TMI Blog2016 (5) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... of development of industrial area but would be an industrial town-ship and would provide services of a municipal corporation. Thus, the objects of the appellant are in the nature of public utility. When it is not the case of Revenue that profit from the activities of acquiring land and selling it after development is being utilized not in the objects of the appellant, it cannot be compared with the activities carried out by a builder developing a colony. The appellant might be selling certain property at market rate through auction after developing that property but it is not the main object of the appellant. Such activity is incidental to the objects of the appellant. We thus come to the conclusion that the appellant is very much entitled for the claimed registration under section 12A(1)(a) of the Act. We thus while setting aside the order impugned direct the Learned CIT(E) to grant registration under sec. 12AA of the Act to the appellant. The grounds are accordingly allowed in favour of assessee. - ITA No. 113/Del/2016, ITA No. 112/Del/2016 - - - Dated:- 19-5-2016 - L. P. Sahu (Accountant Member) And I. C. Udhir (Judicial Member) For the Assessee : Balbir Singh Abhinav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e verdict of the Hon ble Apex Court in the cases of SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY 1971 SCR(1) 719, GUJARAT MARITIME BOARD [2008] 166 TAXMAN 58 (SC) and ANDHRA PRADESH ROAD TRANSPORT CORPORATION 25 TAXMAN 63A (SC) is liable to be repelled being inferior observations in view of the final verdict of the Supreme Court and the assessee be granted registration u/s. 12AA. 5. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in failing to apply and follow the binding judgment of the Hon'ble Jurisdictional High Court in the case of Lucknow Development Authority and that of the Hon ble jurisdictional ITAT Delhi in the case of Haridwar Development Authority by citing relevant/extraneous reasons and which judgments are squarely applicable to the facts and circumstances of the instant case and on such count the impugned order, being unsustainable in law, deserves to be quashed. 6. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in treating the assessee as a commercial business entity, without appreciating that the objects/activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be quashed on this count as well. 11. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), failed to perform its bounden legal obligation to follow and apply the decisions of the Hon'ble Jurisdictional High Court and the Hon ble Jurisdictional Tribunal, in identical facts and circumstances, rather than, to frivolously compel the assessee to pursue litigation and for which reason, COSTS are liable to be awarded to the assessee. 12.The humble applicant craves for leave to raise any other or further ground of appeal with the permission of the Hon ble Income-tax Appellate Tribunal. 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The facts in brief are that the assessee for the year under consideration i.e. assessment year 2012-13 had filed its return of income at nil by reducing the entire amount of ₹ 20,64,84,209 from the net profit as provisions in its computation of income. Though in the year, it has net profit of ₹ 20,64,84,209. The Learned CIT(E) has noted that the appellant had not been fili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or trade carried on by the authority in respect of a previous year. After the amendment, the Explanation defines Local Authority to include only the authorities mentioned in the Explanation which only include Panchayat, District Board, Municipal Committee and Cantonment Board with effect from 01.04.2003. The learned CIT(E) also observed that in case registration is granted to the applicant then big builders/colonizers/developers will also claim exemption from income-tax by seeking registration under sec. 12AA of the Act. The Learned CIT(E) did not agree with the decisions cited before him by the applicant to justify the prayed registration. 5. In support of the grounds, the Learned AR submitted that the Learned CIT(E) is not correct in saying that proper details were not supplied by the applicant to him. On the contrary, all the requisite details were supplied to him and the Learned CIT(E) has passed the impugned order in a premeditated manner, violating the principles of natural justice. The order impugned has been passed on the same day on which hearing was fixed. He failed to appreciate that books of account of the assessee are duly audited by the State Government Audito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h) Indian Trade Promotion Organization vs. DG of Income-tax (E) Ors. (2015)-371 ITR 333 (Del.); j) Managing Director, Haryana State Ind. Dev. Corporation Ors. Vs. Hari Om Enterprises (2009) 16 SCC 208; k) Jodhpur Development Authority vs. CIT ITA No. 508/Jodhpur/2010 order dated 9.1.2012; L) Jaipur Development Authority vs. CIT ITA No. 182/Jp/2012 order dated 30.9.2014. 