MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION, MUMBAI V. ASSISTANT COMMISSIONER INCOME TAX (EXEMPTIONS)-2(1), MUMBAI

ITA 4326/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3984 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY SINGH
• Assessee Lawyers: V SRIDHARA N; S SRIRAM
• Keywords: Reopening of assessment; Capital asset; Charitable institution; Opportunity of being heard; Tangible material; Difference of opinion; Validity of assessment; Revised return; Change of opinion
• Section: 143(3); 12A; 12AA; 32; 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI N. K. PRADHAN , AM ./ I.T.A. NO S . 4326/MUM/2017, 4327/MUM/2017, 4329/MUM/2017, 4331/MUM/2017, 4332/MUM/2 017, 4475/MUM/2017 & 4476/MUM/2017 ( / ASSESSMENT YEAR S : 2007 08, 2008 09, 2009 10, 2010 11,2012 13,2013 14 &, 2014 15 ) MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION UDYOG SARATHI, MAHAKALI CAVES ROAD, ANDHERI (EAST) MUMBAI 400093 / VS. ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTIONS) 2(1) PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400012 ./ ./ PAN/GIR NO. AAACM3560C ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI V . SRIDHARAN & S. SRIRAM / RESPONDENT BY : SHRI SANJAY SINGH (CIT DR) / DATE OF HEARING : 08.10 .2018 / DATE OF PRONOUNCEMENT : 31.10 .2018 / O R D E R PER BENCH TH E AFORESAID APPEALS BY THE ASSE SSEE ARE AGAINST SIX SEPARATE ORDERS PASSED ON DATED 31.03.2017 & 12.04.2017 , BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 2 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 57, MUMBAI FOR THE ASSESSMENT YEARS 2007 08, 2008 09, 2009 10, 2010 11, 2012 13, 2013 14 & 2014 15. SINCE , THE APPEALS RELATE TO SAME ASSESSEE AND INVOLVE COMMON ISSUES THEY HAVE BEEN CLUBBED TOGETHER AND ARE DISPOSED OFF IN A CONSOLIDATED ORDER AS A MATTER OF CONVENIENCE . 2. SINCE , ISSUES RAISED IN ALL THESE APPEALS ARE MORE OR LESS COMMON WE PROPOSE TO TAKE UP ITA NO. 4332/ MUM/2017 FOR ASSESSMENT YEAR 2012 13 AS THE LEAD APPEAL . GROUND NO.1 OF THE AFORESAID APPEAL BEING GENERAL IN NATURE DOES NOT REQUIRE ADJUDICATION. IN GROUND NO.2 ASSESSEE HAS CHALLENGED THE DECISI ON OF THE DEPARTMENTAL AUTHORITIES IN HOLDING THE ASSESSEE AS NOT TO BE EXISTING FOR CHARITABLE PURPOSE BY APPLYING THE PROVISO TO SECTION 2(15) OF THE ACT. BRIEFLY THE FACTS ARE , THE ASSESSEE IS A CORPORATION FORMED UNDER THE MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION ( MIDC ) ACT. 1961 AND IS ENGAGED IN D EVEL OPMENT OF INDUSTRIAL ASSETS BY PROVIDING BASIC INFRASTRUCTURAL FACILITIES LIKE LAND, ROAD, STREET LIGHT, DRAINAGE SYSTEM , WATER SUPPLY ETC. THE ASSESSEE IS MAINTAINING FAC ILITI ES SUCH AS WATER SUPPLY, DRAINAGE AND ALSO PROVIDING CERTAIN FAC ILITIES TO TH E OCCUPANTS OF INDUSTRIAL ASSETS AND COLLECT S CHARGES FOR THE SAME. I NDUSTRIAL PLOTS ARE ALLOTTED BY THE ASSESSEE TO VARIOUS ENTITIES ON RECEIPT OF LEASE PREMIUM, RENT ETC. IT IS ALSO A FACT THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION. 12A A OF THE ACT BY THE DIT(E) MUMBAI VIDE ORDER DATED 01.04.2002. FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 25.09.2012 DECLARING A DEFICIT OF ` .34,39,60,131/ . ON THE STRENGTH OF THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT THE ASSESSEE CLAIMED EXEMPTION 3 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION UNDER SECTION 11 OF THE ACT. DURING THE ASSESSMENT PROCEEDING , THE ASSESSING OFFICER REFERRING TO THE PROVISO TO SECTION 2(15) OF THE ACT INTRODUCED TO THE STATUE W.E.F . 01.02.2009, C ALLED UPON THE ASSESSEE TO EX PLAIN WHY THE EXEMPTION CLAIMED UNDER SECTION 1 1 OF THE ACT SH OULD NOT BE DISALLOWED AS THE ASSESSEE IS ENGAGED IN VARIOUS COMMERCIAL ACTIVITIES , THEREFORE , NOT EXISTING FOR CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER , THE ASSESSEE FILED ELABORATE WRITTEN SUBMISSION JUSTIFYING THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE ASSESSING OFFICER HOWEVER DID NOT FIND MERIT IN THE SUBMISSION S OF THE ASSESSEE. ANALYZI NG THE NATURE OF VARIOUS ACTIVITIES CARRIED OUT BY THE ASSESSEE QUA THE PROVISION CONTAINED UNDER SECTION 2(15) OF THE ACT READ WITH ITS PROVISO , THE ASSESSING OFFICER ULTIMATELY CONCLUDED THAT THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE, HENCE , DO NOT QUALIFY TO BE CONSIDERED AS CHARITABLE PU RPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. WHILE DOING SO TH E A SSESSING O FFICER ALSO NEGATED ASSESSEES CONTENTION RE GARDING IMMUNITY FROM TAXATION UNDER ARTICLE 289 (1) OF THE CONSTITUTION OF INDIA BY CLAIMING ITSELF TO BE AN AGENCY OF THE GOVERNMENT OF MAHARASHTRA. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF EXEMPTION U N DER SECTION 11 OF THE ACT. BEING AGGRIEVED WITH THE AFORESAID DECISION OF THE ASSESSING OFFICER ASSESSEE PR EFER RED APPEAL BEFORE THE LEARNED COMMISSIONER (A PPEALS). HOWEVER, LEARNED COMMISSIONER (A PPEALS ) ALSO UPHELD THE DECISION OF ASSESSING OFFICER IN THIS REGARD. 4 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 3. SHRI V. SRIDHARAN, LEARNED COAUSEL APPEARING FOR THE ASSESSEE FAIRLY SUBMITTED , T HE I SSUES RELATING TO APPLICABILITY OF PROVISO TO SECTION 2(15) ALONG WITH ASSESSEE S CLAIM OF EX EM P T I O N UNDER SECTION.11 AS WELL AS THE PLEA OF THE ASSESSEE THAT IT IS IMM UNE FROM TAXATION UNDER ARTICLE 289 (1) OF CONSTITUTION OF INDIA HAVE BEEN DECIDED AG AINST THE ASSESSEE BY THE TRIBUNAL IN A.Y.2011 12 VIDE ITA NO.6552/MUM/2014 DATED 27.03.2015. 4. SHRI SANJAY SINGH , LEARNED D EPARTMENTAL R EPRESENTATIVE AGREED WITH THE SUBMISSION S OF THE LEARNED COUNSEL FOR THE ASSESSEE. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AN D PERUSED MATERIALS ON RECORD. AS C OULD BE SEEN FROM THE FACTS ON RECORD , IDENTICAL ISSUES AROSE FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2011 12. THE CO ORDINATE BENCH AFTER EX H AUSTI VELY DEALING WITH THE C ONTENTIONS RAISED BY BOTH THE PARTIES HAS DECIDED THE ISSUES AGAINST THE ASSESSEE WHILE DISPOS ING OFF ASSESSEES APPEAL IN ITA NO .6552/MUM/2015 DATED 27.03.2018. THE RELEVANT OBSERVATIONS OF THE BENCH BOTH ON THE ISSUE OF NATURE OF ACTIVITY CARRIED OUT BY THE ASSESSEE AND APPLICABILITY OF PROVISO TO SECTION 2(15) OF THE ACT AS WELL AS ASSESSEES CLAIM OF IMMUNITY FROM TAXATION OF 289(1) OF CONSTITUTION OF INDIA ARE EX TRACTED HEREUNDER FOR CONVE NIENCE: 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT IT IS AN AGENT OR INSTRUMENTALITY OF GOVERNMENT OF MAHARASHTRA GOVERNMENT, SINCE IT IS PERFORMING SOVEREIGN FUNCTIONS OF DEVELOPMENT AND ALLOTMENT OF INDUSTRIAL PLOTS FOR PUBLIC PURPOSES. ACCORDINGLY, IT WAS CONTENDED 5 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION THAT THE ASSESSEE'S INCOME IS IMMUNE FROM UNION TAXATION. IN THIS REGARD THE ASSESSEE PLACED RELIANCE ON VARIOUS CASE LAWS, MAINLY RAMATANU CO - OPERATIVE HOUSING SOCIETY LTD (SUPRA) AND MD., H.S.I.D.C. AND OTHERS (SUPRA). HOWEVER, AS SUBMI TTED BY THE LD D.R, THESE DECISIONS HAVE NOT BEEN RENDERED IN THE CONTEXT OF INCOME TAX PROVISIONS OF THE ACT. IN THE CASE OF RAMATANU CO - OPERATIVE HOUSING SOCIETY LTD (SUPRA) THE APPELLANT THEREIN HAS CHALLENGED THE POWER OF THE GOVERNMENT OF MAHARASHTRA TO ENACT THE MID ACT AND THE HON'BLE SUPREME COURT, BY CONSIDERING VARIOUS PROVISIONS OF THE ACT, CAME TO THE CONCLUSION THAT THE MID ACT WAS A VALID PIECE OF LEGISLATION. IN OUR VIEW, THE HON'BLE SUPREME COURT HAS CONSIDERED THE PROVISIONS OF THE MID ACT, THE OBJECTIVES SOUGHT TO BE ACHIEVED, THE FUNCTIONS PRESCRIBED IN THE MID ACT ETC. WITH REFERENCE TO THE QUESTIONS RAISED BEFORE IT. THUS, PREDOMINANTLY, THE HON'BLE APEX COURT HAS EXAMINED THE VIRES OF THE ACT AND ALL THE OBSERVATIONS MADE THEREIN WERE R ELATED TO THE SAME. THE FOLLOWING OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT IN PARAGRAPH 9 OF ITS ORDER WILL CLARIFY THIS POINT: - '9. THE DEVELOPMENT OF INDUSTRIAL AREAS AND INDUSTRIAL ESTATES (SIC) INTENDED TO SERVE TWO OBJECTS. IN THE FIRST PLACE, T HERE IS TO BE AN ORDERLY DEVELOPMENT AND GROWTH' OF INDUSTRIES IN THE BOMBAY POONA SECTOR. THE SECOND OBJECT IS TO SECURE DISPERSAL OF INDUSTRIES FROM THE CONGESTED AREAS OF THE BOMBAY POONA SECTOR TO THE UNDER DEVELOPED PARTS OF THE STATE. THE INDUSTRIAL AREAS ARE BROADLY CLASSIFIED INTO TWO CATEGORIES, NAMELY, FIRST, THOSE MEANT FOR ENGINEERING AND OTHER INDUSTRIES WHICH ARE NOT OBNOXIOUS, AND SECONDLY, THOSE MEANT FOR CHEMICAL INDUSTRIES. THE ESTABLISHMENT AND GROWTH OF INDUSTRIES IN THE STATE IS INEXTRI CABLY BOUND UP WITH AVAILABILITY OF LAND. AVAILABLE LAND IS LIMITED. SUCH LIMITED SUPPLY LEADS TO SPECULATION IN LAND. POWER IS THEREFORE REQUIRED FOR 6 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION COMPULSORY ACQUISITION OF LAND TO ACHIEVE THE PURPOSES OF THE ACT. AT THE SAME TIME, LAND OWNERS ARE NOT TO BE DERIVED OF THE LEGITIMATE BENEFIT OF REASONABLE INCREASE IN LAND VALUES IN A DEVELOPING ECONOMY......THE ABSENCE OF AMENITIES IS ENVISAGED AND ANSWERED IN THE ACT BY EMPOWERING THE CORPORATION TO PROVIDE THESE ESSENTIAL AMENITIES, FACILITIES AND CONV ENIENCES.' THUS, IT CAN BE SEEN THAT THE HON'BLE SUPREME COURT HAS EXAMINED THE PROVISIONS OF THE MID ACT AND THE OBJECT PURPOSE SOUGHT TO BE ACHIEVED BY FORMATION OF THE ASSESSEE UNDER THE MID ACT AND ACCORDINGLY RENDERED ITS DECISION UPHOLDING THE VALID ITY OF MID ACT. ADMITTEDLY, THE PROVISIONS OF MID ACT WERE NOT EXAMINED VIS - - VIS THE INCOME TAX PROVISIONS. FURTHER, THE HON'BLE APEX COURT HAS EXAMINED THE PROVISIONS OF MID ACT AND NOT ACTUAL FUNCTIONING OF THE ASSESSEE. 