Nagpur: In an unusual move, the Income-Tax Department on Thursday approached the Nagpur Bench of Bombay High Court and sought recovery of income tax from Nagpur Improvement Trust (NIT) on the plea that the development agency is carrying out commercial kind of works. The NIT is eligible for assessment of income tax and the same could be recovered from it, said the petition filed by Income-Tax Department before the Division Bench of Justice Bhushan Dharmadhikari and Justice Vinay Deshpande. After hearing on the matter, the Court issued a notice to NIT and directed to file its affidavit within two weeks.
The NIT undertakes various development works and at the same time deals in selling plots of lands by creating layouts. With these deals the NIT earns money in crores. Apart from huge money from land deals the NIT also receives certain share of stamp duty paid by the customers to the State Government. Moreover, the NIT has fund of approximately Rs 44.10 crore including Haj House Construction Fund, Special Vidarbha Development Fund, MP-MLA Fund, Dalit Slums Development Fund, etc. Hence NIT is eligible to pay income tax and therefore the Income-Tax Department be given permission to assess and recover the tax from the development agency, argued the petition. Considering all these aspects, the Department even had assessed the income tax. However, the NIT moved the Income Tax Appeal Authority and challenged the tax assessment against it. After hearing all the sides, the Income Tax Appeal Authority had ruled that since the NIT is local self body, income tax could not be assessed for recovery of the same. But the Income Tax Department challenged the ruling in the High Court.
Hearing in the matter was held before the Justice Bhushan Dharmadhikari and Justice Vinay Deshpande issued notice to NIT and directed it to file an affidavit within two weeks.
Adv Anand Parchure represented the Income-Tax Department.