TMI Blog2021 (9) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... s transferred to Infrastructure Development Fund, control over the same and obligation of its utilization is required to be examined to ascertain the real nature of Infrastructure Development Fund. Accordingly, we direct the Assessing Officer to adjudicate the issue afresh keeping in mind the ratio laid down. Non-allowance of credit of prepaid taxes - HELD THAT:- As credit of prepaid taxes is a statutory right envisaged under the Income Tax Act, 1961. The Assessing Officer is directed to allow the credit of prepaid taxes after due verification in accordance with law. Accordingly, Ground allowed for statistical purposes. - I.T.A No.2038/Del/2017 And I.T.A No.5355/Del/2017 - - - Dated:- 13-9-2021 - Shri R. K. Panda, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : Dr. Rakesh Gupta, Adv. For the Respondent : Ms. Sunita Singh, CIT- DR ORDER PER SUDHANSHU SRIVASTAVA, JM: Both the appeals are preferred by the assessee. ITA No.2038/Del/2017 pertains to Assessment Year 2012-13 whereas ITA No.5355/Del/2017 pertains to Assessment Year 2013-14. Since, both the appeals involved identical issues, the same were hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat too without complying the mandatory conditions of section 147 to 151, is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of exemption u/s 11 and 12 as claimed by the assessee and further erred in observing as under:- That the assessee authority is covered under the proviso to section 2(15). That the activities of the assessee authority are commercial in nature and are wholly or partially carried on with a motive of profit. That the assessee was engaged dominantly in the activity of development and sale of properties. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in denying the benefit of exemption u/s 11 12, is bad in law and against the facts and circumstances of the case and without observing the principles of natural justice. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in treating the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal, after taking note of the objects and activities of the assessee had held that the objects of the assessee were charitable in nature in terms of Section 2(15) of the Act and further that the assessee was entitled to registration u/s 12AA of the Act. The Ld. AR argued that once the objects and activities were held to be charitable there remained no basis for denying the benefit of exemption u/s 11 of the Act. 4.0 Per contra, the Ld. CIT-DR relied on the concurrent orders of the Assessing Officer as well as the Ld. CIT(A) and submitted that the assessee was a development authority working on commercial lines and as such the benefit of exemption u/s 11 had rightly been denied. However, the Ld. CIT-DR fairly accepted that the registration u/s 12AA of the Act in the case of the assessee had been restored by a Co-ordinate Bench of this Tribunal. 5.0 Having heard the rival submissions and having perused the material on record, we note that the issue for our consideration is the allowability of assessee s claim of exemption u/s 11 read with provisions of Section 2(15) of the Act. The assessee authority has been created under the UP Urban Planning Development Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment Authority, Jodhpur Development Authority, Improvement Trust, Moga, Improvement Trust, Sangrur, Improvement Trust, Khanna, Improvement Trust, Kapurthala Haridwar Development Authority Agra Development Authority 16 Further we also find that Hon'ble Allahabad High Court has held that the objects and activities of Ghaziabad Development Authority are such that it is eligible for benefit of registration u/s 12A even after proviso to section 2(15) is taken into consideration. The proviso to section 2(15) has been considered by Hon'ble Allahabad High Court in assessee's own fase in the order, therefore the judgment of jurisdictional High Court will have the primacy. The Authority GDA is creation of state of U.P UP Urban Planning and Development Act, 1973where as the other improvement trusts are creation of various state laws involving similar activities. Further examination of the activities of the assessee with regard to the objectives, 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 furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be considered as income as the same does not belong to the assessee and that there was an overriding obligation to spend this amount towards specified and approved infrastructure project. It was, accordingly, argued by the Ld. AR that Infrastructure Fund was of capital nature. It was argued that this fund was created by the State Government for the development of infrastructure of cities and that the same was under the control and supervision of the State Government and, thus, the assessee was merely a trustee of the said fund. 7.0 Per contra, the Ld. CIT-DR submitted that the amount transferred to Infrastructure Development Fund was out of income earned by the assessee as such it was merely an application of income. The Ld. CIT-DR refuted the argument of the Ld. AR that there was an overriding title for the purpose of transfer of funds to the Infrastructure Development Fund. The Ld. CIT-DR highlighted the fact that the said infrastructure fund was just a separate bank account which contained part of the receipts of the assessee which was subsequently used for incurring expenses in the normal course and, thus, by no stretch of imagination it could be said that it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated to exemption u/s 11 of the Act and that assessee is custodian of the amount in question and this amount can be used by the assessee as per directions of the State Authorities. Therefore, it can never be the income of the assessee. 14. Ld. DR, however, submitted that this issue has been decided in detail by the CIT(Appeals), therefore, the order may be maintained. 15. After considering the rival submissions, we are of the view that this issue also requires reconsideration at the level of the AO. The assessee has now been granted registration u/s 12AA of the Act and thus, assessee is entitled for exemption from income u/s 11 of the Act as per law. Even if the infrastructure reserve fund may be treated as income of assessee, it will have to be examined, whether, assessee is entitled for exemption u/s 11 of the Act on the same income. Therefore, it would depend upon fundings with regard to exemption u/s 11 of the Act. We have already restored the issue of exemption u/s 11 of the Act to the AO for fresh decision as per law. Further, the authorities below have not appreciated the fact that assessee claimed that infrastructure fund was received for development activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry conditions of section 147 to 151 of the Income Tax Act, 1961. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and in framing the impugned reassessment order 147/143(3) is bad in law and against the facts and circumstances of the case and not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of exemption u/s 11 and 12 as claimed by the assessee and further erred in observing as under:- That the assessee authority appeared to fall within the ambit of the proviso to section 2(15) of the Act. That the activities of the assessee authority are commercial in nature and are wholly or partially carried on with a motive of profit. That the assessee was engaged dominantly in the activity of development and sale of properties. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in denying the benefit of exemption u/s 11 12, is bad in law an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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