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2018 (11) TMI 778 - AT - Income TaxOwnership of land - irrevocable transfer of lands from the state government to the assessee corporation - taxability of lease premium, interest income etc. in the hands of assessee - application of section 60, 61 and 62 of the act. Held that:- the land acquired by/vested with the State Government were only placed at the disposal of the assessee corporation for the furtherance of the objects of the MIDC Act - 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 - income arising therefrom viz. lease premiums, rent, interest income on funds parked as deposits with the bank etc., cannot be taxed as the income of the assessee corporation - Decided against the Revenue. 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. - 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 as to how the ld. D.R had construed the said facts for arriving at a self suiting, but a baseless observation that the same proved that the assessee corporation was the owner of the land under consideration. 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. Depreciation claimed by the assessee corporation u/s 32 while computing its income - Held that:- Depreciation computed under Sec. 32 of the Income-tax Act, 1961 should be deducted for the purpose of 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 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. Decided in favor of assessee and against the Revenue.
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