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TMI Blog2023 (5) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... due date of filing of the Appeal fell in the Covid Lock Down Period, which started from 23.3.2020; and that the due date was extended finally upto 31.7.2020. The ld. Counsel for the assessee has submitted on record a copy of the Instructions issued in this regard by the Hd. Qrs. of the ITAT itself. It is submitted that hence, the delay of 34 days be condoned. 4. We have considered the facts and reasoning given in the Assessee's Application for condonation of delay. In view of the explanation given by the Assessee, which is found to be justified, the delay of 34 days in filing the Appeal is condoned, the Assessee having been prevented by a reasonable cause from filing the appeal in time. 5. The facts of the case are that during the assessment proceedings, the Assessing Officer asked the Assessee-trust to explain its activities during the year, which resulted in income, and to explain how these activities were charitable in nature. The Assessee submitted that the objects / activities of the trust were to bring about improvement in the town of Sangrur by providing streets, housing facilities, development of parks, development of roads and other infrastructures, providing drinking wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic unity; that however, the activities of the trust with regard to the acquisition of land and development of the land and sale thereof in the shape of plots, flats and commercial booths at market rates, after calling for applications from the public with some registration fee cannot be treated as charitable activities under 'general public utility'; that the question was whether the activities carried out by the Assessee involved carrying out any activity in the nature of trade, business or commerce or rendering services in relation to the same; that the dictionary definition of the term 'business' was 'activity of making, buying, selling or supplying goods or services for money'; that the legislature has consciously departed from restricting the import of the term 'business'; and that thus, the term 'business' also includes rendering services of a variegated character. Reference was made to the Hon'ble Supreme Court's decision in 'Laxminaryan Ram Gopal and Son Ltd. Vs. Govt. of Hyderabad', 25 ITR 449 (SC) and the decision of the Hon'ble Supreme Court in 'Sole Trustee, Lok Shikshana Trust Vs. CIT', 101 ITR 234 (SC). It was further observed by the AO that the trust is invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of planning, development or improvement of cities, towns and villages, or for both. Reference was made to 'Punjab Urban Development Authority Vs. CIT', 103 TTJ (Chd.) 988, 'Jalandhar Development Authority Vs. CIT', 35 SOT (Asr.) 15 and 'Jammu Development Authority Vs. CIT', 52 SOT (Asr.) 153. It was observed that 'Jammu Development Authority Vs. CIT' (supra) was upheld by the Hon'ble High Court, as well as by the Hon'ble Supreme Court. It was further observed that the proviso to section 2(15) of the I.T. Act, as amended w.e.f. A.Y. 2016-17, also goes against the Assessee; that in view of the said amended proviso to section 2(15), even if the Assessee claims that these business activities were undertaken in the course of actual carrying out of such advancement of 'general public utility', the Assessee cannot be said to be engaged in charitable activities, as the aggregate receipt from these activities exceeds 20% of the total receipts. Reference was made to the order dated 10.9.2015 passed by the Amritsar Bench of the Tribunal in eleven appeals, in the cases of Hoshiarpur, Pathankot, Bhatinda, Jalandhar, Amritsar and Moga Improvement Trusts. It was observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee contended that the ld. CIT(A) has erred in confirming denial of exemption u/s 11 of the I.T. Act to the Assessee, failing to appreciate that under circumstances exactly similar to the ones attending the year under consideration, exemption u/s 11 of the Act had been allowed by the ITAT in the earlier years, which action stood approved by the Hon'ble High Court; that the Bench had required the Assessee to clarify as to how the decision of the Hon'ble High Court in the Assessee's own case would apply, in view of the amended provisions of section 2(15) of the Act, as relevant to the year under consideration; that for assessment years 2007-08, 2011-12 and 201213, the ld. CIT(A) passed order dated 12.01.2016, allowing the appeal of the Assessee and granting exemption u/s 11; that the Department filed appeal before the ITAT for all these Assessment years; and that the ITAT, vide order dated 28.9.2017, passed in ITA Nos. 16 to 18/Chd/2016, dismissed the Department's appeals. A copy of the said ITAT order has been placed on record. It was further stated that for assessment year 2011-12, pertaining to the same issue of disallowance of exemption u/s 11, the ld. CIT(A) dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alks of non-exclusion of any income u/s 11 and 12 of the Act from total income, if the provisions of section 2(15) become applicable; that the aggregate receipts of the