TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 1749
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....ation under section 12AA of the Act, even when the objects of the assessee fall under the limb 'any other object of general public utility' under section 2(15) of the Income-tax Act and the activities of the assessee under this limb will be hit by the proviso to section 2(15) of the Income-tax Act amended with effect from April 1, 2009 as the services are provided to all sections of the society on commercial basis and major receipts of the assessee are from services, i.e., considera tion received which is obviously in the nature of commercial activities akin to the activities of private parties and no charitable purpose is involved and charging fee for all services are involved ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in following the judgment of this hon'ble court in the case of the KIADB wherein it is held that the two conditions stipulated under section 12AA(3), which empowers the registering authority to cancel registration, do not exist in the case of the asses see ?" 3. According to the Revenue, the respondent-assessee was constituted by notification issued by the State Government bearing No. HUD/849/TTP/87 dated D....
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....any other consideration irrespective of the nature of use or application, or retention of the income from such activity unless (1) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility ; and (ii) the aggregate receipts from the activity or activities of the previous year do not exceed 20per cent. of the receipts of the trust or institution undertaking such activity or activities of the previous order. He contended that the respondent-assessee may be carrying out an object of general public utility but the carrying on its activity is in the nature of trade, commerce or business and does not come within the exception (1) or (2) above and therefore, in view of the amendment made to clause (15) of section 2 of the Act by inclusion of the aforesaid proviso, the Commissioner of Income-tax was justified in cancelling the certificate of registration issued under section 12A(1)(aa) of the Act. Learned counsel for the Revenue contended that substantial questions of law may be answered in favour of the Revenue as the activity by the assessee is hit by the proviso to clause (15) of section 2 of the Act and is not for ....
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....viso being inserted to clause (15) of the section 2 of the Act, the nature of activity carried on by the assessee would not come within the mischief of the proviso. That the Commissioner of Income-tax could not have cancelled the certificate issued in favour of the assessee by exercising power under section 12AA(3) of the Act. Therefore, the order of the Tribunal on that aspect is just and proper. 9. Learned counsel for the assessee further contended that the Tribunal has placed reliance on the judgment of this court in the case of Karnataka Industrial Areas Development Board referred to above. That the said judgment has stipulated two conditions for exercise of power under section 12AA(3) of the Act and those conditions are mandatory. Hence, the Commissioner could not have cancelled the certificate of registration issued in favour of the assessee in the instant case. Hence, the substantial question of law No. 2 may also be answered against the appellant-Revenue and in favour of the assessee. 10. It is also brought to our notice at the Bar that the judgment of this court in the case of Karnataka Industrial Areas Development Board has been confirmed by the hon'ble Supreme Cour....
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....ch of this court in the case of CIT v. Bagalkot Town Development Authority reported in [2015] SCC Online Karn 6951, considered the appeal filed by the Department against the grant of regis tration under section 12A(1)(aa). After noting that the respondent therein had applied and obtained registration under section 12A(1)(aa) of the Act it was considered as an institution of charitable purpose. Consequently the assessee's income therein was exempted from tax under section 11 of the Act. The Co-ordinate Bench considered the expression "any other object of general public utility" under section 2(15) of the Act and interpreted it by saying that the said expression must have a widest connotation with the advancement of any object or benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose. The said expression would prima facie include all objects which would promote the welfare of the general public. That if the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. If the primary or predominant object of an inst....
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....judgments of the hon'ble Supreme Court in the case of CIT v. Gujarat Maritime Board reported in [2007] 295 ITR 561 (SC) and CIT v. Andhra Pradesh State Road Transport Corporation reported in [1986] 159 ITR 1 (SC), it is held that there was no material or evidence to suggest that Lucknow Development Authority, the assessee therein, was conducting its affairs on commercial lines with a motive to earn profit or it deviated from its objects and that therefore, the proviso to section 2(15) was not applicable to the facts and circumstances of the case. Conse quently, it was held that the assessee therein was entitled to exemption provided under section 11 for the relevant assessment year. (d) From the aforesaid judgments what emerges is that in respect of two similar authorities, namely, Bagalkot Town Development Authority and Lucknow Development Authority which are similar to the appellate authority, it has been held that they are entitled to registration under sec tion 12A(1)(aa) of the Act and to the benefit under sections 11 and 12 of the Act. As already submitted by learned counsel for the appellant, the appellate authority is a statutory body constituted under section 3 of th....
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....he assessee functions in a fiduciary capacity. Therefore, following the judgment of Bagalkot Town Development Authority, which has in turn followed the judgment of the hon'ble Supreme Court in the case of Gujarat Maritime Board, it is held that the assessee, being a statutory authority, created under the Karnataka Urban Development Authority Act, 1987 has to carryout its activity towards public purposes. Therefore, the argument advanced on behalf of the Revenue that the asses see was not entitled for exception under section 11 of the Act, is untenable and is rejected. In the circumstances, substantial question of law No. 1 is answered in favour of the assessee and against the Revenue. 12. In view of the aforesaid dicta what emerges is that the nature of activity of the respondent-assessee must be considered. As already noted, the assessee is a statutory authority constituted under the provisions of the Karnataka Urban Development Authorities Act, 1987. In the circumstances, it is held that despite the insertion of the proviso, the assessee was entitled to continue the certificate of registration under section 12A of the Act, as even though the objects of the assessee fall with....