18. IN THE CASE WITH M.D., H.S.I .D.0 (SUPRA), FOLLOWING FACTS NARRATED BY T HE HON'BLE APEX COURT ARE RELEVANT: - '4. APPELLANT - CORPORATION IS PUBLIC SECTOR UNDERTAKING. ITS PRINCIPAL FUNCTION IS ALLOTMENT OF INDUSTRIAL PLOTS BELONGING TO THE STATE OF HARYANA. IT WAS SET UP AS A CATALYST FOR PROMOTING ECONOMIC GROWTH AND ACCELERATING THE PACE OF INDUSTRIALIZATION. IT NOT ONLY PROVIDES FINANCIAL ASSISTANCE TO THE INDUSTRIAL CONCERNS BY WAY OF TERM LOANS; IT ALSO DEVELOPS INFRASTRUCTURE FOR SETTING UP OF INDUSTRIAL UNITS. THE CORPORATION ALS O INVESTS MONEY IN DEVELOPING THE INDUSTRIAL ESTATES AT STRATEGIC LOCATIONS. IN EXERCISE OF ITS FUNCTIONS, IT ALSO ALLOTS INDUSTRIAL PLOTS TO ENTREPRENEURS FOR SETTING UP THEIR INDUSTRIES ON 'NO PROFIT NO LOSS' BASIS. THE ENTREPRENEURS, ACCORDING TO THE CO RPORATION, MUST BE THE DESERVING ONES. FOR THE SAID PURPOSE, IT KEEPS IN MIND THE PRINCIPLE THAT ALLOTMENT OF LAND SHOULD NOT BE MADE TO SPECULATORS WHO INVEST IN PROPERTY FOR GETTING HIGH RETURNS ON ESCALATION OF PRICE.' 7 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION THUS, IT CAN BE NOTICED THAT THE D ECISION IN THE ABOVE SAID CASE WAS ALSO RENDERED IN THE ABOVE SAID BACKGROUND. THE HON'BLE APEX COURT HAS PROCEEDED ON THE BASIS THAT THE INDUSTRIAL PLOTS ARE ALLOTTED ON 'NO PROFIT NO LOSS' BASIS. ADMITTEDLY, THE ISSUE BEFORE THE HON'BLE APEX COURT WAS NO T EXAMINED IN THE CONTEXT OF THE INCOME TAX ACT. ACCORDINGLY, WE ARE OF THE VIEW THE OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT IN THE ABOVE SAID CASES SHOULD BE CONSIDERED TO HAVE BEEN MADE IN A DIFFERENT CONTEXT AND HENCE, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT TAKE SUPPORT OF THE SAME FOR THE ISSUES CONSIDERED UNDER THE INCOME TAX ACT. 19. BEFORE US, THE ID A.R PLACED STRONG RELIANCE ON THE OBSERVATIONS MADE BY HON'BLE SUPREME COURT IN THE CASE OF SHRI RAMTANU CO - OPERATIVE HOUSING SOCIETY LTD (S UPRA) IN ORDER TO CONTEND THAT THE ACTIVITIES OF THE ASSESSEE WOULD NOT FALL IN THE CATEGORY OF 'TRADE, COMMERCE OR BUSINESS'. HOWEVER, WE NOTICE THAT THE HON'BLE APEX COURT WAS MAINLY GUIDED BY THE OBJECTIVES AND PURPOSE OF ENACTMENT OF MID ACT IN DECIDIN G THIS ISSUE. FOLLOWING OBSERVATIONS MADE BY THE HON'BLE APEX COURT ARE RELEVANT HERE: - THE ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES IN THE STATE IS WITHIN THE STATE LIST OF INDUSTRIES. FURTHERMORE, TO EFFECTUATE THE PURPOSES OF THE DEVELOPMENT OF INDUSTRIES IN THE STATE IT IS NECESSARY TO MAKE LAND AVAILABLE. SUCH LAND CAN BE MADE AVAILABLE BY ACQUISITION OR REQUISITION. THE ACT IN THE PRESENT CASE DEALS WITH THE ACQUISITION OF LAND BY THE STATE AND ON SUCH ACQUISITION, THE STATE MAY TRANSFER TH E LAND TO THE CORPORATION WHICH AGAIN MAY DEVELOP IT ITSELF AND ESTABLISH INDUSTRIAL ESTATES OR MAY DEVELOP INDUSTRIAL AREAS CORPORATION IS THEREFORE E STABLISHED FOR CARRYING OUT THE PURPOSES OF THE ACT. THE PITH AND SUBSTANCE OF THE ACT IS ESTABLISHMENT, GROWTH AND ORGANISATION OF INDUSTRIES, ACQUISITION OF 8 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION LAND IN THAT BEHALF AND CARRYING OUT THE PURPOSES OF THE ACT BY SETTING UP THE CORPORATION AS ONE OF THE LIMBS OR AGENCIES OF THE GOVERNMENT. THE POWERS AND FUNCTIONS OF THE CORPORATION SHOW IN NO UNCER TAIN TERMS THAT THESE ARE ALL IN AID OF THE PRINCIPAL AND PREDOMINANT PURPOSE OF ESTABLISHMENT, GROWTH AND ESTABLISHMENT OF INDUSTRIES. THE CORPORATION IS ESTABLISHED FOR THAT PURPOSE........ THESE FEATURES OF TRANSFER OF LAND OR BORROWING OF MONEYS OR REC EIPT OF RENTS AND PROFITS WILL BY THEMSELVES NEITHER BE THE INDICIA NOR THE DECISIVE ATTRIBUTES OF TRADING CHARACTER OF THE CORPORATION.......THE FUNCTIONS AND POWERS OF THE CORPORATION INDICATE THAT THE CORPORATION IS ACTING AS A WING OF THE STATE GOVERNM ENT IN ESTABLISHING INDUSTRIAL ESTATES I AND DEVELOPING INDUSTRIAL AREAS ...... RECEIPTS OF THESE MONEYS ARISE NOT OUT OF ANY BUSINESS OR TRADE, BUT OUT OF THE SOLE PURPOSE OF ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES.' IT CAN BE NOTICED THAT THE HON'BLE APEX COURT HAS MADE ALL THE ABOVE SAID OBSERVATIONS, MAINLY, TAKING INTO ACCOUNT THE PURPOSE AND OBJECT OF THE ACT, VIZ., ESTABLISHMENT, GROWTH AND ORGANISATION OF INDUSTRIES. SINCE THE STATE GOVERNMENT HAS TO TAKE THE INITIATIVE FOR THE SAME AND SINCE THE ASSESSEE WAS INCORPORATED WITH THE SAID PURPOSE, THE HN'BLE APEX COURT HAS OBSERVED THAT THE REAL ROLE OF THE CORPORATION WAS TO ACT AS 'AGENCY OF THE GOVERNMENT IN CARRYING OUT THE PURPOSE AND OBJECT OF THE ACT WHICH IS THE DEVELOPMENT OF INDUS TRIES. IN SOME OTHER PLACE, THE HON'BLE SUPREME COURT OBSERVED THAT THE ASSESSEE CORPORATION WAS SET UP AS 'ONE OF THE LIMBS OR AGENCIES' OF THE GOVERNMENT. BY PLACING RELIANCE ON THE ABOVE SAID OBSERVATIONS, IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT TH E ASSESSEE IS A LIMB OR AGENCY OF THE GOVERNMENT AND IT IS PERFORMING A 'SOVEREIGN FUNCTION'. 20. WE ARE UNABLE TO AGREE WITH THE SAID CONTENTIONS. A CAREFUL PERUSAL OF THE OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT WOULD SHOW THAT THE HON'BLE APEX COU RT HAS EXPRESSED THE VIEW THAT THE ASSESSEE 9 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION CORPORATION WAS SET UP AS ONE OF THE LIMBS OR AGENCIES OF THE GOVERNMENT 'FOR CARRYING OUT THE PURPOSES OF THE ACT ONLY IN RESPECT OF CARRYING OUT THE PURPOSES OF THE ACT, THE ASSESSEE CORPORATION IS CONSIDERED A S LIMBS OR AGENCY OF THE GOVERNMENT. IN YET ANOTHER PLACE, THE HON'BLE HAS CLARIFIED THIS POINT BY OBSERVING AS UNDER: - 'THESE PROVISIONS IN REGARD TO FINANCE OF THE CORPORATION INDICATE THE REAL ROLE OF THE CORPORATION, VIZ., THE AGENCY OF THE GOVERNMENT IN CARRYING OUT THE PURPOSE AND OBJECT OF THE ACT WHICH IS THE DEVELOPMENT OF INDUSTRIES.' THUS THE HON'BLE APEX COURT HAS OBSERVED THAT THE 'REAL ROLE' OF THE ASSESSEE CORPORATION WAS TO PERFORM AS AN AGENCY OF THE GOVERNMENT IN CARRYING OUT THE PURPOSE O F THE ACT. THE HON'BLE APEX COURT NO WHERE STATED THAT THE ASSESSEE IS ACTING AS 'AN AGENT' OF THE GOVERNMENT. IN OUR VIEW, THERE IS A DIFFERENCE BETWEEN 'AGENCY' AND 'AGENT'. IN TRADING CIRCLES, AN AGENT IS CONSIDERED TO BE REPRESENTING THE PRINCIPAL AND ALL HIS ACTIONS ARE BINDING UPON THE PRINCIPAL. HOWEVER, AN AGENCY IS JUST AN ORGANISATION OR AN OUTFIT AND ITS ACTIONS ARE NOT BINDING UPON THE STATE GOVERNMENT. FURTHER, IT IS AN ADMITTED FACT THAT THE ASSESSEE IS A 'STATUTORY CORPORATION' OR 'BODY CORP ORATE' OR LEGAL PERSON' HAVING AN INDEPENDENT EXISTENCE. THE LEGAL STATUS OF THE ASSESSEE IS MADE CLEAR IN SECTION 3(2) OF MID ACT, WHICH READS AS UNDER: - '(2) THE SAID CORPORATION SHALL BE A BODY CORPORATE WITH PERPETUAL SUCCESSION AND A COMMON SEAL, AND MAY SUE AND BE SUED IN ITS CORPORATE NAME, AND SHALL BE COMPETENT TO ACQUIRE, HOLD AND DISPOSE OF PROPERTY, BOTH THE MOVABLE AND IMMOVABLE, AND TO CONTRACT AND DO ALL THE THINGS NECESSARY FOR THE PURPOSES OF THIS ACT.' SINCE THE ASSESSEE IS A SEPARATE PERS ONALITY, IT ALONE IS LIABLE FOR ITS ACTIONS. THE LD AR INVITED OUR ATTENTION TO THE RESOLUTION NO. IDC 1079/(1966)/IND.14 DATED 11TH SEPTEMBER 1986, WHEREIN IT IS STATED THAT THE 10 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION ASSESSEE IS UNDERTAKING THE DEVELOPMENT WORK AS AN AGENCY FUNCTION ON BEHALF OF GOVERNMENT AND FURTHER THE CORPORATION WILL ACT AS AN AGENT OF GOVERNMENT FOR DEVELOPMENT OF INDUSTRIAL AREA AND OTHER INFRASTRUCTURAL FACILITIES UNDER THE PROVISIONS OF THE MAHARASHTRA INDUSTRIAL DEVELOPMENT ACT, 1961. IN OUR VIEW, THE PROVISIONS OF MI D ACT SHALL HAVE SUPREMACY OVER THE RESOLUTIONS PASSED BY THE GOVERNMENT OF MAHARASHTRA. WE HAVE ALREADY NOTICED THAT THE HON'BLE SUPREME COURT HAS ALSO CONSIDERED VARIOUS PROVISIONS OF THE MID ACT ONLY IN THE CASE OF SHRI RAMATANU CO OPERATIVE HOUSING SOC IETY LTD (SUPRA). HENCE, WE ARE OF THE VIEW THAT THE RESOLUTIONS PASSED BY THE STATE GOVERNMENT SHOULD NOT BE CONSIDERED TO DETERMINE THE STATUS OF THE ASSESSEE. THE LD D.R HAS ALREADY PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT RENDERED IN TH E CASE OF RAMANA DAYARAM SHETTY VS. THE INTERNATIONAL AIRPORT AUTHORITY OF INDIA LTD (SUPRA), WHEREIN THE HON'BLE APEX COURT HAS LISTED OUT CERTAIN CRITERIA TO ASCERTAIN THE NATURE OR STATUS OF A CORPORATION. THE LD D.R ALSO CONTENDED THAT THE ASSESSEE FAI LED TO SATISFY ALL THE CRITERIA PRESCRIBED BY THE HON'BLE APEX COURT AND ACCORDINGLY CONTENDED THAT THE ASSESSEE CANNOT BE CONSIDERED TO BE AN AGENCY OR INSTRUMENTALITY OF THE STATE GOVERNMENT. HOWEVER, THE DISCUSSIONS MADE IN THE ENSUING PARAGRAPHS WOULD NOT MAKE ANY DIFFERENCE SO FAR AS TAXATION UNDER THE INCOME TAX ACT IS CONCERNED. 