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

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in stating that the assessee acts on behalf of and as an agent of the State Government without considering the decision of MIDC [relied upon by the Ld. CIT(A)] wherein the Hon High Court has held that the decision in the case of CIDCO was per incuriam?

3. Whether on the point of law and on the facts and circumstances of the case, the Ld. CIT(A) is justified in allowing the benefit of exemption u/s 11 of the Income Tax Act, to the assessee merely on the basis of its orders for the preceding assessment years without appreciating that in the assessment year under consideration, the activities of the assessee are in the nature of advancement of any other object of general public utility, undertaken for a consideration and hence, hit by the mischief of the proviso to section 2(15) of the Income Tax Act, introduced w.e.f 01.04.2009, and the amended provision applies to the assessment year under consideration, even if registration u/s 12A of the Act is valid Ground?

4. Whether on the point of law and on the facts and circumstances of the case, the Ld. CIT(A) is justified in not considering the lease premium of Rs.1191.87 crore received by the assessee against property from different parties as income of the Assessee holding that the property belongs to the Government of Maharashtra, relying on the entry in the Balance sheet, without appreciating the fact that the assessee is a separate entity and, therefore, the income of the Assessee cannot be regarded as income of the State, the same is held in the case of Andhra Pradesh State Road Transport Corporation vs. Income Tax Officer - 52 1TR 524, further Section 3 of the MMRDA Act and Section 126 of the MRTP Act also states that the land is vested in the authority and, therefore, the authority cannot be an agent of this State?

5. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee is not a valid Trust in terms of section 11 to 13 of the Act, and its activities are not charitable in nature and the proviso to section 2(15) is applicable in the facts of the present case?

6. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in allowing the appeal on the issue of addition on account of interest, on account basis, on deposits kept with the public section undertaking and government of Maharashtra, even though in view of section 5 of Income - tax Act, 1961 the income is chargeable to tax on accrual basis?

7. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not deciding the issue of expenditure on merits in a situation where deduction u/s 11 is not allowed? 8. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not deciding on merits the issue of deemed application of income towards objects?

2.1. The most clinching fact to be borne in mind is that assessee continues to have its registration u/s 12AA of the Act and it is not revoked by the Revenue, entitling it to claim exemption u/s 11 and 12 of the Act. Assessee filed its return of income on 14.10.2016 reporting total income at NIL after claiming exemption u/s. 11 of the Act. Assessee is established under a special statute enacted by Maharashtra State Legislature, namely, the Mumbai Metropolitan Region Development Authority Act, 1974 (The MMRDA Act). Assessee is also registered u/s. 12A, r.w.s. 12AA of the Act, with the Director of Income Tax (Exemption), Mumbai. Assessee was set up for development of Mumbai Metropolitan Region. Preamble to MMRDA Act lays down the object of development of the Metropolitan Region. Section 12 of the MMRDA Act lays down the objects for which assessee is formed. Section 17 of the MMRDA Act provides that assessee may in consultation with the Municipal Commissioner of the Brihan Mumbai Municipal Corporation (BMC) prepare any project or scheme with a view to provide an infrastructure within the territorial limits of BMC and execute the same. The development functions carried out by the assessee for the entire Mumbai Metropolitan Region falls within the ambit of the term 'advancement of general public utility’ i.e. charitable purpose as contained in section 2(15) of the Act. and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 2.2. In recent times, assessee had undertaken several projects in accordance with the objectives for which it was established. Out of many, some of the following projects as listed below: ● Mumbai Urban Transport Project (MUTP), ● Mumbai Urban Infrastructure Project (MUI)-Roads, Bridges, Flyovers, ● Mumbai Metro Rail (MMR), ● Mithi River Clean-up project, ● Nariman Point Beautification; ● Solid Waste Management, ● Water Supply Resource, ● Multi Modal Corridor (Virar to Alibaug). ● The Mumbai Trans Harbour Link (MTHL) Project, ● Mumbai Mono Rail Project, ● Nirmal MMR Abhiyan Projects, ● Development of the Bandra-Kurla Complex/Wadala Truck Terminal, ● Construction of Skywalks.

2.3. The aforesaid projects are for the benefit of the general public or for advancement of general public utility and falls within the ambit of "charitable purpose' as defined in section 2(15) of the Act. Further, the activities conducted by assessee constitute "general public utility" which is covered as "charitable purpose”. Assessee has utilized the income for the purpose of the general public utility, i.e., charitable purpose as per provisions of the Act. Assessee has also furnished Form No. 10B along with the return of income. Ld. Assessing Officer has not pointed out many anomalies in the application of funds by the assessee for non-charitable purposes, being not in accordance with the objects for which the assessee was set up under a special statute.

2.4. Ld. Assessing Officer after relying on the assessment order for AY 2010-11, denied exemption u/s. 11 by stating that assessee is not a valid trust. Ld. Assessing Officer by resorting to proviso to Section 2(15), denied exemption u/s. 11 claimed by the assessee.

3. The issue arising for consideration before the Tribunal is whether the proviso to Section 2(15) of the Act disentitles the Assessee from availing exemption u/s. 11 and 12, despite it being registered u/s. 12A r.w.s. 12AA. Another broader issue contested in these appeals is in respect of considering the assessee as an agent of the State Government, who acts on behalf of the State Government. Vide ground No.1, Revenue has argued that decisions by the Coordinate Bench of ITAT, Mumbai in assessee’s own case for past several Assessment years from Assessment Year 2010-11 to Assessment Year 2015-16 have been followed by ld. CIT(A) even though they are not acceptable and Revenue has contested the same before the Hon'ble Jurisdictional High Court of Bombay, where the appeals are pending for adjudication. A specific query was raised by the Bench to the ld. CIT DR to affirm the present status of the appeals filed by the Revenue before the Hon'ble High Court. It was stated that the appeals are at the stage of admission and are pending for adjudication. Further, there is no stay granted by the Hon'ble Court on the operation, execution and implementation of the orders of the Coordinate Bench. Ld. Counsel for the assessee also affirmed the said status update. Considering these facts as submitted before us, there being no stay on the orders of the Coordinate Bench for the past several assessment years from Assessment Year 2010-11 to 2015-16, the issues dealt therein shall apply mutatis mutandis in the present appeal subject to there being no change in the facts and circumstances. Ld. Counsel for the assessee affirmed that there is no change in the facts and circumstances of the assessee when compared with those preceding years and also no change in the applicable provisions of the Act to have any otherwise bearing on the applicability of the precedence laid down in those appeals on the grounds raised

in the present appeal. For giving our finding on the issue in hand, we refer to the decision of Hon'ble Supreme Court in the case of Union of India & Others v. Kamlakshi Finance Corporation Ltd. 1992 Supp (1) SC cases 648 wherein it held as under:

6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion,by-passed two appellate orders in regard to the same issue which were placed before them,one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not 'acceptable' to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws.” [emphasis supplied by us by underline] 3.1. Accordingly, considering the above, ground no.1 raised by the Revenue is dismissed.

4. Assessee has a litigation history which is narrated briefly. Mumbai Metropolitan Region Development Authority primarily known as MMRDA is a local authority created by the Govt. of Maharashtra by enacting MMRDA Act, 1974. Being Local Authority in terms of MMRDA Act as well as falling within the meaning of Section 10(20) and 10(20A) of the Act, it enjoyed blanket exemption under the Act up to A.Y. 2002- 03 as per the then provisions of Section 10(20) & 10(20A). The Finance Act, 2002 deleted the provision of Section 10(20A) along with other provisions and introduced a new definition of Local Authorities u/s. 10(20) wherein Panchayat, Municipality, Municipal Committee and District Boards and Cantonment Boards only are included. In view of the deletion of Section 10(20A) and insertion of new definition of local authority, the authorities like MMRDA were not part of the above definition and the tax authorities considered these authorities as taxable entities. After the amendment, assessee applied registration u/s 12A and got registered u/s. 12AA with the DIT (E), Mumbai.

5. In Assessment Year 2009-10, DIT(E) had withdrawn the registration granted u/s.12A on the ground that activities of the assessee are not for charitable purposes by invoking the proviso to section 2(15) of the Act. Matter went up before the Coordinate Bench of ITAT in appeal in order dated 05.04.2017. After detailed deliberation on the issue raised in the appeal, the Coordinate Bench, quashed the order of DIT(E) and restored the registration u/s. 12 r.w.s.12AA of the assessee. The findings, given by the Coordinate Bench on this aspect, in para-8 are reproduced below: “8. We have gone through the order of DIT(E) and could not find anything in the order which terms that the assessee was undertaking any activity which is not genuine or trust or institution is not genuine. We could not lay our hand on any material in the order of DIT(E) which explains that the assessee or its affairs are not being carry out in accordance with the object of the institution. Accordingly, we quash the order of DIT(E) and restore the registration of the Institution. This issue of assessee's appeal is allowed.

9. Since, the registration is already allowed consequently no disallowance can be made in respect to interest income and leasing activity income i.e. the rent and other fees, because these falls under the objects of the assessee's institution and hence on merits also the assessee has a case. Accordingly, we need not to elaborate on the merits of the case, since we have already allowed registration.

6. In appeals for Assessment Year 2010-11 to Assessment Year 2015-16 vide order dated 03.01.2022 in para 22, the Coordinate Bench observed that assessee is registered u/s. 12AA along with observing certain other preliminary facts about the assessee. The said para is reproduced as under:

“22. Considered the rival submissions and material placed on record, we observe from the record that the assessee is still registered u/s 12AA of the Act and it is not revoked. Further the assessee is established under the MMRDA Act, 1974. As per which the assessee is established to function, activity of development as set out in the section 2 of the MMRDA Act and it is extended arm of the Government Maharashtra in the activity of development as set out in Section 12 to 16 of the Act. We also observe that the assessee is appointed as special planning authority for development of certain regions as per the government notification like Bandra Kurla Complex region etc. under the Maharashtra Region and Town Planning Act (MRTP Act). As per the section 113(3A) of the Act, it is acting as an agent of the Government of Maharashtra. By considering the above facts on record, Ld DIT(E) granted the registration u/s 12A on 22.07.2002.” [emphasis supplied by us by underline] 6.1. For rejecting the contentions of ld. CIT(A) and ld. Assessing Officer it was observed that issue of applicability of section 2(15) has already been considered by ITAT and the issue is well settled in favour of the assessee. The observations and findings in this respect, as contained in para 25 are reproduced. “25. Therefore, from the above decision of the coordinate bench, the assessee is continue to be duly registered as charitable trust u/s 12AA, this is due to subsequent development, hence the contention of the Ld.CIT(A) and Assessing Officer is not correct. In our considered view, the issue of applicability of section 2(15) of the Act is already considered by the ITAT and issue is well settle in favour of the assessee. The courts have held the activities of the assessee are charitable and we observe that the activities of the assessee, which acts on behalf of the Government of Maharashtra, irrespective of nature of transactions, the assessee acts on behalf of and as an agent of the State Government. The development work and relevant activities in the line of development are carried by the assessee on behalf of the State Government and it is only an authority appointed under the MMRDA Act and MRTP Act to carry on the functions on behalf of State Government. All the revenues are belong to State Government and it is only an entity created to functions for the benefit of the common interest of people of the State.”

