General public utility activity kept urban development authority within exemption, as civic development functions were not treated as trade or business.

A statutory urban development authority engaged in preparing and implementing development plans, providing civic infrastructure and recovering prescribed charges was treated as pursuing an object of general public utility. Its receipts were applied to development works and public amenities, and the activity had already been recognised by the jurisdictional High Court and a coordinate Bench in its own case. On those facts, the activity was not regarded as trade, commerce or business, the proviso to section 2(15) did not apply, and the authority remained entitled to exemption under section 11.

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Issues: Whether the assessee-urban development authority was engaged in an activity falling within the proviso to section 2(15) of the Income-tax Act, 1961, so as to disentitle it from exemption under section 11.

Analysis: The dispute turned on the nature of the assessee's functions, namely preparation and implementation of development plans, provision of civic infrastructure and recovery of prescribed charges. The record showed that the assessee was a statutory authority constituted for planned urban development, that its receipts were used for development works and public amenities, and that the activity had already been held by the jurisdictional High Court and the coordinate Bench in the assessee's own case to be an object of general public utility. On those facts, the activity was not treated as trade, commerce or business, and the proviso to section 2(15) was held inapplicable.

Conclusion: The assessee remained entitled to exemption under section 11, and the Revenue's challenge to the relief granted by the first appellate authority failed.

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