CIDCO not Liable to pay Tax for the Income Earned by it as an Agent of Maharashtra Govt: ITAT [Read Order]

While granting relief to CIDCO Limited, the Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the Company is not liable to pay tax for the income earned since it is working as an agent of Maharashtra Government.

In the present case the assessee company worked as an agent of Maharashtra Government. During the year it earned certain sum of income from its transport activities and the Assessing Officer (AO) assess the income and the same was brought into tax in the hands of the assessee.

Before the bench, the assessee contended that it is an agent of the State Government of Maharashtra and the assessee is not doing any trade activity of its own and the entire income of the assessee gets deposited in the consolidated fund of the State and therefore the Revenue Authorities were in error in assessing business income in the hands of the assessee.

But the AO was opinioned that there is no document which has drawn out the Agent-Principal relationship, hence it cannot be confirmed that the assessee worked as a real agent of the Maharashtra Government.

After perusing the material facts and circumstances, the tribunal bench comprising of Judicial Member C.N.Prasad and Accountant Member Manoj Kumar Aggarwal observed that the assessee successfully proved that it has worked as an agent of the Maharashtra Government. The division bench further observed that while analyzing all the financial functions of the assessee it is clear that all dealings have to be routed through authorizations by the Government and all funds receivable shall be in compliance, it indicate that the assessee was a real agent of the state Government of Maharashtra, hence cannot accept the submissions of the revenue and the absence of a document regarding the agent-principal relationship between the assessee and the Maharashtra Government has not relevance in the present circumstances.