7. In the order for Assessment Year 2003-04 to Assessment Year 2005-6, Assessment Year 2007-08 and 2008-09, dated 13.07.2016 on the issue raised by assessee, it being an agent of the state and acting on behalf of the state, the Coordinate Bench left the issue open for consideration in an appropriate case as and when required, since the issue of denial of exemption u/s.11 was held in favour of the assessee. Relevant paras from the said order are reproduced below: “………..the issues raised by the assessee in its appeals are the alternative contentions and will be relevant only if the issue of denial of exemption under section 11 of the Act would have been decided against the assessee. He has further submitted that similar grounds taken by the assessee in its appeal bearing relating to AY 2006-07 have been dismissed by the Tribunal being rendered academic in nature. The relevant part of the order of the Tribunal is reproduced as under: "16. Briefly stated, AO while denying the benefit of section 11 to assessee held that assessee is not a local authority and further also held that assessee has not accounted for the amount of Z124.24 crores of interest on loans given and deposits made with various public sector undertakings/ Govt. of Maharashtra. After considering the submissions of assessee, the CIT (A) considered that as assessee is entitled for exemption of income, the ground of bringing to tax notional interest becomes infructuous. However, he on the issue of assessee being local authority, after discussion in the order, held that assessee is not a local authority for the purpose of section 10(20). In doing so he relied on the decision of the Hon'ble Supreme Court in the case of Adityapur Industrial Area Development Authority, 283 ITR 97 (SC), U.P. State Road Transport Corporation vs. CIT, 286 ITR 350, CALCUTTA STATE TRANSPORT CORPORATION VS CIT 219 ITR 515 (SC) and CIT vs. U.P. Forest Corporation, 230 ITR 945 (SC) wherein it has been held that institutions set up for the specific purposes, does not amount to 'local authority' for the purpose of section 10(20) of the I.T. Act.

17. In the course of arguments the learned Counsel squarely admitted that these issues became academic in nature and can be left open for adjudication at the relevant point of time in view of the granting benefits of section 11 to assessee. He fairly admitted that in case the Revenue appeal is dismissed, there is no need for adjudication of the grounds raised

by assessee. Since we have dismissed the Revenue appeal and upheld the order of the CIT (A) granting benefit of section 11 to assessee, this issue becomes academic in nature and so not adjudicated. Issues are left open for consideration in an appropriate case as and when required. The grounds are, therefore considered rejected.

18. In the result, both the appeals filed by Revenue and Assessee are dismissed."

11. The Ld. Counsel for the assessee has stated that following the similar line, there is no need for adjudication of the grounds raised by the assessee as they being rendered academic in nature and can be left open for adjudication. Since we have dismissed the appeals of the Revenue and upheld the order of the Ld. CIT(A) granting benefit of section 11 to the assessee, the issues raised by the assessee having become academic in nature hence, following the co-ordinate bench decision, on the similar line, the same are not adjudicated at this stage and are left open for consideration in an appropriate case as and when required. The appeals of the assessee are therefore dismissed having become infructuous.” [emphasis supplied by us by underline]

8. In the present appeal, vide ground no. 2, Revenue is contesting that ld. CIT(A) is not justified in stating that the assessee acts on behalf of and as an agent of the State Government. On this issue, the observations and finding of ld. CIT(A) held in favour of the assessee by following the decision of Coordinate Bench in assessee’s own case for Assessment Years 2010-11 to 2015-16 (supra) are taken note of which is reproduced below: “7.3 The appellant in its Grounds of Appeal

No. IV & V assailed the AO for not considering appellant as an agent of the state government'& denial of exemption u/s 10(20) holding that the appellant is not a local authority. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2010-11 to 2015-16, bearing 4391, 4392, 4393, 4394 & 4395/MUM/2019 and & 35/MUM/2020, order dated 03.01.2022 at para no 25 at page no. 70 has adjudicated this issue in detail, the same is reproduced as below :-

25. Therefore, from the above decision of the coordinate bench, the assessee is continue to be duly registered as charitable trust u/s 12AA, this is due to subsequent development, hence the contention of the Ed.CIT(A) and Assessing Officer is not correct. In our considered view, the issue of applicability of section 2(15) of the Act is already considered by the ITAT and issue is well settled in favour of the assessee. The courts have held the activities of the assessee are charitable and we observe that the activities of the assessee, which acts on behalf of the Government of Maharashtra, irrespective of nature of transactions, the assessee acts on behalf of and as an agent of the State Government. The development work and relevant activities in the line of development are carried by the assessee on behalf of the State Government and it is only an authority appointed under the MMRDA Act and MRTP Act to carry on the functions on behalf of State Government. All the revenues are belong to State Government and it is only an entity created to functions for the benefit of the common interest of people of the State."

7.3.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that the issue is settled in favour of the assessee. Thus, following the order of the higher authorities the grounds of appeal IV & V are allowed.” [emphasis supplied by us by underline]

9. Before the ld. Assessing Officer, on this issue of assessee being an agent of the State and acting on behalf of the State, assessee had made an elaborate submission by referring to the provisions of MMRDA Act and Maharashtra Regional and Town Planning Act, 1966 (MRTP Act). The submissions made before the ld. Assessing Officer and as reproduced in the impugned assessment order are extracted below: “X) As per the MRTP Act, while acting as SPA, the assessee is acting as an agent of the Government. The assessee is established to carry out legal obligations as specified in various provisions of the MMRDA Act and MRTP Act. In this regard, attention is invited to section 40(1)(b)/(c) of the MRTP Act which reads as under: "Sec 40 (1) The State Government may, by notification in the Official Gazette for any undeveloped area specified in the notification in this Act referred to as "the notified area" either:- (a)……………………………………………………………………………………….; (b) appoint any Development Authority declared under sub-section (3A) of section 113;" (c) appoint the Mumbai Metropolitan Region Development Authority established under the Mumbai Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area." Further, the assessee would like to invite Your Goodself's attention to the provisions of section 40(3) of the Act which state that the provisions of Chapter VI of the MRTP Act would apply mutatis mutandis to a SPA as they apply in relation to a Development Authority (as if the notified area were a new town). Reliance is also placed on provisions of section 113(3A) of the MRTP Act which reads as under: "(3A) Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation including a company owned or controlled by the State as a new town, the State Government may, notwithstanding anything contained in sub-section (2), require the work of developing and disposing of land in the area of a new town to be done by any such corporation, company or subsidiary company aforesaid, as an agent of the State Government; and thereupon, such corporation or company shall, in relation to such area, be declared by the State Government, by notification in the Official Gazette, to be the New Town Development Authority for that area." As may be observed, the section clearly provides that where work is done through the agency of the Government, the said corporation, company or subsidiary company shall be considered as an agent of the Government and the State Government shall, by a Notification in the Official Gazette declare such agency to be the New Town Development Authority for that area. Further, section 154 of the MRTP Act reads as under: (1) Every Regional Board, Planning Authority and Development Authority shall carry out such directions or instructions as may be issued from time to time by the State Government for the efficient administration of this Act. (2) If in, or his connection with, the exercise of its powers and discharge of its functions by the Regional Board, Planning Authority or Development Authority, under this Act, any dispute arises between the Regional Board, Planning Authority, and the State Government, the decision of the State Government on such dispute shall be final. Upon reading sub-sections (1) and (2), it is abundantly clear that the assessee, who is a Planning Authority / Development Authority, is an agent of the State Government. Lastly, attention is invited to the provisions of section 160 of the MRTP Act which provides that at the time of de-notification / dissolving a Development Authority /Planning Authority, from such date: (i) all properties, funds and dues which are vested in, or realisable by the Regional Board, Special Planning Authority or Development Authority for the purposes of the Act shall vest in, or be realisable, by the State Government; (ii) all liabilities which are enforceable against the Regional Board, Special Planning Authority or Development Authority shall be enforceable against the State Government; and (iii) for the purpose of carrying out any development which has not been fully carried out by the Board or Authority and for the purpose of realising properties, funds and dues referred to in clause (a), the functions of the Regional Board, Special Planning Authority, or Development Authority shall be discharged by the State Government. Thus, it is abundantly clear that the assessee is merely acting as an agent of the Government”

10. Before us, ld. Counsel for the assessee reiterated the submissions made before the authorities below, more importantly on the setup of the assessee and various provisions governing its functionality and status. Assessee categorically stated that Hon'ble Jurisdictional High Court of Bombay affirmed the decision of the Coordinate Bench, Mumbai in the case of CIDCO in of 2013 dated 19.04.2024, Citation for the decision of the Coordinate Bench is CIDCO vs. ACIT [2012] 138 ITD 381 (Mum). According to the ld. Counsel, Department in its ground no. 2 has relied upon the decision of Hon'ble Jurisdictional High Court of Bombai in the case of MIDC with respect to claim of immunity from taxation under Article 289 of the Constitution of India and holding the decision in the case of CIDCO as per incuriam. According to him, assessee never claimed immunity from taxation under Article of 289 of the Constitution of India but only in terms of relevant provisions of the MRTP Act. He further pointed out that Hon'ble Jurisdictional High Court of Bombay in the case of CIDCO while affirming the decision of coordinate bench, dealt with two substantial questions of law and considered the assessee to be an agent of the state under the MRTP Act. Assessee, by referring to provisions contained in Section 40(1) of the MRTP Act, submitted that facts in the case of assessee are similar to that of the case of CIDCO as both the authorities are appointed under the powers conferred by MRTP Act. He pointed out to the fact that CIDCO was appointed as a special planning authority (SPA) for the notified areas of Bandra-Kurla Complex (BKC) vide notification dated 18.07.1973. However, after the establishment of assessee under the MMRDA Act vide notification dated 07.03.1977, CIDCO was replaced by assessee as a SPA for the BKC region. Thus, there was replacement/ substitution of CIDCO with the assessee, who is now acting as an agent of the Government of Maharashtra.