Assessee from its activities of earning income from sale of plots, flats and commercial booths and also earning of income from non-construction fee, transfer fee, penal interest, compounding fee, etc., exceeds 20% of the total receipts; that as such, the amended provisions of section 2(15) of the Act, as brought in by the Finance Act, 2015 w.e.f. 1.4.2016, are clearly applicable to the case; that the Assessee was involved in activities in the nature of trade, commerce and business, for fees and other considerations; that therefore, irrespective of the nature of the use or application or retention of income from the activities of acquisition of land, development of land and sale thereof in the shape of plots, flats and commercial booths at market rate, after calling for applications from the public, with some registration fee, cannot be said to be for charitable purposes, since the aggregate receipts form such activities during the year exceeded 20% of the total receipts of the Assessee trust during the year; and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn more profit from the sale of premises; that builders and colonizers also provided such facilities; that the Assessee MIT's main object was only to earn more profit; that the objects/activities of the Assessee MIT were commercial in nature, and not charitable; and that a charitable institution provides services for charitable purposes free of cost, or for symbolic/nominal costs and not for gain, which was not being done in the assessee MIT's case. The Assessing Officer thus added the amount of Rs.1.46 crores, which had been treated by the Assessee MIT as exempt income. 18. The ld. CIT(A) confirmed the Assessment order. 19. Reversing the ld. CIT(A)'s order, the Tribunal held that the activities of the Assessee MIT were carried out with the larger and predominant objective of general public utility, even assuming that there was a profit motive in such activities, as alleged by the Assessing Officer; that separate books of account were maintained for the business activities; that the Assessee MIT's activities fall within the category 'objects of general public utility'; that the profit on sale does not necessarily imply profit motive in the Assessee MIT's activities; that it is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aggregate receipts of the Assessee trust from the activities of sale of plots, commercial booths, transfer fee, non-construction fee and penal interest, etc., exceed 20% of the total receipts; that therefore, the proviso to section 2(15), as brought in w.e.f. 1.4.2016, is applicable to the year under consideration; that even if for the sake of argument, it were to be considered that the activities of the trust fall under the residuary clause of 'general public utility', the commercial income from such activities is not be excluded from the total income in the light of the second proviso to section 2(15), but is subjected to the limit of the quantum of the proceeds, as prescribed, in keeping with the decision of the Chandigarh Bench of the Tribunal in the case of 'M/s Chandigarh Lawn Tennis Association' rendered in ITA No. 1382/Chd/2016, for assessment year 2013-14; that since the decision of the Hon'ble Punjab & Haryana High Court in the case of 'Moga Improvement Trust' 308 ITR 361 (P&H) (supra) was delivered on 31.10.2008 much after the amendment to section 2(15) and in view of the amended provisions, the said decision is not applicable; that the Finance Act, 2008, w.e.f. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be appropriate to reproduce the relevant portion of the written submissions dated 7.6.2021 filed before us by the Department: "12. Further, the contention of the assessee that all the activities of the trust are charitable in nature and exemption is available under section 2(15) of the Income Tax Act, 1961 and his case is squarely covered by the decision of jurisdictional Punjab & Haryana High Court given in the case of Moga Improvement Trust dated 31st October, 2008 and reported in (2009) 308 ITR 361 is not correctly acceptable. The judgement of Hon'ble Punjab & Haryana High Court was delivered much after amendment to section 2(15) has taken place and in view of amended provisions the same is inapplicable. 13. The Finance Act, 2008 w.e.f 01.04.2009 has excluded any trade, commerce or business related activities by any trust or NGO engaged in the sixth category i.e. advancement of any other object of general public utility from the purview of definition of "charitable purpose" u/s 2(15) of the I.T.Act,1961. Thus, the carrying out of any activities in the nature of trade, commerce or business in pursuit of object (vi) cannot be considered as charitable in nature, if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which are doing activity in the nature of business etc. would be taxable. B. It is also submitted in this respect that SLP has been filed against the judgment of Hon'ble Punjab and Haryana High Court dated 23.12.2016 in ITA No 147/2016 in case of M/s Improvement Trust Moga, decision of which is pending till date but leave has been granted by the Hon'ble Apex Court, which means that the issue has not attained finality 19. ............. The activity carried out by way of construction of flats, commercial booths, sale of plots, construction of colonies and building of shops etc. were not at all covered under the ambit of "charitable" within the meaning of section 2(15) of the Income Tax Act, 1961 and no such activity is related with the public welfare." 