DY. COMMISSIONER OF INCOME TAX(EXEMPTIONS)-2(1),MUMBAI, MUMBAI V. MAHARASHTRA ENERGY DEVELOPMENT AGENCY, MUMBAI

ITA 1259/MUM/2025

AI Insights

The case involves the Maharashtra Energy Development Agency (MEDA), a public charitable trust, which was granted exemption under Section 10(23C)(iv) of the Income Tax Act. The Revenue challenged the exemption claiming that the activities of MEDA constituted carrying on a business and thus did not qualify for the exemption. The Tribunal examined the nature of the funds received by MEDA and its activities, and found that the funds were corpus funds and the activities were charitable, thus upholding the exemption. The Tribunal's decision was based on precedents set in earlier years for similar assessments and the specific provisions of the Income Tax Act regarding charitable trusts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313084 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Other Referred Cases: ITA No. 1765/Mum/2023, ITA No. 1767/Mum/2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BARE GANESH SUDHAKAR
• Assessee Lawyers: DARSHANA HYBRID
• Keywords: Capital asset; Opportunity of being heard; Depreciation; Charitable institution; Cancellation of registration; Benefit of exemption
• Section: 143(3); 271(1)(c); 11; 12A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.1258/Mum/2025 to 1261/Mum/2025 (Assessment Year :2015-16 to 2018-19) Dy. Commissioner of Income Tax (Exemption)- 2(1), Mumbai Vs. Maharashtra Energy Development Agency 1012-A, 10th Floor Embassy Centre Nariman Point Mumbai – 400 021 PAN/GIR No.AAATM5324M (Appellant) .. (Respondent) Assessee by Ms. Darshana (Hybrid) Revenue by Shri Bare Ganesh Sudhakar Date of Hearing 23/04/2025 Date of Pronouncement 28/04/2025 आदेश / O R D E R PER BENCH: The aforesaid appeals have been filed by the Revenue against separate impugned orders of even date 27/12/2024 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for the A.Ys. 2015-16, 2016-17, 2017-18 and 2018- 19. ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 2 2. In all these appeals, the common grounds which have been raised reads as under:- 1 Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in not appreciating the fact that the cancellation of registration and denial of exemption are independent actions under the provisions of the Act and exemption for a particular assessment year can be denied even when registration u/s 10(23C)(iv) is still continuing? 2. Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in not appreciating the fact that exemption u/s 10(23C) (iv) of the Act can be denied for a particular assessment year if the mandate of section 10(230)(iv) has not been followed by the assessee trust even though the registration continues? 3. Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in holding that net increase under head Development Fund' is not income of the assessee available for application during the year ignoring that the receipts credited to Development Fund account were not in the nature of voluntary contributions or donations and therefore the same could not be treated as corpus donation referred to in section 11(1)(d) of the Act? 4. Whether, on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) erred in not appreciating the fact that once the exemption u/s 10(23C)(iv) of the Act is denied to the 4 assessee, the benefit of accumulation can only be allowed in accordance with section 11 of the Act and to the extent mentioned in Form 10 filed by the assessee trust as per the resolution passed by the trustees? 3. At the outset, it has been admitted by both the parties that the grounds raised by the Revenue are squarely covered by the decision of this Tribunal in assessee’s own case for the A.Y.2013- 14 and A.Y. 2014-15. ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 3 4. First we will take up the appeal for A.Y.2015-16 and our finding given therein will apply mutatis mutandis in all the years. The assessee is a society and registered as public charitable trust formed by Maharashtra State Government for development of non-conventional renewable energy sources. It was formed in the year 1985. It has been carrying out research and development activities in the field of energy especially non- conventional energy sources and facility energy services by developing sources of non-conventional energy. The key object clause as per the Memorandum of Association is as under:- \"To promote develop and diffuse knowledge in the various fields of energy, and, in particular to assist the Government of Maharashtra and the Government of India, in the efforts to develop and promote non-conventional, renewable and alternate energy sources and technologies; evolve and promote energy conservation measures; develop the area of energy management as an input to an appropriate environmental policy, and generally to deal with problems arising from depletion of non-renewable sources of energy and evolve suitable alternatives\". 