TMI Blog2019 (12) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... - GUJARAT HIGH COURT] itself has adjudicated the issue in favour of the assessee. The CIT(A) has taken cognizance of the binding decision of the Hon ble Gujarat High Court in great length and has rightly reversed the action of the AO and held that the assessee is entitled to the relief claimed. We find no error in the order of the CIT(A) in view of the decision rendered in AUDA by the Hon ble Gujarat High Court. We therefore decline to interfere with the order of CIT(A). - Decided against revenue - I.T.A. Nos. 2389 to 2394/Ahd/2017 - - - Dated:- 18-12-2019 - Shri Pradip Kumar Kedia, Accountant Member And Smt. Madhumita Roy, Judicial Member For the Appellant : Shri M. S. A. Khan, Sr.D.R. For the Respondent : None ORDER PER BENCH: The captioned appeals directed at the instance of assessee arise from the respective orders of the Commissioner of Income Tax (Appeals) ( CIT(A) ) against different assessment years as tabulated below: ITA Nos. Name of assessee AY CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to sec.2(15) of the Act. 2. The Ld CIT(A) has erred in the law and on facts in allowing the benefit of exemptions u/s.11 without considering the fact that the assessee is involved in widespread commercial activities in nature of business and the activity of the assessee is covered under first and second proviso to sec.2(15) of the Act. 3. The Ld. CIT(A) has erred in the law and on facts in deleting the addition of ₹ 2,63,896/- by not appreciating that the addition to fixed assets has already been allowed in earlier years as application of income which amounts to double deduction. 4. The Ld CIT(A) has erred in the law and on facts in deleting the addition of ₹ 1,51,81,991/- considering that a capital expenditure by a person need not be a capital receipt of the person receiving that amount which the assessee has received for the discharge of its objects. 5. The Ld CIT(A) has erred in the law and on facts in allowing the accumulation of RsA, 60, 00, 000/- u/s.11(2) and accumulation @15% of Rs.l.23,59.649/- u/s11(1)(a) of the Act without appreciating the fact that once the proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific direction, it shall be treated as the capital of the trust for carrying on its charitable activities, and then such income is not liable to tax. As per AS-12, where the government grants leads to creation of fixed assets equals the whole or virtually the whole of the cost of the asset, the asset should be shown in the balance sheet at nominal value or if grants related to depreciable fixed assets may be treated as diverted income which should be recognized in the P L account on a systematic and rational basis over the useful life of the asset. Accordingly, the CIT(A) held that assessee is eligible for claim the benefit u/s.11 of the Act and therefore, CIT(A) allowed accumulation @15% of ₹ 1,23,59,649/- made u/s.11(1)(a) and accumulation of ₹ 4,60,00,000/- made u/s.11(2) of the Act. 7.3 Further, the CIT(A) the directed the AO that after verification of the facts allow the expenditure on addition to fixed assets of ₹ 2,63,896/- and project expenses of ₹ 1,51,81,991/- as application of income. 7.4 The relevant operative para of the CIT(A) is reproduced hereunder: 4.2 I have carefully considered rival co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant provisions of the Gujarat Town Planning Act, under which, the Assessee AUDA has been constituted as Urban Development Authority are as under: Section 2(viii): Development , with all its grammatical variations and cognate expressions, means the carrying out of any building, engineering, mining, or other operations in, or over, or under land or the making of any material change in any building or land or in the use of any building or land, and includes layout and subdivision of any land; Section 2(xxviii): Urban development authority means an urban development authority constituted under section 22; Section 2(xxix). Urban development area means an area declared to be an urban development area under section 22. Section 22: Declaration Of Urban Development Area And Constitution Of Urban Development Authority: (1) Where the State Government is of opinion that the object of proper development or redevelopment of any urban area or group of urban areas in the State together with such adjacent areas as may be considered necessary, whether covered under a development area already declared as such under section 3 or not, will be bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea, exofficio;] (vii) a member secretary to be appointed by the State Government who shall a/so be designated as the Chief Executive Authority of the Urban Development Authority. (5) The provisions of subsections (5) to (12) of section 5 shall apply in relation to an urban development authority as they apply in relation to an area development authority, with the modification that references to an area development authority in the said subsection shall be construed as references to an urban development authority. Section 23: Powers And Function Of Urban Development Authority: (1) [The powers and functions of] an urban development authority shall be:(i) To undertake the preparation of development plans under the provisions of this Act, for the urban development area; (ii) To undertake the preparation [and execution] of town planning schemes under the provisions of this Act, if so