10.1. Ld. Counsel pointed out comparative analysis between the two SPAs, i.e., the assessee and CIDCO which forms part of the written submission. Apart from oral arguments, detailed written submission made by the assessee on this aspect is reproduced as under: “In the matter of: DCIT(E)-2(1), MUMBAI V. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY ("MMRDA" or "RESPONDENT" or "ASSESSEE") Sr. No. Assessment Year 2016-17 3795/M/2023 2 2017-18 3794/M/2023 3 2018-19 3936/M/2023 4 2018-19 3791/M/2023

The captioned Department appeals were heard on May 13, 2024. The Assessee submitted that based on its own case ITAT order for earlier years namely AY 2010-11 to 2015-16 which was attached at Pg no. 1 to 77 of LPB and specifically considering the language of ground no. 3 taken by the Revenue, the Assessee is entitled to exemption u/s. 11 of the Income Tax Act, 1961 ("the Act") and accordingly Revenue's appeal be dismissed. In the course of the hearing, in so far as ground no. 2 of the department appeal, the AR had also argued that, without prejudice to the ground of exemption u/s. 11 of the Act, in so far as certain receipts arising from acting as a Special Planning Authority ("SPA") under the Maharashtra Regional and Town Planning Act, 1966 ("MRTP Act") is concerned, such receipts are not liable to be taxed in the hands of the Assessee, as for the same the Respondent Assessee acts as an agent of the Government of Maharashtra as per the provisions of the MRTP Act. The AR had also submitted that the Assessee is not claiming that it is exempt from tax under Article 289 of the Constitution of India. The AR had invited attention to the detailed submission made at Pg no. 41 to 43 of the ITAT order (supra) and the findings therein. At the time of the hearing, the Assessee had also handed over the decision of Jurisdictional High Court affirming the Tribunal's decision in case of City and Industrial Development Corporation Of Maharashtra Ltd ("CIDCO") v. ACIT [2012] 138 ITD 381 (copy of which was also tendered at bar on 13/05/2024), which was relied on by the Assessee in the earlier years.

As directed by the Hon'ble Tribunal, the Assessee is submitting a comparative analysis between MMRDA and CIDCO.

In this regards, the Assessee would like to submit as follows:

1. The Respondent is an Authority which is established under the MMRDA Act, 1974 ('MMRDA Act'). A copy of the said Act has already been tendered at the Bar on 13/05/2024. The Respondent (earlier known as Bombay Metropolitan Region Development Authority') is set up for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of Mumbai Metropolitan Region.

3. The development functions carried out by the Assessee for the entire Mumbai Metropolitan Region fall within the ambit of the term 'advancement of general public utility' i.e. charitable purpose.

4. Section 17 of the MMRDA Act provides that the Assessee may in consultation with the Municipal Commissioner of the Brihan-Mumbai Municipal Corporation ("BMC") prepare any project or scheme with a view to provide an infrastructure within the territorial limits of BMC and execute the same. At the relevant time, the Assessee has undertaken the major projects as follows: ● Mumbai Urban Transport Project (MUTP); ● Mumbai Urban Infrastructure Project (MUIP) - Roads, Bridges, Flyovers; ● Mumbai Metro Rail (MMR); ● Mithi River Clean-up project; ● Solid Waste Management; ● Water Supply Resource; ● The Mumbai Trans Harbour Link (MTHL) Project; ● Mumbai Mono Rail Project; ● Development of the Bandra-Kurla Complex / Wadala Truck Terminal, etc. The aforesaid projects are undoubtedly for the benefit of the general public or for advancement of general public utility and would fall within the ambit of 'charitable purpose' as defined in section 2(15) of the Act.

5. The Respondent has been granted registration u/s 12AA of the Act which is still valid and subsisting, and it has claimed exemption u/s 11 at the time of filing the Return of Income. 6. The Hon'ble Jurisdictional Mumbai Tribunal in the Respondent's own case for the earlier assessment years namely 2010-11 to 2015-16, bearing 4392, 4393, 4394 & 4395/MUM/2019 and & 35/MUM/2020, order dated 03.01.2022, has allowed the claim of exemption u/s 11 of the Act.

7. For the captioned years, both the lower authorities have recorded that the facts of captioned assessment years are identical to those of earlier years and Id. DR has agreed to the same 8. Without prejudice to the claim of exemption u/s 11 of the Act, the Respondent in so far as acting as a Special Planning Authority ("SPA"), claims the benefit provided u/s. 113(3A) of the MRTP Act and states that all the revenues earned as an SPA belong to State Government and it is only an entity created to function for the benefit of the common interest of people of the State.

10. The department in their Grounds of Appeal no. 2 have relied upon the decision of Hon'ble Jurisdictional Bombay High Court in case of MIDC with respect to claim of immunity from taxation under Article 289 of Constitution of India. The Assessee reiterates that it has never claimed the immunity from taxation under Article 289 of Constitution of India, but only in terms of relevant provisions of the MRTP Act.

11. Recently, the Hon'ble Jurisdictional Bombay High Court has also affirmed the Hon'ble Mumbai Tribunal's decision in case of CIDCO (supra) vide its order April 19, 2024 in of 2013 (copy tendered at bar on 13/05/2024). The two questions of law framed before the said court and its conclusion thereto is reproduced as below: "(a) Whether on the facts and in the circumstances of the cases and in law, the Tribunal was right in its interpretation of Articles 289(1)(2)(3) of the Constitution in coming to the conclusion that the company was not exigible to tax? (b) Whether on the facts and in the circumstances of the cases and in law, the Tribunal is justified in coming to the conclusion that the company was an agent of government and therefore not exigible to tax? 4 As regards first substantial question of law, in view of our findings to second question of law, this question will not survive."

12. The Jurisdictional High Court decided the appeal following its own decision in case of CIDCO [Order dated 11.12.2023 in Writ Petition No.1840 of 2023] and considering the assessee to be an agent of the state under the MRTP Act and thus, the question of adjudication with respect to claim under article 289 of the Constitution of India does not arise.

14. The Government of Maharashtra vide Government Resolution ("GR") dated 18th March, 1970 pursuant to which CIDCO was established, states, inter-alia, as under: "After careful consideration of the relevant factors, and particularly, in view of the tremendous impact this project will have on the industrial development of Maharashtra Government has come to the conclusion that a subsidiary company of the State industrial and Investment Corporation of Maharashtra Limited, Bombay, would be an appropriate agency which would be entrusted with the proposed project. Government is accordingly pleased to allow the State Industrial and Investment corporation of Maharashtra Limited, as required under Article 75 of its Memorandum of Articles of Association, with the object of developing the trans-Thana and capital of Rs. 5 crores, with the object of developing the trans-Thana and trans-Harbor areas in the Thana and Kolaba districts as a twin city to provide relief to Bombay City and also to ensure its integrated development with the industrial development of this region and the State. The lands proposed to be acquired by the Government in the trans-Thane and trans-Harbor areas should be entrusted to the subsidiary company, which would act as an agent of Government for the development of the areas with a view to secure the above objectives. The subsidiary company will in due course be notified as a New Town Development Authority under the Maharashtra Regional and Town Planning Act. The subsidiary company will work under the control and supervision of the State Government in the General Administration Department."

15. Now, attention is invited to following provisions of the MRTP Act:

Section 40(1) The State Government may, by notification in the Official Gazette for any undeveloped area specified in the notification in this Act referred to as "the notified area" either- (a)...or (b) appoint any Development Authority declared under sub-section (3A) of section 113, or (c) appoint the Bombay Metropolitan Region Development Authority establish under the Bombay Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area. ● As discussed in section 40(1)(b) read with section 113(3A), the State Government may, notwithstanding anything contained in sub-section (2) of 113, require the work of developing and disposing of land in the area of a new town to be done by any such-corporation, company or subsidiary company aforesaid, as an 'Agent of the State Government'; and thereupon, such corporation or company shall, in relation to such area, be declared by the State Government, by notification in the Official Gazette, to be the New Town Development Authority for that area.

17. It is also worthwhile to note that originally, CIDCO was appointed as a 'Special Planning Authority' for the notified areas of "Bandra Kurla Complex" ('BKC' as is commonly known) vide notification dated 18th July, 1973, however, after the establishment of the MMRDA, vide Notification dated 7th March 1977; CIDCO was replaced by the Respondent as a Special Planning Authority for the 'Bandra Kurla Complex Region' for the development of the BKC and accordingly the Respondent has merely replaced/substituted CIDCO and is now acting as an agent of the Government of Maharashtra.

19. Thus, it is understood that the facts of MMRDA are similar / identical to that of the case of CIDCO as both the authorities are appointed under the powers conferred by MRTP Act.

20. The Assessee thus prays that, considering the above facts read with provisions of the MRTP Act, the Assessee being designated as an SPA for certain areas of the MMR, and following the binding precedents, the receipts arising to the Assessee in its capacity as an SPA is not chargeable to tax in the hands of the Assessee.

10.2. Ld. CIT DR made an elaborate submission for distinguishing the decision of Coordinate Bench of ITAT, Mumbai in the case of CIDCO (supra) and emphasized that CIDCO and assessee are designated as SPA in different sections of the MRTP Act. According to her, in the case of CIDCO, principal agent relationship was established and there was complete control over its activities with the State Government. Contrary to this, in the case of assessee, such functional tests have not been met and therefore assessee cannot be held to be acting on behalf of the State and as an agent of the State. Her detailed written submission furnished before the Bench is reproduced for ready reference. “BEFORE THE HON'BLE 'D' BENCH, ITAT, MUMBAI REJOINDER ON THE WRITTEN SUBMISSION OF THE ASSESSEE IN THE CASE OF DCIT(E)-2(1), MUMBAI VS MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY FOR AYS 2016-17, 2017-18 AND 2018-19.

2. The assessee's submission is hereby rebutted in the ensuing paragraphs.

The income is therefore payable to the Government and if there is a deficit it is recoverable from the Government. This proves that there is no commercial or profit motive attached to the functions of CIDCO. x) Section 113A of MRTP Act laid down that the State Government shall acquire and vest land in New Town Development Authority. Hence, CIDCO cannot show such land vested in it by the government as its own assets in the Balance Sheet xi) Vide Government Resolution no 10375 dated 06-08-2010, after the development project is complete, the project gets handed back to the state. xii) There is no income to CIDCO and whatever is generated, gets deposited to the Consolidated Fund of the State. xiii) All expenses incurred by CIDCO, whether revenue or capital, are on behalf of the Government of Maharashtra and are reimbursed to it. xiv) As per section 160(2) of the MRTP Act, all liabilities which are enforceable against the Development Authority shall be enforceable against the State Government. 3.1 In the light of the above provisions, the Hon'ble Tribunal held that CIDCO is a legal agent of the state who is very closely held, guarded and monitored by its principal and enjoys immunity from all legal action against it.

