2021 (5) TMI 822 - ITAT AGRA

Exemption u/s 11 - Charitable activity u/s 2(15) - assessee drawing the receipt from various regulatory activities - as per revenue activities of the appellant as activities in nature of Trade, Business or Commerces or rendering services in relation to trade, commerce or business - assessee/appellant is a body corporate constituted under Uttar Pradesh Urban Planning & Development Act, 1973. The assessee was filing its returns of income in the status of 'Local Authority' and claiming exemption d/s 10(20A) earlier - HELD THAT:- Activities like Income from sale of plots/ lands ,Freehold conversion income, interest income from instalments,development charges, building plan sanction fees, lease rent, income from stamp duty , Building rent,Sale of masterplan book/tender form,Cycle/scooter/car stand charges and Miscellaneous incomewere discharged by the assessee in accordance with the objects of the Development Act 1973 and other statutory obligations, and therefore we have no hesitation to hold that all these activities are charitable in nature. These activities were undertaken by the assessee on account of the mandate given to it to do generalize charitable activities for the planned development of the city. These are regulatory and development activities which were done by the assessee and the receipt of the revenue was on account of the said activities. The predominant character of the activities continues to be that of the state and therefore the element of welfare and charity is inbuilt. In the light of the above we hold that these activities also charitable in nature

From the reading of section 18 of the Development Act, it is clear that, the authorities entitled to transfer, dispose of and use the land in the manner provided by the state government or in any other manner as deemed fit. In our considered opinion, the giving of building on rent, parking space, sale of tender document for the purpose of development etc are having direct nexus with the obligation of the assessee under the act. The receipt of the amount on account of the above said activities are related to the statutory and state function of the assessee authority. In our view the above said activities were undertaken by the assessee on account of its obligation under the act and were done by the assessee keeping in mind the welfare and interest of the citizen in mind. The said activities were undertaken by the assessee without any discrimination and on the basis of the guidelines issued by the state government and other authorities in this regard.

Respectfully following the decision of the coordinate bench in the matter of JHANSI DEVELOPMENT AUTHORITY [2021 (1) TMI 680 - ITAT AGRA] we hold that the assessee activities like Income from sale of plots/ lands ,Freehold conversion income, interest income from instalments, development charges, building plan sanction fees, lease rent , income from stamp duty , Building rent, Sale of masterplan book/tender form, Cycle/scooter/car stand charges and Miscellaneous income were discharged by the assessee in accordance with the objects of the Development Act 1973 and other statutory obligations , and therefore we have no hesitation to hold that all these activities are charitable in nature.The activities of the assessee in receipt of amount from such activities cannot be examined in isolation, as the assessee was propelled to do all these activities under the statutory obligation under Development Act 1973 and therefore even if there is receipt more than the threshold limit, then also these activities which were driven by the Development Act, 1973 cannot be held to be in the nature of trade commerce or business.

Various other authorities including Aligarh Development authority, NOIDA development authority etc , which are discharging the similar functions as that of the assessee and were created under the Development Act 1973, wereheld to be entitled for deduction under Section 11 the Income Tax Act by ITAT, Delhi. In the light of the above we are of the opinion that the assessee is also entitled to deduction under section 11 of the Income Tax Act for the activities mentioned hereinabove.- Decided in favour of assessee.