The Hyderabad Metropolitan Development Authority is planning to undertake legal remedy against the seizure of its bank accounts by the income tax department for not paying dues.

The IT department has been slapping notices on the HMDA requesting them to clear tax dues, but the organisation has not responded, forcing IT officials to seize banks accounts of HMDA a few days back for not paying the income tax for auctioned plots. The HMDA has bank accounts in the Indian Overseas Bank and State Bank of Hyderabad.

The HMDA which auctioned a few hundred plots belonging to the state government in different parts of the city from 2002-03 to 2007-08 has to pay a little over `400 crore to the IT department.

The Municipal Administration and Urban Development department and HMDA officials told Express that as per existing rules, the state and central government properties put up for auction, cannot be taxed on their income. HMDA officials said the state government has handed over a series of properties to HMDA as a third-party agent to auction the plot and deposit the amount in the state treasury. The HMDA has auctioned the plots and the same has been handed over to the state government. It is unfortunate they are forcing the HMDA to pay taxes on the auction income, a official said.

A meeting was held on Wednesday evening in the chambers of MAUD minister M Maheedhar Reddy to discuss the issue, which decided to go for legal appeal under various provisions of the act.

Maheedhar Reddy assured HMDA officials that he would take up the issue with the chief minister N Kiran Kumar Reddy in a couple of days.

The HMDA does not owe a single rupee to the IT department and the question of paying does not arise, officials said.