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TMI Blog2016 (7) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... "), were heard together and are being disposed of by this common judgment. 2. The Appeal No.63/12 is directed against order dated 19.1.12 of the ITAT, Jodhpur, partly allowing the appeal preferred by the assessee-JDA, Jodhpur, against the order dated 22.3.10 of Commissioner of Income Tax-I (CIT-I), Jodhpur, rejecting an application seeking registration under Section 12A read with Section 12AA of the Act of 1961. Similarly, the Appeal No.92/13, is directed against the order of ITAT dated 18.1.13, allowing an appeal preferred by the UIT, Sri Ganganagar, against the order dated 28.3.11 of Commissioner of Income Tax (CIT), Bikaner, rejecting its application seeking registration under Section 12A of the Act of 1961. The Appeal Nos.95/13, 96/13 and 98/13 are directed against a common order of the ITAT dated 18.1.13 of the ITAT, Jodhpur, allowing the appeals of the assessee-UIT, Sri Ganganagar against the different orders of the Commissioner of Income Tax (Appeals) [CIT (A)], affirming the assessment orders passed by the Assessing Officer (AO), for the assessment years 2004-05, 2005-06 and 2006-07 and remanding the matter back to the AO for all the assessment years. The Appeal No.12/15 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jodhpur Region and for the purposes of improvement and expansion of the urban area of Sri Ganganagar as specified, respectively, fall within the definition of 'charitable purposes' as defined under Section 2(15) of the Act of 1961 so as to make them entitled to registration under the provisions of Section 12A read with Section 12AA of the Act of 1961 , for claiming the benefit of exemption under Section 11 and 12 read with Section 13 of the Act of 1961? 5. Learned counsel appearing for the Revenue submitted that it is not in dispute that the JDA, Jodhpur and UIT, Sri Ganganagar, were created for the purpose of development of city of Jodhpur and the urban area of Sri Ganganagar respectively by executing the plans, projects and scheme for such development and to provide for matter connected therewith but then, the source of income/receipt of JDA, Jodhpur and UIT, Sri Ganganagar is from sale of developed land, plots, constructed houses, shops, rents and also house property, tax, interest on advances/FDR, land use conversion charges etc.; the activities which are being carried out systematically, continuously and regularly for earning profit at commercial level. Learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vancement of any other object of general public utility, shall also fall within its ambit and therefore, the advancement of any object for benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be charitable purpose. Learned counsel submitted that indubitably, the JDA has been constituted and established for the development of Jodhpur Region and its primary purpose and predominant object is to promote welfare of the general public and not to extend any benefit to an individual or group of individuals and therefore, even if some profit earning activity is undertaken by the JDA, which is ancillary or incidental to its dominant object, it will not be ceased to be an institution engaged in advancement of the objects of general public utility or an institution engaged in carrying out charitable purposes. In support of the contentions, learned counsel has relied upon a decisions of the Hon'ble Supreme Court in the matters of "Commissioner of Income Tax v. Gujarat Maritime Board", (2008) 295 ITR, 561, CIT v. Andhra Chamber of Commerce", (1965) 55 ITR, 722 and "CIT v. A.P. State Road Transport Corporation", (1986) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Punjab & Haryana High Court in the matter of "CIT v. Improvement Trust", (2009) 308 ITR, 361 (P& H), the decision of Allahabad High Court in the matter of "CIT-I v. State Urban Development Agency (SUDA)", (2013) 218 TAXMAN, 146 (All) and a decision of the Karnataka High Court in the matter of "CIT v. Bagalkot Town Development Authority" 8.We have considered the rival submissions of the learned counsels for the parties and perused the relevant provisions as also the various decisions cited at the Bar. 9. Before proceeding to examine the issue whether the activities of the assessees fall within the definition of 'charitable purposes' so as to make them entitle for registration under Section 12A of the Act of 1961, the reference to the provisions germane to the lis between the parties, would be apposite. 10. As per the Section 11 (1) of the Act of 1961 , subject to provisions of Section 60 to 63, the income of the charitable or religious trust in receipt of the income as specified under sub clauses of the aforesaid section, applied for charitable or religious purposes and the income in form voluntary contribution with the specific directions that they shall f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that section and Section 13 shall apply accordingly. 12. Section 13, a non-obstinate clause provides that the provisions of Section 11 or Section 12 shall not operate as to exclude from total income of the previous years of the person in respect of various income enumerated under clauses (a) to (d) thereof. 13. But then, applicability of provisions of Section 11 and Section 12 of the Act of 1961 so as to claim the exclusion from total income of the previous year of the person is subject to fulfilment of the conditions specified under Section 12A of the Act, which includes the making of an application by the trust for registration and granting of the registration by the Commissioner in accordance with the procedure laid down under Section 12 AA. 14. Section 12AA, lays down the procedure to be followed by the Commissioner for grant or refusal of the application seeking registration under clause (a) or clause (aa) of sub-section (1) of Section 12A. As per the procedure laid down, the registration shall be granted by the Commissioner on being satisfied about the objects of the trust or institution and genuineness of its activities. By virtue of provisions of sub-section (3) of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility; Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involve s the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity : Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year;" 18. The 'charitable purpose' as defined under Section 2 (15) and particularly, the expression 'any other object of general public utility' used therein, have been interpreted by the Hon'ble Supreme Court and various High Courts in catena of decisions, which may be beneficially referred. 