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TMI Blog2018 (11) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... k 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. - Decided against the Revenue. Holding the land in fiduciary capacity - Held that:- as the assessee corporation is authorised to enter into lease agreements by virtue of Sec. 14, 15 and 37 of the MIDC Act, thus the contracts made thereof being of a statutory nature would thus not fall within the sweep of Article 299 of the Constitution of India. We thus, in terms of our aforesaid observations are unable to persuade ourselves to subscribe to the aforesaid claim of the revenue authorities, which thus fails and is rejected. Merely because 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 are unable to comprehend that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground of appeal No. 11 is disposed off in terms of our aforesaid observations. Decided in favor of assessee and against the Revenue. - ITA No. 4474/Mum/2017 - - - Dated:- 7-9-2018 - SHRI G.S.PANNU, AM AND SHRI RAVISH SOOD, JM For The Appellant : Shri V. Sridharan And Shri S. Sriram, A.Rs For The Respondent : Shri Purushottam Tripuri, CIT D.R ORDER Ravish Sood, Judicial Member The present appeal filed by the assessee is directed against the order passed by the CIT(A)-1, Mumbai, dated 12.04.2017, which in itself arises from the order passed by the A.O under Sec.143(3) r.w.s. 254 of the Income Tax Act, 1961 (for short Act ), dated 15.03.2016. The assessee assailing the order of the CIT(A) has raised before us the following grounds of appeal: 1. The learned Assessing Officer and CIT(A) erred in holding that the lands in question are not owned by the Government of Maharashtra. Consequently, it is submitted that income is not taxable at the hands of the assessee corporation. 2. The learned Assessing Officer and CIT(A) have concluded that there is an irrevocable transfer of lands to the assessee thus not attracting section 61 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee are owned, controlled and managed by itself, without any interference from Government of Maharashtra, and thus the income is not of Government of Maharashtra but of the assessee. 8. The learned Assessing Officer and CIT(A) erred in treating the accretions to the liability side of balance sheet of the assessee as the income earned by the assessee during the year. 9. It is undisputed that for decades, the accretions to the deposits shown in the liability side of the balance sheet have never been treated as income by the income tax department. The rule of consistency debars the Revenue from taking a contrary stand in the current assessment year. 10. The learned Assessing Officer and CIT(A) erred in holding that the recovery/recoupment of costs of ₹ 32,28,67,135/- by the assessee from the lessees, shown as reduction from the assets, is the income of the assessee. The said authority ought to have simultaneously considered corresponding expenditure debited to assets and given deduction for the same. Consequently, the addition will be nil. 11. The learned Assessing Officer and CIT(A) erred in not noticing that in any event, the learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was noticed by the A.O that while framing the assessment for the immediately preceding year the assessee having been held by him as not being a valid trust was thus on the said ground disentitled from claim of exemption under Sec. 11 of the Act. Following his aforesaid view, the A.O while framing the assessment for the year under consideration held that the assessee not being a valid trust was thus not eligible for exemption under Sec. 11 of the Act. Alternatively, he was also of the view that as the activities carried on by the assessee were commercial in nature, hence the proviso inserted by the Finance Act, 2008 in Sec. 2(15) of the Act would be applicable to the case of the assessee. In the backdrop of his aforesaid observations the A.O concluded that since the gross receipts from the aforementioned activities carried out by the assessee had exceeded the prescribed limit of ₹ 25 lac during the year under consideration, therefore, the assessee by virtue of the proviso to Sec. 2(15) of the Act could not be considered to be carrying on any charitable activity within the meaning of the said statutory provision. The assessee in its rebuttal assailed the aforesaid observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted 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 : (a) Section 58 of the MID Act provided that Government, by a notification, may declare that the Corporation shall be dissolved from such a date as may be specified in the notification. The Ld. CIT(A), accordingly held that the provisions of section 58 of MID Act rendered that nature of the assessee as a revocable trust. (b) The assessee is primarily engaged in such kind of activities which are in the nature of business, manufacture and commerce resulting in some kind of benefit to the industries/industrial development. Hence the activities are only very remotely connected with the development of the public at large. Hence, the proviso to section 2(15) is fully applicable to the assessee. Still further, the CIT(A) after deliberating on the contentions advanced by the assessee was however not persuaded to subscribe to the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 7. 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 acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 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. (i) the lands which were acquired by the State Government under Sec. 32 r.w.s. 1(3) of the MIDC Act and the ownership of which being vested with the State Government as per Sec. 32(4) of the MIDC Act could thereafter be transferred under Sec. 32(7) to the assessee corporation by issuance of a notification; and (ii) the lands which already belonged to the State Government and could be placed at the disposal of the assessee corporation i.e. MIDC as per Sec. 43-1A of the MIDC Act. It was submitted by the Ld. A.R that neither the government had issued any no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the lands acquired or belonging to the Government of Maharashtra had never been transferred to the assessee i.e. MIDC. The Ld. A.R. in order to support his aforesaid contention drew our attention to an affidavit of Mrs. Vaidehi Ranade, General Manager (land acquisition). Alternatively, it was submitted by the Ld. A.R that even otherwise a transfer of land mentioned in Sec. 32(7) of the MIDC Act could not be construed as a transfer of the ownership or title of the land to the assessee corporation by the State Government, as the same was merely a transfer of possession in order to facilitate necessary disposal. It was the claim of the Ld. A.R that the meaning of transfer had to be read contextually and the same being for a limited purpose of enabling the assessee corporation to deal with the land as per the provisions of the MIDC Act, thus could not be construed as a transfer of the ownership of the same. The Ld. A.R in order to support his aforesaid contention relied on the judgments of the Hon ble Supreme Court in the case of CIT v. Narang Dairy Products [1996] 219 ITR 478 and State of Orissa v. Gouranga Prasad Gountia 1974 (40) CLT 237. The Ld. A.R further adverting to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same since then. It was further submitted by the Ld. A.R that the said legal obligation was clearly captured in the notes appended to the accounts of the assessee. Still further, the Ld. A.R in order to fortify the veracity of the accounts of the assessee submitted that the same were independently drawn up by the C AG in a separate audit report (Page 151) of APB-Volume I. The Ld. A.R in order to drive home his claim that the land was handed over to the assessee by the Government of Maharashtra for the limited purpose of industrial development, submitted that the same could safely be gathered from the fact that the assessee was given only a possession letter by the land acquisition officer of the State Government. The Ld. A.R in order to substantiate his aforesaid claim took us through a copy of the possession letter at Page 800-801 of APB-Volume III. It was further submitted by the Ld. A.R that the procedure of handing over the possession of the land by the State Government to the assessee viz. MIDC also referred to the aforesaid aspects only. It was thus the claim of the Ld. A.R that there was no conveyance by which the title of the land could be shown to have been transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MIDC Act were more akin to MHAD Act and MMRDA Act as the intention of the State Government was never to vest any land acquired with the assessee corporation viz. MIDC. The Ld. A.R further taking support of the judgment of the Hon ble Supreme Court in the case of Tata Motors Ltd. v. Talathi of Village 2011 (7) SCC 839, submitted that the Hon ble Apex Court in its aforesaid judgment had approved a Circular dated 29.03.1975 issued by the Government of Maharashtra in context of its relationship with MIDC. The Ld. A.R. vehemently submitted that the Hon ble Supreme Court in its aforesaid judgment had observed that the lessees of MIDC were government lessees as they were exempted from paying the non-agricultural assessment tax. Still further, the Ld. A.R in order to drive home his contention that the lands under consideration were owned by the government and not by the assessee, relied on the judgment of the Hon ble Supreme Court in the case of Fruit Vegetables Merchants Union v. Delhi Improvement Trust AIR 1957 SC 344. The Ld. A.R taking us through the aforesaid judicial pronouncement submitted that the Hon ble Apex Court had held that when a property is vested with an authority for im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Board v. Dy. CIT [1996] 221 ITR 317 (Guj.). In the backdrop of the aforesaid contentions, it was submitted by the Ld. A.R that as the government had only vested the possession of the lands with the assessee corporation, hence only a fiduciary relationship was created between the assessee corporation and the government by the operation of law and no beneficial interest was conferred upon the assessee corporation. The Ld. A.R in support of his aforesaid contention relied on the judgment of the Hon ble Apex Court in the case of Poona Electric Supply Co. Ltd. v. CIT [1965] 57 ITR 521 (SC). It was thus the claim of the Ld. A.R that as the lands which were held by the assessee corporation on behalf of the state government were leased as per the guidelines and directions in the MIDC Act, hence the ownership of the sums received on leasing of the lands was clearly diverted at source to the State Government. In support of the aforesaid contention reliance was placed on the judgment of the Hon ble High Court of Bombay in the case of Somaiya Organao Chemicals Ltd. v. CIT [1995] 216 ITR 291. Alternatively, it was submitted by the Ld. A.R that the A.O had even otherwise erred in treati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame as the income of the assessee for the year under consideration. The Ld. A.R in support of his claim that reimbursement of costs cannot be regarded as the income of the assessee, relied on the judgment of the Hon ble High Court of Calcutta in the case of CIT v. Dunlop Rubber Co. Ltd. [1983] 142 ITR 493. It was further submitted by the Ld. A.R that the A.O had erred in enhancing the income while framing the assessment under Sec. 143(3) r.w.s 254, as against the income as stood assessed in the course of the original assessment proceedings. Reliance in support of the aforesaid contention was placed on the judgment of the Hon ble High Court of Mysore in Pathikonda Balasubba Setty v. CIT [1967] 65 ITR 252 and the order of ITAT, Mumbai in the case of Kellogg India (P.) Ltd. v. Asstt. CIT (2012) 19 ITR (Trib). It was further submitted by the Ld. A.R that even if it was to be assumed, though not admitted, that the assessee was carrying on trade or commerce, even then it would duly be entitled for 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 Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 (supra) 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 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification transferring the same was produced by the assessee as having been issued under Sec. 56. 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. (supra), 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered 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 v. 