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2023 (9) TMI 216 - AT - Income TaxExemption u/s 11 - denial of exemption assessing income of the assessee on commercial basis - charitable activity u/s 2(15) - HELD THAT:- The activities of some essential services provided by non-statutory bodies are held to be not in the nature of trade, commerce or business, or service, towards trade, commerce or business. In the case where the services rendered by the institutions/organizations to the state or its agencies at the cost or marginal mark up over cost and above cost then such activities may fall within the description of one advancing the general public utility. As decided in Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] has given interpretation of section 2(15) r.w. proviso, section 11(4A) and section 13(8) of the Act and held that there is no conflict between these provisions of the Act so far as carrying out activity in the nature of trade, commerce or business, or service in relation to such activities - the activity in the nature of business, trade, commerce or service in relation to such activities should be conducted actually in the course of achieving the general public utility object, and the income, profit or surplus or gains can then, be logically incidental Hon’ble Supreme Court has set out certain parameters for different categories of charities/institutions/trusts and observed that if fee, rent or other charges are mandated under the statute for carrying out some essential public utility activities of development then the fee and charges for providing essential services or amenities for the purpose of public development work will not fall in the nature of business, trade or commerce or services in relation to such business, trade or commerce if the profit or markup is reasonable and not with motive to earn profit. CIT(A) has passed an ex-parte order by observing that in spite of adequate opportunity of proper delivery of notices assessee did not file any documentary evidence/proof in support of the grounds of appeal. Therefore, the appeals of the assessee were dismissed by the Ld. CIT(A) for want of proper representation and supporting evidence. Accordingly in the facts and circumstances of the case and in view of the judgment of Ahmedabad Urban Development Authority (supra) the matter requires a proper verification about the profit margins/markup earned by the assessee for providing these services and activities of publication of newspaper and other contents as well as production of documentary film etc. for the State Government as well as PSUs. Therefore, these matters are set aside to the record of the AO for fresh adjudication after proper verification and examination of the relevant facts and records as well as clarification made by the Hon’ble Supreme court reported in [2022 (11) TMI 255 - SUPREME COURT] Appeals of assessee allowed for statistical purposes.
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