23. Now reverting to the observations of the Hon'ble High Court in 'Improvement Trust, Moga', 390 ITR 547 (P&H) (supra), which was followed by their Lordships in the Assessee's case for A.Y. 2011-12, the Hon'ble High Court held that the Tribunal had rightly rejected the Revenue's contention that to fall within the expression "advancement of any other object of general public utility", the trust must necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant purpose of the assessee; that "town improvement" in the title "Punjab Town Improvement Act, 1922" sums up the predominant activity of the assessee, as well as the purpose for its establishment; that the preamble of the Act, titled "An Act for the improvement of certain areas", states "whereas it is expedient to make provision for the improvement and expansion of towns in Punjab...."; that almost every section in Chapter IV of the PTI Act clearly indicates that the assessee trust is established for the purpose of advancement of the object of general public utility; and that not only that, the entire Act in general indicates this to be the reason for and the basis of the establishment of the trust. 27. It was held that the trust must deal with buildings which are unsafe for human habitation; that the trust must deal with the danger caused or likely to be caused to the health of the inhabitants of the area on account of the congested conditions of streets or buildings or want of light, air ventilation or proper conveniences in an area and sanitary defects; that the trust is required to frame street schemes to lay out new streets, thoroughfares and open spaces, or alter existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t making on account of certain incidental or ancillary activities of the trust does not disentitle it to the exemptions; that the trust, which is constituted under the Punjab Town Improvement Act, is likely to make profit on account of its commercial or business activities, such as when it disposes of its land, as required by section 28(2)(iii) of the PTI Act; that this, however, does not take it out of the definition of 'charitable purpose' in section 2(15) of the I.T. Act; that though trade, commerce and business in section 2(15) must be such as to involve an element of profit, making profit is not the predominant motive of the trusts; that the main purpose of the trusts under the Act is improvement of towns, and disposing of properties is only incidental and ancillary to such main purpose; that even where plots are developed and premises are constructed and sold at market price, such sale is necessitated to implement the provisions of the PTI Act through statutory schemes; that such sale is, therefore, driven by the public requirement; that it is not a commercial or business venture per se; and that the schemes are incidental to the main object of town improvement. 32. The ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government. 35. The following are the functions of the AUDA: (i) To undertake the preparation of development plans under the provisions of GTP 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; (iii) 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 authorities functioning in the urban development area in matters pertaining to the planning, development and use of urban land; (v) To control the development activities in accordance with the development plan in the urban development area; (v-a) to levy and collect such security fees for scrutiny of documents submitted to the appropriate authority for permission for development as may be prescribed by regulations; (vi) To execute works in connection with supply of water, disposal of sewerage and provision of other services and amenities; (via) to levy and collect such fees for the execution of works referred to in clause (vi) and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers vested under section 22 of the Gujarat Town Planning and Urban Development Act; that the powers and functions of the AUDA as Urban Development Authority are as per section 23 of the Gujarat Town Planning Act; that the AUDA as an Urban Development Authority is required to undertake the development of the urban area having jurisdiction as per the Notification issued by the State Government. It was observed that prior to Assessment year 2002-03, the AUDA was enjoying the exemption u/s 10(20A) of the Income-tax Act; that however, subsequently, section 10(20A) of the Income-tax Act came to be deleted by the Finance Act 2002 w.e.f. April 1, 2003; and that simultaneously, the exemption granted u/s 10(20A) also came to be withdrawn by the Finance Act, 2002. 