TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1350
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....w and on facts in rejecting the application filed by the assessee, without lawfully appreciating that the assessee is a statutory authority constituted under sec. 3 of the Uttar Pradesh Industrial Development Act, 1976 (UPIDA) and is duly notified by the Hon'ble Governor of Uttar Pradesh as an Industrial Township under Article 243Q of the Constitution of India; and is statutorily mandated by section 6 of UPIDA for rendering public utility services, satisfying the requirements of sec. 2(15) of the Income-tax Act and hence entitled to be granted registration under sec. 12AA of the Act. 3. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in treating the assessee as a commercial business entity, whereas the assessee, being a statutory authority Notified under Article 243Q of the Constitution of India, is obliged to perform its functions as declared under Schedule XII prescribed under Article 243Q of the Constitution of India and hence cannot be treated a Commercial/Business entity and hence the activities of the authority being in accordance with Section 2(15) of the Income-tax Act, is liable to be granted regist....
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....eserves to be quashed. 8. Because on the facts and in the circumstances of the case, the impugned order of the Learned CIT(Exemption), is liable to be quashed as the same is made by incorrectly observing that proper details were not supplied by the assessee, whereas in contrast, all requisite details were supplied by the assessee before the Learned CIT(Exemption) and the Learned CIT(Exemption) has rather passed the impugned order in a premeditated and biased manner, violating the principles of Natural Justice, as the order is passed on the same date on which the hearing was fixed and hence the order is liable to be quashed on this count. 9. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee seeking grant of Registration U/s. 12AA of the Income-tax Act, 1961, without appreciating that the books of account of the assessee are duly audited by the State Government Auditor [Local Fund Auditor] and that no expense can be incurred by the assessee without the authority of law or for a purpose otherwise than those enumerated under section 6 of the UPIDA; hence the obs....
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....is: i) The applicant-society is a profit making body and not carrying out any charitable activity; ii) In absence of books of account and vouchers, the genuineness of activities could not be verified, exemption under sec. 10(20) of the Act is not admissible to the applicant; iii) The applicant got property development income which comprises sale of developed land and sale of constructed property. iv) The applicant has also got income under the head "urban services income comprising lease rent and fee, penalties, duties and taxes; v) Under the head 'administrative income', the applicant like other builders/colonizers had got income from interest, forfeiture of property and miscellaneous income; vi) Interest bearing fund have been given as interest free loans and grants to other agencies; vii) If any charitable activity is being done by the applicant, it is just coincidental or incidental to its business. viii) The applicant authority is an authority established with the motive of profit. 4. Besides other, the Learned CIT(E) has also noted that the activities of the applicant-authorities are also hit by section 2(15) of the Act and, therefore, it is not entitled for ....
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....of self-sustenance cannot be regarded as profit motive. The objects/activities of the assessee are in furtherance of public policy. The Learned AR referred page Nos. 1 to 34 of the paper book filed on behalf of the assessee i.e. copies of notification for constitution of the appellant authority under sec. 3 of the Uttar Pradesh Area Dev. Act, 1976 (UP Act No. 6 of 1976); UP Industrial Area Dev. Act, 1976; Notification for Declaration of Gr. Noida Ind. Dev. Authority (GAIDA) as industrial town-ship as per proviso to Article 243Q; and Schedule XII to Article 243W of Constitution of India. The Learned AR also referred page Nos. 1 to 220 of the paper book filed on 02.03.2016 which are copies of order sheet of Learned CIT(E); notice dated 29.9.2015 issued by learned CIT(E) requisitioning certain details/information; and submissions made by the assessee to the Learned CIT(E). The Learned AR placed reliance on the following decisions: a) CIT vs. Gujarat Maritime Board (2008) - 166 Taxmann 58 (S.C); b) CIT vs. Andhra Pradesh State Road Tpt. Corpn. (1986) - 25 Taxmann 63A (SC); c) Shri Ramtanu Co-op. vs. St. of Maharashtra (1970 S.C.C(3) 323; d) CIT vs. Lucknow Development Authority....
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....se to the notice issued under sec. 142(1) of the Act. The Learned CIT(DR) placed reliance on the decision of Amritsar Bench of the ITAT in the case of Jammu Development Authority vs. CIT (2012) - 23 Taxmann.com 343(ASR), which has been upheld by the Hon'ble High Court of Jammu & Kashmir - ITA No. 164 of 2012 - judgment dated 7.11.2013. The Learned CIT(DR) pointed out that the assessee had preferred SLP before the Hon'ble Supreme Court against the judgment of Hon'ble High Court but could not succeed. In support, he referred the order dated 24.7.2014 of the Hon'ble Supreme Court in petition for Special Leave to Appeal (C) No. 4990/2014. 8. The Learned AR rejoined with the submission that the above cited decision by the Learned CIT(DR) are not helpful to the Revenue as they are having distinguishable facts. In those cases, the issue was not of granting of registration under sec. 12AA of the Act but the validity of the order of the Learned CIT(E) in withdrawing the registration already granted. 9. Having gone through the orders of the above cited decisions, we find that in the case of CIT vs. Gujarat Maritime Board (supra) - Hon'ble Supreme Court has been pleased ....