"40. (1) The State Government may, by notification in the Official Gazette 7" for any undeveloped area specified in the notification in this Act referred to as "the notified area" either- (a) (constitute an authority consisting of] a Chairman, a Vice-Chairman, a member of the Maharashtra Legislative Assembly representing the notified area, one member representing the municipal area, if any, included in the notified area, the Deputy Director of Town Planning, and the Executive Engineer, Public Health Works Division, each having jurisdiction over the notified area, and an officer not below the rank of an Assistant Collector; or (aa) appoint the Authority constituted under the Maharashtra Housing and Area Development Act, 1976, or (b) appoint any Development Authority declared under sub-section (3A) of section 113, or (c) appoint the Bombay Metropolitan Region Development Authority establish under the Bombay Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area." 5.2 It is seen from the above provisions that while CIDCO is the Development Authority declared u/s 113(3A) of the MRTP Act, the assessee is the Special Planning Authority declared u/s 40(1) (c) of the MRTP Act. It is pertinent to note that while the assessee is conceived as body corporate, local authority and Special Planning Authority, it has not been conferred upon the status of 'agent' of the State. None of the above statutes lay down anywhere that the assessee shall work as agent of the State or on behalf of the State. Hence, the assessee's claim that it is an agent of the State is not supported by any statutory provision.

and Others Mumbai Metropolitan Region Development Authority AYs 2016-17 to 2018-19 ● Section 7 of the Act entrusts the Executive Committee of the assessee with wide powers to plan and implement the projects and schemes, to approve or reject the tenders for projects and schemes, to grant or refuse permission u/s 13(3) of the Act, to invest surplus funds of the assessee and to institute, conduct and withdraw legal proceedings on behalf of the assessee. ● Section 17 (1) of the Act gives power to the assessee to prepare scheme to provide infrastructure within the territorial limits of Brihan Mumbai Municipal Corporation and to execute the same. ● Section 17(3) of the Act deems the assessee to be a Slum Rehabilitation Authority for the purposes of preparation and execution of projects and schemes and to have all the powers and discharge all the duties of the concerned Slum Rehabilitation Authority under the Maharashtra Slum Areas (Improvements, Clearance and Redevelopment) Act, 1971. ● Section 17(4) of the Act empowers the assessee to charge toll for the use of any amenity provided by it. ● Section 46A of the Act chalks out the area of control of the State Government over the assessee. It states that the State Government will lay down the policy and guidelines and it may issue directions from time to time for the assessee in the exercise of its powers and discharge of its duties. In the event of any dispute arising between the assessee and the State Government, the decision of the State Government will be final. 6.1 It is observed that none of the above functions of the assessee warrant prior sanction of the State Government. In fact, there is no stringent control by the State Government on the operations of the assessee. Its functions are autonomous and it is empowered to take decisions suo-motu. Hence, the assessee's claim that it is an agent which acts only at the behest of its principal i.e the State Government is not supported by any statutory provision.

8. Section 24A of the MMRDA Act prohibits the assessee to carry out operations at a loss.

"24A. The Metropolitan Authority shall not and shall not be required to carry out any of its operations under this Act at a loss. Any deficit in the Mumbai Metropolitan Region Development Fund in any financial year shall be made good by the Authority not later than those of the next succeeding financial year." This provision amply proves that the assessee is by statute required to operate with the commercial and profit motive so as to avoid losses and the losses so incurred have to be reversed in the year to come. Further, the generation of huge surplus year after year also indicates that the assessee does operate on commercial and profit motive.

9. As per the audited accounts of the assessee for the year, it is seen that the land acquired and vested in it by the State Government for developmental purposes is shown as its own assets in the Balance sheet.

10. There is no provision in the MMRDA Act stating that all the income/receipts of the assessee are received in capacity as custodian or trustee of the State Government and that the said income shall stand diverted to the State at the source itself.

11. There is no provision in the MMRDA Act stating that all liabilities against the assessee shall be enforceable against the State Government. In fact, section 160(2) of the MRTP Act, pointed out in case of CIDCO, mentions that the aforesaid clause shall be effective from the date of dissolution of the Development Authority by the State Government u/s 160(1) of the Act. Therefore, it cannot be said that the State Government is responsible as a principal for the acts of the assessee. No person can sue the State Government for any contractual liability of the assessee. The assessee is a separate legal entity which can sue and be sued in its own capacity.

12. In the light of the above facts and discussion, it is emphasised that CIDCO and MMRDA are designated as Special Planning Authority under different sections of the MRTP Act. There are crystal clear provisions in the various governing resolutions of CIDCO that establish principal-agent relationship and give complete control over its activities to the State Government. On the other hand, the assessee has not been able to show that it meets the necessary functional tests such as statutory status of agent of the State, working as agent of the State, deep and pervasive control by the State, sole dependence on financial assistance by the State and State protection from all legal action. Submitted for kind perusal and consideration of the Hon'ble Bench.”

10.3. As a rejoinder, ld. Counsel for the assessee made the submission and asserted that what needs to be seen is how CIDCO and assessee as two different entities set up under the respective provisions of the same MRTP Act are similarly placed so as to be treated as agent of the State. To substantiate this, he referred to the objectives for which the assessee is set up as contained in the MMRDA Act. He also referred to section 46A of the MMRDA Act, whereby the assessee is under the control of the State Government. According to him, though ld. CIT DR has pointed out various sections of MMRDA Act to allege that assessee functions with autonomy, provisions of section 46A of the MMRDA Act provides for control by the State Government and thus other sections referred by ld. CIT DR cannot be read independently to hold that assessee functions with autonomy. While referring to section 40(1) of the MRTP Act, it was pointed that assessee was appointed as SPA under clause (c) to the said section whereas CIDCO is covered by clause (b) of the same section. Ld. Counsel thereafter explained that SPA falling either in clause (b) or clause (c) stands at par for application of the MRTP Act, for which attention was drawn to section 154 of the MRTP Act to submit that control by the State Government is an essential feature for the functioning of the SPA. He further pointed to section 160 of the MRTP Act which provides that at the time of dissolution of any SPA, all the properties and liabilities shall vest with the State Government. Reference was also made to certain letters evidencing handing over of completed amenities to the concerned statutory authorities for the working undertaken by the assessee. Out of various letters to substantiate these which forms part of the paper book, one such letter is reproduced for the purpose of reference:-

10.4. The above stated rejoinder furnished by the ld. Counsel on the submissions made by ld. CIT DR is reproduced below: “In the matter of: DCIT(E)-2(1), MUMBAI V. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY ("MMRDA" or "RESPONDENT" or "ASSESSEE") Sr. No. Assessment Year ITA NO. 1. 2016-17 3795/M/2023 2. 2017-18 3794/M/2023 3. 2018-19 3936/M/2023 4. 2018-19 3791/M/2023

In connection with the captioned matter, along with its oral submission made during the course of hearing on May 13, 2024, the Assessee was directed by the Hon'ble Tribunal to file comparative analysis between MMRDA and CIDCO. The said written submission was filed by the Authorized Representatives ("ARs") of the Assessee on May 21, 2024. In rejoinder to the said submission, the Ld. Department Representative ("Ld. DR") tendered a copy of her submission during the course of hearing held on July 5, 2024.

In this connection said rejoinder filed by the Ld. DR, the Assessee submits as under.

The whole crux of the Ld. DR's rejoinder having regard to the decision of the Hon'ble Mumbai Tribunal in the case of City and Industrial Development Corporation of Maharashtra Ltd v. ACIT [2012] 138 ITD 381, affirmed by the Hon'ble Bombay High Court (ITA No. 1394 of 2013) dated April 19, 2024, is that basis certain peculiarities demonstrated before the appellate authorities to CIDCO's status has been accepted be an agent of State Government of Maharashtra, and as a consequence of which it's income has been held to be not taxable. It is stated in the said rejoinder, that the Assessee has not pointed out identical provisions proving agency and therefore ratio of CIDCO (supra) cannot be applied to the present Assessee. The Ld. DR has also raised certain issues from the text of the order of this Hon'ble Tribunal in the case of CIDCO and called upon the Assessee to point out as to whether or not similar facts exist in the case of the Assessee.

In this regard, the Assessee submits as under.

At the outset it may be stated that the facts indicated by the learned DR are matters of arguments but the Hon'ble Tribunal has not based its decision that CIDCO is an agent of the state on the basis of such arguments; the Hon'ble Tribunal has examined the scheme of the Act under which CIDCO was operating to hold that it is an agent of the state. Therefore, it is respectfully submitted that, there is no question of finding out parallel and identical documents. What we need to see is as to whether, considering the respective law under which CIDCO and the Assessee are operating the two parties are similarly placed to be called as the agent of the State. Copy of the above mentioned CIDCO's decisions are enclosed herewith at Pg. 6 to 23.

Subject to the above clarification the Assessee submits that it is an Authority established under the MMRDA Act, 1974 ("MMRDA Act"). The main objective of the Assessee is to secure development of Mumbai Metropolitan Region according to the 'Regional Plan' prepared under the provisions of Maharashtra Regional Town Planning Act, 1966 ("MRTP Act'). The Authority is chaired, controlled and supervised by the Minister of Urban Development, Government of Maharashtra. Metropolitan Commissioner and Executive Committee exercises functions and duties of the Authority.

As per section 46A of the MMRDA Act, the Authority (i.e. the Assessee) is under control of the State Government. Relevant extract of the provision is reproduced below for ease of reference:

"46A. (1) The Metropolitan Authority shall exercise its powers and perform its duties under this Act in accordance with the policy framed State and guidelines laid down from time to time, by the State Government. for development of the areas in Metropolitan Region. (2) The Authority shall be bound to comply with such directions which may be issued, from time to time, by the State Government for efficient administration of this Act. (3) If, in connection with the exercise of the powers and the performance of the duties of the Authority under this Act, any dispute arises between the Authority and the State Government, the matter shall be decided by the State Government and its decision shall be final."

Although Ld. DR has pointed out various sections of MMRDA Act to allege that the Assessee functions with autonomy, the provisions of section 46A stated above have been completely ignored. Since the provisions of section 46A provides for "Control by the State Government", the other sections referred by the Ld. DR cannot be read independently so as to argue that the Assessee functions with the autonomy.

In so far as theory of agent of State Government is concerned, it is reiterated that the Assessee and CIDCO are at par in light of following provisions of the MRTP Act, 1966 copy of MRTP Act is enclosed herewith at Pg 28 to 157 The appointment of MMRDA/CIDCO as 'Special Planning Authority' ("SPA") is under section 40 of the MRTP Act, which reads as under. (Specimen Government Resolutions appointing the Assessee as SPA are enclosed herewith at Pg. 168 to 190.) "(1) The State Government may, by notification in the Official Gazette for any undeveloped area specified in the notification in this Act referred to as "the notified area" either- (a)...or (b) appoint any Development Authority declared under sub-section (3A) of section 113, or (c) appoint the Bombay Metropolitan Region Development Authority establish under the Bombay Metropolitan Region Development Authority Act, 1974, to be the Special Planning Authority for developing the notified area.