5. It is a state nodal agency under the under the umbrella of Ministry of New and Renewable Energy, Government of India whose Chairman is the Minister of Energy, New & Renewable Energy, Maharashtra. The assessee (MEDA) has been filing regular income tax returns since beginning and claiming exemption u/s.10(23C)(iv) after ensuring all due compliances. It has also been granted registration u/s.12A. The return filed for the A.Y.2015-16 filed on 29/09/2015, assessee had computed income in the following manner:- ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 4 Particulars Amount(Rs.) Amount(Rs.) Income from Other sources Total Receipt as per P&L A/c. Less: 15% Permissible accumulation Less: Amount applied for the Charitable Purpose Total Expenditure as per I&E A/c, Less: Depreciation Less: Decrease in Capital Assets Total Surplus for the year Less; Accumulation of surplus u/8.10(23C)( iv) Taxable Income 64,36,44,682 36,34,928 87,603 1,09,05,24,110 16,35,78,617 64,73,67,213 28,33,00,812 28.33,00,812 Nil 6. The ld. AO held that in the past and during the A.Y.2013-14 the activities of the assessee has not been treated to be charitable and exemption u/s. 10(23C) (iv) has been denied which is an appeal and similar discussion has been made in the assessment order for A.Y.2014-15. All these appeals are pending before the ld. CIT(A). The relevant finding of the ld. AO for computing the income at Rs.7,36,56,999/- as under:- “7. Assessee has claimed that it is holding registration under section 10(230)(iv) and therefore income must be exempt from tax. However, it is observed that the assessee trust is in the activities ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 5 of carrying of business or profession and or in the business of providing services in relation to trade, commerce and business for fee and charges. Thus the income from such activities shall not enjoy exemption under proviso to section 10(23)C of the Act. Therefore exemption under section 10(23C)(iv) is not allowed. Under the circumstances and on facts, the alternative claim of exemption under section 10(23C) also fails. Moreover, the objects of the assessee are of general public utility and hence clearly hit by proviso to section 2(15) of the Act and hence not eligible to exemption u/s 11 also. As assessee has furnished Inaccurate particulars of income, penalty proceedings u/s 271(1)(c) is initiated on this issue. 8. MEDA is following cash system of accounting, receipts from parties towards road restoration must be treated as income on receipt basis and expenses towards repair restoration of road should be accounted on payment basis. The comparison of figures with last previous year's figure will also indicate towards the above stated facts. Particulars 31.03.2015 31.03.2014 Difference Development Fund 2,31,83,23,366 2,24,46,65,367 7,36,57,999 Thus an amount of Rs. 7,36,57,999/- is added in the income of the assessee as in earlier years.” 7. The ld. CIT (A) has noted the history of assessment under scrutiny, right from A.Y.2009-10 to 2014-15 especially the observations and finding given by the ld. AO in A.Y.2013-14 and 2014-16 and also the submissions made by the assessee. One of the contention of the assessee was that MEDA is an agent of the Government therefore, it is a government hence not taxable which contention has been rejected by the ld. CIT(A). After ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 6 detailed discussion in so far as merits of the addition are concerned, ld. CIT(A) following the ITAT order for A.Y.2013-14 and 2014-15 in ITA No.1765 & 1767/Mum/2023 order dated 27/06/2024, allowed the assessee’s claim. 8. In so far as issue relating to development fund raised in ground No.3, the observation and the finding of the CIT(A) referring to ITAT order reads as under:- “6.2.1 In the above grounds of appeal, the appellant has challenged the denial of approval granted u/s 10(23C)(iv) of the Act while the approval u/s 10(23C)(iv) was granted by the Hon'ble CCIT which had not been withdrawn and the denial of the said exemption is beyond the powers of AO. It is noted that similar issue raised in the assessment for AY 2013-14 and AY 2014-15, where in the appeal against the orders of AO, my learned predecessor had allowed the grounds in favor of the appellant Appeal was filed by Revenue/Department was decided by the Hon'ble ITAT in ITA No. 1765/Mum/2023 and 1767/Mum/2023 for AY 2013-14 and AY 2014-15 by common order dated: 27.06.2024 and the appeal of the Revenue/Department was dismissed. The relevant part of the order of Hon'ble ITAT is as under: 6.1. All the grounds raised by the Revenue pertain to the order of CIT(A) granting the benefit of provisions contained in Section 10(23C) (iv) of the Act to the Assessee. We have considered the rival submission on this issue, perused the material on record and analysed the position in law. 6.2. It is admitted position that the approval granted by the Chief Commissioner of Income Tax, Mumbai under Section 10(23C) (iv) of the Act was valid during the relevant previous year and had not been withdrawn. During the regular scrutiny assessment proceedings for the Assessment Years 2009-10 to 2011-12 the Assessing Officer had allowed claim for exemption under Section 10(23C) (iv) of the Act. We note that there is no challenge by the Revenue as regards the nature of activities ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 7 conducted by the Assessee/MEDA. The Assessing Officer had accepted that the activities carried out by the Assessée/MEDA are charitable in nature and has granted the benefit of Section 11/12 to the Assessee However, for the Assessment Year 2013-14, the Assessing Officer took a contrary view and denied claim for exemption under Section 10(23C) (iv) of the Act. The CIT(A) overturned the decision and allowed the aforesaid claim. On perusal of the Assessment Order we find that in paragraph 6 the Assessing Officer has rejected the Assessee's Claim for exemption under Section 10(230) of the Act. Though it has been stated therein that /as discussed hereunder, there is no discussion on Section 10(23C) of the Act The Assessing Officer has thereafter examined the alternative claim of exemption under Section 11 of the Act and has proceeded compute the income accordingly. We concur with the CIT(A) that no reasoning has been provided by the Assessing Officer for denying exemption claimed by the Assessee/MEDA under Section 10(23C) (iv) of the Act. In view of the aforesaid, we do not find any infirmity in the order passed by the CIT(A) in overturning the decision of the Assessing Officer and granting the benefit of exemption under Section 10(23C) (iv) of the Act to the Assessee. Accordingly, Ground No. 1 & 2 raised by the Revenue are dismissed. 