Hyderabad: In order to get the tax exemption from the income tax department, the Hyderabad Metropolitan Development Authority (HMDA) has decided to hand over 175 acres of its prime land in Kokapet to the state government.
According to an official, the HMDA would have to pay Rs 1,000 crore tax if it carries on with the auction and sell the land worth Rs 4,000 crore. However, the move by HMDA would boomerang if the government refused to permit the auction and decides to utilise the land for some other developmental activities. The HMDA would become bankrupt and a prolonged legal battle it fought for the land would become futile.
According to highly placed sources, the erstwhile government had transferred the Kokapet land to HMDA in 2006 and gave permission to auction the same to financially strengthen the organisation. The HMDA auctioned 168 acres of land for `1,775 crore. However, a few individuals who claimed to be legal heirs of Nawab Nusrat Jung-1 challenged auction claiming ownership of the land but a division bench of Hyderabad High Court ruled in favour of HMDA. The verdict was later challenged in the apex court.
After winning the legal battle in October last year, the HMDA decided to transfer the ownership rights to the government, eyeing an I-T exemption of `1,000 crore. Sources said if the government decided to use the land for a different purpose and transferred it to the revenue department, it would be a major setback to the HMDA and its success of winning the legal battle would be short lived.
A senior HMDA official said that if the authority auctions the Kokapet land, it would not attract section 12AA Registration (Exemptions) which pertains to charitable institutions that are exempt from paying tax. He said that the HMDA was not in a financial position to loose `1,000 crore in the form of taxes.
The official, however, said that the government has given an assurance that it would not transfer the ownership of the land to the revenue department. He said the HMDA would be the nodal agency for demarcation of layouts and auctioning them. “Since the I-T department claimed that the revenues from auctions was taxable, the HMDA will now play the role of a facilitator for implementation of various welfare schemes and developmental activities announced by the government,” he said.
The official said a special mechanism would be set up where in the money from auctioning the Kokapet land will be deposited in the HMDA’s account soon after it reaches the government....