AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 27
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....nial of exemption under section 11 of the Act to the assessee. It was also submitted that the other issues raised in these appeals revolves around this primary issue. Learned representatives agreed that the facts are also common in all these appeals. Accordingly, the learned representatives addressed their arguments by referring to the orders passed by the lower authorities for assessment year 2011-12, on the basis that same have dealt with various aspects of this issue. Therefore, in view of the above, these seven appeals were heard together and adjudicated by way of this consolidated order, taking ITA No. 1806/Mum./ 2015, for assessment year 2011-12, as lead case and its findings will be applied mutatis mutandis to other appeals of the assessee. 3. The brief facts, as emanating from the record, are: The assessee is a local authority created by the State of Maharashtra under Maharashtra Slum Area (Improvement, Clearance and Rehabilitation) Act, 1971. The assessee is registered as a charitable organisation with DIT (Exemptions), Mumbai under section 12A of the Act vide registration No. INS/36857 dated 24/02/2003. Being a local authority in terms of aforesaid statute as well as wit....
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.... the Act. The AO further held that the main source of funds for assessee are various fees and levies raised for the approval of plan from the developers, interest income etc. The AO further held that assessee is providing deferment facilities to various builders/developers and also providing the instalment facilities for which it is charging interest @16% to 18% per annum. Accordingly, the AO by applying provisions of section 2(15), as amended with effect from 01/04/2009, held that assessee is not entitled to exemption under section 11 in view of provision of section 13(8) of the Act and as a result the entire income of the assessee was liable to tax. 5. In appeal, learned CIT(A) vide impugned order dated 02/02/2015, for assessment year 2011-12, dismissed the appeal filed by the assessee on this issue, by observing as under: "5.2 The first and main Ground of Appeal No. 1 together with Ground Nos. 3 and 4 are on the issue of denial of exemption u/s. 11 of the IT Act, 1961 claimed by the appellant. The AO has held that appellant is not engaged in carrying out charitable activity during the year, thereby has not applied its income for charitable purpose as required u/s. 11(1) for c....
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....rious types. Charging fees and levy for grant of extended facilities in construction and development of buildings is an income arising from development and construction business where the developers are paying the amount to the appellant. Therefore, the sources of income of the appellant are none other than development and construction business and interest income from the surplus generated from such source. 5.2.1 The appellant has argued that even if the activity is in the nature of business so long as objects are charitable, the proviso cannot be applied. However, there is no such stipulation in the proviso to section 2(15) rather contrarily if a charitable organization carrying out objects of 'advancement of general public utility is involved in carrying on any activity in the nature of trade, commerce, business or is charging fees for services in relation to any trade, commerce, business, is excluded from being 'charitable. The case of the appellant is excluded from being charitable also because the charitable activity claimed by it is in the domain of advancement of general public utility' only. The profit motive behind such business, commerce or trade 'activ....
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....Act, 1961. However this argument/ proposition is misplaced because relief of economically deprived class is not 'relief to the poor' as in section 2(15) of the I.T. Act, 1961. Apart from the fact that the claim of relief to economically deprived class is not the similar and same as relief to the poor, this argument has not been raised in the assessment proceedings hence, does not call for being admitted at appellate stage. The levies, and fees derived by appellant is from Developers and as per accounts of the appellant there is no expenditure incurred directly for providing relief to poor rather all the transactions are confined to charging fees, levies from Developers and expenditure on administrative heads. Appellant has not entered in any direct transaction with 'poor' or weaker sections as no such material is placed before me during appellate proceedings also. 5.3.2 It is relevant to point out further two aspects on this claim of appellant as being engaged in relief to economically deprived class as distinct from 'relief to poor as in Section 2(15) of the IT. Act, 1961. Though 'relief to poor' or 'poor' has not been defined under the I.T.....
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....however, allowed the exemption to the assessee. We further find that the Tribunal in assessee's own case for A.Y. 2007-08 on the similar facts after following the decision of Hon'ble Supreme Court in Gujarat Maritime Board (supra) has held vide para 6 & 7 appearing at Page 5 of the Tribunal order as under: "6. In the present case, the Slum Development Authorities i established for providing residential settlements to the slum dwellers without any profit motive. Moreover, primary purpose and the predominant object are to promote the welfare of the general public by providing better residential accommodations to slum dwellers and economically deprived class of society and said purpose would be charitable in nature only. Hence, in our humble opinion assessee's case is squarely covered by the principles laid down by Hon'ble Supreme Court of India in the case of Gujarat Maritime Boards (supra). 7. In our opinion, the activities of the SRA, present assessee are charitable in nature and hence, the assessee is entitled for exemption u/s. 11 of the [T. Act. Moreover, the assessee has been also granted the registration u/s 12AA that has not been cancelled. Therefore, in o....
