AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 659
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.... Administration Trustee g) Managing Director, APUFIDC Secretary of Trust The trust was created with the primary object of financing infrastructure projects in the State of Andhra Pradesh undertaken by urban local bodies, statutory bodies, public sector undertakings and private investors, as the settler has noted the need for providing cost effective finance for urban infrastructure through direct loans, EPT and also providing for raising resources on it pooled basis and also provide new credit enhancements for achieving the objective of low cost finance for the urban sector. The assessee made an application in the prescribed manner on 30-5-2007 before the DIT (E) seeking registration, u/s 12AA of the Act. The application was initially rejected by the DIT (E) vide order dated 22-11-2007 for the reason that the assessee failed to furnish the information called for and did not make the required compliance to the queries made by him. 3. The assessee challenged the order passed by the DIT (E) refusing registration by filing an appeal before the ITAT. The Tribunal vide order dated 31-3-2008 in ITA No.128/Hyd/2008 set aside the order assed by the DIT (E) and remitted the matter back to ....
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....ust deed, it is noted that the trust is fully owned by Government of Andhra Pradesh. From this, the DIT (E) concluded that as the entire income from the trust is meant for the Govt. of A.P and as the trust is wholly owned by Government of Andhra Pradesh and the Government of AP is the sole beneficiary, it cannot be granted registration u/s 12AA of the Act by treating it as public charitable institution. With the aforesaid observation, the DIT (E) rejected the assessee's application for registration. 4. The learned AR referring to the preamble of the trust deed as well as other clauses submitted that the mission statement declares that trust would facilitate the sustained development of urban infrastructure in the state by enabling urban local bodies and other local entities to have access to low cost capital by supporting urban sector reforms to make them creditworthy and eventually access the capital market on their own and by facilitating public private community initiative for building urban infrastructure. The learned AR referring to the object of the trust as contained in section 2.3 of Article II of the trust deed submitted that the trust receives monies from Central and St....
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....ban population and also address problems of environmental conservation. It was submitted that the premises on which the DIT (E) refused to grant registration is totally unfounded. In support of his contention the learned AR relied on the decisions of jurisdictional High Court in case of CIT vs. AP state Road Transport Corporation (159 ITR 1 (SC) and the decision of CIT vs. Gujarat Maritime Board (295 ITR 561 (SC). The learned AR further contended, to encourage such kind of activities being taken up by a trust created by the Central or a State Government, Sec. 10(46) has been enacted by Finance Act, 2011 w.e.f. 1-6-2011. The learned AR submitted that since the assessee-trust has been created on 23-2-2005 when the provision u/s 10(46) was not incorporated in the statute book but nevertheless the statutory provision brought by the Finance Act, 2011 clearly highlights the fact that the legislature recognizing the need for providing incentive to trusts created by Central or State Govt., with the object of regulating or administering any activity for the benefit of the general public has brought the provision into the statute. 6. The learned DR, on the other hand, while justifying the o....
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....enty five lakh rupees] or less in the previous year;]" A reading of the aforesaid provision would make it clear that any object in the nature of general public utility also comes within the expression of 'charitable purpose'. Therefore, the issue before us is whether the activities'/objects of the trust as mentioned in the trust deed are in the nature of objects of general public utility. 9. There is no dispute to the fact that the assessee trust has been created by the Government of Andhra Pradesh and the Board of trustees as mentioned herein before are functionaries of the State Government or its agencies. The reading of the trust deed as a whole certainly makes it clear that the trust has been created to finance different schemes/utilizing the funds provided by the Central or State Government by way of granting loans, grants etc., to different municipal bodies or municipal corporation for implementing schemes of central or state government. The infrastructure projects as mentioned in clause(j) of section 1.1 of Article 1 of the trust deed makes it clear that they include provision of water supply, roads, drainage, solid waste management, street lights, sewerages, sewerage disp....
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....served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. When an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility, but not so, if it seeks to promote the interest of those who conduct the said trade or industry (CIT Vs. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC)). If the primary or predominant object of an institution is charitable, any other object which might not be charitable but which is ancillary or incidental to the dominant purpose, would not prevent the institution from being a valid charity (Addl. CIT Vs. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC)). The present case in our view is squarely covered by the judgment of this court in the case of CIT Vs. Andhra Pradesh State Road Transport Corporation [1986] 159 ITR 1 (SC) in which it has been held that since the Corporation was established for the purpose of providing efficient transport system, having no profit motive, though it earns income in the process, it is not liable to income-tax. Applying the ratio of the said judgme....
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....A (1)(a) of the Act. However, the proviso to the aforesaid section provides an exception by giving a discretion to the registering authority to grant registration from the date of creation of the trust subject to the condition that the assessee trust satisfies the registering authority that it was prevented by sufficient cause for making an application before expiry of the period as mention in clause (a) of section 12A(1). Therefore, it is the duty of the assessee trust to satisfy the registering authority that it was prevented by sufficient cause in applying for registration within the prescribed time. At this stage, we cannot usurp the power of the registering authority by condoning delay. With the aforesaid observation, we set aside the order of the DIT (E) and direct him to grant registration to the assessee trust u/s 12A of the Act. However, the date of grant of registration is left open as the assessee has to satisfy the DIT (E) regarding the cause of delay. The DIT (E) shall afford a reasonable opportunity of being heard to the assessee to explain the delay and decide the issue accordingly. 14. In the result, the appeal filed by the assessee stands allowed. Order pronounce....
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....upra). 4. The leaned DR, on the other hand, relied on the orders of the CIT (A). It is evident from the facts on record that due date for filing the return of the impugned assessment year is 30-9-2010. As can be seen from details of payment made which is extracted in para-5 of the CIT(A) order all the payments have been made prior to due date of filing of return of income. In these circumstances, the expenditure claimed cannot be disallowed in view of the provisions contained under the proviso to section 43B of the Act. In this context, we rely upon decisions of Hon'ble Delhi High Court in case of CIT vs. Aimil Limited (supra) and that of Punjab & Haryana High Court in case of CIT vs. Lakhani India Limited (supra). We therefore direct deletion of amount of Rs.2,12,896/- Hence this ground of the assessee is allowed. 5. The next issue as raised in ground No.3 relates to disallowance of an amount of Rs.1,15,99,328 towards commission payment to agents. Briefly the facts are, during the assessment proceedings, the Assessing Officer noticed that the assessee has claimed expenditure of an amount of Rs.1,15,99,328/- towards payment of commission. On examining the details, the Assessing O....
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....The receipts also shown the amount received in the respective hands. Ity was therefore contended that the payment being genuine, it cannot be disallowed. With regard to the observation made by the Assessing Officer and CIT (A) that the assessee has not furnished necessary details with regard to the services rendered by the so called agents, the learned AR submitted that even though the assessee has submitted all necessary details, but neither the Assessing Officer nor the CIT (A) have examined the same. In this context, the learned AR referring to the documents submitted in the paper book contended that the matter can be verified by the Assessing Officer. 9. The learned DR, on the other hand, strongly supporting the orders of the CIT (A) submitted that as the assessee has failed to prove the genuineness of the payment by furnishing necessary details of the nature of services rendered by the agents, the disallowance made is justified. 10. We have heard the submission of the parties and perused the materials on record. On a perusal of the assessment order as well as the order passed by the CIT (A), it becomes absolutely clear that the expenditure claimed has been disallowed on the ....