6.2.2. In view of the issue being identical in the instant appeal under consideration, respectfully following the decision of jurisdictional Hon'ble ITAT Mumbai as discussed above, the above grounds of appeal are allowed.” ------------------------------------------------------------------------------ 6.3.1 The AO had made the addition of Rs. 7,36,57,999/- being the difference in the balance as on 31.03.2015 (Rs. 231,83,23,366) and closing balance (Rs. 224.46.65.367) as on 31.03.2014, received as development fund to be treated as income of the appellant for the year under consideration. (Para 8 of the assessment order). The main contention of the appellant is that the Development funds under consideration cannot be treated as income of the assessee as same were not in the nature of amount received by the assessee on application towards its objects and the same were in the nature of corpus funds of the assessee or for ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 8 the same the assessee was only a custodian/trustee and therefore not in the nature of income of the appellant. 6.3.2. It is noted that the identical issue was involved for AY 2013- 14 and AY 2014-15 and in the appeal against the assessment order on the above issues, my predecessor CIT(A) had dismissed the grounds of appeal of the appellant. In second appeal before Hon'ble ITAT-Mumbai, the appellant had filed the Cross Objections and Hon'ble ITAT Mumbai vide common order dated 27.06.2024 in ITA No. 1765/Mum/2023 and 1767/Mum/2023, had partly allowed the grounds of appeal in favor of the appellant with certain observations. The relevant part of the above order with respect to ground No. 2,3 & 4 in the above CO, is extracted as under CO No. 88/Mum/2023: \"2. The IT Authorities erred in law and on facts by since they failed to appreciate the fact that the 'Development Fund' was in nature of 'Corpus Fund of MEDA' and as such, is out of the ken of taxation of ITA, 1961 3. The learned IT Authorities erred in law and on facts in considering the incremental closing balance of Rs. 48,98,95,210/- in the Development Fund Account as income. The learned IT Authorities further erred on facts in not appreciating that out of the said amount of Rs. 48,98,95,210/-, amount of Rs. 36,50,22,710/- was a mere transfer entry from the Green Cess Fund account and thus not new receipt in reality. 4. The learned IT Authorities erred in law and on facts in treating net increase of Rs. 61,94,98,432/- in the fund balances as income of the respondent, without appreciating the corresponding overriding title / specified liability attached to such funds. The learned IT Authorities ought to have appreciated that various funds are parked with the respondent by the Maharashtra Government for their specified application, and as such, these funds are received by the respondent merely as a custodian/trustee, and hence, such funds are not income of the respondent. ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 9 8 We would first take up Cross Objection No. 2, 3 & 4 raised by the Assessee in relation to computation of income and exemption under Section 10(230)(iv) of the Act. The main contention of the Assessee was that the funds under consideration could not be treated as income of the Assessee as the same were no in the nature of amount received by the Assessee for application towards its objects. 8.1. On perusal of the record it is clear that as per the Maharashtra State Energy Conservation Fund Rules, 2013 framed under the Energy Conservation Act, 2001, the Assessee has been appointed as the authority to administer the Maharashtra State Energy Conservation Fund Further, on perusal of paper-book Il filed by the Assessee we find that Maharashtra Electricity Regulatory Commission, vide order dated 01/07/2010, has designated the Assessee as a State Agency to undertake functions, as envisaged in MERC (Renewable Purchase Obligation) and shall function as State Agency to give REC Accreditations: The/Assessee has also been functioning as as a a s state agency for implementation of government schemes such as PM KUSUM Scheme. The Assessee has been appointed appointed as state nodal ne agency or state designated authority for the implementation of various schemes. It was submitted by the Learned Authorised Representative for the Assessee that the funds and financial support received by the Assessee under the government policy cannot be considered as income of the Assessee. In this regard reliance was placed on the reasons specified in submission, dated 25/02/2016, filed before the CIT(A) during the appellate proceedings the relevant extract of which reads as under: \"6.3. 