https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=755628 https://www.taxtmi.com/caselaws?id=755628 Denial of exemption u/s 10(46) - NOIDA was systematically indulging in activities which were commercial in character and undertaken with the view to earning profits - NOIDA having extended loans to various entities, thus activities undertaken otherwise than for the benefit of the general public - Also NOIDA had made huge investments in bonds, shares of various entities and created interest yielding fixed deposits which again could not be said to have had any direct, immediate and fundamental connection with the role assigned to it under the UPID Act and thus being in contravention of Section 20 (2) thereof. HELD THAT:- Indisputably, NOIDA, the petitioner herein, has been constituted under the UPID Act with the avowed objective of undertaking developmental activities in an industrial development area. It is in that sense acting as an arm and an adjunct of the State charged with undertaking planned development in the industrial development area. In that connection, the petitioner undertakes planning and development of the area, acquires land and property, engages in construction of housing units or industrial units. In order to fulfil the aforesaid objectives, it is provided funds by the State Government and additionally creates a corpus from the revenue and receipts generated and received in the course of its operations. It is manifest from a reading of the various provisions of the UPID Act that the petitioner acts primarily as an agent of the Government obligated to undertake planned development of areas placed under its control. It cannot possibly be viewed as being a corporation intended to have been incorporated for a profit or commercial motive. The provisions of the UPID Act as well as the material placed before us clearly dispels any notion of the petitioner being a hardcore trading corporation as some precedents have chosen to describe commercial enterprises. As the Constitution Bench in Shri Ramtanu Coop. Housing Society aptly observed, bodies like the petitioner, are intended to act as an architectural agent of development and growth. The respondents have clearly erred in holding that the loans and advances extended by the petitioner would fall within the ambit of commercial activity. The aforesaid conclusion not only fails to bear in consideration the directives of the State Government which prompted and facilitated the said action, the grant of those loans has also not been established to have been motivated with a view to profiteer. As was noticed hereinabove, past precedents rendered in the context of Sections 2 (15) and 10 (46) guide us in this regard to apply the test of activities undertaken with a profit motive and intent. That clearly does not appear to be the case which obtains here. Some of those loans came to be extended to finance activities supportive and supplemental to the development activity that was liable to be undertaken by the petitioner. The finding in the impugned order that the petitioner had advanced loans to private entities such as M/s Amarpali Silicon City has been found to be factually incorrect. Equally destructive of any assumption of commercial activity are the details appearing in the financial statement that has been placed on the record and which establishes that the nominal margin in percentage terms between the income and expenditure of the petitioner has primarily remained in the negative during the period FY 2011-12 to FY 2022-23 [barring a few years]. Thus, we allow the instant writ petition and quash the order - respondents are consequently directed to process the application for exemption made by the petitioner u/s 10 (46) of the Act bearing in mind the observations made hereinabove. Case-Laws Income Tax Thu, 11 Jul 2024 00:00:00 +0530