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TaxTMI 
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2016 (7) TMI 1416
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.... the submissions made on behalf of the assessee and the report of the Assessing Officer, it would be appropriate to go through the relevant provisions of the Act, which prescribes the procedure for registration of Trust, where the application for registration is received by the Commissioner of Income u/s 12A(l)(a) (aa). Under this procedure, the Commissioner will call for such documents or information as may be necessary to satisfy himself about the objects of the trust and the genuineness of its activities. Section 2(15) of the Income Tax Act, 1961 defines "Charitable purpose" to include relief of the poor, education, medical relief and advancement of any other object of general public utility. As per Finance Act, 2008, w.e.f. 01.04.2009, a following. proviso has been added below the said section, which reads as under:- 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 the mature of trade, commerce or business or any activity of rendering any service l am relation to my trade, commerce or business, for access or fee or any other consideration, Irrespective of the nature o....
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....nd secure the development of the local area for which it is constituted according to plan and for that purpose the Authority shall have the power to acquire, hold, manage and dispose off land and other property, to carry out building, engineering and other operations, to execute works in connection with supply of water and electricity, disposal of sewerage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto. The Authority is a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of properties, both movable and immovable, to contract, and by the said name sue or to be sued ""The Authority consists of a Chairman, Vice-Chairman and seven other members appointed by the State Government. The Authority is responsible for the planned development of the City including preparation of the Master Plan of the area (p) The State Government is authorized to entrust the Authority from time to time with any work connected with planned development and matters connected thereto. Section- 19 (Chapter-Vll) of the Jammu & Kashmir Development Act, 1970 obl....
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....s, towns and villages, * which before the amendment was not included in computing the total income, was omitted. Consequently, the benefit conferred by clause (20A) on such an Authority was taken away Thus, in view of the fact that section 10(20A) was omitted and an explanation was added to section 10(20) of the Income tax Act, 1961 enumerating the Authorities contemplated by section 10(20), the assessee i.e. Srinagar Development Authority could not claim any benefit under those provisions after April 1, 2003 such, the assessee was liable to file their income tax returns from A.Y. 2003-04 onwards which the above Authority has failed to file from the assessment year 2003-04 and its income has only been charged to tax by resorting to the provisions of section 147/148 of the Income tax Act, 1961. 4.3. The benefit conferred by section 10(20A) of the Income Tax Act, 1961 on the assessee up to assessment year 2002-03 has been expressly taken away and the explanation added to section 10(20) enumerates the "Local Authority" which do not cover the assessee Authority. Now, the assessee i.e. Srinagar Development Authority has claimed that its objects falls under the provisions of section 2....
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....ere is no restriction as to how the same are to be utilized by the Government. 0 Further, a perusal of the objects as per section 6 also reveals that the objects with which the Authority was set up may appear to be of general public utility for development of the area but then there are other objects like sale and purchase of land and property, which make the Authority a commercial organization: Therefore, the objects pursued by the Authority cannot be said to be charitable in view of the facts that the Authority being a commercial organization with no restriction as to the application of the assets on dissolution/ winding up for charitable purposes. In order to find out whether an organization is a charitable one, tests have been laid down by Hon'ble Supreme Court in the cases of CIT v. Surat Art Silk Cloth Manufacturers Association (1979) 121 ITR and CIT v/s Andhra Pradesh State Road Transport Corporation (1986) 159 ITR-1, In the case of Surat Art silk Cloth Manufacturers Association it has been held "since the income and property of the assessee were able to be applied solely and exclusively for the promotion of the objects set out in the Memorandum and no part of such income or....