While CIDCO is appointed as SPA under clause (b), the Assessee has been so appointed under clause (c) of section 40(1) above. Further, as per provisions of section 40(3), the provision of Chapter VI (i.e. provisions dealing with Authority appointed for New Towns, section 113 to 124) and section 41, apply mutatis mutandis to any Development Authority appointed as an SPA of the notified area, as if it is a new town. In other words, any SPA falling either clause (b) or (c) above, stands at par for application of the MRTP Act. The text of modified Chapter VI of MRTP Act is enclosed at Pg. 158 to 167.

Your Honours’ attention is drawn to section 154 of the MRTP Act, which reads under: “(1) Every Regional Board, Planning Authority and Development Authority shall carry out such directions or instructions as may be issued from time to time by the State Govemment for the efficient administration of this Act. (2) If in, or his connection with, the exercise of its powers and discharge of its functions by the Regional Board, Planning Authority or Development Authority, under this Act, any dispute arises between the Regional Board, Planning Authority, and the State Government, the decision of the State Government on such dispute shall be final.”

The above provisions indicate that the provisions of section 46A of the MMRDA Act are in line with section 154 of the MRTP Act, which emphasizes upon “Control by the State Government qua functions of an SPA”.

Attention is now invited to the provisions of section 160 of MRTP Act, which provides that at the time of dissolution of any SPA/development authority, all the properties and liabilities shall vest with the State Government.

Your Honour’s attention is invited to specimen copies of letters evidencing handover of completed amenities to the concerned statutory authorities at Pg. 191 to 195.

Your Honours’ kind attention is further drawn to provisions of section 44 of the MMRDA Act, whereby any arears receivable by MMRDA can be recovered as “arears of land revenue”. As defined under section 2(19) of The Maharashtra Land Revenue Code, 1966, the term ‘land revenue’ has been defined as under.

“(19) “ land revenue” means all sums and payments, in money received or legally claimable by or on behalf of the State Government from any person on account of any land or interest in or right exercisable over land held by or vested in him, under whatever designation such sum may be payable and any cess or rate authorised by the State Government under the provisions of any law for the time being in force; and includes, premium, rent, lease money, quit rent, judi payable by a namdar or any other payment provided under any Act, rule, contract or deed on account of any land;

This further supports the contention of the Assessee that it is an agent of the State Government.

The Assessee reiterates that, considering the above facts read with provisions of the MRTP Act, the Assessee being designated as an SPA for certain areas of the MMR, and following the binding precedents in the case of CIDCO, the receipts arising to the Assessee in its capacity as an SPA is not chargeable to tax in the hands of the Assessee.

The Assessee also places reliance on the decision in the case of Gujarat Municipal Finance Board [1996] 221 ITR 317 (Guj HC) and the same is enclosed herewith at Pg. 196 to 203”

11.1. Thus, it is undisputed that for the objectives carried out by the assessee, initially it was with CIDCO and later on after the legislation of MMRDA Act by the State Legislature of Maharashtra, assessee was established and substituted. In the case of CIDCO, it is a company incorporated under the Companies Act with share capital. Its incorporation and set up is under a more generic law when compared with the specific statute of MMRDA Act legislated for establishing the assessee which is a strong indicator of intent and modus operandi of the State legislature for the objective it wanted to achieve through the assessee.

11.2. Status of CIDCO as an agent of State has been affirmed by the Hon'ble Jurisdictional High Court of Bombay vide order dated 19.04.2024. The two substantial questions of law framed by the Hon'ble Court and deliberation on the same, affirming the finding of the Tribunal that CIDCO was an agent of Government and therefore not exigible to tax are reproduced as under: “1 This is an appeal filed under Section 260A of the Income Tax Act, 1961 (the Act) impugning an order dated 8th August 2012 passed by the Income Tax Appellate Tribunal (ITAT). 2 On 8" July 2015 the appeal was admitted and the following two substantial questions of law were framed: (a) Whether on the facts and in the circumstances of the cases and in law, the Tribunal was right in its interpretation of Articles 289(1)(2)(3) of the Constitution in coming to the conclusion that the company was not exigible to tax? (b) Whether on the facts and in the circumstances of the cases and in law, the Tribunal is justified in coming to the conclusion that the company was an agent of government and therefore not exigible to tax? 3 As regards second question of law challenging the Tribunal's finding that assessee/respondent was an agent of Government and, therefore, not exigible to tax has been considered and decided in a recent order of this Court in the matter of City and Industrial Development Corporation of Maharashtra Limited v/s. Assistant Commissioner of Income-Tax, Circle 15(1)(2), Mumbai & Ors.. This Court has come to a categorical finding that petitioner is declared as an agent of the State Government and that status cannot be whittled down. This Court has also referred to the impugned order in this appeal in paragraph 10 thereto. Paragraphs 9 to 11 of City and Industrial Development Corporation of Maharashtra Limited (Supra) read as under: 9. In Percival Joseph Pareira (supra), the learned Single Judge of this Court came to a finding hased on the notifications issued by the Government of Maharashtra when Hetitioner was created and also subsequently, that Petitioner was the New Town Development Authority appointed under Sub-section 3(A) of Section 113 of the MRTP Act and the work of Petitioner is being carried out on behalf of the State Government. So considering the provisions of MRTP Act and notifications issued by the State Government, learned Single Judge of this Court has given conclusive finding that Petitioner was carrying out work on behalf of the State Government. When the matter was carried in appeal, the Division Bench of this Court in City & Industrial Development Corporation (CIDCO) v/s. Percival Joseph Pareira and Ors. came to a categorical finding that from bare reading of Sub-section 3(A) of Section 113 of the MRTP Act, it is crystal clear that Petitioner is declared as an agent of the State Government and this statutory status bestowed on Petitioner cannot be whittled down, nor can be elevated to any other position by an administrative decision. The Division Bench also came to a finding that Petitioner is getting only Rs. 5,00,000/- per annum towards administrative expenses and Petitioner on its own has pleaded before the ITAT that it was acting as an agent of the State Government and nothing more. The Court has also observed that the ITAT has accepted that contention of Petitioner and held that Petitioner was not liable to pay income tax on the income derived from the development activities. In the matter of The Officer Incharge and Assistant PE Commissioner v/s. City & Industrial Development Corporation Aurangabad and Ors. heard by the Aurangabad Bench of this Court, the Court has accepted that the conjoint reading of the provisions under Sections 40(1) (b) & 113 of the MRTP Act and the notification dated 1st June 1973 issued by the State Government, Petitioner would be acting as Special Planning Authority and as an agent of the State Government.

10. The ITAT in its order dated 8th August 2012 for Assessment Year 2006-2007 while considering the issue whether Petitioner should be held to be "an agent" of the State or an "arm" of the State, working solely under the authority and guidelines issued through various notifications by the State, i.e., the Government of Maharashtra has come to a finding that the resolutions taking back to 1970 make it clear that Petitioner is an agent and functions as an arm of the State Government because Petitioner can only work under the control and supervision of the State Government meaning thereby Petitioner cannot make/take any decisions suo-motu.

11. The ITAT has also held Petitioner to be an agent of the State. The ITAT has also recorded that it was aware that there is an income to Petitioner by way of remuneration received from the State Government at Rs.5,00,000/- per annum, which has to be assessed in the hands of Petitioner. The ITAT set aside the order passed by the Commissioner of Income Tax (Appeal) and directed the Assessing Officer to decide the case on merits with regard to income of Rs.5,00,000/- received by Petitioner after allowing deduction for any expenses incurred wholly and exclusively for the purpose of earning the said income. In view thereof, this substantial question of law is answered in affirmative. 4 As regards first substantial question of law, in view of our findings to second question of law, this question will not survive. 5 Appeal disposed accordingly.” [emphasis supplied by us by underline] 11.3. Ground raised by the Revenue states that in the decision of Maharashtra Industrial Development Corporation (MIDC) v. DDIT in of 2016, order dated 14.08.2018 by Hon'ble High Court of Bombay, the Hon'ble Court observed that decision of the Coordinate Bench of ITAT Mumbai in CIDCO [2012] 138 ITD 381, order dated 08.08.2012 is per incuriam. In this regard, we went into the chronology of events relating to passing of orders both in the case of CIDCO and MIDC by the Coordinate Bench and the Hon'ble Court to understand the correct position. The same is briefly stated:

S. Date Party Forum Crux of the Finding No. 1 08.08.2012 CIDCO ITAT, Mum Assessee is acting on behalf of the State, not exigible to income-tax 2 27.03.2015 MIDC ITAT, Mum Assessee not carrying on its activities on behalf of the Government of Maharashtra and accordingly, Article 289 of the Constitution of India does not extend to it 3 14.08.2018 MIDC High Court Substantial question of law (SQL) raised on the issue of assessee carrying on its activities on behalf of the Government of Maharashtra and accordingly, Article 289 of the Constitution of India extends to it was not entertained by observing that decision of the Tribunal in CIDCO (supra) was per incuriam as the decision of Apex Court in Aditya Industrial Area Development Authority Vs. Union of India, 2006 (5) SCC 100 was not brought to its notice, wherein an entity identical / similar to MIDC was not extended the benefit of Article 289. This appeal was admitted on the second SQL relating to whether activities of the assessee hit by the proviso to Section 2(15) of the Act. Hon'ble Court took note of the appeal by the State in CIDCO, admitted on similar SQL and pending for disposal. 4 19.04.2024 CIDCO High Court Hon'ble Court dealt with the second SQL of assessee is an agent of the Government and not exigible to income- tax. It answered in affirmative by relying on its own decision on another case of assessee dated 11.12.2023 in WP No. 1840 of 2023. This order is already reproduced in the above paragraphs for ready reference, especially internal para 10 which records that “petitioner can only work under the control and supervision of the State Government meaning thereby Petitioner cannot make/take any decision suo moto.”

