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

Aggrieved, the assessee assailed the order passed by the A.O in appeal before the CIT(A). The CIT(A) observing that the view of the A.O that the assessee was not a validly created trust had been rejected by the Income Tax Appellate Tribunal (for short „Tribunal‟) in an earlier year, thus followed the decision of the Tribunal and vacated the findings arrived at by the A.O that the assessee was not a valid trust. However, the CIT(A) concluded that the assessee was not entitled to exemption under Sec. 11 of the Act for the following reasons :

The assessee carried the matter in appeal before the Tribunal. The order of the CIT(A) was assailed primarily on three grounds viz. (i) that as the activities carried on by the assessee did not fall in the category of “trade, commerce or business”, therefore, it would not be hit by the proviso to Sec. 2(15) of the Act; (ii) that the assessee was performing sovereign functions of the government; and (iii) that the activities carried on by the assessee were both on its own account and also as an agent of the Government of Maharashtra. The Tribunal vide its order passed in dated 27.03.2015, after deliberating at length on the aforesaid contentions advanced by the assessee in respect of the issues under consideration was however not persuaded to subscribe to the same. The Tribunal finding itself to be in agreement with the view arrived at by the CIT(A) that the activities of the assessee were commercial in nature, thus upheld his view that the case of the assessee would be hit by the proviso to Sec. 2(15) of the Act. Still further, the Tribunal also not being impressed with the claim of the assessee that as it was performing sovereign functions of the Government of Maharashtra and thus was immune from the union taxation, rejected the same. As regards the contention advanced by the assessee that it was carrying on the activities on its own account and also as an agent of the Government of Maharashtra, it was observed by the Tribunal that the said contention was never raised before the lower P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) authorities. In the backdrop of the aforesaid fact the Tribunal being of the view that as the lower authorities had no occasion to examine the aforesaid claim of the assessee, thus restored the said issue for fresh examination to the A.O with a direction to examine the same afresh after duly considering all the documents and explanations that may be furnished by the assessee before him in support of its said contention. However, the Tribunal being persuaded to be in agreement with the alternative contention of the assessee that the depreciation computed under Sec. 32 of the Act was liable to be deducted for the purpose of arriving at the income of the assessee, thus directed the A.O to allow the claim of depreciation admissible under Sec. 32 of the Act while computing the income of the assessee. On the basis of the aforesaid observations the appeal of the assessee was partly allowed by the Tribunal for statistical purposes.

The A.O while giving effect to the order of the Tribunal, dated 27.03.2015, wherein the issue as to whether the assessee was carrying on the activities on its own account and also as an agent of Government of Maharashtra was restored to him for fresh adjudication, therein vide its order passed under Sec. 143(3) r.w.s. 254, dated 15.03.2016, observed that the claim of the assessee corporation that the lease premiums, interest on bank deposits etc. were being received by it as an agent of the Government of Maharashtra was without any basis and the same were being received by it as an owner. The A.O was also not impressed with the correctness of the method of accounting followed by the assessee, wherein the latter was found to be crediting the entire receipts in the liability account after deducting the expense corresponding to the same. It was observed by the A.O that the assessee by consistently following the aforesaid accounting policy had allowed surplus to accumulate in its „balance sheet‟ as a liability. The A.O while dislodging the claim of the assessee that it was acting as an agent of the Government of Maharashtra, observed that no principal-agent relationship did exist between the Government of Maharashtra and the assessee viz. MIDC. Rather, it was noticed by the A.O that the aforesaid accounting practice of crediting receipts as deposit in the „balance sheet‟ P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) was also consistently being followed by the assessee also in respect of the receipts/income received from non-government agencies for works executed for them. On the basis of the aforesaid deliberations the A.O concluded that as the accounting policies followed by the assessee were defective, hence its taxable income could not be deduced from its financial statements. It was also observed by the A.O that the assessee had wrongly abated cost of fixed assets against recovery of charges for utilization of assets. The A.O after deliberating at length on the issue under consideration, observed that though the receipts by the assessee were its income, however the latter had as a practice consistently characterized the same as a liability. In the backdrop of the aforesaid observations the A.O rejected the claim of the assessee of having received the amounts by way of lease premium, interest on bank deposits etc. as an agent of the Government of Maharashtra and holding the same as the income of the assessee, therein vide his order passed under Sec. 143(3) r.w.s. 254, dated 15.03.2016 assessed the same at an amount of Rs. 2456,45,98,700/-.

Aggrieved, the assessee assailed the order passed by the A.O under Sec. 143(3) r.w.s. 254 in appeal before the CIT(A). The CIT(A) after deliberating at length on the contentions advanced by the assessee before him was however not persuaded to subscribe to the same and dismissed the appeal of the assessee, vide his order dated 12.04.2017.

The assessee being aggrieved with the order passed by the CIT(A) has carried the matter in appeal before us. The Learned Authorized Representative (for short „A.R‟) Sh. V. Sridharan at the very outset of the hearing of the appeal submitted that the land on which industrial area/industrial estate was developed belonged to the Government of Maharashtra and not the assessee. In the backdrop of the aforesaid contention, it was submitted by the Ld. A.R. that as the income by way of lease premium, interest on bank deposits etc. was received by the assessee on behalf of the State Government and not in its capacity as that of owner of the land, therefore, the same not being the income of the assessee had P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) rightly been shown by the assessee as a liability in its balance sheet for the year under consideration. The Ld. A.R in order to buttress his aforesaid contention submitted that the MIDC Act contemplated two sets of lands viz.

