TaxTMI 
TaxTMI 
2022 (1) TMI 79
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....l activities relating thereto to undertake the preparation of development plans, monitoring and control of development of town planning as construction of Roads, bridges and carried out work in connection with supply for water and disposal of sewerage etc. 4. The assessee has filed its return of income on 29.10.2015 declaring at total income at NIL upon claiming exemption under Section 11 of the Act which was finalized under Section 143(3) of the Act on 26.12.2017 by the Ld. AO determining the total income at Rs. 85,96,19,188/- as against the total income of Rs. NIL. While disallowing the exemption claimed under Section 11 & 12 of the Act by the assessee the Ld. AO observed that the case of the assessee falls under the ambit of the proviso 1 & 2 to the Section 2(15) of the Act and disallowed as follows: 1. Claim of exemptions u/s. 11(2) of Rs. 12,60,81,401/- 2. Claim of exemptions u/s. 11(a)(a) of Rs. 13,68,09,114/- 3. Claim of exemptions for additions to fixed assets Rs. 1,07,76,025/- 4. Claim of exemptions for expedite on Gen Dev Rs. 58,59,82,648/- The above were, in turn, deleted by the Ld. CIT(A) in appeal preferred by the assessee. Hen....
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.... * Working for the preparation and implementation of development measures. * Surveying for the development of areas and land acquisition. * Managing urban development schemes. * Working for water systems, sewage and other facilities and services. In view of the various provisions of Gujarat Town Planning and Urban Development Act, 1976 it is claimed that assessee cannot purchase any land & in fact assessee has not purchased any land. As per provisions of the above Act it is very much clear that assessee can acquire the land either by agreement or under the provisions of Land Acquisition Act only in the cases envisaged clauses (b), (d), (k) & (n) of sub-section (2) to section 12 of said Act. It was submitted that a perusal of said clauses would reveal that land can be reserved for public purposes such as schools, colleges & other educational institutions, transport & communications. prevention or removing pollution of water or air caused by discharge of waste etc. Further, said acquisition can be made only by way of reservation u/s. 40(3)(j) and (jja) of the Act and said reservation is limited to the specified percentage of total land acquire....
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.... 5.4 It was next submitted that since Surat is a city of industries and enterprises, authority is also with several other governmental and private agencies concerned to ensure planned development of trade and industry taking consideration the environmental aspects. It was thus submitted that the development of district of Surat by providing house, roads, development and maintenance of parks (boost to environment), plantation of trees (again pertaining to environment), providing sewerage systems (clean and healthy environment) are all objects of welfare of the people of the district. Further, together with the new developments, the Authority also has to keep fresh and renovate the historic sites and natural attractions of the assigned to SUDA. 5.5 It was also submitted that irrespective of the fact the assessee trust is engaged in development of various areas as per the provisions of the above Act which is for the public at large, the assessee trust does not fall under the last limb of the definition of Charitable purpose. Since the assessee is engaged in above mentioned charitable purpose, hence it is not right to apply first proviso to Section 2(15) of the Act. ....
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....ion 23. Considering section 40 of the Town Planning Act, the Town Planning Scheme prepared by the Urban Development Authority which has been prepared subject to sanction by the State Government for development of the Urban Development Area, also provide for roads, open spaces, gardens, recreation grounds, schools, markets, green-belts, dairies, transport facilities, public purposes of all kinds: drainage, inclusive of sewerage, surface or sub-soil drainage and sewage disposal; Lighting; Water supply etc. The Town Planning Scheme also provides for historical or national interest or natural beauty, and of buildings actually used for religious purposes. The Scheme also provides for reservation of land to the extent often percent, or such percentage as near thereto as possible of the total area covered under the scheme, for the purpose of providing housing accommodation to the members of socially and economically backward classes of people. As per section 40(i)(jj) for the aforesaid purposes certain percentage of total area covered under the scheme are allotted earmarked. Fifteen percent of total area is allotted for the purpose of roads, five percent for parks, play grounds, ....
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....e Gujarat Town Planning Act by no stretch of imagination, it can be said that the activities of the assessee (A UDA) 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 per cent 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. [Para 13] 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 busin....
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....ra 15.2] In view of the above, the impugned order passed by the Tribunal is set aside. Accordingly, the assessee's appeal is allowed. [Para 16] " 5.8 On the similar footing, it was contended that SUDA is an autonomous body which was established under section 22 of the Gujarat Town Planning and Urban Development Act, 1976 (XXVII of 1976) and Rules made under carrying Planned Development of areas as defined and designed by the Government of Gujarat and also infrastructural activities relating thereto such as to undertake the preparations of development plans, monitoring and control of development of town planning as construction of roads, bridges and carry out work in connection with supply of water and disposal of sewerage and provisions for other services and activities such as drainage system, water connection, etc. for the benefit of public at large. SUDA is 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 is required to be used only for the purpose to carry....
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....e applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded. Explanation.-Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the period of accumulation or thereafter. In this backdrop, it was contended that the amount accumulated or set aside by SUDA of Rs. 37,50,00,000/- is as per section 11(2) which can be claimed as deduction and hence, no addition can be made on the account of same. 5.10 As regards addition of Rs. 9,10,65,153/-, it was submitted that as per Section 11(1) of the Act, subject to the provisions of sections 60 to 63, the f....
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....wer authorities but could not bring any distinction qua the decision taken in the case of Ahmedabad Urban Development Authority (supra). 7. We have carefully considered the rival submissions. In the instant case, Tribunal has been called upon to adjudicate whether assessee is entitled to benefit of Section 11 and Section 12 of the Act in the circumstances of the case or not. As a necessary concomitant thereto, an incidental question arises as to whether the first and second proviso to Section 2(15) of the Act is applicable in the facts of the case or not and consequently, the activity of the assessee can be regarded as charitable activities within the meaning of Section 2(15) of the Act or not. The AO, in the instance case, has disallowed exemption of Rs. 37,50,00,000/- claimed under s. 11(2) of the Act and further denied the deduction of Rs. 9,10,65,153/- claimed on account of accumulation of income under s. 11(1)(a) of the Act holding the activity of the assessee authority to be non-charitable in nature. We find that in the similar facts, the coordinate bench in Vadodara Urban Development Authority vs. ITO in ITA No. 2751/Ahd/2014 order dated 28.01.2019 has placed relian....
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....ustrial Development Corporation, wherein it was held as follows: "Section 2(15), read with section 11, of the Income-tax Act, 1961 - Charitable purpose (Objects of general public utility) - Assessment year 2009-10 -Whether where assessee - corporation was constituted under Gujarat Industrial Development Act, 1962, for purpose of securing and assisting rapid and orderly establishment and organization of industrial areas and Industrial estates in State of Gujarat, and for purpose of establishing commercial centers in connection with establishment and organization of such industries it could not be said that activities carried out by assessee were either in nature of trade, commerce or business, for a Cess or Fee or any other consideration so as to attract proviso to section 2(15) and same could be said to be for charitable purpose and, consequently,. Assessee was entitled to exemption under section 11- Held, yes (Paras 15 and 17)[In favour of assessee]" 5. We find that the object of the assessee is similar to that of the corporation before the Jurisdictional High Court and on the similar set of facts the appeal was allowed in favour of the assessee hence relying upo....