2nd Contention - Incorrect treatment of funds as Income related grounds xx xx 6.3.2. Explanation for non- classification of various Funds as Income xx xx Reason A Corpus Fund The Development fund (as so recognized in current year) is, in fact, CORPUS fund. MEDA vide a specific Government GR has renamed the erstwhile CORPUS fund as DEVELOPMENT FUND since year 2001. The requisite minutes of the meeting of the GB along with the related Free English Translation of the same are enclosed herewith and marked as Annexure-8. Further, a perusal of the said minutes of the 37th General Body meeting dated 06/09/2000, it transpires, that MEDA has been directed to utilize only the interest earned out of the said fund in order to carry out ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 10 Research & Development activities and incur other related expenses. It transpires, principal balance of the fund is not to be used per se as per specific government direction. As such, on a true characterization principle, the said fund is nothing but a CORPUS per se. As per the provisions of ITA, 1961, a CORPUS fund ought not to be considered as a stream of taxable revenue/income for a charity. As such it was submitted that, the said fund is in nature of a Corpus Fund and hence has been disclosed under the liabilities side of the balance sheet. Reason-B- Pass-through entity Mere custodian of Funds It is submitted that MEDA is only a custodian of various funds/sums collected, as MEDA only has the powers to formulate various policies. However, the final decision of disbursement of funds / sums collected towards approved projects can only be made after the approvals of the State Government. Hence, it is submitted that the said funds / sums collected are only parked with MEDA for some specific purpose and thus, in reality, the said money does not belongs to MEDA, but MEDA only acts as a pass through entity. As such, the various funds/sums collected cannot be treated as revenue/income of MEDA. Over-riding title-MEDA collects/receives sums with some predefined manner of application. Hence, all money is to be spent only as per the various schemes of the state government. As such, all sums are merely parked with MEDA till the specific directions of spending the funds are received Considering the above it is submitted that, MEDA is merely a trustee of funds and all funds carry a pre-defined overriding title specifying the manner of application of the same. Considering the above, the various funds/sums collected cannot be treated as revenue/income of MEDA. Reason-C-Mere liability since end use only at behest of Government It MEDA receives/collects various sums on behalf of the state government in accordance with the various circulars / notifications issued. The said sums can only be spent after the approval of the specified authority or only once specific directions are received to that extent. As such, MEDA cannot spend the funds / sums collected on its own. Reason-D- Refund obligation As per stipulations of Government in some of the funds/grants, there exist specific stipulations that, firstly, the funds /grants are to be used following conspicuous directions of the government sanctioning authorities. Secondly, it is also provided that unused funds/grants are to be returned back to the Government account. As such, MEDA never assumes any occasion ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 11 to use such funds in it's own right. Hence, the said funds, since carry a refund obligation, are not equivalent to income\". (Emphasis Supplied) 8.2. It is pertinent to mention here that above submission were relied upon by the Learned Authorised Representative to firstly support the submission that the increase in funds during the relevant previous year should not be treated as Income of the Assessee available for application towards its objects. Secondly, the aforesaid submissions were also relied upon to support the contention that the Assessee is an instrumentality of State of Maharashtra working as its agent discharging state function. For now, we would consider and deal with the above submission of the Assessee to examine whether the funds received during the relevant previous year would constitute income of the Assessee available for application during the relevant previous year. 8.3. Having perused the various documents placed before us as part of the paper-book we conclude that the Assessee was function in a dual capacity. Firstly, as a charitable organization and Secondly, as designated authority for administration of funds received in terms of policies of government of Maharashtra. Thus, in respect of funds received by the Assessee in its capacity as designated authority/administrator, the Assessee had a limited role to discharge as an aggregator and/or administrator of funds. While doing so the Assessee was bound to follow the procedures laid down for application and disbursal of funds. Therefore, the same cannot be considered as income of the Assessee available for application for the objects until and unless the applicable policy/rules so provide Whereas in respect of grants, funds, financial support, fee, charges and other, income received by the Assessee (including financial support for implementation of various schemes which are in line with its objects), the Assessee had discretion to take a decision in relation to assessment of the fund requirement and/or disbursal of funds. The fact that the financial support was provided for a predefined object does not lead to the conclusion that the Assessee did not have right to use the funds given the fact that pre-defined objects were same as the main objects of the Assessee. The fact that in some cases the Assessee was required to provide a utilization certificate did not take away the aforesaid discretion of the Assessee to ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 12 utilize/disburse the funds. In our view, such receipts were in the nature of income available for application for the objects of the Assessee. Keeping in view of the aforesaid, we proceed to examine the nature of various funds under consideration received by the Assessee. 