Per contra, the Learned Departmental Representative (for short „D.R‟) submitted that though there was no dispute as regards the principle that an income is liable to be brought to tax in the hands of the real owner alone, but as the assessee was the real owner of the lands under consideration, therefore, no infirmity did emerge from the order of the A.O in assessing the receipts viz. lease premiums, interest on bank deposits etc. as the income of the assessee. It was submitted by the Ld. D.R that though the Tribunal in the first round of appeal observing that the assessee had for the very first time raised a contention before it that lands under consideration were held by it both on its own account and also an agent of Government of Maharashtra, had thus remanded the matter to the file of the A.O with a direction to the assessee to substantiate his aforesaid contention, however the latter had failed to establish such distinction and therein prove that the lands under consideration were not owned by it but were rather held by it on behalf of the State Government. The Ld. D.R rebutted the claim of the assessee that only the possession of the lands under consideration were handed over to it and the ownership of the same remained vested with the State Government. It was submitted by the Ld. D.R that though as per Article 299 of the Constitution of India every contract made by the Government was statutorily required to be expressed to be made by the President or by the Governor of the state, but the contracts entered into by the assessee for lease of land were not found to be entered into by the Governor of the State of Maharashtra or on his behalf, but rather were entered into in the assesses own name only. The Ld. D.R on the basis of his aforesaid submissions averred that the above mentioned factual position proved to the hilt that the assessee by entering into contracts with the lessees in its own name was the owner of the lands under consideration. The Ld. D.R further submitted that as per the principle of nemo dat quod P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) non habet no one could transfer what he did not own. In the backdrop of his aforesaid contention, it was submitted by the Ld. D.R that now when the assessee had transferred the land to the lessees by lease deeds entered into for a period of 30 years/90 years, hence it could safely be gathered beyond doubt that the assessee was duly vested with the ownership of the land that was transferred by it. In further support of his aforesaid contention the Ld. D.R submitted that in the lease agreements as the assessee was referred to as the lessor and nowhere it was mentioned that the same were being executed on behalf of the government, therefore, the ownership of the assessee in respect of the lands under consideration did clearly emerge. The Ld. D.R further taking support of the judgment of the Hon‟ble High Court of Bombay in the case of M/s Skoda Auto India Pvt. Ltd. Vs The State of Maharashtra [Writ Petition No. 4513 of 2010, dated 31.01.2011] (a matter relating to property tax payable to the panchayat), submitted that the High Court after observing at Para 6 of its order that the land was „handed over to MIDC‟, had thereafter stated at Para 16 that the land belonged to the State Government/MIDC. Still further, the Ld. D.R taking support of the judgment of the Hon‟ble Supreme Court in the case of Digamber & Ors. Vs. State of Maharashtra & Ors. [Civil Appeal No. 5346 of 2013, dated 01.08.2013], submitted that the Hon‟ble Apex Court had observed at Para 9 and Para 25 of its order that the State Government had acquired the land in favour of MIDC. The Ld. D.R further referring to Sec. 32(7) of the MIDC Act, submitted that the same contemplated compulsory transfer of land by the Government to the assessee i.e. MIDC. The Ld. D.R strongly objected to the affidavit of Mrs. Vaidehi Ranade, General Manager (land acquisition) on two counts viz. (i) the affidavit though was an additional evidence, however no application seeking liberty of the Tribunal for admission of the same was filed by the assessee; and (ii) that as the affidavit referred to a period post 2014, while for the dispute pertained to a period much earlier than that, thus the same was clearly irrelevant in context of the issue under consideration. The Ld. D.R further taking support of Sec. 39(1)(a) of the MIDC Act, submitted that the same duly empowered the assessee i.e. MIDC to dispose off the land transferred to it without development. In the backdrop of his aforesaid P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) contention it was submitted by the Ld. D.R that the aforesaid fact clearly proved that the ownership of the land under consideration was transferred to the assessee i.e. MIDC. The Ld. D.R taking us through Page 803-805 of the APB submitted that the same clearly revealed that the land was acquired on behalf of MIDC. The Ld. D.R further drawing our attention to the financial statements of the assessee placed at Page 860-861 of APB, submitted that it was therein clearly stated that the government would charge interest @ 7% on the advances given by it to the assessee. It was thus the claim of the Ld. D.R that the lands under consideration were acquired on behalf of the assessee i.e. MIDC. The Ld. D.R rebutting the contention of the assessee that the transfer mentioned in Sec. 32(7) of the MID Act was in context of transfer of possession to facilitate development of land by the assessee corporation, submitted that the said statutory provision clearly contemplated transfer of ownership of land to the assessee i.e. MIDC. The Ld. D.R taking support of the judgment of the Hon‟ble Supreme Court in the case of Digamber & Ors. Vs. State of Maharashtra & Ors. [Civil Appeal No. 5346 of 2013, dated 01.08.2013] submitted that the Hon‟ble Apex Court had at Page 3 – Para 9 of its order clearly stated that the land was acquired by the government „in favour of the corporation‟ and two notifications for such acquisition were issued. It was further submitted by the Ld. D.R that the Hon‟ble Apex Court had ordered that the enhanced compensation was to be paid by MIDC and not by the State Government, which thus proved that the land belonged to MIDC. The Ld. D.R further rebutting the contentions advanced by the Ld. A.R that the rules framed under the MIDC Act in case of any conflict with the enactment would prevail over the same, submitted that as the Tribunal had in the earlier round of appeal categorically observed that the government regulations cannot override the MIDC Act, hence the said contention of the assessee was not maintainable. The Ld. D.R adverting to accounting practice followed by the assessee wherein the revenue receipts had directly been taken by the assessee to its „balance sheet‟, submitted that the said methodology had no sanction of law and as such could not be acted upon for deducing the true income of the assessee. It was submitted by the Ld. D.R that though the P a g e | 20 A.Y 2011-12 Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) deposits received by the assessee from various plot holders for executing certain works for them could be of a capital nature for such plot holders, but the corresponding receipts were certainly revenue receipts for the assessee. In the backdrop of the aforesaid contention it was submitted by the Ld. D.R that as the method of accounting could not be decisive of determining the income of the assessee, thus the revenue receipts in the hands of the assessee had rightly been assessed as the income of the assessee by the A.O. It was further submitted by the Ld. D.R that even otherwise the assessee had not shown its entire receipts in its Income & Expenditure Account. In order to fortify his aforesaid contention, the Ld. D.R submitted that the assessee had only accounted for part of the water receipt charges in the Income & expenditure account with no explanation as to why the remaining amount has not been accounted for. The Ld. D.R further rebutting the claim of the assessee that it was only handed over the possession of the land and the ownership of the same in the absence of any conveyance in its favour continued to remain with the State Government, submitted that the assessee was handed over the possession of land as the owner of the property. Adverting to the claim of the assessee that it did not have any unfettered and unrestricted rights over the lands which could be taken away by the State Government, submitted that the lands which were being handed over by the assessee to the municipalities were only the common areas i.e. roads etc. as could be gathered from a perusal of Page 839 of the APB. The Ld. D.R to fortify his contention that the assessee corporation viz. MIDC was the owner of the lands under consideration submitted that the extract/printout of the website of the assessee corporation i.e. MIDC clearly revealed that Thane (Waghle Estate) was still mentioned as owned by the assessee, while for the corresponding notification transferring the same was produced by the assessee as having been issued under Sec.

It was thus the claim of the Ld. D.R that as the assessee was vested with the ownership of the land under consideration, hence the income arising therefrom would clearly be liable to be brought to tax in the hands of the assessee. The Ld. D.R referring to the judgment of the Hon‟ble Supreme Court of in the case of Tata Motors Ltd. Vs. Talathi of P a g e | 21 ITA No. 4474/Mum/2017 A.Y 2011-12 Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) Village Chikhali & Ors. 2011 (7) SCC 839, submitted that a perusal of the corresponding decision of the Hon‟ble High Court of Bombay revealed that there were certain factual discrepancies. It was submitted by the Ld. D.R that while for the Hon‟ble Supreme Court in its decision had stated that the land was leased to Tata Motors Ltd. by MIDC, however the High Court of Bombay had in its decision stated that the land was leased to Tata Motors Ltd. by the government. As regards the claim of the assessee that the interest on the amounts owed by the assessee to the State Government and parked with the banks was to be assessed in the hands of the State Government, it was submitted by the Ld. D.R that as the assessee had never furnished any details of the amounts owed to the State Government, thus the corresponding interest in respect of the same could not be computed. The Ld. D.R rebutting the claim of the assessee that as the Government had only vested the possession of the lands with assessee with no beneficial interest having been conferred in its favour, hence pursuant to a fiduciary relationship created between it and the government, the ownership of the sums received from leasing of the lands got diverted at source to the government. The ld. D.R in support of his aforesaid contention submitted that as per Sec. 20 of the MIDC Act the money received from the sale of plots became the assesses own money by operation of law. As regards the contention of the assessee that the A.O had erred in assessing the gross receipts as its taxable income, the Ld. D.R submitted that the said issue can be remanded for adjudication by the A.O. However, it was submitted by the Ld. D.R that in case instances of expenditure incurred for development of land which had not been subsequently let out/sold emerges, then the said expenditure could not be allowed as a deduction. The Ld. D.R further meeting out the claim of the assessee that the receipts were not liable to be taxed in its hands due to the principle of overriding title submitted that an overriding title can only be created by a statute or by an order of the court. It was submitted by the Ld. D.R that as there was no such exemption created on the income of the assessee, nor any accrued liability in respect of any amount payable to the government did emerge, hence the income was taxable only in the hands of the assessee. The Ld. D.R further submitted P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) that as the assessee had not furnished any bifurcated details as regards the sums held by it on behalf of the government and the sums belonging to it, hence its claim that the interest income belonged to the government only could not be accepted and the entire interest had rightly been brought to tax by the A.O in the hands of the assessee. The Ld. D.R further adverting to the claim of the assessee that the reimbursement costs recovered from the third parties for the projects undertaken on their behalf was taxed by the A.O, submitted that the surplus arising from such projects carried out by the assessee on behalf of the third parties would be taxable as the income of the assessee. It was the contention of the Ld. D.R that the assessee had wrongly stated that it was covered under Sec. 113(3-A) of the MRTP Act which required a notification to be issued, but no such notification was issued. It was submitted by the Ld. D.R that the assessee was covered under Sec. 40(1A) of the MRTP Act which was inserted on the statute in the year 1994. It was further submitted by the Ld. D.R that Sec. 40(1A) of the MRTP Act granted the assessee the status of a „Special Planning Authority‟ (for short „SPA‟) and post 1994 no notification was thereafter needed to vest the land with the assessee. The Ld. D.R submitted that the definition of „Planning Authority‟ contemplated under Sec. 2(19) of the MRTP Act included within its sweep a SPA. Adverting to the contention of the assessee that the MRTP Act was a general law while for the MIDC Act was a specific law, it was submitted by the Ld. D.R that the Hon‟ble High Court of Bombay in the case of Rajiv Mohan Mishra Vs. CIDCO [PIL No. 80 of 2013; dated 24.03.2017], had at Page 6 of its order specifically stated that in the event of a conflict between the two acts the MRTP Act was to prevail. It was further averred by the Ld. D.R that the Hon‟ble High Court had at Page 14 of its aforesaid order stated that MIDC was a planning authority. The Ld. D.R further taking support of the judgment of the Hon‟ble Supreme Court in the case of Trig Guards Force Ltd. Vs. MIDC [Civil Appeal Nos. 984-986 of 2005, dated 06.12.2007] submitted that on a perusal of the said judgment it could safely be gathered that MIDC was itself using the powers given under the MRTP Act. On the basis of the aforesaid contentions, it was submitted by the Ld. D.R that as the A.O had rightly assessed the receipts as the income of the P a g e | 23 A.Y 2011-12 Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) assessee corporation, therefore, no infirmity did emerge from his order passed under Sec. 143(3) r.w.s. 254 of the Act while giving effect to the order passed by the Tribunal in the first round of appeal. The Ld. D.R submitted that as the appeal filed by the assessee was devoid of any merit, thus the same was liable to be dismissed.

