TMI Blog2019 (8) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... y issue to be adjudicated in this appeal is with regard to challenging the action of the ld. CIT(A) in confirming the levy of penalty u/s.271(1)(c) of the Act in respect of addition made in the sum of ₹ 1,00,00,000/- received as repairs and maintenance grant from the Government of Maharashtra and addition made in the sum of ₹ 1.05 lakhs received as rental income by the assessee. We find that the Co-ordinate Bench decision of this Tribunal in assessee s own case in the quantum proceedings in ITA No.3072/Mum/2014 for A.Y.2010-11 dated 19/06/2019 had deleted the aforesaid two additions. The relevant operative portion is reproduced hereunder:- 18. Issue nos. 5 6 are inter connected, therefore, are being taken up together for adjudication. However, the assessee has challenged the order of the CIT(A) in which the CIT(A) has treated the grant of ₹ 1 crores of Government of Maharashtra and rental income of ₹ 1,05,000/- as income from business of Assessee. The main contention of the assessee is that the CIT(A) was not authorized to decide the issue which was not before him and to raise the addition in question. On appraisal of the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any, as Parliament by Law provide in respect of a trade or business of any kind carried on by, or on behalf of the Government or State, or any operation connected therewith, or any property used or occupied for the purpose of such trade or business, or any income accruing or arising in connection therewith and Article 289(3) reads, Nothing in clause (2) shall apply to any trade or business, or to any class of trade or business, which Parliament may by Law declare to be incidental the ordinary functions of Government . 39. To our mind, the entire case of the assessee in the instant case, hinges on clause (2) or clause (3) of Article 289 of the Constitution of India. The basic purport of Article 289(2) is to neutralize clause (1), but with a rider that, if there is any trade or business , done on behalf of the Government or any operations connected therewith or any property issued or occupied for the purposes of such trade or business, or any income accruing or arising in connection therewith. To make this clause effective, even for Government / State, conduct of trade or business is necessary, which simply means involvement of commercial and profit motive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficulty in holding that the said income is the income of the State. It may be that the statute under which a notification has been issued constituting the appellant corporation may provide expressly or by necessary implication that the income derived by the corporation from its trading activity would be the income of the State . This observation read together with section 113(3A) of MR TP Act, 1966, shall emerge that the activity so performed by the assessee is nothing but an act of State without any profit or commercial motive attached with it. The only clause left for our consideration then would be clause (3), which shall come into play once clause (2) is disbanded and as soon as it become disbanded, clause (3) come to life, which operates only if, Parliament may by Law declare to be incidental to the ordinary functions of Government . Here, in the instant case, we have to read Parliament as State Government because in the instant case, it is the State Government which has authorized the assessee to perform the development projects at Navi Mumbai, VasaiVirar, Waluj and such other places. 40. We cannot agree with the argument of the DR that there is no do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k to the State, i.e. when there is a development project, as per phases, and in the case of local authority, as and when the authorizing committee is satisfied, the reins are transferred to the municipal boards, from whom, the project was taken over, as we have seen from Resolution no. 10375 dated 06/08/2010. 43. In tune with these observations, read with sections 113 113A of MR TP Act along with Articles 289(1) 289(3) and holding that the assessee corporation is not doing any trade activity on its own accord, we hold, relying on the decision of the Hon ble Bombay High Court in the assessees own case, in the Writ Petition, following the decision Percival case (supra), wherein it has been held, that CIDCO, the assessee herein, is an agent of the State Government of Maharashtra. We, therefore, respectfully follow the Hon ble jurisdictional High Court of Bombay, as held in the case of Percival (supra), and hold, the assessee to be the agent of the State Government of Maharashtra, read with the entire overwhelming documents, suggesting that there is no income to the assessee as such, and whatever is, generated, it gets deposited in the Consolidated Fund of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Government company. MADC has been formed to play a lead role in the planning and implementation of the Multi-modal National Hub Airport at Nagpur (MIHAN) project. The main objects of the appellant company as per clause Ill (A) of the Memorandum of Association is to design, plan, construct, erect, build, remodel, repair, execute, develop, operate, sale, lease, rent, improve, administer, manage control, maintain and demolish airport, air-traffic equipment, traffic terminals, roads, railways, highways, expressways, bridges, tunnels, railroads, urban transport systems, alleys, township schemes, industrial, docks, shipyards, canal, wells, ports, reservoirs, embankments, dams, r-cation works, reclamations, improvements, sanitary systems, water works, water gas or any other structural or architectural work and Special Economic Zones. It is the most essential business activity of the appellant to operate the SEZ and income from leasing out parts of it to eligible persons for eligible activities, with It approval of Govt. of India and inconformity with SEZ policy. 5.5.3 The assessing officer has failed to explain why this essential component of appellant's business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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