8.4. At this point it would be pertinent to refer to the document on 'Modalities for Setting-Up Non-Conventional Energy Projects in Maharashtra State as per Government of Maharashtra's New Policy 2008 for Energy Generation' placed on record by the Assessee as part of paper-book-1. Annexure A attached thereto deals with Modalities of Wind Energy Projects. On perusal of the same we find that as per Clause 11, for obtaining Infrastructure Clearance from the Assessee, the developer/project owner are required to pay/deposit (a) application fee of INR 5000/- per MW, (b) Infrastructure processing fee INR 3 lakh per MW, (c) Security Deposit of INR 5 lakh per MW and (d) Road Repair Charges of INR 2 lakh per MW. As per Clause 18 on Infrastructure Processing Fee and Security Deposits developer/project owner had 9 months from the date of Infrastructure Clearance to commission the project failing which the Security Deposit was to be forfeited by way of conversion for use as Development Fund. In addition, as per the scheme the developer/project owners were also required to contribute to Green Energy Fund. Thus, we find that the Assessee was receiving various funds under this scheme. Development Fund (INR 12,48,72,500/-), Infrastructure Road Maintenance Fund & Green Cess Fund 8.5. It has been stated in the submission filed by the Assessee that the Assessee has provided following treatment to the funds received in terms of the aforesaid policy: (a) Amount of INR 12,48,72,500/- collected at the rate of INR 3 Lakh per MW of installed capacity collected from developers/project owners has been credited to the Development Fund Account (b) Amount of INR 8,85,30,000/- collected at the rate of INR 2 Lakh per MW of installed capacity collected from developers/project owners has been credited to the Infrastructure Road Maintenance Fund e Fund Account (c) Though no amount has been credited to the Green Cess Fund Account during the relevant previous year, INR 36,50,22,710/accumulated over the past years has been transferred to the Development Fund Account In our view the ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 13 above amounts were received by the Assessee in its capacity as designated authority or administrator and the same cannot be regarded as income on the Assessee available for application application during the relevant previous yea year. It would be pertinent to note that during the relevant previous year, there has been movement of funds amounting to INR 36,50,22,710/- from Green Cess Fund to Development Fund. We would consider the impact/consequences of the aforesaid movement while dealing with the nature of Development Fund. EC Fund 2001 8.6. We note that amount of INR 2,19,13,222/-, reflected under the head 'EC Fund 2001', was received by the Assessee from Bureau of Energy Efficiency (BEE). On perusal of documents placed on record we find that the BEE was allocated funds by the Ministry of Power, Government of India for strengthening the various State Development Authorities [SDAs] (which included the Assessee). This was in the nature of financial support extended to the Assessee. In our view, the Assessee was at liberty to utilize the same for the stated purpose of capacity building as designated state development authority and therefore, had discretion to apply the same for its objects. Accordingly, we hold that the Assessing Officer and CIT(A) were correct in treating the aforesaid amount as income of the Assessee available for application towards the object of the Assessee during the relevant previous year. Energy Conservation Fund 2012 8.7. We note that the Assessee had also received INR 2,00,00,000/- as part of State Energy Conservation Fund specifically earmarked as 'Revolving Investment Fund' in terms of Energy Conservation Act, 2001. On perusal of the documents placed on record, we find that the aforesaid amount has been received by the Assessee as an authority administering the funds, and the same cannot be treated as income of the Assessee. Development Fund 8.8. This takes us to the Development Fund which has been claimed by the Assessee to be in the nature of Corpus Fund. We have already concluded that INR 12,48,72,500/- collected at the rate of INR 3 Lakh per MW of installed capacity from developers/project owners and credited to the Development Fund Account cannot be regarded as income of the Assessee. As ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 14 regards the balance, on perusal of the Ledger Account for the Development placed on record we find that fee and charges have been credited to the said account which are clearly in the nature of income of the Assessee. It would be pertinent to refer to resolution dated 07/07/2000 passed by the Governing Body of the Assessee in its 37th General Body Meeting, on which reliance was placed on behalf of the Assessee, which reads as under Point No.14- Regarding change in the name of Corpus Fund to Development Fund & its utilization The point of creating the Corpus Fund was sanctioned in MEDA 36th Governing Body meeting which was held on 3rd May. 2000. In order to facilitate the administrative & audit procedures, it procedures, it is proposed to rename the Corpus Fund as Development Fund. Also it is proposed to take Rs.2 lakh per machine as development fund from project promoters/developers. Tender registration fee, sale of guidelines books, registration charges for power generation projects, fund to be received from sale of electricity through demonstration wind energy projects, interest on deposits, development fund to be received from wind energy projects etc. shall be deposited as Development Fund The collection of development fund has been started & as per GB directives (March. 