We have heard the authorized representatives for both the parties at length, perused the orders of the lower authorities and the order passed by the Tribunal in the first round of appeal, as well deliberated on the exhaustive submissions placed on record and judicial pronouncements relied upon by the representatives for both the parties before us. We find that the assessee has primarily sought our indulgence in the present appeal for adjudicating the validity of the order of the CIT(A) that as the lands under consideration were not owned by the Government of Maharashtra, hence the income arising therefrom viz. lease premiums, rent, interest income from funds parked as bank deposits etc. were liable to be assessed as the income of the assessee corporation. The assessee has assailed before us the observations of the lower authorities that the income from the lands was liable to be taxed in the hands of the assessee on multiple grounds viz. (i). that it was wrongly observed by the authorities below that the lands under consideration were owned by the assessee corporation and not by the State Government of Maharashtra; (ii). that as per Sec. 60 of the Act, in the absence of the transfer of the lands to the assessee the income arising therefrom was to be assessed in the hands of the transferor i.e the Government of Maharashtra; (iii). that the authorities below were in error in concluding that as there was an irrevocable transfer of lands to the assessee, thus the provisions of Sec. 61 of the Act contemplating the assessing of the income in the hands of the transferor were not applicable; (iv). that it was erroneously concluded that the exception carved out in Sec. 62 as regards the applicability of Sec. 61 stood excluded. Alternatively, the assessee had also assailed the order of the CIT(A) before us on the ground that even if it was to be assumed (not admitted) that the lands under consideration stood vested with the assessee, the same however being held P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) by the assessee corporation in a fiduciary capacity under trust on behalf of the State Government, thus the income arising from the same was not liable to be brought to tax in its hands. The assessee had also disputed the orders of the lower authorities on the ground that as it was a case of diversion of income by overriding title, hence the same could not be assessed in its hands. Observations of the lower authorities that the monies received by the assessee were owned, controlled and managed by it without any interference by the Government of Maharashtra to whom the same were not payable during the life time of the corporation has also been challenged before us. Still further, the assessee taking support of the principle of consistency has disputed the departure taken by the revenue authorities from its consistent approach of accepting the receipts on behalf of the State Government as a liability in the „balance sheets‟ of the assessee corporation in the past years, and holding to the contrary and assessing the same as the income of the assessee for the year under consideration. We further find that independent of assailing the order of the lower authorities on the ground that they had erred in assessing the income arising therefrom viz. lease premiums, rent, interest income on bank deposits etc. as the income of the assessee corporation, it has also challenged the quantum of additions made in its hands viz. (i). the recovery/recoupment of costs of Rs. 32,28,67,135/- received by the assessee from the lessees and assessed as its income; (ii). the failure on the part of the lower authorities in not giving a deduction of a sum of Rs. 1042,85,70,248/- being the increase in the „balance sheet‟ of the assessee; (iii). the enhancement of income carried out by the lower authorities from the original assessed income of Rs. 1,701.77 crores to an amount of Rs. 2,456.50 crores while giving effect to the order of the Tribunal; (iv) the error on the part of the lower authorities in not allowing depreciation of Rs. 12,34,18,456/- despite direction by the Tribunal, vide its order dated 27.03.2015; and (v). that the lower authorities had erred in bringing to tax interest on deposits of Rs. 404,02,49,074/-.

Before proceeding further, we may herein observe that the assessee in the present appeal has also assailed the applicability of the proviso to Sec.

We further find from a perusal of Sec. 32 of the MIDC Act that in case the State Government is of the opinion that any land is required for the purpose of development by the assessee corporation, or for any other purpose in furtherance of the objects of the said Act, then after putting the owner of the land or any other person interested therein to notice as regards its decision of acquiring such land, calling for his objections and disposing off the same after affording an opportunity of being heard to such person, the State Government shall acquire such land by publishing a notice in the official gazette. On a perusal of sub-section (4) of Sec. 32 of the MIDC Act, it emerges that when a notice under Sec. 32(1) of the Act is published in the official gazette, the land shall, on and from the date of such publication, vest absolutely in the State Government free from all encumbrances. Still further, as per sub-section (5) of Sec. 32 of the MIDC Act, where any land is vested with the State Government under sub-section (4) of Sec. 32 of the P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) MIDC Act, then the State Government may by notice in writing order any person who may be in possession of the land to surrender or deliver possession thereof to the State Government or any person duly authorised by it in this behalf within thirty days of the service of the notice. As per sub- section (7) of Sec. 32 of the MIDC Act, after the land had been acquired for the assessee corporation or any local authority, the State Government shall, after it has taken possession thereof, by notification in the official gazette transfer the land to the assessee corporation or that local authority, as the case may be, for the purpose for which it was acquired and the provisions of Sec. 43-1A of the MIDC Act shall thereafter be applicable. As per Sec. 43-1A of the MIDC Act, for the furtherance of the Act, the State Government may by notification in the official gazette, upon such conditions as may be agreed between it and the assessee corporation, place at the latters disposal the lands vested in the State Government. That after such land is developed by, or under the control and supervision of the assessee corporation, it shall be dealt with by the corporation in accordance with the regulations made, and directions given by the State Government in this behalf. On a perusal of sub-section (3) of Sec. 43-1A, it emerges that if any land placed at the disposal of the assessee corporation under sub-section (1) of Sec. 43-1A is required at any time thereafter by the State Government, the assessee corporation shall replace it at the disposal of the State Government upon such terms and conditions as may be mutually agreed upon. We further find that as per Sec. 33 and Sec. 36 of the MIDC Act, where any land is acquired by the State Government under Chapter VI of the Act, the compensation for acquisition of the same shall be paid by the State Government under the said statutory provision. Still further, in case the compensation is not paid or deposited on or before taking the possession of the land, then as per Sec. 38 of the MIDC Act the State Government shall be liable to pay the said amount alongwith interest determined at the rate of four percent per annum from the date of taking of possession of the same till the said amount is paid or deposited.

