TMI Blog2015 (5) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of "The advancement of any other object of general public utility under section 2(15) of the Income Tax Act". The ld. CIT(Appeals) also noted in the impugned order that facts of the case of the assessee are identical to that of PUDA [2006 (6) TMI 141 - ITAT CHANDIGARH-B] as was contended by the assessee before him. CIT(Appeals) was therefore, justified in following the decision of ITAT Chandigarh Bench in the case of PUDA (supra). It was also found that when income of M/s. Omaxe Ltd. was taxable which earned 85% of the income, then how the income of the assessee at 15% from the same Joint Agreement with M/s. Omaxe Ltd. would be exempt and how the assessee could claim exemption of income under section 11 of the Act. The authorities below have correctly analyzed the facts and material on record before giving adverse finding against the assessee denying exemption u/s 11 of IT Act. Status of artificial jurisdictional person against status of AOP (Trust) - Held that:- CIT(Appeals) noted that facts are similar as were considered in assessment year 2009-10 in which status of assessee has been taken as artificial jurisdictional person. It was also noted that in the similar case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. On 20.01.2015, again ld. counsel for the assessee made a similar request for adjournment on the similar ground that Paper Book and written submissions are required to be filed. The appeals were adjourned to 09.04.2015. The appeals were taken up for hearing on 09.04.2015 and again a request was made for adjournment on the ground that arguing counsel has gone abroad for a short visit. On his request, the appeals were adjourned to 30.04.2015 and it was directed that it would be last opportunity to the assessee. 3. The remaining two appeals for assessment years 2010-11 and 2011-12 were also later on taken up together for the purpose of hearing, being the issues common. On 30.04.2014 the ld. counsel for the assessee instead of arguing the appeals on merits, again made a request for adjournment on the ground that the appeal under section 12AA of the Act is fixed on 25.05.2015, therefore, these appeals may be adjourned. The request of assessee was found improper as it has no connection with such appeal. The assessee, till date has not filed any Paper Book or written submissions on which earlier adjournments were sought. The request for adjournment was accordingly rejected. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2009-10, it was found that assessee has not used the income for charitable purposes. Therefore, claim under section 11 was disallowed. The facts were same in the assessment year under appeal also. Therefore, the Assessing Officer re-opened the case under section 148 of the Act. During the course of assessment proceedings, the Assessing Officer sent a detailed questionnaire. In response, the assessee submitted its objections. All these facts are duly discussed in the assessment order. The Assessing Officer, thereafter disallowed the claim made by assessee under section 11 of the Act. Further, in this case the assessee has claimed the status of AOP (Trust) in the return of income in this assessment year. However, the same was changed to the status of artificial jurisdictional person relying on the assessment order for assessment year 2009-10. 7. The assessee challenged the assessment order before ld. CIT(Appeals) and raised various objections which were forwarded to the Assessing Officer for his comments. 8. The assessee on ground Nos. 5 6 challenged the reopening of the assessment under section 147 of the Income Tax Act. The ld. CIT(Appeals) considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of belief by the A.O. is within the realm of subjective satisfaction of A.O. -3 The appellant has further submitted that the higher authorities have mechanically granted an approval for re-opening of assessment without application of mind. While granting approval, it is written as Yes, it is a fit case for issue of notice u/s. 148. The appellant relied on case of Central India Electricity Supply Co. Ltd. v. ITO 51 DTR 51 DHC, German remedies Ltd. v. DCIT MANU/MH/0861/2005 : 287 ITR 494, CIT v. Suman Waman Chaudhary MANU/MH/1781/2008 : 321 ITR 495 (Bom). I have considered the submissions as noted above. The A.O. has recorded his reasons in details before initiating action u/s. 147 of the IT Act'61. The reasons are duly reproduced in the assessment order which shows that a detailed analysis of the case is made. It is but apparent that the higher authority has gone through the same before approving the case for reassessment. Further from the submission, it is noted that the A.O. has enclosed the details of the case as per annexure-A with the proposal sent to the Addl. CIT. The Addl. CIT has thereafter, duly endorsed the comment that it is a fit case for issue of notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when assessment proceedings are to be taken up and to decide as to whether assessee is entitled for the benefit of s. 11 or 12, as the case may be. That will be the second stage. In this case, a detailed analysis of the facts of the case shows that the appellant is not engaged in charitable activities and, therefore, the claim of exemption u/s. 11 is denied. Therefore, relying on the decision as above, in my opinion, there is no irregularity in the action of the A.O. As regards the issue of tangible material is concerned, it is noted that the A.O. has discussed the reasons in details in the assessment order itself. Further, relying on the case of Rajesh Jhaweri Stock Brokers and Others (supra), in my opinion, there is no error on the part of the A.O. in re-opening the case and, therefore, Ground No. 2 of the appeal is dismissed. 