TaxTMI 
TaxTMI 
2025 (3) TMI 2106
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....the action of Ld. AO in holding that the assessee authority is hit by the provisions of section 13(8) r.w.s. 2(15) of the Act and the assessee authority is not entitled for the benefit of exemption under section 11, 12 & 12A and assessee is not charitable entity and has further erred in holding that the assessee is conducting its affairs on commercial lines and further erred in taxing the surplus of Rs. 77,27,50,277/- at maximum marginal rate and that too by recording incorrect facts and findings and without observing the 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 and further erred in taxing the amount of surplus of Rs. 77,27,50,277/- at maximum marginal rate, is bad in law and against the facts and circumstances of the case and without observing the principles of natural justice 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 as taxable. 3. That having regard to the ....
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.... NIL. Assessment in this case was completed u/s 143(3) at total income of Rs. 82,00,29,400/- on 11.12.2017 after denying exemption u/s 11 to the assessee. From the records, AO noted that an amount of Rs. 62,11,35,199/- was credited in Infrastructure Fund without crediting in Income & Expenditure account. AO held that the same may be credited to Income Expenditure account and expenditure on Infrastructure amounting Rs. 57,80,03,316/- was allowed. However, AO held that the same shall not be allowable for various reasons mentioned in the assessment order. 2.1 In view of the above facts and circumstances, unclaimed expenditure on infrastructure amounting Rs. 57,80,03,316/- was added to the total income of the assessee. Hence, the total income of the assessee was assessed at Rs. 1,39,80,32,716/- u/s. 147/153(3) r.w.s. 144B of the Act. 3. Against the above order, assessee appealed before the Ld. CIT(A), who vide his impugned order has dismissed the appeal of the assessee. Aggrieved with the same, assessee is now in appeal before us. 4. At the time of hearing, Ld. Counsel for the assessee submitted that as regards Ground Nos. 1 and 2 are concerned, the primary issue in the presen....
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.... order dated 12.03.2025. 4.3 As regards, Ground No. 5 and 6 are concerned, it was the further contention of the Ld. AR that these grounds are against the disallowance of contribution to AwasBandhu allegedly as payment for non-business purposes. It is submitted that contribution to AwasBandhu is allowable as application of income in view of decision of Hon'ble Jurisdictional High Court (Allahabad) in the case of CIT vs. UPSIDC dated 03.09.2012 wherein Hon'ble High Court have decided the issue in favour of assessee and the said decision has been relied upon by Ld. CIT(A) in assessee's own case for AY 2013-14 and has allowed the contribution to AwasBandhu as application of income and department has not disputed this issue in AY 2013-14. In this view of the matter, it is submitted that since assessee is eligible to benefit of section 11&12 and therefore the said disallowance does not survive. 4.4 As regards Ground No. 7 it is submitted by the Ld. AR that in view of the above discussions, the action of Ld. CIT(A) in confirming the action of Ld. AO in making the impugned additions/disallowances and passing the impugned assessment order dated 11-12-2017 is illegal, bad i....
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.... 25.01.2018 (Agra). 7. We note that the identical issues viz. Ground 1 to 4 as above, have already been decided in favour of assessee in assessee's own case for AY 2014- 15 in ITA No. 1655/Del/2018 vide order dated 12.03.2025 wherein, the Tribunal has held as under:- "7. The learned counsel for assessee has submitted that the assessee has been setup for achieving essential public services and the object 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 ITR 1 (SC). 8. The Ld. Counsel for the assessee has also submitted that Infrastructure funds are received by the assessee under the order of the Government of Uttar Pradesh and the assessee was required to use such funds as per the directions of the high-powered committee having constituted by State Government and the assessee has no control over the said funds and therefore said funds cannot be treated as taxable in the hands of the assessee. He has also submitted that in the case of CIT v.....
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....costing of EWS houses in Shatabdi Nagar Scheme wherein it can be clearly seen that KDA has given a reduction in Land Cost and not added any overhead Charges so as to make the houses affordable for the rural poor; or act of not adding any overhead charges and further reducing the cost of the houses by a further 10°% all these activities show that KDA is spending more than cost, on account of meeting its objectives for weaker section of society. These all activities are nothing but purely charitable in nature. Another major "charitable activity "of Kanpur Development Authority (KDA) is the providing development of the town of Kanpur through various development of Naveen Market and construction of multi-level parking at parade as infrastructure, providing public amenities like Multi-Level parking at various places in Kanpur, preservation-of Ganga River Bank, beautification of parks etc. I have also perused the UPUPD Act, 1973. Section 4 of the said Act provides that State Government may, by notification in the Gazette constitute for the purposes of this Act, an Authority to be called the Development Authority for any development area. The Kanpur Development Authority has ....
