TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 580
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....f properties, filed its return of income on 30.09.2014 declaring income at Rs. Nil; the assessee declared profit of Rs. 9,11,22,877.74 on total income/gross receipt of Rs. 118,374,565.74 which was claimed exempt as per provisions of Section 11 and 12 of the Act. On compulsory scrutiny under Section 143(3) of the Act, the Assessing Officer finalized the assessment upon determining the total income of appellant at Rs. 17,04,37,602/- by making disallowance of Rs. 9,11,22,877/- on account of exemption under Section 11 of the Act, addition of Rs. 7,87,64,299/- out of receipt under Infrastructure Development Fund and disallowance of Rs. 5,50,426/- towards the depreciation claimed. Assessing Officer was of the opinion that the assessee was engaged in activity in the nature of trade, commerce or business in as much as one of the dominant activities of the authority is acquisition and sale of immovable properties, the receipts from which are in excess of Rs. 25 lakh being the ceiling stipulated in the second proviso of Section 2(15) of the Act. Thus, the activities of the appellant either wholly or partially are carried on with a motive for profit and in terms of the provision of section 2(....
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....s been accepted by the Learned AR to this effect that the judgment passed by the Hon'ble Apex Court in the case of ACIT(E) vs. Ahmedabad Urban Development Authority (supra) clarified that the assessee advancing general public utility cannot engage itself in any trade, commerce or business or provides services in relation thereto for any consideration. Further guidelines have also been framed under the said judgment passed by the Apex Court to verify and examine the objects and activities of the organizations to find out whether they are in the nature of trade, commerce or business and if it is found so than it must be examined whether the quantified limit as amended time to time in proviso to Section 2(15) of the Act has been breached or not. In that view of the matter since the verification/examination has not been carried out by the authorities below in terms of the observations and guidelines framed by the Hon'ble Apex Court in the case of Ahmedabad Urban Development Authority (supra), the Learned AR also prayed for setting aside the issue to the file of the Learned AO for examining the same and to pass the order accordingly. 6. We have heard the rival contentions made by the r....
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....there is no conflict. Carrying out activity in the nature of trade, commerce or business, or service in relation to such activities, should be conducted in the course of achieving the GPU object, and the income, profit or surplus or gains must, therefore, be incidental. The requirement in Section 11(4A) of maintaining separate books of account is also in line with the necessity of demonstrating that the quantitative limit prescribed in the proviso to Section 2(15), has not been breached. Similarly, the insertion of Section 13(8), seventeenth proviso to Section 10(23C) and third proviso to Section 143(3) (all w.r.e.f. 01.04.2009), reaffirm this interpretation and bring uniformity across the statutory provisions. B. Authorities, corporations, or bodies established by statute B.1. The amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the state government or central governments, for achieving what are essentially 'public functions/services' (such as housing, industrial development, supply of water, sewage management, supply of food grain, development and town planning, etc.) may resemble trade, commercial, or business activities. ....
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....ness or commercial receipts. However, this is subject to the caveat that if the assessing authorities discern that certain kinds of activities carried out by such regulatory body involved charging of fees that are significantly higher than the cost incurred (with a nominal mark-up) or providing other facilities or services such as admission forms, coaching classes, registration processing fees, etc., at markedly higher prices, those would constitute commercial or business receipts. In that event, the overall quantitative limit prescribed in the proviso to Section 2(15) (as amended from time to time) has to be complied with, if the regulatory body is to be considered as one with 'charitable purpose' eligible for exemption under the IT Act. C.2. Like statutory authorities which regulate professions, statutory bodies which certify products (such as seeds) based on standards for qualification, etc. will also be treated similarly. *** H. Application of interpretation H. At the cost of repetition, it may be noted that the conclusions arrived at by way of this judgment, neither precludes any of the assessees (whether statutory, or non-statutory) advancing objects of general public....