directed by the State Government; (Hi) To carry out surveys in the urban development area for the preparation of development plans or town planning schemes; (iv) To guide, direct and assist the local authority or authorities and other statutory authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of this subsection the expression land likely to be used for building purposes shall include any land likely to be used as, or for the purpose of providing, open spaces, roads, streets, parks, pleasure or recreation grounds, parking spaces or for the purpose of executing any work upon or under the land incidental to a town planning scheme, whether in the nature of a building work or not. (3) A town planning scheme may make provision for any of the following matters, namely:(a) The laying out or relaying out of land, either vacant or already built upon: (b) The filling up or reclamation of low lying, swampy or unhealthy areas, or levelling up of land; (c) Layout of new streets or roads, construction, diversion, extension, alteration, improvement and closing up of streets and roads and discontinuance of communications; (d) The construction, alteration and removal of buildings, bridges and other structures; (e) The allotment or reservation of/and for roads, open spaces, gardens, recreation grounds, schools, markets, greenbelts, dairies, transport facilities, public purposes of all kinds; (f) Drainage, inclusive of sewerage, surface or subsoil drainage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to operate in the event of the State Government refusing to sanction the preliminary scheme, or in the event of the withdrawal of the scheme under section 66. or on the coming into force of the final scheme; (m) such other matters not inconsistent with the objects of this Act as may be prescribed. Section 91: Fund Of The Appropriate Authority : (1) An appropriate authority shall have and maintain its own fund to which shall be credited(a) All moneys received by the authority by way of grants, loans, 1 [advances, fees, development charges or otherwise;] (b) All moneys derived from its undertakings, projections and other sources; (c) Such amount of contributions from local authorities as the State government may specify from time to time to be credited to the fund of, the authority. (2) The fund of an appropriate authority shall be applied towards meeting (a) Expenditure incurred in the administration of this Act; (b) Cost of acquisition of land for the purposes of this Act; (c) Expenditure for any development of land in the development area; (d) Expenditure for such other purposes as the State Government may direct. (3) An appropriate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties functioning in the urban development area, as may IK: nominated by the State Government; (iii) Three officials of the State Government, to be nominated by that Government, exofficio; (iv) the Presidents of the district panchayats functioning in the urban development area, or, as the case may be, part thereof, exofficio; (v) the Chief Town planner or his representative, exofficio; (vi) the Chief Engineer or Engineers (Public Health) of the local authority or authorities functioning in the urban development area or his or their nominee or nominees, exofficio; 5[(via) the Municipal Commissioner of the Municipal Corporation, if any, functioning in the urban development area, exofficio;] (vii) a member secretary to be appointed by the State Government who shall also be designated as the Chief Executive Authority of the Urban Development Authority. Thus, the constitution of the Urban Development Authority is subject to the control of the State Government. The powers and functions of the Urban Development Authority as contained in Section 23 are reproduced herein above. Considering Section 40 of the Town Planning Act, the Town Planning Scheme prepared by the Urban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of 15% of total area, by public auction and gets maximum amount, it amounts to profiteering and therefore, the activities of the Assessee can be said to be in the nature of business. However, while holding so, learned Tribunal has not properly appreciated the object and purpose of permitting the Urban Development Authority to sale the plots, maximum to the extent of 15% of the total area i.e. to meet with the expenditure for providing them infrastructural facilities like gardens, roads, lighting, water supply, drainage system etc. The learned Tribunal has also not property appreciated the reasons for selling the plot by holding public auction i.e.; (1) to avoid any further allegation of favoritism and nepotism and (2) so that maximum market price can be fetched, which can be used for the development of the Urban Development Area. 12.1. At this stage decision of the Hon'ble Supreme Court in the case of Ahmedabad Green Belt Khedut Mandal (supra) ((2014) 7 SCO 357) is required to be referred to. Before the Hon'ble Supreme Court, it was contended on behalf of original land owners whose lands were included in the TP Scheme that by permitting the Area Develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associated with the object of marking profit . 