TMI Blog2023 (11) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... rity [ 2022 (10) TMI 948 - SUPREME COURT] that the activities of assessee is eligible for Section 2(15) of the Act. The Legal Ground of the assessee is adjudicated in favour of the assessee. - DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER For the Appellant : None For the Respondent : Sh. Amit Jain, CIT. DR. ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals), Bathinda, (in brevity the CIT (A) ) order passed u/s 250 (6) of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2014-15. The impugned order was emanated from the order of the ld. Dy. Commissioner of Income Tax, Circle-1 (Exemption), (in brevity the ld. AO) order passed u/s 143(3) of the Act. 2. The assessee has taken the following grounds: 1. On the facts in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred by holding that, since proviso to section 2(15) is applicable, section 13(8) gets invoked and as a result of section 13(8), the assessee appellant looses all the benefits of sections 11 and 12 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred by confirming the addition of Rs. 6,09,41,639/- instead of loss of Rs 38,76,965 as per revised return filed, supported by the books of accounts maintained as prescribed by the Govt, of Punjab. 7. On the facts in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred by confirming the addition made by the assessing officer after taking the receipts on the accrual/mercantile method of accounting and expenditure on cash basis and ignoring the revised audit report giving true correct state of affairs of income. As such addition made is unjustified and uncalled for. The same be deleted. 8. That the appellant craves leave to add or amend any grounds of appeal before the appeal is finally heard or disposed of. 3. Brief fact of the case is that the assessee is an Urban Cooperative Development Authority which is called General Public Utility (GPU). The assessee claimed the exemption u/s 11 and 12 of the Act. Accordingly, after depreciation the income amount of Rs. 6,09,41,640/- was claimed as exempt u/s 11 of the Act. So, the total income of the assessee was Nil. The assessment was framed u/s 143(3). In the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 12. As per the revenue the application of section 2(15) in case of urban development company, (GPU) is well settled by the recent case of Hon ble Supreme Court in Ahmadabad Urban Development Authority (supra). The relevant paragraphs are duly reproduced as below: 186. In Shri Ramtanu Cooperative Housing Society (supra) no doubt, this court did not have to decide whether the Maharashtra Industrial Development Corporation was entitled to tax exemption. However, it examined the provisions of the Act, and the ratio, that such industrial development corporations are not engaged in trading, is binding. Like in that case, here too, the concerned state Acts (Gujarat Industrial Development Act, 1962 and the Karnataka Industrial Areas Development Act, 1966) tasked the boards with planning and development of industrial areas. Their personnel are appointed under the enactments and are deemed to be public servants. The state government is empowered to acquire land, in exercise of eminent domain power, for their purposes; their audits are by the Accountant General of the concerned state, or auditors appointed by the state. They are authorized by law, to levy rates and charges, for the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(46)) applied to the Central Government for exemption, the treatment of their receipts, should be no different than how such receipts can and should have been treated for the purposes of determining whether they are GPU charities, during the period when section 10(46) was not in existence. Furthermore, this court is of the opinion that having regard to the observations in Gujarat Maritime Board case (supra), the denial of exemption under one category cannot debar such corporations from claiming income exempt status under another category. 6.1 Further, the revenue has already agitated the issue before the Hon ble Supreme Court in the case of assessee s own case also and which was duly dismissed by the Hon ble Supreme Court. The assessee is eligible for exemption section 11 and 12 and as per the guideline of the Hon ble Apex Court in the relevant paragraph is duly reproduced as below: 253. In view of the foregoing discussion and analysis, the following conclusions are recorded regarding the interpretation of the changed definition of charitable purpose (w.e.f. 1-4-2009), as well as the later amendments, and other related provisions of the IT Act. A. General test u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 143(3) (all w.r.e.f. 1-4-2009), reaffirm this interpretation and bring uniformity across the statutory provisions. B. Authorities, corporations, or bodies established by statute B.1. The amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the state government or central governments, for achieving what are essentially 'public functions/services' (such as housing, industrial development, supply of water, sewage management, supply of food grain, development and town planning, etc.) may resemble trade, commercial, or business activities. However, since their objects are essential for advancement of public purposes/functions (and are accordingly restrained by way of statutory provisions), such receipts are prima facie to be excluded from the mischief of business or commercial receipts. This is in line with the larger bench judgments of this court in Ramtanu Cooperative Housing Society and NDMC (supra). B.2. However, at the same time, in every case, the assessing authorities would have to apply their minds and scrutinize the records, to determine if, and to what extent, the consideration or amounts charged ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15) (as amended from time to time) has to be complied with, if the regulatory body is to be considered as one with 'charitable purpose' eligible for exemption under the IT Act. C.2. Like statutory authorities which regulate professions, statutory bodies which certify products (such as seeds) based on standards for qualification, etc. will also be treated similarly. D. Trade promotion bodies Bodies involved in trade promotion (such as AEPC), or set up with the objects of purely advocating for, coordinating and assisting trading organisations, can be said to be involved in advancement of objects of general public utility. However, if such organisations provide additional services such as courses meant to skill personnel, providing private rental spaces in fairs or trade shows, consulting services, etc. then income or receipts from such activities, would be business or commercial in nature. In that event, the claim for tax exemption would have to be again subjected to the rigors of the proviso to section 2(15) of the IT Act. E. Non-statutory bodies E.1. In the present batch of cases, non-statutory bodies performing public functions, such as ERNET ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed judgment of the High Court does not call for interference. H. Application of interpretation H. At the cost of repetition, it may be noted that the conclusions arrived at by way of this judgment, neither precludes any of the assessee's (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 to exemption. 254. In accordance with the foregoing discussion, and summary of conclusions, the numerous appeals are disposed of as follows: (i) The revenue's appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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