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....Development Authority, Kud District Udhampur had also sought registration u/s 12A of the Income Tax Act, 1961, but their application was rejected try the then Commissioner of Income tax, J&K, Jammu vide his order dated 28-06-2007. It is pertinent to mention that similar issue had come up before the Hon'ble Income Tax Appellate Tribunal, Amritsar bench, Amritsar in the case of M/s Jalandhar Development Authority v/s Commissioner of Income Tax -2, Jalandhar in which case, the Commissioner of Income tax had rejected. the application filed by the assessee holding that the object of Jalandhar Development Authority is profit making and as such, is not entitled for registration u/s 12AA of the Income Tax Act, 196l. The Hon'ble Tribunal upheld the decision of the Commissioner of Income Tax in Income Tax Act, 1961 No.562(ASR)/ 208 dated (12-06-2009) the Hon'ble ITAT Amritsar has also considered the cases of Addl. CIT Vs, Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1 and CIT Vs. Andhra Pradesh State Transport Corporation (1986) 159 ITR 1 (SC) while deciding the case in favour of the Revenue. It is also observed that the Hon'ble Apex Court in the case of Indian Chamber of....
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....s registration is granted, then anybody will claim the exemption from tax. if the accounts of the assessee are analyzed, it has turned into a huge profit-making agency from which it Is taking money from, the general public, if any Institution of public Importance like schools, community centers are created/developed, the assessee Is charging the cost of It from the public at large and the money is coming from the coffer of the Government. it can be said that objects / activities of the assessee are more of commercialized nature and no charity Is Involved In It. At the time. If these facilities are not provided, then nobody will purchase a plot. It ca. be said that it is a means of attracting the people so that maximum people may apply for the same and the hidden cost is already added, so no charity Is Involved. At best, the assessee can be said to be an authority created to help It to achieve certain objects, it can be said that he duty of the government to create/provide all these facilities to public e, which Is being done through an agency in a particular area. At the same time the funds which are provided to the assessee by the government is again a public money or generated fr....
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....ay of bidding at the market rate and sometimes more than that is charging interest on belated payments. In such a situation, no charity is involved. Rather the assessee has converted itself into a big businessman. Similar development/ infrastructure/ facilities are also provided by private developers these days, then they will also claim the status of a charitable institution The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the assessee and if certain facilities like parks, community center, school are provided, it is not only basis requirement, rather a tool attracting the investors wherein the hidden cost of these facilities is already included. In the absence of these facilities, normally the purchaser may not invest and the prices may be less. In view of these facts, the assessee's activities not being of charitable nature, the application of registration under section 12A does not qualify for registration and same is rejected. In other words, the purpose of the authority is not an advancement of any object of general public utility and the activity of the assessee involve carrying on activity for profit and the acti....
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....this, we derive comfort and strength from the wise and inspiring words of Justice Bronson in Pierce v. Delamater (A.M.Y, at page 18): "a judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn; great and honest enough to discard all mere pride of opinion and follow wherever it may lead: and courageous enough to acknowledge his errors". Under these circumstances, it is clear that on merits as well as on facts, there is no room to blithe arguments put forth on behalf of the assessee Authority. It is the settled legal position that if a word or an expression has been judicially defined by the Court then it should be presumed that the legislature was well aware of such meaning while enacting an enactment and consequently, such word or expression in the statement should be understood in the same sense in which it was judicially defined. It is pertinent to mention that the Counsel for the applicant has relied upon case laws in the case of Addl. CIT Vs. Surat Art Silk Cloth Manufacturers Association (1979) 13 CTR (SC) 378: (1980) 121 ITR 1 (SC), CIT 52 Vs. Andhra Pradesh State Road Transport Corporation (1986) but the same have been decided on the ....
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....course to the provisions of section 11 of the Act on the ground that they are charitable institutions, this is based on the argument that they are engaged in the "advancement of an object of general public utility" as is included in the fourth limb of the current definition of "charitable purpose". Such a claim, when made in respect of an activity carried out on commercial lines is contrary to the intention of the provisions. With a view to limiting the scope of the phrase "advancement of any other object of general public utility, sub section (15) of section 2 has been amended to provide 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. 6. In views of the foregoing discussion, I am satisfied that Srinagar Development Authority is an Authority established with the motive of profit constituted under the Jammu ....
