AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 1151
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....ually engaged in the business activities, the Assessing Officer refer red to the amended provisions of sect ion 2(15) of the Income Tax Act , 1961 ( in short ' the Act ' ) and held that the business is not entitled to exempt ion under sect ion 11 of the Act . 4. Before the learned CIT (Appeals) detailed submissions were made, which did not find favour with him and the appeal of the assessee was dismissed. 5. Aggrieved by the order of the learned CIT (Appeals) , the assessee has come in appeal before us, raising the following grounds of appeal : "1. That the learned CIT (A) has erred in disallowing exemption u/s 11 of the I.T. Act. on the basis that the appellant has not followed its objectives in letter & spirit without specifying any basis that objective of the appellant falls in the proviso to Sec. 2(15) of the I.T. Act. i.e. appellant is carrying on activity in the nature of trade, commerce or business. 2. That the learned CIT (A) has erred in holding that appellant is engaged in an activity in the nature of trade commerce & business just on the basis that there is violation of rules & forfeiture amount has not been shown as income which is factually incorrect, otherwise als....
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....on 2(15) and further whether the work ceased to be for charitable purpose due to the first proviso to Section 2(15) which lays down 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, irrespective of the nature of use or application, or retention of the income from such activity." As a corollary the Hon'ble Bench adjudicated upon the issue whether the assessee trust was entitled to claim exemption u/s 11 read with section 2(15) of the Income Tax Act. Since in the present case the assessee trust is also an improvement trust formed under the Punjab Town Improvement Act 1922 for the purpose of improvement of the cities and the issue before us is the claim of exemption u/s 11 read with section 2(15) of the Act, we find that the case of Hoshiarpur Improvement Trust is identical to the assessees case and the ratio propounded therein would squarely apply to the assessees case. Adverting to the decision in the case of Hoshiarpur Improvement Trust(supra) we find that the Hon'ble Bench interpreted the provision of section 2 (15) in detail and held ....
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.... of revenue authorities that the activities of the trusts do not serve the objects of the general public utility but the case is confined to the stand that these activities have been carried out in such a manner as to make profit and no activities directly of any general public utility are carried out. The registration granted to the assessee evidences that the objects of the assessee trust were advancement of objects of general public utility, and there is nothing to demonstrate any paradigm shift from this fundamental position. The allegation is only of the profit making but that does not obliterate the overall objects of general public utility. As regards the maintenance of the separate books of accounts for the business activities pursued by the assessee trust, since all the activities of the assessee trust are said to be of the business nature, the books of accounts maintained by the assessee trust meet this requirement as well. Of course, we will deal with the issue of activities being in the nature of 'profit making activities' a little later, but, suffice to say, that on the admitted facts of this case, so far period prior to 1st April 2009 is concerned and for the reasons ....
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....so. In our considered view, therefore, this amendment cannot be treated as clarificatory or retrospective in effect. In view of these discussions, even post insertion of proviso to Section2(15) but before 1st April 2016, when business activities are carried by the assessee trust "in the course of actual carrying out of such advancement of any other object of general public utility", the benefit of Section 11 read with Section 2 (15) cannot be declined. Nothing, therefore, turns on the assessee carrying out, even if that be actually so, activities in the nature of trade, commerce or business etc as long as these activities are carried out in the course of actual carrying out of advancement of any other object of general public utility. The planned development of cities and towns is an object of general public utility, and that is an object consistently followed by the assessee in all its activities. For this short reason alone, the stand of the authorities below must be held to be unsustainable in law. The Hon'ble Bench further held at para 33, 35 and 36, of its order that profit making was not the main object of the assessee trust. 33. We must, however, also deal with the fundame....
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....he bidding process ensures transparency in functioning of the improvement trusts and that, by itself, does not make the functioning of the improvement trust a commercial venture. It is also important that this use of bidding process is only in the context of commercial units etc. The development of commercial areas is in the interest of planned growth of an area and when such commercial areas develop, all the stakeholders in the development of that area benefit. In order of this benefit to the common cause, it is not necessary that the businessmen, buying such units, must also benefit. The denial of any advantage, at the cost of general public, to the business entities buying the commercial areas, in our considered view, does not amount to an defeating an object of general public utility. In this context, it is important to understand the benefit from developing commercial areas, which is for public good, and benefit to the business persons in buying these units from the assessee trust, which can only be for the good of benefit of these entrepreneurs. As for the sale of residential units, it is an admitted position that in terms of the Punjab Town Improvement (Utilization of Land a....