41. Their Lordships observed that the first question posed was as to whether the activities of the AUDA can be said to be in the nature of trade, commerce or business so as to deny to it the status of a charitable institution within the meaning of section 2(15) of the I.T. Act; that the second question was whether the activity of the AUDA can be said to be an activity of rendering any service in relation to any trade, commerce or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment Area, also provides for roads, open spaces, gardens, recreation grounds, schools, markets, greenbelts, dairies, transport facilities, public purposes of all kinds, drainage, inclusive of sewerage, surface or subsoil drainage and sewage disposal, lighting; water supply, etc.; that the Town Planning Schemes also provide for historical or national interest or natural beauty, and of buildings actually used for religious purposes; that the Schemes also provide for reservation of land to the extent of ten percent, 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; that as per Section 40(i)(jj) for the aforesaid purposes certain percentage of total area covered under the scheme is allotted earmarked; that fifteen percent of the total area is allotted for the purpose of roads, five percent for parks, play grounds, gardens and open space, five percent 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 the appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt and in a taxing statute, it is used in the sense of an occupation or profession which occupies time, attention or labour of a person, and is clearly associated with the object of making profit. 46. It was noted that in the case of 'Institute of Chartered Accountants of India Vs. DGIT (Exemptions)', 347 ITR 99 (Del.), the Hon'ble Delhi High Court has held that an activity would be considered 'business' if it is undertaken with a profit motive, but in some cases, this may not be determinative; that normally, the profit motive test should be satisfied, but in a given case, an activity may be regarded as a business even when profit motive cannot be established or proved; that in such cases, there should be evidence and material to show that the activity has continued on sound and recognised business principles and pursued with reasonable continuity; that there should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of 'business'; that in view of the decision of the Hon'ble Supreme Court in the case of 'CST Vs. Sai Publication Fund', 258 ITR 70 (SC), if the dominant activity of the Assessee was not business, then a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressions 'business', 'trade' or 'commerce'. 47. It was noted that in 'Addl. CIT v. Surat Art Silk Cloth Manufacturers Association' 121 ITR 1 (SC), the Hon'ble Supreme Court has held: that the test 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; that where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose and not to earn profit, it would lose its character of a charitable purpose merely because some profit arises from the activity; that the test of dominant object of an entity would be relevant to determine whether the entity is carrying on business or not; and that although it is not essential that an activity be carried on for profit motive in order to be considered as business, but existence of profit motive would be a vital indicator in determining whether an organisation is carrying on business or not. 48. It was noted that in State of 'Andhra Pradesh v. H. Abdul Bakshi and Bros.' (supra), the Hon'ble Supreme Court held: that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, trade or commerce; that business activity has an important pervading element of selfinterest, though fair dealing should and can be present, whilst charity or charitable activity is the anti-thesis of activity undertaken with profit motive or activity undertaken on sound or recognized business principles; that charity is driven by altruism and desire to serve others, though element of self-preservation may be present; that for charity, benevolence should be omnipresent and demonstrable but it is not equivalent to self-sacrifice and abnegation; that the antiquated definition of charity, which entails giving and receiving nothing in return is outdated; that a mandatory feature would be that the charitable activity should be devoid of selfishness or illiberal spirit; that enrichment of oneself or self-gain should be missing and the predominant purpose of the activity should be to serve and benefit others; that a small contribution by way of fee that the beneficiary pays would not convert the charitable activity into business, commerce or trade in the absence of contrary evidence; that quantum of fee charged, economic status of the beneficiaries who pay, commercial value of benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be entitled to claim its object to be a 'charitable purpose'; and that on the other hand, 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. 52. Their Lordships held that applying the said decisions to the facts of the case and with respect to the activities of the AUDA under the provisions of the Gujarat Town Planning Act, it cannot be said that the activities of the AUDA are in the nature of trade, commerce or business and / or its object and purpose is profiteering; that merely because under the statutory provisions and to meet with the expenses of the Town Planning Scheme and / or providing various services under the Town Planning Scheme, such as road, drainage, electricity, water supply, etc., if the AUDA is permitted to sell the plots and while selling the said plots, they are sold by holding a public auction, it cannot be said that the activity of the AUDA is profiteering, to be in the nature of trade, commerce and business. 