TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1800
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....The learned CIT(A) has erred in law as well as on facts in holding that the appellant authority functions with profit motive and its activities are in the nature of trade, commerce or business without appreciating that the appellant authority has been constituted u/s. 5 of the Gujarat Town Planning and Urban Development Act 1973 (GTPUD) with sole objective to carry out the development and town planning schemes. 3. The learned CIT(A) has failed to appreciate that collection of fees, charges or any amount as prescribed under GTPUD Act and rules thereunder cannot be said to the activities in the nature of trade, commerce or business. 4. The learned CIT(A) has failed to appreciate that the activities &. objectives of the appellant authority are to be seen holistically and not each of them on standalone basis. 5. The learned CIT(A) has erred in law as well as on facts in wrongly applying first proviso to Section 2(15) to the appellant's case. 6. The learned CIT(A) has erred in law as well as on facts in contending that the appellant authority is not eligible to claim exemption u/s. 11 of the Act. 7. The learned CIT(A) has erred in law as well as on facts in considerin....
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....an appeal before the Ld. CIT (A). The assessee before the Ld. CIT (A) submitted that merely charging fees for the above-said activity does not mean that it is like trade, commerce or business. 6.1 The object of the assessee is not to earn profit but to advance the object of general public utility and accordingly, the 1st and 2nd proviso attached to section 2(15) cannot be applied to it. 6.2 The assessee further submitted that the JADA had been constituted under the provision of Gujarat Town Planning and Urban Development Act, 1976 (in short GTPUD Act, 1976) which was wholly owned and controlled by the State Government of Gujarat for planning, coordinating and rapid development of areas. It also carried out work for construction of roads, sewerage, parks, playgrounds, health, and cultural institution, etc. for the benefits of the public at large. As such it had no intention to earn profit but to recover the cost by charging the fees. 6.3 The assessee in addition to the above submits and justifies its receipt and its nature before the Ld. CIT (A) as detailed under: "5.3 JADA has submitted details of receipts and their nature during tne course of appellate proceedings, which ....
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....e building is sold out & used by other Government bodies like L/C, Central Excise Department etc. Other Loan 1,96,41,3637- It is liability towards interest payable on loan granted by the Government to JADA. Advance of FSI & SPB Plot 16,44,4257- It represents amount received for providing FSI rights in Sardar Patel Bhavan Project constructed by JADA. Advance of TP plot 33,87,75,387 This is amount has been received towards the sale of plot covered under TP scheme. However, amount shown as liability due to registration of documents are pending because of court cases are pending for disputes. Advance of Premium Fee 67,08,4407- It represents amount received as advance (being 10%) of the total Premium Fees on sale / lease of plot as per stipulated clause contained in the tender which is adjusted / refunded on final execution of sale agreement. The other account viz. premium fees accordingly represent balance 90% of the total price of sale/lease of plot Advance for Solid waste Management Project 53,07,2507- The year 2007 was declared as Nirmal Gujarat 2007 by the State Government and in order to maintain cleanliness of public places and to ensure better healthy lives, this....
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....Rs. 15,68,250/- from Vibhapar Gram Panchayat towards construction of road. (iii) JADA receives service and amenities fees from the applicants for permission granted to carry out development work for execution of works in connection with supply of water, disposal of sewerage and provision of other services and amenities in a particular area / under the TP scheme. Since the aforesaid amounts are not in the nature of income at the time of receipt and they are to be apportioned against expenditure wherever it is incurred for the said amounts and to be adjusted against the net amount to be paid by the applicant in the town planning scheme and therefore the same is recognized and accounted for as liability in the books of account. 7. The Ld. CIT (A) after considering the submission observed that the assessee merely constituted under the GTPUD Act, 1976 cannot enjoy the blanket exemption, and therefore it cannot be concluded that the proviso of section 2(15) do not apply to it. 7.1 The Ld. CIT (A) further observed that the provisions of section 13(8) as amended by Finance Act, 2012 are also applicable to it and accordingly denied the exemption claimed u/s 11 and 12 of the Act. 7.....
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....hmedabad Urban Development Authority under the provisions of the Gujarat Town Planning Act by no stretch of imagination, it can be said that the activities of the assessee (AUDA) can be said to be in the nature of trade, commerce or business and/or its object and purpose is profiteering. Merely because under the statutory provisions and to meet with the expenditure of Town Planning Scheme and/or providing various services under the Town Planning Scheme, such as road, drainage, electricity, water supply etc. if the assessee is permitted to sale the plots (land) to the extent of 15% of the total area under the Town Planning Scheme and while selling the said plots they are sold by holding the public auction, it cannot be said that activities of the assessee is profiteering, to be in the nature of trade, commerce and business. 13.1 In the case of Lucknow Development Authority, Gomti Nagar (supra), it is held by the Allahabad High Court that the activities of the authority cannot be said to be in the nature of trade, commerce or business and/or profiteering and therefore, proviso to Section 2(15) of the Act shall not be applicable. 13.2 Similar, view has been expressed by the Raja....
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.... quality of cows and oxen and other related activities. The Assessing Officer denied the exemption to the trust under Section 11 of the Act on the ground that considerable income was generated from the activities of milk production and sale and therefore, considering the proviso to Section 2(15) of the Act, the said Trust- assessee was denied the exemption under Section 11 of the Act. While holding that the activities of the assessee trust still can be said to be for charitable purpose within the meaning of Section 2(15) of the Act and same cannot be said to be in the nature of trade, commerce or business for which proviso to Section 2(15) of the Act is required to be applied. In paras 6, 7, 8 and 12, it is observed and held as under: "6. The legal controversy in the present Tax Appeal centers around the first proviso. In the plain terms, the proviso provides for exclusion from the main object of the definition of the term Charitable purposes and applies only to cases of advancement of any other of general general public utility. If the conditions provided under the proviso are satisfied, any entity, even if involved in advancement of any other object of general public uti....
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....f fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1 There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are for charitable purpose as these are covered under any other object of general public utility. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to section 2 (15) owing to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be chargeable organizations would no....
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....ing the aforesaid decision to the facts of the case on hand and the object and purpose for which the assessee is established/constituted under the provisions of the Gujarat Town Planning Act and collection of fees and cess is incidental to the object and purpose of the Act, even the case would not fall under second part of proviso to Section 2(15) of the Act. 15.2 Considering the aforesaid facts and circumstances of the case, we are of opinion that the learned Tribunal has committed a grave error in holding the activities of the assessee in the nature of trade, commerce or business and consequently holding that the proviso to Section 2(15) of the Act shall be applicable and therefore, the assessee is not entitled to exemption under Section 11 of the Act. For the reasons stated above, it is held that the proviso to Section 2(15) of the Act shall not be applicable so far as assessee- AUDA is concerned and as the activities of the assessee can be said to be providing general public utility services, the assessee is entitled to exemption under Section 11 of the Act. Both the questions are therefore, answered in favour of the assessee and against the revenue. 16. In view of the ab....