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TMI Blog2006 (6) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... y' in the context of appellant mean benefits derived by general public other than plot holders. 3. That the learned CIT is not justified in comparing the appellant with private builders completely ignoring the fact that appellant authority has not been created with the object of earning profit but the whole profit has to be spent for the benefit of the area itself being developed by authority. 4. That the learned CIT has erred in interpreting the judgment of Hon'ble Supreme Court in the case of Asstt. CIT vs. Thanthi Trust (2001) 165 CTR (SC) 681 : (2001) 247 ITR 785 (SC) by holding that the same is applicable to only registered trusts completely ignoring the objects of the authority which are clearly for general public utility and charitable in nature. 5. That the appellant craves leave to add or amend any grounds of appeal before the appeal is heard or disposed of." 2. Brief facts in the present appeal are that assessee, i.e., Punjab Urban Planning and Development Authority (in short 'PUDA'), a local authority constituted under the Punjab Regional & Town Planning & Development Act, 1995, applied for registration under s. 12A of the Act. The learned CIT reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee may be granted registration as a charitable institution. Reliance was placed on certain judicial pronouncements which we will discuss while concluding the issue. On the other hand, the learned CIT - Departmental Representative strongly defended the rejection of the application of the assessee by contending that the assessee is just like private colonizers making huge profits by giving little compensation to the actual land owners and the assessee is working like a big colonizer. Mr. Goyal strongly pleaded that to become eligible for registration under s. l2A the activity should be wholly charitable. The learned CIT - Departmental Representative explained the activities of the assessee by putting it in juxtaposition with big builders/colonizers by contending that similar facilities are provided by the private colonizers also. So the whole activity is to be seen. On the issue of granting registration to Patiala Urban Planning and Development Authority, it was contended that if the learned CIT has committed a mistake, the same should not be repeated by the last fact-finding authority and the orders are not binding on the Tribunal. Reliance was placed on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2(b) of the said Act. The learned counsel for the assessee during argument took a strong plea that on identical facts registration under s. 12A of the Act was accorded to Patiala Urban Planning & Development Authority, Patiala, vide order under s. 12AA of the Act, dt. 28th Sept., 2005 by the CIT, Patiala, the objects of which are' identical to the present assessee. If the Act under which the assessee was constituted is analysed, it includes the State of Punjab excluding Patiala. Shri Ajay Vohra contended that it can be said that Patiala authority is parte of the State and when registration has been granted to Patiala authority, then no two yardsticks should be adopted. At the outset, we are of the view that we are not agreeable with the contention of the learned counsel because if the intention of creating Patiala authority was the same then there was no need of its creation as the same objects would have been fulfilled by the bigger unit, i.e., the assessee. At the same time, res judicata is not applicable in. income-tax proceedings. We do not want to comment as to why and how the registration was granted to Patiala authority as the same is. not pending before us for adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed making the trust irrevocable and another supplementary deed for establishing and running a school/college for teaching journalism were added. The question before the Hon'ble Court was whether the income of the trust was exempt from income-tax during the relevant period. The Hon'ble apex Court while coming to a particular conclusion reversed the decision of the Hon'ble High Court of Madras and held that the trust did not fall within the provisions of s. 11(4A), as it then stood, and was not entitled to exemption from tax. 8. The Hon'ble apex Court also considered various judicial pronouncements which were referred to it by the respective counsel as are available in the said order specially at p. 787. However, there is a major shift in the law with regard to institutions who are claiming charities. It is a well known fact that in some of the situations the provisions of law is misused in the names of charities. If an expanded/broader latitude is extended to the word charity, then there are so many institutions/Departments who will try to come under the umbrella of this provision to misuse the provision. Therefore, for the broad development of the nation/society, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be an authority created to help it to achieve certain objects. It can be said that it is the duty of the Government to create/provide all these facilities to public at large, which is being done through his agency in a particular area. At the same time, the funds which are provided to the assessee by the Government is again a public money or generated from the public itself, so where is the charity? If the activities of the assessee and the arguments of both the learned counsel are put in a juxtaposition, it can be said that the objects of the assessee, though claimed to be charitable, but actually are of purely commercial nature where profit motive is involved. It is a known fact that the assessee is acquiring the land at very low prices and selling the same land on very higher rates and is earning a profit therefrom. A new trend has also emerged that PUDA, i.e., the assessee has started auctioning the plots by way of bidding at the market rate and sometimes more than that and charging interest on belated payments. In such a situation, we are of the view that no charity is involved. Rather the assessee has converted itself into a big businessman. Similar development/in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decisions pronounced in Union of India & Ors. vs. Kaumudini Narayan Dalal & Anr. (2001) 168 CTR (SC) 3: (2001) 249 ITR 219 (SC), CIT vs. Shivsagar Estate (2002) 177 CTR (SC) 107 : (2002) 257 ITR 59 (SC), CIT vs. Federation of Indian Chambers of Commerce & Industry (1981) 22 CTR (SC) 124 : (1981) 130 ITR 186 (SC) and also the decision in the case of Dy. CIT vs. United Vanaspati Ltd. (2004) 83 ITJ (Chd)(TM) 201 : (2004) 88 ITD 313 (Chd)(TM). We are of the view that principles of res judicata do not apply to income-tax proceedings. However, we agree with the learned counsel to the extent that equally important is the rule of consistency. We are of the view that consistency has to be seen in totality of circumstances which depends upon facts of each case in the light of primary object and real activities done by the assessee, so these judicial pronouncements in our humble opinion are not going to help the assessee. The Hon'ble High Court of Delhi in the case of Daulat Ram Public Trust vs. CIT (2000) 161 CTR (Del) 331 : (2000) 244 ITR 514 (Del) wherein on scrutiny of objects of the assessee-trust, there was no defined dominant charitable purpose in the trust deed to which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by land owners. However, if the argument of the assessee is analysed on point of general public utility, still it can be said that commercial angle with profit motive is involved which has become predominant object of the assessee. Even if this issue is analysed as contended by the learned counsel for the assessee that application of income is not the criteria in the light of the decision of Hon'ble High Court of Allahabad in the case of Fifth Generation Education Society vs. CIT (1990) 87 CTR (All) 169 : (1990) 185 ITR 634 (All), still we are of the view that if the objects and real situation is analysed, the objects are not of charitable nature. Almost in every activity there is a scent of commercialization/profit motive but in the charitable institution no profit motive is involved and the service is done mainly with the intent of social/religious upliftment of the masses in general. Admittedly, the assessee is doing some activities like housing/infrastructure development and the public is also benefited but for the same the assessee has already charged in the form of hidden cost. Rather the assessee is generating income, so no charity is involved. We agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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