section 40(3) of the Act which state that the provisions of Chapter VI of the MRTP Act would apply mutatis mutandis to a SPA as they apply in relation to a Development Authority (as if the notified area were a new town). Reliance is also placed on provisions of section 113(3A) of the MRTP Act which reads as under: \"(3A) Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation 14 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 including a company owned or controlled by the State as a new town, the State Government may, notwithstanding anything contained in sub-section (2), require the work of developing and disposing of land in the area of a new town to be done by any such corporation, company or subsidiary company aforesaid, as an agent of the State Government; and thereupon, such corporation or company shall, in relation to such area, be declared by the State Government, by notification in the Official Gazette, to be the New Town Development Authority for that area.\" As may be observed, the section clearly provides that where work is done through the agency of the Government, the said corporation, company or subsidiary company shall be considered as an agent of the Government and the State Government shall, by a Notification in the Official Gazette declare such agency to be the New Town Development Authority for that area. Further, section 154 of the MRTP Act reads as under: (1) Every Regional Board, Planning Authority and Development Authority shall carry out such directions or instructions as may be issued from time to time by the State Government for the efficient administration of this Act. (2) If in, or his connection with, the exercise of its powers and discharge of its functions by the Regional Board, Planning Authority or Development Authority, under this Act, any dispute arises between the Regional Board, Planning Authority, and the State Government, the decision of the State Government on such dispute shall be final. Upon reading sub-sections (1) and (2), it is abundantly clear that the assessee, who is a Planning Authority / Development Authority, is an agent of the State Government. Lastly, attention is invited to the provisions of section 160 of the MRTP Act which provides that at the time of de-notification / dissolving a Development Authority /Planning Authority, from such date: (i) all properties, funds and dues which are vested in, or realisable by the Regional Board, Special Planning Authority or Development Authority for the purposes of the Act shall vest in, or be realisable, by the State Government; (ii) all liabilities which are enforceable against the Regional Board, Special Planning Authority or Development Authority shall be enforceable against the State Government; and (iii) for the purpose of carrying out any development which has not been fully carried out by the Board or Authority and for the purpose of realising properties, funds and dues referred to in clause (a), the functions of the Regional Board, Special Planning Authority, or Development Authority shall be discharged by the State Government. Thus, it is abundantly clear that the assessee is merely acting as an agent of the Government” 15 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 10. Before us, ld. Counsel for the assessee reiterated the submissions made before the authorities below, more importantly on the setup of the assessee and various provisions governing its functionality and status. Assessee categorically stated that Hon'ble Jurisdictional High Court of Bombay affirmed the decision of the Coordinate Bench, Mumbai in the case of CIDCO in ITA No.1394 of 2013 dated 19.04.2024, Citation for the decision of the Coordinate Bench is CIDCO vs. ACIT [2012] 138 ITD 381 (Mum). According to the ld. Counsel, Department in its ground no. 2 has relied upon the decision of Hon'ble Jurisdictional High Court of Bombai in the case of MIDC with respect to claim of immunity from taxation under Article 289 of the Constitution of India and holding the decision in the case of CIDCO as per incuriam. According to him, assessee never claimed immunity from taxation under Article of 289 of the Constitution of India but only in terms of relevant provisions of the MRTP Act. He further pointed out that Hon'ble Jurisdictional High Court of Bombay in the case of CIDCO while affirming the decision of coordinate bench, dealt with two substantial questions of law and considered the assessee to be an agent of the state under the MRTP Act. Assessee, by referring to provisions contained in Section 40(1) of the MRTP Act, submitted that facts in the case of assessee are similar to that of the case of CIDCO as both the authorities are appointed under the powers conferred by MRTP Act. He pointed out to the fact that CIDCO was appointed as a special planning authority (SPA) for the notified areas of Bandra-Kurla Complex (BKC) vide notification dated 18.07.1973. However, after the establishment of assessee under the MMRDA Act vide notification dated 07.03.1977, CIDCO was replaced by assessee as a SPA for the BKC region. Thus, there was replacement/ 16 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 substitution of CIDCO with the assessee, who is now acting as an agent of the Government of Maharashtra. 10.1. Ld. Counsel pointed out comparative analysis between the two SPAs, i.e., the assessee and CIDCO which forms part of the written submission. Apart from oral arguments, detailed written submission made by the assessee on this aspect is reproduced as under: “In the matter of: DCIT(E)-2(1), MUMBAI V. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY (\"MMRDA\" or \"RESPONDENT\" or \"ASSESSEE\") Sr. No. Assessment Year ITA No. 1 2016-17 3795/M/2023 2 2017-18 3794/M/2023 3 2018-19 3936/M/2023 4 2018-19 3791/M/2023 The captioned Department appeals were heard on May 13, 2024. The Assessee submitted that based on its own case ITAT order for earlier years namely AY 2010-11 to 2015-16 which was attached at Pg no. 1 to 77 of LPB and specifically considering the language of ground no. 3 taken by the Revenue, the Assessee is entitled to exemption u/s. 11 of the Income Tax Act, 1961 (\"the Act\") and accordingly Revenue's appeal be dismissed. In the course of the hearing, in so far as ground no. 2 of the department appeal, the AR had also argued that, without prejudice to the ground of exemption u/s. 11 of the Act, in so far as certain receipts arising from acting as a Special Planning Authority (\"SPA\") under the Maharashtra Regional and Town Planning Act, 1966 (\"MRTP Act\") is concerned, such receipts are not liable to be taxed in the hands of the Assessee, as for the same the Respondent Assessee acts as an agent of the Government of Maharashtra as per the provisions of the MRTP Act. The AR had also submitted that the Assessee is not claiming that it is exempt from tax under Article 289 of the Constitution of India. The AR had invited attention to the detailed submission made at Pg no. 41 to 43 of the ITAT order (supra) and the findings therein. At the time of the hearing, the Assessee had also handed over the decision of Jurisdictional High Court affirming the Tribunal's decision in case of City and Industrial Development Corporation Of Maharashtra Ltd (\"CIDCO\") v. ACIT [2012] 138 ITD 381 (copy of which was also tendered at bar on 13/05/2024), which was relied on by the Assessee in the earlier years. As directed by the Hon'ble Tribunal, the Assessee is submitting a comparative analysis between MMRDA and CIDCO. In this regards, the Assessee would like to submit as follows: 17 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 1. The Respondent is an Authority which is established under the MMRDA Act, 1974 ('MMRDA Act'). A copy of the said Act has already been tendered at the Bar on 13/05/2024. The Respondent (earlier known as Bombay Metropolitan Region Development Authority') is set up for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of Mumbai Metropolitan Region. 2. The powers and functions of the Assessee are set out u/s. 12 of the MMRDA Act, which states that 'the main object of the Authority shall be to secure the development of Bombay Metropolitan Region according to the Regional Plan'. The 'regional plan' means plan prepared under the provisions of the MRTP Act. 3. The development functions carried out by the Assessee for the entire Mumbai Metropolitan Region fall within the ambit of the term 'advancement of general public utility' i.e. charitable purpose. 4. Section 17 of the MMRDA Act provides that the Assessee may in consultation with the Municipal Commissioner of the Brihan-Mumbai Municipal Corporation (\"BMC\") prepare any project or scheme with a view to provide an infrastructure within the territorial limits of BMC and execute the same. At the relevant time, the Assessee has undertaken the major projects as follows: ● Mumbai Urban Transport Project (MUTP); ● Mumbai Urban Infrastructure Project (MUIP) - Roads, Bridges, Flyovers; ● Mumbai Metro Rail (MMR); ● Mithi River Clean-up project; ● Solid Waste Management; ● Water Supply Resource; ● The Mumbai Trans Harbour Link (MTHL) Project; ● Mumbai Mono Rail Project; ● Development of the Bandra-Kurla Complex / Wadala Truck Terminal, etc. The aforesaid projects are undoubtedly for the benefit of the general public or for advancement of general public utility and would fall within the ambit of 'charitable purpose' as defined in section 2(15) of the Act. 5. The Respondent has been granted registration u/s 12AA of the Act which is still valid and subsisting, and it has claimed exemption u/s 11 at the time of filing the Return of Income. 6. The Hon'ble Jurisdictional Mumbai Tribunal in the Respondent's own case for the earlier assessment years namely 2010-11 to 2015-16, bearing ITA nos. 4391, 4392, 4393, 4394 & 4395/MUM/2019 and ITA Nos. 34 & 35/MUM/2020, order dated 03.01.2022, has allowed the claim of exemption u/s 11 of the Act. 7. For the captioned years, both the lower authorities have recorded that the facts of captioned assessment years are identical to those of earlier years and Id. DR has agreed to the same 8. Without prejudice to the claim of exemption u/s 11 of the Act, the Respondent in so far as acting as a Special Planning Authority (\"SPA\"), claims the benefit provided u/s. 113(3A) of the MRTP Act and states that all the revenues earned as an SPA belong to State Government and it is only an entity created to function for the benefit of the common interest of people of the State. 18 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 9. In this regard, reliance is placed on the following decisions: o Percivial Joseph Pereira v. The Special Land Acquisition Officer (ITA 1211/2009) (Jurisdictional HC) o Percivial Joseph Pereira v. The Special Land Acquisition Officer (LPA No. 184/2010 with WP No. 1211/2009) (Jurisdictional HC) o City and Industrial Development Corporation of Maharashtra Ltd (\"CIDCO\") v. ACIT [2012] 138 ITD 381 (Jurisdictional tribunal) 10. The department in their Grounds of Appeal no. 2 have relied upon the decision of Hon'ble Jurisdictional Bombay High Court in case of MIDC with respect to claim of immunity from taxation under Article 289 of Constitution of India. The Assessee reiterates that it has never claimed the immunity from taxation under Article 289 of Constitution of India, but only in terms of relevant provisions of the MRTP Act. 11. Recently, the Hon'ble Jurisdictional Bombay High Court has also affirmed the Hon'ble Mumbai Tribunal's decision in case of CIDCO (supra) vide its order April 19, 2024 in ITA No. 1394 of 2013 (copy tendered at bar on 13/05/2024). The two questions of law framed before the said court and its conclusion thereto is reproduced as below: \"(a) Whether on the facts and in the circumstances of the cases and in law, the Tribunal was right in its interpretation of Articles 289(1)(2)(3) of the Constitution in coming to the conclusion that the company was not exigible to tax? (b) Whether on the facts and in the circumstances of the cases and in law, the Tribunal is justified in coming to the conclusion that the company was an agent of government and therefore not exigible to tax? 4 As regards first substantial question of law, in view of our findings to second question of law, this question will not survive.\" 12. The Jurisdictional High Court decided the appeal following its own decision in case of CIDCO [Order dated 11.12.2023 in Writ Petition No.1840 of 2023] and considering the assessee to be an agent of the state under the MRTP Act and thus, the question of adjudication with respect to claim under article 289 of the Constitution of India does not arise. 13. Insofar as CIDCO is concerned, it was incorporated as a corporation on 17.03.1970 with share capital, which was wholly and exclusively subscribed by the Government of Maharashtra, with the object of creation of new town of Navi Mumbai, New Aurangabad, New Nashik, New Nanded, Tarapur, Waluj Mahanagar, Oras, Vasai-Virar sub region, Nagpur and Mhaismal Projects. 14. The Government of Maharashtra vide Government Resolution (\"GR\") dated 18th March, 1970 pursuant to which CIDCO was established, states, inter-alia, as under: \"After careful consideration of the relevant factors, and particularly, in view of the tremendous impact this project will have on the industrial development of Maharashtra Government has come to the conclusion that a subsidiary company of the State industrial and Investment Corporation of Maharashtra Limited, Bombay, would be an appropriate agency which would be entrusted with the proposed project. Government is accordingly pleased to allow the State Industrial and Investment corporation of Maharashtra Limited, as required under Article 75 of its Memorandum of Articles of Association, with the object of 19 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 developing the trans-Thana and capital of Rs. 5 crores, with the object of developing the trans-Thana and trans-Harbor areas in the Thana and Kolaba districts as a twin city to provide relief to Bombay City and also to ensure its integrated development with the industrial development of this region and the State. The lands proposed to be acquired by the Government in the trans-Thane and trans-Harbor areas should be entrusted to the subsidiary company, which would act as an agent of Government for the development of the areas with a view to secure the above objectives. The subsidiary company will in due course be notified as a New Town Development Authority under the Maharashtra Regional and Town Planning Act. The subsidiary company will work under the control and supervision of the State Government in the General Administration Department.\" 15. Now, attention is invited to following provisions of the MRTP Act: Section 40(1) The State Government may, by notification in the Official Gazette for any undeveloped area specified in the notification in this Act referred to as \"the notified area\" either- (a)...or (b) appoint any Development Authority declared under sub-section (3A) of section 113, or (c) appoint the Bombay Metropolitan Region Development Authority establish under the Bombay Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area. ● As discussed in section 40(1)(b) read with section 113(3A), the State Government may, notwithstanding anything contained in sub-section (2) of 113, require the work of developing and disposing of land in the area of a new town to be done by any such-corporation, company or subsidiary company aforesaid, as an 'Agent of the State Government'; and thereupon, such corporation or company shall, in relation to such area, be declared by the State Government, by notification in the Official Gazette, to be the New Town Development Authority for that area. 16. In exercise of the powers conferred by sub-section (3A) of section 113 of the MRTP, CIDCO was notified by the Government of Maharashtra vide its notification no. No. RPB 1171-18124-11-W dated March 20, 1971; to be a 'Town Development Authority' for the area comprised in the site of New Bombay. 17. It is also worthwhile to note that originally, CIDCO was appointed as a 'Special Planning Authority' for the notified areas of \"Bandra Kurla Complex\" ('BKC' as is commonly known) vide notification dated 18th July, 1973, however, after the establishment of the MMRDA, vide Notification dated 7th March 1977; CIDCO was replaced by the Respondent as a Special Planning Authority for the 'Bandra Kurla Complex Region' for the development of the BKC and accordingly the Respondent has merely replaced/substituted CIDCO and is now acting as an agent of the Government of Maharashtra. 18. A comparative analysis between both the Special Planning Authorities viz. MMRDA & CIDCO is submitted herewith as 'Annexure A'. 20 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 19. Thus, it is understood that the facts of MMRDA are similar / identical to that of the case of CIDCO as both the authorities are appointed under the powers conferred by MRTP Act. 20. The Assessee thus prays that, considering the above facts read with provisions of the MRTP Act, the Assessee being designated as an SPA for certain areas of the MMR, and following the binding precedents, the receipts arising to the Assessee in its capacity as an SPA is not chargeable to tax in the hands of the Assessee. 