TaxTMI 
TaxTMI 
2025 (3) TMI 1416
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....aritable entity and has further erred in holding that the assessee is engaged in the commercial activity and that too by recording incorrect facts and findings and in violation of principles of natural justice. 2. 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 not granting the benefit of exemption u/s 11&12 as claimed by the assessee authority and further erred in observing that the assessee authority is carrying activity with the motive to earn profit and further erred in treating the assessee's income/surplus as taxable under the business income. 3. 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. 3,25,27,565/- on account of infrastructure funds and that too by recording incorrect facts and findings and in violation of principles of natural justice. 4. 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. 3,25,27,565/- on account of infrastructure funds, is illegal, b....
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....e Tribunal. 6. The learned counsel for assessee has submitted that the assessee has been setup for achieving essential public services and the objects of the assessee are essential for advancement of public purpose and therefore, the activities undertaken by the assessee are not hit by the proviso to Section 2(15) of the Act. Reliance has placed the case of ACIT (Exemption) v. Ahmedabad Urban Development Authority, 449 ITR1 (SC) in this case the Hon'ble Supreme Court held as under: ACIT vs. Ahmedabad Urban Development Authority (Exemptions) Vs. Ahmedabad Urban Development Authority and Ors. dated 19/10/2022 reported in 449 ITR 1 (SC) which has settled the issue by dismissing the Revenue's appeal vide Para 254(ii) of the judgment as follows: "....254. In 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 Improveme....
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....T, Agra Bench, (Supra) by observing Para 6 as follows: "6. I have noticed that the CIT(A) has given too much of emphasis on how the monies are invested - in a current account with District Cooperative Bank or in fixed deposits elsewhere. That is not material in the present context. What is material is that income from interest on these funds does not accrue to the assessee and even interest receipts are at the disposal only in accordance with Government directions on disposal of the funds relating to infrastructure development. The assessee does not get any unfettered direction to use such interest earnings, but these earnings only add up to the corpus which can be used in terms of Government directives and for the purpose of infrastructure development. That aspect of the matter being undisputed before me, I am of the considered view that interest in question cannot be treated as income of the assessee. I, therefore, direct the Assessing Officer to delete the impugned addition of Rs. 7,26,878/-. The assessee gets the relief accordingly." (ii) In the case of ITO vs. Saharanpur Development Authority ITA No. 4113/Del/2017 dated 24-03-2021 the Co-ordinate bench held a....
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....er the ratio laid down in the case of CIT Vs. Gujarat Maritime Board [2007] 295 ITR 561 / [2008] 166 Taxman 58 (SC), where it was observed that:- '..........in Section 2(15), namely, "any other object of general public utility". From the said decisions it emerges that the said expression is of the widest connotation. The word "general" in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose [CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR (SC). The said expression would prima facie include all objects which promote the welfare of the general public. 11 cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. When an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility, but not so, if it seeks to promote the interest....
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....ized provident fund. 24. Needless to mention that this Hon'ble Court in the case of CIT v. U.P. Forest Corpn. Ltd., Tax Appeal No. 70 of 2009 observed that the Forest Corporation being an statutory entity is entitled for the registration under Section 12A of the Act. The said observations was upheld by the Hon'ble Apex Court vide its order dated 12.05.2011 in Special Leave Petition No. (Civil) No. 2590/2011. 25. We may also like to refer a C.B.D.T. Circular No. 11/2008 dated 19.12.2008, wherein the applicability of the commercial activities in respect of charitable purpose has been clarified. The said circular is reproduced as below:- "2.2. 'Relief of the poor encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the ....