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....Transport Corporation Act that in carrying on its undertaking, assessee would act on business principles. 9.2 In the case of CIT vs. Lucknow Development Authority (supra), which is more akin to the case of the present appellant before us, the Hon'ble jurisdictional Allahabad High Court has been pleased to decide the issue in favour of the assessee upholding the order of the ITAT that income of the assessee is exempted under sec. 11 of the Income-tax Act, 1961, though there was no condition that no profit should be earned by its activities and the profit earned will not be distributed amongst the stakeholders. In that case also before the Hon'ble High Court, it was argued by the Revenue that assessee is not on different footing from private colonizer and was making huge profits by giving compensation for land which is less than the market value of the actual land owners. As regards the claim of providing public amenities, private colonizers were also providing similar facilities. It was contended that (i) assessee is a huge profit making agency for which it is taking money from general public; (ii) assessee did not engage in any charitable and if assessee developed any inst....
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....ral public utility" had been extensively dealt with and defined, to meant that where the objects of an institution cover the public at large or a section of public, the objects are to be held to the "objects of general public utility" as meant in section 2(15) of the Act. Thus, discussing the cases of the parties in detail and the decisions cited by them going through, the Hon'ble jurisdictional Allahabad High Court has given following findings: "We have heard learned counsel for the parties and gone through the material available on record. It is undisputed fact that the assessee is a "Statutory Authority" which was established under the provisions of the Uttar Pradesh Planning and Development Act, 1973. In the instant case, prior to 1st April, 2003, the assessee were enjoying exemption under Section 10(20A) and Section 10(29). When these provisions were amended w.e.f. 1st April, 2003, then the necessity arose to register these institutions under Section 12A. In view of the objects, there is no good reason for holding that statutory bodies could not be treated as "charitable" within the meaning of Section 2(15). The object of the "Authority" is to provide shelter to the ho....
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....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 Manufacturer Association [1980] 121 ITR 1 (SC)]." Applying the ratio laid down in the case of CIT vs. Andhra Pradesh State Road Transport Corporation [1986] 159 ITR 1 (SC), where of in the present case, the "Autonomous Authority" was established for the purpose of predominant of development the area and provide to shelter to the homeless people within the State of U.P. The management and control of the Authority is essentially with the State Government and there is no profit motive as the income earned by the Authority is deployed for the development of the State. Further, it may be mentioned that Se....
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....es who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under Section 11(4A) or the seventh proviso to Section 10(23C), which are that - (i) the business should be incidental to the attainment of the objectives of the entity, and (ii) separate books of accounts should be maintained in respect of such business." For the applicability of proviso to Section 2(15), the activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activities on non-commercial lines with no motive to earn profits, for fulfillment of its aims and objectives, which are charitable in nature and in the process earn some profits, the same would not be hit by proviso to section 2(15). The aims and objects of the assessee-trust are admittedly charitable in nature. Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under Section 11. The intention of the trustees and the manner in which the activities of the charitable trust institutio....
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....tion in the Official Gazettee. ii) In the above notification, a reference has been made regarding declaration of Greater New Okhla Industrial Development Area at an Industrial Development Area by government notification No. 7436/DHA-U/XVIII-11-107Bha/85 dated 28.1.1991 and that the municipal services are being provided by the Greater New Okhla Ind. Dev. Authority in that area. iii) The Uttar Pradesh Ind. Area Dev. Act, 1976 (UP Act No. 6 of 1976) has been passed by the Uttar Pradesh Legislature to provide for the constitution of an Authority for the development of certain areas in the state into industrial and urban township and for matters connected therewith. iv) In exercise of the powers under sec. 3 of the Uttar Pradesh Area Development Act, 1976, the Hon'ble Governor vide Notification No. 7436BHA-U-XVIII-II-107Bha/85 dated 28.1.1991 has been pleased to constitute an Authority to be called the Greater Noida Industrial Dev. Authority for the industrial development area mentioned in the Schedule given. In the said notification for the constitution of the Authority, the details of districts, tehsil, villages coming there under have been given in the schedule coming under GNI....
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....been duly carried out by the authority and for the purpose of realizing properties, funds and dues referred in clause (a), the functions of the authority shall be discharged by the state government. Under Article 243P of the Constitution of India "Municipality" has been defined in clause (e) of the said Article as "means an institution of self-government constituted under Article 243Q". Under Article 243W, the legislature of a State, may by laws, Endo the Municipalities with such powers and authorities as may be necessary to enable them to function as institution of self-government and such law may contends provisions for the devolution of the powers and responsibilities upon municipalities, subject to such conditions as may be prescribed therein with respect to the preparation of plans for economic development and social justice; the performance of function and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the 12th Schedule; and the committee with such powers and authorities as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in th....
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....uashed. 2. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee, without lawfully appreciating that the assessee is a statutory authority constituted under sec. 3 of the Uttar Pradesh Industrial Development Act, 1976 (UPIDA) and is duly notified by the Hon'ble Governor of Uttar Pradesh as an Industrial Township under Article 243Q of the Constitution of India; and is statutorily mandated by section 6 of UPIDA for rendering public utility services, satisfying the requirements of sec. 2(15) of the Income-tax Act and hence entitled to be granted registration under sec. 12AA of the Act. 3. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in treating the assessee as a commercial business entity, whereas the assessee, being a statutory authority Notified under Article 243Q of the Constitution of India, is obliged to perform its functions as declared under Schedule XII prescribed under Article 243Q of the Constitution of India and hence cannot be treated a Commercial/Business entity and hence the a....