2001), GB may give sanction to use some funds from the capital fund for immediate works to be carried out (as interest is not deposited). After March, 2001, MEDA will not use the capital fund & only interest will be utilized for various development schemes. The operation & maintenance for approach roads which are developed for wind energy projects, to install newly developed renewable energy projects, for research & development in this sector & to deploy new technology projects, human resource development of MEDA & their training in India & foreign countries, the additional expenditure to be incurred after implementation of 5th pay commission after 5 years to MEDA' employee, for implementation of employee welfare scheme & for the purchase of immovable & movable property for official use of MEDA, above interest amount may be utilized Guiding principles are mentioned in Annexure 10. This amount shall not be utilized for releasing subsidy to the pre installed projects. Director General, MEDA conferred with the powers to sanction upto Rs. 10 lakh for the above said activities. For the expenditure greater than Rs. 10 lakh. Governing Body approval is necessary. In line with this, it is proposed, to sanction to rename Corpus Fund as Development Fund, to utilize the ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 15 Development Fund on above said activities & to confer the powers to sanction upto Rs. 10 lakh to Director General, MEDA to the Governing Body.\" (Emphasis Supplied) 8.9. On perusal of the above it emerges that the creation of Corpus Fund was sanctioned by the Governing Body of the Assessee held on 03/05/2000. Subsequently, the name of Corpus Fund was changed to Development Fund. There was a proposal to receive an amount of INR 2,00,000/- per machine as corpus/development fund from the project owners/developers. It was resolved that tender registration fee, sale of guidelines books, registration charges for power generation projects, fund to be received from sale of electricity through demonstration wind energy projects, interest on deposits, development fund to be received from wind energy projects would be deposited as Development Fund. It was also resolved that only the, interest accruing on the aforesaid Development Fund shall be used for various development schemes after March 2001. The aforesaid resolution has been stated to be a government resolution' at some places in the submission filed by the Assessee which is factually incorrect as the aforesaid resolution has been passed by the governing body and not by the Government of Maharashtra From the above it is clear that the aforesaid amounts/receipts (except amount of INR 2,00,000/- per machine to be collected as corpus/development fund) were to credited to Development Fund account as per the decision taken by the Governing Body The payer of the tender registration fee, registration charges etc. did not intend to make any payment towards the corpus, and therefore, the same cannot be regarded as a contribution towards the corpus. In our view, the decision of the Assessee to treat some of the receipts as payments towards corpus would not change the nature of receipt from income to corpus donations We note that the Rule 22 of the Rules governing the Assessee/MEDA placed on record by the Assessee, specifically provides that the funds of the Assessee shall, inter alia, consist of service charges, maintenance charges, consultancy fee and all other income arising or accruing in pursuance of the objects of the Assessee. Thus, Rule 22 also supports our view that the service charges, consultant fee and other charges/fee of similar nature collected by the Assessee would constitute income to be applied for the objects of the Assessee. We note that in the Income & Expenditure Account, the Assessee has disclosed the ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 16 interest, grants and Income From Other Sources' aggregating to INR 93,03,89,888/-, \"Schedule N' forming part of the Financial Statements giving details of 'Income from Other Sources' reads as under: SCHEDULE N INCOME FROM OTHER SOURCES Amount (INR) Amount (INR) REGISTRATION FEE & PROCESSING FEE 3,30,14,000 OTHER INCOME (CONSUTANCY AND PENALTY REC.TEN) 2,79,60,217 VDURG/G'GANI/C WAID/C'WADI II/MOTHA MSEB 5,45,25,510 PESHWE ENERGY PARK- ACCREDITATION FEES AND CHARGES 78,89,000 WIND ZONE PROCESSING FEE/TRANSFER CLEARANCE 4,20,59,250 APPLICATION FEES FOR WIND FARM PROJECT 30,36,750 Total Schedule N 16,84,84,727 8.10. Therefore, fee, charges and income credited to the Development Fund Account shall be treated as income available for application to the Assessee during the relevant previous year. Accordingly, the Assessing Officer