53. It was noted that in the case of 'CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be in the nature of trade, commerce or business. 58. It was noted that in 'DIT (Exemptions) v. Sabarmati Ashram Gaushala Trust', 362 ITR 539 (Guj.), the Gaushala Trust was engaged in breeding milch cattle and improving the quality of cows and oxen and other related activities; that the AO denied exemption u/s 11 of the I.T. Act to the Trust on the ground that considerable income was generated from the activities of milk production and, therefore, considering the proviso to section 2(15) of the I.T. Act, the Trust was entitled to exemption u/s 11 of the Act; that it was held by the Hon'ble High Court that the activities of the Assessee Trust still can be said to be for charitable purpose within the meaning of section 2(15) of the I.T. Act and the same cannot be said to be in the nature of trade, commerce or business for which the proviso to section 2(15) to the Act is required to be applied; that it was held that the legal controversy centers around the first proviso; that it was held that in plain terms, the proviso provides for exclusion from the main object of the definition of the term 'charitable purpose' and applies only to the cases of advancement of any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entities whose purpose is 'advancement of any other object of general public utility', i.e., the fourth limb of the definition of 'charitable purpose' contained in section 2(15), that hence, the said entities will not be eligible for exemption u/s 11 or under section 10 (23C) of the Act if they carry on commercial activity, and that whether such an entity is carrying on any activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 61. It was noted that it was stated in the Circular that there are Industry and trade associations who claim exemption from tax u/s 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'; that under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax; that in such cases, there must be complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tility and would squarely fall under section 2 (15) of the Act; that profit making was neither the aim, nor the object of the Trust; that it was not its principal activity; that merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, this would not render the activity to be in the nature of trade, commerce or business; and that as clarified by the CBDT in its Circular No. 11/2008, the proviso to section 2(15) aims to attract those activities which are truly in the nature of trade, commerce or business, but are carried out under the guise of activities in the nature of public utility. 65. Thus, having taken note of the observations made by the Hon'ble High Court in 'DIT (Exemptions) v. Sabarmati Ashram Gaushala Trust', (supra), their Lordships observed that applying the same to the facts of the case of the AUDA, considering the (i) object and purpose for which the assessee AUDA is established / constituted under the provisions of the Gujarat Town Planning Act, and (ii) that the collection of fees and cess is incidental to the object and purpose of the Gujarat Town Planning Act, even the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to specific Central or State laws; that however, if their activities are akin to or "in the nature of" business, or trade, or they provide services to businesses or trade, for consideration, fee or even cess (since they may be enabled to do so by law), they have to fulfill the mandate and restrictions under Section 2(15), especially proviso (ii); that as per the decision of the Hon'ble Supreme Court in 'New Delhi Municipal Council v. State of Punjab', ["NDMC", for short], (1997) 7 SCC 339, state entities are not exempt from Union taxation, if they engage in trade or business; that the effect of proviso (i) to Section 2 (15) is that there can be no question of any incidental activity, nor can the proceeds of trade claim to be exempt merely because they are ploughed back to feed the charitable object; that in keeping with 'Adityapur Industrial Area Development Authority v. Union of India', [2006] 283 ITR 97 (SC), there is no constitutional immunity from taxation for the State, because by Article 289(2) of the Constitution, even State or its instrumentalities/agencies are not immune from taxation if they carry on trade or business; that in the light of Article 289(2), there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c utility purpose and the price fixation of lands/plots sold by them is also regulated through statutory regulations, due to which, such activities qualify the test of general public utility; that in keeping with the decision of the Delhi High Court in 'Greater Noida Industrial Development Authority', [2018] 406 ITR 418 (Delhi), there is need to distinguish commercial activity