Alternatively, we are further of the considered view that the aforesaid statutory provisions viz. Sec. 32 and Sec. 43-1A of the MIDC Act are inextricably interlinked and interwoven in order to facilitate furtherance of the objects of Act. We find from a conjoint reading of the aforesaid statutory provisions that after the land which in the opinion of the State Government is required for the purpose of development by the assessee corporation, or for any other purpose in furtherance of the objects of the Act, is compulsorily acquired under Sec. 32 of the MIDC Act by the State Government and gets absolutely vested with it free from all encumbrances, then the latter after being put into possession of the same transfers it to the assessee corporation for the purpose for which the same was acquired. After the land acquired and vested with the State Government is transferred by the State Government to the assessee corporation for the purpose for which the same was acquired, the same as per the provisions of Sec. 43-1A is placed at the disposal of the assessee corporation for being developed by, or under its control and supervision, and thereafter dealt with by the assessee corporation in the manner in accordance with the regulations made and directions given by the State Government in this behalf. In this regard it would be relevant and pertinent to observe that as per sub-section (3) of Sec. 43-1A of the MIDC Act, if any land placed at the disposal of the assessee corporation under sub-section (1) of Sec. 43-1A is required at any time thereafter by the State Government, the assessee corporation remains under an obligation to place it at the disposal of the State Government upon such terms and conditions as may be mutually agreed upon. We have deliberated at length on the aforesaid statutory provisions viz. Sec. 32 and P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) Sec. 43-1A, and are of the considered view that in either of the situations contemplated therein viz. (i). that lands are compulsorily acquired by the State Government under Sec. 32 of the MIDC Act for development of the same by the assessee corporation, and are thereafter by way of a notification published in the official gazette transferred to the assessee corporation for the purpose for which it was acquired; or (ii). the lands vested with the State Government are by way of a notification published in the official gazette placed at the disposal of the assessee corporation, for being developed and dealt with by it in accordance with the regulations made and directions given by the State Government in this behalf, the assessee as per sub- section (3) of Sec. 43-1A remains under an obligation to place such land at the disposal of the State Government, as and when the same is required by the latter. Thus, from a careful consideration of the restrictive covenant contemplating the fettered and bridled rights as regards the lands transferred/placed at the disposal of the assessee corporation as embodied in Sec. 43-1A(3) r.w Sec. 32(7) of the MIDC Act, it can safely be gathered beyond doubt that though the land under either of the aforesaid statutory provisions is transferred/placed at the disposal of the assessee corporation, however as the assessee remains under an obligation to place such land at the disposal of the State Government, as and when the same is so required by the latter, thus, the same would clearly be in the nature of a „revocable transfer‟ and no absolute interest as regards such land can be said to have been vested with the assessee. Still further, our aforesaid view that there is no irrevocable transfer of land by the State Government to the assessee corporation also stands fortified on a perusal of the powers vested with the State Government under Sec. 56 of the MIDC Act to withdraw industrial estates or industrial areas or part thereof from the jurisdiction of the assessee corporation. On a perusal of Sec. 56 of the MIDC Act, it emerges that where the State Government is satisfied that in respect of any particular industrial estate or industrial area, or any part thereof, the purpose for which the corporation was established under this Act had been substantially achieved so as to render the continued existence of such estate or area or part thereof under the corporation unnecessary, the State P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) Government may, by notification in the official gazette declare that such industrial estate or industrial area or part thereof has been removed from the jurisdiction of the corporation. In the backdrop of our aforesaid observations we are thus of the considered view that even if the ownership of the lands was to be presumed as having been transferred to the assessee corporation, the same clearly being in the nature of a revocable transfer, hence the income arising therefrom viz. lease premiums, rent, interest income on bank deposits etc. would as per Sec. 61 r.w.s 63 of the Income- tax Act, 1961 be assessable in the hands of the transferor viz. the State Government of Maharashtra and could not be brought to tax in the hands of the assessee corporation. Before parting, we may herein observe that in the first round of appeal the Tribunal had vide its order dated 27.03.2015 dislodged the observations of the lower authorities that as Sec. 58 of the MIDC Act provided that in case of dissolution of the assessee all its assets would go to the State Government, hence it being a “revocable trust” would not be eligible for exemption under Sec. 11 of the Income-tax Act, 1961. We find that the Tribunal expressing its disagreement with the view taken by the CIT(A) had observed that as “revocation” and “winding up” have different meaning and purpose, thus the fact that dissolution clause viz. Sec. 58 of the MIDC Act only provided for the manner of distribution of assets in the case of winding up, and every trust deed or memorandum is expected to have such kind of clause, therefore, the same cannot be construed for characterising the assessee as a “revocable trust” and therein disentitling the assessee of its claim of exemption under Sec. 11 of the Income-tax Act, 1961 on the said count. We find that the aforesaid observations which were recorded by the Tribunal in context of Sec. 58 of the MIDC Act, having been rendered in context of adjudicating the eligibility of the assessee for claim of exemption under Sec. 11 on a reading of the “dissolution clause”, thus would have no bearing on our observations recorded on a perusal of Sec. 43-1A(3) r.w Sec. 32(7) and Sec. 56 of the MIDC Act, for concluding that the transfer of land by the State Government to the assessee corporation was a “revocable transfer” within the meaning of P a g e | 34 A.Y 2011-12 Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) Sec. 61 r.w.s 63 of the Income-tax Act, 1961. The Grounds of appeal No. 2 and 3 are allowed in terms of our aforesaid observations.

We shall now advert to the claim of the ld. D.R who taking support of the principle nemo dat quod habet i.e no one can transfer what he does not have, had thus tried to impress upon us that as the assessee corporation had transferred lands to the private parties i.e lessees by lease deeds entered into for a period of 30 years/90 years, thus it could safely be presumed that the ownership of the land was vested with the assessee corporation, which thereafter had been transferred by it. The ld. A.R had objected to the said contention on the ground that as the assessee corporation had transferred the land in exercise of powers vested with it as an agent, thus no adverse inference as regards the status in which the lands were held and thereafter transferred by the assessee could be drawn. We have deliberated on the issue under consideration and are afraid to observe that the ld. D.R had failed to appreciate the true import of the principle P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) nemo dat quod habet, which provides that a person who does not own the property cannot confer it to another except with the owner‟s authority. The aforesaid principle excludes situations where the sale of the property is by a person who is duly authorised by the owner to sell the property viz. agent, power of attorney holder etc. Our aforesaid conviction is fortified from a perusal of Sec. 7 of the Transfer of Property Act, 1882, which contemplates the persons competent to transfer a property. We find that Sec. 7 of the Transfer of Property Act. 1882 specifically provides that where the transferor has no title to the property, he must have authority to transfer it. Thus, in the present case as the assessee corporation is conferred with the authority to lease or dispose the lands under Sec. 14, Sec. 15 and Sec. 37 of the MIDC Act, therefore, the lease deeds executed by the assessee corporation under a statutory right vested with it would not lead to a presumption that the same had been disposed by the assessee corporation as an owner. We thus, are of the considered view that as the reliance placed by the revenue on the aforesaid principle viz. nemo dat quod habet is devoid of any force, hence the same is rejected.