21 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 22 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 10.2. Ld. CIT DR made an elaborate submission for distinguishing the decision of Coordinate Bench of ITAT, Mumbai in the case of CIDCO (supra) and emphasized that CIDCO and assessee are designated as SPA in different sections of the MRTP Act. According to her, in the case of CIDCO, principal agent relationship was established and there was complete control over its activities with the State Government. Contrary to this, in the case of assessee, such functional tests have not been met and therefore assessee cannot be held to be acting on behalf of the State and as an agent of the State. Her detailed written submission furnished before the Bench is reproduced for ready reference. “BEFORE THE HON'BLE 'D' BENCH, ITAT, MUMBAI REJOINDER ON THE WRITTEN SUBMISSION OF THE ASSESSEE IN THE CASE OF DCIT(E)-2(1), MUMBAI VS MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY FOR AYS 2016-17, 2017-18 AND 2018-19. 1. Kindly refer to the written submission of the assessee submitted before the Hon'ble Bench and copy marked to the undersigned. The assessee has stated that certain receipts arising from acting as Special Planning Authority under the Maharashtra Regional and Town Planning Act, 1966 (MRTP Act) are not liable to be taxed in the its hands as for the same the assessee acts as an agent of the Government of Maharashtra as per the provisions of the MRTP Act. The assessee has relied upon the decision of the Bombay High Court in the case of Commissioner of Income-Tax-10 V/s City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) vide order April 19th, 2024 in ITA No. 1394 of 2013. In the said decision, the Hon'ble Court has considered CIDCO to be an agent of the State Government. It has affirmed the ITAT, Mumbai's finding given in City and Industrial Development Corporation of Maharashtra Ltd v/s ACIT 10(3) (2012) 25 taxmann.com 333 (Mum.) that the assessee should be held to be an agent of the state, working solely under the authority and guidelines issued through various notifications by the State ie the Government of Maharashtra and that resolutions taking back to 1970 make it clear that the assessee is an agent and functions as an arm of the State Government because it can only work under the control and supervision of the State Government meaning thereby that it cannot make/take any decisions suo-motu. The Hon'ble High Court has also upheld the ITAT's ruling that the assessee receives income by way of remuneration at Rs 5,00,000/- per annum which has to be assessed in the hands of the assessee after allowing deduction of expenses incurred for earning the said income. 1.1 The assessee has claimed in its written submission that its facts are similar to that of CIDCO as both the authorities are appointed under the powers conferred by the MRTP Act. It has also submitted a comparative chart of various similarities 23 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 with CIDCO. It has taken the plea that given the comparison, it is covered by the order of the Hon'ble Bombay High Court(supra). 2. The assessee's submission is hereby rebutted in the ensuing paragraphs. 3. It is seen from the perusal of the above-mentioned order of the Hon'ble ITAT, Mumbai that its findings are based on specific resolutions of the Government of Maharashtra defining its principal-agent relationship with CIDCO and on certain characteristics in CIDCO's functioning which imply that it is fully controlled by the State Government. The Hon'ble Tribunal has referred to the following provisions: i) CIDCO was incorporated as a company on 17.03.1970 with a share capital which was wholly and exclusively subscribed by the Government of Maharashtra. ii) Vide Government of Maharashtra Resolution dated 18th March, 1970, CIDCO would act as agent of the Government for the development of the areas trans- Thana and trans-Harbor areas in Thana and Kolaba districts. The said Resolution provided that CIDCO will work under the control and supervision of the State Government in the General Administration Department. iii) Vide the Gazette of the State of Maharastra dated 20th March, 1971, it was stated that in the exercise of powers conferred by section 113(1) of MRTP Act, 1966, the State Government designates the new town to be known as New Bombay. With regard to complexity and magnitude of the work involved and speedy development, the work of development of the area was entrusted to the subsidiary company owned and controlled by the State. iv) The enabling section under which CIDCO was declared as New Town Development Authority was sub-section 3(A) of section 113 of the MRTP Act wherein it was to work as agent of the State Government. v) Vide letter dated Sept 10, 1971, it was reiterated that CIDCO has been appointed as agent of Government for development of \"New Bombay\" and the Government of Maharashtra undertook the reimbursement of all expenditure incurred by CIDCO on development of land and to reimburse CIDCO suitably with its remuneration. vi) Vide Government Resolutions dated 24-01-1972 and 11-01-1974 with regard to Navi Mumbai, the appointment of CIDCO as the arm of the Government of Maharashtra was elucidated. vii) Vide Government Resolution dated 11-01-1974, the remuneration of the assessee from State Government was initiated at Rs 3 lakhs and capped at Rs 5 lakhs for all times to come. viii) It was specifically noted in the Schedule 27 of 36th Annual Report of the Government of Maharashtra that CIDCO was exempted from payment of Income- tax under Article 289 of the Constitution of India. ix) As per clause 8 of the above report under the heading Loans and Advances, the note states that the project is executed on behalf of the State Government. 24 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 The income is therefore payable to the Government and if there is a deficit it is recoverable from the Government. This proves that there is no commercial or profit motive attached to the functions of CIDCO. x) Section 113A of MRTP Act laid down that the State Government shall acquire and vest land in New Town Development Authority. Hence, CIDCO cannot show such land vested in it by the government as its own assets in the Balance Sheet xi) Vide Government Resolution no 10375 dated 06-08-2010, after the development project is complete, the project gets handed back to the state. xii) There is no income to CIDCO and whatever is generated, gets deposited to the Consolidated Fund of the State. xiii) All expenses incurred by CIDCO, whether revenue or capital, are on behalf of the Government of Maharashtra and are reimbursed to it. xiv) As per section 160(2) of the MRTP Act, all liabilities which are enforceable against the Development Authority shall be enforceable against the State Government. 3.1 In the light of the above provisions, the Hon'ble Tribunal held that CIDCO is a legal agent of the state who is very closely held, guarded and monitored by its principal and enjoys immunity from all legal action against it. 4. Consequently, if the assessee seeks to rely on the aforesaid orders passed in the case of CIDCO, then it is required - to point out the identical provisions which prove that it is an agent of the Government of Maharashtra and, - to demonstrate that it is similarly subjected to strict control of the State and that it functions only at the behest of the State without any autonomy. 4.1 It is pertinent to mention here that the written submission of the assessee does not fulfill the above requirement. 5. Reference is made to The Mumbai Metropolitan Region Development Authority Act, 1974(MMRDA Act) which provides for the legal framework for establishment of the assessee and outlines its scope, powers and functions. Sub-sections (2) and (3) to Section 3 of the Act define the legal personality of the assessee. \"3.(1) (2) The Metropolitan Authority shall be a body corporate, having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both moveable and immoveable and to contract and may sue or be sued by its corporate name aforesaid. (3) The Metropolitan Authority shall be deemed to be a local authority within the meaning of the term \"local authority\" as defined in the Bombay General Act, 1904.\" 5.1 Kind attention is drawn to section 40(1)(c) of the MRTP Act which is the enabling provision for appointing the assessee as Special Planning Authority. 25 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 \"40. (1) The State Government may, by notification in the Official Gazette 7\" for any undeveloped area specified in the notification in this Act referred to as \"the notified area\" either- (a) (constitute an authority consisting of] a Chairman, a Vice-Chairman, a member of the Maharashtra Legislative Assembly representing the notified area, one member representing the municipal area, if any, included in the notified area, the Deputy Director of Town Planning, and the Executive Engineer, Public Health Works Division, each having jurisdiction over the notified area, and an officer not below the rank of an Assistant Collector; or (aa) appoint the Authority constituted under the Maharashtra Housing and Area Development Act, 1976, or (b) appoint any Development Authority declared under sub-section (3A) of section 113, or (c) appoint the Bombay Metropolitan Region Development Authority establish under the Bombay Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area.\" 5.2 It is seen from the above provisions that while CIDCO is the Development Authority declared u/s 113(3A) of the MRTP Act, the assessee is the Special Planning Authority declared u/s 40(1) (c) of the MRTP Act. It is pertinent to note that while the assessee is conceived as body corporate, local authority and Special Planning Authority, it has not been conferred upon the status of 'agent' of the State. None of the above statutes lay down anywhere that the assessee shall work as agent of the State or on behalf of the State. Hence, the assessee's claim that it is an agent of the State is not supported by any statutory provision. 6. Further, a perusal of the Chapter IV of the MMRDA Act on Powers and Functions of the Authority shows that the assessee is authorised to carry out its activities with great autonomy and without any interference by the State Government. ● Section 12(1) of the Act, which lays down the various functions of the assessee for the purpose of development of the Mumbai Metropolitan Region, does not indicate any supervision or control by the State Government. ● Section 12(2) of the Act confers upon the assessee powers of a Regional Planning Board constituted u/s 4 of the MRTP Act for revision of Regional Plan for the Metropolitan Region. ● Section 13(1) of the Act empowers the assessee to prevent any person from undertaking any development within the Metropolitan Region without the previous permission of the assessee. ● Section 13(3) of the Act empowers the assessee to grant or refuse such permission. ● Section 14 holds the State Government to be the appellate authority for deciding appeals filed by any person against the assessee with regard to its decision given u/s 13(3) of the Act. 26 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 ● Section 7 of the Act entrusts the Executive Committee of the assessee with wide powers to plan and implement the projects and schemes, to approve or reject the tenders for projects and schemes, to grant or refuse permission u/s 13(3) of the Act, to invest surplus funds of the assessee and to institute, conduct and withdraw legal proceedings on behalf of the assessee. ● Section 17 (1) of the Act gives power to the assessee to prepare scheme to provide infrastructure within the territorial limits of Brihan Mumbai Municipal Corporation and to execute the same. ● Section 17(3) of the Act deems the assessee to be a Slum Rehabilitation Authority for the purposes of preparation and execution of projects and schemes and to have all the powers and discharge all the duties of the concerned Slum Rehabilitation Authority under the Maharashtra Slum Areas (Improvements, Clearance and Redevelopment) Act, 1971. ● Section 17(4) of the Act empowers the assessee to charge toll for the use of any amenity provided by it. ● Section 46A of the Act chalks out the area of control of the State Government over the assessee. It states that the State Government will lay down the policy and guidelines and it may issue directions from time to time for the assessee in the exercise of its powers and discharge of its duties. In the event of any dispute arising between the assessee and the State Government, the decision of the State Government will be final. 6.1 It is observed that none of the above functions of the assessee warrant prior sanction of the State Government. In fact, there is no stringent control by the State Government on the operations of the assessee. Its functions are autonomous and it is empowered to take decisions suo-motu. Hence, the assessee's claim that it is an agent which acts only at the behest of its principal i.e the State Government is not supported by any statutory provision. 7. On perusal of Chapter V of the MMRDA Act relating to Finance, Budget and Accounts of the assessee, it is seen that no agency remuneration is received by the assessee from the State Government in the Mumbai Metropolitan Region Development Fund maintained by the assessee, Further, there is no clause for reimbursement by the State Government of the expenses incurred by the assessee for carrying out its functions. Besides the financial assistance of the State Government, the assessee also receives proceeds of betterment charge levied, fees, cost and developmental charges levied by the assessee under the Act, money received from sale of land, buildings and other properties, interest on loans, interest on deposits, lease rent, other rent etc. Thus, it is evident that the assessee is not wholly dependent on State funds for its operations and has several other independent sources of income. It is also seen that the assessee generates huge surplus every year (for example, it had a surplus of Rs 180.23 crores in AY 2016-17). 8. Section 24A of the MMRDA Act prohibits the assessee to carry out operations at a loss. 27 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 \"24A. The Metropolitan Authority shall not and shall not be required to carry out any of its operations under this Act at a loss. Any deficit in the Mumbai Metropolitan Region Development Fund in any financial year shall be made good by the Authority not later than those of the next succeeding financial year.\" This provision amply proves that the assessee is by statute required to operate with the commercial and profit motive so as to avoid losses and the losses so incurred have to be reversed in the year to come. Further, the generation of huge surplus year after year also indicates that the assessee does operate on commercial and profit motive. 9. As per the audited accounts of the assessee for the year, it is seen that the land acquired and vested in it by the State Government for developmental purposes is shown as its own assets in the Balance sheet. 10. There is no provision in the MMRDA Act stating that all the income/receipts of the assessee are received in capacity as custodian or trustee of the State Government and that the said income shall stand diverted to the State at the source itself. 11. There is no provision in the MMRDA Act stating that all liabilities against the assessee shall be enforceable against the State Government. In fact, section 160(2) of the MRTP Act, pointed out in case of CIDCO, mentions that the aforesaid clause shall be effective from the date of dissolution of the Development Authority by the State Government u/s 160(1) of the Act. Therefore, it cannot be said that the State Government is responsible as a principal for the acts of the assessee. No person can sue the State Government for any contractual liability of the assessee. The assessee is a separate legal entity which can sue and be sued in its own capacity. 12. In the light of the above facts and discussion, it is emphasised that CIDCO and MMRDA are designated as Special Planning Authority under different sections of the MRTP Act. There are crystal clear provisions in the various governing resolutions of CIDCO that establish principal-agent relationship and give complete control over its activities to the State Government. On the other hand, the assessee has not been able to show that it meets the necessary functional tests such as statutory status of agent of the State, working as agent of the State, deep and pervasive control by the State, sole dependence on financial assistance by the State and State protection from all legal action. Submitted for kind perusal and consideration of the Hon'ble Bench.” 