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2023 (12) TMI 777 - BOMBAY HIGH COURTReopening of assessment against agent of the State Government - as argued Petitioner is only an agent of the State Government and as the State Government itself cannot be taxed, Petitioner also cannot be taxed - as argued in any event the income of Petitioner is restricted to Rs. 5,00,000/-, which has been offered to tax and an assessment order dated 31st March 2016 has been passed accepting the same etc, therefore, the question of any tax escaping assessment also would not arise - HELD THAT:- When the matter was carried in appeal, the Division Bench of this Court in [2013 (3) TMI 826 - BOMBAY HIGH COURT] came to a categorical finding that from bare reading of Sub-section 3(A) of Section 113 of the MRTP Act, it is crystal clear that Petitioner is declared as an agent of the State Government and this statutory status bestowed on Petitioner cannot be whittled down, nor can be elevated to any other position by an administrative decision. The Division Bench also came to a finding that Petitioner is getting only Rs. 5,00,000/- per annum towards administrative expenses and Petitioner on its own has pleaded before the ITAT that it was acting as an agent of the State Government and nothing more. The Court has also observed that the ITAT has accepted that contention of Petitioner and held that Petitioner was not liable to pay income tax on the income derived from the development activities. In another [2019 (7) TMI 2009 - BOMBAY HIGH COURT] heard by the Aurangabad Bench of this Court, the Court has accepted that the conjoint reading of the provisions under Sections 40(1)(b) & 113 of the MRTP Act and the notification dated 1st June 1973 issued by the State Government, Petitioner would be acting as Special Planning Authority and as an agent of the State Government. ITAT in its order [2012 (9) TMI 331 - ITAT MUMBAI] while considering the issue whether Petitioner should be held to be “an agent” of the State or an “arm” of the State, working solely under the authority and guidelines issued through various notifications by the State, i.e., the Government of Maharashtra has come to a finding that the resolutions taking back to 1970 make it clear that Petitioner is an agent and functions as an arm of the State Government because Petitioner can only work under the control and supervision of the State Government meaning thereby Petitioner cannot make/take any decisions suo-motu. ITAT has also held Petitioner to be an agent of the State. ITAT has also recorded that it was aware that there is an income to Petitioner by way of remuneration received from the State Government at Rs. 5,00,000/- per annum, which has to be assessed in the hands of Petitioner. The ITAT set aside the order passed by the Commissioner of Income Tax (Appeal) and directed the Assessing Officer to decide the case on merits with regard to income of Rs. 5,00,000/- received by Petitioner after allowing deduction for any expenses incurred wholly and exclusively for the purpose of earning the said income. Even in the assessment order for Assessment Year 2013-2014, i.e., the case at hand, passed under Section 143(3) of the Act, the Assessing Officer has accepted the returned income of Petitioner to be a fixed amount of Rs. 5,00,000/- only. Thus the question of any income escaping assessment in the case of Petitioner does not and cannot arise.
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