9. On consideration of the submissions of the ld. DR for the revenue and perusal of record, we do not find any merit in ground Nos. 5 6 of the appeal of the assessee. 10. The authorities below noted the conduct of the assessee in subsequent assessment year 2009-10 and it was found that assessee was carrying on activities which are not in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital gains in respect thereof was taxable in the assessment year 1992-93. Admittedly, the issue regarding the capital gains arising from the sale of shares pursuant to the agreement dated January 3, 1992, was neither raised nor discussed in the assessment order for the assessment year 1992-93 it is well established in law that the assessments can be reopened on the basis of the information contained in the assessment for subsequent years. The fact that the appeal from the assessment order for the assessment year 1993-94 was pending before the appellate authority was wholly irrelevant for the purpose of reopening the assessment. The notice of reassessment was valid. 13. The facts of the above case clearly show that the Assessing Officer on the basis of finding of fact brought against assessee in subsequent assessment year 2009-10 had reason to believe that income chargeable to tax had escaped assessment. The Assessing Officer, therefore, has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that the income had escaped assessment. The Assessing Officer was, therefore, justified in initiating the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,39,46,665 ii) It was further noticed that the appellant is carrying on the business of sale of plots under Joint Development Agreement with OMAXE Ltd. and earns 15% profit from this activity and the balance profit going to M/s. Omaxe Ltd. The figures for last two years are as under:- F.Y. Total income 15% share of assessee 2007-08 69,44,72,203/- 14,46,70,830/- 2008-09 76,01,27,620/- 1,40,19,430/- 2009-10 53,60,35,760/- 8,04,05,364/- iii) Looking into the activity of the assessee trust it was clear that it is in the nature of trade, commerce and doesn't fall within the meaning of the words The advancement of any other object of General Public Utility u/s. 2(15) of the IT Act'61. iv) The net profit in this year is 95-84% while the net profit in the case of builders/developers in this trade is generally between 5% 10%. v) The A.O. has also observed that the net surplus generated by the trust reveals that the trust has been e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This also shows that the activities are in the nature of trade commerce or business. The assessee is charging different type of fees, Cess, late fees, interest and penalties etc. If the contention of the appellant is accepted then other similar trade, commerce or business done by every person in India will also be termed as an activity of general public utility. The appellant's plea that setting up of integrated township which includes sale of plots is an incidental activity to the main activity covered u/s. 11(4)/11(4A) of the Act is not relevant when the activities of the trust itself is held to be commercial in nature. xii)The assessee's plea is that section 2(15) is applicable w.e.f. 01.04.2009 is also not relevant as even then the activity itself is not for the purpose of advancement of general public utility. 6.1 At this point, it is worthwhile to note that the Hon'ble ITAT Chandigarh in the case of PUDA v. CIT MANU/IG/5009/2006 : 103 TTJ (Chd) 988 has held that It is a well known fact that in some of the situations the provisions of law are misused in the names of charities. If expanded/broader latitude is extended to the word charity, then there are so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee has started auctioning the plots by way of bidding at the market rate and sometimes more than that and charging interest on belated payments. In such a situation, no charity is involved. Rather the assessee has converted itself into a big businessman. Similar development/infrastructure/facilities are also provided by private developers these days, then they will also claim the status of a charitable institution. The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the assessee and if certain facilities like parks, community center, school are provided, it is not only basic requirement, rather a tool of attracting the investors wherein the hidden cost of these facilities is already included. In the absence of these facilities, normally the purchaser may not invest and the prices may be less. In view of these facts, the assessee's activities not being of charitable