TaxTMI 
TaxTMI 
2020 (12) TMI 20
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....tory body formed under Maharashtra Housing Area Development Act 1976 ( in short 'MHADA') on 05/12/1977. Right from its inception till assessment year 2002-03, the assessee enjoyed exemption under section 10(20A) of the Income Tax Act, 1961 ( in short 'the Act'). After omission of sub-section (20A) of section 10 of the Act from the statute by the Finance Act, 2007 w.e.f. 01/04/2003, the assessee ceased to be eligible for exemption under the aforesaid provision. Therefore, the assessee applied for registration under section 12A of the Act as charitable institution. The registration under section 12A of the Act was granted to the assessee w.e.f. from assessment year 2003-04 onwards. The assessee enjoyed the benefit of exemption as set out under section 11 to 13 of the Act . However, after amendment to section 2(15) of the Act by the Finance Act, 2010, there has been constant tussle between the Revenue and the assessee as to whether the activities of assessee fall within the ambit of "charitable purpose" or are in the nature of "general public utility". In the impugned assessment year, the Assessing Officer has denied the benefit of exemption under section 11 of the Act to the as....
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....ns, in disregard of the Statement of Facts appended to the Memo of Appeal and submissions made before him during the Appellate proceedings. Relief claimed: The addition of Rs. 9,82,68,290/= be directed to be deleted. 5.0 Levy of Interest u/s 234B of the Act The learned CIT(A) erred in law and on facts in dismissing Ground of appeal before him, challenging the charge of interest u/s 234B of the Act, on the ground that it was mandatory, without appreciating that the appellant was denying the very application of S.234B of the Act to it, for the fact that the appellant was not under obligation to pay advance tax. Relief claimed: Interest u/s 234B of the Act be directed to be deleted." 3. Shri Nishant Thakkar, appearing on behalf of the assessee submitted at the outset that the ground of appeal No. 2 and 3 are identical to the one raised by the assessee in assessment year 2010-11 in ITA No.6678/Mum/2013. The Tribunal vide order dated 04/06/2019 has held that the assessee is eligible for claiming exemption under section 11 as the activities of the assessee are charitable in nature. The ld.Authorized Representative of the assessee referred to the ....
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....s invalid. 4. On the other hand, Shri Purushottam Tripuri, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. The ld.Departmental Representative submitted that in the absence of assessment folder he is not in a position to counter the arguments made by the assessee challenging the validity of notice issued under section 143(2) of the Act . The ld.Departmental Representative pointed that due to restructuring of the Department coupled with restrictions due to COVID-19 pandemic, very less strength of supporting staff is available in the office. Therefore, it may not be possible to retrieve the assessment records. 5. In respect of ground No.2 and 3 of the appeal he admitted that Tribunal has adjudicated similar issue in the appeal of assessee in assessment year 2010-11. However, he asserted that it is not emanating from records that the facts in the assessment year under appeal and facts for the assessment year 2010-11 are identical. The ld.Departmental Representative pointed that in the assessment order for assessment year 2010-11, the Assessing Officer has given bifurcation of surplus, whereas no such bifurcation....
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....ation is at page 30 of the Paper Book. The ld. Authorized Representative for the assessee asserted that the assessee has been filing its return of income throughout giving the office address and the assessments have been made and communicated on the said address. To substantiate this contentions, the copies of assessment orders starting from assessment year 2003-04 to 2010-11 have been furnished in paper book at page 33 to 40. We find that in the past, notices to the assessee issued under section 142(1) or 143(2) of the Act have been served on the assessee at the office address. ( some of the sample notices are at pages 41 to 44 of the Paper Book) We fail to understand that when assessee in the return of income for the impugned assessment year has mentioned the office address, then what prompted the Department to issue notice under section 143(2)/143(1) of the Act for the impugned assessment year on an address different from the officie address of the assessee. The ld. Authorized Representative has made a statement at the Bar that the assessee at no point of time has intimated the address to the Department on which the statutory notice under section 143(2) was sent and there has be....
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....y the Ld. Special Counsel in any way, diminishes the assessee's claim or its entitlement to claim benefit u/s. 11; or persuade us to come to a conclusion that the assessee's activities are done purely for a profit motive. Whether an activity construes business or is in the nature of business is largely dependent upon the factor, whether such activity is actuated by profit motive or not. Merely because MHADA builds tenements and sells them does not lead to any inference that MHADA's activities are in the nature of trade, commerce or business. We have already discussed in detail that assessee's activity is no way can be held for the profit motive or for carrying out systematic business, albeit all its policy as well as conduct is to provide shelter to the needy and poor people in line with the mandate of Constitution of India. Xxxxx Xxxx xxxx 44. The aforesaid decision clearly clinches the entire issue not only to the nature and scope of definition of 'charitable purposes' in section 2(15) but also the scope of restriction provided in proviso to section 2(15). If the principle laid down by Hon'ble High Court is applied he....
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....ld easily have made. xiv) Does the Institution stick to its resolve to sell properties at predetermined rates even though the demand supply position for housing is such that it could have sold the properties at a much higher rate? xv) Does it sell properties by inviting bids and allotting the property on the basis of a draw of lots rather than allotting the properties by holding an auction which would ensure the receipt of the highest price? xvi) Does the Institution sell its properties primarily to the economically less fortunate at a concessional price rather than the maximum price available from any free purchaser who would offer a higher price? xvii) Is the making of profit deliberately shunned? xviii) Does the institution continues to operate and run its activities as per its framed policy and rules and sells its properties in the manner and at the rates as per its regulations even though the demand for the properties of the institution far exceeds their supply? If the aforesaid tests are applied on the facts of the present case which have been discussed in detail hereinabove, the only inference /conclusion which can be dra....
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....al with the various facets of the arguments which have been placed before us by both the parties. The core issue here is, whether in the light of the proviso to section 2(15), the assessee's activities can be held to be for "charitable purposes" or not. The first and foremost point as canvassed before us by Mr. Dastur is that, owing to the very nature and unique status of the assessee, it has to be held that the assessee's activities are nothing but for charitable purpose. In this regard, he had mainly relied on the various provisions of the MHAD Act and how MHADA has being operated under the direct control and supervision of the Government and how it is supported by the grants and subsidies given by the Government only for catering to the needy and poor people for providing shelter. Mr. Dave's counter argument on this ground was that, if such an argument is to be accepted then it will open the flood gates and even the builders will start claiming exemption u/s. 11. At the outset, the argument put forth by Ld. Special Counsel appears to be too farfetched because here, we are looking into the matter of an authority which has been specifically constituted for the purpose of providing....
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....t, acquisition of land by MHADA for the purpose of constructing tenements maybe for public purpose but it cannot be treated as, for the charitable purposes. In this regard, Mr. Dastur had pointed out that firstly, when MHADA holds a certificate u/s 12A there cannot be any doubt that its activities constitute charitable purpose; and secondly, charitable purpose is always a public purpose because a charitable trust cannot by definition be for a private purpose. There is no such thing as a private charitable trust recognized under any law, hence to say that MHADA's activities cannot be regarded as charitable as they constitute 'public purpose' is contradictory in itself. We fully endorse the argument put forth by Mr. Dastur, because within the face of charitable purpose, public purpose is inherently embedded and there cannot be any charitable purpose without catering to the public. Thus, such an argument of the Ld. Special Counsel for the revenue is hereby rejected." We find no merit in the argument raised by ld. Departmental Representative. The Tribunal while deciding the issue of assessee's eligibility to claim benefit of section 11 and 13 of the Act was alive to the fact that....