Vidarbha Irrigations Bank Accounts Frozen

The cash-starved Vidarbha Irrigation Development Corporation has suffered another blow as the income-tax department has frozen all its bank accounts for non-payment of income tax to the tune of Rs 6.42 crore during 1999-2000.

This is the second consecutive year when the corporation has not been able to pay tax. Last year the I-T department had taken a similar action to recover tax to the tune of Rs 5.05 crore for the assessment year 1998-99.

It had resulted in a fierce legal battle between the Vidarbha corporation and the I-T department and the matter had eventually reached the Supreme Court of India. The apex court had asked the I-T department not to take any coercive action against the corporation and had asked the petitioner corporation to approach the Income Tax Tribunal.

The corporation had opposed levy of income tax on the ground that it was a corporation involved in developmental activity and hence was exempted from paying any income tax under Section 10 (20) (a) of the Income Tax Act. The matter is still pending before the Income Tax Tribunal.