11.4. Subsequently, another matter came up before the Coordinate Bench in the case of CIDCO for Assessment Year 2014-15 vide appeal in order dated 16.10.2019 on the issue relating to revision order passed u/s 263 of the Act since its income was exigible to income-tax owing to omission of section 10(20A) of the Act and that assessee is not an agent of the Government. CIDCO contested that assessment completed u/s 143(3) was by following the binding decision of the Hon'ble jurisdictional High Court as well as the jurisdictional Tribunal in its own case (supra). Amongst various contentions raised by the ld. Counsel, it was also asserted that it can be treated as agent as per the MRTP Act and not necessary to be treated as agent also in the case of Income-tax Act. Decision of the Hon'ble Bombay High Court in MIDC (supra) was referred wherein the ITAT decision of CIDCO was held to be per incuriam. Judgment in MIDC was distinguished by stating that issue before Hon’ble Court was relating to Article 289, whereas in the case of CIDCO, the issue was completely different that it is distinguished as agent of the State Government, not seeking the benefit of Article 289. Reference was made to the decision of Hon'ble Supreme Court in the case of Tata Motors Ltd. v. Talathi of Village Chikhali & Ors (Civil appeal no. 10187 of 2010), wherein it was held as under:- “10. It is evident from section 113,114 and 118 of MRTP Act that the Development Authority is a body corporate which can acquire, hold, manage and dispose of land. Section 113 provides for constitution of a New Town Development Authority. Section 114 states the objects of such Development Authority. Section 118 of MRTP Act provides for disposal by the Development Authority of any land acquired by it or vesting in it. The Development Authority is therefore a body corporate which can acquire, hold, possess, manage, develop and dispose of land in its name and on its own behalf. The fact that the Development Authority requires the consent of the state government to dispose of any of its land by way of leases in excess of 99 years will not alter the position that the lands leased are lands of the Development Authority. There is no provision in MRTP Act which requires the New Town Development Authority, to hold and dispose of any government land as agent of the state government. In contrast, MRTP Act contains a specific provision enabling the state government to require a corporation or company (other than a New Town Development Authority, which is specific to a new Town), to execute development work and dispose of its lands as its agent. Sub-section (3A) of section 113 of MRTP Act provides: "(3A). Having regard to the complexity and magnitude of the work involved in developing any area as a site for the new town, the time required for setting up new machinery for undertaking and completing such work of development, and the comparative speed with which such work can be undertaken and completed in the public interest, if the work is done through the agency of a corporation including a company owned or controlled by the State or a subsidiary company thereof, set up with the object of developing an area as a new town, the state government may, notwithstanding anything contained in sub-section (2), require the work of developing and disposing of land in the area of a new town to be done by any such corporation, company or subsidiary company aforesaid, as an agent of the state government; and thereupon, such corporation or company shall, in relation to such area, be declared by the state government, by notification in the official gazette, to be the New Town Development Authority for that area." MIDC is a corporation which would fall under sub-section 113(3A) whereas the Development Authority falls under section 113(2) of MRTP Act. The circular issued with reference to MIDC is therefore of no assistance to contend that land leased by the Development Authority to appellant is a government land. The contention of appellant that the Development Authority is the agent of state government and that the appellant is a government lessee are therefore rejected. 11.5. In the above decision, the Coordinate Bench then concluded dismissing the revisionary order passed u/s 263. While concluding, specific reference was made to the decision of Hon'ble High of Bombay in civil appeal whereby it was held as an agent of the State as per section 113(3A) of the MRTP Act. The relevant para is extracted below for ease of reference:

12.1. Similar is the reflection from the composition of Executive Committee of the assessee composed u/s 7 of the MMRDA Act, relevant portion of which is extracted below: 7.(1) There shall be an Executive Committee of the Authority, consisting of the following members, namely:- (i) the Chief Secretary to Government; (ii) the Metropolitan Commissioner; (iii) the Secretary to Government, Urban Development Department; (iv) the Secretary to Government Housing Department;

(v) the Municipal Commissioner, Mumbai Municipal Corporation; (vi) the Managing Director, City and Industrial Development Corporation of Maharashtra; (vii), (viii) and (ix) three members who are experts in the field of urban planning and development, to be appointed by the State Government. (2) The Chief Secretary shall be the Chairman of the Executive Committee. He shall appoint a suitable person to be the Secretary of the Executive Committee.

12.2. Further, section 46A of the MMRDA Act, specifies that assessee shall exercise its powers to perform its duties and in accordance with the policy framed by the State. According to the said provision, assessee is bound to comply with the directions issued by the State Government and in the event of any dispute between the assessee and the State Government, it shall be decided by the State Government and its decision shall be final. Thus, under the provisions of section 46A of the MMRDA Act, assessee is under the control of the State Government.

12.3. Submissions made by the ld. CIT(A) DR emphasis on the aspect of control and ownership of the assessee for its functioning. In para 4 of her written submissions, for placing reliance on the decision in the case of CIDCO, the requirement according to her are that identical provisions ought to be pointed and control by the State Government is to be demonstrated. In this regard, it is noted from the provisions contained in section 40 of the MRTP Act that assessee and CIDCO are at par. While CIDCO is appointed as SPA under clause (b), assessee is appointed under clause (c) of section 40(1). Further, in view of section 40(3) and 41, they apply mutatis mutandis to any Development Authority appointed as an SPA of the notified area, as if it is a new town. Thus, any SPA falling either under clause (b) or (c) of section 40, they stand at par for application of provisions of the MRTP Act. Further, section 154 of the MRTP Act also provides that assessee shall carry out directions and instructions from time to time from the State Government for efficient administration of the Act and in the event of any dispute, the decision of State Government shall be final. Provisions of section 46A of the MMRDA Act and that of section 154 of the MRTP Act are in coherence, emphasising on control by the State Government qua functioning of a SPA.

12.4. We have also taken note of the fact that assessee is required to handover the completed amenities to the concerned statutory authorities. It is also important to take note of provisions contained in section 113(3A) of the MRTP Act, where by the State Government may, for carrying out the work of developing and disposing of land in the area of new town may require the same to be done by such authority as an agent of the State Government, which the State Government shall declare by notification in the official gazette. The said section is already reproduced in the above paragraphs in the submissions made by the two parties. List of certain notifications in this respect issued by the State Government is tabulated below: Sr. No. Notification NO. Dated Area 1. BKR 1177/262-UD-5 07.03.1977 BandraKurla Complex 2. TPB1275/1199-UD8 15.03.1976 AmbernathKulgaon, Badalapu Surrounding Notified Area (AKBSNA) 3 TPB 4382/26/UD-5 18.06.1982 Oshiware District Centre (ODC) 4 BBR1082/CR- 15.06.1983 Back bay Reclamation Scheme 140/1687/UD-1 5 TPB-4305/CR- 03.12.2005 Wadala TT Area 318/05/UD-11 6 TPS1299/1910/CR- 09.08.2006 27 Village of Kalyan Area 34/2000/UD-12 7 TPS1206/330/CR- 17.03.2007 51 Village of Bhiwandi Area 230/06/UD-12 8 TPB-4307/108/CR- 01.12.2007 Manori GoraiUttan Area 29/07/UD-11 9 TPB-4308/3709/CR- 01.12.2007 Mumbai International Airport Limited 347/08/UD-11 (MIAL) 10 TPB-4313/CR- 19.03.2013 Indu Mill (Dr.Ambedkar Memorial 44/2013/UD-11

13. On the issue relating to lease premium received by the assessee against property from different parties, which in the present case has been considered as income of the assessee though stand of the assessee is that it belongs to the Government of Maharashtra and therefore the same has been duly accounted for in the balance sheet as a liability (issue raised by the revenue vide ground No. 4 in the present appeal), Coordinate Bench in assessee's own case for Assessment Year 2009-10 in dated 10.04.2019, held that lease premium reported in the balance sheet as payment to government of Maharashtra cannot be held as income of the assessee. According to the Coordinate Bench, this is a liability payable to Maharashtra Government and hence rightfully accounted for by the assessee in its balance sheet. Relevant paragraphs in this respect from the said order are extracted below: “11. Before us, the learned Counsel for the assessee Shri JD Mistry produced the consolidated balance sheet of assessee as on 31.03.2009 and drew our attention to current liabilities and provisions of lease premium i.e. 9760.77 crores and work-in-progress is to the tune of 3235.25 crores. The learned Counsel for the assessee explained that the reading of balance sheet by the AO is totally erroneous, not holding that the receipt of land lease rent payable to Govt. of Maharashtra was to the extent of ₹ 8169.94 crores in the earlier years and that has increased to 8303.18 crores in the current year. Therefore, he noted that the income of 133.24 crores has been recorded in the accounts of the assessee. The learned Counsel stated that he has completely gone into the wrong facts and held that the assessee has not recorded the income from lease rentals in the current year. It was argued that the assessee received lease premium from various other properties like Kalyan Complex, Oshiwara District Centre, Wadala Truck Terminus, etc. and these premium are payable to Govt. of Maharashtra and the same are recorded under the head current liabilities and provisions. It was contended that treatment of premium received is the same as given to the lease premium received from Bandra Kurla Complex (BKC). When these facts were confronted to the learned CIT Departmental Representative, he could not controvert the above factual position and the consolidated balance sheet produced before us.

12. We have gone through the facts in entirety and noted that these lease premium liability declared in the balance sheet which is payable to Govt. of Maharashtra is actually received from various persons against properties and it cannot be held as income of the assessee. Actually this is a liability payable to Maharashtra Govt. Hence, we concur with the findings of CIT(A) and dismiss this issue of Revenue's appeal.” [emphasis supplied by us by underline]

16. We take up ground no. 3 and 5 which deals with claim of exemption u/s 11, ld. CIT(A) has in his order has elaborately dealt the coverage of the issue by the decision of Coordinate bench in assessee's own case by order dated 03.01.2022 for Assessment Year 2010-11 to 2015-16 (supra). The findings arrived at by ld. CIT(A) in this respect are reproduced as under: “7. Decision: The appellant in its grounds of appeal

has assailed the AO in assessing the income by making additions and disallowances under various head without proper appreciation of facts and pleaded for the deletion of the said additions/disallowances. 7.1 7.1 The appellant in its Ground of Appeal No. I & II assailed the AO for denial of Exemption u/s 11 of the Act holding that the appellant is not a valid trust & denial of exemption u/s 11 of the Act by invoking proviso to section 2(15) of the Act. The Appellant submitted that it has claimed exemption u/s. 11 of the Act since the activities of the Appellant are charitable in nature. The Ld. AO after relying on the assessment order for AY 2010-11 denied exemption of section 11 by stating that the Appellant Trust is not a valid trust and also stated that the change of status from Local Authority to Trust is not permissible. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2010-11 to 2015-16, bearing 4391, 4392, 4393, 4394 & 4395/MUM/2019 and & 35/MUM/2020, order dated 03.01.2022-at para no 23 to 26 at page no. 55 to 72 has adjudicated this issue in detail, relevant part of the same is reproduced as below:-

22. Considered the rival submissions and material placed on record, we observe from the record that the assessee is still registered u/s 12AA of the Act and it is not revoked. Further the assessee is established under the MMRDA Act, 1974. As per which the assessee is established to function, activity of development as set out in the section 2 of the MMRDA Act and it is extended arm of the Government Maharashtra.in.the activity of development as set out in Section 12 to 16 of the Act. We also observe that the assessee is appointed as special planning authority, for development of certain regions as per the government notification like Bandra-Kurla Complex region etc. under the Maharashtra Region and Town Planning Act (MRTP Act). As per the section 113(3A) of the Act, it is acting as an agent of the Government of Maharashtra. By considering the above facts on record, LdDIT(E) granted the registration u/s 12 on 22.07.2002.