is directed to examine the ledger account to identify the fee, charges and income received during the relevant previous year which were credited to the Development Fund Account and treat the same as income of the Assessee. While doing so the Assessing Officer shall after taking into consideration the fee/charges/income already credited to the Income & Expenditure Account to avoid double taxation of same income. As regards, amount of INR 2,00,000/- per machine which was proposed to be collected for development fund is concerned, the same can be collected for development regarded as payments towards corpus having been received as such. Accordingly, subject to fulfillment of other applicable conditions, we direct the Assessing Officer to treat the same as corpus donations 8.11. As regards, the transfer of Green Cess Fund no addition has been made by the Assessing Officer since there was no increase in the balance. However, amount of Green Cess Fund transferred to the Development Fund Account was brought to tax as part of the Development Fund. In our view the Green Cess Fund, being similar in nature to the Infrastructure Road Maintenance Fund received by the Assessee, would not be treated as income of the Assessee. However, in the context of security deposits we have also noted hereinabove that, as per government policy, the security deposits could be forfeited by the Assessee for use as development fund. In our view, on forfeiture the Assessee gets ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 17 control over the funds and discretion to use the same as any other income towards its object. Therefore, in the year of forfeiture the same should constitute income of the Assessee. On parity of reasoning, the transfer of Green Cess Fund to Development Fund Account would amount to receipt of income for the Assessee during the relevant previous year provided there is change in the attached conditions which permit the Assessee use the funds for its objects. In the case funds stand released from connected obligation and the Assessee has liberty to use the same towards its objects, then the same would be treated as income available for application in the year of transfer. On the other hand in case the Assessee continues to have limited right of administration of such funds, the same would continue to be in the nature of funds available for administration with the Assessee and cannot be regarded as income available for application. Accordingly, we direct the Assessing Officer to examine the applicable policy/government resolutions and the reason on account of which Green Cess Fund was transferred to Development Fund after giving the Assessee opportunity of being heard. The Assessee would be at liberty to provide such documents/details are it may deem fit to support the contention that there is no change in the nature of Green Cess Fund though transferred to Development Fund Account. At the same time the Assessing Officer would also be at liberty to call for such information/detail as it deems necessary for adjudication of this issue. It is clarified that we have already concluded that the Assessee would b be entitled to claim exemption under Section 10(230) of the Act and therefore, subject to fulfillment of application conditions, the Assessee would be entitled to claim exemption under Section 10(23C) of the Act in respect of income, if any, determined by the Assessee. 8.12. In terms of above, Cross Objection No. 2/3 & 4 raised by the Assessee are partly allowed\" 6.3.3 On perusal of the above order it is evident that the Hon'ble ITAT has differentiated in the different nature of funds received by the appellant under the head \"Development Fund\" and the treatment of the same for computing the income. This requires further details to be provided by the appellant and to be verified by the assessing officer. In view of the above facts, the decision of Hon'ble ITAT in appellant's own case for earlier AY 2013-14 & AY ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 18 2014-15, the appellant is directed to furnish the details of the different funds and their break-up for the year under consideration and AO should accordingly verify the nature of payments and modify the order in light of and in compliance to the directions of Hon'ble ITAT for computation of income. Hon'ble ITAT has also clarified that it has already concluded that the appellant would be entitled to claim exemption u/s 10(23C) of the Act and therefore, subject to the fulfillment of application conditions, the appellant would be entitled to claim exemption u/s 10(23C) of the Act in respect of income, if any, determined on the above issue, Subject to the above details filed by the appellant and verification by the AO in light/compliance of the directions of Hon'ble ITAT as above, the AO may modify and re-compute the income accordingly, and the above grounds of appeal are partly allowed for statistical purpose. 9. Lastly, with regard to ground No.4, the finding of the ld. CIT(A) reads as under:- “Ground No. 5. The learned AO erred in law and on facts by denying the exemption u/s 11 r.w.s. 12A of the ITA, 1961 by making an observation that MEDA is involved in the activities of carrying of business or profession and/or in the business of providing services in relation to trade, commerce and business for fee and charges; and thereby failed to appreciate the fact that MEDA was collecting fees as per the directions of the government and as such merely acting as an Agent of the Government. Ground No. 6. The learned AO erred in law and on facts by denying the appellant the exemption u/s 11 r.w.s. 12A of the ITA, 1961 by placing reliance on the assessment order of AY 2013-14 and thereby failed to appreciate the fact that in the said order the erstwhile AQ has not given any adverse finding w.r.t. the said exemption. 