TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 194
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.... urban development and town planning. The Assessing Officer was of the view that the assessee was carrying out the activities of "advancement of other general public utility" in the nature of trade/commerce/business, therefore, the provision of section 2(15) r.w. proviso 1 & 2 were applied to the case. The assessee has contended that object of the trust was not to make profit. It is stated that object of the assessee trust was clearly defined under the provision of the Gujarat Town Planning and Urban Development Act. The receipt on account of lease of plots has to be spent for providing infrastructural facilities. The assessee had explained at the time of assessment that activity of the assessee trust of purchase and sale of land was not of the nature of commercial activity and profit making was neither the aim nor object of the trust. The Assessing Officer has not accepted the explanation of the assessee trust and stated that assessee charged various types of fees from the public for providing certain amenities i.e. roads, bridges, development charges, registration fee etc. The Assessing Officer was of the view that these receipts received from the general public/beneficiaries fo....
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....rban Development Authority vs. ACIT (Exempt) (2017) 83 taxman 78 (Guj). The Id. departmental representative was fair enough not to controvert the same. 6. With the assistance of Id. representatives, we have gone through the findings of Hon'ble Jurisdictional High Court in the case of the assessee itself as supra. The relevant part of the findings is reported as under: - "12.9. While upholding the constitutional validity of the proviso to Section 2(15) of the Act, the Division Bench of the Delhi High Court in the case of Indian Trade Promotion Organization vs. Director of Income Tax (Exemption) in WP(C) No. 1872 of 2013 decided on 22.01.2015 has observed in para 58 as under: "As defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered .in the context of Section 10(23C)(iv) of the said Act It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be rea....
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....de, commerce and business. 13.1. In the case of Lucknow Development Authority, Gomli Nagar (supra), it is held by the Allahabad High Court that the activities of the authority cannot he 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. 132. Similar, view has been expressed by the Rajasthan High Court in the case of Commissioner of Income Tax, Jodhpur vs. Jodhpur Development Authority, Jodhpur Tax Appeal No. 63 of 2012 decided on 5. 7.2016. 14. Considering the aforesaid facts and circumstances and more particularly, considering the fact that the assessee is a statutory body Urban Development Authority constituted under the provisions of the Act, constituted to carry out the object and purpose of Town Planning Act and collects regulatory fees for the object of the Acts: no services are rendered to any particular trade, commerce or business: whatever the income is earned / received by the assessee even while selling the plots (to the extent of 15% of the total area covered under the Town Planning Scheme) is required to be used only for the purpose to carry out the object and p....
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....nd the first proviso, in the plain terms, the proviso provides nor 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 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 utility by virtue to proviso, would be excluded from the definition of charitable trust. However, for the application of the proviso, what is necessary is that the entity should be involved in currying on activities in the nature of trade, commerce or business, or any activity of rendering services in relation to any trade, commerce or business, for a cess or fee or any other consideration. In such a situation, the nature, use or application, or retention of income from such activities would not be relevant. Under the circumstances, the important elements of application of proviso are that the entity should be involved in carrying on the activities of any trade, commerce or business or any activities of rendering service in relation to any trade, commerce or business, for a cess or fee or any other consideration. Such....
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....stitutions 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 nonmembers, their claim to be chargeable organizations would now be governed by the additional conditions stipulated in the proviso to section 2 (15). 3.2 In the final analysis, however, whether the assessee has for its object the advancement of any other object of general public utility is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of general public utility will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is....
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....5) 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. " After considering the finding of the Hon'ble High Court in the case of the assessee itself as supra we do not find any infirmity in the decision of Id. CIT(A) in holding that assessee is eligible to claim exemption/s. 11 of the Act as proviso of section 2(15) are not applicable in the case of the assessee. Accordingly, this ground of appeal of revenue is dismissed. 7. The other grounds of appeal vide ITA No. 1256/Ahd/2018 of the revenue is filed for the same assessment year against the decision of Id. CIT(A) on similar issue of allowing the benefit of exemption u/s. 11 against the order of assessing officer dated 30th June, 2017 passed u/s. 154 of the Act wherein the total income of the assessee was determined at Rs, 13,29,88,496/- after making rectification in respect of the order giving effect to the CIT(A)'s order. The assessee has filed....