nature, the application of registration under s. 12A has been rightly rejected by CIT 17. The ld. CIT(Appeals) considering the material on record dismissed these grounds of appeal of the assessee. The findings of ld. CIT(Appeals) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant that PDA is set up with the object of development of Patiala and sale of plots in the process of setting up of integrated township is to subserve the main object. The appellant relied on case of Jodhpur Development Authority v. CIT MANU/IO/0048/2012 : 145 TTJ 221 and Jaipur Development Authority v. CIT in ITA No. 27/JB/2007 etc. These cases apparently pertains to registration u/s. 12A/12AA of the IT Act'61. The appellant also contended that the main activity in the case of the assessee is not business. The connected incidentally or ancillary activities of sales carried out in furtherance and to accomplish their main objects would not normally amount to business unless an independent intention to conduct business in these connected, incidental or ancillary activity is established by the revenue. However, in this case, it is seen that the appellant was acquiring huge chunks of land at nominal price and, thereafter, the same were sold at exorbitantly high prices. The commercial plots were sold through auction evidently to the highest bidder. Levy of fines and penalties implies and element of force to avail monetary benefit. It is also noted from the assessment order that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of profit motive and cannot be said to be carrying on charitable activities and therefore, registration under s. 12A could not be granted. 19. The ld. DR also relied upon decision of Hon'ble High Court of Jammu Kashmir in the case of Jammu Development Authority v. Union of India in ITA No. 164/2012 in which the order of the Tribunal has been upheld withdrawing the status of charitable institution given to the assessee and copy of the order of Hon'ble Supreme Court is also filed in which the SLP of Jammu Development Authority has been dismissed. 20. The ld. DR also relied upon decision of Hon'ble Allahabad High Court in the case of CIT v. Red Rose School MANU/UP/1167/2007 : 212 CTR 394 (All) on the proposition that even if registration is granted under section 12AA of the Act, sufficient safeguards have been given under section 11, 12 and 13 of the Act for assessing income which has not been applied to the purpose of the trust or institution. The ld. DR, therefore, contended that even if assessee has pleaded that there was registration under section 12AA which was later on cancelled by the Ld. Commissioner of Income Tax, still Assessing Officer is empowered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional person against status of AOP (Trust). The ld. CIT(Appeals) noted that facts are similar as were considered in assessment year 2009-10 in which status of assessee has been taken as artificial jurisdictional person. It was also noted that in the similar case of Patiala Improvement Trust for assessment year 2003-04 and 2004-05, ITAT held that the status of assessee should be of artificial jurisdictional person. Therefore, finding the issue to be same, ld. CIT(Appeals) confirmed the order of Assessing Officer and dismissed this ground of appeal of the assessee. Nothing is argued from the side of the assessee. Therefore, we do not find any justification to interfere with the order of ld. CIT(Appeals) in confirming the order of the Assessing Officer taking the status of artificial jurisdictional person by following the order of the Tribunal in the case of Patiala Improvement Trust. Ground No. 4 of the appeal of the assessee is accordingly, dismissed. 22. Ground No. 1 is general and needs no finding. 23. In the result, appeal of the assessee is dismissed. ITA 675/CHD/2014 (A.Y. 2008-09) 24. This appeal by assessee is directed against the order of ld. CIT(Appeals), Pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in preceding assessment years above. Following the reasons for decision in assessment year 2007-08, we dismiss these six grounds of appeal of assessee being identical in nature. 28. In the result, appeal of the assessee is dismissed. ITA 840/CHD/2014 (A.Y. 2011-12) 29. This appeal of the assessee is directed against the order of ld. CIT(Appeals), Patiala dated 20.08.2014 for assessment year 2011-12 on the following grounds: 1. That the Learned CIT(A) has grossly erred in law and on facts in upholding the illegal assessment order passed by the Assessing Officer. 2. That the CIT(A) has erred in law and on facts in upholding the disallowance made by the AO of the claim made by the appellant under section 11 ignoring the registration granted u/s. 12AA by the CIT valid at the time of assessment; 3. That the CIT(A) has erred in law and on facts in upholding the opinion of the AO that the activities of the appellant are for profit and not charitable despite registration u/s. 12AA in force, ignoring that registration under section 12A is a 'fait accompli' to hold the Assessing Officer back from further probe into the objects of the trust. 4. That the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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