21. WE SHALL NOW REFER TO SOME OF THE OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT IN THE CASE OF ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION VS. ITO (52 ITR 524), WHIC H ARE RELEVANT HERE: - 'IT MAY BE THAT THE STATUTE UNDER WHICH A NOTIFICATION HAS BEEN ISSUED CONSTITUTING THE APPELLANT CORPORATION MAY PROVIDE EXPRESSLY OR BY NECESSARY IMPLICATION THAT THE INCOME DERIVED BY THE CORPORATION FROM ITS TRADING ACTIVITY WOULD BE THE INCOME OF THE STATE. THE DOCTRINE OF SEPARATE IDENTITY OR PERSONALITY OF THE CORPORATION IS ALWAYS SUBJECT TO THE EXCEPTIONS WHICH STATUTES MAY CREATE, AND IF THERE IS A STATUTORY PROVISION WHICH CLEARLY INDICATES THAT DESPITE THE CONCEPT OF SEPARA TE 11 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION PERSONALITY OF THE CORPORATION, THE TRADE CARRIED ON BY AT BELONGS TO THE SHARE HOLDERS WHO BROUGHT THE CORPORATION INTO EXISTENCE AND THE INCOME RECEIVED FROM THE SAID TRADE LIKEWISE BELONGS TO THEM, THAT WOULD BE ANOTHER MATTER. IT WOULD THEN BE POSSI BLE TO HOLD THAT AS A RESULT OF THE SPECIFIC STATUTORY PROVISIONS THE INCOME RECEIVED FROM THE TRADE CARRIED ON BY THE CORPORATION BELONGS TO THE SHAREHOLDERS WHO HAVE CONSTITUTED THE SAID CORPORATION, AND SO, WE MUST LOOK TO THE ACT TO DETERMINE WHETHER T HE INCOME IN THE PRESENT CAN BE SAID TO BE INCOME OF THE STATE OF ANDHRA PRADESH. IN THIS CONNECTION, WE MAY USEFULLY REFER TO THE OBSERVATIONS MADE BY LORD DENNING IN TAMLIN VS. HANNAFORD (1950) 1 KB 18: 18. 'IN THE EYE OF THE LAW' SAID LORD DENNING, 'THE CORPORATION IS ITS OWN MASTER AND IS ANSWERABLE AS FULLY AS ANY OTHER PERSON OR CORPORATION. IT IS NOT THE CROWN AND HAS NONE OF THE IMMUNITIES OR PRIVILEGES OF THE CROWN. ITS SERVANTS ARE NOT CIVIL SERVANTS, AND ITS PROPERTY IS NOT CROWN PROPERTY. IT IS AS MUCH BOUND BY ACTS OF PARLIAMENT AS ANY OTHER SUBJECT OF THE KING. IT IS, OF COURSE, A PUBLIC AUTHORITY AND ITS PURPOSES, NO DOUBT, ARE PUBLIC PURPOSES, BUT IT IS NOT A GOVERNMENT DEPARTMENT NOR DO ITS POWERS FALL WITHIN THE PROVINCE OF GOVERNMENT.' THE SE OBSERVATIONS TEND TO SHOW THAT A TRADING ACTIVITY CARRIED ON BY THE CORPORATION IS NOT A TRADING ACTIVITY CARRIED ON BY THE STATE DEPARTMENTALLY, OR IS IT A TRADING ACTIVITY CARRIED ON BY A STATE THROUGH ITS AGENTS APPOINTED IN THAT BEHALF' THE OBSERVAT IONS MADE BY LORD DENNING, VIZ., 'IT IS, OF COURSE, A PUBLIC AUTHORITY AND ITS PURPOSES, NO DOUBT, ARE PUBLIC PURPOSES, BUT IT IS NOT A GOVERNMENT DEPARTMENT NOR DO ITS POWERS FALL WITHIN THE PROVINCE OF GOVERNMENT' ARE VERY MUCH RELEVANT HERE AND, IN OUR VIEW, THEY SQUARELY APPLY TO THE ASSESSEE HEREIN. WE NOTICE THAT THE HON'BLE GUJARAT HIGH 12 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION COURT IN THE CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION V/S CIT [1985] 151 ITR 255 (GUJ) HAS CONSIDERED AN IDENTICAL ISSUE AND HAS HELD AS UNDER: 11. HAVING C ONSIDERED AS TO WHETHER THE SSESSEE GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION, AHMEDABAD IS ENTITLED OR IS NOT EN TITLED TO EXCLUDE ITS INCOME FROM LIABILITY UNDER THE 1922 ACT, WE ARE CLEARLY OF THE OPINION THAT FROM THEIR TOTAL INCOME, NO EXCLUSION COU LD BE MADE ON THE GROUND THAT IT IS A STATE, AS CONTEMPLATED BY ARTICLE 289(1). THE STATE IS ENTIRELY DIFFERENT FROM THE CORPORATIONS, WHICH ARE CREATED BY LAWS WHICH ARE ENACTED EITHER BY THE PARLIAMENT OR BY THE STATE LEGISLATURES FOR DIFFERENT AND DIST INCT PURPOSES. THEY ARE SEPARATE ENTITIES IN LAW. THEY SUE AND ARE SUED IN THEIR OWN CAPACITIES AND FOR ANY CONTRACTUAL LIABILITY OF THE CORPORATION, NO PERSON CAN SUE THE STATE BECAUSE EVERY CORPORATION IN ITSELF IS NOT THE STATE BUT A SEPARATE LEGAL ENTI TY. UNDER THESE CIRCUMSTANCES, OUR OPINION ON THE FIRST QUESTION WOULD BE IN THE AFFIRMATIVE, AND WE HOLD THAT THE DECISION OF THE TRIBUNAL IS RIGHT. THEREFORE, THIS POINT IS DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' THE LD. DR, IN HIS WR ITTEN SUBMISSIONS, HAS ALSO PLACED RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF VIDARBHA HOUSING BOARD V/S ITO (1973) (92 ITR. 430). IDENTICAL VIEW HAS BEEN EXPRESSED BY PUNE BENCH OF ITAT IN THE CASE OF GOA, DAMAN AND DIU INDUSTRIAL DEVELOPMENT CORPORATION (151 LTD 447). THE HON'BLE SUPREME COURT IN THE CASE OF ANDHRA PRADESH STATE CIVIL SUPPLIES CORPORATION LTD (1984)(148 ITR 497) HAS, IN CLEAR TERMS, HELD THAT 'WHAT IS EXEMPT FROM TAXATION IS THE INCOME OF A STATE AND NOT THE INCOME OF THE INSTRUMENTALITY OR AGENCY OF A STATE.' HENCE, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT CONSIDERED TO BE A PART OF THE GOVERNMENT DEPARTMENT IMMUNE FROM UNION TAXATION. WE MAY 13 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION POINT OUT HERE THAT THE ASSESSEE ITSELF HAS UNDERSTOOD THIS FACTUAL AND LEGAL POSITION AND ACCORDINGLY OBTAINED REGISTRATION U/S 12A OF THE ACT, FILED RETURNS OF INCOME ETC. ACCORDINGLY, WE REJECT THE CONTENTIONS OF THE ASSESSEE THAT IT IS A PART OF GOVERNMENT OF MAHARASHTRA. 22. THE NEXT CONTENTION URGED BEFORE U S WAS THAT THE ASSESSEE IS PERFORMING SOVEREIGN FUNCTION OF THE GOVERNMENT. SINCE WE HAVE HELD THAT THE ASSESSEE CANNOT BE CONSIDERED TO BE A PART OF STATE GOVERNMENT AND SINCE THE PRIVATE PARTIES ARE ALLOWED TO CARRY ON THE ACTIVITY OF DEVELOPMENT OF INDU STRIAL ESTATES, IN OUR VIEW, THE SAID CONTENTION IS BOUND TO FAIL. 23 . THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE WOULD NOT FALL 1 N THE CATEGORY OF 'TRADE, COMMERCE OR BUSINESS'. RELIANCE WAS PLACED BY LD A.R ON THE DECISION OF HON'BLE SUPREME COURT RENDERED IN THE CASE OF SHRI RAMTANU CO - OPERATIVE HOUSING SOCIETY LTD AND ANR. (SUPRA), WHEREIN THE HON'BLE APEX COURT HAS HELD AS UNDER: - .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......RECEIPT OF THESE MONEYS ARISE NOT OUT OF ANY BUSINESS OR TRADE, BUT OUT OF THE SOLE PURPOSE OF ESTABLISHMENT, GROWTH AND DEVE LOPMENT OF INDUSTRIES.' IT WAS SUBMITTED THAT THE MEANING OF THE TERM 'COMMERCE' IS THE ACTIVITY OF BUYING AND SELLING, ESPECIALLY ON LARGE SCALE OR THE EXCHANGE OF GOODS AND SERVICES ON A LARGE SCALE INVOLVING TRANSPORTATION BETWEEN CITIES, STATES AND NAT IONS. ACCORDINGLY, IT WAS CONTENDED THAT THE ASSESSEE IS NOT CARRYING ON ANY TRADE OR BUSINESS OR COMMERCE. 24 . A PERUSAL OF PARAGRAPH 16 OF THE DECISION RENDERED IN THE CASE OF SHRI RAMTANU CO - OPERATIVE HOUSING SOCIETY LTD AND ANR. (SUPRA) WOULD SHOW THAT THE PETITIONERS CONTENDED THAT THE ASSESSEE CORPORATION WAS A 14 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION TRADING ONE FOR THE REASONS THAT THE CORPORATION COULD SELL PROPERTY, NAMELY, TRANSFER LAND; THAT THE CORPORATION HAD BORROWING POWERS, AND THAT THE CORPORATION WAS ENTITLED TO MONEYS BY WAY OF RE NTS AND PROFITS. THUS, IT CAN BE SEEN THAT THE CLAIM OF THE PETITIONERS WAS THAT THE ASSESSEE CORPORATION WAS ENGAGED IN 'TRADING ACTIVITY' AND THE SAME HAS BEEN NEGATED BY THE HON'BLE SUPREME COURT, MAINLY, TAKING INTO ACCOUNT THE PURPOSE OR OBJECTIVE OF THE ASSESSEE. WHILE DISCUSSING THE ISSUE, THE HON'BLE APEX COURT HAS USED THE TERM 'BUSINESS' ALSO AND, IN OUR VIEW, THE SAME WAS TO USED AS DISTINCT AND SEPARATE FROM 'TRADING'. HENCE, IN OUR VIEW, THE EXPRESSION 'BUSINESS' WAS USED IN THE CONTEXT OF 'TRA DING BUSINESS' ONLY, SINCE THE EXPRESSION 'BUSINESS' IS OF A WORD OF LARGE AND INDEFINITE IMPORT AND IT WOULD ENCOMPASS THE TRADING ALSO. 25. WE FIND THAT THE MEANING OF THE EXPRESSIONS 'TRADE, COMMERCE OR BUSINESS' WAS ANALYSED BY THE HON'BLE DELHI HIGH C OURT IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VS. DGIT (347 ITR 99) AND THE RELEVANT DISCUSSIONS HAVE BEEN EXTRACTED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF GS1 INDIA VS. DGIT (EXEMPTION) (20140(360 ITR 138)(DELHI) AS UNDER: - 'SCOP E OF 'TRADE, COMMERCE OR BUSINESS 16. THE KEY WORDS, NAMELY; TRADE, COMMERCE AND BUSINESS WERE ENUMERATE AND ELUCIDATE IN INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA(SUPRA) AS UNDER (PAGE 113): 'TRADE', AS PER THE, WEBSTER'S NEW TWENTIETH CENTURY DICTIONA RY (2ND EDITION), MEANS, AMONGST OTHERS, 'A MEANS OF EARNING ONE'S LIVING, OCCUPATION OR WORK. IN BLACK'S LAW DICTIONARY, 'TRADE' MEANS A BUSINESS WHICH A PERSON HAS LEARNT OR HE CARRIES ON FOR PROCURING SUBSISTENCE OR PROFIT; OCCUPATION OR EMPLOYMENT, ETC . THE MEANING OF 'COMMERCE' AS GIVEN BY THE CONCISE OXFORD DICTIONARY 15 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION IS 'EXCHANGE OF MERCHANDISE, SPECIALLY ON LARGE SCALE'. IN ORDINARY PARLANCE, TRADE, AND COMMERCE CARRY WITH THEM THE IDEA OF PURCHASE AND SALE WITH A VIEW TO MAKE PROFIT. IF A PERSON BU YS GOODS WITH A VIEW TO SELL THEM FOR PROFIT, IT IS AN ORDINARY CASE OF TRADE. IF