10.3. As a rejoinder, ld. Counsel for the assessee made the submission and asserted that what needs to be seen is how CIDCO and assessee as two different entities set up under the respective provisions of the same MRTP Act are similarly placed so as to be treated as agent of the State. To substantiate this, he referred to the objectives for which the assessee 28 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 is set up as contained in the MMRDA Act. He also referred to section 46A of the MMRDA Act, whereby the assessee is under the control of the State Government. According to him, though ld. CIT DR has pointed out various sections of MMRDA Act to allege that assessee functions with autonomy, provisions of section 46A of the MMRDA Act provides for control by the State Government and thus other sections referred by ld. CIT DR cannot be read independently to hold that assessee functions with autonomy. While referring to section 40(1) of the MRTP Act, it was pointed that assessee was appointed as SPA under clause (c) to the said section whereas CIDCO is covered by clause (b) of the same section. Ld. Counsel thereafter explained that SPA falling either in clause (b) or clause (c) stands at par for application of the MRTP Act, for which attention was drawn to section 154 of the MRTP Act to submit that control by the State Government is an essential feature for the functioning of the SPA. He further pointed to section 160 of the MRTP Act which provides that at the time of dissolution of any SPA, all the properties and liabilities shall vest with the State Government. Reference was also made to certain letters evidencing handing over of completed amenities to the concerned statutory authorities for the working undertaken by the assessee. Out of various letters to substantiate these which forms part of the paper book, one such letter is reproduced for the purpose of reference:- 29 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 30 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 10.4. The above stated rejoinder furnished by the ld. Counsel on the submissions made by ld. CIT DR is reproduced below: “In the matter of: DCIT(E)-2(1), MUMBAI V. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY (\"MMRDA\" or \"RESPONDENT\" or \"ASSESSEE\") Sr. No. Assessment Year ITA NO. 1. 2016-17 3795/M/2023 2. 2017-18 3794/M/2023 3. 2018-19 3936/M/2023 4. 2018-19 3791/M/2023 In connection with the captioned matter, along with its oral submission made during the course of hearing on May 13, 2024, the Assessee was directed by the Hon'ble Tribunal to file comparative analysis between MMRDA and CIDCO. The said written submission was filed by the Authorized Representatives (\"ARs\") of the Assessee on May 21, 2024. In rejoinder to the said submission, the Ld. Department Representative (\"Ld. DR\") tendered a copy of her submission during the course of hearing held on July 5, 2024. In this connection said rejoinder filed by the Ld. DR, the Assessee submits as under. The whole crux of the Ld. DR's rejoinder having regard to the decision of the Hon'ble Mumbai Tribunal in the case of City and Industrial Development Corporation of Maharashtra Ltd v. ACIT [2012] 138 ITD 381, affirmed by the Hon'ble Bombay High Court (ITA No. 1394 of 2013) dated April 19, 2024, is that basis certain peculiarities demonstrated before the appellate authorities to CIDCO's status has been accepted be an agent of State Government of Maharashtra, and as a consequence of which it's income has been held to be not taxable. It is stated in the said rejoinder, that the Assessee has not pointed out identical provisions proving agency and therefore ratio of CIDCO (supra) cannot be applied to the present Assessee. The Ld. DR has also raised certain issues from the text of the order of this Hon'ble Tribunal in the case of CIDCO and called upon the Assessee to point out as to whether or not similar facts exist in the case of the Assessee. In this regard, the Assessee submits as under. At the outset it may be stated that the facts indicated by the learned DR are matters of arguments but the Hon'ble Tribunal has not based its decision that CIDCO is an agent of the state on the basis of such arguments; the Hon'ble Tribunal has examined the scheme of the Act under which CIDCO was operating to hold that it is an agent of the state. Therefore, it is respectfully submitted that, there is no question of finding out parallel and identical documents. What we need to see is as to whether, considering the respective law under which CIDCO and the Assessee are operating the two parties are similarly placed to be called 31 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 as the agent of the State. Copy of the above mentioned CIDCO's decisions are enclosed herewith at Pg. 6 to 23. Subject to the above clarification the Assessee submits that it is an Authority established under the MMRDA Act, 1974 (\"MMRDA Act\"). The main objective of the Assessee is to secure development of Mumbai Metropolitan Region according to the 'Regional Plan' prepared under the provisions of Maharashtra Regional Town Planning Act, 1966 (\"MRTP Act'). The Authority is chaired, controlled and supervised by the Minister of Urban Development, Government of Maharashtra. Metropolitan Commissioner and Executive Committee exercises functions and duties of the Authority. As per section 46A of the MMRDA Act, the Authority (i.e. the Assessee) is under control of the State Government. Relevant extract of the provision is reproduced below for ease of reference: \"46A. (1) The Metropolitan Authority shall exercise its powers and perform its duties under this Act in accordance with the policy framed State and guidelines laid down from time to time, by the State Government. for development of the areas in Metropolitan Region. (2) The Authority shall be bound to comply with such directions which may be issued, from time to time, by the State Government for efficient administration of this Act. (3) If, in connection with the exercise of the powers and the performance of the duties of the Authority under this Act, any dispute arises between the Authority and the State Government, the matter shall be decided by the State Government and its decision shall be final.\" Although Ld. DR has pointed out various sections of MMRDA Act to allege that the Assessee functions with autonomy, the provisions of section 46A stated above have been completely ignored. Since the provisions of section 46A provides for \"Control by the State Government\", the other sections referred by the Ld. DR cannot be read independently so as to argue that the Assessee functions with the autonomy. In so far as theory of agent of State Government is concerned, it is reiterated that the Assessee and CIDCO are at par in light of following provisions of the MRTP Act, 1966 copy of MRTP Act is enclosed herewith at Pg 28 to 157 The appointment of MMRDA/CIDCO as 'Special Planning Authority' (\"SPA\") is under section 40 of the MRTP Act, which reads as under. (Specimen Government Resolutions appointing the Assessee as SPA are enclosed herewith at Pg. 168 to 190.) \"(1) The State Government may, by notification in the Official Gazette for any undeveloped area specified in the notification in this Act referred to as \"the notified area\" either- (a)...or (b) appoint any Development Authority declared under sub-section (3A) of section 113, or 32 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 (c) appoint the Bombay Metropolitan Region Development Authority establish under the Bombay Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area. While CIDCO is appointed as SPA under clause (b), the Assessee has been so appointed under clause (c) of section 40(1) above. Further, as per provisions of section 40(3), the provision of Chapter VI (i.e. provisions dealing with Authority appointed for New Towns, section 113 to 124) and section 41, apply mutatis mutandis to any Development Authority appointed as an SPA of the notified area, as if it is a new town. In other words, any SPA falling either clause (b) or (c) above, stands at par for application of the MRTP Act. The text of modified Chapter VI of MRTP Act is enclosed at Pg. 158 to 167. Your Honours’ attention is drawn to section 154 of the MRTP Act, which reads under: “(1) Every Regional Board, Planning Authority and Development Authority shall carry out such directions or instructions as may be issued from time to time by the State Govemment for the efficient administration of this Act. (2) If in, or his connection with, the exercise of its powers and discharge of its functions by the Regional Board, Planning Authority or Development Authority, under this Act, any dispute arises between the Regional Board, Planning Authority, and the State Government, the decision of the State Government on such dispute shall be final.” The above provisions indicate that the provisions of section 46A of the MMRDA Act are in line with section 154 of the MRTP Act, which emphasizes upon “Control by the State Government qua functions of an SPA”. Attention is now invited to the provisions of section 160 of MRTP Act, which provides that at the time of dissolution of any SPA/development authority, all the properties and liabilities shall vest with the State Government. Your Honour’s attention is invited to specimen copies of letters evidencing handover of completed amenities to the concerned statutory authorities at Pg. 191 to 195. Your Honours’ kind attention is further drawn to provisions of section 44 of the MMRDA Act, whereby any arears receivable by MMRDA can be recovered as “arears of land revenue”. As defined under section 2(19) of The Maharashtra Land Revenue Code, 1966, the term ‘land revenue’ has been defined as under. “(19) “ land revenue” means all sums and payments, in money received or legally claimable by or on behalf of the State Government from any person on account of any land or interest in or right exercisable over land held by or vested in him, under whatever designation such sum may be payable and any cess or rate authorised by the State Government under the provisions of any law for the time being in force; and includes, premium, rent, lease money, quit rent, judi 33 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 payable by a namdar or any other payment provided under any Act, rule, contract or deed on account of any land; This further supports the contention of the Assessee that it is an agent of the State Government. The Assessee reiterates that, considering the above facts read with provisions of the MRTP Act, the Assessee being designated as an SPA for certain areas of the MMR, and following the binding precedents in the case of CIDCO, the receipts arising to the Assessee in its capacity as an SPA is not chargeable to tax in the hands of the Assessee. The Assessee also places reliance on the decision in the case of Gujarat Municipal Finance Board [1996] 221 ITR 317 (Guj HC) and the same is enclosed herewith at Pg. 196 to 203” 11. We have heard both the parties and given our thoughtful consideration to the elaborate submissions made by referring to provisions of MMRDA Act, MRTP Act, provisions contained in the Act as well as judicial precedents of the Hon'ble Jurisdictional High Court of Bombay. At the outset, we take note of the evidencing document by which the assessee was set up under the MMRDA Act, replacing CIDCO vide document issued by Urban Development and Public Health Department of the State Government of Maharashtra, dated 07.03.1977. It is important to note from this document that assessee was replaced with CIDCO as SPA in reference to the same notified area vide notification dated 18.07.1973 for the area mentioned therein, under which CIDCO was appointed as SPA. While replacing the assessee, the said notification was cancelled and assessee was appointed as the SPA u/s 40(1)(c) of the MRTP Act. Relevant extracts from the said correspondence are reproduced: 34 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 35 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 36 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 11.1. Thus, it is undisputed that for the objectives carried out by the assessee, initially it was with CIDCO and later on after the legislation of MMRDA Act by the State Legislature of Maharashtra, assessee was established and substituted. In the case of CIDCO, it is a company incorporated under the Companies Act with share capital. Its incorporation and set up is under a more generic law when compared with the specific statute of MMRDA Act legislated for establishing the assessee which is a strong indicator of intent and modus operandi of the State legislature for the objective it wanted to achieve through the assessee. 37 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 11.2. Status of CIDCO as an agent of State has been affirmed by the Hon'ble Jurisdictional High Court of Bombay vide order dated 19.04.2024. The two substantial questions of law framed by the Hon'ble Court and deliberation on the same, affirming the finding of the Tribunal that CIDCO was an agent of Government and therefore not exigible to tax are reproduced as under: “1 This is an appeal filed under Section 260A of the Income Tax Act, 1961 (the Act) impugning an order dated 8th August 2012 passed by the Income Tax Appellate Tribunal (ITAT). 2 On 8\" July 2015 the appeal was admitted and the following two substantial questions of law were framed: (a) Whether on the facts and in the circumstances of the cases and in law, the Tribunal was right in its interpretation of Articles 289(1)(2)(3) of the Constitution in coming to the conclusion that the company was not exigible to tax? (b) Whether on the facts and in the circumstances of the cases and in law, the Tribunal is justified in coming to the conclusion that the company was an agent of government and therefore not exigible to tax? 3 As regards second question of law challenging the Tribunal's finding that assessee/respondent was an agent of Government and, therefore, not exigible to tax has been considered and decided in a recent order of this Court in the matter of City and Industrial Development Corporation of Maharashtra Limited v/s. Assistant Commissioner of Income-Tax, Circle 15(1)(2), Mumbai & Ors.. This Court has come to a categorical finding that petitioner is declared as an agent of the State Government and that status cannot be whittled down. This Court has also referred to the impugned order in this appeal in paragraph 10 thereto. Paragraphs 9 to 11 of City and Industrial Development Corporation of Maharashtra Limited (Supra) read as under: 9. In Percival Joseph Pareira (supra), the learned Single Judge of this Court came to a finding hased on the notifications issued by the Government of Maharashtra when Hetitioner was created and also subsequently, that Petitioner was the New Town Development Authority appointed under Sub-section 3(A) of Section 113 of the MRTP Act and the work of Petitioner is being carried out on behalf of the State Government. So considering the provisions of MRTP Act and notifications issued by the State Government, learned Single Judge of this Court has given conclusive finding that Petitioner was carrying out work on behalf of the State Government. When the matter was carried in appeal, the Division Bench of this Court in City & Industrial Development Corporation (CIDCO) v/s. Percival Joseph Pareira and Ors. came to a categorical finding that from bare reading of Sub-section 3(A) of Section 113 of the MRTP Act, it 38 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 is crystal clear that Petitioner is declared as an agent of the State Government and this statutory status bestowed on Petitioner cannot be whittled down, nor can be elevated to any other position by an administrative decision. The Division Bench also came to a finding that Petitioner is getting only Rs. 5,00,000/- per annum towards administrative expenses and Petitioner on its own has pleaded before the ITAT that it was acting as an agent of the State Government and nothing more. The Court has also observed that the ITAT has accepted that contention of Petitioner and held that Petitioner was not liable to pay income tax on the income derived from the development activities. In the matter of The Officer Incharge and Assistant PE Commissioner v/s. City & Industrial Development Corporation Aurangabad and Ors. heard by the Aurangabad Bench of this Court, the Court has accepted that the conjoint reading of the provisions under Sections 40(1) (b) & 113 of the MRTP Act and the notification dated 1st June 1973 issued by the State Government, Petitioner would be acting as Special Planning Authority and as an agent of the State Government. 