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....lic utility as given in sub section 15 of Section 2 of the Act. In support of above the Reliance is placed on the following decisions of the various ITATs: 1. Aligarh Development Authority-ITA No. 168(Ag)/Del/2007, order dated 30.05.2008. 2. U.P Awas Evam Vikas Parishad- ITA No. 1690 (Luck)/2003 for A. Y. 2003-04 dt: 25.07.2005. 3. Lucknow Development Authority, Lucknow Bench. ITA 3056/D/12, 3013/D/13 & 6058/D/12 4. Kanpur Development Authority, Lucknow Bench. 5. Khurja Development Authority-ITA No. 1851 (DEL) 2009 order dt: 14.07.2009. 6. Saharanpur Development Authority- ITA No. 5008 (Del) 2007 order dated 20.06.2008. 7. Hapur Pilkhuwa Development Authority- ITA No. 2735/Del/2006, order dated 15.05.2007. 8. Ghaziabad Development Authority- ITA No. 2903 (Del) 2006 order dated 31.01.2007. 9. Ayodhya Faizabad Development Authority. 10. Unnao- Shuklaganj Development Authority ITA ho. 686,690,696,703and 736 (Luck)/2003 for A.Y. 2003-04 dt: 25.07.2005. 11. Muzzafarnagar Development Authority decided by ITAT, Delhi "E" Bench on 01.02.2010 the latest order on the issue. Further to above this Honorable Bench has also allowed the Appeals of various Im....
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.... attracted and the assessee is entitled to registration under sec. 12A of the Act. 6 It is not the case of the appellant CIT that the assessee is not carrying on activities of general welfare covered by the expression "any other object of general public utility" in sec. 2(15) of the Act. 7. In view of judgment of Hon'ble Supreme Court in the case of case Gujrat Maritime Board (supra) and the Division Bench judgment of this Court in the case of Market Committee (supra), we are of the view that the question sought to be raised is covered against the Revenue. 8. The appeal is accordingly dismissed. It is submitted before this Honorable Bench that the Facts of Haridwar Development Authority are similar to that of Srinagar Development, Authority. We are accordingly reproducing the observations of honorable bench hereunder for a ready reference (Copy of the Judgment is also enclosed) "7. We have heard rival submissions and perused the record of the case. The first proviso to section takes out an activity from the ambit of charity object if the same is in the nature of trade, commerce or business. Section 2(15) reads as under: "2(15) "charitable purpose" includes relief o....
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.... of general public utility. However, since these are the objects of general publicity utility and the boost to environment is only incidental to the activity undertaken by the assessee, therefore, the activity carried out by assessee comes within the last limb of section 2( 15) viz. advancement of any other object of general public utility and, therefore, it is to be examined whether the same does not involve the carrying on of activity in the nature of trade, commerce or business or any activity of rendering any services in relation to any trade, commerce or business or cess or fee or any other consideration irrespective of the nature of use or application or reduction of the income from such activity. 7.3. In this regard, we would first refer to the various sections dealing with activity undertaken by the assessee. As per section 3 of the U P. Urban Planning & Development Act, 1973, first of all the State has to form a lion that any area within the state requires to be developed according to n and on formation of such opinion, it is to notify in the gazette the area as a development area. Thereupon, the State will constitute an Authority to be called the Development Authority ....
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....other purposes." 7.8. All these provisions in the Act lead to inescapable conclusion that State Govt, constituted Development Authority for the welfare of people and not with any profit motive. 7.9. Now, we will examine the proviso to section 2(15) with reference to have broad scheme of the Act. From the above it is evident that the main object of the assessee is development of the area as per the mandate of U.P. urban Planning & Development Act, 1973. The activity undertaken by the authority comes within the object of general public utility but it cannot be concluded that it involves the carrying on of any activity in the nature of made. commerce or business. Unless the activity undertaken by the assessee comes within the ambit of trade, commerce or business, the proviso would not get attract. 7.10. Hon'ble Supreme Court in the case of CIT vs. Gujarat Maritime Hoard 295 1TR 561 has held that where the assessee was under a legal obligation to apply its income which was directly and substantially from the business held under trust for the development of minor ports in the State of Gujarat then it does not involve any profit motive and assessee was entitled or registration u....