We shall now deliberate on the reliance placed by the ld. D.R on the judgment of the Hon‟ble High Court of Bombay in the case of M/s Skoda Auto India Pvt. Ltd. Vs. The State of Maharashtra [Writ Petition No. 4513 of 2010; dated 31.01.2011]. As regards the reference to Para 6 of the said decision, we find that the High Court while referring to the facts of the case had observed that the State Government of Maharashtra after acquiring the land after following the due process under Sec. 32(2) of the MIDC Act, vide notification dated 04.12.1997, had handed over the same to the assessee corporation viz. MIDC, which thereafter had leased the same to Skoda Auto India Pvt. Ltd. We are of the considered view that such acquiring of land by the State Government and handing over of the same to the assessee corporation, which thereafter had leased it to the aforementioned private party is absolutely in accord with the scheme of the MIDC Act, as had been averred by the assessee before us. We are unable to comprehend that as to how the ld. D.R had construed the said facts for arriving at a self suiting, P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) but a baseless observation that the same proved that the assessee corporation was the owner of the land under consideration. Still further, on a perusal of Para 16 of the decision of the High Court as had been referred to by the ld. D.R only reveals the contention of the counsel for the petitioner, wherein he had averred before the court that the property is vested in the State Government/MIDC. We are of the considered view that the said contentions of the counsel before the court cannot persuade us to conclude that MIDC had been held to be the owner of the land under consideration. Rather, we find that the issue before the Hon‟ble High Court was as regards the liability of the petitioner viz. Skoda Auto India Pvt. Ltd to pay lump sum contribution in lieu of taxes as per Sec. 125 of BVP Act, in the backdrop of the agreement that was entered into by it with the Gram Panchayat, agreeing to pay such amount. We are of the considered view that the reliance placed by the revenue on the aforesaid judgment of the Hon‟ble High Court of Bombay not being in context of the issue under consideration, thus would not assist the case of the revenue.

We shall now advert to the judgment of the Hon‟ble Supreme Court in the case of Digamber & Ors. Vs. State of Maharashtra & Ors [Civil Appeal No. 5346 of 2013; dated 01.08.2013] relied upon the ld. D.R. We find that the appellant in the said case had assailed before the Hon‟ble Apex Court the order of the Hon‟ble High Court of Bombay which had set aside the judgment and award of the learned Civil Judge, Senior division enhancing the compensation awarded by the Special Land Acquisition Officer, Nanded in respect of land acquired by the State Government of Maharashtra in favour of the assessee corporation viz. MIDC. We find on a perusal of Para 9 of the judgment of the Hon‟ble Apex Court as had been referred to by the ld. D.R, that the same narrating the facts therein states that the State Government of Maharashtra in exercise of its statutory powers had acquired the lands in favour of MIDC for the purpose of industrial development by the corporation in the State of Maharashtra, by publishing a notification in the government gazette on 07.09.1991, and a final notification published in the official gazette on 12.07.1992. We find that the aforesaid acquiring of land P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) by the State Government of Maharashtra for the purpose of development by the corporation is in absolute conformity with Sec. 32 of the MIDC Act and the same is not in dispute before us. We thus are unable to comprehend that as to how the reference to the aforesaid facts involved in the case before the Hon‟ble Supreme Court would advance the case of the revenue in context of the issue under consideration?. As regards the observations of the Honb‟le Supreme Court at Para 25 of its decision as had been relied upon by the ld. D.R, wherein the court had directed MIDC to issue the demand draft in respect of the compensation to the appellant, we are of the considered view that the same also would not advance the case of the revenue and therein prove that the assessee corporation was held to be the owner of the land under consideration. We may herein observe, that a perusal of the accounts of the assessee corporation which are subject to audit by C & AG, reveals that the assessee corporation had consistently been making payments/advances on behalf of the State Government which are reflected as recoverable on the asset side of its „balance sheet‟. Thus, in the backdrop of the aforesaid facts, in the absence of details as regards the treatment given by the assessee corporation to the aforesaid payment, the claim of the revenue that the assessee corporation is proved to be the owner of the land cannot be accepted.

We shall now advert to the claim of the ld. A.R that in the absence of publishing of a notification contemplated in Sec. 32(7) and Sec. 43-1A of the MIDC Act, it could safely be concluded that lands acquired or belonging to the State Government of Maharashtra had never been transferred to the assessee. Before further proceeding, we may herein observe that the assessee corporation in order to buttress its aforesaid claim had filed before us an „Affidavit‟ of one Mrs. Vaidehi Ranade, General Manager (Land Acquisition). That as the affidavit of Mrs. Vaidehi Ranade (supra) was clearly in the nature of an „Additional evidence‟, hence the admission of the same was vehemently objected to by the ld. D.R. It was submitted by the ld. D.R that as the assessee had not filed any application under Rule 29 of the Appellate Tribunal Rules, 1963 seeking liberty of the Tribunal for admission P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) of the affidavit as an „Additional evidence‟, hence the same was liable to be summarily dismissed on the said count itself. Alternatively, it was the contention of the ld. D.R that even otherwise as the affidavit filed by the assessee referred to the period post 2014, hence the same was not relevant for adjudication of the present appeal. The ld. A.R rebutting the aforesaid contention of the revenue submitted that as the affidavit of Mrs. Vaiedehi Ranade, General Manager (Land Acquisition) was only supporting a fact already stated, hence it could not be regarded as an additional evidence. Still further, the ld. A.R averred that the deposition of Mrs. Vaiedhi Ranade that no notification contemplated in Sec. 32(7) and Sec. 43-1A of the MIDC Act was issued was on the basis of her knowledge acquired from her employment since November, 2014, thus it could not be construed as pertaining to the period post 2014. We have given a thoughtful consideration to the issue under consideration and find ourselves to be in agreement with the contention of the ld. D.R that as the „Affidavit‟ of Mrs. Vaiedhi Ranade, General Manager (Land acquisition), dated 18.11.2017, filed by the assessee before us is clearly in the nature of an additional evidence, hence the assessee for seeking admission of the same remained under a statutory obligation to have sought the liberty of the Tribunal for placing it on record as per Rule 29 of the Appellate Tribunal Rule, 1963. However, as the assessee in all its wisdom has dispensed with the requirement of filing an application under Rule 29 of the Appellate Tribunal Rules, 1963 for admission of the said affidavit, therefore, we are constrained to decline to consider the same. Be that as it may, we are of the considered view that not only the aspect as regards publishing of a notification contemplated in Sec. 32(7) r.w Sec. 43-1A of the MIDC Act could be successfully established or dislodged by the parties before us in support of their respective claims raised to the contrary, but even otherwise, to our understanding the adjudication of the issue under consideration i.e as to whether there was a transfer of the ownership of the lands acquired by/vested with the State Government to the assessee corporation by placing the same at its disposal for the furtherance of the objects of the MIDC Act, has to gathered on a perusal of the scheme of the said Act.

We have further deliberated on the contention of the ld. D.R that as Sec. 39(1)(a) of the MIDC Act empowers the assessee to dispose off the land transferred to it without development, hence it could safely be concluded that the assessee was the owner of the said land. We are unable to persuade ourselves to subscribe to the said claim of the revenue. We find that Sec. 39(1) contemplates that subject to any directions given by the State Government under the MIDC Act, the assessee corporation may dispose off the lands acquired by the State government and transferred to it viz. (a). without undertaking or carrying out any development thereon; or (b). after carrying out such development as it thinks fit. We are of the considered view that not only the ownership of the lands by the assessee corporation is at all discernible from the mere fact that the assessee as per the first limb viz. Sec. 39(1)(a) is vested with the power to dispose off the land without carrying out any development thereon, but rather the ld. D.R while raising the said claim before us had lost sight of the material fact that such land could only disposed off by the assessee corporation subject to the directions given by the State Government. We thus, decline to accept the aforesaid self suiting interpretation arrived at by the ld. D.R by divorcing few words from the text.

