TaxTMI 
TaxTMI 
2019 (6) TMI 429
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....n 2(15) and related grounds. (a) The authorities below are not justified in holding that the proviso to section 2(15) of the Act is applicable to the appellant on the facts and circumstance of the case. (b) The authorities below are not justified in not considering that the appellant falls within several limbs of charity as defined in section 2(15) of the Act and hence ought not to have applied the proviso to the facts of the appellants case. (c) The learned Commissioner of Income-tax (Appeals) is not justified in law in not deleting the total income before the addition made by the learned Assessing Officer a sum of Rs. 52,26,47,000 being surplus as per Income and Expenditure account after prior period adjustments, treating as taxable income by the learned Assessing Officer by invoking the proviso to section 2(15) of the Act on the facts and circumstances of the case. (d) The learned Commissioner of Income-tax (Appeals) is not justified in law in not holding that the learned Assessing Officer ought not to have considered the starting point of computation of total income at Rs. 1,72,37,000/- on the facts and circumstances of the case. (e)....
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....ntioned in the definition of Charitable purpose u/s.2(15) of the Act. As stated earlier, the definition of "Charitable Purpose" as given in Sec.2(15) of the Act was amended by the Finance Act, 2010, w.e.f. 1.4.2009. By the aforesaid Amendment, a proviso has been inserted to the definition of "Charitable Purpose" in Sec.2(15) of the Act, which reads as follows:- "2(15)"Charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility: 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 retention, of the income from such activity"] 4. Thus the proviso to section 2(15) (supra) lays down that if any ....
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....t of corner sites and flats, sale transactions are done through auction sale wherein highest bidder will only get the eligibility to own the sites or flats. (ii) The assessee is generating huge amount of profits year after year from sale of sites and flats indicating that the assessee is carrying out the activities as a business venture rather than charitable organization. (iii) The assessee is not applying the huge amount of profits generated from the activities towards any charitable activities such as relief of poor, education, medical relief and other objects of advancement of the general public utility and such surplus is being invested in fixed deposits in order to earn interest income. (iv) The activities of the assessee and the generation of profits on account of the same are akin to the activities carried on by real estate companies, property developers, infrastructure firms etc., and therefore, the activities of the assessee are squarely fall under the ambit of activities which are in the nature of trade, commerce or business. Accordingly, the activities of the assessee are hit by the first proviso below section 2(15). 6. Thereafter the AO....
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....ear capital expenditure claimed as revenue expenditure due-to change in accounting 100,28,80,000 8. Interest on FD with lOB of Rs. 98,89,42,664 adopted @ 8% p.a. as per Para 8.00 7,91,15,000 9. Conversion of loan into grant as per para 7.00 1,06,00,000 1 10 Sundry debtors rectification entry passed in F./Y 2014-15 as per para 9 above 38,50,000 11. Devpt. Expenditure on Arkavathy Layout as per para 10 above 12,39,69,000 156,60,11,000 Total 158,32,48,000 0. Less: depreciation on current year capital expenditure disallowed @ 10% (i.e.10 % of Rs. 100,28,80,000 = Rs. 10,02,88,000) 10,02,88,000 Total taxable income 148,29,60,000 (Rupees One hundred forty eight crores twenty nine lakhs sixty thousand Only) 7. On appeal by the assessee, the CIT(A) upheld the stand taken by the AO. 8. Aggrieved by the order of the CIT(A), the assessee has raised ground No.5 before the Tribunal. 9. At the time of hearing of the appeal, it was agreed by both the parties that identical issue had come up for consideration in assessee's own case for asst....
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....ce the commercial value of the layout developed is untenable. 2. The Tribunal held that allotment of sites and flats to the economically weaker sections of society constitutes relief for the poor and that relief to the poor does not necessarily mean giving something free of cost to the poor. It also includes providing them things at a concessional rate. The Tribunal also embarked upon an enquiry as to whether the word "poor" can mean only those who are below the official poverty line or does it include all those who are economically weaker, but not necessarily below the poverty line. The Tribunal concluded that it is not necessary that educational / medical assistance is to be given free only to those below the poverty line. It will suffice if education / medical assistance is provided at concessional rates. The Tribunal also held that the rules that govern the allotment of sites are so formed in order to facilitate the economically weaker sections of society to purchase these sites. In the case of construction of flats, it was clear from the very scheme and the name thereof, that these flats are meant only for the Economically Weaker Sections of society. 3. The T....
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....rtant to be considered; whether it is one with profit motive or not. Merely because surplus is generated from a particular activity, it cannot be said that such activity is in the nature of trade, commerce or business. What needs to be seen is, what the intent and purpose of starting such activity is. The tribunal found that BDA's embarkation of the activity of setting up of residential layouts, including the activity of sale of sites and flats, is definitely not with a view to earn profit, but to ensure planned urban development and also to accomplish a social objective of providing an opportunity to economically weaker sections of society to be able to own a residence on their own. The tribunal also held that the process of auctioning of corner sites by the BDA was only to ensure that officials do not use their discretion to allot corner sites and was therefore an activity which will ensure no loss to the public exchequer. 4. The Tribunal took note of the fact that the concerned Income Tax authorities have recognized the assessee as a public charitable organization by grant of registration under section 12A of the Act since 26.03.2003 and that the assessee's objects clau....