TaxTMI 
TaxTMI 
2021 (9) TMI 698
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....rding to plan and for that purpose, the authority has been empowered to acquire, hold, manage and dispose land and other properties to carry out building activities, engineering, mining and other operations. The assessment for Assessment Year 2012-13 was framed u/s 147/143(3) of the Income Tax Act, 1963 (hereinafter called 'the Act') after disallowance of assessee's claim of exemption u/s 11 of the Act and after making a further addition of Rs. 3,46,03,14,429/- being net amount transferred to Infrastructure Development Fund as income of the Ghaziabad Development Authority. The Assessing Officer (AO) disallowed the claim of exemption u/s 11 of the Act on the ground that registration u/s 12AA granted to the assessee stood cancelled vide order dated 31.03.2014 passed by the Ld. CIT, Ghaziabad. Further, the Assessing Officer also disputed the charitable nature of activities carried out by the assessee in terms of Section 2(15) of the Act. 2.2 Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal. The Ld. CIT(A) not only upheld the issuance of notice u/s 148 of the Act but also upheld the rejection of exemption u/s 11 of the Act and also upheld t....
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....er expenditure as income chargeable to tax u/s 11(4A), is bad in law and against the facts and circumstances of the case. 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 3,46,03,14,429- earmarked as amount related to Infrastructure Fund and that too by treating it as taxable income and further erred in observing as under:- * That this amount is to be first credited to Income & Expenditure account. * That these receipts were not deposited in accordance with the G.O. * That the said amounts are in the nature of capital receipts and are transferred to Infrastructure Development Fund. 8. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 3,46,03,14,429/- on account of Infrastructure Fund is bad in law and against the facts and circumstances of the case. 9. Without prejudice to the above grounds, Ld. CIT(A) has erred in law and on facts in not granting the benefit of expenses and in not computing the income as per generally accepted comme....
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....urpose as defined u/s 2(15) of the Act while keeping in mind the language and intent of the proviso as well as. However, we note that this exercise has been cut short by the order of the Co-ordinate Bench in assessee's own case in ITA No.2400/Del/2014 wherein, while deciding the eligibility of registration u/s 12A of the Act, the Tribunal had the occasion to in-depth examine the objects and activities of the assessee authority in context of Section 2(15) of the Act. The Tribunal proceeded to restore the registration u/s 12AA of the Act by holding as under: "13 In the case of Navodaya Education Trust and G D Singla Charitable Trust mentioned Supra the registration was refused as the entities were operated by a single family unit. In the case of Self Employers Service Society, it was held that there was no charitable activity undertaken by the society. Similarly the case of UPDA, there was no finding of charitable work undertaken by the association. The case of Travancore Education Society the registration was cancelled due to collection of capitation fee which was prohibited by law. Thus we find none of the cases referred to by the revenue were in the work of development of....
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.... application, or retention of the income from such activity we find that the assessee has not brought any changes in the objectives which forces the revenue to change its earlier stand. As long as the object of general public utility is not merely a mask to hide true purpose or rendering of any service in relation thereto, and where such services are being rendered as purely incidental to or as subservient to the main objective of 'general public utility', the carrying on of bonafide activities in furtherance of such objectives of 'general public utility' cannot be hit by proviso to s. 2(15). 17 Hence keeping in view the provisions of the act , objectives of the assessee , judgment in the case of the assessee by the Hon'ble High court of Allahabad, approvals given in the case of other town development agencies, we hold that the assessee trust is carrying out charitable activity of advancement of public utility and the business activity carried out by it are incidental to the attainment of its main object and thus the proviso to section 2(15) is not attracted in the assesses case. We therefore hold that the assessee is entitled for restoration of registration u/....
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....nal in the case of Saharanpur Development Authority in ITA No.4113/Del/2017 vide order dated 24.03.2021 wherein it was held as under: "6. It is noted from the material on record that in the case, similar issue has been decided in the case of the assessee for the assessment years 2004-05 to 2007-08 by the Co-ordinate Bench of ITAT "G" Bench, Delhi where in it was held that, "the appellant has received in fra structure funds under the orders o f Govt. o f U.P. and it was required to use such funds as per the direction of the High Powered Committee and has no control over the said funds. There fore, the interest income from such funds is not the income o f the appellant." 7. This observation has been given consistently by the ITAT in favour of the assessee for the Assessment years 2004-05 to 2007-08. Further , the Hon'ble Allahabad High Court in the case of Lucknow Development Authority has held that the money transferred to the Infra structure fund account is to be utilized for the purpose of the pro jects as specified by the Committee having constituted by the State Government and cannot be treated as belonging to the authority or receipt is taxable nature in its h....
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....as per the directions of the State Authorities. Then in that event it is difficult to believe that part amount is capital receipt and part would be Revenue in nature. Therefore, there was no justification for Ld. CIT(A) to hold that the impugned receipt is Revenue in nature. This issue also requires reconsideration in view of the fact that assessee is entitled for exemption u/s 11 of the Act. We, accordingly, set aside the orders of the authorities below on the issue of infrastructure fund as well and restore the issue to the file of AO with direction to redecide the issue as per law by giving reasonable opportunity of being heard to the assessee." 8.2 In the light of the orders of the Co-ordinate Bench as reproduced in the preceding paragraphs in the case of Saharanpur Development Authority (supra) and Khurja Development Authority (supra), we are of the view that source of funds transferred to Infrastructure Development Fund, control over the same and obligation of its utilization is required to be examined to ascertain the real nature of Infrastructure Development Fund. Accordingly, we direct the Assessing Officer to adjudicate the issue afresh keeping in mind the ratio laid d....
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....essee with regard to amount relating to Infrastructure Development Fund and also erred in making an addition of Rs. 268,71,92,937/- in this regard and that that too by recording incorrect facts and findings and without observing the principles of natural justice. 6. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 268,71,92,937/-, is bad in law and against the facts and circumstances of the case. 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not allowing the credit of prepaid taxes amounting to Rs. 9,32,77,634/- as claimed. 8. That action of Ld. AO in framing the impugned assessment order and in denying the benefit of exemption u/s 11&12 and in making addition of Rs. 268,71,92,937/- and in assessing the income of the assessee at aggregate amount of Rs. 186,75,56,884/- is not sustainable on various legal and factual grounds and Ld. CIT(A) ought to have quashed the same. 9. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the ab....