TMI Blog2020 (4) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... - Pradip Kumar Kedia, Accountant Member And Mahavir Prasad, Judicial Member Prateek Tosniwal, AR for the Appellant. Surendra Kumar, CIT DR for the Respondent. ORDER Pradip Kumar Kedia, The captioned appeals by the Assessee and Revenue are directed against the Commissioner of Income Tax (Appeals)-9, Ahmedabad. The relevant details are tabulated as under: ITA Nos. Name of assessee AY CIT/CIT(A)'s order dated AO's penalty order dated AO's order under section 955/Ahd/16 Surat Urban Development Authority (SUDA) 2012-13 10-2-2016 24-3-2015 143(3) of the Income-tax Act, 1961 (in short 'the Act') 2432/Ahd/17 -do- 2013-14 28-8-2017 28-3-2016 -do- 2433/Ahd/17 -do- 2014-15 -do- 21-12-2016 -do- 2. The grievances raised being common in all three a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... schemes. Working for water systems, sewage and other facilities and services. In view of the various provisions of Gujarat Town Planning and Urban Development Act, 1976 it is claimed that assessee cannot purchase any land in fact assessee has not purchased any land. As per provisions of the above Act it is very much clear that assessee can acquire the land either by agreement or under the provisions of Land Acquisition Act only in the cases envisaged in clauses (b), (d), (k) (n) of sub-section (2) to section 12 of said Act. It was submitted that a perusal of said clauses would reveal that land can be reserved for public purposes such as schools, colleges other educational institutions, transport communications. prevention or removing pollution of water or air caused by discharge of waste etc. Further, said acquisition can be made only by way of reservation u/s 40(3)(j) and (jja) of the Act and said reservation is limited to the specified percentage of total land acquired under the town planning scheme. This reservation can be made for the purpose of providing housing accommodation to the members of socially economically backward classes of the people. Further, lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l aspects. It was thus submitted that the development of district of Surat by providing house, roads, development and maintenance of parks (boost to environment), plantation of trees (again pertaining to environment), providing sewerage systems (clean and healthy environment) are all objects of welfare of the people of the district. Further, together with the new developments, the Authority also has to keep fresh and renovate the historic sites and natural attractions of the assigned to SUDA. 5.5 It was also submitted that irrespective of the fact the assessee trust is engaged in development of various areas as per the provisions of the above Act which is for the public at large, the assessee trust does not fall under the last limb of the definition of Charitable purpose. Since the assessee is engaged in above mentioned charitable purpose, hence it is not right to apply first proviso to section 2(15) of the Act. 5.6 Reliance was placed on the recent decision of the Hon'ble Gujarat High Court in the similar case of Ahmedabad Urban Development Authority v. Asstt. CIT [2017] 396 ITR 323. where the court was called upon to decide as to whether AUDA constituted under Gujarat T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t facilities, public purposes of all kinds: drainage, inclusive of sewerage, surface or subsoil drainage and sewage disposal; Lighting; Water supply etc. The Town Planning Scheme also provides for historical or national interest or natural beauty, and of buildings actually used for religious purposes. The Scheme also provides for reservation of land to the extent often per cent, or such percentage as near thereto as possible of the total area covered under the scheme, for the purpose of providing housing accommodation to the members of socially and economically backward classes of people. As per section 40(i)(jj) for the aforesaid purposes certain percentage of total area covered under the scheme are allotted earmarked. Fifteen per cent of total area is allotted for the purpose of roads, five per cent for parks, playgrounds, gardens and open space, five per cent for social infrastructure such as school, dispensary, fire brigade, public utility place as earmarked in the Draft Town Planning Scheme and Fifteen percent for sale by appropriate authority for residential, commercial or industrial use depending upon the nature of development. Last Fifteen per cent is earmarked under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Planning Scheme, such as road, drainage, electricity, water supply etc. if the assessee is permitted to sale the plots (land) to the extent of 15 per cent of the total area under the Town Planning Scheme and while selling the said plots they are sold by holding the public auction, it cannot be said that activities of the assessee is profiteering, to be in the nature of trade, commerce