23. Further we observe from the record that the Assessing Officer continue to disallow the claim of exemption u/s 11 from AY 2003-04 holding that the assessee is not a lawful trust within the meaning of the term Trust for the purpose of sections 11, 12 and 12A of the Act and its activities are not charitable. We observe from the record that Ld.CIT(A) and coordinate benches have decided the issue of allowing the exemption u/s 11 in favor of the assessee. The revenue filed appeal before the Hon'ble High Court for AY. 2006-07, which was dismissed. In our considered view, the issue of exemption u/s 11 is settled in favor of the assessee.

24. Further, in the current AY, the Assessing Officer and Ld.CIT(A) denied the exemption u/s 11 by invoking the provisions of sec 2(15) of the Act to deny the exemption by raising issues on activity of the assessee amounts to carrying on trade, commerce or business. We observe from the record that in AY 2009-10, the Ld.DIT(E) had withdrawn the registration granted u/s 12A of the Act on the ground that the assessee activities are not for the charitable purposes invoking the proviso to section 2(15) of the Act, the coordinate bench considered the above issue and adjudicated in favour of the Assessee. For the sake of clarity, it is reproduced below: 7. From the above facts of the case, wherein the objects are discussed and the fact that the DIT (E) has cancelled the registration granted only on the premise that the assessee's charitable purpose is hit by the proviso to section 2(15) of the Act. We have gone through the objects and noticed that the entire objects are charitable in nature for the reason that the term charitable purpose as defined in the Act includes what has been specified therein and interalia the advancement of any other object of general public utility. The proviso was brought in by the legislature for the reason that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves carrying of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application or retention, of the income from such activity. We find that this issue is covered by the decision of Hon'ble Jammu and Kashmir High Court in the case of Jammu Development Authority vs. Union of India and another in dated 07-11-2013. Even otherwise, on the aspect of the proviso to section 2(15) of the Act. Hon'ble Madras High Court in the case of Tamil Nadu Cricket Association vs. The Director Of Income Tax (2013) in 343 ITR 300 has decided this issue after elaborate discussion in regard to cancellation of 2 registration granted u/s 12A of the Act by observing as under: - 22. We had already extracted in the preceding paragraph, the objects of the association. Going by the objects, we find that the trust falls under the head of "any other object of general public utility and hence falls within the meaning of charitable purpose under Section 2(15) of the Act. Section 2(15) of the Act defines "charitable purpose" as it originally stood at the time of grant of registration as under: "charitable purpose' includes relief of the poor, education, medical relief and the advancement of any other object of general public utility." “23 Section 2(15) was amended under Finance Act, 2008, with effect form 1.4.2009 by subiung the following provision which reads s under 2. Definitions (15) "charitable purpose" includes relief of the poor, education, modical relief, preservation of environment (Including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.) 24. Section 2(15) as it stood prior to 1983 defined 'charitable purpose to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. The phrase "not involving the carrying on of any activity for profit was omitted from the Section by the Finance Act 1983, with effect from 01.04.1984, consequent on the amendment to Section 11, where under profits and gains of business in the case of chantable or religious trust and institutions would not be entitled to exemption under that Section, except in cases where the business fulfilled the conditions under Section 11 (4). The Section was once again amended by substitution in the year 2006 under the Finance Act, 2008, with effect from 01.04.2009, streamlining the definition of charitable purpose, considering the fact that taking advantage of the phrase "advancement of any other object of general public utility, number of entities zoperating on commercial lines claimed exemption on their Income either under Section 20/23c) or under Section 11 of the Act. Thus, to limit the scope of this expression, Section was amended in the year 2008 that the advancement of any other object of general public utility shall not be a charitable purpose, if the object involved the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade. commerce of business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. Though the section as it stood prior to the substilution in 2008 contained no provision as in the provise under the 2008 amendment, yet the Supreme Court held that that if the primary or dominant purpose of a trust er institution is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity: vide CIT v. Andhra Chamber of Commerce (1985) 55 (TR 722 (SC) (referred to in the decision reported in (1980) 121 ITR 1(Add Commissioner of Income- tax v. Surat Art Silk Cloth Manufacturers Association). Thus if the dominant object or the primary object was chantable, the subsidiary object for the purpose of securing the fulfilment of the dominant object would not militate against its charitable character and the purpose would not be any the less charitable. The amendment in the year 2008 made a drastic amendment to deny the status of a charitable purpose to an institution with the object of general public utility, having any activity in the nature of trade, commerce or business, or the rendering of any service in relation to any trade, commerce or business."

9. Since, the registration is already allowed consequently no disallowance can be made in respect to interest income and leasing activity income i.e. the rent and other fees, because these falls under the objects of the assessee's institution and hence on merits also the assessee has a case. Accordingly, we need not to elaborate on the merits of the case, since we have already allowed registration."

25. Therefore, from the above decision of the coordinate bench, the assessee is continue to be duly registered as charitable trust u/s 12AA, this is due to subsequent development, hence the contention of the Ld.CIT(A) and Assessing Officer is not correct. In our considered view, the issue of applicability of section 2(15) of the Act is already considered by the ITAT and issue is well settle in favour of the assessee. The courts have held the activities of the assessee are charitable and we observe that the activities of the assessee, which acts on behalf of the Government of Maharashtra, irrespective of nature of transactions, the assessee acts on behalf of and as an agent of the State Government. The development work and relevant activities in the line of development are carried by the assessee on behalf of the State Government and it is only an authority appointed under the MMRDA Act and MRTP Act to carry on the functions on behalf of State Government. All the revenues are belong to State Government and it is only an entity created to functions for the benefit of the common interest of people of the State 26. We observe from the appellate order, Ld.CIT(A) opined that the allotment of land is not made to needy people at free of cost or subsidized rates, therefore assessee has not actually carried any charitable activities, in our view, the assessee entity is not created with the above object/motive rather to extend the facilities of development in the region as per the 'GO' of the State Government for the benefit of the region The functions are carried on without any profit motive and also there is no clause in the trust deed which Indicate that the profit or surplus earned are distributed to any stake holders. It clearly indicates that the institution is created for the purpose of facilitating the state government to achieve the development work in the state. As discussed earlier, the issue is already decided by the coordinate bench and it is brought to the notice of the authorities below, the lower authorities should refrain from racking up such issues agen and again. In our view, the issue is settled in favour of the assessee that the assesses, created for the Charitable purpose within the meaning of Section 11 and 2(15) of the Act. Accordingly, the grounds raised by the assessee in this regard are allowed." 7.1.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that the issue is settled in favour of the assessee that the assessee is created for the Charitable purpose within the meaning of Section 11 and 2(15) of the Act. Thus, following the order of the higher authorities the grounds of appeal I & II are allowed.

16.1. The issue relating to proviso to section 2(15) in the case of assessees including statutory corporations, authorities or bodies carrying out object of General Public Utility has been dealt by Hon'ble Supreme Court in the case of Ahmedabad Urban Development Authority [2022] 449 ITR 1 (SC). In this respect, certain paragraphs from the said judgement are reproduced for the sake of ready reference: "170. Classically, the idea of charity was tied up with eleemosynary. However, "charitable purpose" and charity as defined in the Act have a wider meaning where it is the object of the institution which is in focus. Thus, the idea of providing services or goods at no consideration, cost or nominal consideration is not confined to the provision of services or goods without charging anything or charging a token or nominal amount. This is spelt out in ballon Chamber of Commerce (supra) where this Court held that certain GPUs can render services to the public with the condition that they would not charge "more than is actually needed for the rendering of the services, may be it may not be an exact equivalent, such mathematical precision being impossible in the case of variables, may be a little surplus is left over at the end of the year the broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for profit".

20. The underlying concept of a trading Corporation is buying and selling. There is no aspect of buying or selling by the Corporation in the present case. The Corporation carries out the purposes of the Act, namely, development of industries in this State. The construction of buildings, the establishment of industries by letting buildings on hire or sale, the acquisition and transfer of land in relation to establishment of industrial estate or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent in setting up industries in the State. The Act aims at building an industrial town and the Corporation carries out the objects of the Act. The hard core of a trading Corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one." … … 190. In light of the above discussion, this court is of the opinion that: (i) The fact that bodies which carry on statutory functions whose income was eligible to be considered for exemption under section 10(20A) ceased to enjoy that benefit after deletion of that provision w.e.f. 1-4-2003, does not ipso facto preclude their claim for consideration for benefit as GPU category charities, under section 11 read with section 2(15) of the Act. (ii) Statutory Corporations, Boards, Authorities, Commissions, etc. (by whatsoever names called) in the housing development, town planning, industrial development sectors are involved in the advancement of objects of general public utility, therefore are entitled to be considered as charities in the GPU categories. (iii) Such statutory corporations, boards, trusts authorities, etc. may be involved in promoting public objects and also in the course of their pursuing their objects, involved or engaged in activities in the nature of trade, commerce or business. (iv) The determinative tests to consider when determining whether such statutory bodies, boards, authorities, corporations, autonomous or self- governing government sponsored bodies, are GPU category charities: (a) Does the state or central law, or the memorandum of association, constitution, etc. advance any GPU object, such as development of housing, town planning, development of industrial areas, or regulation of any activity in the general public interest, supply of essential goods or services such as water supply, sewage service, distributing medicines, of food grains (PDS entities), etc.; (b) While carrying on of such activities to achieve such objects (which are to be discerned from the objects and policy of the enactment; or in terms of the controlling instrument, such as memorandum of association etc.), the purpose for which such public GPU charity, is set-up - whether for furthering the development or a charitable object or for carrying on trade, business or commerce or service in relation to such trade, etc.; (c) Rendition of service or providing any article or goods, by such boards, authority, corporation, etc., on cost or nominal mark-up basis would ipso facto not be activities in the nature of business, trade or commerce or service in relation to such business, trade or commerce; (d) where the controlling instrument, particularly a statute imposes certain responsibilities. or duties upon the concerned body, such as fixation of rates on pre-determined statutory basis, or based on formulae regulated by law, or rules having the force of law, setting apart amenities for the purposes of development, charging fixed rates towards supply of water, providing sewage services, providing food-grains, medicines, and/or retaining monies in deposits or government securities and drawing interest there from or charging lease rent, ground rent, etc., per se, recovery of such charges, fee, interest, etc. cannot be characterized as "fee, cess or other consideration" for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto; (e) Does the statute or controlling instrument set out the policy or scheme, for how the goods and services are to be distributed; in what proportion the surpluses, or profits, can be permissively garnered; are there are limits within which plots, rates or costs are to be worked out; whether the function in which the body is engaged in, is normally something a government or state is expected to engage in, having regard to provisions of the Constitution and the enacted laws, and the observations of this court in NDMC whether in case surplus or gains accrue, the corporation, body or authority is permitted to distribute it, and if so, only to the government or state; the extent to which the state or its instrumentalities have control over the corporation or its bodies, and whether it is subject to directions by the concerned government, etc.; (f) As long as the concerned statutory body, corporation, authority, etc. while actually furthering a GPU object, carries out activities that entail some trade, commerce or business, which generates profit (ie, amounts that are significantly higher than the cost). and the quantum of such receipts are within the prescribed limit (20% as mandated by the second proviso to section 2(15)) - the concerned statutory or government organisations can be characterized as GPU charities. It goes without saying that the other conditions imposed by the seventh proviso to section 10(23C) and by section 11 have to necessarily be fulfilled. (v) As a consequence, it is necessary in each case, having regard to the first proviso and seventeenth proviso (the latter introduced in 2012, w.r.e.f 1-4-2009) to section 10(23C), that the authority considering granting exemption, takes into account the objects of the enactment or instrument concerned, its underlying policy, and the nature of the functions, and activities, of the entity claiming to be a GPU charity. If in the course of its functioning it collects fees, or any consideration that merely cover its expenditure (including administrative and other costs plus a small proportion for provision) such amounts are not consideration towards trade, commerce or business, or service in relation thereto. However, amounts which are significantly higher than recovery of costs, have to be treated as receipts from trade, commerce or business. It is for those amounts, that the quantitative limit in proviso (ii) to section 2(15) applies, and for which separate books of account will have to be maintained under other provisions of the IT Act.”

