TaxTMI 
TaxTMI 
2016 (7) TMI 1416
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....rough the factual matrix of the case, with reference to 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....
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....970 and it came into effect from 31.10.1970, As per die 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 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 developm....
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....d 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. 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....
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....d by the Government. 4.4.2 From the said clause, it reveals 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. 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 Associatio....
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.... public utility but when put to test as per the conditions laid down by the Hon'ble Supreme Court In the cases mentioned above they fail to qualify the same. 4.5.1. It is pertinent to mention here that M/s. Patnitop 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 (1....
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.... non-tax payable organization. A charitable Institution provides services for charitable purposes free of cost and not for a gain, in the present scenario, similar activities are performed by big colonizers/developers who are earning a huge profit, if this 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....
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....ere profit motive is involved. It is known fact that the assessee is acquiring the land at very low prices and selling the same on very higher rates and is earning as profit there from. A new trend has also emerged that the assessee is auctioning the plots by way 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....
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....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 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 menti....
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.... that through Finance Act, 2002 clause (20A) of section 10 has been so as to withdraw exemption available to the Development Authorities so as to the intention of the Legislature that their income becomes taxable. It has been noticed that entities operating on commercial lines are now claiming exemption on their income by taking recourse 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 o....
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....h "C" vide its order dated 25.07.2014 has allowed the appeal of Haridwar Development Authority for Grant of the Registration U/S 12AA in Addition the Following are the Development Authorities which have been granted registration by different Benches of the Income Tax Appellate Tribunal (ITAT) & have held that activities of these authorities are for advancement of general public 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 A....
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....ects which promote welfare of general public. Gujarat Maritime Board, for development of minor ports in the State of Gujarat, was held to be charitable institution. 5. Learned counsel for the assessee has also drawn our attention to a Division Bench judgment of this Court in the case of CIT vs. Market Committee, Dhariwal (2007) 294 ITR 563 (P&H). It was held that even if assessee was not a trust, if its objective was to promote general public interest, sec. 2(15) of the Act was 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....
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....watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest have been brought within the definition of "charitable purpose". In our opinion, the submission of the assessee that development of the district by providing housing, roads, development and maintenance of parks (boost to environment) plantation of trees (again pertaining to environment), providing sewerage system (clean and healthy environment) are all objects for the welfare of the people of the district; as also these are objects 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 ....
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....f grants, loans, advances or otherwise; b) All moneys borrowed by the Authority from sources other than the State Government by way of loans or debentures; c) All fees. tolls and charges received by the Authority under this Act; d) A11 moneys received by the Authority from the disposal of lads, buildings and other properties, movable and immovable: and e) All moneys received by the Authority by way of rents and profits or in any other manner or from any other source. f) The fund shall be applied towards meeting the expenses incurred by the Authority in the administration of this Act and for no 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 ge....
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....High Court is in the case of U P. Avas Evam Vikas Parishad (supra) is applicable to the facts of the case, therefore, we do not find any reason to refer to the decisions relied upon by the Id. CIT in the cases of Punjab Urban Planning & Development Authority (supra) & Jalandhar Development Authority (supra). It is pertinent to note that Id. CIT has granted registration u/s 12AA from 201-2009. 7.15 In view of above discussion we hold that assessee-Authority has been created with the object of general public utility which is a charitable object within the meaning of section 2(15) and the proviso to section 2(15) is not applicable because assessee-Authority is not carrying out activity with 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 l....
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.... that that the Govt. can reclaim the Land etc any time as & when it decides by way of notification. v) Dissolution of the Authority: 1) Where the Government is satisfied that the purposes for which the Authority was Authority was established under the Act have been substantially achieved or that there are goood grounds which render the continued existence of the Author unnecessary, the Government Gazette, declare that the Authority shall be dissolved with effect from such date as m be specified in the notification, and the Authority shall deemed to be dissolved accordingly. 2) From the said date:- a) all properties, funds and dues which are vested in, realizable by, the Authority shall vest in, or be realisable by the Government; b) all Nazul lands shall be placed 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 c....