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....h any profit motive but the predominant object is welfare of people at large. 8. 8. In the result, the grounds raised by assessee are allowed and the registration is restored herewith for ready reference):- Based on the quoted judgment of Hon Punjab & Haryana High Court & Hard-war Development Authority, The Following Points need to be considered while deciding the Appeal of Srinagar Development Authority: 1. "Srinagar Development Authority has been created by the state legislature and the legislatures and the objects of the Authority are: "The objects of the Authority shall be to promote and secure the development of the local area for which it is constituted, according to plan and for that purpose the Authority shall have the power to acquire, hold, manage and dispose of land and other property, to carry out building, engineering and other operations, to execute works in connection with supply of water and electricity, disposal of sewerage and other services and amenities and generally to do anything necessary or expedient for purpose- of such development and for purposes incidental thereto; (Copy of the Act is enclosed herewith for ready reference) For achieving ....
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.... at the disposal of the Government; c) all liabilities which are enforceable against the Government; and d) For the purpose of carrying out by the Authority and for the purpose of realising properties, funds and dues referred to in clause. e) the functions of the Authority shall be discharged by the Government. vi) From the above it is ample clear that it Authority is implementing the development agenda of the Govt which is of advancement of general Public utility. Profit Moto: The Authority is not for earning of any Profit but is implementing the development program of the Jammu & Kashmir Govt as directed and as per the terms & conditions as set by the Govt. There is no Capital, No reserves and no provision for declaration of a kind of Dividend or distribution of Profits. Clause/ sec 19 deals with the Fund of the Authority which is reproduced here and Provides that the Authority shall have and maintain its own fund to which shall be credited: a) all moneys received by the Authority from the Central or State Government by way of grants, loans, advances or otherwise; b) all money borrowed by the Authority from source other than the Government by way of loans or....
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....been added below the said section, which reads as under: "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 rentention of the income from such activity". Further, as per the Finance Act, 2010 after the first proviso, proviso-2 has been inserted and shall be deemed to have been inserted with effect from the Ist day of April, 2009, namely: "Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year." Prior to insertion of these proviso, certain bodies have been treated "charitable "on the ground of advancement of object of general public utility. However, after the insertion of the above proviso, the advancement of any other object of general public utility shall not be a "charitable purposes", if it involves the ....
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....Income Tax Act, 1961, therefore, I am satisfied that the applicant Authority is not entitled to registration in terms of provisions of section 12AA(1)(1)(ii) of the Income Tax Act, 1961. Therefore, in terms of the provisions of section 12AA(3) which provides that where a Trust has been granted registration u/s 12AA(1)(b) and subsequently the Commissioner of Income Tax is satisfied that the activities of such trust are not genuine or are not being carried out in accordance with the objects of the Trust, he shall after affording reasonable opportunity of being heard to it, cancel the registration by passing an order in writing. 4. You are hereby requested to appear before the undersigned at Ayakar Bhawan, Railhead Complex, Panama Chowk, Jammu on 29.10.2010 at 11.30AM/PM and show cause why an order canceling the registration granted to Jammu Development Authority should not be made u/s 12AA(3) of the Income Tax Act, 1961. If you do not wish to avail yourself of this opportunity of being heard in person or through an authorized representative, you may show cause in writing on or before the said date which will be considered before any such order made u/s 12AA(3) of the Income tax Ac....
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....fect from 31.10.1970. As per the said Act, the object of the Authority is to promote and secure the development of the local area for which it is constituted according to plan and for that purpose the Authority shall have the power to acquire hold, manage and dispose off land and other property, to carrying out building, engineering and other operations, to execute works in connection with supply of water and electricity, disposal of sewerage and other services and amenities and generally to do anything necessary or expedient for purposes such development and for the purposes incidental thereto. The Authority is a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of properties, both movable and immovable to contract, and by the said name sue or to be sued. The Authority consists of a Chairman, Vice Chairman and seven other members appointed by the State Government. The Authority is responsible for the planned development of the city including preparation of the Master Plan of the area. The State Government is authorized to entrust the Authority from time to time with any work connected with planned development and matters connected....