12.5 In the case of Institute of Chartered Accountants of India (supra) while considering the whether activities of Indian Trade promotion organization can be said to be in the nature of business , despite the fact that the said organization was collecting rent for providing the space at trade, fair and exhibitions and though was receiving income by way of sale of tickets and income from tickets and sale in Pragati Maidan etc., after considering the various decisions of the Hon'ble Supreme Court as well as decisions of the other High Courts, it is held that activities of the said organization cannot be considered as business . While holding so, Delhi High Court has observed and held as under: An activity would be considered 'business' if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case activity may be regarded as a business even when profit motive cannot be established / proved. In such cases, there should be evidence and material to show that the acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to any trade, commerce or business and earning incomes have sought to claim that their purposes would also fall under charitable purpose. Obviously, this was not the intention of Parliament and, hence, I propose to amend , the law to exclude the aforesaid cases. Genuine charitable organizations will not in any way be affected.' The expressions business, trade or commerce as used in the first proviso must, thus, be interpreted restrictively and where the dominant object of an organisation is charitable any incidental activity for furtherance of the object would not fall within the expressions business, trade or commerce. 69. In the case of Addl. Commissioner of Income Tax v. Surat Art Silk Cloth Manufacturers Association: [1980] 121 ITR 1 (SC), the Supreme Court held as under: The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit making is the predominant object of the activity, the. purpose, though an object of general public utility would cease to be a charitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.7. Identical question came to be considered by (he Delhi High Court in the case of Bureau of India Standard vs. Director General of Income Tax (Exemptions) reported in (2013) 212 Taxrnan 210 (Delhi). In the said decision, the Delhi High Court was considering whether the activities of the Bureau of Indian Standards (supra) in granting licenses and trading certificates and charging amounted to carrying on business, trade or commerce and while considering the said question, it is observed as under: In these circumstances, rendering any service in relation to trade, commerce or business cannot, in the opinion of the Court, receive such a wide construction as to enfold regulatory and sovereign authorities, set up under statutory enactments, and tasked to act as agencies of the State in public duties which cannot be discharged by private bodies. Often, apart from the controlling or parent statutes, like the BIS Act, these statutory bodies (including BIS) are empowered to frame rules or regulations, exercise coercive powers, including inspection, raids; they possess search and seizure powers and are invariably subjected to Parliamentary or legislative o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng element of self interest, though fair dealing should and can be present, whilst charity or charitable activity is antithesis of activity undertaken with profit motive or activity undertaken on sound or recognized business principles. Charity is driven by altruism and desire to serve others, though element of self preservation may be present. For charity, benevolence should be omnipresent and demonstrable but it is not equivalent to self sacrifice and abnegation. The antiquated definition of charity, which entails giving and receiving nothing in return is outdated- A mandatory feature would be; charitable activity should be devoid of selfishness or illiberal spirit. Enrichment of oneself or self gain should be missing and the predominant purpose of the activity WP(C) 1872/13 Page 52 of 55 should be to serve and benefit others. A small contribution by way of fee that the beneficiary pays would not convert charitable activity into business, commerce or trade in the absence of contrary evidence. Quantum of fee charged, economic status of the beneficiaries who pay, commercial value of benefits in comparison to the tee. purpose and object behind the fee etc. are sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited to activities 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. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the WP(C) 1872/13 Page 54 of 55 institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. 13. Applying the aforesaid decisions to the facts of the case on hand and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at all, the activities of the assessee cannot be said to be in the nature of trade, commerce and business and therefore, proviso to Section 2(15)of the Act shall not be applicable so far as assessee is concerned and therefore, the assessee is entitled to exemption under Section 11 of the Income Tax Act. Therefore, the question no. 1 is to be held in favour of the assessee and against the revenue. 