and business. [Para 13] Considering the aforesaid facts and circumstances and more particularly, considering the fact that the assessee is a statutory body -Urban Development Authority constituted under the provisions of the Act, constituted to carry out the object and purpose of Town Planning Act and collects regulatory fees for the object of the Acts; no services are rendered to any particular trade, commerce or business; whatever the income is earned/received by the assessee even while selling the plots (to the extent of 15 per cent of the total area covered under the Town Planning Scheme) is required to be used only for the purpose to carry out the object and purpose of Town Planning Act and to meet with expenditure while providing general utility service to the public such as electricity, roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined and designed by the Government of Gujarat and also infrastructural activities relating thereto such as to undertake the preparations of development plans, monitoring and control of development of town planning as construction of roads, bridges and carry out work in connection with supply of water and disposal of sewerage and provisions for other services and activities such as drainage system, water connection, etc. for the benefit of public at large. SUDA is constituted to carry out the object and purpose of Town Planning Act and collects regulatory fees for the object of the Acts; no services are rendered to any particular trade, commerce or business. Whatever the income is earned/received by the assessee is required to be used only for the purpose to carry out the object of Town Planning Act and to meet the expenditure while providing general utility service to the public such as electricity, road, drainage, water etc. Also, the entire control is with State Government and even accounts are also subjected to audit. As there is no element of profiteering at all, the activities of the assessee cannot be said to be in the nature of trade, commerce and business having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter. In this backdrop, it was contended that the amount accumulated or set aside by SUDA of ₹ 37,50,00,000/- is as per section 11(2) which can be claimed as deduction and hence, no addition can be made on the account of same. 5.10 As regards addition of ₹ 9,10,65,153/-, it was submitted that as per section 11(1) of the Act, subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India: and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to section 2(15) of the Act is applicable in the facts of the case or not and consequently, the activity of the assessee can be regarded as charitable activities within the meaning of section 2(15) of the Act or not. The AO, in the instance case, has disallowed exemption of ₹ 37,50,00,000/- claimed under s.11(2) of the Act and further denied the deduction of ₹ 9,10,65,153/- claimed on account of accumulation of income under s.11(1)(a) of the Act holding the activity of the assessing authority to be non-charitable in nature. We find that in the similar facts, the co-ordinate bench in Vadodara Urban Development Authority v. ITO in ITA No. 2751/Ahd/2014 order dated 28.01.2019 has placed reliance upon the decision of the Hon'ble Gujarat High Court in the case of Ahmedabad Urban Development Authority (supra) and CIT v. Gujarat Industrial Development Corpn. [2017] 83 taxmann.com 366 (Guj) and adjudicated the issue in favour of the assessee. The relevant operative para of the order of the co-ordinate bench of Tribunal in Vadodara Urban Development Authority's case (supra) is reproduced hereunder for ease of reference: '4. We have heard the respective partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishing commercial centers in connection with establishment and organization of such industries it could not be said that activities carried out by assessee were either in nature of trade, commerce or business, for a Cess or Fee or any other consideration so as to attract proviso to section 2(15) and same could be said to be for charitable purpose and, consequently,. Assessee was entitled to exemption under section 11- Held, yes (Paras 15 and 17) [In favour of assessee] 5. We find that the object of the assessee is similar to that of the corporation before the Jurisdictional High Court and on the similar set of facts the appeal was allowed in favour of the assessee hence relying upon the same we allow the claim of the assessee and the disallowance of exemption as claimed by the assessee u/s 11 of the Act to the tune of ₹ 70,73,005/- is hereby quashed and addition made thereon is thus deleted. 6. In the result, assessee's appeal is thus allowed.' 8. In the light of the decision rendered by the Hon'ble Gujarat High Court and applied by the co-ordinate bench in Vadodara Urban Development Authority's (supra) and Gandhinagar Urban Development Authority v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