6.4.1 The above grounds are related to the alternate claim of the appellant for exemption under section 11 rows 124 of the Act. As discussed above, since it is already held that the appellant is eligible for claim of exemption u/s 10(23C)(iv), the above grounds ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 19 of appeal are rendered in-fructuous and do not require any adjudication. The grounds of appeal are dismissed for statistical purpose. 6.5. (Accumulation and application related Grounds of Appeal) Ground No. 7. The learned AQ-erred in law and on facts by not granting the appellant an opportunity of filing of Form 10 in order year under consideration to future years. 6.5.1 As discussed above, it has already been held that the appellant is eligible for claim of exemption u/s 10(23C)(iv) and therefore, the condition described u/s 11(1) of the Act is not applicable to the case of the appellant but the appellant is to fulfill the condition u/s 10(23C) of the Act. It is also noted that in the appeal against assessment order for AY 2013-14 & AY 2014-15, my predecessor CIT(A) had already held that as per section 10(23C), there is no limit to the amount of accumulation and there is no need to file resolution of trustees for such accumulation and there is no need to file Form 10 specifying the purpose of accumulation. Only condition is that the accumulated funds should be utilized for the objects of the trust within five years. Therefore, for the purpose of eligibility of claim u/s 10(23C), the above ground related to not granting of opportunity for filing of Form-10, is rendered in-fructuous and does not need any adjudication, However, the appellant is required to file the details of the accumulation done from the earlier years and whether the same have been utilized for the objects of the trust within five years. If any accumulated funds which have not been spent within five years and assessment year 2015-16 is the sixth year for such funds, the same need to be brought to tax in the assessment year 2015-16. Since the above details/working is neither emanating from the assessment order, nor furnished during the appellate proceedings so far, while the appellant is directed to furnish the same before the AO with its supporting financials, the AO is directed to verify the same and take appropriate action and re- compute the income. Subject to the above remarks/directions for verification from records, the ground is partly allowed for statistical purpose. ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 20 11. After hearing both the parties and on perusal of the impugned order, it is seen that all the grounds raised by the Revenue are covered by the earlier decision of the Tribunal which has been followed by the ld. CIT(A). In so far as ground No. 1& 2 are concerned, it is an admitted fact that MEDA has been granted approval by Chief CCIT, Mumbai u/s.10(23C)(iv) is still valid. Thus, when assessee has been granted approval u/s.10(23C)(iv) then, ld. AO cannot deny the exemption claimed by the assessee. In so far as issues raised in ground No.3 with regard to addition on account of difference in balance as on 31/03/2015 and closing balance as on 31/03/2014 received as development fund to be treated as income of the assessee for the year under consideration. It has been contended that development funds cannot be treated as income of the assessee as the same were not in the nature of amount received by the assessee of application towards the objects and same were in the nature of corpus funds and assessee was only a custodian / trustee. This issue has been dealt in detail by the Tribunal as incorporated in the appellate order. We uphold the directions of the ld. CIT (A) which is in accordance with the observation of the Tribunal. Accordingly, ground No. 1,2 & 3 raised by the assessee are dismissed. 12. Lastly, with regard to ground No. 4 also we agree with the observations and finding of the ld. CIT(A) that once exemption has been granted u/s.10(23C)(iv), there is no limit to the amount of accommodation and there is nothing to file resolution of ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 21 trustees for such accommodation and there is no need to file Form 10 specifying the purpose of accommodation. The only condition is that accumulated fund should be utilized for the objects of the trust within five years. Accordingly, the observation and the direction of the ld. CIT(A) to the AO to verify as given in para 5.1 is confirmed. In the result, the grounds raised by the Revenue are dismissed 13. In the result, appeal of the Revenue is dismissed. 14. Since similar finding has been given in A.Y.2016-17, 2017- 18 and 2018-19, our aforesaid finding will apply mutatis mutandis wherein the order of the ld. CIT(A) has been confirmed. 15. In the result, all the appeals of the Revenue are dismissed. Order pronounced on 28th April, 2025. (GIRISH AGRAWAL) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 28/04/2025 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No.1258/Mum/2025 to 1261/Mum/2015 Maharashtra Energy Development Agency 22 BY ORDER, (Asstt. Registrar) ITAT, Mumbai "