Mumbai: The Mumbai Metropolitan Region Development Authority (MMRDA), which is financing and executing most of the big-ticket transport infrastructure projects in Mumbai, has unpaid income tax dues of nearly Rs 8,000 crore as of 2017-18.
The Maharashtra Chief Minister Devendra Fadnavis-led development authority is at loggerheads with the income tax department over the dues and has appealed for an exemption, saying it is an agency creating public infrastructure with public money, without any profit motive, said sources in the agency.
“We have appealed against it in the larger interest. We are executing public projects with public money. There is no profit that we are making here, so we should not ideally have to pay any income tax,” R.A. Rajeev, metropolitan commissioner, MMRDA, told ThePrint.
The agency, which was initially exempt from paying income tax, was brought under the tax net through an amendment in the Finance Act in 2015, said an MMRDA official who didn’t want to be named.
Another MMRDA official said the authority has been challenging the IT department’s move since 2015. “We appealed at the Income Tax appellate authority and got a stay on the order asking us for recovery of tax. The matter is still sub-judice,” he said.
Now the MMRDA plans to approach the Centre once a new government is formed after the 23 May Lok Sabha election results for an amendment to exempt the agency from paying income tax.
“Simultaneously, we are also preparing to approach the Bombay High Court to seek waiver from paying income tax,” said Rajeev.
According to the Income Tax department, however, MMRDA’s total outstanding demand for assessment years 2010-11 to 2016-17 is Rs 6,945 crore.
CBDT spokesperson Surabhi Ahluwalia, when reached for comment, told ThePrint, that the “activity of the MMRDA” was seen to be “commercial in nature” and, therefore, the authority was not exempt from income tax.
“The demand has been raised by invoking Proviso to Section 2(15) of the I.T. Act, 1961, holding the activity of MMRDA to be commercial in nature, thereby not being eligible for exemption u/s 11 of the I.T. Act, 1961. MMRDA has filed appeals for all the relevant years, which are pending for disposal.”
Ahluwalia also said that recovery of demand in the case could not be effected as the Bombay High Court has stayed it until the disposal of appeals by the CIT(A).
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What MMRDA does
The MMRDA is implementing Metro projects worth over Rs 1 lakh crore in the Mumbai Metropolitan Region, comprising the city and its satellite settlements.
It is also implementing several multi-crore road projects in the urban agglomeration, including the showpiece Sewri-Nhava Sheva trans-harbour link, touted to be the country’s longest sea-link.
The authority raises funds for infrastructure works by auctioning plots in areas such as Bandra Kurla Complex, where it has been designated the special planning authority, and through subordinate debt from the state government for specific projects.
It also raises funds for projects through loans from international financing agencies such as Japan International Cooperation Agency, the World Bank and the Asian Development Bank.
The income tax dues — about Rs 8,000 crore — are roughly equivalent to the cost of a 20-22 kilometre elevated Metro line.
Other government agencies exempt from I-T
The MMRDA discussed its income tax dues at a recent meeting of its executive committee, headed by the Maharashtra chief secretary, in March.
“If the state government declares MMRDA to be a part of the government, the authority can get a tax waiver,” said the agency official.
“In the meeting, the then chief secretary, D.K. Jain, asked the MMRDA to send such a proposal to the state urban development department requesting it to issue a resolution declaring the MMRDA to be part of the government,” added the official.
He added the authority has learnt that other agencies such as the Maharashtra Industrial Development Corporation and the City and Industrial Development Corporation are exempt from paying income tax.
Rajeev, however, said not all agencies are declared a part of the government and the MMRDA is currently focused on getting an exemption from income tax by either seeking an amendment in the Act or through court intervention.
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This report has been updated with the response from the CBDT spokesperson.