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2016 (7) TMI 733 - ITAT DELHI

2016 (7) TMI 733 - ITAT DELHI - [2016] 49 ITR (Trib) 270 - 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 consider .....

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rein it was held that the development authorities will not 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 Responde .....

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ntities engaged in advancement of general public utility exceeds ₹ 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 .....

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decision of the Ld.CIT(A), Bareilly is against the amended 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 In .....

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to be in conformity with its object. The activities of the 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 .....

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The CIT(A) held that the status of the assessee in the earlier 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 .....

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ion u/s 12A as granted from 1/4/2003 and the same has not been 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 .....

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the assessee is engaged in a charitable purpose. Therefore 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 .....

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being a development authority has been established under the 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 201 .....

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e order of the Assessing Officer. The Ld. DR referred following 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 .....

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n 10(23C) of the Act if they carry on commercial activities. 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 .....

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le in the case as the charitable purpose and object was never changed at any time in case of assessee herein. Thus, exemption u/s 11 rejected by the Assessing Officer is not just and proper. In assessee s own case for the preceding year and the subsequent year, the Co-ordinate Bench of the ITAT has allowed the appeal of the assessee. The Delhi High Court in its decision in the case of India Trade Promotion Organization (Supra) has clearly given the interpretation of Constitutional validity of th .....

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