That in order to buttress his aforesaid contention that the lands under consideration were acquired on behalf of the assessee corporation, the ld. D.R had drawn our attention to the copy of record of rights (Page 802-805 of „APB‟). The ld. D.R taking us through Page 803 drew our attention to the fact that as against the mention “Possession of these lands has been obtained and given to the Acquiring Body” the name of the Asst. general manager of the assessee corporation was stated. The ld. D.R by taking support of his aforesaid contention had thus tried to impress upon us that the land under consideration was proved to the hilt to have been acquired by the assessee corporation viz. MIDC. However, the ld. A.R rebutting the said contention of the revenue submitted that the lands were acquired by the State Government and the assessee corporation was merely put into possession of the same in furtherance of the objects of the Act. The ld. A.R in order to P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) fortify his aforesaid contention drew our attention to Page 804-805 of the same document, which revealed that the lands pursuant to the acquisition were owned by the State Government. We have perused at length the copy of record of rights at Page 803-805 of the „APB‟ and are persuaded to be in agreement with the claim of the ld. A.R that the land under consideration, subsequent to acquisition of the same from a private party was vested with the State Government of Maharashtra as the owner of the same. In this regard it would be relevant to refer to Para VIII of the said document, which reads as under: “ VIII. As full compensation is now being paid in respect of these lands, rights should be extinguished and the lands should be shown in the name of the State Government in Industries and Labour Department, if not already done. Action should also be taken for reduction of land revenue on said lands.” On a careful perusal of the aforesaid notings, we are of the considered view that not only the claim of the revenue that the land under consideration had been acquired on behalf of the assessee corporation as an owner fails, but rather the claim of the assessee corporation that the land acquired was owned by the State Government and only possession of the same was delivered to it for the purpose of furtherance of the objects of the MIDC Act, stands further substantiated.

The ld. D.R by referring to the Government of Maharashtra, Resolution No. IDC 1067/38498-IND I; dated 16.08.1967 (Page 860-861 of „APB‟) in support of his contention that the State Government had stated that it would charge interest at the rate of 7% on the advances given by it to the assessee corporation, had thus tried to impress upon us that as the interest bearing loans advanced by the State Government were deployed by the assessee corporation for acquiring the land under consideration, thus it proved that the said land was not owned by the State Government, but by the assessee corporation. The ld. A.R rebutting the said contention of the revenue had submitted before us that no such loan was ever taken by the assessee corporation from the State Government. We have perused the records and specifically the financial statements of the assessee corporation and are persuaded to subscribe to the claim of the ld. A.R that no such P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) interest bearing loan was ever raised by the assessee from the State Government. Rather, on a perusal of the aforesaid resolution we find that contemplating advancing of interest bearing loans by the State Government to the assessee corporation is not for the purpose of acquisition of land, but rather is specifically stated to be in reference to and in context of development of industrial areas and similar other purposes under the MIDC Act. We thus are of the considered view that as the reliance placed by the revenue on the aforesaid resolution no. IDC 1067/38498-IND I; dated 16.08.1967, does not supports its claim, hence no adverse inference is liable to be drawn on the said count as regards the claim of the assessee that the land under consideration are owned by the State Government and only the possession of the same in furtherance of the objects of the MIDC Act was delivered to it. Rather, a perusal of Para 2(ii) of the said resolution (Page 862 of „APB‟) provides that the assessee corporation shall from the proceeds collected out of disposal of lands recoup the development cost including administrative expenses before remitting the remainder to the Government. We are of the considered view that the aforesaid fact that the entitlement of the assessee on disposal of land is restricted to recoupment of the development costs and administrative expenses borne by it, while for the remainder amount i.e the surplus is to be remitted to the Government, further advances the claim of the assessee corporation that the land is owned by the State Government and it is only put into possession of the same in furtherance of the objects of the MIDC Act.

We shall now advert to the government regulations viz. (i) Government Regulation No. IDC/067/38498; dated 16.08.1967; and (ii). Government Regulation No. IDC/1079(1966)/-IND-14; dated 11.09.1986 as had been relied upon by the ld. A.R to drive home his contention that the assessee which was only handed over the possession of the land could not be regarded as the owner of the same. We find that Government Regulation No. IDC/067/38498; dated 16.08.1967 (Page 860-863 of „APB‟) and Government Regulation No. IDC/1079(1966)/-IND-14; dated 11.09.1986 (Page 869-877 of „APB‟) both provides that as the assessee is only put into possession of the P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) land for development of industrial areas and for similar other purposes under the MIDC Act, hence merely on the said count it could not be held as the owner of the same. We find that the ld. D.R had objected to the reliance placed by the assessee on the aforesaid government regulations for the reason that the Tribunal in the first round of appeal had concluded that the regulations cannot override the MIDC Act. We are unable to find ourselves as being in agreement with the said objection of the revenue. We find that the Tribunal in the first round of appeal while dislodging the claim of the assessee that the assessee corporation was acting as an agent of the State Government for development of industrial area and other infrastructural facilities under the provisions of the MIDC Act, had in the said context observed that as the provisions of the MIDC Act shall have supremacy over the resolutions passed by the State Government, hence the resolutions passed by the State Government were not to be considered for determining the status of the agency. However, the aforementioned resolutions viz. Government Regulation No. IDC/067 /38498; dated 16.08.1967 and Government Regulation No. IDC/1079 (1966)/-IND-14; dated 11.09.1986 relied upon by the assessee before us only clarifies the position that is contemplated in the MIDC Act. Rather, we are of the considered view that the aforesaid resolutions being in conformity with the provisions of the MIDC Act, therein states that the land shall vest with the State Government and the possession thereof would be handed over to the assessee in furtherance of the objects of the Act. We thus, being of the considered view that the aforementioned government regulations relied upon by the assessee in no way militates against the provisions contemplated in the MIDC Act, hence the reliance placed by the assessee corporation on the same is well founded and further supplements its claim that the ownership of the lands was vested with the State Government and only the possession of the same was delivered to the assessee corporation in furtherance of the objects of the MIDC Act. Still further, we find from a perusal of the “Possession letters” (Page 800-801 of „APB‟) to which our attention was drawn by the ld. A.R, that the assessee corporation was only delivered the possession of the land P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) after issue of notice under Sec. 32(1) of the MIDC Act by the Industries and the labour department of the State Government of Maharashtra.

We shall now advert to the judicial pronouncements which had been relied upon by the ld. A.R to buttress his contention that the land was owned by the State Government and not by the assessee corporation. The ld. A.R had in support of his claim relied on the judgment of the Hon‟ble Supreme Court in the case of Tata Motors Limited vs. Talathi of Village Chikhali & Ors. 2011 (7) SCC 839. It was averred by the ld. A.R that the Hon‟ble Apex Court had in the said decision observed that the lessees of the assessee corporation viz. MIDC were government lessees as they were exempted from paying the non-agricultural assessment. We have perused the aforesaid judgment and find that in the case before the Hon‟ble Apex Court the appellant viz. Tata Motors Ltd. had taken on lease land measuring 164.5 acres in Sectors No. 15 and 15-A in Village Chikhali, Taluka: Haveli, District: Pune for a term of 99 years commencing from 21.11.1994 from Pimpri-Chinchwad New Town Development Authority (for short “the Development authority”), which was converted to industrial use. Still further, the assessee had also taken an adjoining plot on lease from the assessee corporation viz. MIDC for construction of its factory. The appellant was served with a demand notice dated 26.02.2002 by the Gar Kamgar Talathi, Chikhali, demanding a payment of Rs. 45,25,538/- as non- agricultural cess and additional non-agricultural cess, for the period 1995- 96 to 2001-02. On an appeal assailing the liability to pay the aforesaid amount, it was observed by the Hon‟ble Apex court that a government lessee was not liable to pay any land revenue. In the backdrop of the aforesaid observation it was held that in respect of the lands taken on lease by the assessee from Pimpri-Chinchwad New Town Development Authority the said “Development authority” was the lessor, hence as the said leased lands were not the government lands and the lessor was not the government, therefore, the appellant could not call itself as a government lessee in respect of the said lands. However, in respect of the lands taken by the assessee corporation on lease from MIDC, the Hon‟ble Apex Court after referring to a P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) Circular dated 29.03.1975 observed that as MIDC being the agent of the State Government was not liable to pay any assessment to the Government in respect of the lands held by it as an agent of the State Government, therefore, any lessee under MIDC would become a government lessee and will not be liable to pay the non-agricultural assessment under the provisions of the Maharashtra Land Revenue Code, 1966. We are of the considered view that the aforesaid observations of the Hon‟ble Apex Court, though admittedly rendered in context of the issue as regards the liability of the lessees of MIDC to pay non-agricultural assessment under the Maharashtra Land Revenue Code, 1966, however, establishes that the ownership of the lands leased by MIDC remains vested with the State Government of Maharashtra.

