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2016 (5) TMI 1026 - AT - Income TaxExemption u/s 11 denied - non charitable activity - Held that:- Huge profits have been made by the assessee in these years. If that be so, where is the element of charity? The activity of developing roads, park or laying of sewerage land are not to be seen representing a charitable act. These are just to demonstrate that the assessee shall perform the activity of advancement of any other objects of general public utility. But auction of land to the highest bidder is an activity, which is specifically, keeping in view, the profit in mind. As far as other circumstances are concerned, we are in agreement with the contentions of Shri G.C. Srivastava, which have been noticed by us by taking cognizance of the written submissions filed by the Revenue in para 16 of this order. There are surplus and reserves which are continuously swelling. These are generated by the assessee by way of this activity sale/lease of land and charging fees. The assessee has not been charging nominal fees or selling the land at a nominal rate. It has been making money by putting the land on auction after taking a reserve price. This activity cannot be said to be a charitable activity. In view of the above discussion, we do not find merit in the contentions of the assessee that there was no profit intention in the activities of the assessee. Therefore, it is not entitled for charitable status. The income has to be assessed under the normal provisions i.e. under sections 28 to 44 of the Income Tax Act. The assessee is not a “charitable institution”, therefore, it is not entitled for the alleged deduction at 15% from the receipt provided in section 11(1)(a). In other words, benefit of section 11 is not available to the assessee. Quantification of income of the assessee - Held that:- Keeping in view various discrepancies in determination of total income by treating the assessee as business entity and the stand of the respective parties, we deem it appropriate to set aside all the impugned orders and restore the issues to the file of the AO. The ld.AO shall treat the assessee as an “AOP” and determine the taxable income of the assessee under sections 28 to 44 of the Income Tax Act. The ld.AO shall compute the income under the normal provisions of the Income Tax Act, as if applied on a regular business entity. He will re-compute all the claims of the assessee with regard to the depreciation etc., after providing an opportunity of hearing to the assessee.
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