TaxTMI 
TaxTMI 
2014 (4) TMI 102
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....Finance Act, 2008 w.e.f. 01.04.2009, which reads as under: 'Definitions. 2. In this Act, unless the context otherwise requires,- (1) ............... (2) ................ (15) "charitable purpose" includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ....
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....th the law, which w.e.f. 01.04.2009 includes section 13(8), is only on the tax payer. The legislative intent is, thus, clearly in favour of the impact of the provisos to section 2(15) being allowed or being given effect to in determination of the total income for a particular year, being a variable phenomenon (refer para 8 in Maharashtra Housing & Area Development Authority vs. Addl. DIT(E) [2013] 58 SOT 196 (Mum.)). Reliance was placed on the following decisions: i. CIT vs. Sarvodaya Ilakkiya Pannai [2012] 343 ITR 300 (Mad.) ii. Maharashtra Housing & Area Development Authority vs. ADIT(E) (supra); iii. Khar Gymkhana vs. DIT(E) (in ITA No.373/Mum/2012 dated 10.07.2013); iv. Mahatma Gandhi Charitable Society vs. CIT [2013] 142 ITD 565 (Cochin- Trib.); v. Rajasthan Housing Board vs. CIT [2012] 19 ITR (Trib) 524 (Jp.); vi. Asst. CIT vs. Aurangabad Holiday Resorts (P.) Ltd. [2009] 118 ITD 01 (Pune) and vii. Gujarat Cricket Association vs. DIT (E) [2012] 19 ITR (Trib) 520 (Ahbd). 3.2 On facts, the assessee is a....
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....warranting withdrawal of registration, while the purview of the Assessing Officer (A.O.) in assessment proceedings is to verify the application of income of a charitable institution for charitable purposes and the satisfaction of other conditions, as spelled out in sections 11 to 13 of the Act, subject to which the exemption to the said income as not forming part of the total income is granted. It is to be noted that per the amended law, applicable w.e.f. 01.04.2009 (i.e., A.Y. 2009-10 onwards), the law links the manner in which the object, per se charitable, is achieved or accomplished, with it being so or regarded as so under the Act, in-so-far as it is toward the advancement of an object of general public utility (Maharashtra Housing & Area Development Authority (supra) - para 8). In other words, the only course available in law is for the cancellation of the said registration where the first proviso to section 2(15) is attracted. As regards the application of the second proviso to section 2(15), which limits the operation of the first proviso to an extant threshold limit qua the receipts of the institution from its activities (presently at Rs.25 lacs), the same, where so, could....
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.... i. Entertainment Society of Goa vs. CIT [2013] 23 ITR (Trib) 635 (Panaji); ii. Mumbai Metropolitan Region Development Authority (in ITA Nos.5584 & 5062/Mum/2009 dated 29.06.2012); iii. Jalandhar Development Authority vs. CIT [2009] 124 TTJ (Asr) 598; iv. Tamil Nadu Cricket Association vs. Director of Income-tax (Exemptions) [2013] 57 SOT 439 (Chennai); v. Punjab Urban Planning & Development Authority vs. CIT [2006] 103 TTJ (Chd.) 988; vi. Jammu Development Authority vs. CIT [2012] 52 SOT 153 (Asr.)(URO); vii. Improvement Trust vs. CIT [2013] 30 taxmann.com 58 (Asr.); Findings 4. Having heard both the parties at length, and given our careful consideration to the matter, we proceed with our analysis/decision. 4.1 At the outset, however, it would be relevant to clarify an aspect of the matter having a direct bearing on its adjudication. There is no scope to say of the Revenue's action as being in excess of the jurisdiction of the competent authority on account of the registration withdrawn having been granted u/s.12A of the Ac....
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....RITY Functions of the Metropolitan Authority. 12.(1) The main object of the Authority shall be to secure the development of the Bombay Metropolitan Region according to the Regional Plan, and for that purpose the functions of the Authority shall be- a) review any physical, financial and economical plan; b) review any project or scheme for development which may be proposed or may be in the course of execution or may be completed in the Metropolitan Region; c) formulate and sanction for the development of the Metropolitan Region or any part thereof; d) execute projects and schemes; e) recommend to the State Government any matter or proposal requiring action by the State Government or any other authority for the overall development of the Metropolitan Region; f) participate with any other authority for inter-regional development; g) finance any project or scheme for the development of the Metropolitan Region; h) co-ordinate execution of the project or schemes for the development of the Metro....
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....pplication of second proviso, nor is so contended at any stage. During hearing, the ld. AR would explain us as to how the said receipts are integral to the functioning of the authority, and for which it has the requisite mandate under its charter, referring to sections 12(1)(g) and 21A of the MMRD Act for the purpose, as we observe was also done before the ld. DIT(E). Section 12(1) stands reproduced above. Section 18 (1)(j) is relevant in this regard. The same, as also s. 21A, read as under: "CHAPTER V FINANCE, BUDGET AND ACCOUNTS '18. (1) There shall be a fund for the Metropolitan Authority to be called Mumbai Metropolitan Region Development Fund to which shall be credited all moneys received by the Authority, including- Funds of the Metropolitan Authority. (j) all moneys borrowed by the Authority.' Power to Metropolitan Authority to finance projects and schemes and impose conditions therefor. '21A. The Metropolitan Authority shall be Competent to give grants, advances or loans to, or to share expenses with, any local authority or other authority in the Metropolitan Region, for any of the purposes of time bein....
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....or business by itself, as in the case of a bank or a term lending institution. We are not for a moment advocating a strict meaning to its activity of financing, but only seek to emphasize that in order to be considered as a part of the assessee's regular business or functional activity, it has to be firstly in compliance of the objective of s. 12 of its governing act, qua projects that fall within its purview as a part of the regional plan, being reviewed and supervised by it. Secondly, that the assessee cannot be only or even predominantly a financing organization, and as such earning its revenue primarily or predominantly by way of interest, as financing itself could not be considered as an advancing an object of general public utility. True, financing is a vital input for execution of projects, but then so are other goods and services that go into undertaking the same. Their supply, as also that of funds, as by banks and financial institutions engaged in providing long term finance to public or infrastructure projects, cannot be considered as per se charitable. Again, the terms of lending (e.g. whether as soft loans over long gestation period, or at regular, prevailing rates of ....
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....between the two would decide on this aspect of the matter. Such a finding/s, as would be patently clear, is necessary to arrive at a finding as to the satisfaction or otherwise of any of the two conditions of section 12AA(3), i.e., on facts. The primary onus to establish its case in this regard is on the assessee. Conclusion 5. The issue of applicability or otherwise of section 12AA(3) in the instant case being factually indeterminate, we only consider it fit and proper in the facts and circumstances of the case to restore this matter back to the ld. DIT(E) for allowing the assessee a reasonable opportunity to present its case in this regard before him, to be decided per a speaking order and in accordance with law. The ld. DIT(E), though not restricted to the facts and figures for a particular year, shall restrict his inquiry to the factual aspect of the case, i.e., qua the satisfaction of the condition/s of section 12AA(3) on facts. That is, the fact that the first proviso to section 2(15) gets attracted shall not influence or colour the ld. DIT(E)'s factual findings nor by itself be considered as a ground for considering the assessee's activities as not genuine or not in ac....