TMI Blog2022 (8) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... of its aims and objectives, which are charitable in nature and in the process earn some profits, the same would not be hit by proviso to section 2(15). The aims and objects of the assessee-trust are admittedly charitable in nature. Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under Section 11. The intention of the trustees and the manner in which the activities of the charitable trust institution are undertaken are highly relevant to decide the issue of applicability of proviso to Section 2(15). The proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 for the relevant assessment year. Another statutory body, namely, Krishi Utpadan Mandi Samiti constituted under U.P. Krishi Utpadan Mandi Adhiniyam, 1964 was also registered under Section 12AA 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 Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the respondent assessee had filed appeal before the Income Tax Appellate Tribunal, Delhi Bench C : New Delhi. The Tribunal considered the submissions of both the sides and recorded the following findings/held, as under :- 3.1 With respect to ground Nos.3 to 6, the Ld. AR submitted that the issue of cancellation of registration u/s 12AA of the Act had been considered by this Tribunal and the Tribunal had restored the registration u/s 12AA vide order dated 29.04.2019 in ITA No.2400/Del/2014. A copy of the said order was placed on record by the Ld. AR and it was submitted 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various courts/tribunals in the case of Moradabad Development Authority, Jaipur Development Authority, Ahmdabad_Urban Development 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 assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso gone through the material on record. We note that the issue of nature and taxability of amount transferred to the Infrastructure Development Fund was considered by the Co-ordinate Bench of this Tribunal in the case of Saharanpur Development Authority in ITA No.4113/Del/2017 vide order dated 24.03.2021 wherein it was held as under: 6. It is noted from the material on record that in the case, similar issue has been decided in the case of the assessee for the assessment years 2004-05 to 2007-08 by the Co-ordinate Bench of ITAT G Bench, Delhi where in it was held that, the appellant has received in fra structure funds under the orders o f Govt. o f U.P. and it was required to use such funds as per the direction of the High Powered Committee and has no control over the said funds. There fore, the interest income from such funds is not the income o f the appellant. 7. This observation has been given consistently by the ITAT in favour of the assessee for the Assessment years 2004-05 to 2007-08. Further , the Hon ble Allahabad High Court in the case of Lucknow Development Authority has held that the money transferred to the Infra structure fund account is to be utilize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the same sources. It may also be noted here that whatever amount has been spent by assessee on the same issue, the AO has accepted that assessee spent the same amount as per the directions of the State Authorities. Then in that event it is difficult to believe that part amount is capital receipt and part would be Revenue in nature. Therefore, there was no justification for Ld. CIT(A) to hold that the impugned receipt is Revenue in nature. This issue also requires reconsideration in view of the fact that assessee is entitled for exemption u/s 11 of the Act. We, accordingly, set aside the orders of the authorities below on the issue of infrastructure fund as well and restore the issue to the file of AO with direction to redecide the issue as per law by giving reasonable opportunity of being heard to the assessee. 5. The impugned order of the Income Tax Appellate Tribunal shows that the order cancelling the registration under Section 12 AA of the Act, 1961 has been set aside by the Tribunal and the Tribunal has restored the registration of the respondent - assessee under Section 12 AA of the Act, 1961 by order dated 29.04.2019 in ITA No.2400/DEL/2014. In paragraph 5.1 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) 183 and Court held as under: 21. We have heard learned counsel for the parties and gone through the material available on record. It is undisputed fact that the assessee is a statutory authority which was established under the provisions of the Uttar Pradesh Planning and Development Act, 1973. In the instant case, prior to 1st April, 2003, the assessee was enjoying exemption under Section 10(20A) and Section 10(29). When these provisions were amended w.e.f. 1st April, 2003, then the necessity arose to register these institutions under Section 12A. In view of the objects, there is no good reason for holding that statutory bodies could not be treated as charitable within the meaning of Section 2(15). The object of the Authority is to provide shelter to the homeless people, therefore, there is no objectionable material to treat these institutions as non-charitable. The registration under Section 12A is mandatory to claim exemption under Sections 11 13, but registration alone cannot be treated as conclusive. It is always open to Revenue Authorities, while processing return of income of these assessees, to examine the claim of the assessees under Sections 11 13 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No. 11 of 2008 dated 19th December, 2008 [(2009) 221 CTR (St) 1 : (2009) 17 DTR (St) 1] wherein the applicability of the commercial activities in respect of charitable purpose has been clarified. The said circular is reproduced as below: 2.2. 'Relief of the poor' encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under Section 11(4A) or the seventh proviso to Section 10(23C), which are that- (i) the business should be incidental to the attainment of the objectives of the entity, and (ii) separate books of accounts should be maintained in respect of such business. 29. For the applicability of proviso to Section 2(15), the activities of the trust should be carried out on commercial lines with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax Vs. Krishi Utpadan Mandi Samiti 2012 (12) SCC 267 wherein Court has also confirmed this Court's judgment dated 04.12.2009 passed by this Court at Lucknow in I.T.A. No. 102 of 2009. 21. In view of above, we answer above question against Revenue and confirm judgment of Tribunal impugned in all these appeals. 22. All the appeals are, accordingly, dismissed. 6. The appellant herein has challenged the aforesaid judgment of this Court dated 29.8.2016 in Income Tax Appeal No.657 of 2007 (Commissioner of Income Tax Ghaziabad and another Vs. Hapur Pikhuwa Development Authority Preet Vihar) in Special Leave Petition (Civil) Diary No(s).26127 of 2018 which was dismissed by Hon ble Supreme Court by order dated 27.08.2018 with cost of Rs.10 lacs. The aforesaid order of Hon ble Supreme Court dated 27.08.2018 is reproduced below : This petition for special to leave has been filed by the Commissioner of Income Tax, Ghaziabad. First of all this petition has been filed after a delay of 596 days. There is an inadequate and unconvincing explanation given for the delay in filing the petition. Secondly, it is mentioned in the proforma for first listing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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