10. The ITAT in its order dated 8th August 2012 for Assessment Year 2006-2007 while considering the issue whether Petitioner should be held to be \"an agent\" of the State or an \"arm\" of the State, working solely under the authority and guidelines issued through various notifications by the State, i.e., the Government of Maharashtra has come to a finding that the resolutions taking back to 1970 make it clear that Petitioner is an agent and functions as an arm of the State Government because Petitioner can only work under the control and supervision of the State Government meaning thereby Petitioner cannot make/take any decisions suo-motu. 11. The ITAT has also held Petitioner to be an agent of the State. The ITAT has also recorded that it was aware that there is an income to Petitioner by way of remuneration received from the State Government at Rs.5,00,000/- per annum, which has to be assessed in the hands of Petitioner. The ITAT set aside the order passed by the Commissioner of Income Tax (Appeal) and directed the Assessing Officer to decide the case on merits with regard to income of Rs.5,00,000/- received by Petitioner after allowing deduction for any expenses incurred wholly and exclusively for the purpose of earning the said income. In view thereof, this substantial question of law is answered in affirmative. 4 As regards first substantial question of law, in view of our findings to second question of law, this question will not survive. 5 Appeal disposed accordingly.” [emphasis supplied by us by underline] 39 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 11.3. Ground raised by the Revenue states that in the decision of Maharashtra Industrial Development Corporation (MIDC) v. DDIT in ITA No. 10 of 2016, order dated 14.08.2018 by Hon'ble High Court of Bombay, the Hon'ble Court observed that decision of the Coordinate Bench of ITAT Mumbai in CIDCO [2012] 138 ITD 381, order dated 08.08.2012 is per incuriam. In this regard, we went into the chronology of events relating to passing of orders both in the case of CIDCO and MIDC by the Coordinate Bench and the Hon'ble Court to understand the correct position. The same is briefly stated: S. No. Date Party Forum Crux of the Finding 1 08.08.2012 CIDCO ITAT, Mum Assessee is acting on behalf of the State, not exigible to income-tax 2 27.03.2015 MIDC ITAT, Mum Assessee not carrying on its activities on behalf of the Government of Maharashtra and accordingly, Article 289 of the Constitution of India does not extend to it 3 14.08.2018 MIDC High Court Substantial question of law (SQL) raised on the issue of assessee carrying on its activities on behalf of the Government of Maharashtra and accordingly, Article 289 of the Constitution of India extends to it was not entertained by observing that decision of the Tribunal in CIDCO (supra) was per incuriam as the decision of Apex Court in Aditya Industrial Area Development Authority Vs. Union of India, 2006 (5) SCC 100 was not brought to its notice, wherein an entity identical / similar to MIDC was not extended the 40 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 benefit of Article 289. This appeal was admitted on the second SQL relating to whether activities of the assessee hit by the proviso to Section 2(15) of the Act. Hon'ble Court took note of the appeal by the State in CIDCO, admitted on similar SQL and pending for disposal. 4 19.04.2024 CIDCO High Court Hon'ble Court dealt with the second SQL of assessee is an agent of the Government and not exigible to income- tax. It answered in affirmative by relying on its own decision on another case of assessee dated 11.12.2023 in WP No. 1840 of 2023. This order is already reproduced in the above paragraphs for ready reference, especially internal para 10 which records that “petitioner can only work under the control and supervision of the State Government meaning thereby Petitioner cannot make/take any decision suo moto.” 11.4. Subsequently, another matter came up before the Coordinate Bench in the case of CIDCO for Assessment Year 2014-15 vide appeal in ITA No. 2840/Mum/2019, order dated 16.10.2019 on the issue relating to revision order passed u/s 263 of the Act since its income was exigible to income-tax owing to omission of section 10(20A) of the Act and that assessee is not an agent of the Government. CIDCO contested that assessment completed u/s 143(3) was by following the binding decision of the Hon'ble jurisdictional High Court as well as the jurisdictional Tribunal in its own case (supra). Amongst various contentions raised by the ld. Counsel, it was also asserted that it can 41 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 be treated as agent as per the MRTP Act and not necessary to be treated as agent also in the case of Income-tax Act. Decision of the Hon'ble Bombay High Court in MIDC (supra) was referred wherein the ITAT decision of CIDCO was held to be per incuriam. Judgment in MIDC was distinguished by stating that issue before Hon’ble Court was relating to Article 289, whereas in the case of CIDCO, the issue was completely different that it is distinguished as agent of the State Government, not seeking the benefit of Article 289. Reference was made to the decision of Hon'ble Supreme Court in the case of Tata Motors Ltd. v. Talathi of Village Chikhali & Ors (Civil appeal no. 10187 of 2010), wherein it was held as under:- “10. It is evident from section 113,114 and 118 of MRTP Act that the Development Authority is a body corporate which can acquire, hold, manage and dispose of land. Section 113 provides for constitution of a New Town Development Authority. Section 114 states the objects of such Development Authority. Section 118 of MRTP Act provides for disposal by the Development Authority of any land acquired by it or vesting in it. The Development Authority is therefore a body corporate which can acquire, hold, possess, manage, develop and dispose of land in its name and on its own behalf. The fact that the Development Authority requires the consent of the state government to dispose of any of its land by way of leases in excess of 99 years will not alter the position that the lands leased are lands of the Development Authority. There is no provision in MRTP Act which requires the New Town Development Authority, to hold and dispose of any government land as agent of the state government. In contrast, MRTP Act contains a specific provision enabling the state government to require a corporation or company (other than a New Town Development Authority, which is specific to a new Town), to execute development work and dispose of its lands as its agent. Sub-section (3A) of section 113 of MRTP Act provides: \"(3A). Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation including a company owned or controlled by the State or a subsidiary company thereof, set up with the object of developing an area as a new town, the state government may, notwithstanding anything contained in sub-section (2), require the work of developing and disposing of land in the area of a new town to be done by any such corporation, company or subsidiary company aforesaid, as an agent of the state government; and thereupon, such corporation or company shall, in relation to such area, be declared by the 42 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 state government, by notification in the official gazette, to be the New Town Development Authority for that area.\" MIDC is a corporation which would fall under sub-section 113(3A) whereas the Development Authority falls under section 113(2) of MRTP Act. The circular issued with reference to MIDC is therefore of no assistance to contend that land leased by the Development Authority to appellant is a government land. The contention of appellant that the Development Authority is the agent of state government and that the appellant is a government lessee are therefore rejected. 11.5. In the above decision, the Coordinate Bench then concluded dismissing the revisionary order passed u/s 263. While concluding, specific reference was made to the decision of Hon'ble High of Bombay in civil appeal whereby it was held as an agent of the State as per section 113(3A) of the MRTP Act. The relevant para is extracted below for ease of reference: 25. Respectfully, following the above decision, in our considered view that Pr. CIT has adopted one possible view in the present case and the order passed by Pr. CIT u/s 263 of the Act is accordingly dismissed as assessment order may be prejudicial but not erroneous. Further, the main dispute arouse due to whether assessee is an agent or not. In the civil appeal, Hon’ble high court held that assessee is an agent as per Section 113(3A) of MRTP Act. PCIT refused to consider this decision as it is not adjudicated under Income Tax Act. We cannot neglect the Hon’ble high court findings, we have to accept the definition/ meanings by higher court and most of the time, meanings and definitions are adopted from other law or from wisdoms of higher courts in Income Tax proceedings. PCIT has taken a strange stand not to follow the Judicial precedents in order to defend his proceedings u/s 263. Accordingly order u/s 263 is set aside.” [emphasis supplied by us by underline] 12. From the perusal of the MMRDA Act, copy of which is placed on record, we take note of the preamble to the said Act which provides for establishment of the authority for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of the areas in the Brihan Mumbai and Mumbai Metropolitan Region and executing plans and schemes for such development and to provide for matters connected therewith. Section 4 of this Act is also taken note of which deals with the composition of the Metropolitan Authority, i.e. the 43 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 assessee. The composition also reflects control of the State Government bestowed on the functioning of the assessee. Relevant provisions of Section 4 are reproduced as under: 4. (1) On and from the date of commencement of the Bombay Metropolitan Region Development Authority (Amendment) Act, 1983, in place of the existing members, the Metropolitan Authority shall consist of the following members, namely :- (i) The Minister for Urban Development ; (ii) The Minister for Housing ; (iiz) The Minister of State for Urban Development ; (iv) The Mayor of Mumbai; (v) The Chairman, Standing Committee, Municipal Corporation of Brihan Mumbai; (vi), (vii) and (vii) three Councillors of the Municipal Corporation of' Brihan Mumbai, elected by the Corporation, the election being held by ballot according to the system of proportional representation by means of the single transferable vote; (ix) and (x) two members of the Maharashtra Legislative Assembly, representing constituencies falling, wholly or partly, within the limits of the Mumbai Metropolitan Region, to be nominated by the State Government; (xi) one member of the Maharashtra Legislative Council, to be nominated by the State Government; (xii) The Chief Secretary to the Government of Maharashtra; (xiii) The Municipal Commissioner of the Municipal Corporation of' (Brihan Mumbai) ; (xiv) The Secretary to the Government of Maharashtra, Urban Development Department; (xv) The Secretary to the Government of Maharashtra, Housing Department; (xvi) The Managing Director, City and Industrial Development Corporation of Maharashtra; (xvii) The Metropolitan Commissioner. (2) The Minister for Urban Development shall be the Chairman, and the Metropolitan Commissioner shall be the Member-Secretary, of the Authority. 12.1. Similar is the reflection from the composition of Executive Committee of the assessee composed u/s 7 of the MMRDA Act, relevant portion of which is extracted below: 7.(1) There shall be an Executive Committee of the Authority, consisting of the following members, namely:- (i) the Chief Secretary to Government; (ii) the Metropolitan Commissioner; (iii) the Secretary to Government, Urban Development Department; (iv) the Secretary to Government Housing Department; 44 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 (v) the Municipal Commissioner, Mumbai Municipal Corporation; (vi) the Managing Director, City and Industrial Development Corporation of Maharashtra; (vii), (viii) and (ix) three members who are experts in the field of urban planning and development, to be appointed by the State Government. (2) The Chief Secretary shall be the Chairman of the Executive Committee. He shall appoint a suitable person to be the Secretary of the Executive Committee. 12.2. Further, section 46A of the MMRDA Act, specifies that assessee shall exercise its powers to perform its duties and in accordance with the policy framed by the State. According to the said provision, assessee is bound to comply with the directions issued by the State Government and in the event of any dispute between the assessee and the State Government, it shall be decided by the State Government and its decision shall be final. Thus, under the provisions of section 46A of the MMRDA Act, assessee is under the control of the State Government. 12.3. Submissions made by the ld. CIT(A) DR emphasis on the aspect of control and ownership of the assessee for its functioning. In para 4 of her written submissions, for placing reliance on the decision in the case of CIDCO, the requirement according to her are that identical provisions ought to be pointed and control by the State Government is to be demonstrated. In this regard, it is noted from the provisions contained in section 40 of the MRTP Act that assessee and CIDCO are at par. While CIDCO is appointed as SPA under clause (b), assessee is appointed under clause (c) of section 40(1). Further, in view of section 40(3) and 41, they apply mutatis mutandis to any Development Authority appointed as an SPA of the notified area, as if it is a new town. Thus, any SPA falling either under clause (b) or (c) of section 40, they stand at par for application of provisions of the MRTP Act. Further, section 154 of the MRTP Act also provides that assessee shall carry out directions and instructions from time to time from the State 45 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 Government for efficient administration of the Act and in the event of any dispute, the decision of State Government shall be final. Provisions of section 46A of the MMRDA Act and that of section 154 of the MRTP Act are in coherence, emphasising on control by the State Government qua functioning of a SPA. 12.4. We have also taken note of the fact that assessee is required to handover the completed amenities to the concerned statutory authorities. It is also important to take note of provisions contained in section 113(3A) of the MRTP Act, where by the State Government may, for carrying out the work of developing and disposing of land in the area of new town may require the same to be done by such authority as an agent of the State Government, which the State Government shall declare by notification in the official gazette. The said section is already reproduced in the above paragraphs in the submissions made by the two parties. List of certain notifications in this respect issued by the State Government is tabulated below: Sr. No. Notification NO. Dated Area 1. BKR 1177/262-UD-5 07.03.1977 BandraKurla Complex 2. TPB1275/1199-UD8 15.03.1976 AmbernathKulgaon, Badalapu Surrounding Notified Area (AKBSNA) 3 TPB 4382/26/UD-5 18.06.1982 Oshiware District Centre (ODC) 4 BBR1082/CR- 140/1687/UD-1 15.06.1983 Back bay Reclamation Scheme 5 TPB-4305/CR- 318/05/UD-11 03.12.2005 Wadala TT Area 6 TPS1299/1910/CR- 34/2000/UD-12 09.08.2006 27 Village of Kalyan Area 7 TPS1206/330/CR- 230/06/UD-12 17.03.2007 51 Village of Bhiwandi Area 8 TPB-4307/108/CR- 29/07/UD-11 01.12.2007 Manori GoraiUttan Area 9 TPB-4308/3709/CR- 347/08/UD-11 01.12.2007 Mumbai International Airport Limited (MIAL) 10 TPB-4313/CR- 44/2013/UD-11 19.03.2013 Indu Mill (Dr.Ambedkar Memorial 46 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 13. On the issue relating to lease premium received by the assessee against property from different parties, which in the present case has been considered as income of the assessee though stand of the assessee is that it belongs to the Government of Maharashtra and therefore the same has been duly accounted for in the balance sheet as a liability (issue raised by the revenue vide ground No. 4 in the present appeal), Coordinate Bench in assessee's own case for Assessment Year 2009-10 in ITA No. 173/Mum/2013 dated 10.04.2019, held that lease premium reported in the balance sheet as payment to government of Maharashtra cannot be held as income of the assessee. According to the Coordinate Bench, this is a liability payable to Maharashtra Government and hence rightfully accounted for by the assessee in its balance sheet. Relevant paragraphs in this respect from the said order are extracted below: “11. Before us, the learned Counsel for the assessee Shri JD Mistry produced the consolidated balance sheet of assessee as on 31.03.2009 and drew our attention to current liabilities and provisions of lease premium i.e. 9760.77 crores and work-in-progress is to the tune of 3235.25 crores. The learned Counsel for the assessee explained that the reading of balance sheet by the AO is totally erroneous, not holding that the receipt of land lease rent payable to Govt. of Maharashtra was to the extent of ₹ 8169.94 crores in the earlier years and that has increased to 8303.18 crores in the current year. Therefore, he noted that the income of 133.24 crores has been recorded in the accounts of the assessee. The learned Counsel stated that he has completely gone into the wrong facts and held that the assessee has not recorded the income from lease rentals in the current year. It was argued that the assessee received lease premium from various other properties like Kalyan Complex, Oshiwara District Centre, Wadala Truck Terminus, etc. and these premium are payable to Govt. of Maharashtra and the same are recorded under the head current liabilities and provisions. It was contended that treatment of premium received is the same as given to the lease premium received from Bandra Kurla Complex (BKC). When these facts were confronted to the learned CIT Departmental Representative, he could not controvert the above factual position and the consolidated balance sheet produced before us. 12. We have gone through the facts in entirety and noted that these lease premium liability declared in the balance sheet which is payable to Govt. of Maharashtra is actually received from various persons against properties and it cannot be held as income of the assessee. Actually this is a liability payable to Maharashtra Govt. Hence, we concur with the findings of CIT(A) and dismiss this issue of Revenue's appeal.” [emphasis supplied by us by underline] 47 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 14. Thus, after having elaborately considered the submissions made by both the parties on various provisions of the MMRDA Act, MRTP Act as well as judicial precedents discussed above of Hon'ble High Court of Bombay, we observe that the activities of the assessee are carried out on behalf of and as an agent of State Government of Maharashtra. The development work and relevant activities carried by the assessee fall in line with the development work and the development activities carried by the assessee on behalf of the State Government which are for the benefit of common interest for the people of the state who is an authority appointed under the MMRDA Act and MRTP Act. Accordingly, ground no.2 raised by the Revenue is dismissed. 