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 plannin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income arising therefrom viz. lease premiums, rent, interest income earned on the funds parked as deposits with the banks etc. were liable to be assessed as the income of the assessee corporation. We are of the considered view that as held by the Hon ble Supreme Court in the case of ITO v. Ch. Attchaiah [1996] 218 ITR 239, it is obligatory on the part of the revenue authorities to assess the income in the hands of the right person and the right person alone. We have deliberated at length on the issue under consideration in the backdrop of the contentions advanced by the representatives for both the parties and perused the exhaustive material placed on record and the judicial pronouncements relied upon by both the parties to drive home their respective claims. It is the contention of the assessee before us that all the industrial lands are held by the assessee corporation on behalf of the State Government of Maharashtra. It is further claimed that the assets which are owned by the assessee in its own name viz. buildings and other assets are separately shown in its own name in its balance sheet . We are of the considered view that the issue as to in what status the lands under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees of such industries; (vi). to allot factory sheds or such buildings or parts of buildings, including residential tenements to suitable persons in the industrial estates established or developed by the assessee corporation; and (vii). to modify or rescind such allotments, including the right and power to evict the allottees concerned on breach of any of the terms or conditions of their allotment. We find from a perusal of the aforementioned functions and powers of the assessee corporation that in furtherance of its object of establishing and developing industrial estates and industrial areas selected by the State Government for the said purpose, the assessee corporation subject to the provisions of the MIDC Act is vested with the powers of acquiring and holding property and leasing, selling, exchanging or transferring the same on such conditions as it may deem fit, as well as purchasing or taking on lease or under any form of tenancy any land, erect buildings on the same and make the same available on hire or sale to industrialists or persons intending to start industrial undertakings. Still further, the assessee corporation as per Sec. 17 of the MIDC Act also stands vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rather, a thoughtful deliberation of the context in which the term transfer had been used in sub-sec. (7) of Sec. 32 reveals that the same is in reference to advancing of the purpose for which such land was acquired, with a further mention of application of the provisions of Sec. 43-1A of the MIDC Act to the land acquired by the State Government. In the backdrop of our aforesaid observations, we are of the considered view that now when Sec. 43-1A [application of which is referred to in sub-sec. (7) of Sec. 32] contemplates placing of the land vested in the State Government at the disposal of the assessee corporation for developing by, or under the control and supervision of the corporation, and thereafter to be dealt with for the furtherance of the objects of the MIDC Act in accordance with the regulations made and directions given by the State Government in this behalf, hence the claim of the revenue of there being an absolute transfer of the ownership of the land to the assessee corporation can safely be ruled out. We have given a thoughtful consideration to the issue under consideration and are of a strong conviction that a perusal of the scheme of the MIDC Act reveals beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation in a fiduciary capacity under trust on behalf of the State Government was clearly disproved. The ld. D.R in order to buttress his aforesaid claim submitted that as Article 299 of the Constitution of India required that every contract made by the Government shall be expressed to be made by the President or by the Governor of the State, thus the aforesaid factual position proved to the hilt that the lands held by the assessee were not owned by the State Government of Maharashtra. The ld. A.R rebutting the said contention of the revenue submitted that as Article 299 of the Constitution of India was applicable only in respect of the contracts entered into in exercise of the executive powers of the Government, thus the said contention of the revenue was grossly misconceived. We have deliberated at length on the issue under consideration. We would not hesitate to observe that though at the first blush the aforesaid contention of the revenue appeared to be convincing, however on a perusal of the Article 299 of the Constitution of India we are unable to persuade ourselves to subscribe to the said claim of the revenue. Admittedly, all the contracts made in exercise of the executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ert to the judgment of the Hon ble Supreme Court in the case of Digamber (supra); 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 by the State Government of Maharashtra for the purpose of development by the corporation is in ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 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 rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 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. 26. 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 Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds 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. 27. 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 (supra). 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. Subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished 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 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. 28. 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 (supra) 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. (supra) submitted that a perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the Tribunal in its order dated 27.03.2015 passed in the first round of appeal, had raised the originally assessed income of ₹ 1701,76,74,360/- to amount of ₹ 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 ₹ 1701,76,74,360/- to amount of ₹ 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 34. 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. 35. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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