and charging and payment of fee, service charges, reimbursement of costs or consideration for transfer of rights for performing and undertaking regulatory or administrative duties for general public interest, when these are not guided and undertaken with profit motive or intent. It was contended that like the 'AUDA', the 'Gujarat Industrial Development Corporation' and the 'Gujarat Housing Board', the trust was established under a statute enacted by the State Legislature; that it was treated as a local authority u/s 10(2) of the I.T. Act, as it existed till 2003; that thereafter it was treated as a 'charitable institution' engaged in activities involved in the advancement of public utility till the amendment of 2008; that it was created purely for the development and redevelopment as well as for augmentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose is fulfilled, the carrying on of some activity which might result in surplus, would not disentitle the entity from the benefit of tax exemption. 71. It was submitted that in the absence of profit motive, the activity is not trade, commerce or business within the meaning of the first proviso to Section 2 (15) of the IT Act, 1961; that in the present context, the activities do not amount to "trade", "commerce" or "business" and the first proviso to Section 2 (15) is attracted only if the primary/dominant objects are (a) in the nature of trade, commerce or business, or (b) rendering any service in relation to any trade, commerce or business; that hence, if the main activity is 'business', the connected, incidental or ancillary activities of sales carried out in furtherance of 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 activities is established by the Revenue. 72. It was submitted that any statutory cess, or, or fee, authorized or compelled by law, which is within the domain of the State Legislature, cannot be construed as taxable, having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , councils, associations or organizations (iv) Non-statutory bodies - ERNET, NIXI and GS1 India (v) State cricket associations (vi) Private trusts 76. We will now reiterate, briefly, the interpretation and conclusion of the Hon'ble Supreme Court, as held applicable to the category of Statutory corporations, authorities or bodies established by Statutes, to which category the present Assessee belongs. 77. The Hon'ble Supreme Court examined the question of the scope of the term "of any other object of general public utility" not being charitable purpose "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 other consideration, irrespective of the nature of use or application, or retention, of the income from such activity." 78. While summing up their interpretation of section 2 (15), their Lordships observed as follows: "Section 2(15) - in the wake of its several amendments between 2008 and 2015 - can be juxtaposed with the interpretation of the unamended Section 2(15) by this Court. In 'Surat Art Silk' (supra), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey would not charge "more than is actually needed for the rendering of the services may be it may not be an exact equivalent, such mathematical precision being impossible in the case of variables, - may be a little surplus is left over at the end of the year - the broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for profit". Therefore, pure charity in the sense that the performance of an activity without any consideration is not envisioned under the Act. If one keeps this in mind, what Section 2 (15) emphasizes is that so long as a GPU's charity's object involves activities which also generates profits (incidental, or in other words, while actually carrying out the objectives of GPU, if some profit is generated), it can be granted exemption provided the quantitative limit (of not exceeding 20 per cent) under second proviso to Section 2 (15) for receipts from such profits, is adhered to. 80. While answering what is the true meaning of the expression 'fee, cess or consideration', the Hon'ble Supreme court has held that 'fee, cess and any other consideration' has to receive a purposive interpretation, in the present context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts; that the answers to these are that the definition ipso facto does not spell out whether certain kinds of income can be excluded; that however, the reference to specific provisions enabling or mandating collection of certain rates, tariffs or costs would have to be examined; that generically, going by statutory models in enactments (under which corporations boards or trust or authority by whatsoever name, are set up), the mere fact that these bodies have to charge amounts towards supplying goods or articles, or rendering services, i.e., for fees for providing typical essential services like providing water, distribution of food grains, distribution of medicines, maintenance of roads, parks, etc., ought not to be characterized as "commercial receipts"; that the rationale for such exclusion would be that if such rates, fees, tariffs, etc., determined by statutes and collected for essential services, are included in the overall income as receipts as part of trade, commerce