15. Having held in favour of the assessee to be acting on behalf of the State Government and as an agent of the State Government, grounds raised by the Revenue in respect of allowance of exemption u/s.11 of the Act and treatment of lease premium and TDR (in AY 2017-18 and 2018-19) are rendered academic in nature. However, for the purpose of completeness, since these issues are already settled in favour of the assessee by the decisions of the Coordinate Bench (supra), we summarily point out the coverage of the same by the orders of the Coordinate Bench in the preceding years as under, there being no controversy on facts remaining the same. 16. We take up ground no. 3 and 5 which deals with claim of exemption u/s 11, ld. CIT(A) has in his order has elaborately dealt the coverage of the issue by the decision of Coordinate bench in assessee's own case by order dated 03.01.2022 for Assessment Year 2010-11 to 48 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 2015-16 (supra). The findings arrived at by ld. CIT(A) in this respect are reproduced as under: “7. Decision: The appellant in its grounds of appeal has assailed the AO in assessing the income by making additions and disallowances under various head without proper appreciation of facts and pleaded for the deletion of the said additions/disallowances. 7.1 7.1 The appellant in its Ground of Appeal No. I & II assailed the AO for denial of Exemption u/s 11 of the Act holding that the appellant is not a valid trust & denial of exemption u/s 11 of the Act by invoking proviso to section 2(15) of the Act. The Appellant submitted that it has claimed exemption u/s. 11 of the Act since the activities of the Appellant are charitable in nature. The Ld. AO after relying on the assessment order for AY 2010-11 denied exemption of section 11 by stating that the Appellant Trust is not a valid trust and also stated that the change of status from Local Authority to Trust is not permissible. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2010-11 to 2015-16, bearing ITA No.s 4391, 4392, 4393, 4394 & 4395/MUM/2019 and ITA Nos. 34 & 35/MUM/2020, order dated 03.01.2022-at para no 23 to 26 at page no. 55 to 72 has adjudicated this issue in detail, relevant part of the same is reproduced as below:- 22. Considered the rival submissions and material placed on record, we observe from the record that the assessee is still registered u/s 12AA of the Act and it is not revoked. Further the assessee is established under the MMRDA Act, 1974. As per which the assessee is established to function, activity of development as set out in the section 2 of the MMRDA Act and it is extended arm of the Government Maharashtra.in.the activity of development as set out in Section 12 to 16 of the Act. We also observe that the assessee is appointed as special planning authority, for development of certain regions as per the government notification like Bandra-Kurla Complex region etc. under the Maharashtra Region and Town Planning Act (MRTP Act). As per the section 113(3A) of the Act, it is acting as an agent of the Government of Maharashtra. By considering the above facts on record, LdDIT(E) granted the registration u/s 12 on 22.07.2002. 23. Further we observe from the record that the Assessing Officer continue to disallow the claim of exemption u/s 11 from AY 2003-04 holding that the assessee is not a lawful trust within the meaning of the term Trust for the purpose of sections 11, 12 and 12A of the Act and its activities are not charitable. We observe from the record that Ld.CIT(A) and coordinate benches have decided the issue of allowing the exemption u/s 11 in favor of the assessee. The revenue filed appeal before the Hon'ble High Court for AY. 2006-07, which was dismissed. In our considered view, the issue of exemption u/s 11 is settled in favor of the assessee. 49 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 24. Further, in the current AY, the Assessing Officer and Ld.CIT(A) denied the exemption u/s 11 by invoking the provisions of sec 2(15) of the Act to deny the exemption by raising issues on activity of the assessee amounts to carrying on trade, commerce or business. We observe from the record that in AY 2009-10, the Ld.DIT(E) had withdrawn the registration granted u/s 12A of the Act on the ground that the assessee activities are not for the charitable purposes invoking the proviso to section 2(15) of the Act, the coordinate bench considered the above issue and adjudicated in favour of the Assessee. For the sake of clarity, it is reproduced below: 7. From the above facts of the case, wherein the objects are discussed and the fact that the DIT (E) has cancelled the registration granted only on the premise that the assessee's charitable purpose is hit by the proviso to section 2(15) of the Act. We have gone through the objects and noticed that the entire objects are charitable in nature for the reason that the term charitable purpose as defined in the Act includes what has been specified therein and interalia the advancement of any other object of general public utility. The proviso was brought in by the legislature for the reason that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves carrying of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application or retention, of the income from such activity. We find that this issue is covered by the decision of Hon'ble Jammu and Kashmir High Court in the case of Jammu Development Authority vs. Union of India and another in ITA NO. 164/2012 dated 07-11-2013. Even otherwise, on the aspect of the proviso to section 2(15) of the Act. Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association vs. The Director Of Income Tax (2013) in 343 ITR 300 has decided this issue after elaborate discussion in regard to cancellation of 2 registration granted u/s 12A of the Act by observing as under: - 22. We had already extracted in the preceding paragraph, the objects of the association. Going by the objects, we find that the trust falls under the head of \"any other object of general public utility and hence falls within the meaning of charitable purpose under Section 2(15) of the Act. Section 2(15) of the Act defines \"charitable purpose\" as it originally stood at the time of grant of registration as under: \"charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility.\" “23 Section 2(15) was amended under Finance Act, 2008, with effect form 1.4.2009 by subiung the following provision which reads s under 2. Definitions (15) \"charitable purpose\" includes relief of the poor, education, modical relief, preservation of environment (Including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility. 50 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.) 24. Section 2(15) as it stood prior to 1983 defined 'charitable purpose to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. The phrase \"not involving the carrying on of any activity for profit was omitted from the Section by the Finance Act 1983, with effect from 01.04.1984, consequent on the amendment to Section 11, where under profits and gains of business in the case of chantable or religious trust and institutions would not be entitled to exemption under that Section, except in cases where the business fulfilled the conditions under Section 11 (4). The Section was once again amended by substitution in the year 2006 under the Finance Act, 2008, with effect from 01.04.2009, streamlining the definition of charitable purpose, considering the fact that taking advantage of the phrase \"advancement of any other object of general public utility, number of entities zoperating on commercial lines claimed exemption on their Income either under Section 20/23c) or under Section 11 of the Act. Thus, to limit the scope of this expression, Section was amended in the year 2008 that the advancement of any other object of general public utility shall not be a charitable purpose, if the object involved the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade. commerce of business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. Though the section as it stood prior to the substilution in 2008 contained no provision as in the provise under the 2008 amendment, yet the Supreme Court held that that if the primary or dominant purpose of a trust er institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity: vide CIT v. Andhra Chamber of Commerce (1985) 55 (TR 722 (SC) (referred to in the decision reported in (1980) 121 ITR 1(Add Commissioner of Income- tax v. Surat Art Silk Cloth Manufacturers Association). Thus if the dominant object or the primary object was chantable, the subsidiary object for the purpose of securing the fulfilment of the dominant object would not militate against its charitable character and the purpose would not be any the less charitable. The amendment in the year 2008 made a drastic amendment to deny the status of a charitable purpose to an institution with the object of general public utility, having any activity in the nature of trade, commerce or business, or the rendering of any service in relation to any trade, commerce or business.\" 51 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 27. Thus, the anxiety of the Parliament in introducing the proviso to Section 2(15) of the Act is only to check that institution, which attempt to gain exemption under the cloak of a trust 28. Section 11 of the Act states that income from property held for religious or charitable purposes shall not be included in the total income of the previous year, Section 12 deals with income of trusts or institutions from contributions. Section 12A deals with making application for registration of the trust/association so that the said institution will have the benefit of exemption under Section 11 and 12 of the Act. 29. Section 12AA of the Act prescribes procedure for registration. As per this, on receipt of the application for registration, the Commissioner is to call for such documents or information from the trust or institution in order to satisfy himself about the genuineness of activities of the trust or institution. The Section further empowers the Commissioner to make such enquiry as he deems necessary in this regard. Once the Commissioner is satisfied himself about the objects of the trust or institution and the genuineness of the activities of the trust, he has to pass an order in wetting registering the trust or institution; if he is not so satisfied, he has to pass an order in writing refusing to register the trust or institution 30. Section 12AA(3) of the Act inserted with effect from 01.10.2004 under the Finance (No.2) Act, 2004 and the amendment inserted by Finance Act, 2010, with effect from 01.06.2010 there in empowering the Commissioner to cancel the registration granted under the stated circumstances, reads as under Provision inserted under Finance Act, 2004 Section 12AA(3)-Where a trust or an institution has been granted registration under clause (0) of sub section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution ar not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. Provided that order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. 31. After amendment in the year 2010. Section 1243) of the INCOME TAX DEPARTMEN Act reads as follows: \"Section 12AA(3)-Where a trust or an institution has been granted registration under clause (b) of sub section (1) or has obtained registration at any time under section 12A as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in willing cancelling the registration of such trust or institution Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.\" 52 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 32. Thus in contrast to Section 12AA(1)(b) of the Income Tax Act, 1961, where the grant of registration requires satisfaction about the objects of the trust as well as genuineness of the activities, for the cancellation of the registration under Section 12AA(3), all that it is insisted upon is the satisfaction as to whether the activities of the trust or institution are genuine or not and whether the activities are being carried on in accordance with the objects of the trust. Thus, even if the trust is a genuine one i.e., the objects are genuine, if the activities are not genuine and the same not being carried on in accordance with the objects of the trust, this will offer a good ground for cancellation. Thus, in every case, grant of registration as well as cancellation of registration rests on the satisfaction of the Commissioner on findings given on the parameters given in Section 12AA(1) and 12AA(3) of the Act, as the case may be. 33. Registration of the trust under the Act, confers certain benefits from taxation under the provisions of the Act. The conditions under which the income of the trust would be exempted under the provisions of the Act are clearly laid down under Section 11 as well as in Section 12 of the Act. Section 11 of the Act specifically points out the circumstances under which income of the trust is not to be included in the total income of the previous year of the person. So too, Section 12 of the Act on the income derived from property held for charitable or religious purposes. 34. Thus, when the assessee is in receipt of income from activities, which fits in with Sections 11 and 12 of the Act as well as from sources which do not fall strictly with the objects of the trust, would not go for cancellation of registration under Section 12AA of the Act on the sole ground that the assessee is in receipt of income which does not qualify for exemption straight away by itself. All that ultimately would arise in such cases is the question of considering whether Section 11 of the Act would at all apply to exempt these income from liability. These are matters of assessment and has nothing to do with the genuineness of the activity or the activities not in conformity with the objects of the trust. As rightly pointed out by learned Senior counsel appearing for the assessee, as is evident from the reading of Circular No.11 of 2008 dated 19.12.2008, the object of the insertion of first proviso to Section 2(15) of the Act was only to curtail institution, which under the garb of 'general public utility', carry on business or commercial activity only to escape the liability under the Act thereby gain unmerited exemption under Section 11 of the Act. 36. In the decision reported in (2012) 343 ITR 23 (Bom) (Sinhagad Technical Education Society V. Commissioner of Income Tax (Central), Pune &Anr), the Bombay High Court held as follows: \"As a result of the amendment, which has been brought about by the Finance Act of 2010, Subsection (3) of Section 12AA has been amended specifically to empower the Commissioner to cancel a registration obtained under Section 12A as it stood prior to its amendment by the Finance (No.2) Act, 1996. SubSection (3) was inserted into the provisions of Section 12AA by the Finance (No.2) Act, 2004 with effect from 1 October 2004. As it originally stood, under subsection (3), a power to cancel registration was conferred upon the Commissioner where a trust or an institution had been granted registration under clause (b) of 53 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 subsection (1) of Section 12AA. The Commissioner, after satisfying himself that the objects of the trust or an institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, was vested with the power to pass an order in writing cancelling the registration of such trust or institution. By the Finance Act of 2010, subsection (3) was amended so as to empower the Commissioner to cancel the registration of a trust or an institution which has obtained registration at any time under Section 12A (as it stood before its amendment by the Finance (No.2) Act, 1996). As a result of the amendment, a regulatory framework is now sought to be put in place so as to cover also a trust or an institution which has obtained registration under Section 12A as it stood prior to its amendment in 1996. power under Section 12AA(3) can be exercised by the Commissioner in respect of a trust registered prior to 1 June 2010. The mere fact that a part of the requisites for the action under Section 12AA (3) is drawn from a time prior to its passing namely registration as a charitable trust under Section 12A prior to 2010 would not make the amendment retrospective in operation. The amendment does not take away any vested right nor does it create new obligations in respect of past actions.