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ITO Ward 1 (1) , Moradabad Versus Moradabad Development Authority

2016 (7) TMI 733 - ITAT DELHI

Eligibility for exemption as per section 11 - Held that:- The status of the assessee in the earlier years was accepted by the Revenue as a charitable in nature having income allowable for exemption u/s 11 of the Act. There was no change in the facts and circumstances during the present assessment year. The Assessing Officer never denied the fact that the assessee is registered u/s 12AA of the Incometax Act. During the year under consideration the activities of the assessee were charitable in nat .....

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be hit by the proviso to Sec 2 (15). There was no change in the charitable purpose while doing the activity of development by the assessee. It is part of development only which is the object of the assessee since the beginning. - Decided against revenue - I.T.A. No. 3005/DEL/2013 - Dated:- 10-6-2016 - Shri G. D. Agrawal, Vice President And Smt Suchitra Kamble, Judicial Member For the Appellant : Ms. Sulekha Verma, CIT DR For the Respondent : Sh. Piyush Kaushik, Adv ORDER Per Suchitra Kamble, JM .....

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ceeds ₹ 10 lakh. The assessee has shown excess of income over expenditure of ₹ 19,69,28,027.00 by sales of Plots, shops and flats and its activities are in the nature of trade, commerce or business and amended provision of Section 2(15) of the Income Tax Act, 1961 is squarely applicable in this case. 2. That the Ld. Commissioner of Income Tax (appeal), Barreilly has erred in law as well as in facts by not considering the case of M/s Safdurjung Enclave Educational Society Vs. Municipa .....

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provisions of Section 2(15) of the Income Tax Act, 1961. 4. That the Ld. Commissioner of Income Tax (appeal), Barreilly erred in holding that income of the assessee is exempt as it sis registered under section 12AA whereas the registration u/s 12AA does not confer blanket exemption of income. 5. Any other ground which may be taken during the course of the appellate proceedings. 3. The assessee was granted registration u/s 12AA of the Income Tax Act, 1961 w.e.f 1/4/2003. The A.O examined the eli .....

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assessee during the year under consideration are to purchase/acquires land and sale them after making development thereon. It has also constructed house/flats/shops etc. on such plots and sold the same at marketable competitive price. Prima facie such activities appear to be commercial activities akin to those carried out by the property dealers, Builders and Developers. Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of M/s Safdurjung Enclave Education Soci .....

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ier years was accepted as a charitable trust having income eligible for exemption u/s 11 of the Act and there was no change in the facts and circumstance of the cases during the year under consideration. The CIT(A) further observed that the A.O has never denied the fact that the assessee is registered u/s 12AA of the Income Tax Act. The CIT(A) partly allowed the appeal of the assessee vide instant order. 5. The Ld. AR submitted that the present matter is covered by the decision of Co- ordinate b .....

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een cancelled till date. Registration u/s 12A is not an empty formality as it has to be granted after satisfying that the objects are charitable in nature. Since the registration is in effect therefore the objects of assessee will have to be taken as charitable in nature. The ITAT further held that Legislature postulates that a charitable institution may have to carry on incidental business for attainment of its objective. The incidence of taxation is lifted where business is incidental to the a .....

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it is entitled to deduction u/s 11. 6. The Ld. AR submitted that the decision of Delhi High Court on the detailed interpretation of constitutional validity of the proviso to section 2(15) in the case of India Trade Promotion Organization vs. Director general of Income Tax (Exemption) & ors 371 ITR 333 (Del.) held that the said proviso applies in a situation where the main objective is essentially to carry on business for the purpose of profit. But the situation is different in the assessee s .....

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he UP Urban Planning & Development Act 1973. Under the said legislation various other development authorities in UP have been constituted for instance Lucknow Development Authority etc. All these authorities have identical objects as prescribed by UP Urban Planning & Development Act 1973. The Jurisdictional High Court (Allahabad High Court) in the case of CIT vs. Lucknow Development Authority vide its decision dated 16/9/2013 2013-TIOL-795- Hon'ble High Court-ALL after examining the .....

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wing case law and circulars:- 1. Jammu Development Authority Vs. Union of India, ITA No. 164/2012, judgment of Hon ble High Court of Jammu and Kashmir. 2. M/s Jammu Development Authority Vs. CIT, Jammu, ITA No. 30 (Asr)/2011, decision of Hon ble ITAT Amritsar Bench, Amritsar 3. CBDT Circular No. 11/2008, dated 19/12/2008 and Explanatory Notes of Finance Act, 2008 on Section 2(15). The Ld. DR submitted that the decisions in case of Jammu Development Authority by the ITAT as well as by the Hon ble .....

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. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 9. We have heard both the parties and perused all the records. The status of the assessee in the earlier years was accepted by the Revenue as a charitable in nature having income allowable for exemption u/s 11 of the Act. There was no change in the facts and circumstances during the present a .....

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