15. Now, so far as another question which is posed for the consideration of this Court i.e. whether while collecting the cess or fees, activities of the assessee can be said to be rendering any services in relation to any trade, commerce or business is concerned, for the reasons stated above, merely because the assesses is collecting cess or fees which is regulatory in nature, the proviso to Section 2(15)of the Act shall not be applicable As observed herein above neither there is element of profiteering nor the same can be said to be in the nature of trade, commerce or business. At this stage, decision of the Division Bench of this Court in the case of Sabarmati Ashram Gaushala Trust (supra) is required to be referred to. In the case before the Division Bench, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing the usual practice, issue an explanatory circular containing guidelines for determining whether any entity is carrying on 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. Whether the purpose is a charitable purpose will depend on the totality of the facts of the case. Ordinarily, Chambers of Commerce and similar organizations rendering services to their members would not be affected by the amendment and their activities would continue to be regarded as advancement of any other object of genera! public utility. 7. In consonance with such assurance given by the Finance Minister on the floor of the House, CBDT issued a Circular No. 11 of 2008 dated 19th December 2008 explaining the amendment as under: 3. The newly inserted proviso to section 2 (15) will apply only to entities whose purpose is advancement of any other object of general public utility ie., the fourth limb of the definition of charitable purpose contained in section 2 (15). Hence, such entities will not be eligible for exemption under section 11 or under section 10 (23C) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce or business or the rendering of any service in relation to any trade, commerce or business. 8. What thus emerges from the statutory provisions, as explained in the speech of Finance Minister and the CBDT Circular, is that the activity of a trust would be excluded from the term charitable purpose if it is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business for a cess, fee and/or any other consideration. It is not aimed at excluding the genuine charitable trusts of general public utility but is aimed at excluding activities in the nature of trade, commerce or business which are masked as charitable purpose. 12. All these were the objects of the general public utility and would squarely fall under section 2 (15) of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business. As clarified by the CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied applicability of provisions of proviso to section 2(15) r.w.s. 13(8) to the appellant, the AO needs to be careful while computing the income of the appellant. There are issues with regard to maintenance of accounts and the appellant has treated the various grants received by it. There are issues with regard (a) to claim of accumulation 15% u/s 11(1)(a) of the Act; (b) to claim u/s 11(1)(d) of the act; (c) to claim of correct rate of depreciation; (d) to claim of income receipts being reflected in the balance sheet; (e) to claim of application of income from project specific grants; (f) to claim of capital expenses as application of income etc. As certain grounds of appeal pertain to these issues, the relevant discussion in subsequent paras has been made. 4.5 With reference to treatment of specific project grants, Hon'ble High Court of Delhi has held in the case of DIT vs Society for Development Alternatives 18 taxman.com 364 that grants with specific directions from the Govt. cannot be treated as income. These grants will have to be spent as per the conditions and purpose laid down by the donor. As per sec,12(1) any voluntary contrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly for charitable or religious purpose. In the case of DIT vs Sri Ramakrishna Seva Ashram 18 Taxman.com 37 (Kar) it was held that donation for specific project shall be treated as corpus donation and the 85% application condition shall not apply. It was held that the word 'corpus' is used in the context of the Act. Therefore, if any voluntary contribution is made with a specific direction, it shall be treated as the capital of the trust for carrying on its charitable or religious activities, then such an income falls u/s.11(1)(d) and is not liable to tax. In many other cases various High Courts have held that any receipt of capital nature cannot be treated as income and hence it was outside the purview of sec. 12. 46 It would be pertinent here to refer to Accounting Standard (AS) 12 that deals with the accounting for Govt. Grants. According to the clause-4 AS-12 the receipt of Govt. Grants by an enterprise is significant for preparation of the financial statements for two reasons. Firstly, if the Govt. Grant has been received an appropriate method of accounting therefore is necessary. Secondly, it is desirable to give an indication to the extent to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.5 It is fundamental to the 'income approach' that government grants be recognised in the profit and loss statement on a systematic and rational basis over the periods necessary to match them with the related costs. Income recognition of government grants on a receipts basis is not in accordance with the accrual accounting assumption (see Accounting Standard (AS) 1, Disclosure of Accounting Policies). 5.6 In most cases, the periods over which an enterprise recognises the costs or expenses related to a government grant are readily ascertainable and thus grants in recognition of specific expenses are taken to income in the same period as the relevant expenses. 