TaxTMI 
TaxTMI 
2017 (9) TMI 1724
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....essee are charitable in nature even though the amended provision of section 13(8) r.w. 1st and 2nd proviso of section 2(15) are attracted? ii) Whether on the facts and in circumstances of the case and in law the Hon'ble ITAT has erred in law in allowing the benefits of set apart u/s 11(2) of the Act, deleting the additions of Rs. 79,76,39,913/- as unspent amount in spite of the fact that the provision of section 11(2) r.w.s. 11(3)(c) are attracted as assessee is not granted exemption u/s 11 & 12 of the Act.? iii) Any other question of law as deemed fit in the facts and circumstances of the case may also be framed by the Hon'ble Court in the interests of justice." In appeal no. 113/2016 (i) Whether on the facts and the circumstances of the case the Hon'ble ITAT is right in law in treating the assessee a charitable institution and allowing benefit of exemption U/s. 11, 12 of the Act? (ii) Whether on the facts and circumstances of the case the Hon'ble ITAT is right in holding the change of accounting policies by the assessee's are accurate and scientific to determine assessee without considering the qualification made by the auditor of the ....
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....ur assuming them as donation to charitable institution, further doubly allowing the same. (ix) Whether on the facts and in the present circumstances of the case, the Ld. Tribunal is legally correct in allowing Rs. 1,74,22,857/- on account of amortization of expenditure on three guard/wire fencing being provided for growing trees in JDA region." 3. Counsel for the appellant contended that these appeals have now become academic inasmuch as this Court in case of Urban Improvement Trust, Kota vs. The Income Tax Officer, Ward-1(2), Kota which is statutory authority like the Jaipur Development Authority in Tax Appeal No. 294/2009 & 73/2011 and other matters decided on 25th July, 2017 has held as under:- "3. Counsel for the appellant has taken us to the definition of local authority under the Income Tax Act and contended that in view of the proviso added to explanation of Section 10(20) of the Income Tax Act which reads as under:- "Explanation. For the purpose of this clause, the expression "local authority" means (i) Panchayat as referred to in clause (d) of article 243 of the constitution; or (ii) Municipality as referred to in clause (e) ....
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....rol and management of a municipal or local fund. What then are the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority? First, the authorities must have separate legal existence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next, they must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social wel....
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.... land available with it as stock in trade for the year under reference. He further found that opening stock of the land was shown at 112.11 crore and closing stock at 107.06 crore. He asked the appellant to provide the details of working out such valuation. In response thereof the ld. AR informed that the appellant had valued the land according to reserves price of each scheme determined in the Trust Meeting. It was also explained that during the relevant period no change in reserve price was made. In this regard the ld. AR submitted the copy of decision of the meeting of the trust held on 29-5-1999. However, the AR could not file the basis of such reserve price as determined by the Trust. The AO found that as per provision of Rule 6(2) of Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974, the reserve price was required to be worked out after adding the following amounts:- (i) Cost of undeveloped land this would be subject to change to the extent of final cost of compensation determined by the competent court, (ii) Cost of development based on the prevailing PWD Schedule of rates for the area, (iii) 30% of the items (i) and (ii), t....
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....,07,06,84,101) The above calculation made contains an error even as per method adopted by AO i.e. increase in the value of the opening stock at Rs. 3,20,87,56,328/- is included in closing stock without considering that, part of the land was sold during the year. The correct calculation of the value of closing stock by applying method adopted by AO would be at 4,31,82,76,563/- Thus amount to be increased for value of opening stock remaining in closing stock is Rs. 3,06,44,23,524/- & not of Rs. 3,20,87,56,328/-. The value of closing stock accordingly, works out to Rs. 4,31,82,76,563/- as against Rs. 4,46,26,09,367/- worked out by the AO resulted in the year valuation of closing stock by Rs. 14,43,32,804/- (4462609367-4318276563). (i) Similarly when opening stock of Rs. 1,12,12,783/- is revalued at Rs. 4,32,98,69,111/- i.e. increased by 286.21% the closing stock of Rs. 1,07,06,84,101/- also needs to be increased by same percentage which works out to Rs. 3,06,44,23,524/- as against Rs. 3,20,87,56,328/- considered by the AO. The closing stock is thus overvalued by Rs. 14,43,32,804/- (3,20,87,56,328- 3,06,44,23,524). (ii) As per the generally accepted ....
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....ed upon the decision of the Supreme Court in the case of Adityapur Industrial Area Development Authority vs. Union of India & Ors. reported in 2006 (5) SCC 100 wherein it has been held as under:- "Similarly, the decision in New Delhi Municipal Council v. State of Punjab and Ors. (supra) does not advance the case of the appellant. It was held that the property/ municipal taxes levied by the New Delhi Municipal Council under the relevant Act constituted Union taxation within the meaning of Clause (1) of Article 289 of the Constitution of India. The levy of property taxes under the aforesaid enactments on lands or buildings belonging to the State Government was invalid and incompetent by virtue of the mandate contained in Clause (1) of Article 289. However, if any land or building is used or occupied for the purpose of any trade or business, meaning thereby a trade or business carried on with profit motive, by or on behalf of the State Government, such land or building shall be subject to the levy of the property taxes levied by the said enactments. In other words, State property exempted under Clause (1) means such property as is used for the purpose of the Government and no....
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....erefore, he contended that the exemption cannot be claimed only in the income of the State Government. 14. Taking into consideration he has also taken us to the different part of the judgment and contention raised by the parties and ultimately that the issue is squarely covered against the assessee. He has also relied upon the decision of the Tribunal in M/s Jammu Development Authority, Jammu vs. Commissioner of Income Tax ITA No. 30 (Asr)/2011 decided on 14th June, 2012. wherein it has been held as under:- "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....
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....or urban development therefore, in our considered opinion, the functions carried out by the authority is a supreme function and fall within the activity of the State Government. 16. In that view of the matter, the judgments which are strongly relied upon by counsel for the department are of no help in the facts of the case as the case relied upon by the department was in respect of industrial corporation which was under the statute for the purpose of making profit. The fees and other charges which are covered are statutorily for the development of the urban area. In that view of the matter, the judgment which sought to be relied upon by the counsel for the respondents, in our considered opinion, would be of importance and the functions which are carried out by the assessee is statutory function. In our considered opinion, under clause-10 (20) & Subcluase (3) Municipal Committee and District Board are legal entity entrusted by the function of the Government within the control or management of the municipal or local authority and will try to help the assessee. 17. In that view of the matter, the reliance placed by counsel for the department regarding 10(20)....