TMI Blog2021 (1) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... ot genuine. The Department has not placed any material before us that the objects and activities are not genuine. Therefore, we are of the opinion that the Ld. CIT(Exemptions) is not correct in rejecting the registration applied by the assessee u/s. 12AA of the Act. Thus, we are of the considered opinion that the assessee is entitled for registration u/s. 12AA of the Act. Accordingly, we grant the registration to the assessee u/s. 12AA of the Act - Decided in favour of assessee. - ITA No.52/Viz/2020 - - - Dated:- 27-1-2021 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Appellant : Shri V. Satish, Advocate For the Respondent : Shri D.K. Sonowal, CIT(DR) ORDER PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Exemptions), Hyderabad in F. No.CIT(E)/Hyd/51(05)/12A/2019-20, dated 28.11.2019. 2. The brief facts of the case are that the assessee M/s. Visakhapatnam Metropolitan Region Development Authority (VMRDA for short) has been formed on 05.09.2018 by Government of Andhra Pradesh through issue of G.O. Ms.No.301 302 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard both the sides and perused the materials available on record and gone through the orders of the authorities below. The assessee before us is VMRDA has been formed on 05.09.2018 by Government of Andhra Pradesh through issue of G.O. Ms. No.301 302 by dissolving that the VUDA has already applied for registration u/s. 12A of the Act which was duly granted registration u/s. 12AA of the Act on 31.07.2006. However, the said registration was cancelled by the Ld. CCIT(OSD), Visakhapatnam, vide order in F. No. Asst./VUDA/CIT- 1/VSP/2011-12 dated 04.05.2012 on the ground that the assessee has been engaged in commercial activities and also rendering services for fee and as per amendment to Sec. 2(15) of the Act, the assessee is a commercial charitable organization. The assessee preferred an appeal before the Hon'ble ITAT. When the appeal is pending, the assessee filed another application before the Ld. CIT(Exemptions) for registration u/s. 12A of the Act on 15.05.2019 and the same is dismissed by the Ld. CIT(Exemptions) on 28.11.2019 mainly on the ground that the registration granted to the assessee was already cancelled earlier on the ground that the assessee is carrying on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale proceeds to Government account which is against the objects of the assessee trust and the assessee acted as an agent and the agent is not entitled for registration. Further the assessee is the owner of the lands since, the lands were alienated to the assessee, hence, the funds ought to have been utilized for the purpose of objects, instead of remitting to Government account. We have carefully examined the arguments of both the parties. VUDA is constituted u/s 3 of the Urban Areas (Development) Act, 1975 and its objects are to promote, secure and development of areas in the jurisdiction according it s master plan. The objects of the Authority are defined in section 5 which reads as under: Section 5 5. Object and powers of the Authority :- The object of the Authority shall be to promote and secure the development of all or any of the areas comprised in the development area concerned according to plan and for that purpose, the Authority shall have the power to acquire, by way of purchase or otherwise, hold, manage, plan, develop and mortgage or otherwise dispose of and aid other property, to carry out by or on its behalf building, engineering, mining a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h requirements as to its development and use as the Authority or the local authority concerned may think fit to impose. According to which, subject to the directions given by the Government under this Act, the assessee may dispose of any land acquired by Government and transfer to it without undertaking and carrying out any development thereon. Any such land after taking or carrying out such development as it thinks fit to such persons in such manner and subject to such terms and conditions as it considers expedient for securing the development of the area concerned according to plan. 5.2. Section 20 provides for placement of Government vacant lands at the disposal of Authority on the terms and conditions agreed between the Government and the Authority, in the instant case, VUDA is the Authority. Section 20A provides for sale of Government land by public auction and their administration. As per section 20A, the Government is permitted to sell their vacant lands by public auction on such terms and conditions as may be prescribed. Section 22 of the Act provides for procedure for managing the funds of the assessee. 5.3. Section 34 gives authority to Government to give direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide publicity, but not the lands earmarked for civic amenities or for weaker sections. The Department did not explain how the sale of lands earmarked for high income groups and for commercial ventures in public auction violate the objects of the assessee. As long as the sale proceeds are utilized for advancement of the objects without diversion, it does not violate the objects of the assessee. The department did not place any material to show that the funds of the assessee other than the sale proceeds of land in GO No.1401 are diverted for other purposes. Therefore, we, are of the opinion that the same is not against the objects of the Society and do not violate the objects mentioned in APUDA Act. 7. Apart from the above, the Ld.CCIT observed that the assessee had entered into joint venture for construction of commercial buildings which is also treated to be not within the purview of objects of the society. Overall development of the area is the order of the day and for overall development of any city or town, commercial complexes, malls etc., have become the signs of development in the cities. Visakhapatnam is tier II city and private operators do not come forward f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Perusal of page No.181 to 186, we find that the said lands do not find figure in G.O.No.1401 and were related to the orders dated 23.11.1992 and 26.09.1995 which are not relevant for cancellation of Registration and there is no evidence to show that the sale proceeds of subject lands were remitted to Government. Therefore, the same cannot be taken into consideration for deciding the validity of cancellation of Registration u/s 12AA(3) of the Act. The Ld.Standing Counsel also taken the help of page No.347 of the paper book and argued that the assessee was the owner of the land and Page No.347 of the paper book refers to the sale deed dated 09.03.2004 with Gandeva Properties Pvt. Ltd., which is also not related to the period of cancellation of the registration u/s 12AA(3) of the Act. Thus, the sale proceeds of lands mentioned by the Ld.Standing Counsel which were stated to be belonged to the assessee were neither proved to be remitted to the government nor the parts of the lands in GO No.1401, thus there is no impact on Registration u/s 12AA of the Act. Therefore, we are unable to accept the contention of the Ld.Standing Counsel that the assessee has sold the lands belonging to it an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advancement of it s objects, we do not find any reason to hold that VUDA is prohibited from helping the Government in selling the Government s vacant lands as per the specific directions of the Government and there is no case law brought on record by either parties to support or to prohibit the assessee to sell the lands of the Government. Therefore, we are of the considered opinion that assisting the Government, in sale of lands, after collecting the expenses does not make the assessee disentitle for registration u/s 12AA(3) of the Act. 10. The next contention of the department is that the assessee has carried on commercial activity, hence, the assessee is hit by the amendment to section 2(15) of the Act. In the instant case, the assessee is a Government institution and the department did not place any material to show that the assessee is engaged in the commercial activity. We have already held that the activities such as sale of lands by public auction, entering into joint development agreement for construction of commercial complexes, houses and malls are held to be for public utility services for furtherance of objects, hence, the activities of the assessee are within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axmann.com 546, held that cancel of trust registration was set aside as it could not be traced out to Sec.12AA(3) and did not carry out activities contrary to its object. 10.1. From the above we find that there is no material placed before us to establish that the assessee is not carrying on the activities in accordance with the objects or the activities of the assessee are not genuine. The Ld.CCIT has cancelled the registration on presumptions and assumptions without having proper material. Therefore, we cancel the order of the Ld.CCIT passed u/s 12AA(3) of the Act and restore the registration granted to the assessee. Accordingly, appeal of the assessee is allowed. 11. In the result, appeal of the assessee is allowed. 7. In view of the above decision of the Hon'ble ITAT, we find that the present appeal before us, the objects of the assessee are one and the same and there is no material before us to say that the assessee is carrying on its activities contrary to the objects and the activities are not genuine. The Department has not placed any material before us that the objects and activities are not genuine. Therefore, we are of the opinion that the Ld. CIT(Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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