TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 1858
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....lopment Authority, Belgaum. It has assailed the legality and correctness of the order dated June 15, 2012 passed in I. T. A. No. 214/PNJ/2011 passed by the Income-tax Appellate Tribunal, Panaji Bench, Panaji (hereinafter referred to as "the Tribunal", for the sake of brevity). 3. The relevant facts of the case are that the appellant, which is a statutory authority constituted under the provisions of the Karnataka Urban Development Authorities Act, 1987 (hereinafter referred to as "KUDA Act", for short), filed an application for registration under section 12A(1)(aa) of the Income-tax Act, 1961 (hereinafter referred to as "the Act", for the sake of brevity). The said application was made on April 28, 2009 before the Commissioner of Income-tax, Belgaum. The Commissioner, by order dated October 27, 2009, rejected the said application. Aggrieved by the said order, the appellant herein preferred an appeal before the Tribunal, which, by its order dated June 21, 2011 (annexure-B), remanded the matter to the Commissioner of Income-tax for his reconsideration. Thereafter, the Commissioner of Income-tax passed an order on October 28, 2011, at annexure-C, which was an order once again rejecti....
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.... That the object and purpose of the said Act is to provide for the establishment of urban development authorities for the planned development of major and important urban areas in the State and the areas adjacent thereto and for matters connected therewith. That sections 15 to 34 of the said Act deal with development schemes. Sections 35 and 36 deal with acquisition of land and sections 37 to 39 deal with property and finance and there are other sections to the said Act dealing with incidental, ancillary and other matters. 7. Having regard to the nature of activity carried on by the appellant- authority, it is squarely coming within the scope of section 12A(1)(aa) of the Act and its activity is in the nature of charitable activity and not commercial or with the profit motive. Therefore, the authorities under the Act as well as the Tribunal ought to have granted registration under section 12A(1)(aa) of the Act. 8. In support of his submissions, learned counsel for the appellant placed reliance on certain decisions of the hon'ble Supreme Court as well as this court which shall be referred to later. 9. Learned counsel for the appellant next contended that the appellate authorit....
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....itable act is merely incidental or even accidental and immaterial. That charity is always directed at benefiting others. The said direction must be evident and obligatory upon the trustee from the terms of a deed of trust before it can be held to be really charitable. 12. The hon'ble Supreme Court, on considering the deed of trust in the said case found that the assessee-trust therein was formed with the object of educating people by spread of knowledge on all matters of general interest and welfare through publication of newspaper and journals, but printing and publishing of newspaper could not be held to be education within the meaning of section 2(15) of the Act and hence not entitled to exemption under section 11 thereof. It was observed therein that concluding words "not involving the carrying on of any activity for profit" at the end of section 2(15), even if for the purpose of trust is on "advancement of any other object of general public utility". It would not be considered to be a "charitable purpose", unless it is shown that the above purpose does not involve the carrying on of any activity for profit. That both the above conditions must be fulfilled before the purpo....
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....ommerce or business and therefore, the proviso to section 2(15) of the Act was applicable and the assessee was not entitled to exemption under section 11 of the Act. It was further held that the proviso to section 2(15) of the Act was not applicable as far as the Ahmedabad Urban Development Authority was concerned as the activity of the said authority was in the nature of providing general public utility services and therefore, was entitled for exemption under section 11 of the Act. 15. Further, in CIT v. Lucknow Development Authority reported in [2014] 98 DTR 183 (All), the Allahabad High Court considered a similar question and observed that it is an undisputed fact that the assessee therein, namely, Lucknow Development Authority, being a statutory authority, established under the provisions of the Uttar Pradesh Planning and Development Act, 1973, was constituted with the object of providing shelter to the homeless people. That registration under section 12A being mandatory to claim exemption under sections 11 and 13 of the Act, it is necessary to consider if the objects and purpose of the authority is charitable as public utility, and then to grant the benefit of being charitabl....
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.... and allot sites to the eligible persons, as well as auction sites and generally carry out the objects and intentions of the KUDA Act. 18. The activity of the appellant is thus a charitable activity as defined under the expression "charitable trust" under section 2(15) of the Act. The activity of the appellant comes within the scope and ambit of the expression "the advancement of any other object of general public utility". The activity carried on by the appellant does not involve an activity which is in the nature of trade, commerce or business so as to come within the mischief of proviso to section 2(15). As already noted, the appellant is a statutory authority constituted under the provisions of the KUDA Act, whose object is to establish and develop urban areas in an orderly fashion. Even though the appellant-development authority may be involved in developing various residential or commercial areas and thereby preparing house sites or commercial sites and even alienating such sites through auction or through allotting to eligible persons, the said activity cannot be held to be profit motive so as to come within the mischief of the expression trade, commerce or business. The up....
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....s to be compliance with rule 17A of the Rules and there can be no relaxation in that regard and if there is any compliance to be made by the appellant then this court may grant an opportunity to the appellant to comply with the said Rule. He, however, submitted that any non-compliance of the requirements of rule 17A of the Rules would not entitle the appellant from seeking registration under section 12A(1)(aa) of the Act. Consequently, substantial question of law No. 2 is answered by holding that the appellant would have to comply with all requirements stipulated under rule 17A of the Rules. If there has been any non-compliance with the same, then, the appellant is at liberty to comply with the said requirements in accordance with law. Consequently, the substantial questions of law raised in this appeal are answered as under : Sl. No. Questions of law Answers (i) Whether in law, the finding arrived at by the Tribunal is perverse and contrary to the facts and circumstances inasmuch as whether the activity carried on by the appellant would amount to an activity in the nature of trade, commerce or business to deny registration under section 12A of the Act ? The Tribunal wa....