The Greater Cochin Development Authority (GCDA) is set to move the Supreme Court next week, seeking exemption from paying income tax after its repeated petitions to the Central and State governments went in vain.
The GCDA secretary and lawyer, who were in New Delhi earlier this week, have engaged a senior Supreme Court advocate to fight the agency’s case. The legal battle is likely to cost the agency about Rs. 10 lakh.
The GCDA’s move comes after the Income Tax Department got the stay secured by it from the High Court against tax collection vacated a few weeks back.
The agency had on March 30 paid Rs. 2 crore out of the Rs. 5 crore it was asked to pay as income tax for the 2014-15 period. GCDA chairman N. Venugopal alleged that the Income Tax Department had warned of freezing the agency’s bank accounts if it did not pay the tax.
“We will argue for an exemption in the Supreme Court stating that the GCDA is a development agency using its own revenue to undertake socially committed projects and meet expenses without any grant from the government. While all local bodies remain out of the income tax net, the development agencies in the State have not been given such exemption,” Mr. Venugopal said.
Except for a grant of Rs. 3.20 crore last year, the GCDA had not received any assistance from the State government, he said. Mr. Venugopal pegged the GCDA’s annual income at around Rs. 23 crore with additional revenue of Rs. 2 crore as interest from fixed deposits. Out of this, about Rs. 7 crore is spent on salaries, about Rs. 4.50 crore on pension, and more than Rs. 10 crore on various projects, including infrastructure projects, for the benefit of the public.
Mr. Venugopal had met Income Tax authorities after the GCDA was first asked to pay the tax in 2012-13. “But they declined to accept our reasoning that we were a self-sustained agency working with social commitment. That year, we had to pay Rs. 50 lakh and were asked to pay Rs. 5 crore the next financial year. That’s when we approached the High Court and secured the stay,” he said.
Legal battle likely to cost the agency about Rs.10 lakh.