7. The Learned CIT(DR) on the other hand has basically placed reliance on the order of Learned CIT(E) in question. He submitted that the appellant had not filed its return of income for the last 12 assessment years voluntarily. The appellant is a profit making body and is not carrying out any charitable activities. It failed to prove genuineness of its activities to make it eligible for granting of the requested registration. As per financial statement filed by the appellant for the financial year 2013-14, it is evident that it has got property development income which comprises of sale of developed land and sale of constructed property. Besides, the appellant has also got income under the head urban services income which comprises lease rent and fee, penalties, duties and taxes. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined under sec. 2(15) of the Act. The Hon'ble Supreme Court held that the expression, in section 2(15), namely, any other object of general public utility is of the widest connotation. The word general in the said expression means pertaining to a whole clause. Therefore, advancement of any object or benefit to the public or a section of public as distinguished from benefit to an individual or a group of individual would be a charitable purpose. In that case before the Hon'ble Supreme Court, the assessee was established for the predominant purpose of development of minor ports within the state of Gujarat, the management and control of which was essentially with the state government and there was no profit motive, as indicated by the provisions of sections 73, 74 and 75 of the Gujarat Maritime Board Act, 1981. The income earned by it was deployed for the development of minor ports in India. Under the scheme of section 11, the source of income must be held under trust or under other legal obligation. Applying the said test, the Hon'ble Supreme Court held that the assessee was under legal obligation to apply the income which would arise directly and substantially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, there was a scent of commercialization/profit motive and infra-structure/facility provided by the assessee are also provided by private builders. It was contended by the Revenue that the ITAT has grossly erred in holding that the assessee authority was not established for commercial purposes, but for charitable purposes. The submission of the assessee on the other hand remained that as per section 4 of the Uttar Pradesh Planning Development Act, 1973, the assessee s object is an act to provide for the development of certain areas of Uttar Pradesh according to plan and for matter ancillary thereto . The objects of the development authority were referred as per section 7 of the said 1973 Act. The objects shall be to promote and secure the development of the area according to plan and for that purpose the authority shall have the power to acquire, hold, manage and disposed off land and other property to carry out building, engineering, mining and other operations to execute works in connection with the supply of water and electricity, to dispose of sewage and to provide and maintain other services and amenities and generally to do anything necessary or expedient for purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processing return of income of these assessees, to examine the claim of the assessees under Sections 11 13 and give such treated to these institutions as is warranted by the facts of the case. Revenue Authorities are always at liberty to cancel the registration under Section 12AA(3). Moreover, it may be mentioned that the benefit of Section 11 is not absolute or conclusive. It is subject to control of Sections 60 to 63. If it is found by keeping in view the provisions of Sections 60 to 63 that it is not so includible then such income does not qualify for any relief. The contention that the assessee are earning profit has no merit as per the ratio laid down in the case Sarafa Association vs. CIT, [2007] 294 ITR 262 (MP), where it was observed that the promotion of commercial trade is a charitable purpose under Section 2(15) of the Act . In the case of Director, ITO vs. Govinda, 315 ITR 237 (Mad), it was observed that the construction of commercial complex by charitable trust is eligible. If the objects of the Authority is charitable as public utility then the benefit being a charitable trust is eligible as per the ratio laid down in the case of CIT vs. Gujarat Maritime Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration to the trust or institution the certificate is a document evidencing satisfaction about (i) the genuineness of the activities of the trust or institution, and (ii) about the objects of the trust or institution. Section 12A stipulates that the provisions of Sections 11 12 shall not apply in relation to income of a trust or an institution unless the conditions stipulated therein are fulfilled. Thus, granting of registration under Section 12AA denotes that the conditions laid down in Section 12A stand fulfilled. The effect of such a certificate of registration under Section 12AAA, therefore, cannot be ignored or wished away by the Assessing Officer by adopting a stand that the trust or institution is not fulfilling the conditions for applicability of Sections 11 12. In the case of Gestetner Duplicators P. Ltd. vs. CIT [1979] 117 ITR 1 (SC), the Apex Court was called upon to determine as to whether the contribution made by the employer should be treated as a business expenditure, the requirement being contribution should be made to a recognized provident fund. Needless to mention that this Hon'ble Court in the case of CIT vs. M/s. U.P. Forest Corporation Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o earn profit or has deviated from its objects as detailed in the trust deed of the assessee. In these facts and circumstances of the case, the proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 for the relevant assessment year. From the record, it also appears that the Authority had been maintaining infrastructure, development and reserve fund IDRF as per the notification dated 15.01.1998, the money transferred to this funds is to be utilized for the purpose of project as specified by the committed having constituted by the State Government under the said notification and the same could not be treated to be belonging to the Authority or the receipt is taxable nature in its hands. For this reason also, it appears that the funds are utilized for general utility. Moreover, in the instant case, the Assessing Officer has not given any defective in computation of income as per Section 11 as submitted in Form-XB, but observed that the activities of the assessee are not charitable. The activities of the assessees are genuine. So, then it is so, then we find no reason to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.5 The appellant authority is governed under the UP Industrial Area Development Act, 1976 and UP Government Notifications. As per this the authority shall have to maintain its own funds to which shall be credited (a) all moneys received by the authority from the State Government by way of grants, loans, advances or otherwise; (b) all moneys borrowed by the authority from sources other than the State Government by way of loans or debentures; (c) all fees, tools and charges received by the authority under the Act; (d) all moneys received by the authority from the disposal of lands, buildings and other properties moveable and immoveable; (e) all moneys received by the authorities by way of rent and profits or in any other manner or from any other sources. It is mentioned under section 20(1) of the UP Industrial Area Development Act, 1976. In sub-section (2) to section 20 of the said Act has been mentioned that the funds shall be applied toward meeting the expenses incurred by the authority in the administration of the said acts and for no other purposes. 9.6 In section 58 of the said 1976 Act has been provided that where the State Government is satisfied that the purposes fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industrial Development Area to be an Industrial Town-ship w.e.f. the date of the publication of the said notification in the official gazette. In this notification, it has been mentioned that having regard to the size of Greater New Okhla Industrial Development Area which has been declared as an industrial development area by government notification dated 28.1.1991 and the municipal services are being provided by the Greater New Okhla Industrial Development Authority in that area. Thus, it is clear that the appellant has been constituted by the State Act and it is assigned not only with the object of development of industrial area but would be an industrial town-ship and would provide services of a municipal corporation. Thus, the objects of the appellant are in the nature of public utility. When it is not the case of Revenue that profit from the activities of acquiring land and selling it after development is being utilized not in the objects of the appellant, it cannot be compared with the activities carried out by a builder developing a colony. The appellant might be selling certain property at market rate through auction after developing that property but it is not the main ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the assessment years 2008-09, A.Y. 2010-11 to 2013-14, are been undertaken by the respective Assessing Officer and there is likelihood that the same would be completed in foreseeable future, due to limitation. A copy of the Notice of hearing in the matter is also enclosed. 5. In this view of the matter, it is most respectfully submitted that in consideration of the statutory stipulation contained under Proviso to Sub-Section 2 of Section 12A, which reads as Providied that where registration has been granted to the trust or institution under sec. 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived form property held under trusdt of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year the income tax appeals of the assessee, bearing ITA No. 113/Del/16 be directed to be fixed for hearing at early date. 6. It is further submitted that the assessee is confident of succeeding in the appeals filed and has a ve ..... 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