The Income Tax Appellate Tribunal (ITAT) recently directed that income tax cannot be levied on the rent from land acquired by the Maharashtra Industrial Development Corporation (MIDC) and given on lease. The tribunal also directed the Income Tax department to refund the ?395 crore it had collected with 12% interest to the MIDC. A Bench of G.S. Punnu and Ravi Sood, in its order last week, cancelled tax recovery of ?9,000 crore from the MIDC for 10 years. According to MIDC officials, the order will also benefit corporations such as the City and Industrial Development Corporation, the Maharashtra Housing and Area Development Authority and the Mumbai Metropolitan Region Development Authority. The Income Tax department had started tax collection on the leased rent amount on land acquired by the MIDC from 2006 to 2016. The department issued notices for the recovery of tax dues worth ?9,000 crore. The Income Tax department sealed the bank accounts of the corporation and recovered ?395 crore. While opposing the Income Tax department’s move to levy tax, the MIDC argued that though it controls the land, its ownership remains with the State government. “We informed the tribunal that being the representative of the government, the lease amount is not used commercially or to make profit,” said an official from the Industries Department. The MIDC had approached the Supreme Court, which granted the stay. The matter was referred to the Income Tax Commissioner, who rejected the appeal. The MIDC then challenged the appeal before the tribunal.

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