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....ing the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, which before the amendment was not included in computing the total income, was omitted. Consequently, the benefit conferred by clause (20A) on such an Authority was taken away. Thus, in view of the fact that section 10(20A) was omitted and an Explanation was added to section 10(20)A) of the Act, enumerating the "Local Authorities" contemplated by section 10(20), the assessee i.e. Jammu Development Authority could not claim any benefit under those provisions after April 1, 2003. The benefit conferred by section 10(20)A) of the Act on the assessee upto the A.Y. 2002-03 has been expressly taken away and the explanation added to section 10(20) enumerates the "Local Authority" which do not cover the Authority. The assessee i.e. Jammu Development Authority subsequently claimed that its objects falls under the provisions of section 2(15) of the Act and has complied with all the eligibility criteria for grant of registration u/s 12A of the Act, which was allowed vide order dated 30.09.2009 subject to fulfillment of certain conditions. On examination of the facts ....
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....d purchase of land and property which make the Authority a commercial organization. Therefore, the objects pursued by the Authority cannot be said to be charitable in view of the fact that the authority being a commercial organization with no restriction as to the application of the assets on dissolution or winding up of for charitable purposes. In order to find out whether an organization is a charitable one, tests have been laid down by the Hon'ble Supreme Court in the case of CIT vs. Surat Art Silk Cloth Manufacturers Association (1997) 121 ITR and CIT vs. Andhra Pradesh State Road Transport Corp. (1986) 159 ITR 1. In the case of Surat Art Silk Cloth Manufacturers Association, it was held as under: "Since the income and property of the assessee were liable to be applied solely and exclusively for the promotion of the objects set out in the Memorandum and no part of such income or property could be distributed amongst the Members in any form or utilized for their benefit either during its operational existence or on its winding up or dissolution as such the object was a charitable one". 4.5. Therefore, vide para 4.6, the Ld. CIT observed that on being dissolved or wound up,....
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....istration u/s 12AA of the Act and upheld the decision of the ld. CIT-2, Jalandhar. The ITAT, Amritsar Bench, in the said case of Jalandhar Development Authority has also considered the cases of Addl. CIT Vs. Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1, while deciding the case in favour of the Revenue. The Ld. CIT, referred to the decision of the Hon'ble Supreme Court in the case of Indian Chamber of Commerce vs. CIT reported in 101 ITR wherein it has been held as under: "that the activities of the chamber being activities carried on for profit, in the absence of any restriction in its memorandum and articles of association against the making of profit from those activities, the income of chamber from those activities was liable to income tax. Section 2(15) must be interpreted according to the language used therein and against the background of India Life. By definition in section 2(15) the benefit of exclusion from total income is taken away when in accomplishing a charitable purpose the institution engages itself in activities for profit". 4.8. The ITAT, Amritsar Bench, in the case of M/s. Jalandhar Development Authority relied upon the decision of the....
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....ic money or generated from public itself. The objects of the assessee, though claimed to be charitable, but actually are of purely commercial nature where profit motive is involved. It is a known fact that the assessee is acquiring the land at very low prices and selling the same land on very higher rates and is earning as profit therefrom. A new trend has also emerged that the assessee has started auctioning the plots by way of bidding at the market rate and sometimes more than that and charging interest on belated payments in such a situation, no charity is involved. Rather the assessee has converted itself into a big businessman. Similar development/infrastructure/facilities are also provided by private developers these days, then they will also claim the status of a charitable institution. The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the assessee and if certain facilities like parks, community center, school are provided, it is not only basic requirement, rather a tool attracting the investors wherein the hidden cost of these facilities is already included. In the absence of these facilities, normally the purchas....
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....r of the three Member Bench, the Hon'ble Court ruled as under: "We have given our most anxious consideration to this question, particularly since one of us, namely, P.N. Bhagwati J, was a party to the decision in Cloth Traders" case............. we are compelled to reach the conclusion that Cloth Traders case must be regarded as wrongly decided. The view taken in that case............must be held to be erroneous and it must be corrected. To perpetuate an error is no heroism. To rectify it is the compulsion of the judicial conscience. In this, we derived comfort and strength from the wise and inspiring words of Justice Bronson in Pierce v. Delamater (A.M.Y at page 18) "a judge ought to be wise enough to know that he is fallible and therefore, ever ready to learn: great and honest enough to discard all mere pride of opinion and follow wherever it may lead " and courageous enough to acknowledge his errors". 4.11. On the issue of principle of consistency, as argued by the Ld. counsel for the assessee before the Ld. CIT, it was observed by the Ld. CIT vide para 6.2. of his order and referred to the decision of ITAT, Amritsar Bench, in the case of ITO Vs. Goverdhan Dass & Sons 20 I....