\" 37. As already pointed out earlier, the question as to whether the particular income of trust is eligible for exemption under Section 12 of the Act is a matter of assessment and this Court had pointed out in the decision reported in 343 ITR 300 in the case of CIT Vs. Sarvodayallakkiya Pannai, as under: \"In order to avail the benefit of exemption under Section 11 of the Income Tax Act, 1961, a Trust can make an application to the Commissioner for registration under Section 12A of the Income Tax Act, 1961. On receipt of the said application for registration of a trust or institution, the Commissioner should satisfy himself about the genuineness of the activities of the trust or institution. In order to satisfy himself, the Commissioner may also make such enquiry as he may deem necessary in that behalf. In the event the Commissioner satisfies himself that the trust is entitled to registration keeping in mind the objects, th grant registration in writing in terms of Section 12AA(1)(b)(0) of the Income Tax Act, 1961. In the event the Commissioner is not satisfied, he shall refuse such registration in terms 12AA(1)b) of the Income Tax Act, 1961. Once such a of Section satisfaction is arrived at by the Commissioner to grant, such registration cannot be cancelled by following the very same provision of section 12AA(B)(0) of the Income Tax Act, 1901 to go into the genuineness of the activities of the trust. However, the Commissioner is empowered to revoke the certificate in terms of Section 12AA(3) of the Income Tax Act, 1961. As Commissioner is empowered to revoke the certificate in terms of section 12AA(3) of the Income Tax Act, 1961. As per the said provision, in the event the Commissioner is satisfied subsequently i.e., after registration that the activities of such trust or institution are not genuine or not being carried out in accordance with the objects of the trust of the institution as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution.\" 38. After the grant of registration, if the Commissioner is satisfied subsequently that the activities of the institution are not genuine or they are not carried on in 54 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 accordance with the trust/ institution, he could pass an order in writing cancelling the registration of such trust or institution. 39. Referring to Section 11 and 12A of the Act, this Court pointed out that the act of granting registration under Section 12AA(1) itself is a result of a satisfaction recorded by the Commissioner as regards the genuineness of the objects of the trust as well as the activities of the trust and once a satisfaction is arrived at by the Commissioner, the cancellation could only be in terms of Section 12AA(3) of the Income Tax Act, 1961. 40. This Court pointed out that the cancellation made in the case of assessee therein was not on the ground that the activities were not genuine, but the activities of the trust in publication and sale and spread of Sarvodaya Literature and Gandhian Ideologies was not the objects of the trust. This Court pointed out that the cancellation was made not on the ground that the activities of the trust were not genuine but the activities of the trust were not in accordance with the objects of the trust; when the trust was registered with definite objects, carrying on such activities would be in terms of the objects for which registration was granted. 41. Referring to Section 12AA of the Income Tax Act, 1961, this Court has held as under CTAX DEPARI \"9. Under section 12AA, the Commissioner is empowered to grant or refuse the registration and after granting registration, would be empowered to cancel and that too, only on two conditions laid down under Section 12AA(3) of the Income Tax Act, 1961. Whether the income derived from such transaction would be assessed for tax and also whether the trust would be entitled to exemption under section 11 are entirely the matters left to the assessing officer to decide as to whether it should be assessed or exempted.\" 42. In the light of the law declared by this Court in the above sald decision, we do not find that the scope of Section 12AA(3) of the Act is of any doubt for a fresh look. It is relevant herein to point out that in two other assessee's case, the Income Tax Appellate Tribunal, Ahmedabad Bench-A rendered in the case of Gujarat Cricket Association Vs. DIT (Exemption) in ITA.No.93(Ahd)/2011 dated 31.01.2012 and that of the Nagpur Bench rendered in the case of M/s. Vidarbha Cricket Association Vs. Income-tax-1, Nagpur in ITA.No.3/Nag/10 dated 30.05.2011, Commissioner of considered the said decision reported in 343 ITR 300 in the case of CIT Vs. Sarvodayallakkiya Pannai rendered under Section 12AA(3) of the Act. On appeal before the respective High Courts, the decision of the Income Tax Appellate Tribunal was confirmed. 43. Leaving that aside, there being no dispute raised by the Revenue as to the genuineness of the trust, or as to the activities of the trust not being in accordance with the objects of the trust, the question of cancellation under Section 12AA of the Act does not arise. We further hold that at the time of grant of registration on 28.3.2003, the same was made taking into consideration the objects of the institution fitting in with the definition of 'charitable purpose' defined under Section 2(150 of the Act and the substitution of the Section itself came only 2008, with effect from 01.04.2009. As rightly pointed out by the learned seni counsel 55 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 appearing for the assessee, the circular clearly brings out the object of the amendment and the amended provision has no relevance to the case. The power regarding cancellation, hence has to be seen with reference to the registration and the object satisfying the definition on charitable purpose, as it stood at the time of registration and not by the subsequent amendment to Section 2(15) of the Income Tax Act. 44 Leamed Standing counsel appearing for the Revenue placed heavy reliance on the proviso to Section 12AA(3) of the Act and submitted that when the assessee has income received from conduct of the matches, which are commercial in nature, as had been found by the Income Tax Appellate Tribunal, the objects of the trust ceased to be charitable. He submitted that going by the definition of Section 2(15) of the Act, rightly, the Commissioner assumed jurisdiction under Section 12AA(3) of the Act to cancel the registration. He further pointed out that for the finding to be recorded that the activities of the trust are not genuine, one must necessarily look into the objects of the association; if the objects of the association reveal commercial nature in the conduct of matches, the association cannot be one for charitable purpose as defined under Section 2(15) of the Act. Thus, there could be no inhibition for the Commissioner to assume jurisdiction to issue show cause notice calling upon the assessee to state whether the association is genuine or not. He further submitted that on looking at the activities of the association, the Commissioner had rightly come to the conclusion that the assessee's registration was liable to be withdrawn. 45. We do not accept the submission of learned Standing counsel appearing for the Revenue. As rightly observed by learned Senior counsel appearing for the assessee, the Revenue granted registration under Section 12AA of the Act satisfying itself as to the objects of the association befitting the status as charitable purpose as defined under Section 2(15), as it stood in 2003 and after granting the registration, if the registration is to be cancelled, it must be only on the grounds stated under Section 12AA(3) of the Act with reference to the objects accepted and registered under Section 12AA, as per the law then stood under the definition of Section 2(15) of the Income Tax Act. Even therein, Courts have defined as to when an institution could be held as one for advancement of any other object of general public utility. Thus, if a particular activity of the institution appeared to be commercial in character, and it is not dominant, then it is for the Assessing Officer to consider the effect of Section 11 of the Act in the matter of granting exemption on particular head of receipt. The mere fact that the said income does not fit in with Section 11 of the Act would not, by itself, herein lead to the conclusion that the registration granted under Section 12AA is bad and hence, to be cancelled. 46. It may be of relevance to note the language used in the definition \"charitable purpose\" in Section 2(15) of the Act, which states that charitable purpose includes relief of the poor, education, medical relief and advancement of any other object of general public utility. The assessee's case falls within the phrase of the definition general public utility. In the decision reported in (2000) 246 ITR 188 in the case of Hiralal Bhagwati Vs. Commissioner of Income Tax, the Gujarat High court considered the said phrase in the context of Section 12AA registration and 56 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 held that registration of the charitable trust under Section 12AA of the Act is not an idle or empty formality; the Commissioner of Income-tax has to examine the objects of the trust as well as an empirical study of the past activities of the applicant; the Commissioner of Income-tax has to examine that it is really a charitable trust or institution eligible for registration; the object beneficial to a section of the public is an object of \"general public utility\". The Gujarat High Court held that to serve as a charitable purpose, it is not necessary that the object must be to serve the whole of mankind or all persons living in a country or province; it is required to be noted that if a section of the public alone are given the benefit, it cannot be said that it is not a trust for charitable purpose in the interest of the public; it is not necessary that the public at large must get the benefit; the criteria here is the objects of general public utility. Thus, the Gujarat High Court held that in order to be charitable, the purpose must be directed to the benefit of the community or a section of the community, the expression \"object of general public utility\", however, is not restricted to the objects beneficial to the whole of mankind; an object beneficial to a section of the public is an object of general public utility; the section of the community sought to be benefited must undoubtedly be sufficiently defined and identifiable by some common quality of a public or impersonal nature. 47.The above said decision (2000) 246 ITR 188 – Hiralal Bhagwati Vs. Commissioner of Income Tax) came up on April 18, 2000. Evidently, the Revenue has not gone on appeal as against this judgment. In the decision reported in (2008) 300 ITR 214(SC) in the case of Assistant Commissioner of Income Tax Vs. Surat City Gymkhana, reference was made about this decision and the Apex Court pointed out that the Revenue did not challenge this case and it attained finality. 48. It is no doubt true that the decision reported in (2008) 300 ITR 214(SC) in the case of Assistant Commissioner of Income Tax Vs. Surat City Gymkhana, was in the context of Section 10(23) of the Income Tax Act, 1961, nevertheless, the fact remains that the understanding of the scope of the expression \"general public utility\" would nevertheless is of relevance herein. Admittedly when the assessee was granted registration, the Revenue recorded its satisfaction that the objects are of charitable purpose. Thus only possible enquiry under Section 12AA of the Act for cancellation is to find out whether the activities of the trust are genuine or in accordance with the objects of the trust. If any of the income arising on the activities are not in accordance with the objects of the trust, the assessees income, at best, may not get the exemption under Section 11 of the Act. But this, by itself, does not result in straight rejection of the registration as \"trust' under Section 12AA of the Act. Consequently, we reject the prayer of the Revenue that Section 12AA(1) of the Income Tax Act, 1961 must be read along with Section 12AA(3) of the Income Tax Act, 1961 before considering the cancellation. 49. As far as the unreported decision of this Court in T.C(A) No.91 of 2013 dated 29.04.2013 (Gowri Ashram Vs. Director of Income Tax (Exemptions) is concerned, on which heavy reliance was placed by the Revenue, the said decision relates to the rejection of the registration at the threshold of the application filed for registration. So too the decision of the Apex court reported in 315 ITR 428 in the 57 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 case of Commissioner of Income Tax Vs. National Institute of Aeronautical Engineering Educational Society, wherein, rejection was made on the threshold of application for registration made by the assessee. The decisions relied on is thus distinguishable and has no relevance to the facts of the present case. 50. As far as unreported decision of this Court in T.C(A) No.91 of 2013 dated 29.04.2013 (Gown Ashram Vs. Director of Income Tax (Exemptions) is concerned, while rejecting the appeal filed by the assessee on the rejection of the application for registration, this Court observed that it was open for the assessee Society to renew its application as and when it expanded the objects of the Society and were approved by the competent Court. The rejection order passed by the Revenue was on the ground that the projects of the trust were not charitable in character. This decision also has no relevance to the case on hand. 51. As already noted in the preceding paragraphs, considering the provision under Section 12AA(3) of the Act, the cancellation or registration in a given case could be done only under the stated circumstances under Section 12AA(3) of the Act and in the background of the definition relevant to the particular year of registration. As rightly pointed out by the assessee, Revenue does not allege anything against the genuineness of the objects of the assessee or its activities. It rests its order only on the ground of the assessee receiving income from holding of matches which according to the assessee were not held by it. Thus, as regards the question as to whether the particular income qualified under Section 11 of the Act or not is not the same as activity being genuine or not. In the circumstances, we do not agree with the view of the Income Tax Appellate Tribunal that the order passed by the Director of Income Tax (Exemptions) was in accordance with the provisions of the Income Tax Act, 1961. He viewed that the conduct of test matches and ODI are in the nature of commerce or business. Though the assessee claimed their activities for promotion of sports, he held that the dominant feature is evident from the huge profits received and hence the amount received from BCCI as subsidy are commercial. As regards conducting of IPL Matches, he pointed out that though no services are rendered by the assessee for conducting the matches, the ground where the matches are played are given for rent which is a commercial venture. The subsidy received from BCCI included mainly TV Advertisements sold by BCCI for the conduct of IPL and their commercial receipts arising for IPL transactions. Therefore, the nature of receipt was important than the name of account under which it was accounted. Thus he viewed that the objects and activities would no longer come within the definition of Section 2(15) of the Act after the amendment come in effect from 01.04.2009. 