THE TRANSACTIONS ARE ON A LARGE SCALE IT IS CALLED COMMERCE. NOBODY CAN DEFINE THE VOLUME, WHICH WOULD CONVERT A TRADE INTO COMMERCE. FOR THE PURPOSE OF THE FIRST PROVISO TO SECTION 2(15), TRADE IS SUFFICIENT, THEREFORE, THIS ASPECT IS NOT REQUIRED TO BE EXAMINED IN DETAIL. THE WORD 'BUSINESS' IS THE BROADEST TERM AND IS ENCOMPASSES TRADE, COMMERCE AND OTHER ACTIVITIES. SECTION 2(13) OF THE INCOME - TAX ACT DEFINES THE TERM 'BUS INESS' AS UNDER '2. DEFINITIONS. (13) 'BUSINESS' INCLUDES ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANUFACTURE.' THE WORD 'BUSINESS' IS A WORD OF LARGE AND INDEFINITE IMPORT. SECTION 2(13) DEFINES BUSINESS TO INCLUDE ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANUFACTURE. THE INTENTION OF THE LEGISLATURE IS TO MAKE THE DEFINITION EXTENSIVE AS THE TERM 'INCLUSIVE' HAS BEEN USED. THE LEGISLATURE HAS DELIBERATELY DEPARTED FROM GIVING A DEFINITE IMPORT TO THE TERM 'BUSINESS' BUT MADE REFERENCE TO SEVERAL OTHER GENERAL TERMS LIKE 'TRADE', 'COMMERCE', 'MANUFACTURE' AND 'ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE AND MANUFACTURE'. IN BLACK'S LAW DICTIONARY, SIXTH EDITION, THE WORD 'BUSINESS' HAS BEEN DEFINED AS UNDER: 'EMPLOYMENT, OCCUPATION, PROFESSION OR COMMERCIAL ACTIVITY ENGAGED IN FOR GAIN, OR LIVELIHOOD. ACTIVITY OR ENTERPRISE FOR GAIN, BENEFIT, ADVANTAGE OR LIVELIHOOD. UNION LEAGUE CL UB V/S JOHNSON 18 CAL 2D 275. ENTERPRISE IN 16 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION WHICH' PERSON ENGAGED SHOWS WILLINGNESS TO INVEST TIME AND CAPITAL ON FUTURE OUTCOME. DOGGETTV/S SURNET62 APP DC 103; 65 F. 2D 191. T HAT WHICH HABITUALLY BUSIES OR OCCUPIES OR ENGAGES THE TIME, ATTENTION, LABOUR AND EFFORT OF PERSONS AS A PRINCIPAL SERIOUS CONCERN OR INTEREST OR FOR LIVELIHOOD OR PROFIT.' ACCORDING TO SAMPATH IYENGAR'S LAW OF INCOME TAX (9TH EDITION), A BUSINESS ACTIVITY HAS FOUR ESSENTIAL CHARACTERISTICS. FIRSTLY, A BUSINESS MUST BE A CONTINUOUS AND SYSTEMATIC EXERCISE OF ACTIVITY. BUSINESS IS DEFINED AS AN ACTIVE OCCUPATION CONTINUOUSLY CARRIED ON. BUSINESS VOCATION CONNOTES SOME REAL, SUBSTANTIVE AND SYSTEMATIC COURSE OF ACTIVITY OR CONDUCT WITH A SET PURPOSE. THE SECOND ESSENTIAL CHARACTERISTIC IS PROFIT MOTIVE OR CAPABLE OF PRODUCING PROFIT. TO REGARD AN ACTIVITY AS BUSINESS, THERE MUST BE A COURSE OF DEALINGS CONTINUED, OR CONTEMPLATED TO BE CONTINUED, NORMALLY WITH AN OBJECT OF MAKING PROFIT AND NOT FOR SPORT OR PLEASURE (BHARAT DEVELOPMENT P . LTD. V/S CIT [1982] 133 ITR 470 (DELHI). THE THIRD ESSENTIAL CHARACTERISTIC IS THAT A BUSINESS TRANSACTION MUST BE BETWEEN TWO PERSONS. BUSINESS IS NOT A UNILATERAL ACT. IT IS BROUGHT ABOUT BY A TRANSACTION BETWEEN TWO OR MORE PERSONS. AND, LASTLY, THE B USINESS ACTIVITY USUALLY INVOLVES A TWIN ACTIVITY. THERE IS USUALLY AN ELEMENT OF RECIPROCITY INVOLVED IN A BUSINESS TRANSACTION.' 17 . IN THE SAID CASE RELIANCE AND REFERENCE WAS MADE TO STATE OF PUNJAB V/S BAJAJ ELECTRICALS LTD. [1968] 2 SCR 536, KHODAY DISTI LLERIES LTD. V/S STATE OF KARNATAKA [1995] 1 SCC 574, BHARAT DEVELOPMENT (P) LTD. V/S CIT[1982] 133 ITR 470198014 TAXMAN 58 (DELHI), BARENDRA PRASAD RAY V/S ITO [1981] 129 ITR 295/6 TAXMAN 19 (SC), STATE OF ANDHRA PRADESH V/S H. ABDUL BAKHI & BROS [1964] 1 5 STC 664 (SC), STATE OF GUJARAT V/S RAIOURMFG. CO. [1967] 19 STC 1(SC), DIRECTOR OF SUPPLIES & DISPOSAL V/S. MEMBER, BOARD OF REVENUE [1967] 20STC 398(SC) AND 17 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION MRS.SAROJINI RAJAH V/S CZT[19691 71 ITR 504 (MAD) TO EXPLAIN THE TERMS 'TRADE, COMMERCE OR BUSIN ESS'. 18 . REFERRING TO THE CONCEPT AND PRINCIPLE OF 'ECONOMIC ACTIVITY' THAT HAS GAINED SOME ACCEPTABILITY IN EUROPEAN UNION AND ENGLAND IT WAS EXPLAINED THAT THE SAID PRINCIPLE IS APPLICABLE TO SALES TAX, VALUE ADDED TAX, EXCISE DUTY ETC. BECAUSE THESE ARE NO T TAXES ON INCOME BUT THE TAXABLE EVENT OCCURS BECAUSE OF THE 'ECONOMIC ACTIVITY' INVOLVED. EVEN IF A PERSON/ORGANIZATION IS CARRYING ON TRADING/BUSINESS ON 'NO LOSS NO PROFIT' PRINCIPLE, IT MAY BE LIABLE TO PAY TAXES OR COMPLY WITH THE STATUTE WHEN THE CH ARGE, OR INCIDENT OF TAX, IS ON THE 'ECONOMIC ACTIVITY'. THE WORDS TRADE, COMMERCE AND BUSINESS ARE ETYMOLOGICAL CHAMELEON AND SUIT THEIR MEANINGS TO THE CONTEXT IN WHICH THEY ARE FOUND. FIVE TESTS PROPOUNDED IN CUSTOMS & EXCISE COMMISSIONER V/S LORD FISHE R [1981] 'S.T.C. 238 AND DECISION IN COMMISSIONER OF SALES TAX V/S SAL PUBLICATION FUND 12002] 252 ITR 701122 TAXMAN 437 (SC) WAS QUOTED. 19. THE FINAL AND DETERMINING FACTORS, IT WAS OBSERVED WAS CONSEQUENTIAL PROFIT MOTIVE OR PURPOSE BEHIND THE ACTI VITY AND WHEN AN ACTIVITY IS TRADE, COMMERCE OR BUSINESS WAS ELUCIDATED IN INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (SUPRA) IN THE FOLLOWING WORDS(PAGE 123): 'SECTION 2(15) DEFINES THE TERM CHARITABLE PURPOSE. THEREFORE, WHILE CONSTRUING THE TERM BUSINE SS FOR THE SAID SECTION, THE OBJECT AND PURPOSE OF THE SECTION HAS TO BE KEPT IN MIND. WE DO NOT THINK THAT A VERY BROAD AND EXTENDED DEFINITION OF THE TERM BUSINESS IS INTENDED FOR THE PURPOSE OF INTERPRETING AND APPLYING THE FIRST PROVISO TO SECTION 2(15 ) OF THE ACT TO INCLUDE ANY TRANSACTION FOR A FEE OR MONEY. AN ACTIVITY WOULD BE CONSIDERED 'BUSINESS' IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE, BUT IN SOME CASES THIS MAY NOT BE DETERMINATIVE. NORMALLY THE PROFIT MOTIVE TEST SHOULD BE SATISFIED BUT IN A G IVEN CASE ACTIVITY MAY BE REGARDED AS 18 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION BUSINESS EVEN WHEN PROFIT MOTIVE CANNOT BE ESTABLISHED/PROVED. IN SUCH CASES, THERE SHOULD BE EVIDENCE AND MATERIAL TO SHOW, THAT THE ACTIVITY HAS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES, AND PURSUED WITH REASONABLE CONTINUITY. THERE SHOULD BE FACTS AND OTHER CIRCUMSTANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS INFECT IN THE NATURE OF BUSINESS. THE TEST AS PRESCRIBE IN RAIPUR MANUFACTURING COMPANY (SUPRA) AND SAI PUBLICATIONS FUND (SUPRA) C AN BE APPLIED. THE SIX INDICIA STIPULATED IN LORD FISHER (SUPRA) ARE ALSO RELEVANT. EACH CASE, THEREFORE, HAS TO BE EXAMINED ON ITS OWN FACTS.' RECENTLY IN ANOTHER DECISION IN WP(C) NO. 1755/2012 TITLED BUREAU OF INDIAN STANDARDS V/S DIRECTOR GENERAL OF IN COME TAX (EXEMPTIONS) 1-20131 212 TAXMAN 210/1`20121 27 TAXMANN.COM 127 (DELHI) IT WAS HELD THAT BUREAU OF INDIAN STANDARDS (BIS) WAS CARRYING ON CHARITABLE ACTIVITIES AS DESCRIBED WITHIN THE AMBIT OF SECTION 2(15) AND WAS ENTITLED TO REGISTRATION/NOTIFICATION UNDER SECTION 10(23C)(IV). WE, HOWEVER, NOTE THAT THERE IS ONE DISTINCTION BETWEEN THE PRESENT PETITIONER AND BIS. BIS IS A STATUTORY AUTHORITY CREATED BY LEGISLATION AND, 'THEREFORE, THEIR CASE AND CLAIM STANDS ON A BETTER FOOTING BUT THIS DOES NOT IMPLY THAT ONLY STATUTORY BODIES CAN BE TREATED AS ESTABLISHED FOR CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT. SUCH CONTENTION HAS NOT BEEN RAISED AND CANNOT BE SUSTAINED/ACCEPTED.' THE HON'BLE DELHI HIGH COURT, AFTE R REFERRING TO THE CIRCULAR NO.11OF 2008 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, FURTHER HELD THAT THE LEGAL TERMS 'TRADE, COMMERCE OR BUSINESS' IN SECTION 2(15), MEANS ACTIVITY UNDERTAKEN WITH A VIEW TO MAKE OR EARN PROFIT. PROFIT MOTIVE IS DETERMINA TIVE AND A CRITICAL FACTOR TO DISCERN WHETHER AN ACTIVITY IS BUSINESS, TRADE OR COMMERCE. THE HON'BLE DELHI HIGH COURT FURTHER DISCUSSED ABOUT THE DIFFERENCE BETWEEN THE OBJECTIVES WHILE CARRYING ON A PURE BUSINESS ACTIVITY AND CHARITABLE ACTIVITY: - 19 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 'BUSIN ESS ACTIVITY HAS AN IMPORTANT PERVADING ELEMENT OF SELF INTEREST, THOUGH FAIR DEALING SHOULD AND CAN BE PRESENT, WHILST CHARITY OR CHARITABLE ACTIVITY IS ANTI - THESIS OF ACTIVITY UNDERTAKEN WITH PROFIT MOTIVE OR ACTIVITY UNDERTAKEN ON SOUND OR RECOGNIZED BU SINESS PRINCIPLES. CHARITY IS DRIVEN BY ALTRUISM AND DESIRE TO SERVE OTHERS, THOUGH ELEMENT OF SELF - PRESERVATION MAY BE PRESENT. FOR CHARITY, BENEVOLENCE SHOULD BE OMNIPRESENT AND DEMONSTRABLE BUT IT IS NOT EQUIVALENT TO SELF SACRIFICE AND ABNEGATION. THE ANTIQUATED DEFINITION OF CHARITY, WHICH ENTAILS GIVING AND RECEIVING NOTHING IN RETURN IS OUTDATED. A MANDATORY FEATURE WOULD BE; CHARITABLE ACTIVITY SHOULD BE DEVOID OF SELFISHNESS OR ILLIBERAL SPIRIT. ENRICHMENT OF ONESELF OR SELF - GAIN SHOULD BE MISSING AND THE PREDOMINANT PURPOSE OF THE ACTIVITY SHOULD BE TO SERVE AND BENEFIT OTHERS. A SMALL CONTRIBUTION BY WAY OF FEE THAT THE BENEFICIARY PAYS WOULD NOT CONVERT CHARITABLE ACTIVITY INTO BUSINESS, COMMERCE OR TRADE IN THE ABSENCE OF CONTRARY EVIDENCE. THE QUANTUM OF FEE CHARGED, ECONOMIC STATUS OF THE BENEFICIARIES WHO PAY, COMMERCIAL VALUE OF BENEFITS IN COMPARISON TO THE FEE, PURPOSE AND OBJECT BEHIND THE FEE, ETC., ARE SEVERAL FACTORS WHICH WILL DECIDE THE SEMINAL QUESTION, IS IT BUSINESS? 