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....egislature by looking into the mischief that was sought to be remedied by the legislature. This rule of consistency comprises four things to be considered; a) What was the common law before the making of the Act; b) What was the mischief and defect for which the common law did not provide; c) What remedy the Parliament has appointed to cure the defect; and d) The true reasons of the remedy. This rule contemplates n considering the position prevailing anterior to the amendment, which was intended to be rectified by way of amendment or insertion of a section and then considering the amendment as overruling the hitherto legal position. If a particular provision is enacted for getting rid of the existing law, as it is or as interpreted by the Courts, the new amendment would be construed as superseding the earlier prevalent view which was considered by the legislature as mischievous. The Mischief rule has been repeatedly approved by several courts in the country including the Hon'ble Apex court in the case of CIT vs. Shahzada Nand & Sons (1966) 60 ITR 392 (SC). Coming back to our case and applying the Mischief rule, we observed that through Finance Act, 2002 clause (20A) ....
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....velopment Authority is an Authority established with the motive of profit constituted under the Jammu & Kashmir Development Act, 1970 and that the activities of such Authority are hit by subsection 15 of section 2 of the Act and are not in line with the objects of the trust so far as the activities relating to purchase and sale of properties as discussed above. Hence, the activities are not genuine to the extent discussed above, therefore, I am satisfied that the Jammu Development Authority is not entitled to registration and accordingly the registration granted is hereby cancelled in terms of provisions of section 12AA(3) of the Income tax Ac, 1961." 5. The Ld. counsel for the assessee argued on similar lines as argued before the Ld. CIT. In addition, it was argued that the decision in the case of M/s. Jalandhar Development Authority Vs. ITO Jalandhar, in ITA No.562(Asr)/2008 dated 12th June, 2009, is not applicable in the present facts and circumstances of the case, since in that case registration of the Institution was not granted. Whereas in the present case registration having been granted, the Ld. CIT does not have any right to withdraw/cancel the said registration since t....
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....the Finance Act, 2008 w.e.f. 01.04.2009 was not taken into consideration while granting registration vide order dated 30.09.2009. Therefore, in the facts and circumstances of the case, we concur with the views of the Ld. CIT, who had placed reliance on the decision of five Member Bench of Hon'ble Supreme Court in the case of A Distributors (Baroda) P. Ltd. vs. Union of India & Ors. reported in 155 ITR120 (SC), wherein it has been held to perpetuate an error is no heroism. To rectify it is the compulsion of the judicial conscience. In this, we derived comfort and strength from the wise and inspiring words of Justice Bronson in Pierce v. Delameter (A.M.Y at page 18). Therefore, the Ld. CIT in view of the decision of the Hon'ble Supreme Court in the case of A Distributors (Baroda) P. Ltd. vs. Union of India & Ors.(supra) is within his power to decide the issue as per insertion of the first proviso by the Finance Act, 2008 w.e.f. 01.04.2009 and also the second proviso inserted by the Finance Act, 2010 w.e.f. 01.04.2009 whereas the aggregate value of the receipts in the present assessee are Rs. 10 lakhs. Also, on the principle of consistency, we concur with the views of the ld. CIT r....
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....advancement of any other object of general public utility shall not be a "charitable purposes" if it involves the carrying on of :- a) Any activity in the nature of trade, commerce or ; business b) Any activity of rendering any service in relation to any trade, commerce or business. d) For a cess or fee or any other consideration, irrespective of the nature of use or application or retention of income from such activity. 7.4.1. Therefore, the Institutions/Trusts/Societies which are involved in the activities in (a)(, (b) & (c) mentioned hereinabove and aggregate value of the receipt of the activities referred to in the first and second proviso is more than Rs. ten lakhs in the previous year, they shall not be eligible to continue with registration u/s 12A and the same is required to be withdrawn. 7.5. The main objects of the assessee's institution has been mentioned inPara 4.1. of Ld. CIT's order, as mentioned hereinabove. It has rightly been mentioned by the Ld. CIT in para 4.2 mentioned hereinabove that till the financial year 2002-03, the income of such Authorities were exempt u/s 10(20A) of the Act. However, in view of omission of section 10(20A) of the Act, an E....
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....t mere incidental or by product of the assessee. There is no real object of the assessee and there is no spending of the income exclusively for the purpose of charitable activities and profits of the assessee are not used for charitable purpose under the terms of the object and there is no obligation on the part of the assesse to spend on "charitable purpose" only. Also as per clause 53 of the Jammu & Kashmir Development Act, on dissolution of all properties and funds to vest in the Government and for the purpose of realizing properties, the function of the Authority shall be discharged by the Government. We concur with the views of the Ld. CIT on transfer of the properties, funds and dues and liabilities etc. will vest in the Govt. There is no restriction, how the same are to be utilized by the Government. There are other objects like sale and purchase, which makes the Authority a commercial organization. Therefore, in the facts and circumstances of the case, even on dissolution or winding up by not having any restriction on application of asset for charitable purpose, the objects pursued by the assessee cannot be said to be a charitable in nature. 7.7. As regards the reliance ....
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....thing necessary or expedient for purposes of such development and for purposes incidental thereto. 4) The Authority is a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of properties, both movable and immovable, to contract, and by the said name, sue or be sued. 5) The Authority consists of a Chairman, Vice-Chairman and seven other members appointed by the State Government. 6. The Authority is responsible for the planned development of the City, including preparation of the Master Plan of the area. 7. The State Government is authorized to entrust the Authority from time to time with any work connected with planned development and matters connected thereto. 8. Section- 19 (Chapter-Vll) of the Jammu & Kashmir Development Act, 1970 obliges the Authority to maintain its own fund to which shall be credited moneys received by the Authority from the Central or State Government by way of grants, loans, advances or otherwise, all fees, rents, charges, levies and fines received by the authority under the Act, all moneys received by the Authority from disposal of its movable or immovable assets and all moneys received by the ....
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....ovisions after April 1, 2003. 15. The benefit conferred by section 10(20A) of the Income Tax Act, 1961 on the Authority up to assessment year 2002-03 has been expressly taken away and the explanation added to section 10(20) enumerates the "Local Authority". 16. The Authority has claimed that its objects fall under the provisions of section 2(15) of the I T. Act, 1961 and has complied with all the eligibility criteria for grant of registration under section 12A of the Income Tax Act, 1961. 17. The Authority has generated income by way of disposing of the developed lands. 18. As per clause 53 of the Jammu & Kashmir Development Act relating to dissolution of the Authority it is provided that on dissolution / winding up of the Authority, all the assets as well as liabilities will be transferred to the Government and there is no restriction as to how the same are to be utilized by the Government. 9. In "Jammu Development Authority" (supra), this Bench held that that the facts in that case were identical to the facts as in the case of Jalandhar Development Authority; that as regards the first proviso inserted in section 2(15) of the Act, the Ld. CIT had not considered the f....
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.... other sources", or from a trade or business carried on by it, was earlier excluded in computing the total income of the Authority of a previous year, however, in view of the amendment, with effect from 01.04.2003, the expression "Local Authority" was defined to include only the Authorities enumerated in the Explanation to include Panchayat, Municipal Committee and District Board and Cantonment Board, as referred in the said Explanation, that also, at the same time, section 10(20A), which related to income of an Authority constituted in India by or under any law enacted for the purpose of dealing with and satisfying the need for housing accommodation, or for the purpose of planning, development or improvement of cities, towns and villages which, before the amendment was not included in computing the total income, was omitted, that consequently, the benefit conferred by clause (20A) on such an Authority was taken away, that thus, in view of the fact that section 10(20A) was omitted and an Explanation was added to section 10(20) of the Act, enumerating the "Local Authorities" contemplated by section 10(20), the assessee could not claim any benefit under those provisions after April 1....