52. As rightly pointed out by the assessee, the Revenue does not question the objects of the Association as not genuine or are in accordance with the objects. All that the Revenue stated was that the nature of re could not be called a subsidy. Thus Revenue came to the conclusion that the objects and activities could not come within the meaning of 'charitable purpose under Section 2(15) of the Act. 53. On going through the materials, the Income Tax Appellate Tribunal pointed out that instead of promoting and developing the game of cricket, the assessee was promoting and developing cricket as an entertainment and the tickets are 58 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 highly priced; here, the assessee has shifted the activities of general public utility to commercial activity for generating revenue; the public merely participate to view costly matches; hence the conditions of Section 12AA(3) were satisfied. The Income Tax Appellate Tribunal agreed with the Director of Income Tax (Exemptions) that the expression 'subsidy from BCCI was a misleading nomenclature and it was a share from the revenue collected by BCCI from the sale of telecast rights. The surplus from IPL Season-I worked out to 8.5% of the total receipts. It further held that 78% of the fotal receipt came out of advertisement revenue. 54. The Income Tax Appellate Tribunal pointed out that the physical aspect of the game was one in accordance with the objects of the assessee and the activities are genuine. However, the matches held were not advancement of any specific object of general public utility. The pattern of receipt is commercial in character and the matches conducted are not in accordance with the objects of the Association. Thus, it rejected the assessee's case and held that both the conditions under Section 12AA(3) of the Act stood attracted. 55. As seen from the observation of the Income Tax Appellate Tribunal, although generally it accepted the case of the assessee that the physical aspect of the game was one in accordance with the objects, the quantum of receipt apparently led the Income Tax Appellate Tribunal and the Revenue to come to the conclusion that the activities are commercial and hence by Section 2(15) proviso to the Act, the receipt from BCCI could not be called as subsidy. As for the observation of the Income Tax Appellate Tribunal that the twin conditions stood satisfied is concerned, it is not denied by the Revenue that at the time of granting registration, the Commissioner had satisfied himself about the objects of the trust and the genuineness of the activities as falling within the meaning of 'charitable purpose', as it stood in 2003. The Revenue does not deny as a matter of fact that the objects remain as it was in 2003 and there is no change in its content to call the assessee's object as not genuine. There are no materials to indicate that the grant of registration was not based on materials indicating objects of general public utility,\" 8. We have gone through the order of DIT(E) and could not find anything in the order which terms that the nssessee was undertaking any activity which is not genuine or trust or institution is not genuine. We could not lay our hand on any material in the order of DIT(E) which explains that the assessee or its affairs are not being carry out in accordance with the object of the institution. Accordingly, we quash the order of DIT(E) and restore the registration of the Institution. This issue of assessee's appeal is allowed. 9. Since, the registration is already allowed consequently no disallowance can be made in respect to interest income and leasing activity income i.e. the rent and other fees, because these falls under the objects of the assessee's institution and hence on merits also the assessee has a case. Accordingly, we need not to elaborate on the merits of the case, since we have already allowed registration.\" 59 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 25. Therefore, from the above decision of the coordinate bench, the assessee is continue to be duly registered as charitable trust u/s 12AA, this is due to subsequent development, hence the contention of the Ld.CIT(A) and Assessing Officer is not correct. In our considered view, the issue of applicability of section 2(15) of the Act is already considered by the ITAT and issue is well settle in favour of the assessee. The courts have held the activities of the assessee are charitable and we observe that the activities of the assessee, which acts on behalf of the Government of Maharashtra, irrespective of nature of transactions, the assessee acts on behalf of and as an agent of the State Government. The development work and relevant activities in the line of development are carried by the assessee on behalf of the State Government and it is only an authority appointed under the MMRDA Act and MRTP Act to carry on the functions on behalf of State Government. All the revenues are belong to State Government and it is only an entity created to functions for the benefit of the common interest of people of the State 26. We observe from the appellate order, Ld.CIT(A) opined that the allotment of land is not made to needy people at free of cost or subsidized rates, therefore assessee has not actually carried any charitable activities, in our view, the assessee entity is not created with the above object/motive rather to extend the facilities of development in the region as per the 'GO' of the State Government for the benefit of the region The functions are carried on without any profit motive and also there is no clause in the trust deed which Indicate that the profit or surplus earned are distributed to any stake holders. It clearly indicates that the institution is created for the purpose of facilitating the state government to achieve the development work in the state. As discussed earlier, the issue is already decided by the coordinate bench and it is brought to the notice of the authorities below, the lower authorities should refrain from racking up such issues agen and again. In our view, the issue is settled in favour of the assessee that the assesses, created for the Charitable purpose within the meaning of Section 11 and 2(15) of the Act. Accordingly, the grounds raised by the assessee in this regard are allowed.\" 7.1.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that the issue is settled in favour of the assessee that the assessee is created for the Charitable purpose within the meaning of Section 11 and 2(15) of the Act. Thus, following the order of the higher authorities the grounds of appeal I & II are allowed. 16.1. The issue relating to proviso to section 2(15) in the case of assessees including statutory corporations, authorities or bodies carrying out object of General Public Utility has been dealt by Hon'ble Supreme Court in the case of Ahmedabad Urban Development 60 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 Authority [2022] 449 ITR 1 (SC). In this respect, certain paragraphs from the said judgement are reproduced for the sake of ready reference: \"170. Classically, the idea of charity was tied up with eleemosynary. However, \"charitable purpose\" and charity as defined in the Act have a wider meaning where it is the object of the institution which is in focus. Thus, the idea of providing services or goods at no consideration, cost or nominal consideration is not confined to the provision of services or goods without charging anything or charging a token or nominal amount. This is spelt out in ballon Chamber of Commerce (supra) where this Court held that certain GPUs can render services to the public with the condition that they would not charge \"more than is actually needed for the rendering of the services, may be it may not be an exact equivalent, such mathematical precision being impossible in the case of variables, may be a little surplus is left over at the end of the year the broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for profit\". 171. Therefore, pure charity in the sense that the performance of an activity without any consideration is not envisioned under the Act. If one keeps this in mind, what section 2(15) emphasizes is that so long as a GPU's charity's object involves activities which also generates profits (incidental, or in other words, while actually carrying out the objectives of GPU, if some profit is generated), it can be granted exemption provided the quantitative limit (of not exceeding 20%) under second proviso to section 2(15) for receipts from such profits, is adhered to. 172. Yet another manner of looking at the definition together with sections 10(23) and 11 is that for achieving a general public utility object, if the charity involves itself in activities, that entail charging amounts only at cost or marginal mark up over cost, and also derive some profit, the prohibition against carrying on business or service relating to business is not attracted if the quantum of such profits do not exceed 20% of its overall receipts. 173. It may be useful to conclude this section on interpretation with some illustrations. The example of Gandhi Peace Foundation disseminating Mahatma Gandhi's philosophy (in Surat Art Silk) through museums and exhibitions and publishing his works, for nominal cost, ipso facto is not business. Likewise, providing access to low-cost hostels to weaker segments of society, where the fee or charges recovered cover the costs (including administrative expenditure) plus nominal mark up; or renting marriage halls for low amounts, again with a fee meant to cover costs; or blood bank services, again with fee to cover costs, are not activities in the nature of business. Yet, when the entity concerned charges substantial amounts over and above the cost it incuts for doing the same work, or work which is part of its object (de, publishing an expensive coffee table book on Gandhi, or in the case of the marriage hall, charging significant amounts from those who can afford to pay, by providing extra services, far above the cost-plus nominal markup) such activities are in the nature of trade, commerce, business or service in relation to them. In such case, the receipts from such latter kind of activities where higher amounts are charged, should not exceed the limit indicated by proviso (ii) to section 2(15). … … 176. It would be essential now to deal with certain kinds of receipts which GPU charities, typically statutory housing boards, regulatory authorities and corporations may be entitled to, if mandated to collect or receive. During the course of hearing, learned counsels highlighted that statutory boards, and 61 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 corporations have to recover the cost of providing essential goods and services in public interest, and also fund large scale development and maintain public property. These would entail recovering charges or fees, interest and also receiving interest for holding deposits. It was further pointed out that in some cases, income in the form of rents - having regard to the nature of the schemes which the concerned board, trust or corporation may be mandated or permitted to carry on, has to be received. For instance, in some situations, for certain kinds of properties, the boards may be permitted only to lease out their assets and receive rents. 177. The answers to these, in the opinion of this court, are that the definition ipso facto does not spell out whether certain kinds of income can be excluded. However, the reference to specific provisions enabling or statutory models in enactments (under which corporations boards or trust or authority by whatsoever name, are set up), the mere fact that these bodies have to charge amounts towards supplying goods or articles, or rendering services Le, for fees for providing typical essential services like providing water, distribution of food grains, distribution of medicines, maintenance of roads, parks etc., ought not to be characterized as \"commercial receipts\". The rationale for such exclusion would be that if such rates, fees, tariffs, etc,, determined by statutes and collected for essential services, are included in the overall income as receipts as part of trade, commerce or business, the quantitative limit of 20% imposed by second proviso to section 2(15) would be attracted thereby negating the essential general public utility object and thus driving up the costs to be borne by the ultimate user or consumer which is the general public. By way of illustration, if a corporation supplies essential food grains at cost, or a marginal mark up, another supplies essential medicines, and a third, water, the characterization of these, as activities in the nature of business, would be self-defeating, because the overall receipts in some given cases may exceed the quantitative limit resulting in taxation and the consequent higher consideration charged from the user or consumer. … … 185. As far as boards and corporations which are tasked with development of industrial areas, by statute, the judgments of this court, in Shri Ramtanu Cooperative Housing Society (supra) and Gujarat Industrial Development Corporation (supra) have declared that these bodies are involved in 'development' and are not essentially engaged in trading, In Shri Ramtanu Cooperative Housing Society (supra) this court, by a five judge bench, held that the Maharashtra Industrial Development Corporation is not a trading concern, and observed as follows: \"These features of transfer of land, or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their Directors for the regulation and management of the Corporation Such a Corporation set up by the shareholders carries on business and is intended for making profits. When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading Corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity Board and the 62 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings. It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries. 17. The Corporation has to provide amenities and facilities in industrial estates and industrial areas. Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas are within the programme of work of the Corporation. The found of the Corporation consists of moneys received from the State Government, all fees, costs and charges received by the Corporation, all moneys received by the Corporation from the disposal of lands, buildings and other properties and all moneys received by the Corporation by way of rents and profits or in any other manner. The Corporation shall have the authority to spend such sums out of the general funds of the Corporation or from reserve and other funds. The Corporation is to make provision for reserve and other specially denominated funds as the State Government may direct. The Corporation accepts deposits from persons, authorities or institutions to whom allotment or sale of land, buildings, or sheds is made or is likely to be made in furtherance of the object of the Act. A budget is prepared showing the estimated receipts Sund expenditure. There cobiects of the Corporation are audited by an auditor appointed by the State Government. These provisions in regard to the finance of the Corporation indicate the real role of the Corporation wiz the agency of the Government in carrying out the purpose and object of the Act which is the development of industries. If in the ultimate analysis there is excess of income over expenditure that will not establish the trading character of the Corporation. There are various departments of the Government which may have excess of income over expenditure. 20. The underlying concept of a trading Corporation is buying and selling. There is no aspect of buying or selling by the Corporation in the present case. The Corporation carries out the purposes of the Act, namely, development of industries in this State. The construction of buildings, the establishment of industries by letting buildings on hire or sale, the acquisition and transfer of land in relation to establishment of industrial estate or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent in setting up industries in the State. The Act aims at building an industrial town and the Corporation carries out the objects of the Act. The hard core of a trading Corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and 63 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one.