CIDCO was issued I-T notice in July this year, asking to file income tax for the fiscal 2005-06
The Bombay High Court has stayed Income Tax department's notice asking City and Industrial Development Corporation of Maharashtra (CIDCO) to pay tax to the tune of Rs 453 crore. CIDCO received the notice in July this year, in which the I-T department had asked it to file income tax for the fiscal 2005-2006. Soon after, the corporation approached the I-T tribunal with a request to waive off the tax, but the tribunal rejected its claim.
It then knocked the doors of the High Court earlier this month arguing that since it's a government agency it should be exempt from paying tax. The court put a stay on the notice, giving temporary relief to the cash-rich corporation.
Confirming the reports, Tanaji Satre, managing director of CIDCO, said, "We received the notice from the I-T department asking us to file income tax of Rs 453 crore for the fiscal 2005-06. However, CIDCO is a government agency and we are not supposed to file taxes on the income earned. On receiving the notice, we approached the I-T tribunal but it rejected our claim. We have filed a writ petition in the Bombay High court, and hearing our petition, the court has put a stay on the notice."
I-T officials say Citing the reason for slapping CIDCO with the tax notice, I-T officials said that CIDCO collects huge funds in the sale, transfer and lease of land. An I-T officer on condition of anonymity said, "As per Section 194 (A) of the Income Tax Act, government agencies are not supposed to file income tax. However, CIDCO collects a huge income through the sale, lease and transfer of land and through development. This means it is a profit-making company. So the I-T department has sent a notice to CIDCO, asking it to file income tax."
CIDCO says However, CIDCO claims that the profit it earns is spent for public works. "Unlike any private company, CIDCO uses all profits earned from the sale, transfer and lease of land and other means for public use. Private companies use their profits for themselves. But CIDCO uses the profit for development of various infrastructure projects like Central Park in Kharghar, Urban Haat in Navi Mumbai," said Satre.