TMI Blog2013 (12) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... me Board [2007 (12) TMI 7 - SUPREME COURT OF INDIA] - The expression 'any other object of general public utility' include all objects which promote the welfare of the general public - If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be a charitable purpose – Decided in favour of assessee. Penalty u/s 271B – The assessee was not granted registration u/s 12A and exemption u/s 11 - The assessee had shown gross receipts of Rs. 1,42,02,845 - Held that:- In view of the order of the Tribunal to grant the assessee registration u/s 12A – Penalty cannot be imposed - Decided in favour of assessee. - I.T.A. No.169/JODH/2011, I.T.A. Nos.59 to 61/JODH/11, I.T.A. Nos.88 to 92/JODH/11 - - - Dated:- 18-1-2013 - SHRI HARI OM MARATHA AND SHRI N. K. SAINI, JJ. For the Appellant : Shri N. R. Mertia, C.A. For the Respondent by : Dr. Deepak Sehgal, CIT, D.R. Order N. K. Saini (Accountant Member).- These appeals, by the assessee, are directed against the following orders : I. T. A. No. Order date Order passed by 169/Jodh/11 28-03-2011 CIT, Bikaner 59/J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the Government Department, non-Government organisations, private persons for educational or health medical facility purpose or for constructing the community centres. 6. To regularise or demolish the illegal constructions in the different projects of the trust or on the lands under the ownership of trust. 7. To develop the environment of the city by planting tree and by providing drainage system and retaining walls, etc. 8. To provide the roads, electricity, water and drainage system in a planned way in the Kachi colonies falling within the jurisdiction of the trust. 9. To get the beautification of the city in a planned way. 10. To regularise the agriculture lands for non-agricultural purposes." 3.1. However, the application for registration was rejected by the learned Commissioner of Income-tax vide order dated September 24, 2007. Against the said order, the assessee preferred an appeal before the Income-tax Appellate Tribunal, Jodhpur in I. T. A. No. 736/JU/07 wherein vide order dated April 28, 2008, the matter was remanded back for fresh adjudication after considering the judgment of the hon'ble apex court in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department against the order of the Tribunal was dismissed by holding that it was not the case of the Commissioner of Income-tax that the assessee was not carrying on activities of general welfare covered by the expression "any other object of general utility" in section 2(15) of the Act. 6.2. A similar view has been taken by this Bench of the Tribunal in the case of Jodhpur Development Authority v. CIT [2012] 145 TTJ (Jd) 221 wherein it has been held as under : "The then Union Finance Minister by his letter dated 18th November, 2002 addressed to the Chief Minister of Delhi, clarified that irrespective of the withdrawal of exemption under section 10(20), if the assessees are working for advancement of an object for general public utility and there is no profit motive, they can still claim exemption from income-tax as charitable institution after fulfilling the conditions prescribed under section 11. The word 'it' in the phrase 'if it involves the carrying on of any activity in the nature of trade, commerce or business, etc.' in the proviso to section 2(15) qualifies the 'object of general public utility' and not its 'advancement' or accomplishment or carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction. Similar bodies had been created for other cities, towns, etc. Thus, the assessee was an organisation founded for a social purpose and, therefore, it constituted an institution. Market committees, performing the work of development activities of the market to help agriculturists to sell their agricultural produce without exploitation by middleman, had been granted registration. The word 'institution' has a wide ambit as seen from its meaning in the Oxford Dictionary, than the word 'person' used in the Act. Therefore, there was no reason as to why the assessee performing a useful social purpose should not have been termed as an institution registerable under section 12AA. Therefore, the assessee constituted an institution under section 12A. Section 12A provides that provisions of sections 11 and 12 shall not apply to the income of any trust or institution, unless it has made an application for its registration in the prescribed form and in the prescribed manner. The assessee had made an application to the Commissioner in the prescribed form and in the prescribed manner. Therefore, apart from the delay in filing the application, conditions of section 12A(a) were sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applies to the trusts created on or before the commencement of the Act. As all the objects of the assessee were charitable in nature, this section was not applicable." 6.3.1. In our opinion, the ratio laid down in the aforesaid referred to case is squarely applicable to the facts of the present case, therefore, the assessee was entitled for registration under section 12A of the Act. The hon'ble Supreme Court in the case of CIT v. Gujarat Maritime Board [2007] 295 ITR 561 (SC) held as under (headnote) : "The expression 'any other object of general public utility' in section 2(15) of the Income-tax Act, 1961, is of the widest connotation. That expression would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be a charitable purpose. The assessee, the Gujarat Maritime Board, which was constituted under the Gujarat Maritime Board Act, 1981, for the purpose of development and maintenance of minor ports in the State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having registration under section 12A of the Act. Since in the former part of this order, while deciding the appeal in I. T. A. No. 169/ Jodh/2011, we have directed for granting the registration under section 12A of the Act to the assessee, therefore, the issues raised in I. T. A. Nos. 88 to 92/Jodh/2011 are remanded back to the Assessing Officer for fresh adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee. 9. Now we will deal with I. T. A. Nos. 59 to 61/Jodh/2011 relating to assessment years 2003-04 to 2005-06. All these three appeals relate to the penalty of Rs. 1,00,000 levied by the Assessing Officer by invoking the provisions of section 271B of the Income-tax Act which had been confirmed by the learned Commissioner of Income-tax (Appeals). 10. First we will deal with I. T. A. No. 59/Jodh/2011 relating to the assessment year 2003-04. The facts of the case, in brief, are that the assessee filed the return of income declaring total income at nil. In the return gross loss was shown at Rs. 2,15,60,346, which was claimed to be carried forward to the next year. However, the assessment was completed at a loss of Rs.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Commissioner of Income-tax (Appeals) and submitted that it was not carrying any trade or business and was a trust created by the Rajasthan State Government under the Rajasthan Urban Improvement Trust Act, 1959 by way of notification for the systematic and planned improvement of the city and that the trust was a semi Government body which was on equal footing with the municipalities. It was further stated that there was no motive to earn any income but the trust was working for the benefit of public at large and that a trust which was carrying on activities similar to business activities but not for profit motive could not be construed as carrying on business activity. The reliance was placed on the following judgments of the honourable Supreme Court : 1. CIT v. Lahore Electric Supply Co. Ltd. [1966] 60 ITR 1 (SC). 2. CST v. Sai Publication Fund [2002] 126 STC 288 (SC) 3. Sole Trustee, Lok Shikshana Trust v. CIT [1975] 101 ITR 234 (SC). 11.1. It was stated that the assessee had shown only loss, which was admitted by the Assessing Officer and even after scrutiny only loss was determined. It was further stated that the activities of the assessee-trust no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Government. It was further stated that earlier the assessee's income was exempt under section 10(20A) of the Act, however, this section was omitted with effect from April 1, 2003 by the Finance Act, 2002 but still the assessee was hopeful of getting exemption by getting registration under section 12A of the Act and since the assessee was under a bona fide belief that as its income was exempt hence audit of its accounts was not required. Therefore, the assessee had a reasonable cause for not getting its accounts audited under section 44AB of the Act and also there was no intention of the assessee to cause loss to the Revenue, so as per section 271B of the Act, penalty should not be levied. Reliance was placed on the judgment of the honourable Uttarakhand High Court in the case of CIT v. Iqbalpur Co-operative Cane Development Union Ltd. [2009] 23 DTR 60 (Uttarakhand) ; [2009] 179 Taxman 27 (Uttarakhand). 13. In his rival submissions the learned Departmental representative strongly supported the orders of the authorities below. 14. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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