\" … … 190. In light of the above discussion, this court is of the opinion that: (i) The fact that bodies which carry on statutory functions whose income was eligible to be considered for exemption under section 10(20A) ceased to enjoy that benefit after deletion of that provision w.e.f. 1-4-2003, does not ipso facto preclude their claim for consideration for benefit as GPU category charities, under section 11 read with section 2(15) of the Act. (ii) Statutory Corporations, Boards, Authorities, Commissions, etc. (by whatsoever names called) in the housing development, town planning, industrial development sectors are involved in the advancement of objects of general public utility, therefore are entitled to be considered as charities in the GPU categories. (iii) Such statutory corporations, boards, trusts authorities, etc. may be involved in promoting public objects and also in the course of their pursuing their objects, involved or engaged in activities in the nature of trade, commerce or business. (iv) The determinative tests to consider when determining whether such statutory bodies, boards, authorities, corporations, autonomous or self- governing government sponsored bodies, are GPU category charities: (a) Does the state or central law, or the memorandum of association, constitution, etc. advance any GPU object, such as development of housing, town planning, development of industrial areas, or regulation of any activity in the general public interest, supply of essential goods or services such as water supply, sewage service, distributing medicines, of food grains (PDS entities), etc.; (b) While carrying on of such activities to achieve such objects (which are to be discerned from the objects and policy of the enactment; or in terms of the controlling instrument, such as memorandum of association etc.), the purpose for which such public GPU charity, is set-up - whether for furthering the development or a charitable object or for carrying on trade, business or commerce or service in relation to such trade, etc.; (c) Rendition of service or providing any article or goods, by such boards, authority, corporation, etc., on cost or nominal mark-up basis would ipso facto not be activities in the nature of business, trade or commerce or service in relation to such business, trade or commerce; (d) where the controlling instrument, particularly a statute imposes certain responsibilities. or duties upon the concerned body, such as fixation of rates on pre-determined statutory basis, or based on formulae regulated by law, or rules having the force of law, setting apart amenities for the purposes of development, charging fixed rates towards supply of water, providing sewage services, providing food-grains, medicines, and/or retaining monies in deposits or government securities and drawing interest there from or charging lease rent, ground rent, etc., per se, recovery of such charges, fee, interest, etc. cannot be characterized as \"fee, cess or other consideration\" for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto; (e) Does the statute or controlling instrument set out the policy or scheme, for how the goods and services are to be distributed; in what proportion the surpluses, or profits, can be permissively garnered; are there are 64 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 limits within which plots, rates or costs are to be worked out; whether the function in which the body is engaged in, is normally something a government or state is expected to engage in, having regard to provisions of the Constitution and the enacted laws, and the observations of this court in NDMC whether in case surplus or gains accrue, the corporation, body or authority is permitted to distribute it, and if so, only to the government or state; the extent to which the state or its instrumentalities have control over the corporation or its bodies, and whether it is subject to directions by the concerned government, etc.; (f) As long as the concerned statutory body, corporation, authority, etc. while actually furthering a GPU object, carries out activities that entail some trade, commerce or business, which generates profit (ie, amounts that are significantly higher than the cost). and the quantum of such receipts are within the prescribed limit (20% as mandated by the second proviso to section 2(15)) - the concerned statutory or government organisations can be characterized as GPU charities. It goes without saying that the other conditions imposed by the seventh proviso to section 10(23C) and by section 11 have to necessarily be fulfilled. (v) As a consequence, it is necessary in each case, having regard to the first proviso and seventeenth proviso (the latter introduced in 2012, w.r.e.f 1-4-2009) to section 10(23C), that the authority considering granting exemption, takes into account the objects of the enactment or instrument concerned, its underlying policy, and the nature of the functions, and activities, of the entity claiming to be a GPU charity. If in the course of its functioning it collects fees, or any consideration that merely cover its expenditure (including administrative and other costs plus a small proportion for provision) such amounts are not consideration towards trade, commerce or business, or service in relation thereto. However, amounts which are significantly higher than recovery of costs, have to be treated as receipts from trade, commerce or business. It is for those amounts, that the quantitative limit in proviso (ii) to section 2(15) applies, and for which separate books of account will have to be maintained under other provisions of the IT Act.” 16.2. From the above, para 185 is noted with specific attention which deals with boards and corporations entrusted with development of industrial areas, by statute. Hon'ble Court referred to its own decision in Shri Ramtanu Cooperative Housing Society (supra) and Gujarat Industrial Development Corporation (supra) whereby it was declared that these bodies are involved in 'development' and are not essentially engaged in trading. In the decision of Shri Ramtanu Cooperative Housing Society (supra), it was noted that “receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries.” It further noted in para 20 that “The hard core of a trading corporation is its commercial 65 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one.” In the present case, the factum of such buying and selling is not brought out by the Revenue to hold against the assessee. 16.3. In para 190, while drawing summary, the Hon'ble Court opinionated in sub-para (d) of para 190(iv) on determinative test for GPU category of charities to state that “where the controlling instrument, particularly a statute imposes certain responsibilities. or duties upon the concerned body, such as fixation of rates on pre-determined statutory basis, or based on formulae regulated by law, or rules having the force of law, setting apart amenities for the purposes of development, charging fixed rates towards supply of water, providing sewage services, providing food-grains, medicines, and/or retaining monies in deposits or government securities and drawing interest there from or charging lease rent, ground rent, etc., per se, recovery of such charges, fee, interest, etc. cannot be characterized as \"fee, cess or other consideration\" for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto.” 16.4. In the present case, assessee earning interest income from retaining monies in deposits or government securities which enables it to meet the deficits in conduct of operations for mono-rail and such similar functions and therefore cannot be characterized as \"fee, cess or 66 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 other consideration\" for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto. From the Income and Expenditure statement for the year ended on 31.03.2016, it is noted that receipts from mono-rail services are much less than the expenditure incurred on the same. Such a deficit is met by the interest income. 16.5. Considering the factual matrix of the case, extensive documents placed on record, elaborate discussion made on the applicable provisions of the Act and the decisions in the assessee’s own case as well as those by Hon'ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) and the provisions of governing statutes of MMRDA Act and MRTP Act, we summarised our conclusions on the core issue as stated above. We find that assessee is held to be a charitable institution carrying on the object for which it is established under the MMRDA Act read with MRTP Act, falling under the category of General Public Utility as per section 2(15) of the Act. The registration granted to the assessee u/s 12AA still continues and is not revoked by the Revenue. Keeping the litigation history and the entire discussion made above in perspective, it is held that assessee is a charitable trust and ld. Assessing Officer is not justified in applying the proviso to section 2(15) of the Act for denying the claim of exemption u/s.11 of the Act. Thus, we do not find any reason to interfere with the findings arrived by ld. CIT(A) as adjudicated by him on the issue who has followed the decision of the Coordinate Bench in assessee’s own case. Accordingly, ground no.3 and 5 raised by the Revenue are dismissed. 17. For ground no.4 on the treatment of lease premium, which ld. Assessing Officer has treated as income in the hands of the assessee, 67 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 the issue is covered by the decision of Coordinate Bench in assessee’s own case, relied upon by the ld. CIT(A), holding in favour of the assessee and the same is reproduced as under: “7.2 The appellant in its Grounds of Appeal No. III assailed the AO for addition on account of lease premium of Rs. 1191,87,99,809/-. The Appellant submitted that the Ld. AO erred in making addition on account of Lease Premium of 1191,87,99,809/-on the alleged grounds that the same are income of the Appellant. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2010-11 to 2015- 16, bearing ITA No.s 4391, 4392, 4393, 4394 & 4395/MUM/2019 and ITA Nos. 34 & 35/MUM/2020, order dated 03.01.2022 at para no 31 at page no. 75 has adjudicated this issue in detail, the same is reproduced as below :- \"31. Considered the rival submissions and material placed on record, we observe from the submission that all the issues raised by the assessee and revenue are consequential to the decision in the ground no 1, we have already adjudicated in favor of the assessee, therefore all these issues raised have becomes academic and we direct Assessing Officer to assess the income of the assessee as per our direction in the para no 24 above. Accordingly, we allow the grounds raised by the assessee in this regard.\" 7.2.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that since the issue relating to exemption u/s 11 of the Act holding that the appellant is a valid trust & eligible for exemption u/s 11 of the Act under proviso to section 2(15) of the Act, is settled in favour of the assessee, all other issues raised have become academic and directed the Assessing Officer to assess the income of the assessee as per their direction in the para no 24 of the order reproduced at para 7.1. Thus, following the order of the higher authorities the grounds of appeal III is allowed as per direction of the Hon'ble ITAT Mumbai. 17.1. We do not find any reason to interfere with the findings arrived by ld. CIT(A). Accordingly, ground no.4 raised by the Revenue is dismissed. 17.2. In respect of appeals for Assessment Year 2017-18 and 2018-19, similar issue in respect of TDRs is raised in ground no. 4 on the same footing as that of lease premium treatment. This issue is also held in terms of finding given for treatment of lease premium in appeal for Assessment Year 2016-17. 68 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 18. In respect of ground no.6 is in respect of addition on account of accrual of interest by making a notional addition for the interest on the loans given and deposits made with various public sector undertaking/GOM/Government bodies. The said issue is also covered by the decision of Coordinate Bench in assessee’s own case vide order dated 13.07.2016 for AY 2003-04 and others. Relevant findings arrived at by ld. CIT(A) following the decision of Coordinate Bench is extracted below: “7.4 The appellant in its Grounds of Appeal No. VI assailed the AO for addition on account of accrued interest Rs. 68,84,00,000/-. The assessee claimed that the Ld. AO erred in making notional addition on account of interest aggregating to Rs. 68,84,00,000/- on loans given and deposits made with various Public Sector Undertakings (\"PSU\") / GOM / Government Bodies. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2003-04, 2004-05, 2005-06, 2007-08 & 2008-09 bearing ITA Nos. 5576 & 5580/M/2007, 4177/M/2008, 5761/M/2010 & 6756/M/2011, order dated 13.07.2016 at para no 10 &11 at page no. 13 &14 has adjudicated this issue in detail, the same is reproduced as below :- \"10. The Ld. A.R of the assessee has stated that the issues raised by the assessee in its appeals are the alternative contentions and will be relevant only if the issue of denial of exemption under section 11 of the Act would have been decided against the assessee. He has further submitted that similar grounds taken by the assessee in its appeal bearing ITA No.5062/Mum/2009 relating to AY 2006-07 have been dismissed by the Tribunal being rendered academic in nature. The relevant part of the order of the Tribunal is reproduced as under: \"16. Briefly stated, AO while denying the benefit of section 11 to assessee held that assessee is not a local authority and further also held that assessee has not accounted for the amount of Z124.24 crores of interest on loans given and deposits made with various public sector undertakings/ Govt. of Maharashtra. After considering the submissions of assessee, the CIT (A) considered that as assessee is entitled for exemption of income, the ground of bringing to tax notional interest becomes infructuous. However, he on the issue of assessee being local authority, after discussion in the order, held that assessee is not a local authority for the purpose of section 10(20). In doing so he relied on the decision of the Hon'ble Supreme Court in the case of Adityapur Industrial Area Development Authority, 283 ITR 97 (SC), U.P. State Road Transport Corporation vs. CIT, 286 ITR 350, C AL CU TTA S TATE TRA NS PORT CORPORATION VS CIT 219 ITR 515 (SC) and CIT vs. U.P. Forest Corporation, 230 ITR 945 (SC) 69 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 wherein it has been held that institutions set up for the specific purposes, does not amount to 'local authority' for the purpose of section 10(20) of the I.T. Act. 17. In the course of arguments the learned Counsel squarely admitted that these issues became academic in nature and can be left open for adjudication at the relevant point of time in view of the granting benefits of section 11 to assessee. He fairly admitted that in case the Revenue appeal is dismissed, there is no need for adjudication of the grounds raised by assessee. Since we have dismissed the Revenue appeal and upheld the order of the CIT (A) granting benefit of section 11 to assessee, this issue becomes academic in nature and so not adjudicated. Issues are left open for consideration in an appropriate case as and when required. The grounds are, therefore considered rejected.” 7.4.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that since the issue relating to exemption u/s 11 of the Act holding that the appellant is a valid trust & eligible for exemption u/s 11 of the Act under proviso to section 2(15) of the Act, is settled in favour of the assesse, all other issues raised have become academic and directed the Assessing Officer to assess the income of the assessee as per their direction in the above order. Thus, following the order of the higher authorities the grounds of appeal VI are allowed as per direction of the Hon'ble ITAT Mumbai. 18.1. From the perusal of the above, in the given facts, we do not find any reason to interfere with the findings arrived by ld. CIT(A) and the ground raised by the Revenue is dismissed. 19. Ground No.7 and 8 raised by the Revenue are rendered academic in nature in view of the observations and findings given while adjudicating ground no.2. 20. In the result, appeal of the Revenue for Assessment Year 2016-17 is dismissed. Since identical issues are involved in appeals for Assessment Year 2017-18 and 2018-19, there being no change in the factual matrix and applicable law, our observations and findings in appeal for Assessment Year 2016-17 applies mutatis mutandis to the 70 ITA Nos. 3791/Mum/2024 and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 appeals for the said two Assessment Years. These two appeals of the Revenue are also dismissed. 21. Appeal for Assessment Year 2018-19 against order u/s 154 of the Act is rendered infructuous on account of outcome in the appeal against assessment order passed u/s 143(3) of the Act. Accordingly, the said appeal is dismissed as infructuous. 22. In the result, all the four appeals of the Revenue are dismissed. Order is pronounced in the open court on 28 May, 2025 Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice President Accountant Member Dated: 28 May, 2025 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 5 Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "