TMI Blog2016 (2) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... Rano Jain, The appeals f i led by the assessee in ITA No.305/Chd/2013 ITA No.1182/Chd/2013 are directed against the separate orders of learned Commissioner of Income Tax (Appeals) , Patiala, dated 16.1.2013 and 17.10.2013 for assessment years 2009-10 and 2010-11 respectively and the appeal of the assessee in ITA No.874/Chd/2014 is directed against the order of learned Commissioner of Income Tax (Appeals) , Patiala dated 30.7.2014 for assessment year 2009-10. 2. We will first take up the appeal of the assessee in ITA No.305/Chd/2013. ITA No.305/Chd/2013 : 3. Briefly, the facts of the case are that the assessee is doing the business of planning, development and improvement of city. During the assessment proceedings citing various instances which point towards the fact that the assessee is actually engaged in the business activities, the Assessing Officer refer red to the amended provisions of sect ion 2(15) of the Income Tax Act , 1961 ( in short the Act ) and held that the business is not entitled to exempt ion under sect ion 11 of the Act . 4. Before the learned CIT (Appeals) detailed submissions were made, which did not find favour with him and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the findings of the authorities below and considered the material available on record. On perusal of the order in the case of The Improvement Trust , Sangrur (supra) , we observe that the findings are recorded at para 9 onwards, in following words : 9. We find that in the case of Hoshiarpur improvement Trust Vs. ITO, ITA No. 496/ASR/2013 relied upon by the assessee, the assessee was an Improvement Trust constituted under the Punjab Town Improvement Act (PTIA), 1922, by the Government of Punjab with the principal objective of bringing about improvement in towns by the means set out under section 22 to 26 of the PITA. The Hon ble Amritsar Bench in the impugned case dealt with the issue whether the manner in which the assessee trust was conducting its activities constituted advancement of general public utility as set out in section 2(15) and further whether the work ceased to be for charitable purpose due to the first proviso to Section 2(15) which lays down that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, irrespective of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, is concerned, the stand taken by the authorities below cannot be sustained in law. Assuming that all the allegations of the Assessing Officer, with respect to presence to profit motive in activities of the assessee are correct, since these activities were carried out with the larger and predominant objective of general public utility. It is only when, to use the words of the CBDT circular cited earlier in this order and the beneficial impact of which has the binding force on the field authorities under section 119 of the Act, the Assessing Officer finds that the income is income of any other business which is not incidental to the attainment of the objectives of the trust or institution that the such an income will not be exempt from tax . There is no finding to that effect by any of the authority below. In any case, it is not even the case of revenue authorities that the activities of the trusts do not serve the objects of the general public utility but the case is confined to the stand that these activities have been carried out in such a manner as to make profit and no activities directly of any general public utility are carried out. The registration granted to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the activities are carried out is of a profit seeking entity that a business inherently is. In other words, thus, the case of the revenue is that the activities in the nature of trade, commerce and business are carried out for advancement of objects of general public utility. This situation at best falls in the second category. However, these cases, for the detailed reasons set out above, the exclusion of these cases from Section 2(15) is only effective 1st April 2016, i.e. assessment year 2016-17. The law is well settled by a five judge bench of Hon ble Supreme Court, in the case of Vatika Township Pvt Ltd (supra), that, following the maxim lex prospicit non respici, the law, particularly with respect to a requirement which is more onerous on the assessee, cannot be treated as retrospective in effect unless it is specifically legislated to be so. In our considered view, therefore, this amendment cannot be treated as clarificatory or retrospective in effect. In view of these discussions, even post insertion of proviso to Section2(15) but before 1st April 2016, when business activities are carried by the assessee trust in the course of actual carrying out of such advancement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness or charity. What is really, therefore, required to be carefully examined, in order to find whether an act of the institution is charitable or not, is not only to assess the work being done by the institutions, which claim to be pursuing charitable activities, but also the economic dynamics and motivations of such activities. 36. Learned Departmental Representative has pointed out that the commercial plots and units are auctioned off which shows that the idea is to make maximum profits but what he clearly overlooks is the fact that since it is not a desirable state of affairs for the State to subsidize businesses, and to ensure highest degree of transparency in maximising returns from public assets, competitive bidding for commercial units is a safe option, and that the use of bidding process is justified for the larger causes. The bidding process ensures transparency in functioning of the improvement trusts and that, by itself, does not make the functioning of the improvement trust a commercial venture. It is also important that this use of bidding process is only in the context of commercial units etc. The development of commercial areas is in the interest of planned gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fair and conservative approach to ensure that the costs incurred by the assessee trust are recovered from the end buyers of the residential units or land. The element of charity is not in giving away the residential units at subsidized or low prices but in pursing the object of advancement of object of general public utility in planned development of the are in accordance with the policies of the State Government. Thereafter the Hon ble Bench concluded at para 40 of the order that the assessee trust was entitled to claim exemption u/s 11 read with section 2(15) of the Act, as follows : 40. For the reasons set out above, we are of the considered view that the authorities below were not justified in declining the benefit of section 11 read with section 2(15) to the assessee, and in holding that the assessee trust was not covered by advancement of any object of general public utility. We, therefore, direct the Assessing Officer to delete the disallowance of exemption of ₹ 65,20,690. The assesse gets the relief accordingly. Grievances of the assessee are upheld. Since as stated above the facts in the present case are identcial to that in the case of Hoshiarpur Improv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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