or business, the quantitative limit of 20 per cent imposed by the second proviso to section 2(15) would be attracted, thereby negating the essential general public utility object and thus driving up the costs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion, that they would fall within the mischief of "cess, or fee, or any other consideration" towards "trade, commerce or business". In this regard, the Court has clarified through illustrations what kind of services or goods provided on cost or nominal basis would normally be excluded from the mischief of trade, commerce, or business, in the body of the judgment. A.4. Section 11(4A) must be interpreted harmoniously with Section 2(15), with which there is no conflict. Carrying out activity in the nature of trade, commerce or business, or service in relation to such activities, should be conducted in the course of achieving the GPU object, and the income, profit or surplus or gains must, therefore, be incidental. The requirement in Section 11(4A) of maintaining separate books of account is also in line with the necessity of demonstrating that the quantitative limit prescribed in the proviso to Section 2(15), has not been breached. Similarly, the insertion of Section 13(8), seventeenth proviso to Section 10(23C) and third proviso to Section 143(3) (all w.r.e.f. 01.04.2009), reaffirm this interpretation and bring uniformity across the statutory provisions. B. Authorities, corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporation, board, or whatever such body may be called, from claiming that it is set up for a charitable purpose and seeking exemption under Section 10(23C) or other provisions of the Act." 83. As for the application of the interpretation, it was reiterated by the Hon'ble Supreme Court that: "At the cost of repetition, it may be noted that the conclusions arrived at by way of this judgment, neither preclude any of the assessees (whether statutory, or non-statutory) advancing objects of general public utility, from claiming exemption, nor the taxing authorities from denying exemption, in the future, if the receipts of the relevant year exceed the quantitative limit. The assessing authorities must on a yearly basis, scrutinize the record to discern whether the nature of the assessee's activities amount to "trade, commerce or business" based on its receipts and income (i.e., whether the amounts charged are on cost-basis, or significantly higher). If it is found that they are in the nature of "trade, commerce or business", then it must be examined whether the quantified limit (as amended from time to time) in proviso to Section 2(15), has been breached, thus disentitling them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Report). 87. It is not the case of the Department that the above position has undergone any change whatsoever post A.Y. 2011-12, upto A.Y. 201617, i.e., the year under consideration, or beyond. This position is in full compliance of the Supreme Court directive of the receipts being in accordance with the mandate of the provisions of the PTI Act, 1922, in every year. 88. The findings of the Hon'ble High Court thus squarely meet the stipulation of the Hon'ble Supreme Court regarding determination of the exempt ability of receipts which the Assessee trust is mandated by the PTI Act to collect. 89. The Hon'ble High Court also held (page 606, placitum 82 of the Report) that considering the nature of the PTI Act, selling of plots and premises by the trust is only incidental and ancillary to its main purpose of "town improvement"; that mere profit making on account of such incidental or ancillary activity does not disentitle the trust to the exemptions under the Income Tax Act; that the trust is likely to make profit on account of its commercial or business activities of disposing of its lands pursuant to the power under section 28(2) (iii) of the PTI Act; that, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) regulating any matter, for the benefit of the general public, arising out of the object for which it has been created. [source : 330 CTR (Statutes) 257] 92. Further, we find that our aforesaid view is supported by the decision of the Hon'ble Gujarat High Court in the case of 'CIT (Exemptions) vs. Gujarat Industrial Development Corporation', (2023) 452 ITR 27 (Guj.) wherein, the Hon'ble Gujarat High Court, following the decision of the Hon'ble Supreme Court in the case of 'Ahmedabad Urban Development Authority' (supra) has dismissed the appeal filed by the Revenue, holding that the matter is squarely covered by the decision of the Hon'ble Supreme Court and no question of law, much less any substantial question of law arises for consideration. It is relevant to note that in the said case, the Senior Standing Counsel appearing for the Revenue fairly submitted that the decision rendered by the Hon'ble Supreme Court in the case of 'Ahmadabad Urban Development Authority' (supra) would govern the case of the assessee. We, therefore, find that the Revenue has also accepted the decision of the Hon'ble Supreme Court as applicable in the case of Gujarat Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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