M/S URBAN IMPROVEMENT TRUST, Jaipur V. CIT, Ajmer

ITA 1019/JPR/2011

• Counselvise Citation: 101923114 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ROLEE AGARWAL CIT DHK
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 1019/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : ---- SECTION 12AA OF THE ACT M/S. URBAN IMPROVEMENT TRUST, AJMER CUKE VS. THE CIT AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA , ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY : MRS. ROLEE AGARWAL (CIT). LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/11/2014 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16 /01/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT, AJMER DATED 23-09-2011 CHALLENGING THE DENIAL OF REGISTRATION U/S 12AA OF THE I.T. ACT, 1961, ON THE GROUND THAT THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE AND IT HAS NO ELE MENT OF CHARITY. 2.1 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT LD. CIT DISMISSED THE APPLICATION U/S 12AA BY FOLLOWING OBSERVATION . 2 FROM THE ABOVE, IT APPEARS THAT THE TRUSTS OBJEC TS ARE NOT CHARITABLE IN NATURE. ALMOST IN EVERY ACTIVITY, THE RE IS A SCENT OF COMMERCIALIZATION / PROFIT MOTIVE. ADMITTEDLY, THE ASSESSEE IS DOING SOME ACTIVITIES LIKE HOUSING/ INFRASTRUCTURE DEVELO PMENT AND THE PUBLIC IS ALSO BENEFITED FOR THE SAME, THE APPELLAN T HAS ALREADY CHARGED IN THE FORM OF HIDDEN COST. RATHER THE ASSE SSEE IS GENERATING INCOME, SO NO CHARITY IS INVOLVED. A CHA RITABLE INSTITUTION PROVIDES SERVICES FOR CHARITABLE PURPOS ES FREE OF COST AND FOR NO GAIN AND ARE BENEFIT OF PUBLIC AT LARGE. THE ASSESSEE ACQUIRES LAND AT NOMINAL RATES AND AFTER DEVELOPING THE SAME, THE SAME LAND IS SOLD ON HIGH PROFIT WHICH CANNOT BE SA ID TO BE A CHARITABLE ACTIVITY. UNDER THE PRESENT FACTS IF REG ISTRATION IS GRANTED, THEN EVERY PRIVATE COLONIZER WILL CLAIM CH ARITY. THE FACILITIES WHICH ARE PROVIDED TO THE PLOT HOLDERS A RE INCIDENTAL TO THE COMMERCIAL ACTIVITY CARRIED OUT BY THE UIT AND IF CERTAIN FACILITIES LIKE PARKS, COMMUNITY CENTRE, ROAD, DRAI NAGE, CONSTRUCTION OF TENNIS COURT INDOOR STADIUM AND SCH OOLS ARE PROVIDED IS NOT ONLY BASIC REQUIREMENT, RATHER A TO OL OF ATTRACTING INVESTORS WHERE IN THE HIDDEN COST OF THESE FACILIT IES IS ALREADY INCLUDED. THE ABOVE FINDINGS ARE SQUARELY COVERED W ITH THE CASE OF PUNJAB URBAN PLANNING & DEVELOPMENT AUTHORITY VS. C IT REPORTED AT 103 TTJ (CHD.) 988 (2006) OF ITAT, CHANDIGARH B BENCH. THE OTHER ACTIVITIES CARRIED OUT BY UIT ARE NOT ACC ORDING TO THEIR MAJOR ACTIVITIES. THE UIT ALSO NOT PRODUCED B OOKS OF ACCOUNT AUDITE4D BY THE CHARTERED ACCOUNTANT FOR THE F.Y. 2 009-10 & 2010-11. A CERTIFICATE OF AUDIT CONDUCTED BY LOCAL FUND AUDIT HAS BEEN ENCLOSED WITH THE REPLY DATED 21-09-2011. 2.2 IT IS PLEADED THAT ORDER OF THE LD. CIT IS NOT SUSTAINABLE INASMUCH AS: (I) THE REGISTRATION HAS BEEN DENIED ON A VAGUE ALL EGATION THAT ALMOST IN EVERY ACTIVITY THERE IS A SCENT OF COMMERCIALIZATION/ PROFIT MOTIVE. (II) ASSESSEE IS AN STATUTORY ORGANIZATION UNDER TH E AEGIS OF STATE URBAN MINISTRY FOR THE DEVELOPMENT OF AJME R CITY AND . 3 CARIES OUT THE WORKS ASSIGNED BY LEGISLATURE BY WAY OF RELEVANT LAWS AND RULES. (III) THERE ARE VARIOUS ACTIVITIES WHICH ARE CONDUC TED BY THE ASSESSEE IN PUBLIC INTEREST WHICH ARE CLEARLY C HARITABLE IN NATURE, AND IT ARE NOT APPRECIATED BY THE LD. CIT IN PROPER MANNER. MERELY BECAUSE THE ACTIVITIES YIELD SURPLUS CANNOT TANTAMO UNT TO COMMERCIAL ACTIVITY AS THE SURPLUS AGAIN IS UTILIZE D FOR CHARITABLE PURPOSES. (IV) THE ANALYSIS OF VARIOUS ACTIVITIES BEING CHARI TABLE OR OTHERWISE IS IN THE DOMAIN OF THE AO WHILE FRAMING THE RELEVANT ASSESSMENT. A PLAIN READING OF SEC. 12AA(1) READS T HAT THE LD. CIT AT THE TIME OF REGISTRATION MAY INQUIRE ABOUT THE O BJECTS AND GENUINENESS OF THE ACTIVITIES OF THE INSTITUTION. THE OBJECTS ARE STATUTORY AND ACTIVITIES ARE GENUINE. THERE IS NO A DVERSE OBSERVATION EXCEPT THAT ASSESSEES AUDIT IS CONDUCT ED IN ACCORDANCE WITH STATE GOVT. RULES AND NOT BY CHARTERED ACCOUNT ANT; SUCH VAGUE OBSERVATIONS CANNOT BE HELD AGAINST THE ASSESSEE TO DISENTITLE FROM REGISTRATION U/S 12AA. 2.3 THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, THE RE GISTRATION CANNOT BE REFUSED ON THE BASIS OF VAGUE FINDINGS LIKE THE SC ENT OF COMMERCIAL ACTIVITY AND ACCOUNTS AUDIT BEING AS PER STATE GOV T. RULES AND NOT A CA. FROM THE VERIFICATION OF THE RELEVANT URBAN DEVELOP MENT RULES, IT EMERGES THAT ASSESSEE CARRIES ON VARIOUS ACTIVITIES WHICH APPEAR TO BE CHARITABLE IN NATURE. IN OUR CONSIDERED VIEW, THE L D. CIT HAS NOT APPRECIATED THE APPLICATION FOR REGISTRATION IN PRO PER PERSPECTIVE, THE . 4 ACTIVITIES OF THE ASSESSEE CAN BE JUDGED FROM THE D OCUMENTS SUBMITTED BY IT. THUS LOOKING AT THE ENTIRETY OF THE FACTS AND C IRCUMSTANCES OF THE CASE, WE ARE INCLINED TO SET ASIDE THE ISSUE BACK TO THE FILE OF THE LD. CIT TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW BY PR OVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE EXPEDITI OUSLY. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 16 /01/2 015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16 TH JANUARY, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. URBAN IMPROVEMENT TRUST, AJMER 2. IZR;FKHZ@ THE RESPONDENT- THE CIT, AJMER . 3. VK;DJ VK;QDR@ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.1019/JP/2011) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR