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TMI Blog2022 (8) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the U.P. Urban Planning and Development Act, 1973 with the object of development of areas according to plan and for that purpose, the authority has been empowered to acquire, hold, manage and dispose land and other properties to carry out building activities, engineering and other operations etc. For the Assessment Year 2012-13, the assessment of the respondent - assessee was framed under Section 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act 1961"), after disallowance of assessee's claim of exemption under Section 11 of the Act, 1961 and an addition of Rs.3,46,03,14,429/- being the net amount transferred to Infrastructure Development Fund, was determined as Income of the Respondent - Development Authority/Assessee. The exemption was disallowed by the Assessing Officer on the ground that registration under Section 12AA granted to the assesee stood cancelled vide order dated 31.03.2014, passed by the CIT, Ghaziabad. Further, the Assessing Officer has disputed the charitable nature of activities carried out by the respondent - assessee in terms of Section 2(15) of the Act, 1961. 4. Aggrieved with the assessment order the respondent - assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gla Charitable Trust mentioned Supra the registration was refused as the entities were operated by a single family unit. In the case of Self Employers Service Society, it was held that there was no charitable activity undertaken by the society. Similarly the case of UPDA, there was no finding of charitable work undertaken by the association. The case of Travancore Education Society the registration was cancelled due to collection of capitation fee which was prohibited by law. Thus we find none of the cases referred to by the revenue were in the work of development of townships or city development by the local bodies / improvement trust/ developing authority. The facts and the operations of the assessee and the cases refereed above are on different set of circumstances. The only relevant cases referred by the revenue namely JDA and Baddi Barotiwala development authority have been well differentiated by various courts and tribunal as mentioned above and registration was allowed to various development agencies, development authorities, improvement trust by whatever name they are known and in the same line of operation as that of the assessee in question. 14. We also find registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee by the Hon'ble High court of Allahabad, approvals given in the case of other town development agencies, we hold that the assessee trust is carrying out charitable activity of advancement of public utility and the business activity carried out by it are incidental to the attainment of its main object and thus the proviso to section 2(15) is not attracted in the assesses case. We therefore hold that the assessee is entitled for restoration of registration u/s 12AA of the income Tax, 1961." 5.1 Therefore, in view of the above observations of the Coordinate Bench of this Tribunal in assessee's own case restoring the registration u/s 12AA of the Act, we are of the opinion that the objects of the assessee authority are charitable in nature and the same are not hit by proviso to Sec.2(15) of the Act. However, we direct the Assessing Officer to examine the activities of the assessee authority and if the same are found to be in consonance with the objects, the benefit of exemption u/s 11 is to be allowed. Accordingly, Ground Nos.3 to 6 are allowed for statistical purposes. 8.0 We have considered the arguments of both the parties with respect to Ground Nos. 7 & 8 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 activities from the State Authorities, the assessee has to spend the amount on the same as per approval of the State Authorities. Thus, there may not be any profit element out of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Saharanpur Development Authorities and Khurja Development Authority. That apart the question of grant of registration under Section 12 AA of the Act, 1961 to Development Authority like the present respondent assessee, was considered by Co-ordinate bench of this court in Income Tax Appeal No. 657 of 2007 and other connected appeals decided on 29.08.2016 in the matters of Hapur Pilkhuwa Development Authority, Ghaziabad Development Authority, Kanpur Development Authority, A.D.A. Allahabad, Alighar Development Authority, Jhansi Development Authority, Gorkahpur Development Authority and Banda Development Authority in various income Tax appeals and it was held in paragraphs 18, 19, 20, 21 and 22 as under : "18. We find it unnecessary to go for much research work and debate issue further for the reason that in respect to a similar authority, namely, "Lucknow Development Authority", which is also constituted under U.P. Act, 1973, a similar question, whether activities of Development Authority can be said to be 'charitable' as defined under Section 2(15) came up for consideration before a Division Bench in CIT Vs. Lucknow Development Authority 2014 (98) DTR (All) 183 and Court hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration under Section 12AA denotes that the conditions laid down in Section 12A stand fulfilled. 26. The effect of such a certificate of registration under Section 12AAA, therefore, cannot be ignored or wished away by the Assessing Officer by adopting a stand that the trust or institution is not fulfilling the conditions for applicability of Sections 11 & 12. In the case of Gestetner Duplicators P. Ltd. vs. CIT (1979) 8 CTR (SC) 371 : (1979) 117 ITR 1 (SC), the Apex Court was called upon to determine as to whether the contribution made by the employer should be treated as a business expenditure, the requirement being contribution should be made to a recognized provident fund. 27. Needless to mention that this Hon'ble Court in the case of CIT vs. M/s. U.P. Forest Corporation Ltd., in Income Tax Appeal No. 70 of 2009 observed that the Forest Corporation being an statutory entity is entitled for the registration under Section 12A of the Act. The said observations was upheld by the Hon'ble Apex Court vide its order dated 12th May, 2011 in Special Leave Petition (Civil) No. 2590 of 2011. 28. We may also like to refer a C.B.D.T. Circular No. 11 of 2008 dated 19th Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the record, it also appears that the "authority" had been maintaining infrastructure, development and reserve fund IDRF as per the notification dated 15th January, 1998, the money transferred to this funds is to be utilized for the purpose of project as specified by the committed having constituted by the State Government under the said notification and the same could not be treated to be belonging to the "authority" or the receipt of taxable nature in its hands. For this reason also, it appears that the funds are utilized for general utility." 19. The findings and observations in the aforesaid judgment are squarely applicable in the case in hand also. 20. We also find that another statutory body, namely, Krishi Utpadan Mandi Samiti constituted under U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (hereinafter referred to as "Act, 1964") was also registered under Section 12AA of Act, 1961 and the question whether amount transferred to Mandi Parishad would constitute application of income for 'charitable purpose' under Section 11(1)(a) of Act, 1961 has been decided against Revenue by Supreme Court in Commissioner of Income Tax Vs. Krishi Utpadan Mandi Samiti 2012 (12) SCC 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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