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..... A show cause notice was issued to the assessee under section 12AA(3) of the Act on 14.10.2010. For the sake of clarity, the said show cause notice is reproduced as under: "Please refer to this office order under section 12A read with section 12AA of the Income-tax Act, 1961 issued under No. CIT/J&K/2009-10/5211-13 dated 30.09.2009 under which registration was granted to Jammu Development Authority, Jammu w.e.f. 01.04.2008 subject to satisfaction of conditions enumerated below the said order and entered at serial No.56 of the register maintained in this office. 2.1. Your attention is invited to the provisions of sub-section (15) of Section -2 of the Income Tax Act, 1961 which 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 in the nature of trade, commerce or business, or any act....
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.... 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. 3. In view of the above, I am satisfied that Jammu Development Authority is a 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 sub-section 15 of section 2 of the 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....
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....t of general public utility, were eligible for exemption from tax u/s 11 of the Act, if they were not involved in any such commercial activities as brought out in (a) (b) and (c). However, in case, they are involved in such commercial activities and if the aggregate value of the receipt from the activities referred to in the 1st proviso is more than rupees 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. It was observed by the Ld. CIT that if any institution is carrying on any activity in the nature of trade, commerce or business for access or fee or any other consideration, it would lose the status of charitable organization irrespective of the nature of use, or application or retention of income from such activity. 4.2. The fact of the present case as observed by the Ld. CIT in para 4.1. are that Jammu Development Authority was established vide Jammu & Kashmir Development Act, 1970 and it came into effect 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 t....
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....ity as referred to in clause (3) of article 243P of the Constitution; or iii) Municipal committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; of iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)". It would thus be seen that the income of a local Authority chargeable under the head "income from house property", "Capital gains" or "Income from 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 April 1, 2003, the Explanation "Local Authority" was defined to include only the Authorities enumerated in the Explanation, which does not include an Authority such as the Jammu Development Authority. 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 bef....
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....e object and there is no obligation on the part of the assessee to spent on "charitable purpose" only. The Ld. CIT referred to clause 53 of the Jammu & Kashmir Development Act relating to dissolution of the Authority. The said clause is reproduced in para 4.4 of CIT`s order at page-21 where it has been declared that such authority shall be dissolved w.e.f. such date as may be specified in the notification and tall the properties, funds and dues etc. shall vest in the Government and for the purpose of realizing the properties, funds and dues, functions of the Authority shall be discharged by the Government. It was interpreted by the Ld. CIT that all assets and liabilities as per clause 53 of Jammu & Kashmir Development Act, will be transferred to the Government and there is no restriction as to how the same are utilized by the Government. On perusal of the objects as per clause 6 it reveals that 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 ....
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.... over to the Government as per the provisions of section 53 of the J & K Development Act, 1970 will become a part of general revenue of the State and the State Government is not under any obligation to utilize the same for the purpose for which the Authority was set up. Therefore, the assessee does not fulfil the conditions required for claiming the status of charitable organization as envisaged under the fourth limb of the definition of charitable purposes contained in section 2(15) or in other words the objects cannot be termed as charitable although they appear to be of a general public utility but were put to test as per the conditions laid down by the Hon'ble Supreme Court in the cases mentioned hereinabove, they fail to qualify the same. 4.7. Vide para 4.9 of the Ld. CIT`s order, it was observed that the ITAT, Amritsar Bench, Amritsar, in the case of M/s. Jalandhar Development Authority vs. CIT-2, Jalandhar, had rejected the application filed by the assessee holding that the object of Jalandhar Development Authority is profit making and as such s not entitled for registration u/s 12AA of the Act and upheld the decision of the ld. CIT-2, Jalandhar. The ITAT, Amritsar ....
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....from tax. If the accounts of the assessee are analysed, it has turned into a huge profit-making agency for 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 can 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 it is the duty of the Government to create / provide all these facilities to public large, which is being done through is 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 from public itself. The objects of the assessee, though ....
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....s not mere incidental or by product of the activity of the assessee. The main pre-dominant purpose of assessee's is making profit and it is the real object of the assessee and also there is no spending of the income exclusively for the purpose of charitable activities and profit of the assessee not used for charitable purposes only under the terms of the object clause of notification under which it was formed and there is no obligation on the part of the assessee to spend on "charitable purpose" and accordingly, the Ld. CIT cancelled the registration so granted u/s 12A of the Act within the meaning of section 12AA(3) of the Act. 4.10. The Ld. CIT has also dealt with the arguments of the ld. counsel made before him that registration to the assessee was granted on 30.09.2009 i.e. well after the amendment of section 2(15) of the Act by Finance Act, 2008. It was observed by the Ld. CIT in this regard and invited our attention to the decision of five Member Bench of Hon'ble Supreme Court in the case of A Distributors (Baroda) Pvt. Ltd. vs. Union of India and Others 155 ITR 20 (SC) wherein while reversing the order of the three Member Bench, the Hon'ble Court ruled as under: ....
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....ntrary to law or not warranted in the facts and circumstances of the case or runs contrary to the reasoning and result reached, or a mistaken view of statutory provisions has been taken or the order is contrary to the law pronounced by the Hon'ble Supreme Court or jurisdictional High Court or Tribunal, then the rule of consistency has no application and merely because an illegal .unwarranted for erroneous view in law has been taken by an authority, such illegality or erroneous view cannot be allowed to be repeated or perpetuated. Such illegal/erroneous view must be corrected, if it can be done according to law. An erroneous view in law cannot be allowed to be perpetuated on the ground of consistency. On a cursory look at the Memorandum explaining the provisions in the Finance Bill under which the provisions of section 10(20A) were omitted and the definition of the term "Charitable purposes" amended, it becomes abundantly clear that the Legislature clarified its intention. At this stage, it would not be out of place to consider the Hydron`s Rule also known as the "Mischief Rule" which deals with ascertaining the correct intention of the legislature by looking into the misch....
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....n 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. In view of the above, I am satisfied that Jammu Dev Development 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 sub section 15 of section 2 of the Act, therefore, I am satisfied that the Jammu Development Authority is not entitled to registration in terms of provisions of section 12AA(1)(a)(ii) of the Act. 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 C.I.T. 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. Accordingly, I am satisfied that Jammu De....
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....gistration u/s 12AA(3) of the act to the assessee had observed that he is satisfied that instrument does not exist in any trade, commerce or business. The order is dated 30.09.2009 whereas the amendment by Finance Act, 2008 is w.e.f. 01.04.2009, whereas per Finance Act, 2008, following proviso had been added w.e.f. 01.04.2009: "Provided that the advancement of any other object of generally 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 of application, or retention, of the income from such activity." 7.1. Further, as per Finance Act, 2010, after first proviso, second proviso has been added w.e.f. 01.04.2009, which is read as under: "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". 7.2. As a matter of fact, from the perusal of the order of the Ld. CIT, it ....
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....t case are identical to the facts as in the case of Jalandhar Development Authority. As regards the first proviso inserted in section 2(15) of the Act, we have given our views hereinabove that the Ld. CIT had not considered the first proviso to section 2(15) as well as the second proviso to section 2(15) while making the order for grant of registration on 30.09.2009. Therefore, the Ld. CIT is well within his power to decide the issue by his order in view of the decision of the Hon'ble Supreme Court in the case of A. Distributors (Baroda) P. Ltd. vs. Union of India and Ors. 155 ITR 120 (SC). Therefore, in the facts and circumstances of the present case and following our order in the case of M/s. Jalandhar Development Authority (supra) being on identical facts, the registration u/s 12AA cannot be granted to the assessee and the Ld. CIT has rightly cancelled the registration so granted. 7.4. Also, we concur with the views of the Ld. CIT(A) vide para 3.2 to 6.2 of his order that prior to insertion of these provisos i.e. first and second proviso to section 2(15) of the Act, certain bodies were treated as "charitable" on the ground of advancement of object of general public util....
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....ity 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 Act, enumerating the "Local Authorities" contemplated by section 10(20), the assessee could not claim any benefit under those provisions after April 1, 2003. The assessee 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 under section 12A of the Act, which was allowed vide order dated 30.09.2009. It is at this juncture that the first proviso and second proviso were added by the Finance Act, 2008 w.e.f. 01.04.2009, as mentioned hereinabove. Therefore, after insertion of the said proviso, any institution carrying on of any activity in the nature of trade, commerce or business etc. as mentioned hereinabove, shall not be a charitable purpose. As per objects of the assessee, it is observed that the main object of the assessee is to promote and secure the development of local area and there is no charitable purpose or any activity for general public utility. The activities of the assessee are aimed at earning profit as it is carrying on ac....
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....esult, the appeal filed by the assessee in ITA No.30(Asr)/2011 is dismissed." 7. The order of this Bench in the case of "Jammu Development Authority" (supra) has undeniably been upheld right up to the Hon'ble Supreme Court. The factum of its being confirmed by the Hon'ble High Court stands noted in the written submissions filed by the assessee also. The ld. counsel for the assessee has reiterated these written submissions. The ld. DR, on the other hand, has also placed strong reliance on the impugned order and on "Jammu Development Authority" (supra). 8. "Jammu Development Authority" (supra), of this Bench is directly applicable to the present case. The facts in both the cases are exactly similar, as, inter-alia, follows: Regarding both the Authorities, i.e., Srinagar Development Authority and Jammu Development Authority: 1) Established vide Jammu and Kashmir Development Act, 1970. 2) The object of the Authority is to promote and secure the development of the local area for which it is constituted 3) The power to acquire, hold, manage and dispose of land and other property, to carry out building, engineering and other operations, to execute....
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....y entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)". 11. The income of a Local Authority chargeable under the head "income from house property", "Capital gains" or "Income from 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 April 1, 2003, the Explanation "Local Authority" was defined to include only the Authorities enumerated in the Explanation. 12. 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. 13. Consequently, the benefit conferred by clause (20A) on such an Authority was taken away. 14. In view of the....
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....le" on the ground of advancement of object of general public utility, that 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 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. c) For a cess or fee or any other consideration, irrespective of the nature of use or application or retention of income from such activity, and therefore, the Institutions/Trusts/Societies which are involved in the activities in (a) (b) & (c) and whose aggregate value of the receipt of the activities referred to in the first and second proviso was more than Rs. ten lakhs in the previous year, shall not be eligible to continue with registration u/s 12A and the same was required to be withdrawn. 9.2 The Tribunal observed that the main objects of the assessee institution had been mentioned in Para 4.1. of Ld. CIT's order, that it had rightly been mentioned by the Ld. CIT in para 4.2, that till the financial year 2002-03, the income of such Author....
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....mmerce or business, that further, the profit making by the assessee was not merely incidental, or a byproduct of the assessee, that there was no real object of the assessee and there was no spending of the income exclusively for the purpose of charitable activities and the profits of the assessee were not used for charitable purposes under the terms of the objects and there was no obligation on the part of the assesse to spend on "charitable purpose" only, that also as per clause 53 of the Jammu & Kashmir Development Act, on dissolution, all properties and funds were to vest in the Government and for the purpose of realizing properties, the function of the Authority shall be discharged by the Government, that the Bench concurred with the view of the Ld. CIT that on transfer of the properties, funds and dues and liabilities, etc., would vest in the Govt. and there was no restriction, how the same were to be utilized by the Government, that there were other objects, like sale and purchase, which made the Authority a commercial organization, that therefore, in the facts and circumstances of the case, even on dissolution or winding up, by not having any restriction on application of th....