The ld. A.R had further in order to impress upon us that only the possession of the land was delivered to the assessee and the ownership remained vested with the State Government, relied on the judgment of the Hon‟ble Apex Court in the case of Fruit and Vegetable Merchants Union Vs. Delhi Improvement Trust AIR 1957 SC 344. On a perusal of the aforesaid decision it emerges that in the said case certain area of land admittedly belonging to the Government and compendiously referred to as “the Nazul Estate”, was placed at the disposal of the Delhi Improvement Trust (for short “Trust”) for the orderly expansion of Delhi under the supervision of a single authority. By a letter dated May 1/2, 1939 the chairman of the Trust forwarded a copy of a Resolution No. 551, dated 24.04.1939 to the Chief Commissioner of Delhi for the construction of the “New SubziMandi Fruit Market” on a gross area of 10.87 acres including certain lands which till then did not vest in the Trust. Subsequently, additional area was placed at the disposal of the Trust for the setting up of the market. The Chief Commissioner sanctioned under Sec. 22-A of the Trust law the scheme of the “New Fruit & Vegetable Market” as proposed in the resolution, subject to the remarks viz. (i). that “the whole of the land required for the construction of the market is the property of the Government”, and (ii). that “the trust will administer the new market on its completion”. That pursuant to litigation P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) emerging from the action thereafter taken by the Trust for evicting the plaintiff from the market, the issue came up before the Hon‟ble Supreme Court that as to whether the property in dispute belonged to the Government within the meaning of Section 3(a) of the Rent Control Act, 1952. It is in the backdrop of the aforesaid issue that the Hon‟ble Apex Court deliberating on the scope and gamut of the term “vest”, observed that the said term has not got a fixed connotation, meaning in all cases that the property is owned by the person or the authority in whom it vests. It may vest in title, or it may vest in possession, or it may vest in a limited sense, as indicated in the context in which it may have been used in a particular piece of legislation. On the basis of its aforesaid deliberations, the Hon‟ble Apex Court referring to the provisions of the Improvement Trust Act, particularly Sections 45 to 49 and Sec. 54 and Se. 54-A observed that when they speak of a certain building or street or square or other land vesting in a municipality or other local body or in a trust, it would not necessarily mean that ownership had passed to any of them. We have deliberated at length on the aforesaid judgment and though are not oblivious of the fact that the said judicial pronouncement was rendered in context of the provisions of the Improvement Trust Act and thus would not be squarely applicable for adjudicating the issue involved in the case of the assessee before us, but the gamut of the term “vest” as had been deliberated upon by the Hon‟ble Apex Court and held to have varied meanings in context in which it had been used in a particular legislation will have a strong bearing on the adjudication of the issue involved in the case before us. We find that the term vest used in sub-sec. (4) of Sec. 32 of the MIDC Act, which therein contemplates that when a notice under sub-section (1) is published in the official gazette, the land shall, on and from the date of such publication, vest absolutely in the State Government free from all encumbrances, can safely be construed as vesting in title in the context in which it has been used therein. Still further, in the backdrop of our aforesaid observations, as per sub-sec. (7) of Sec. 32, the “transfer of the land” to the assessee corporation viz. MIDC, for the purpose for which it has been acquired has to be construed as transfer of possession, with the vesting of the title of the P a g e | 47 A.Y 2011-12 Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) property remaining with the State Government of Maharashtra. We thus, in terms of our aforesaid observations are of the considered view that the claim of the assessee corporation that the ownership of the land is vested with the State Government, while for only the possession of the same is delivered to the assessee corporation in furtherance of the objects of the MIDC Act, draws force from our aforesaid observations.

We further find that it is the contention of the ld. D.R before us that as per Sec. 20 of the MIDC Act, the money received from the sale of plots becomes the assesse‟s own money by operation of law, hence the claim of the assessee corporation that it is only put into the possession of land and the sale proceeds of land received by it were held on the behalf of the State Government in a fiduciary relation under trust was clearly dislodged. The ld A.R had rebutted the said contention of the revenue on the ground that Sec. 20 of the MIDC Act only empowered the assessee corporation to keep with it the funds received on sale of land, and the same could by no stretch of imagination be construed as vesting of ownership over the said sale receipts with the assessee corporation. We have carefully perused Sec. 20 of the MIDC Act and find substantial force in the contention advanced by the ld. A.R. We find that Sec. 20 of the MIDC Act only contemplates maintaining by the assessee corporation of its “Own fund” to which the receipts specified therein are to be credited. As per Clause (c) of Sec. 20(1) of the MIDC Act, all monies received by the corporation from the disposal of lands, buildings and other properties movable and immovable, and other transactions is permitted to be credited. There is nothing which could persuade us to conclude that the ownership of the receipts credited by the assessee in the aforesaid fund would stand vested with the assessee corporation. Rather, on the contrary a perusal of Sec 19 of the MIDC Act reveals that all property, fund and other assets vesting in the assessee corporation shall be held and applied by it, subject to the provisions and for the purposes of the Act. Still further, a perusal of sub-section (2) of Sec. 20 of the MIDC Act provides that the assessee corporation is permitted to keep a prescribed sum of money out of its fund in the current deposit or deposit account, while for the money in P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) excess of the said sum shall be invested in such manner as may be approved by the State Government. We thus, in terms of our aforesaid observations are of the considered view that as a conjoint reading of Sec. 20 r.w Sec. 19 of the MIDC Act nowhere reveals vesting of the ownership of the amounts received on the sale of plots with the assessee corporation, but rather only contemplates the mode of parking of such funds, thus the claim of the revenue that the ownership of the proceeds received on the sale of plots gets vested with the assessee corporation cannot be accepted and is therefore rejected.

We shall now take up the contention of the ld. D.R that the assessee had wrongly claimed that its case was covered by Sec. 113(3-A) of the „Municipal Regional Town Planning Act‟ (for short „MRTP‟), as the said statutory provision only dealt with development of new towns. It was the claim of the ld. D.R that the case of the assessee was covered by sub-section (1A) of Sec. 40 of the MRTP Act, which was made available on the statute in the year 1994 and granted the assessee the status of a „Special Planning Authority‟. The ld. D.R further submitted that post 1994, as per sub-sec. (1A) of Sec. 40 of the MRTP Act, no notification was needed to vest the land in the assessee. It was further averred by the ld. D.R that the definition of “Planning Authority” under Sec. 2(19) of the MRTP Act also included a “Special Planning Authority”. The ld. D.R submitted that though MRTP Act was a general law while for the MIDC Act was a specific law, however as held by the Hon‟ble High Court of Bombay in the case of Rajiv Mohan Mishra Vs. CIDCO [PIL No. 80 of 2013; dated 24.03.2017] in the event of conflict between the two Acts, the MRTP Act was to prevail. The ld. D.R further taking support of the judgment of the Hon‟ble Apex Court in the case of Trig Guards Force Ltd. Vs. MIDC [Civil Appeal Nos. 984-986 of 2005; dated 06.12.2007] submitted that a perusal of the said judgment revealed that MIDC was itself using the powers given under the MRTP Act. The ld. A.R rebutting the aforesaid contention of the revenue submitted that the assessee had never claimed that its case was covered under Sec. 113(3-A) of the MRTP Act. It was submitted by the ld. A.R that as the land under P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) consideration was not acquired under the MRTP Act but under the MIDC Act, hence the provisions of the MRTP Act would not be applicable in its case. It was averred by the ld. A.R that the revenue had failed to show that the land under consideration was acquired for the purpose of MIDC Act under the MRTP Act. In the backdrop of his aforesaid submissions, it was the claim of the ld. A.R that while for the scope and ambit of the MIDC Act was in respect of acquisition and development of industrial lands, whereas the MRTP Act governed the planning and development of the identified town/area. It was submitted by the ld. A.R that the assessee corporation does not exercise jurisdiction under the MRTP Act to acquire any land that is required for development. The ld. A.R further submitted that the exercise of powers under the MRTP Act by the assessee were only to the extent of the notified towns falling under the industrial areas developed by the assessee. We have given a thoughtful consideration to the issue before us and find substantial force in the contention of the ld. A.R that as the lands were acquired in the case of the assessee corporation under the MIDC Act, therefore the provisions of the MRTP Act which governs the planned development of the identified town/area would not be applicable. In terms of our aforesaid observations the contention advanced by the ld. D.R fails and is thus resultantly rejected.

We shall now take up the contention of the ld. A.R that the A.O had erred in bringing to tax reimbursements/recoouping of expenses amounting to Rs. 32,28,67,135/- which were incurred by the assessee on behalf of the users of the land developed by it. It is submitted by the ld. A.R that the specific costs incurred by the assessee on behalf of the users of land would be shown on the asset side of the „balance sheet‟, which on being recouped from such parties was thereafter shown as deduction in the „balance sheet‟ from the asset side. It is the claim of the ld. A.R that the said amounts received by the assessee towards reimbursement of costs incurred had wrongly been brought to tax by the A.O. The ld. D.R though did not controvert the claim of the assessee that the reimbursement of cost received by the assessee could not be subjected to tax, however submitted that the P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) surplus receipts on the said count were liable to be assessed as the income of the assessee. We have deliberated at length on the issue under consideration and find ourselves to be in agreement with the contention of the ld. A.R that the reimbursement of costs cannot be subjected to tax. However, as the requisite details which would justify the veracity of the claim of the assessee that the aforesaid amount received from the users of land was in the nature of cost to cost reimbursement involving no mark up are not available before us, hence we restore the matter to the file of the A.O. The A.O is directed to verify the claim of the assessee that the aforesaid amount received from the users of land was in the nature of reimbursement of cost and did not involve any element of income. The A.O is herein directed that in case the aforesaid amount received by the assessee corporation is proved to be towards reimbursement of costs involving no element of income, then no addition on the said count shall be made in the hands of the assessee. The Ground of appeal No. 10 is allowed for statistical purposes in terms of our aforesaid observations.

We are of the considered view that from a perusal of the aforesaid facts it can safely be gathered that the A.O while giving effect to the directions given by the Tribunal in its order dated 27.03.2015 passed in the first round of appeal, had raised the originally assessed income of Rs. 1701,76,74,360/- to amount of Rs. 2456,45,98,700/-, vide his order passed under Sec. 143(3) r.w.s 254; dated 15.03.2016. On a perusal of the order passed by the Tribunal in the first round of appeal though no enhancement of the income is discernible, but the A.O in the garb of giving effect to the directions of the said order under Sec. 143(3) r.w.s 254; dated 15.03.2016 is found to have enhanced the originally assessed income from an amount of Rs. 1701,76,74,360/- to amount of Rs. 2456,45,98,700/-. We are unable to persuade ourselves to subscribe to such exercise of enhancement carried out by the A.O while giving effect to the order passed by the Tribunal. We are of the considered view that the worst detriment which the Tribunal may visit on an appellant is to dismiss the appeal with a direction in an appropriate case to pay costs. However, an order adverse to the interests of the appellant in the sense that it takes away from him a benefit which he has already acquired under the order appealed from is possible only by means of an order made either upon a cross-appeal filed by the other side or P a g e | 52 A.Y 2011-12 Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) on the basis of a cross-objections presented by him. We are of the view that though the Tribunal is vested with the power to make a remand, but the exercise of the said power has to be exercised in aid of the main power and not in excess of it. We find that our aforesaid view is fortified by the judgment of the High Court of Mysore in the case of Pathikonda Balasubba Setty Vs. CIT (1967) 65 ITR 252 (Mysore) and the order of the ITAT, Mumbai in the case of Kellogg India (P) Ltd. Vs. ACIT (2012) 19 ITR (T) 220 (Mum) We thus, in the backdrop of our aforesaid observations are of the considered view that the income of the assessee after having been set aside by the Tribunal to the file of the A.O on the aforementioned limited issues, in any case could not have been assessed at an amount in excess of that at which was originally assessed by making fresh additions which were not there in the impugned order. In terms of our aforesaid observations we direct the A.O to consider our aforesaid observations while giving appeal effect to our order passed while disposing off the present appeal. The Ground of appeal No. 12 is allowed for statistical purposes in terms of our aforesaid observations.

We shall now advert to the claim of the assessee that even if it was to be assumed, though not admitted, that the assessee corporation was carrying on trade or commerce, even then it would duly be entitled to depreciation on the assets which were used by it in carrying on the alleged trade or commerce. In the backdrop of his aforesaid contention it was submitted by the Ld. A.R that though the Tribunal had vide its order dated 27.03.2015 allowed the claim of deprecation of the assessee, however both the A.O and the CIT(A) had erred in not following the directions of the Tribunal and had wrongly declined the depreciation of Rs. 12,34,18,456/- as claimed by the assessee. We have perused the order dated 27.03.2015 passed by the Tribunal in the first round of appeal and find substantial force in the aforesaid contention of the assessee. We find that the Tribunal while deliberating on the claim of depreciation of the assessee, had therein observed at Page 43 – Para 35 of its order that depreciation computed under Sec. 32 of the Income-tax Act, 1961 should be deducted for the purpose of P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) arriving at the income of the assessee. We find ourselves to be in agreement with the claim of the ld. A.R and are pained to observe that despite specific directions by the Tribunal to allow depreciation to the assessee while computing its income under the provisions of the Income-tax Act, the same had not been allowed by the lower authorities. We thus, herein restore the matter to the file of the A.O with a clear direction to allow the claim of depreciation of the assessee, as per law. The Ground of appeal No. 13 is allowed in terms of our aforesaid observations.

That as we have observed that the incomes arising from the lands under consideration viz. lease premiums, rent, interest income on bank deposits etc., were not the income of the assessee and had rightly been shown by it as accretion in the liabilities in the „balance sheets‟, hence we refrain from adverting to and adjudicating upon the contentions advanced by the ld. A.R before us in respect of quantification of the additions on merits on the said count. The Ground of appeal No. 11 is disposed off in terms of our aforesaid observations.

We further find that as claimed by the ld. A.R before us, the revenue had consistently for the last many decades accepted the claim of the assessee that the incomes arising from the lands under consideration viz. lease premiums, rent, interest income on bank deposits etc., were not the income of the assessee corporation and had rightly been shown by it as accretion in the liabilities in the „balance sheets‟ for the said respective years. Rather, the assessee corporation as a matter of fact had been preparing its accounts in „Form C‟ i.e the manner prescribed in the MIDC Rules since the year 1961, which were consistently accepted by the C & AG as well as by the Income-tax department for the last more than 50 years. However, without pointing out any change of facts, the revenue authorities had during the year under consideration adopted an inconsistent approach and dislodged the said claim of the assessee. We are of the considered view that as observed by the Hon‟ble Supreme Court in the case of Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC) that though res judicata does not P a g e | Maharashtra Industrial Development Corporation Vs. Deputy Commissioner of Income Tax (Exemption) -2(1) apply to income-tax proceedings and each assessment year is an independent unit, thus what is decided in one year may not apply in the following year, but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. Thus, in the backdrop of the fact that the revenue authorities in the case of the assessee had for decades admittedly accepted that the income arising from the lands under consideration viz. lease premiums, rent, interest income on bank deposits etc., as claimed by the assessee were not liable to be assessed as its income, hence in the absence of any material change in the facts the inconsistent approach adopted by the revenue authorities during the year under consideration by bringing the aforesaid receipts to tax as the income of the assessee corporation was even on the said count not justified. The Ground of appeal No. 9 is allowed in terms of our aforesaid observations.

The appeal of the assessee is partly allowed in terms of our aforesaid observations.