TaxTMI 
TaxTMI 
2023 (11) TMI 1140
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....ses all the benefits of sections 11 and 12 of the Act on the basis of judgments of various benches of Hon'ble ITAT ignoring the judgment of Hon'ble Jurisdictional High Court in the similar cases of other Improvement trust. As such addition made of Rs 9,09,41,639/- is unjustified and uncalled for. The same be deleted. 2. On the facts & in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 9,09,41,639/- by not allowing the benefit of sections 11 and 12 of the Income Tax Act, whereas as per the explanations furnished and material placed on record, the assessee appellant is duly entitled for the same. 3. On the facts & in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition made by the assessing officer on the basis of original audit report ignoring the revised audit report whereas as per explanation furnished and other material placed on record, the original audit report prepared is not correct. Accordingly, revised audit report has been filed giving true state of affairs of correct income. As such addition made is unj....
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....as Nil. The assessment was framed u/s 143(3). In the assessment the assessee was rejected for claimed of exemption u/s 11 and 12 by invoking section 13(8) as there is no application of section 2(15) in the activity of the assessee. In assessment the addition was made amount to Rs. 3 crore for payment towards public utility and amount to Rs. 1.5 crore towards Municipal Community. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the observation of the ld. AO. Only, the ground related addition amount to Rs. 1.5 crore for payment to Municipal Community was allowed and other grounds of appeal before the ld. CIT(A) were upheld and the appeal was partly allowed. The ld. CIT(A) in observation rejected the assessee's activities in relation to section 2(15) and the exemption section 11 and 12 was duly rejected. Being aggrieved the assessee filed an appeal before us. 4. When the appeal was called for hearing, no one appeared on behalf of assessee to represent his case. There is no application for seeking adjournment either. On perusal of record, we find that the hearing is scheduled on 22/08/2023. Previously the dates were fixed number of times. We find from ....
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..... They are authorized by law, to levy rates and charges, for the services they provide, on pre-determined basis. In the light of these provisions, clearly, these boards and authorities perform objects of general public utility; and they are not driven by profit motive. 187. There is a two-fold distinction between the now-deleted section 10(20A) and the newly added section 10(46) (w.e.f. 1-6-2011). Firstly, that the erstwhile section 10(20A) applied to a limited class of undertaking i.e., the bodies, or corporations, constituted by or under any law-confined to the planning and development of housing infrastructure. However, the newly added section 10(46) is wider in comparison and the activities of any body or authority or board constituted by or under any central or State Act with "the object of regulating or administering any activity for the benefit of the general public", has broader import. In a sense, the newly added section 10(46), resembles a GPU category charity classified under section 2(15). The second distinction is that section 10(20A) did not bar any board, or corporations, etc. from indulging in commercial activities. However, sub-clause (b) of section 10(46)....
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....amendments, and other related provisions of the IT Act. A. General test under section 2(15) A.1. It is clarified that an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration ("cess, or fee, or any other consideration"); A.2. However, in the course of achieving the object of general public utility, the concerned trust, society, or other such organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that (i) the activities of trade, commerce or business are connected ("actual carrying out..." inserted w.e.f. 1-4-2016) to the achievement of its objects of GPU; and (ii) the receipt from such business or commercial activity or service in relation thereto, does not exceed the quantified limit, as amended over the years (Rs. 10 lakhs w.e.f. 1-4-2009; then Rs. 25 lakhs w.e.f. 1-4-2012; and now 20% of total receipts of the previous year, w.e.f. 1-4-2016); A.3. Generally, the charging of any amount towards consideration for such an activity (advancing general public utility), which is on....
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.... and scrutinize the records, to determine if, and to what extent, the consideration or amounts charged are significantly higher than the cost and a nominal mark-up. If such is the case, then the receipts would indicate that the activities are in fact in the nature of "trade, commerce or business" and as a result, would have to comply with the quantified limit (as amended from time to time) in the proviso to section 2(15) of the IT Act. B.3. In clause (b) of section 10(46) of the IT Act, "commercial" has the same meaning as "trade, commerce, business" in section 2(15) of the IT Act. Therefore, sums charged by such notified body, authority, Board, Trust or Commission (by whatever name called) will require similar consideration - i.e., whether it is at cost with a nominal mark-up or significantly higher, to determine if it falls within the mischief of "commercial activity". However, in the case of such notified bodies, there is no quantified limit in section 10(46). Therefore, the Central Government would have to decide on a case-by-case basis whether and to what extent, exemption can be awarded to bodies that are notified under section 10(46). B.4. For the period 1-....
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..... Non-statutory bodies E.1. In the present batch of cases, non-statutory bodies performing public functions, such as ERNET and NIXI are engaged in important public purposes. The materials on record show that fees or consideration charged by them for the purposes provided are nominal. In the circumstances, it is held that the said two assessees are driven by charitable purposes. However, the claims of such non- statutory organisations performing public functions, will have to be ascertained on a yearly basis, and the tax authorities must discern from the records, whether the fees charged are nominally above the cost, or have been increased to much higher levels. E.2. It is held that though GS1 India is in fact, involved in advancement of general public utility, its services are for the benefit of trade and business, from which they receive significantly high receipts. In the circumstances, its claim for exemption cannot succeed having regard to amended section 2(15). However, the Court does not rule out any future claim made and being independently assessed, if GS1 is able to satisfy that what it provides to its customers is charged on cost-basis with at the most, ....
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....n accordance with the foregoing discussion, and summary of conclusions, the numerous appeals are disposed of as follows: (i) The revenue's appeals against the Improvement Trust, Moga, the Hoshiarpur Improvement Trust, Bathinda Improvement Trust, Fazilka Improvement Trust, Sangrur Improvement Trust; Patiala Improvement Trust, Jalandhar Improvement Trust, Kapurthala Improvement Trust, Pathankot Improvement Trust, Improvement Trust, Hansi, and the Special Leave Petitions filed against the Gujarat VC Maritime Board and Karnataka Water Supply and Drainage Board are rejected." 6.2 The issue was not agitated before the ld. CIT(A) as because the order of the Hon'ble Apex Court was in letter position. The observation of the ld. CIT(A) in relevant paragraphis reproduced as below: - "The legal preposition that can be summarized is that 'even though the activity of appellant are charitable falling under the category " advancement, of any other object of general public utility, provisos to section 2(15) are applicable as the appellant is carrying out activities in the nature of trade, commerce or business and receipts from such trade/commerce/business exceeds the prescr....