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....s been laid down by the Assessing Officer on page 5 of the assessment order and reads as hereunder: _ "On the Perusal of Income & Expenditure Account read with annexure B out of the total receipts only a fixed portion is credited to Income & Expenditure account the details being as under :- Head of Receipt Credited to Income and Exp. Account Total receipts Short credited in income expenditure (directly credited to infrastructure development fund) Conversion of land use 1,17,44,258.00 1,05,69,832.20 11,74,425.80 Betterment and registration 1,63,06,390.00 1,46,75,751.00 16,30,639.00 Compounding fee 5,25,66,441.00 2,62,83,220.50 2,62,83,220.00 Income from Stamp duty 21,59,42,368.00 19,43,49,131.20 2,15,94,236.80 Freehold charges 2,16,87,260.00 1,95,18,533.94 21,68,726.00 Development fee 49,24,40,032.00 44,31,96,027.75 4,92,44,003.25 Total 10,63,15,008.51 85,28,84,320.00 74,65,69,311.49 On the basis of the aforesaid chart the assessing officer proceeds to arrive at the assessed income by adding the amount shown in column 4 of the above chart against the item of addition. Be....
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....r the Government order and the same was liable to be utilized in the manner laid down in the related Government order itself. In other words, it was to be utilized only for the purposes as spelt out and specified by the State Government and the "appellant authority" has merely acted as "nodal agency", having no right, title or interest of its own in the said 'Fund'. It is also relevant to mention here that 'infrastructure fund is being utilised as per instructions of the State Government and it is for this reason that balance in the said account as on 31.3.2014 got increased to Rs. 1,76,86,50,200.17/- and it kept on fluctuating as per the instructions of the State Government. In fact, in relation to infrastructure fund the status of KDA is that of a mere nodal agency. Looking to the nature of receipts, it is stated that the appellant had never acquired any right, title or interest therein of its own, therein. The receipts stood diverted from source. However, the ground on which the disallowance has been made by the Assessing Officer, is that these receipts cannot be allowed exemption under section ll(l)(d) as benefit of exemption under section 11 itself was being denied....
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....ion of Income in earlier years. In this regard as already has been discussed and submitted herein above KDA filed its return in Form 10B after claim exemption under section 11 of the Act, after balancing the receipts with the utilization thereof and the same is fully supported by the audit report in Form 108 that was available on record. It has also been discussed herein above that KDA is NOT a commercial entity and its registration U/s 12AA remained intact and continued to be in force, even on today. Further it has been submitted applicability and scope of proviso to section 2(15) as had been inserted by Finance Act 2009 w.e.f. 1.4.2009 will not apply to KDA. KDA filed its return claiming the benefits U/s 11 and while computing the receipts and the utilisation thereof did not claim Depreciation of Assets as a utilization as is evident from the computation U/s 11 available on record. It may be pointed out that in the last few years assessments KDA has not been allowed the benefit U/s. 11. All these assessments are under various stages of litigation before authorities. Without prejudice to KDA's claim to the benefits U/s. 11 it is most humbly submitted that this addition of Rs. ....
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....gh the amount spent on acquiring such assets had been treated as application of income of the Trust in the year in which such assets were acquired. The Hon'ble IT AT Pune in the case of Parkar Medical Foundation v. Deputy Commissioner of Income- tax, Ratnagiri Circle, Ratnagiri reported in [2015] 55 taxmann.com 268 (Pune - Trib.) has also affirmed the view taken by Hon'ble Bombay High Court and held that assessee is entitled to depreciation on assets entire amount of which has been claimed as deduction on account of application for charitable purposes. The Hon'ble Rajasthan High Court in the case of Commissioner of Income Tax-II, Jodhpur vs. Krishi UpajMandiSamiti reported in [2015] 55 taxmann.com 63 (Rajasthan) held that income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable institution and its income for tax purposes is required to be determined by provisions of Section 11 of the Act of 1961 after taking into consideration provisions extending normal depreciation and deductions from its gro....
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....n of income of the Trust in the year in which such assets were acquired. The Hon'ble IT AT Pune in the case of Parkar Medical Foundation v. Deputy Commissioner of Income-tax, Ratnagiri Circle, Ratnagiri reported in [2015] 55 taxmann.com 268 (Pune Trib.) has also affirmed the view taken by Hon'ble Bombay High Court and held that assessee is entitled to depreciation on assets entire amount of which has been claimed as deduction on account of application for charitable purposes. The Hon'ble Rajasthan High Court in the case of Commissioner of Income Tax-II, Jodhpur vs. Krishi UpajMandiSamiti reported in [2015] 55 taxmann.com 63 (Rajasthan) held that Income of a charitable trust like the present assessee derived from the depreciable heads is also liable to be computed on commercial basis, however, while doing so it is to be kept in mind that ultimately assessee is a charitable Institution and its income for tax purposes is required to be determined by taking into consideration provisions of Section 11 of the Act of 1961 after extending normal depreciation and deductions from its gross income. In computing the income of a charitable institution/trust depreciation of assets ow....