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.... Act, 1961 for the A.Y. under appeal before me i.e. A.Y. 2011-12. Such arguments were raised by the appellant before the A.O also who concluded that each assessment year has to be treated Independent of earlier year and principle of res-judicata does not apply. In fact the conclusion drawn by the A.O and legal position is settled and clear that 'Rule of Consistency' /res-judicata is not applicable and each assessment year is a separate proceedings, as also affirmed in the decision of the Apex Court in Bharat Sanchar Nigam Ltd. vs Union of India (S.C) 282 ITR. In another case of CIT Vs Seshasayee Industries Ld. (Mad.) 242 ITR 691, it was further held that the fact that its claim was not questioned in earlier years does not entitle the assessee to contend that the law should not be applied during the current A.Y. and in the case of Ace Investments (P) Ltd Vs. CIT (Mad) 244 ITR 166 it was held that facts can be reconsidered in later year and record different finding - Finding for earlier year not conclusive." 5.7.1 The rule of consistency argued by the appellant is in fact not applicable because it is not a case where the issues and reasons relating to proviso to section 2(1....
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....he lower authorities also submitted that the issue of applicability of proviso to section 2(15) of the Act was not under consideration before the Hon'ble jurisdiction High Court and coordinate bench of the Tribunal, in earlier years in the case of the assessee. 8. We have considered the rival submissions and perused the material available on record including the written submissions filed by both the parties. The main grievance of the assessee in these appeals is against denial of exemption under section 11 of the Act. As per the assessee, since it is an authority established under the statute of the State of Maharashtra, its functions and duties are well laid down in the said statute and it cannot perform any function or perform any duty, beyond what it has been authorised under the said statute. On the other hand, it is the plea of the Revenue that assessee charges/levies fees from builders/developers and also earns interest from deferred payment by them and thus same is in the nature of trade or business and therefore cannot be considered as a charitable purpose under section 2(15) of the Act. Consequently, assessee is not entitled to claim exemption under section 11 of the Act.....
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....d with the appellate order and thus beyond the scope of revision under section 263 of the Act. Secondly, it was held that the issue is purely academic as there is no difference at all between the income which was assessed in the original assessment order and the income which is now being sought to be assessed in the wake of order under section 263 of the Act. This order of coordinate bench of the Tribunal was upheld by the Hon'ble jurisdictional High Court in Revenue's appeal in ITA No. 1359 of 2016 vide judgment dated 26/03/2019. Thus, no finding on merits of applicability of proviso to section 2(15) of the Act was rendered in earlier years in the case of assessee. 11. Further, we find that recently, in assessee's own case in Slum Rehabilitation Authority vs DIT (Exemptions), in ITA No. 2436/Mum./2014, for assessment year 2009-10, the coordinate bench of the Tribunal vide order dated 05/04/2022, while quashing the withdrawal of registration granted under section 12A of the Act to the assessee held that where the receipts are coming under the purview of proviso to section 2(15) of the Act, then the benefit of exemption to the income for the relevant previous year would not be avai....
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....the poor', then other categories of inclusive definition of 'charitable purpose' need not be satisfied. However, if it is found that the assessee is not rendering activities which will result in 'relief of the poor", then it is to be seen whether there is advancement of any object of general public utility. For the same, the conditions laid down in the proviso, inserted with effect from 01/04/2009, becomes relevant. 13. Reference has been made to section 3A(3) of the aforesaid statute, which provides for the following powers, duties and functions of the Slum Rehabilitation Authority: (a) to survey and review existing position regarding slum areas; (b) to formulate schemes for rehabilitation of slum areas; (c) to get the Slum Rehabilitation Scheme implemented; (d) to do all such other acts and things as may be necessary for achieving the objects of rehabilitation of slums. 14. Thus, as per the assessee, the fees/levy collected by it is under its powers, duties and functions as laid down in the aforesaid statute and in furtherance of object, for which it has been established under the aforesaid statute. Further, reference was also made to section 3M of the aforesaid statute....