26. NOW, LET US DISCUSS ABOUT THE FACTS PREVAILING IN THE CASE UNDER CONSIDERATION. WHEN THE ASSESSEE CORPORATION WAS ORIGINALLY INCORPORATED, THE ACTIVITY OF PROMOTION OF INDUSTRIALIZATION ALL OVER THE STATE OF MAHARASHTRA SHOULD HAVE BEEN THE AVOWED OBJECTIVE OF THE STATE GOVERNMENT. HITHERTO, THE RELEVANT ACTIVITIES WERE CARRIED OUT THROUGH A BOARD AND SUBSEQUENTLY, IT SHOULD HAVE BEEN DECIDED TO FORM A SEPARATE AUTONOMOUS BODY OR STATUTORY CORPORATION TO CARRY OUT OR ACCELERATE THE PROCESS OF INDUSTRIALIZATION B Y DEVELOPING INDUSTRIAL ESTATES. ACCORDINGLY, MID ACT WAS ENACTED AND THE ASSESSEE CORPORATION WAS INCORPORATED UNDER THAT ACT. AT THAT POINT OF TIME, THE ASSESSEE CORPORATION WAS ENJOYING MONOPOLY, I.E., IT WAS THE ONLY ORGANISATION INVOLVED IN ORDERLY DE VELOPMENT OF INDUSTRIAL ESTATES. AS 20 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION OBSERVED EARLIER, THE PROFIT MOTIVE SHOULD HAVE BEEN ABSENT AT THAT POINT OF TIME. SINCE, THE INDUSTRIALIZATION BROUGHT IN MANY ECONOMIC BENEFITS, LIKE, DEVELOPMENT OF UNDEVELOPED AREAS, ECONOMIC ACTIVITY, EMPLOYMENT, GE NERATION OF FRESH TAXES ETC., IT WAS CONSIDERED TO BE USEFUL TO THE PUBLIC AT LARGE AND HENCE THE ACTIVITIES OF THE ASSESSEE WAS CONSIDERED TO BE AN OBJECT OF GENERAL PUBLIC UTILITY FALLING WITHIN THE DEFINITION OF CHARITABLE PURPOSE AS DEFINED U/S 2(15) O F THE ACT. 27. HOWEVER, WE NOTICE FROM THE CONTENTIONS OF LD DR, THERE APPEARS TO BE DRASTIC CHANGE IN THE APPROACH OF THE ASSESSEE. IN THE PRESENT DAYS, THE ASSESSEE APPEARS TO BE ADOPTING THE SYSTEM OF OFFERING PLOTS/SPACE BY WAY OF 'AUCTIONING', OB VIOUSLY THE OBJECT IS TO CORNER MAXIMUM POSSIBLE PRICE ON SALE OF PLOT / SPACE. WE ALSO UNDERSTAND THAT THE GOVERNMENT OF MAHARASHTRA HAS FRAMED THE MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION (DISPOSAL OF LAND) REGULATIONS, 1975 IN ORDER TO GIVE EFFEC T TO THE PROVISIONS OF MID ACT. WE CAME TO UNDERSTAND THAT THE REGULATION 4 PROVIDES FOR DISPOSAL OF LAND COVERED BY THE LAY OUT PREPARED BY THE CORPORATION BY THE CORPORATION BY PUBLIC AUCTION OR BY ENTERTAINING INDIVIDUAL APPLICATIONS. THE ID. DR BRO UGHT TO OUR NOTICE THE FOLLOWING PAPER REPORT WHICH SUPPORTS THE VIEW THAT THE ASSESSEE HAD ADOPTED THE PRACTICE TO DISPOSE OF LAND BY PUBLIC AUCTION. 'TWO FLOT AUCTIONS PROMPT MIDC TO MULL CHANGE IN IT PARK POLICY TUSHAR PAWAR, TNN I NOV 5, 2014, 04.08 AM 1ST NASHIK: TWICE BITTEN, NEVER SHY. THE MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION (MIDC) LOOKS DETERMINED TO MAKE THE IT PARK PROJECT IN ITS AMBAD INDUSTRIAL ESTATE A SUCCESS. AFTER TWO FAILED AUCTION ATTEMPTS, THE MIDC IS PLANNING TO CHANGE THE 21 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION RES ERVATION OF THE IT PARK FOLLOWING POOR RESPONSE FROM THE INDUSTRY. AROUND A DECADE AGO, THE STATE GOVERNMENT HAD SET UP SEVERAL STATE - OF - THE - ART IT PARKS IN SOME SELECT CITIES ACROSS MAHARASHTRA, INCLUDING THE ONE IN NASHIK. THE IT PARK BUILDING, WHICH WAS BUILT BY MIDC AT RS.2.23 CRORE, WAS INAUGURATED IN 2002. BUT SINCE THEN, IT HAS BEEN LYING IDLE BECAUSE OF POOR RESPONSE FROM INDUSTRY. THE MIDC TRIED TO AUCTION THE IT PARK TWICE IN THE PAST ONE - AND - A - HALF YEARS, BUT FAILED MISERABLY AS NOT A SINGLE INDU STRY FILED ANY BID ON BOTH THE OCCASIONS. SPEAKING TO TOT, A SENIOR MIDC OFFICIAL SAID, 'THERE IS NO RESPONSE FROM THE INDUSTRY TO THE IT PERK IN THE AMBAD MIDC AREAS. IN MARCH LAST YEAR, WE HAD INVITED BIDS FROM INDUSTRIAL HOUSES FOR THE AUCTION OF SHOPS AT THE IT PARK. BUT WE DID NOT RECEIVE A SINGLE BID. OUR SECOND ATTEMPT WAS IN AUGUST THIS YEAR. THIS TIME, WE HAD REDUCED THE MINIMUM BID RATE BY 10% FROM RS.24,530 PER SQ. M TO RS.22,300 PER SQ. MT KEEPING IN MINDS DEMANDS FROM THE INDUSTRY. NEVERTHELESS , WE DID NOT RECEIVE ANY RESPONSE FROM THE INDUSTRIES. WE ARE NOW PLANNING TO CHANGE THE RESERVATION OF THE IT PARK AND ALLOT THE SHOPS TO INDUSTRIAL HOUSES FROM OTHER SECTORS. WE ARE PREPARING THE PROPOSAL FOR THE CHANGE OF IT RESERVATION OF THE PARK, WHI CH WILL BE SENT SHORTLY TO OUR HEAD OFFICE IN MUMBAI FOR APPROVAL.' THIS NEWS PAPER REPORT WOULD SHOW THAT THE POLICY OF 'NO PROFIT NO LOSS' HAS BEEN GIVEN A GO - BY BY THE ASSESSEE. FURTHER, AS SUBMITTED BY LD DR, THE ASSESSEE HAS ALSO LOST IS MONOPOLY IN T HIS FIELD AND THE PRIVATE ENTREPRENEURS ARE ALSO NOWADAYS ALLOWED TO DEVELOP INDUSTRIAL ESTATES. THE PRESENT DAY SCENARIO WOULD SHOW THAT THE PRIVATE ENTREPRENEURS ARE DEVELOPING MANY SPECIAL ECONOMIC ZONES ALL OVER THE COUNTRY. HENCE, IN THE PRESENT DAY S CENARIO, THE ACTIVITIES OF THE ASSESSEE AND THE PRIVATE ENTREPRENEURS STAND ON SAME FOOTING. THERE CANNOT BE ANY DISPUTE THAT THE ACTIVITY OF SETTING UP/DEVELOPING INDUSTRIAL ESTATES AND MAINTAINING THE INFRASTRUCTURE FACILITIES BY THE PRIVATE ENTREPRENEUR S IS CONSIDERED AS 'BUSINESS ACTIVITY'. SINCE THE ACTIVITY 22 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION CARRIED ON BY THE ASSESSEE IS NO DIFFERENT FROM THAT ONE CARRIED ON BY THE PRIVATE ENTREPRENEURS, IN OUR VIEW, THE ACTIVITY CARRIED ON BY THE ASSESSEE SHOULD ALSO BE CONSIDERED TO BE 'BUSINESS ACTI VITY' ONLY. HENCE, THE ACTIVITY CARRIED ON BY THE ASSESSEE, IN OUR VIEW, WOULD BE HIT BY THE PROVISO TO SEC. 2(15) OF THE ACT. 28. THE LD A.R INVITED OUR ATTENTION TO THE VARIOUS PROVISIONS OF MID ACT TO CONTEND THAT THE ASSESSEE IS CARRYING ON ITS OPERATI ONS IN ACCORDANCE WITH THE DIRECTIONS ISSUED BY THE STATE GOVERNMENT. HE FURTHER SUBMITTED THAT THE LANDS VESTED WITH THE ASSESSEE CAN ALSO BE TAKEN BACK BY THE STATE GOVERNMENT. ACCORDINGLY HE CONTENDED THAT THE ACTIVITIES OF THE ASSESSEE CANNOT BE CONS IDERED TO BE A BUSINESS ACTIVITY, SINCE IT IS ;ACTING IN ACCORDANCE WITH THE DIRECTIONS ISSUED BY THE STATE GOVERNMENT. IN OUR VIEW, THE CONTROL OR DIRECTIONS ISSUED BY THE STATE GOVERNMENT WOULD NOT CHANGE THE CHARACTER OF 'BUSINESS ACTIVITY'. WE ARE OF T HE VIEW THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE SHOULD BE EXAMINED INDEPENDENTLY AND THE FACT THAT THE ASSESSEE IS BEING REGULATED BY THE STATE GOVERNMENT WOULD NOT MAKE ANY DIFFERENCE. IN OUR VIEW 'OWNERSHIP' OF THE CORPORATION AND 'ACTIVITIES' OF TH E CORPORATION ARE TWO DIFFERENT ASPECTS AND THE OWNERSHIP CANNOT BE CONSIDERED OR TAKEN INTO ACCOUNT TO DETERMINE THE CHARACTER OR NATURE OF THE ACTIVITIES CARRIED ON BY THE CORPORATION. 29 . IN VIEW OF THE FOREGOING DISCUSSIONS, WE AGREE WITH THE LD CIT(A) IN /11 HOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE AND HENCE WOULD BE HIT BY THE PROVISO TO SEC. 2(15) OF THE ACT. 6. IN VIEW OF THE AFORESAID DECISION OF THE CO ORDINATE BENCH IN ASSESEES OWN CASE AND CONSIDERI NG THAT THER E IS NO DIFFERENCE IN FACT S IN THE IM P U GNED ASSES SMEN T YEAR, R ESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO ORDINATE BENCH WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM UNDER SECTION 11 OF THE ACT AS T HE ACTIVITIES 23 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION CARRIED OUT ARE OF COMMERCI AL NATURE , HENCE , IS H IT BY THE PROVISO TO SECTION 2(15) OF THE ACT. FURTHER, WE HOLD THAT THE AS SESSEE CAN NOT BE REGARDED AS A P ART OF THE GOVERNMENT OF MAHARA S H TR A SO AS TO CLAIM IMMUNITY UNDER A RTICLE 289 (1) OF CONSTITUTION OF INDIA . ACCORDINGLY, GRO UND NO. 2 IS DISMISSED. 7. GROUND NO. 3 BEING CONSEQUENTIAL TO GROUND NO. 2 IS ACCORDINGLY DISMISSED. 8. G ROUND NO. 4 IS WITH REGARD TO ASSESSEES CLAIM THAT LEASE PREMIUM, RENT, INTEREST ON BANK DEPOSITS ETC. HAVING BEEN RECEIVED ON BEHALF OF GOVT. OF MAHARASHTRA ARE NOT TAXABLE AS INCOME AT THE HAND S OF THE ASSESSEE. FACTS RELATING TO THIS ISSUE ARE , DURING THE ASSESSMENT PROCEEDING S THE ASSESSING OFFICER WHILE EXAMI N ING THE ACCOUNTS OF THE ASSESSEE FOUND THAT RECEIPT S FROM LEASE PREMIUM , RENT, INTEREST ON BANK DEPOSITS ETC. INST EAD OF BEING SHOWN AS INCOME HAVE BEEN SHOWN AS LIABILITY IN THE BALANCE SHEET. WHEN THE ASSESSING OFFICER CALLE D UPON THE ASSESSEE TO EXPLAIN THE REASON FOR NOT OFFER ING THE INCOME , THROUGH AN ELA B ORATE WRITTEN S UBMISSION ASSESSEE SUBMITTED , SINCE , IT HAS RECEIVED THE LEASE PRE M I UM AND OTHE R CHARGES ON BEHALF OF GOVT. OF M AHARAS HTRA, THEY ARE NOT TAXABLE 9. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE AND HELD THAT THE AMOUNT RECEIVED TOWARDS LEASE PREMIUM AND OTHER CHARGE S SHOWN IN THE LIABILITY SIDE OF THE BALANCE SHEET HAVE TO BE TREATED AS INCOME OF THE ASSESSEE AND ACCORDINGLY BROUGHT THEM TO T AX AT THE HANDS OF THE ASSES S EE AS HE HAS ALRE ADY DENIED ASSESSEES C L A IM UNDER SECTION.11 OF THE ACT. THE ASSESSEE CHALLENGE D THE ADDITION MADE BY THE ASSESSING OFFICER BEFORE COMMISSIONER (APPEALS). LEARNED 24 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION COMMISSIONER (APPEALS ) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND TAKIN G NOTE OF THE FACT THAT WHILE DECIDING IDEN TICAL IS SU E IN ASSESSEES OWN CASE FOR A.Y.2011 12 THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER , DIRECTED THE ASSESSING OFFICER TO DECIDE THE ISSUE FOLLOWING THE DIRECTIONS OF THE TRIBUNAL IN A.Y.2011 12. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , AFTER THE APPEAL FOR THE IMPUGNED ASSESSMENT YEAR WAS DECIDED BY THE LEARNED COMMISSIONER (APPEALS ) THERE HAS BEEN SOME DEVELOPMENT WITH REGARD TO THIS ISSUE AS IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL IN A.Y.2011 12 THE ASSESSIN G OFFICER HAD AGAIN COMPLETED THE ASSESSMENT BY ASSESSING THE LEASE PREMIUM AND OTHER CHARGES AS INCOME OF THE ASSE SS EE. HE SUBMITTED , WHEN THE ISSUE ULTIMATELY CAME UP FOR CO NSIDERATION BEFORE THE TRIBUNAL IN A.Y.2011 12 , THE CO ORDINATE BENCH VIDE ORDER DATED 07.09.2018 IN ITA NO . 4474 / M UM/2017 HAS ACCEPTED ASSESSEES CLAIM THAT LEASE PREMIUM AND OTHER CHARGES RECEIVED BY THE ASSESSEE ON BEHALF OF THE GOVT. OF MAHARASHTRA ARE NOT TAXABLE AS THE ASSESSEE IS MERELY A CUSTODIAN OF SUCH FUNDS. IN THIS CO NT EX T HE DREW OUR ATTENTION TO RELEVANT OBSERVATIONS OF THE BENCH WITH REGARD TO THE DISPUTED ISSUE. THUS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE TRIBUNAL HAVING HELD TH AT THE ASSESSEE CANNOT BE CONSID ERED TO BE THE OWNER OR DEEMED OW NER OF THE LAND , THE RECE IPTS ARISING FROM LEASE PREMIUM , RENT , INTEREST ETC CANNOT BE TAXED AT THE HANDS OF THE ASSESSEE. 25 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 11. THE LEARNED D EPARTMENTAL R EPRESENTATIVE DRAWING OUR ATTENTION TO THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD SUBMITTED , THE ASSESSEE HAS NOT C L A IMED ANY SPECIFIC RELIEF IN THE SAID GROUND. WITHOUT PREJUDICE TO THE AFOR ESAID SUBMISSION THE LEARNED D EPARTMENTAL R EPRESENTATIVE SUBMITTED , SINCE, THE LATEST ORDER OF THE TRIBUNAL FOR THE A.Y.2011 12 WAS NEITHER AVAILAB L E BE FOR E THE ASSESSING OFFICER NOR COMMISSIONER (APPEALS) , THE ISSUE MAY BE RESTORE D TO THE ASSESSING OFFICER FOR FRESH EXAMINATION IN THE LIGHT OF THE ORDER PASSED BY THE TRIBUNAL FOR A.Y.2011 12. 12. WE HAVE CONSID ERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. FACTS EMERGING FROM RECORD CLEARLY INDICATE THAT DURING THE ASSESSMENT PROCEEDING S THE ASSESSING OFFICER NOTICIN G THAT THE A SSESSEE HAS SHOWN RECEIPT S FROM LEASE PREM I UM , RENTS , INTEREST ETC IN THE LI A BILITY SIDE OF THE BALANCE SHEET WITHOUT O FFERING THEM AS INCOME , H AS SHOW CAUSE D THE ASSESSE E TO EXP L AIN WHY SUCH RECEIPTS SHOULD NOT BE TREATED AS ITS I N COME. IN RE SPON SE , THE AS S ES S EE HAS TAKEN A CATEGORICAL STAND THAT , SINCE, IT IS NOT THE OWNER OF THE LAND , THE LEASE PREM I UM, RENT AND INTER E ST ARISING OUT OF DEP O SITS ON SURPLUS FUNDS BELONG TO THE GOVT. OF M AHARA SHTRA AND THE ASSESSEE MERELY HOLDS SUCH FUND AS THE CUSTO D IAN OF S T ATE G OVT. HOWEVER, THE AS SESSING OFFICER REJECTING THE C L A IM OF THE ASSESSEE ASSESSED THE INCOME IN THE HAND S OF T HE A SSESSEE. NOTAB LY , LEARNED COMMISSIONER (APPEALS) HAS RESTORE D THE ISSUE TO THE ASSESSING OFFICER FOR DECIDING THE ISSUE FOLLOWING THE DIRECTION OF THE TRIBUNAL IN A.Y.2011 - 12. AS COULD BE SEEN FROM THE MATERIALS PLACED BEFORE US, AFTER THE DIS PO S AL OF THE APPEAL BY THE COMMISSIONER (APPEALS ) FURTHER DEVELO PMENT HAS TAKEN PLACE AND THE ISSUE 26 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION RELATING TO ASSESSEES CLAIM THAT THE INCOME FROM LEASE PREMIUM , RENT , IN TEREST AS RAISED IN A.Y.2011 12 CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ITA N O. 4474/MUM/2017 AND TH E TRIBUNAL ALLOWED ASSESSEES C L A IM VIDE ORDER DATED 07.09.2018 OBSERVING AS UNDER: 13. WE SHALL NOW ADVERT TO THE CORE ISSUE INVOLVED IN THE PRESENT APPEAL I.E AS TO WHETHER THE CIT(A) WAS RIGHT IN LAW AND THE FACTS OF THE C ASE IN CONCURRING WITH THE A.O THAT AS THE LANDS UNDER CONSIDERATION WERE NOT OWNED BY THE GOVERNMENT OF MAHARASHTRA, HENCE THE INCOME ARISING THERE FROM VIZ, LEASE PREMIUMS, RENT, INTEREST INCOME EARNED ON THE FUNDS PARKED AS DEPOSITS WITH THE BANKS ETC. WERE LIABLE TO BE ASSESSED AS THE INCOME OF THE ASSESSEE CORPORATION. WE ARE OF THE CONSIDERED VIEW THAT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ITO VS. CH. ATTCHAIAH (1996) 218 ITR 239 (SC), IT IS OBLIGATORY ON THE PART OF THE REVENUE AUTHORIT IES TO ASSESS THE INCOME IN THE HANDS OF THE RIGHT PERSON AND THE RIGHT PERSON ALONE. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION IN THE BACKDROP OF THE CONTENTIONS ADVANCED BY THE REPRESENTATIVES FOR BOTH THE PARTIES AND PERUSED THE EXH AUSTIVE MATERIAL PLACED ON RECORD AND THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY BOTH THE PARTIES TO DRIVE HOME THEIR RESPECTIVE CLAIMS. IT IS THE CONTENTION OF THE ASSESSEE BEFORE US THAT ALL THE INDUSTRIAL LANDS ARE HELD BY THE ASSESSEE CORPORATION ON BE HALF OF THE STATE GOVERNMENT OF MAHARASHTRA. IT IS FURTHER CLAIMED THAT THE ASSETS WHICH ARE OWNED BY THE ASSESSEE IN ITS OWN NAME VIZ, BUILDINGS AND OTHER ASSETS ARE SEPARATELY SHOWN IN ITS OWN NAME IN ITS 'BALANCE SHEET'. WE ARE OF THE CONSIDERED VIEW TH AT THE ISSUE AS TO IN WHAT STATUS THE LANDS UNDER CONSIDERATION WERE HELD BY THE ASSESSEE CORPORATION CAN BE APPRECIATED IN THE BACKDROP OF THE SCHEME OF THE 'MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION ACT, 1961' [FOR SHORT 'MIDC ACT']. WE FIND FROM A PERUSAL OF THE MIDC ACT THAT THE ASSESSEE CORPORATION VIZ. MIDC HAD BEEN ESTABLISHED FOR SECURING AND ASSISTING RAPID AND ORDERLY ESTABLISHMENT AND ORGANISATION OF INDUSTRIES IN INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE 27 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION STATE OF MAHARASHTRA. ON A PERU SAL OF SEC. 3(2) OF THE MIDC ACT, IT EMERGES THAT THE ASSESSEE CORPORATION VIZ. MIDC IS COMPETENT TO ACQUIRE, HOLD AND DISPOSE OFF PROPERTY, BOTH MOVEABLE AND IMMOVABLE, AND TO CONTRACT AND DO ALL THINGS NECESSARY FOR THE PURPOSES OF THE ACT. STILL FURTHER , A PERUSAL OF THE FUNCTIONS OF THE ASSESSEE CORPORATION AS CONTEMPLATED IN SEC. 14() OF THE MIDC ACT REVEALS THAT THE SAME PARTICULARLY INCLUDES VIZ. (I). ESTABLISHING AND MANAGING INDUSTRIAL ESTATES AT PLACES SELECTED BY THE STATE GOVERNMENT; (II). DEVE LOPING INDUSTRIAL AREAS SELECTED BY THE STATE GOVERNMENT FOR THE PURPOSE AND MAKE THEM AVAILABLE FOR UNDERTAKINGS TO ESTABLISH THEMSELVES; AND (III). UNDERTAKING SCHEMES OR WORKS, EITHER JOINTLY WITH OTHER CORPORATE BODIES OR INSTITUTIONS, OR WITH GOVERNME NT OR LOCAL AUTHORITIES, OR ON AN AGENCY BASIS, IN FURTHERANCE OF THE PURPOSE FOR WHICH THE ASSESSEE CORPORATION IS ESTABLISHED AND ALL MATTERS CONNECTED THEREWITH. STILL FURTHER, THE ASSESSEE CORPORATION AS PROVIDED IN SEC. 15 OF THE MIDC ACT INTERALIA ST ANDS VESTED WITH THE POWERS VIZ. (I). TO ACQUIRE AND HOLD SUCH PROPERTY, BOTH MOVABLE AND IMMOVABLE AS THE ASSESSEE CORPORATION MAY DEEM NECESSARY FOR THE PERFORMANCE OF ANY OF ITS ACTIVITIES AND TO LEASE, SELL, EXCHANGE OR OTHERWISE TRANSFER ANY PROPERTY HELD BY IT ON SUCH CONDITIONS AS MAY BE DEEMED PROPER BY IT; (II). TO PURCHASE BY AGREEMENT OR TO TAKE ON LEASE OR UNDER ANY FORM OF TENANCY ANY LAND, TO ERECT SUCH BUILDINGS AND TO EXECUTE SUCH OTHER WORKS AS MAY BE NECESSARY FOR THE PURPOSE OF CARRYING O UT ITS DUTIES AND FUNCTIONS; (III). TO PROVIDE OR CAUSE TO BE PROVIDED AMENITIES AND COMMON FACILITIES IN INDUSTRIAL ESTATES AND INDUSTRIAL AREAS AND CONSTRUCT AND MAINTAIN OR CAUSE TO BE MAINTAINED WORKS AND BUILDINGS THEREOF; (IV) TO MAKE AVAILABLE BUILD INGS ON HIRE OR SALE TO INDUSTRIALISTS OR PERSONS INTENDING TO START INDUSTRIAL UNDERTAKINGS; (V). TO CONSTRUCT BUILDINGS FOR THE HOUSING OF THE EMPLOYEES OF SUCH INDUSTRIES; (VI). TO ALLOT FACTORY SHEDS OR SUCH BUILDINGS OR PARTS OF BUILDINGS, INCLUDING R ESIDENTIAL TENEMENTS TO SUITABLE PERSONS IN THE INDUSTRIAL ESTATES ESTABLISHED OR DEVELOPED BY THE ASSESSEE CORPORATION; AND (VII). TO MODIFY OR RESCIND SUCH ALLOTMENTS, INCLUDING THE RIGHT AND POWER TO EVICT THE ALLOTTEES CONCERNED ON BREACH OF ANY OF THE TERMS OR CONDITIONS OF THEIR ALLOTMENT. WE FIND FROM A PERUSAL OF THE AFOREMENTIONED FUNCTIONS AND POWERS OF THE ASSESSEE CORPORATION THAT IN FURTHERANCE OF ITS 28 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION OBJECT OF ESTABLISHING AND DEVELOPING INDUSTRIAL ESTATES AND INDUSTRIAL AREAS SELECTED BY THE STATE GOVERNMENT FOR THE SAID PURPOSE, THE ASSESSEE CORPORATION SUBJECT TO THE PROVISIONS OF THE MIDC ACT IS VESTED WITH THE POWERS OF ACQUIRING AND HOLDING PROPERTY AND LEASING, SELLING, EXCHANGING OR TRANSFERRING THE SAME ON SUCH CONDITIONS AS IT MAY DE EM FIT, AS WELL AS PURCHASING OR TAKING ON LEASE OR UNDER ANY FORM OF TENANCY ANY LAND, ERECT BUILDINGS ON THE SAME AND MAKE THE SAME AVAILABLE ON HIRE OR SALE TO INDUSTRIALISTS OR PERSONS INTENDING TO START INDUSTRIAL UNDERTAKINGS. STILL FURTHER, THE ASSE SSEE CORPORATION AS PER SEC. 17 OF THE MIDC ACT ALSO STANDS VESTED WITH THE POWER TO LEVY FEES OR SERVICE CHARGES FOR PROVIDING AMENITIES OR COMMON FACILITIES VIZ, MAINTENANCE OF ROADS, DRAINAGE, WATER SUPPLY, PROVIDING OF STREET LIGHTING ETC IN SUCH INDUS TRIAL ESTATES AND INDUSTRIAL AREAS ON THE PLOT