TaxTMI 
TaxTMI 
2025 (7) TMI 365
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....ax Act, 1961 ("the Act") dated 29.06.2021 was issued to the assessee. After considering the submission of the assessee, the Learned Assessing Officer ("Ld. AO") completed the assessment u/s. 143(3) r.w.s. 144B of the Act on 30.09.2022 assessing the total income at Rs. 72,96,60,104/-. 3. Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee. Against the impugned order of Ld. CIT(A), both the assessee as well as the revenue have filed cross appeals before us. ITA No.581/Hyd/2024 (Assessee's Appeal) 4. The assessee has raised the following grounds of appeal: 1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax (Appeals) erred in holding that the scrutiny proceedings have taken place for scrutiny of all the issues whereas the Assessing officer mentioned clearly that the case is selected for scrutiny of 11 items only. 3. The learned Commissioner of Income-Tax (Appeals) erred 'in confirming the action of the Assessing officer in treating balance of 85% of the development charges of Rs. 490,16,65;407/- as the....
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....f his order which is to the following effect : "Reason of selection : i) Sale consideration of property in ITR is less than sale consideration report in Form 26QB. ii) Sale of high value immovable property. iii) Ratio of expenditure on Establishment and Administration, to Expenditure on objects of the trusts is high. iv) Large capital expenditure for charitable purposes. v) Large receipts reported by trust for charitable purposes. vi) Claim of large value refund. vii) Large receipts from other income. viii) Trust executing contracts, providing professional services, earning commission incomes or rent (verification as per proviso to section 2(15) or any other section). ix) High refund claimed by Trust. x) Large amount of income accumulated or set apart by Trust. xi) Large claim of depreciation for Trust - Whether asset itself has been claimed as application of income." 7.1 The Ld. AR further submitted that, the Ld. AO had made certain additions on account of receipt of development charges by the assessee which was not covered under the reasons for selection of the case of the assessee. Therefore, it was argued that the Ld. AO exceeded his jurisdiction by mak....
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....ble Bombay High Court in the case of City and Industrial Development Corporation of Maharashtra Limited Vs. ACIT (2023) 157 taxmann.com 603 (Bombay) and the co-ordinate bench of the Tribunal in the case of DCIT Vs. Andhra Pradesh Capital Region Development Authority in ITA nos.26 to 29/Viz/2023 dated 21.04.2023. Accordingly, the Ld. AR prayed before the bench to delete the addition made by the Ld. AO on account of development charges. 8.2 Per contra, the Ld. DR invited our attention to para no.3 of G.O. no.439 (supra) and submitted that, there was no restriction from the state government that the assessee cannot use the 85% of the collection on account of development charges. The only restriction imposed by the said G.O. no.439 (supra) was that, the assessee shall utilise 85% of the receipts to implement the provisions of master plan viz. a) traffic improvement (b) construction of bridges (c) development of green belts and parks, etc. ("specified objects") . Therefore, there was only restriction towards certain specific object where the assessee can utilise 85% of the development charges. The contention of the assessee that, the assessee has no liberty to utilise 85% of the develo....
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....ent charges. The restriction has been made for utilisation of 85% for some specified objects i.e. a) traffic improvement (b) construction of projects. (c) development of green belt and parks, etc. We have also gone through page no.23 of the paper book which is to the following effect: HYDERABAD METROPILITAN DEVELOPMENT AUTHORITY Computation of Income Assessment Year 2020-21 Assessee's version Rupees Income :- Revenue Receipts Advertisement & Hoardings 38,76,809 Income from Parks 20,96,64,229 Interest 57,66,70,227 Rental Income 12,33,26,012 Prior Period income 14,20,452 Other Receipts 62,24,669 Development Charges 5,21,67,82,555 92,11,82,398 Fees & Levies collected 54,98,82,631 5,76,66,65,185 . Assessee's income (Administration Charges) 15% 86,49,99,778 1,78,61,82,176 Application towards Charitable Purpose :- Revenue Payments Salaries &....
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....t because petitioner can only work under the control and supervision of the State Government meaning thereby petitioner cannot make / take any decisions suo motu." 8.7 On perusal of above, we found that the decision of Hon'ble Court has been given under different set of facts, where the assessee is an agent and functions as an arm of the state government. However, the facts in the present case are different. Hence, the decision of Hon'ble Court(supra) is not applicable to the issue before us. 8.8 We have also gone through the decision of co-ordinate bench of Tribunal in the case of DCIT Vs. Andhra Pradesh Capital Region Development Authority (supra), wherein at para no.8 of its order the Tribunal has held as under : "8. We have heard both the parties and perused the material available on record. It is undisputed fact that the assessee is a non-profit organisation, established for the development of urban areas by implementing the provisions of the Master Plan as per the directions of the Government of Andhra Pradesh. The assessee debited 85% of the Development Charges received to the sinking fund to meet the future formation charges as per the directions given in GO Ms.....
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....cluded that the assessee as formed under the Andhra Pradesh Urban Areas (Development) Act is bound by the directions of the Government in the collection and execution of development charges. It is also found that the assessee after getting necessary approvals and permissions from the Government of Andhra Pradesh has to expend 85% of the Development Charges collected by them to implement the provisions of the Master Plan. In view of the above discussions, we are of the considered view that the assessee being a non-profit oriented organization established for the purpose of implementing the provisions of the Master Plan is not carrying on any business activity and is only an organ of Government of Andhra Pradesh. Since the assessee could not expend 85% of the development charges during the relevant assessment year it does not warrant disallowance of the same as the expenditure shall be incurred in future years for the purpose of general public utilities. Accordingly, we allow the 7 I.T.A. No.26- 29/Viz/2023 & CO No.04-07/Viz/2023, A.Y.2014-15, 2016-17 to 2018-19 Andhra Pradesh Capital Region Development Authority, Vijayawada ground raised by the assessee and hereby set aside the orde....
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....TDS as application of income. 9.2 Per contra, the Ld. DR submitted that the TDS was primarily deducted on the sale of land. The assessee is only an agent of state government as far as the receipt of sale proceeds of land is concerned, and as such the assessee has not offered the same as its income. Therefore, no deduction of TDS should be allowed as application of income on such amount. 9.3 In rejoinder, the Ld. AR invited our attention to the details of TDS placed at page nos.24 & 25 of the paper book and submitted that the TDS in question is not entirely related to sale of land. He argued that TDS has also been deducted on other revenue receipts which have been offered as income of the assessee. Accordingly, the Ld. AR submitted that, the entire amount of TDS could not be disallowed on the ground that it relates only to sale of land. 9.4 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. There is no dispute that, in so far as the sale of land is concerned, the assessee had acted as an agent of the state government and the corresponding receipts has not been offered as income. Hence, the TDS corresponding to....
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....ied upon the orders of revenue authorities and submitted that, the claim of the assessee is liable to be rejected. 10.3 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. It has been submitted by the Ld. AR that, the assessee had availed loan from HUDCO for construction of express highway, the proceeds of which were utilized towards the object of the assessee. It has been specifically contended by the Ld. AR that in the year of utilization of loan amount, the assessee had not claimed the same as application of income. However, we found that the Ld. AO has rejected the claim of the assessee contending that the amount had already been utilized for the object in earlier year and hence could not be treated as application of income in the year of repayment. Further, the Ld. CIT(A) dismissed the appeal of the assessee on the ground that application of loan amount has already been claimed by the assessee in the year of actual utilization. We are of the considered view that, where a charitable institution utilises borrowed fund towards its object, and such utilization is not claimed as application of income in the year....
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....or to insertion of Explanation 5 to section 11(1) clearly permitted the charitable institution to set off b/f deficit of earlier year against the income of current year. Therefore, for the year under consideration, we hold that the Ld. AO has erred in denying the claim of the assessee on account of set off of b/f deficit against the income of the current year. However, we are of the considered view that, the set off of b/f deficit claimed by the assessee needs to be verified with the record of the assessee to ensure correctness and arithmetical accuracy. Accordingly, we direct the Ld. AO to verify the correctness of the amount of b/f deficit claimed by the assessee from the record and if found correct, to allow the set off of the same against the income of current year while completing the assessment. Accordingly, the ground no.7 is allowed for statistical purposes. 12. In the additional ground, the assessee argued that, the assessee has incurred total expenditure of Rs. 639,25,72,346/-. However, while completing the assessment, the Ld. AO has taken the same as Rs. 578,49,20,346/-. In this regard, we are of the considered opinion that, the matter requires factual verification from....
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....s contended that if the underline revenue has not been offered to tax, then the GST/ST paid in relation to such receipts cannot be allowed as an application for deduction. 15.2 Per contra, the Ld. AR invited our attention to Schedule III of GST Act placed at page no.128 of the paper book and submitted that, as per item no.5 of Schedule III, no GST is leviable on the sale of land. Further, it was contended that the assessee has not offered the sale proceeds of land as income, as the assessee has acted merely as an agent of the state government, with regard to collection of sale proceeds of land. However, the GST/ST paid by the assessee pertains to other service components, which have been duly offered as revenue by the assessee in its books of account. Accordingly, there is no infirmity in the order of Ld. CIT(A). 15.3 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through entry no.5 of Schedule III of GST Act placed at page no.128 of the paper book, which is to the following effect: 15.4 On perusal of above, we found that sale of land is not a taxable supply under the GST Act and hence no GST....