5. Further para-8 deals with the presentation of grants related to specific fixed assets. The relevant paras i.e. para-8.1 to 8.3 are reproduced below for the sake of convenience :- 8. Presentation of Grants Related to Specific Fixed Assets 8.1 Grants related to specific fixed assets are government grants whose primary condition is that an enterprise qualifying for them should purchase, construct or otherwise acquire such assets. Other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grants related to revenue should be recognised on a systematic basis in the profit and loss statement over the periods necessary to match them with the related costs which they are intended to compensate. Such grants should either be shown separately under 'other income' or deducted in reporting the related expense 7. Thus, it is seen from the AS-12 as quoted above that as per AS-12 the grants received with specific direction especially for specified fixed assets which is applicable to the appellant can be accounted for in two ways in the books of the appellant. Where the grant leads to creation of fixed assets equals the whole or virtually the whole of the cost of the asset, the asset should be shown in the balance sheet at nominal value. Or alternatively govt grants related to depreciable fixed assets may be treated as diverted income which should be recognized in the P L A/c. on a systematic and rational basis over the useful life of the asset. 8. Based on above referred discussion, the AO is directed to verify and compute the income of appellant as per the following guidelines: (i) Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) (a)During the appellate proceedings it is seen from the Balance Sheet and Income and Expenditure Account of the appellant that certain receipts have been taken by the appellant directly to the Balance Sheet. The AG, Audit had been raising audit objection for treating them as revenue receipts and hence the said receipts have been considered as capital receipts. According to these audit objections for e.g. receipt from 'Betterment Charges' are required to be shown as liabilities in Balance sheet because they should be adjusted against the net amount to be paid by the owners. Similarly as per the Form Q under GTPUD Rules, 1979, 'Development Charges' are required to be shown in the Balance Sheet under the head of 'Capital Receipts'. Audit department also wants the Part Plan Fees, Additional TSI charges etc. to be reflected as 'capital receipts' as per the requirement of Format of Annual Accounts. There are many other issues on which 'Audit' wing had been raising audit objection with regard to classification of receipts. Be as it may, as far as Audit objections are concerned. Here, we are concerned with computation of income under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu Dharmashala Trust vs CIT 86 ITR 683, Hon'ble Supreme Court in the case of SRM CTM Tirupanni Trust, 230 ITR 636, Hon'ble Allahabad High Court in the case of CIT vs Moolchand Sharbati Devi Hospital Trust 190 Taxman 338). (vi) After the calculation of expenses or amount applied for the objects of the appellant, A.O. will allow the accumulation u/s 11(1)(a)of the Act to the extent of 15% of income. If the excess of income over the expenditure is less than 15% of the income, then A.O. shall allow accumulation to the extent of 15% u/s.11(1)(a) of the Act. (For example: If appellant earns Rs, 100 and applies ₹ 90 then only ₹ 10 would be allowed to be accumulated u/s 11(1)(a) of the Act.) (vii) If the appellant has applied more than the income during the year then A.O. is directed to allow carry forward of deficit of that year to be set off against future income of the appellant (Reliance placed on the judgment of Hon'ble Gujarat High Court in the case of CIT vs Sri Plot Swetamber Murtipujak Jain Mandal 211 ITR 293). In that year, the AO shall not allow any accumulation u/s.11(1)(a) of the Act @ 15%. (For example: If appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vide ground of appeal No.8 the appellant has raised the issue of not examining the source of funds such as grants which have been received from State Government and application thereof under the head project fund. I have already discussed the issue of project specific grant and generic grant and the treatment to be given by the A.O as per the directions given at para-8(i) and 8(ii). The A.O is directed to follow those directions. The ground of appeal No.8 is allowed for statistical purpose. 9.3 Ground of appeal no,9 relates to claim of accumulation at the rate of 15% u/s.11(1)(a) and u/s.11(2). The appellant would be eligible to claim the benefit u/s.11 of the Act. A.O is directed' to allow the accumulations u/s.11(1)(a) and 11(2) of the Act. However, during the appellate proceedings and as per the discussions with the A.R, the appellant has filed the revised computation of income. The A.O is directed to follow the directions given at para-8(i) to para-8(viii) and accordingly allow the quantum of accumulation u/s.11(1)(a) and 11(2) of the Act. The appellant has been claiming the various operational receipts as capital receipts in the balance sheet. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(15) of the Act and consequently the action of the assessee cannot be regarded as charitable purpose as envisaged under s.2(15) of the Act having regard to following facts and conditions. 