COMMISSIONER OF INCOME TAX (EXEMPTIONS) V. URBAN IMPROVMENT TRUST

ITA/322/2018

AI Insights

The case involves an appeal by the Commissioner of Income Tax (Exemptions) against the Urban Improvement Trust, which pertained to the eligibility of the Trust for exemption under Section 10(20) of the Income Tax Act, 1961. The ITAT had previously allowed this exemption based on earlier High Court decisions. However, the Supreme Court had reversed these decisions, leading to the current appeal. The High Court of Rajasthan, referencing the Supreme Court's decision, concluded that the Urban Improvement Trust does not qualify as a local authority under the specified section, thus not eligible for the tax exemption claimed. The matter was remanded for further consideration of other issues not addressed due to the decision on the exemption.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 719800 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 02-08-2023
• Assessment Year: misc
• Other Referred Cases: The Income Tax Officer Vs. Urban Improvement Trust (Civil Appeal No. 10577/2018 and other connected matters)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJAT SHARMA; ARYAN SINGH; PRAKUL KHURANA
• Assessee Lawyers: SHANTANU SHARMA; BHAVANA LODHA
• Keywords: Exemption; Finance Act, 2002; Income tax appeal; Section 10(20); Urban Improvement Trust
• Section: 10(20); 12(A)(1)(b)

Judgement Text

"[2023:RJ-JP:16292-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 322/2018 Commissioner Of Income Tax (Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. ----Appellant Versus Urban Improvement Trust, UIT Building, Near CAD Circle, Kota (Raj). ----Respondent For Appellant(s) : Mr. Shantanu Sharma, Advocate with Ms. Bhavana Lodha, Advocate For Respondent(s) : Mr. Rajat Sharma, Advocate with Mr. Aryan Singh, Advocate for Mr. Prakul Khurana, Advocate HON'BLE MR. JUSTICE MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE PRAVEER BHATNAGAR Judgment / Order 02/08/2023 Heard. This appeal was admitted on following substantial questions of law:- “i. Whether on the facts and circumstances of the case and in law the ld. ITAT was right in allowing the benefit of section 10(20) of the Act, relying upon the decision of the Hon’ble High Court in the case of assessee in DB ITA No.73/2011 and 357/2011 dated 25.07.2017,inspite of the fact that the income of UIT is not exempt after insertion of explanation of section10(20) by the Finance Act, 2002 w.e.f. 01.04.2003? ii. Whether on the facts and circumstances of the case and in law the assessee would be still be held eligible for exemption u/s 10(20) of the Act [2023:RJ-JP:16292-DB] (2 of 3) [ITA-322/2018] inspite of the fact that the Hon’ble Supreme Court vide its judgment/order dated 12.10.2018has held Urban Improvement Trust not eligible for the exemption u/s 10(20)? iii. Whether on the facts and circumstances of the case and in law the Hon’ble ITAT is right in ignoring the fact that assessee failed to maintain its Books of Accounts as well as getting audited of the same in accordance to the provision of section 12(A)(1)(b) of the Act,1961?” Learned counsel for the parties would jointly submit that that the questions of law were framed by this Court keeping in view the judicial pronouncement of this Court in D.B. Income Tax Appeal Nos.73/2011 and 357/2011 dated 25.07.2017, admitting the appeal on above substantial questions of law. Learned counsel for the parties would jointly submitted that the issue raised in the present case is no longer res integra in view of the judicial pronouncement of the Hon’ble Supreme Court in the case of The Income Tax Officer Vs. Urban Improvement Trust (Civil Appeal No. 10577/2018 and other connected matters) decided on 12.10.2018. The decision of the ITAT in allowing benefit of Section 10(20) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), proceeded on the decision of this Court in the case of assessee in D.B. Income Tax Appeal Nos. 73/2011 and 357/2011. The Hon’ble Supreme Court in the case of The Income Tax Officer Vs. Urban Improvement Trust (supra) has reversed the decision of the High Court on which the ITAT relied upon and allowed the benefit of Section 10 (20) of the Act to the assessee. [2023:RJ-JP:16292-DB] (3 of 3) [ITA-322/2018] Accordingly, the question of law framed are answered in the manner that under the scheme of Rajasthan Urban Improvement Act, 1959, Urban Improvement Trust is not a local authority within the meaning of Clause (iii) of Explanation to Section 10(20) of the Act. Consequently, the order passed by the ITAT is held unsustainable in law and set aside. We, however, find that the order of ITAT as well as the Commissioner of Income Tax did not decide other issue arising for consideration in appeal on account of decision on the issue with regard to applicability of the exemption clause. The case is, therefore, remanded to CIT appeal for consideration and adjudication on other grounds raised in appeal. (PRAVEER BHATNAGAR),J (MANINDRA MOHAN SHRIVASTAVA),J Mohita /87 "