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17. The Ld. Counsel for the assessee during the course of hearing argued at length and also filed written synopsis. The written synopsis as filed by the assessee is reproduced as under:-

"Issue:

Whether one time lease premium in addition to lease rent collected by the assessee (engaged in development of industrial area on the land owned by State Government) on behalf of the State Government before commencement of lease is Capital Receipt or Revenue Receipt? Brief facts The assessee Madhya Pradesh Audhyogik Kendra Vikas Nigam (Indore) Limited (MPAKVN) was incorporated in the year 1981 by the State Government as wholly owned government company with the main object to develop industrial area for industrial growth in the State of Madhya Pradesh. The State Government had acquired the land from the private landowners and contributed its own land for development of industrial area. The raw land were handed over to the assessee for development and further management and maintenance of the same. The land remained in the ownership of the State and the assessee was allowed to act as a nodal agency. The development of industrial area which was commenced in the year 1981 came to at halt around 2000 when most of the land available have been utilized for development. It is further submitted that in the year 2005 the State Government decided to develop fist Special Economic Zone and therefore established a new entity in the name of SEZ Indore Limited and diverted the development work in that company. Therefore, no major projects remained with the assessee and all the resources and land available with it had been transferred to M/s. SEZ Indore Limited which has developed the first SEZ of the country in India. The second assessee SEZ Indore Limited(SEZ) is a wholly owned subsidiary of MPAKVN Ltd. and it is a Government Company engaged in the development of Special Economic Zone in the region in terms of provisions of Special Economic Zone Act, 2005. The main object of the assessee Company is to develop, promote, encourage or to assist in formation of Special Economic Zones and other allied infrastructure development work. The development of infrastructure is the primarily responsibility of the State Government. However, the State Government may delegate such responsibilities upon its instrumentalities. MPAKVN and the assessee Company are such instrumentalities, which are discharging the responsibility of industrial infrastructure development on behalf of the State Government for promotion of the industrial development in the State. The assessee allots the developed industrial land to the prospective industrialist to setup industry in the area developed by the assessee in consideration of payment of

That, after acquisition of lands for the purpose of development of industrial area from private land owners the entire such lands have been recorded in the land records under section 108 of the Code in the name of Industries Department, Government of Madhya Pradesh. Copy of survey reports (land records) is available in paper book.

The State Government instead of undertaking the industrial infrastructure development work on its own delegated the responsibility up on its instrumentalities in the name of MPAKVN/SEZ and entrusted the task of development of infrastructure on the land owned by the State.

(iii) The assessee/MPAKVN were involved in the industrial infrastructure development as an instrumentalities to discharge the responsibility of State Government towards infrastructure development as nodal agency.

(iv) The lease deeds have been executed on behalf of State Government in the name of Governor of Madhya Pradesh. The assessee has no power or right to dispose of any of the assets without prior consent of the State Government. Therefore, the assessee is under obligation to follow the directions of the State Government in respect of the land.

"4. The material on record shows that the very purpose of constitution of the assessee was to act as a nodal agency for implementation of mega-city scheme worked out by the Planning Commission. Both the Central and the State Governments are expected to provide requisite finances for implementation of the said project. The funds from the Central and State Governments will flow directly to the specialised institutions/nodal agencies as grant and the nodal agency will constitute a revolving fund with the help of Central and State shares out of which finance could be provided to various agencies such as water, sewerage boards, municipal corporations, etc. The objective is to create and maintain a fund for the development of infrastructural assets on a continuing basis and, therefore, the assessee is a nodal agency formed/created by the Government of Karnataka as per the guidelines; there is no profit motive as the entire fund entrusted and the interest accrued therefrom on deposits in bank though in the name of the assessee has to be applied only for the purpose of welfare of the nation/States as provided in the guidelines; the whole of the fund belongs to the State Exchequer and the assessee has to channelise them to the objects of centrally sponsored scheme of infrastructural development for mega-city of Bangalore. Funds of one wing of the Government is distributed to the other wing of the Government for public purpose as per the guidelines issued. The monies so received, till it is utilised, is parked in a bank. The finding recorded by the Tribunal clearly shows that the entire money in question is received for implementation of the scheme which is for a public purpose and the said scheme is implemented as per the guidelines of the Central Government and, therefore, the assessee is only acting as a nodal agency of Central Government for implementation of these projects. It is not the case of the Revenue that the assessee was carrying on any business or activities of its own while implementing the scheme in question. The unutilised money, during which the project could not be fully implemented, is deposited in a bank to earn interest. That interest earned is also again utilised for the implementation of the mega-city scheme which is also permitted under the scheme. Therefore, in computing the total income of the assessee for any previous year the interest accrued on bank deposits cannot be treated as an income of the assessee as the interest is earned out of the money given by the Government of India for the purpose of implementation of mega-city scheme.