10.1 The main object of the assessee is contribution towards planned and controlled development for the entire urban development area and such activity falls under the category of 'advancement of general public utility. When the activities of the assessee can be said to be in the nature of trade, commerce and business, considering the proviso to Section 2(15), the activities of the assessee cannot be said to be for charitable purpose. 10.2 Further, First and second provisos to Section 2(15) inserted by Finance Act, 2010 and are effective from 01.04.2009. Prior to insertion of these provisions certain bodies have been treated as 'Charitable' on the ground of advancement of object of general public utility. However, after the insertion of the above provisos, the advancement of any other object of general public utility shall not be a charitable purpose, if it involves carrying on of. a) Any activity in the nature of trade, commerce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by the assessee for carrying out the activity of urban development and town planning schemes. The assessee being an urban development authority charges various types of fees from the public for providing certain amenities like roads, bridges etc, which is recovered from the beneficiaries who get benefit out of development of such common infrastructure. Similarly assessee charges betterment charges from beneficiary land owner to compensate for the infrastructure cost. Similarly, the assessee charges building height fee, charge of use fee; ground coverage fee, development charges. Jantree fee. NOC processing fee, regulation fee. impact fee, sewage charge etc. It is evident that these are charges levied by the assessee from the beneficiary/land owner for certain services rendered by it. The beneficiary on payment of the said fee gets certain amenities, regularization of certain infirmities in land/ plan, increase in FSI/additional FSI. NOC certificate for certain other amenities/privileges etc These are receipts from the beneficiaries for the services rendered by the assessee in its capacity as an urban development authority. These receipts are not in the nature of capital, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (g) Proviso to Section 2(15) only needs an assessee to carry on activities in the nature of business, commerce or trade irrespective of whether the assessee generates profits from such activities or not and irrespective of whether profit making is prime motive or not. Section 2(15) has defined charitable purpose to include (i) relief of the poor, (ii) education, (iii) medical relief, (iv) preservation of monuments or places or objects of artistic or historic interest and (v) the advancement of any other object of general public utility . In this regard, It was submitted that the proviso (i) and (ii) to Section 2( 15) would apply if the activity of the trust is deemed to be that of advancement of any other object of general public utility The proviso further provides that such activities will not be charitable if it involves 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 consideration, irrespective of the nature of use or application, or retention, of the income from such activity. In this regard, it was submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not free but for at cost. It was thus submitted that therefore, even second limb of the proviso to section 2(15) is also satisfied. (j) There are surplus and reserves which are continuously swelling. These are generated by the Assessee by way of the activity of sale/lease of land and charging fees. The assessee has not been charging nominal fees or selling the land at a nominal rate. It has been making money by putting the land on auction after taking a reserve price. This activity cannot be said to be a charitable activity. 10.4. It was next contended that; (a) Regarding 'business' and activities carried out by an institution, Hon'ble ITAT Amritsar Bench in the case of Jalandhar Development Authority, ITA No.562/2008, ITA No.562/2008, has relied upon the decision of ITAT Chandigarh Bench in the case of Punjab Urban Planning and Development Authority Vs. CIT, 156 Taxmann 37 (Chd), Hon'le ITAT and has held as under: No activity can be carried on efficiently, properly unless and until it is carried out on business principle but it does not mean that the provision is misused in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re at Allahabad, Lucknow Bench in Writ Petition No. M.B 25204 of 2016 dated 21.4.2017 has dismissed the appeal of Revenue against with SLP has been preferred before Hon ble Supreme Court. Similarly, in the case of New Okhla industrial Development Authority in ITA No.114/2016 and in the case of Yamuna Expressway Industrial Development Authority in ITA No.107/2016 against which SLP before the Hon'ble Supreme Court has been preferred. 10.5 It was thus contended that the decision of the CIT(A) is incorrect on merit. It was pointed out for the same issue, in the case of Ahmedabad Urban Development Authority, the ITAT has given a judgment in the favour of the department. However, Hon'ble H.C. of Gujarat in the case of AUDA vs ACIT in ITA No. 423,424,425 of 2016 dtd. 02-05-2017 has given judgment in the favour of the assessee. It was stated that against the decision of Hon'ble Gujarat High Court, the department has preferred SLP before Hon'ble Supreme Court. 10.6 It was thus ultimately contended by the learned DR for the Revenue that the decision of the CIT(A) is not proper on merits. 11. We have carefully considered rival ..... X X X X Extracts X X X X X X X X Extracts X X X X
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