16.2. From the above, para 185 is noted with specific attention which deals with boards and corporations entrusted with development of industrial areas, by statute. Hon'ble Court referred to its own decision in Shri Ramtanu Cooperative Housing Society (supra) and Gujarat Industrial Development Corporation (supra) whereby it was declared that these bodies are involved in 'development' and are not essentially engaged in trading. In the decision of Shri Ramtanu Cooperative Housing Society (supra), it was noted that “receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries.” It further noted in para 20 that “The hard core of a trading corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one.” In the present case, the factum of such buying and selling is not brought out by the Revenue to hold against the assessee.

16.3. In para 190, while drawing summary, the Hon'ble Court opinionated in sub-para (d) of para 190(iv) on determinative test for GPU category of charities to state that “where the controlling instrument, particularly a statute imposes certain responsibilities. or duties upon the concerned body, such as fixation of rates on pre-determined statutory basis, or based on formulae regulated by law, or rules having the force of law, setting apart amenities for the purposes of development, charging fixed rates towards supply of water, providing sewage services, providing food-grains, medicines, and/or retaining monies in deposits or government securities and drawing interest there from or charging lease rent, ground rent, etc., per se, recovery of such charges, fee, interest, etc. cannot be characterized as "fee, cess or other consideration" for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto.”

16.4. In the present case, assessee earning interest income from retaining monies in deposits or government securities which enables it to meet the deficits in conduct of operations for mono-rail and such similar functions and therefore cannot be characterized as "fee, cess or other consideration" for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto. From the Income and Expenditure statement for the year ended on 31.03.2016, it is noted that receipts from mono-rail services are much less than the expenditure incurred on the same. Such a deficit is met by the interest income.

16.5. Considering the factual matrix of the case, extensive documents placed on record, elaborate discussion made on the applicable provisions of the Act and the decisions in the assessee’s own case as well as those by Hon'ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) and the provisions of governing statutes of MMRDA Act and MRTP Act, we summarised our conclusions on the core issue as stated above. We find that assessee is held to be a charitable institution carrying on the object for which it is established under the MMRDA Act read with MRTP Act, falling under the category of General Public Utility as per section 2(15) of the Act. The registration granted to the assessee u/s 12AA still continues and is not revoked by the Revenue. Keeping the litigation history and the entire discussion made above in perspective, it is held that assessee is a charitable trust and ld. Assessing Officer is not justified in applying the proviso to section 2(15) of the Act for denying the claim of exemption u/s.11 of the Act. Thus, we do not find any reason to interfere with the findings arrived by ld. CIT(A) as adjudicated by him on the issue who has followed the decision of the Coordinate Bench in assessee’s own case. Accordingly, ground no.3 and 5 raised by the Revenue are dismissed.

17. For ground no.4 on the treatment of lease premium, which ld. Assessing Officer has treated as income in the hands of the assessee, the issue is covered by the decision of Coordinate Bench in assessee’s own case, relied upon by the ld. CIT(A), holding in favour of the assessee and the same is reproduced as under: “7.2 The appellant in its Grounds of Appeal

No. III assailed the AO for addition on account of lease premium of Rs. 1191,87,99,809/-. The Appellant submitted that the Ld. AO erred in making addition on account of Lease Premium of 1191,87,99,809/-on the alleged grounds that the same are income of the Appellant. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2010-11 to 2015- 16, bearing 4391, 4392, 4393, 4394 & 4395/MUM/2019 and & 35/MUM/2020, order dated 03.01.2022 at para no 31 at page no. 75 has adjudicated this issue in detail, the same is reproduced as below :-

31. Considered the rival submissions and material placed on record, we observe from the submission that all the issues raised by the assessee and revenue are consequential to the decision in the ground no 1, we have already adjudicated in favor of the assessee, therefore all these issues raised have becomes academic and we direct Assessing Officer to assess the income of the assessee as per our direction in the para no 24 above. Accordingly, we allow the grounds raised by the assessee in this regard." 7.2.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that since the issue relating to exemption u/s 11 of the Act holding that the appellant is a valid trust & eligible for exemption u/s 11 of the Act under proviso to section 2(15) of the Act, is settled in favour of the assessee, all other issues raised have become academic and directed the Assessing Officer to assess the income of the assessee as per their direction in the para no 24 of the order reproduced at para 7.1. Thus, following the order of the higher authorities the grounds of appeal III is allowed as per direction of the Hon'ble ITAT Mumbai. 17.1. We do not find any reason to interfere with the findings arrived by ld. CIT(A). Accordingly, ground no.4 raised by the Revenue is dismissed.

17.2. In respect of appeals for Assessment Year 2017-18 and 2018-19, similar issue in respect of TDRs is raised in ground no. 4 on the same footing as that of lease premium treatment. This issue is also held in terms of finding given for treatment of lease premium in appeal for Assessment Year 2016-17.

18. In respect of ground no.6 is in respect of addition on account of accrual of interest by making a notional addition for the interest on the loans given and deposits made with various public sector undertaking/GOM/Government bodies. The said issue is also covered by the decision of Coordinate Bench in assessee’s own case vide order dated 13.07.2016 for AY 2003-04 and others. Relevant findings arrived at by ld. CIT(A) following the decision of Coordinate Bench is extracted below: “7.4 The appellant in its Grounds of Appeal

No. VI assailed the AO for addition on account of accrued interest Rs. 68,84,00,000/-. The assessee claimed that the Ld. AO erred in making notional addition on account of interest aggregating to Rs. 68,84,00,000/- on loans given and deposits made with various Public Sector Undertakings ("PSU") / GOM / Government Bodies. The appellant has relied on various case laws in support of his claim after giving detailed reasoning for the same. It further vide it's reply dated 31.07.23 submitted that Hon'ble Jurisdictional Mumbai Tribunal in the Appellant's own case for the earlier assessment years namely 2003-04, 2004-05, 2005-06, 2007-08 & 2008-09 bearing & 5580/M/2007, 4177/M/2008, 5761/M/2010 & 6756/M/2011, order dated 13.07.2016 at para no 10 &11 at page no. 13 &14 has adjudicated this issue in detail, the same is reproduced as below :- "10. The Ld. A.R of the assessee has stated that the issues raised by the assessee in its appeals are the alternative contentions and will be relevant only if the issue of denial of exemption under section 11 of the Act would have been decided against the assessee. He has further submitted that similar grounds taken by the assessee in its appeal bearing relating to AY 2006-07 have been dismissed by the Tribunal being rendered academic in nature. The relevant part of the order of the Tribunal is reproduced as under: "16. Briefly stated, AO while denying the benefit of section 11 to assessee held that assessee is not a local authority and further also held that assessee has not accounted for the amount of Z124.24 crores of interest on loans given and deposits made with various public sector undertakings/ Govt. of Maharashtra. After considering the submissions of assessee, the CIT (A) considered that as assessee is entitled for exemption of income, the ground of bringing to tax notional interest becomes infructuous. However, he on the issue of assessee being local authority, after discussion in the order, held that assessee is not a local authority for the purpose of section 10(20). In doing so he relied on the decision of the Hon'ble Supreme Court in the case of Adityapur Industrial Area Development Authority, 283 ITR

97. (SC), U.P. State Road Transport Corporation vs. CIT, 286 ITR 350, C AL CU TTA S TATE TRA NS PORT CORPORATION VS CIT 219 ITR 515 (SC) and CIT vs. U.P. Forest Corporation, 230 ITR 945 (SC) wherein it has been held that institutions set up for the specific purposes, does not amount to 'local authority' for the purpose of section 10(20) of the I.T. Act.

17. In the course of arguments the learned Counsel squarely admitted that these issues became academic in nature and can be left open for adjudication at the relevant point of time in view of the granting benefits of section 11 to assessee. He fairly admitted that in case the Revenue appeal is dismissed, there is no need for adjudication of the grounds raised by assessee. Since we have dismissed the Revenue appeal and upheld the order of the CIT (A) granting benefit of section 11 to assessee, this issue becomes academic in nature and so not adjudicated. Issues are left open for consideration in an appropriate case as and when required. The grounds are, therefore considered rejected.” 7.4.1 The submission of the appellant is examined. The Hon'ble ITAT Mumbai has adjudicated the issue in favour of appellant's own case in earlier years and has allowed the grounds of appeal after detailed discussion, observing that since the issue relating to exemption u/s 11 of the Act holding that the appellant is a valid trust & eligible for exemption u/s 11 of the Act under proviso to section 2(15) of the Act, is settled in favour of the assesse, all other issues raised have become academic and directed the Assessing Officer to assess the income of the assessee as per their direction in the above order. Thus, following the order of the higher authorities the grounds of appeal VI are allowed as per direction of the Hon'ble ITAT Mumbai.

18.1. From the perusal of the above, in the given facts, we do not find any reason to interfere with the findings arrived by ld. CIT(A) and the ground raised by the Revenue is dismissed.

Order is pronounced in the open court on 28 May, 2025