19. In Andhra Chamber of Commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not involve carrying on of any activity for profit, the requirement of definition would be met and it is immaterial how the money's for achieving or implementing such purpose are found whether by carrying on an activity for profit or not. 22. In Andhra Pradesh Road Transport Corporation's case (supra), the Hon'ble Supreme Court while relying upon the earlier decisions in the matter of "Additional CIT v. Surat Art Silk Cloth Manufactures Association", (1980) 121 ITR 1 and "CIT v. Bar Council of Maharashtra", (1981) 130 ITR 28 (SC), held that if predominant object is to carry out a charitable purpose and not earn profit, the purpose would not lose its charitable character merely because some profit arises from the activity. 23. In Gujarat Maritime Board's case (supra), the Hon'ble Supreme Court after due consideration of various earlier decisions, observed : "We have perused a number of decisions of this court which have interpreted the words, in section 2 (15), namely , "any other object of general public utility". From the said decisions it emerges that the said expression is of the widest connotation. The word "general" in the said expression means pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case." (emphasis added) 24. In "Commissioner of Income Tax v. Krishi Upaj Mandi Samiti, Jaisalmer", (2011) 331 ITR 135 (Raj.), a Bench of this court while considering the entitlement of Krishi Upaj Mandi Samiti, a statutory body, constituted and established under the Rajasthan Agricultural Produce Market Act, 1961 , observed that may be the income received by the Samiti by way of cess or mandi fees is not shown to be spent wholly for the purpose of relief of the poor, education, or medical relief, but under the scheme of the Act, being the Rajasthan Agricultural Produce Markets Act, 1961, the entire amount received by the samiti is required to be spent for the purposes mentioned therein, which obviously include advancement of "any other object of general public utility". 25. In Lucknow Development Authority's case (supra), while examining the question regarding applicability of proviso to Section 2(15), Allahabad High Court observed: "29. For the applicability of proviso to Section 2(15), the activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activities on non-commercial lines with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Jodhpur Region and for that purpose to discharge inter alia the functions of Urban Planning including preparation of Master Development Plan and Zonal Development Plans; formulation and sanction of the projects and schemes for the development of Jodhpur Region or any part thereof; execution of the project and schemes directly by itself or through a local authority or other agency; coordinating execution of projects or schemes for the development of Jodhpur Region supervision or otherwise ensuring adequate supervision over the planning and execution of any project or scheme the expenses of which in whole or in part are to be met from Jodhpur Region Development Funds; preparing schemes and advising the concerned authorities, department and agencies in formulating and undertaking schemes for development of agriculture horticulture, forestry, dairy development, transport, communication, schooling, cultural activities, sports, medicine, tourism and similar other activities; to prepare Master Plan for traffic control and management; devise policy and programmes of action for smooth flow of traffic and matters connected therewith; undertaking housing activity in Jodhpur Region etc., are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, it does not cease to be charitable in character so as to render it ineligible to claim registration under Section 12A read with Section 12AA of the Act of 1961. As a matter of fact, it is not even the case of the Revenue that the object of general public utility sought to be achieved by constitution and establishment of the JDA as such, involve carrying on of any activity for profit and therefore, it is immaterial if some income is earned by ancillary and incidental activities, which as per the mandate of the relevant statute, is used for achieving or implementing such object. The genuineness of the activities of the JDA, which are regulated by the provisions of the JDA Act and the Rules made thereunder, cannot be doubted. Thus, the order passed by the ITAT holding the JDA, Jodhpur entitled for registration under Section 12A read with Section 12AA of the Act of 1961 , does not suffer from any infirmity or illegality. 29. Coming to the question of entitlement of UIT, Sri Ganganagar, for registration under Section 12A of the Act of 1961, as noticed above, the UIT, Sri Ganganagar, a statutory body, has been constituted and established under Section 8 of UIT Act for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute a fund to be called 'Improvement Fund' and as per the mandate of sub-section (2) (iii) and (v), all rents, profits and sale proceeds of lands, buildings and other property vested or vesting in or acquired by the trust under the said Act and all fees and charges payable to or received by the trust under the said Act are credited to the said Fund, which is utilised for the achievement of the predominant object of improvement of the urban area. Thus, for the parity of the reasons indicated above, while arriving at the conclusion regarding the entitlement of JDA, Jodhpur for registration under Section 12A read with Section 12 AA of the Act of 1961, the order passed by the ITAT, holding the UIT, Sri Ganganagar entitled for registration under Section 12A read with Section 12AA of the Act of 1961 , also cannot be faulted with. 30. In view of the conclusions arrived at as aforesaid, the appeals preferred by the Revenue against the orders of the ITAT, restoring the matters back to the files of Assessing Officer for the assessment year 2004-05, 2006-07 and 2010-11, for passing the assessment orders afresh, also deserve to be dismissed. 31. At this stage, it may be noticed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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