HOLDERS OR OTHER PERSONS RECEIVING BENEFIT OF SAID SERVICES OR AMENITIES. FURTHER, PERUSAL OF SEC. 19 OF THE MIDC ACT REVEALS THAT THE PROPERTY, FUND AND OTHER ASSETS VESTING IN THE ASSESSEE CORPORATION SHALL BE HELD AND APPLIED BY IT, SUBJECT TO THE PROVISIONS AND THE PURPOSES OF THE SAID ACT. 14. WE FURTHER FIND FROM A PERUSAL OF SEC. 32 OF THE MIDC ACT THAT IN CASE THE STATE GOVERNMENT IS OF THE OPINION THAT ANY LAND IS REQUIRED FOR THE PURPOSE OF DEVELOPM ENT BY THE ASSESSEE CORPORATION, OR FOR ANY OTHER PURPOSE IN FURTHERANCE OF THE OBJECTS OF THE SAID ACT, THEN AFTER PUTTING THE OWNER OF THE LAND OR ANY OTHER PERSON INTERESTED THEREIN TO NOTICE AS REGARDS ITS DECISION OF ACQUIRING SUCH LAND, CALLING FOR H IS OBJECTIONS AND DISPOSING OFF THE SAME AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO SUCH PERSON, THE STATE GOVERNMENT SHALL ACQUIRE SUCH LAND BY PUBLISHING A NOTICE IN THE OFFICIAL GAZETTE. ON A PERUSAL OF SUB - SECTION (4) OF SEC. 32 OF THE MIDC ACT, IT EMERGES THAT WHEN A NOTICE UNDER SEC. 32(1) OF THE ACT IS PUBLISHED IN THE OFFICIAL GAZETTE, THE LAND SHALL, ON AND FROM THE DATE OF SUCH PUBLICATION, VEST ABSOLUTELY IN THE STATE GOVERNMENT FREE FROM ALL ENCUMBRANCES. STILL FURTHER, AS PER SUB - SECTION (5) OF SEC. 32 OF THE MIDC ACT, WHERE ANY LAND IS VESTED WITH THE STATE GOVERNMENT UNDER SUB - SECTION (4) OF SEC. 32 OF THE 15. WE THUS, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS THAT THE LAND ACQUIRED IS VESTED WITH 29 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION THE STATE GOVERNMENT, THEREIN DELIB ERATE UPON THE ISSUE THAT ON THE TRANSFER OF THE LAND TO THE ASSESSEE CORPORATION FOR THE PURPOSE FOR WHICH IT WAS ACQUIRED BY THE STATE GOVERNMENT UNDER SEC. 32 OF THE MIDC ACT, OR PLACING OF THE LAND VESTED IN THE STATE GOVERNMENT AT THE OF THE ASSESSEE CORPORATION WITHIN THE MEANING OF SEC. 43 - IA OF THE MIDC ACT, CAN IN EITHER OF THE SITUATIONS BE CONSTRUED AS A 'TRANSFER' OF THE OWNERSHIP OF THE LAND TO THE ASSESSEE CORPORATION, WHICH RESULTANTLY WOULD LEAD TO ASSESSING OF THE INCOME ARISING THEREFROM V IZ, LEASE PREMIUMS, RENT, INTEREST INCOME FROM THE FUNDS PARKED AS DEPOSITS WITH THE BANK ETC., AS THE INCOME OF THE ASSESSEE CORPORATION. WE HAVE PERUSED THE COPY OF THE 7/12 EXTRACTS PLACED ON RECORD BY THE ASSESSEE (PAGE 338 - 342 AND PAGE 792 - 9 OF 'APB '), WHICH AS CLAIMED BY THE ID. A.R REVEALS THAT THE ASSESSEE IN THE SAID REVENUE RECORDS IS ONLY STATED TO BE AN OCCUPIER OF THE LAND (KABZADHAR), WHILE FOR THE OWNERSHIP OF THE SAME REMAINS VESTED WITH THE STATE GOVERNMENT OF MAHARASHTRA. WE ARE FURTHER PERSUADED TO SUBSCRIBE THE CLAIM OF THE ID. A.R THAT IN CASE THE OWNERSHIP OF THE LAND VESTED WITH THE STATE GOVERNMENT WAS TO BE TRANSFERRED TO THE ASSESSEE CORPORATION, THE SAME COULD ONLY HAVE BEEN POSSIBLE BY WAY OF A REGISTERED DOCUMENT AS REQUIRED UN DER THE TRANSFER OF PROPERTY ACT, 1 882 AND REGISTRATION ACT, 1908, WHICH HOWEVER WAS NOT SO IN THE CASE OF THE ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT THE TERM 'TRANSFER' USED IN SUB - SECTION (7) OF SEC. 32 OF THE MIDC ACT, WHICH THEREIN READS AS UNDE R: ?) WHERE THE LAND HAS BEEN ACQUIRED FOR THE CORPORATION OR ANY LOCAL AUTHORITY, THE STATE GOVERNMENT SHALL, AFTER IT HAS TAKEN POSSESSION THEREOF, BY NOTIFICATION PUBLISHED IN THE OFFICIAL GAZETTE, TRANSFER THE LAND TO THE COMORATION OR THAT LOCAL AUTH ORITU. AS THE CASE MAZI BE. FOR THE PURPOSE FOR HAS TO BE ACCORDED ITS CONTEXTUAL MEANING. RATHER, A THOUGHTFUL DELIBERATION OF THE CONTEXT IN WHICH THE TERM 'TRANSFER' HAD BEEN USED IN SUB - SEC. (7) OF SEC. 32 REVEALS THAT THE SAME IS IN REFERENCE TO ADVAN CING OF THE PURPOSE FOR WHICH SUCH LAND WAS ACQUIRED, WITH A FURTHER MENTION OF APPLICATION OF THE PROVISIONS OF SEC. 43 - 1A OF THE MIDC ACT TO THE LAND ACQUIRED BY THE STATE GOVERNMENT. IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERE D VIEW THAT NOW WHEN SEC. 43 - 1A [APPLICATION OF WHICH IS REFERRED TO IN SUB - SEC. (7) OF SEC. 32] CONTEMPLATES PLACING OF THE LAND VESTED IN THE STATE GOVERNMENT AT THE DISPOSAL OF THE ASSESSEE CORPORATION FOR DEVELOPING BY, OR UNDER THE CONTROL AND SUPERVI SION OF THE CORPORATION, AND THEREAFTER TO BE DEALT WITH FOR THE FURTHERANCE OF THE 30 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION OBJECTS OF THE MIDC ACT IN ACCORDANCE WITH THE REGULATIONS MADE AND DIRECTIONS GIVEN BY THE STATE GOVERNMENT IN THIS BEHALF, HENCE THE CLAIM OF THE REVENUE OF THERE BEING A N ABSOLUTE TRANSFER OF THE OWNERSHIP OF THE LAND TO THE ASSESSEE CORPORATION CAN SAFELY BE RULED OUT. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE UNDER CONSIDERATION AND ARE OF A STRONG CONVICTION THAT A PERUSAL OF THE SCHEME OF THE MIDC ACT REVE ALS BEYOND ANY SCOPE OF DOUBT THAT THE LAND ACQUIRED BY/VESTED WITH THE STATE GOVERNMENT WERE ONLY PLACED AT THE DISPOSAL OF THE ASSESSEE CORPORATION FOR THE FURTHERANCE OF THE OBJECTS OF THE MIDC ACT VIZ. (I) IN GENERAL TO PROMOTE AND ASSIST IN THE RAPID AND ORDERLY ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES IN THE STATE OF MAHARASHTRA, AND IN SPECIFIC (II). TO ESTABLISH AND MANAGE INDUSTRIAL ESTATES AT PLACES SELECTED BY THE STATE GOVERNMENT; (III). DEVELOP INDUSTRIAL AREAS SELECTED BY THE STATE GOVERNMENT FOR THE PURPOSE AND MAKE THEM AVAILABLE FOR UNDERTAKINGS TO ESTABLISH THEMSELVES; AND (IV). TO UNDERTAKE SCHEMES OR WORKS, EITHER JOINTLY WITH OTHER CORPORATE BODIES OR INSTITUTIONS, OR WITH GOVERNMENT OR LOCAL AUTHORITIES, OR ON AN AGENCY BASIS , IN FURTHERANCE OF THE PURPOSES FOR WHICH THE CORPORATION IS ESTABLISHED AND ALL MATTERS CONNECTED THEREWITH. WE ARE OF THE CONSIDERED VIEW THAT A BARE PERUSAL OF THE SCHEME OF THE MIDC ACT, AND THE ABSENCE OF ANY INSTRUMENT OF TRANSFER EVIDENCING VESTING OF THE OWNERSHIP OF THE LAND IN FAVOUR OF THE ASSESSEE CORPORATION, BOTH MILITATES AGAINST THE OBSERVATIONS OF THE LOWER AUTHORITIES THAT THE OWNERSHIP OF THE LAND HAD BEEN TRANSFERRED TO ASSESSEE CORPORATION. WE THUS, IN THE BACKDROP OF OUR AFORESAID OBS ERVATIONS ARE OF THE CONSIDERED VIEW THAT AS NEITHER THERE IS ANY MATERIAL BORNE FROM RECORD, NOR ANY DOCUMENTARY EVIDENCE HAD BEEN FURNISHED BEFORE US BY THE REVENUE WHICH COULD IRREFUTABLY DISLODGE THE CLAIM OF THE ASSESSEE AND THEREIN PERSUADE US TO CON CLUDE THAT EITHER THE OWNERSHIP OF THE LAND UNDER CONSIDERATION HAD BEEN TRANSFERRED TO THE ASSESSEE CORPORATION, OR THE LATTER COULD JUSTIFIABLY BEHELD AS A 'DEEMED OWNER' OF THE SAME FOR THE PURPOSE OF JUSTIFYING ASSESSING OF THE INCOME ARISING THEREFROM VIZ. LEASE PREMIUMS, RENT, INTEREST INCOME ON FUNDS PARKED AS 31 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION DEPOSITS WI TH THE BANK ETC., AS THE INCOME OF THE ASSESSEE CORPORATION, HENCE THE SAID CLAIM OF THE REVENUE FAILS AND IS THUS REJECTED. THE GROUNDS OF APPEAL NOT 1,4,5 ,8 AND 14 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 13. THUS, AS COULD BE SEEN FROM THE AFORESAID OBSERVATION S OF THE TRIBUNAL , IN ASSESSEES OWN CASE FOR A.Y . 2011 12 THE CO ORDINATE BENCH HAS CATEGORICALLY HELD THAT , SINCE , THE ASSESSEE CANNOT BE CONSIDERED EITH ER OW N E R OR DEEMED OWNER OF THE LAND S, THE LEASE PREMIUM, RENT , INTEREST ETC . CANNOT BE BR O UGHT TO TAX AT THE HANDS OF THE ASSESSEE. IN VIEW OF THE AFORESAID AND CONSIDERING THE FACT THAT THE AFORESAID DECISION WAS NOT AVAILABLE BEFORE THE DEPARTMENTAL AU THORITIES WHEN THEY DECIDED THE ISSUE IN THE IMPUGNED ASSESSMENT YEAR, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER WITH A DIRECT ION TO EXAMINE THE FACTS AND DECIDE THE ISSUE FOLLOWING THE OB SERVATIONS OF THE TRIBUNAL IN ITA NO. 4474/MUM/2 017 DATED. 07.09.2018. OF COURSE, THE ASSESSING OFFICER MUST DECIDE THE ISSUE AFTER AFFORDING REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. GROUND RAISED IS ALLOWED FOR STATI STICAL PURPOSE S . 14. GROUND NO.5 BEING GENERAL IN NATURE DOES NOT REQUIR E ADJUDICATION . 15 . GROUNDS RAISED IN ITA N O S . 4475/MU M /18 & 4476/MUM/2017 FOR ASSESSMENT YEARS 2013 14 AND 2014 15 RESPECTIVELY BEING IDENTICAL, OUR DECISION IN ITA N O . 4332/MUM/2017 WILL APP LY MUTA TIS MU TANDIS TO THESE TWO AP P E AL S ALSO . 1 6. ACCORDINGLY, ALL THESE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES ITA NO. 4326 /MUM/2017 - A.Y. 2007 08 32 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 17. IN GROUN D NO. 1 OF BOTH THESE APPEALS THE ASSES S EE HAS CHALLENGED THE VALID ITY OF REOPENING OF ASSE SSMEN T UNDER SECTION.147 OF THE ACT. FOR THE A.Y.2007 08 ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING LOSS OF ` .54,39,99,473/ . S UBSEQU EN TLY , ASSESSEE FILED A REVISED RETURN OF INCOME ON 25.2008 REDUCING THE LOSS TO ` .40452295/ . ASSESSME N T IN CASE OF THE ASSESSEE WAS ORIG I N ALLY COMPLETED UNDER SECTION 143(3) OF T H E ACT VIDE ORDER DATED 21.12.2009 DETERMINING THE TOTAL INCOME AT NIL. MUCH AFTER COMPLETION OF THE ORIGINAL ASSESSMENT THE ASSESS ING OFFICER REOPENED THE ASSESS M ENT UNDER SECTIO N 147 OF THE ACT BY ISSUIN G A NOTICE UNDER SECTION 148 OF THE ACT ON 29.03.2014. AS COULD BE SEEN FROM THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT , ON PERUSING THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2009, HE COULD FI ND THAT THE ASSESSEE HAS NOT OFFERED THE RECEIPTS ON ACCOUNT OF SALE / LONG TERM LEASE OF INDUS TRIAL PLOTS AS INCOME. ON FURT H E R VE RIFI C A TION HE FOUND THAT AMOUNT OF ` .960,10,40,437/ RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE / LONG TERM LEA S E FOR THE I MPUG NED ASSE SS MENT YEAR HAS BEEN SHOWN IN THE LI AB ILITY SIDE OF THE BALA N C E SH EET AND HAD NOT OFFERED IT AS INCOME. ACCORDINGLY, THE ASSESSING OFFICER IN ITIATED PROCEEDING UNDER SECTION 147 OF THE ACT AND IN DUE COURSE COMPLET ED THE ASSESSMENT UNDER SECTI ON 143(3) R.W. SECTION 147 OF THE ACT DENYING ASSESSEES CLAIM OF EXEMPTION UNDER SECTION.11 OF THE ACT . IN THE PROC ES S HE BROUGHT TO TAX AN AMOUNT OF ` .1294,27,24,217/ SHOWN IN THE LIABILITY SIDE OF THE BALANCE SHEET AS INCOME OF THE ASSESSEE. BEING AGG RIEVED OF THE ASSESSMENT ORDER SO PASSED THE ASSESSEE PR E FER RED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS ) 33 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION CHALLENGING BOTH THE VALID ITY OF REOPENI N G OF AS SESSMENT UNDER SECTION 147 OF THE ACT AS WELL AS MERITS OF THE ADDITIO N MADE. AS REGARDS THE ISSUE RELATING TO THE VALIDITY OF ASSESSMENT UNDER SECTION 147 OF THE ACT , LEARNED COMMISSIONER (APPEALS ) REJECTED ALL CONTENT IONS OF THE ASSESSEE BY UPHOLDI N G THE VALIDI T Y OF PROCEEDING INIT IATED UNDER SECTION 147 OF THE ACT. 18. THE LEARNED COU N SEL FOR THE AS S ES S EE DRAWING OUR ATTENTION TO THE REASON S RECORDED BY ASSESSING OFFICER F OR REOPENING THE ASSESSMENT SUBMITTED, THE ASSESSING OFFICER HAD NO TANGIBLE MATERIAL BEFORE HIM AFTE R COMPLETION OF ORIGINAL ASSESS M ENT TO FORM THE B ELIEF THAT INCOME ASSESS ABLE TO TAX H AS ESCAPED ASSESSMENT. HE SUBMITTED , ONLY UPON RE EXAMI N ING THE BALANCE SHEET OF THE ASSE SSEE TH E A SSESSING O FFICER FORMED OPINION THAT THERE IS ESCAPEM E NT OF INCOME . T HUS , HE SUBMITTED , THERE BEING NO FAILURE ON THE PART OF THE ASSE SSEE TO D ISC L OSE FULLY AND TRULY ALL MATERIAL FACTS REQUIRED FOR ASSESSMENT , REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR IS INVALID. THE LEARNED COUNSEL SUBMITTED , ASSES S EE B E ING A STATUT ORY CORPORATION OF GOVT. O F MAH A RAS HTRA HAS TO MAINTAIN ITS ACCOUNTS AS PER THE MIDC ACT AND IS NOT REQUIR ED TO MAINTAIN ACCOUNT S AS PER COMPANIES A CT. HE SUBMITTED , ACCOUNTS OF THE ASSESSEE ARE SUBJECTED TO AUDIT BY THE CAG AND THERE IS NO CHANCE OF ANY MANIPULATION OR SUP P RESSIO N OF INCOME. HE SUBMITTED , DURING THE ORIG I NAL ASSES SM ENT PROCEEDING THE ASSESSING OFFICER HAS TH O ROUGHLY EXAMINED THE BO O KS OF ACC O U NT AND ALL OTHER RELEVANT MATER IAL AND DOCUMENT AND THEREAFTER COMPLETED THE ASSE SS MENT. THUS , HE SUBMITTED , REOP ENING OF ASSESS M ENT ON A MERE 34 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION CHANGE OF OPINION , THAT TO O, AFTER EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR IS INVALID. 19. THE LEARNED D EPARTMENTAL R EPRESENTATIVE STRONGLY SU PPORTING THE OBSERVATIONS OF THE LEAR N ED COMMISSIONER (A PPEALS ) SUBMITTED , THOUGH, THE ORIG INAL ASSESS MENT WAS COMPLE TED UNDER SECTION 143( 3) OF THE ACT, HOWEVER , THE ISSUE OF TAXABILITY OF LEASE PREMIUM AND OTHER CHARGES W AS NOT AT ALL EX AMINED BY THE ASSESSING OFFICER. T HEREFORE, NO OPIN ION ON THE ISSUE WAS FORMED WHILE COM P LE T ING THE ORIG I NAL ASSES SMENT. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , DURING THE REASSE SSMENT PROCEEDING THE ASSES S EE HAD RAISED OBJECTIONS AGAINST THE REOPENING OF ASSE SSMENT AND THE A SSESSING OFFICER HAS DISPOSED OF THE OBJECTION OF THE ASSES S EE SEPARATELY , DEALING WITH EACH OF THE ISSUES RAISED B Y THE ASSESSEE POINT BY POINT. THUS , HE SUBMITTED , THE DECISION OF THE COMMISSIONER (APPEALS ) SHOULD BE UPHELD. 20. WE HAVE CONSIDER ED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. UN DISPUTED FACTS ARE , FOR THE IMPUGNED ASSESSMENT YEAR ORIGINALLY ASSESSMENT WAS COMPL ETED UNDER SECTION 143(3) OF THE ACT. IT IS ALSO A FAC T THAT THE NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO TH E ASSESSEE ON 29.03.2014 I.E. AFTER EXPIRY OF FOUR YEA RS FROM THE END OF THE IMPUGNED ASSESS MENT YEAR AND JUST BEFORE EXPIRY OF SIX YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR. THEREFORE, THERE IS NO DOUBT THAT THE PROVISO TO SECTION 147 IS ATTRACTED TO THE FACTS OF THE PRESENT CASE. HENCE , IT HAS TO BE EXAMINE D WHETHER THE CONDITIONS OF THE PRO VISO TO SECTION 147 ARE SATISFIED TO EMPOWER THE ASSESSING OFFICER TO REOPEN THE ASSE SSMENT UNDER SECTION 147 OF THE ACT. 35 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION ON PERUSAL OF REASONS RECORDED , A COPY WHICH IS AT PAGE 1 OF THE PAPER BOOK , WE FIND TH AT THE ASSESSING OFFICER HAS MADE A SPECIFIC ALLEGATION T HAT WITHOUT OFFERING THE INCOME FROM SALE / LONG TERM LEASE OF INDUSTRIAL PLOTS, S INCE , THE ASSESSEE HAS DIRECTLY TAKEN THEM TO THE LIABILITY SIDE OF THE BALANCE SHEET, THERE IS FAILURE ON THE PART O F THE ASSESSE E TO MAKE FULL AND TRUE DISCLO SURE OF MATERIAL FACTS FOR COMP UTING ITS INCOME. IT IS ALSO NOTICED THAT THE AFOR E SAID FACTS CAME TO THE NOTICE OF THE ASSESSING OFFICER WHILE EXAMINING THE BALANCE SHEET OF TH E ASSESSEE FOR Y E AR ENDING 31.03.20 09. FURTHER , NO MATERIAL HAS BEEN BROUGHT TO OUR NOTICE FROM ASSES S EE S SIDE TO DEMONSTRATE THAT THIS ISSUE WAS EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSE SSM E N T PROCEEDING. IT IS ALSO OBSERVED, THE ISSUE ON WHICH ASSESSMENT WAS REOPENED W AS A ISSUE IN DISPUTE IN SUBSEQUENT YEARS AS WELL AND THE ASSESSING OFFICER HAS MADE SIMILAR ADDITIONS IN THOSE ASSESSMENT YEARS. THUS, IN OUR OPINION, THE ASSESSING HAD MATERIAL BEFORE HIM TO FORM A PRIMA FACIE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN VIEW OF THE A F O RESAID , WE DO NOT FIND ANY REASON TO I N TER FERE WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS ) ON THE ISSUE OF VALID ITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. GROUND NO. 1 IS DISMIS S ED . 21. IN GROUND NO. 2 AS SESSEE HAS CHALLE N GED THE ADDITION MADE ON ACCOUNT OF LEASE PREMIUM, RENT, INTEREST ETC AS INCOME OF THE ASSESSEE. THIS GROUND IS IDENTICAL TO GROUND NO.4 OF ITA N O.4332/MUM/2017. FOLLOWING OUR DECI SION THEREIN WE RESTORE THE ISSUE TO THE ASSESSING OFFIC ER FOR DECIDING AFRESH IN TERMS WITH OUR DIRECTION THEREIN. GROUND RAISED IS ALLOWED FOR STATISTICAL PURPOSES. 36 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION ITA N O.4327/M UM /17 - A.Y. 2008 09 22. GROUNDS RAISED IN THE AFORESAI D APPEAL ARE MORE OR LESS IDENTI CAL TO ITA NO. 4326/M/2017. FOLL OW I NG OUR DEC ISION THEREIN WE DIS M ISS GROUND NO.1 . W HEREAS , GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES . ITA NO.4329/MUM/ 2017 A.Y. 2009 10 23. GROUND NO.1 IS ON REOPENING OF ASSESSMENT UNDER SECTION.147 OF THE ACT. THE FACTS RELATING TO THIS G ROUND ARE ALMOST SIMILAR TO FACTS INVOLVED IN RESPECT OF SIMILAR GROUND IN ITA NO. 4327/M/17 . T HE ONLY DIFFE R ENCE BEING, IN THE IMPUG N ED ASSE SS M ENT YEAR THE REOPENING OF ASSESS MEN T IS BEFORE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR . IN VIEW OF OUR DECISION IN RESPECT OF SIMILAR GROUNDS RAISED IN OTHER APPEALS CONSIDERED BY US EARLIER IN THIS ORDER , WE DISMISS THE GROUND RAISED BY THE ASSESSEE. 24. GROUND NO. 2 IS IDENTICAL TO G ROUND NO . 2 OF ITA N O. 4332/MUM/ 2017. FOLLOWING OUR DETAIL REA SONING THEREIN , WE DISM ISS THE GROU ND RAISED BY THE ASSE SS EE . 25. GROUND NO. 3 BEING CONSE Q U EN TIAL TO G ROUND NO . 2 IS DISMISSED. 26. GROUND NO. 4 IS IDE N TI CAL TO GROUND NO. 4 OF ITA NO. 4 3 32/M/17. FOLLOWING OUR DETAIL REA SONING THEREIN WE ALLOW THE GROUND FOR STATISTICAL PURPOSES . ITA NO.4331/M UM /17 A.Y.2010 11 27. GROUND NO. 1 I S IDE N TI C AL TO G ROUND NO.1 OF ITA NO.4329/M/1. FOL LO WING OUR DECISION THERE IN WE DISMISS THE GROUND RAISED. 37 ITA 4326, 4327, 4329, 4331, 4332, 4475 &4476/MUM/ 2017 MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 28. GROUND NO. 2 IS IDE N TI C AL TO GROU ND NO. 2 OF ITA NO. 4332/MUM/17. FO LLO WING OUR D ECI SION THERE IN WE DISMISS THE G R OU ND. 29. GROUND NO. 3 BEING CONSE Q U ENTIAL TO GROUND NO. 2 IS DISMISSED. 30. GROUND NO. 4 IS IDE NTICAL TO GROUND NO. 4 OF ITA NO. 4332/MUM /17. FOLLO W I NG O UR DECISION THEREIN WE ALLOW THE GR OUND RAISED BY THE ASSESSEE FOR STATISTICAL PURPOSES. 30 . IN THE RESULT, ALL THE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2018 SD/ SD/ ( N. K. PRADHAN ) (S A KTIJIT DEY ) / A CCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 31.10.2018 MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CMMISSIONER (APPEALS) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI