A.P.Housing Board, Hyderabad V. DIT, Hyderabad

ITA 110/HYD/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91721 (ITAT-HYDERABAD)
• Duration Of Justice: 45 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Capital asset; Gift; Charitable institution; Rule of consistency; Benefit of exemption
• Section: 12A; 12AA; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 110/HYD/2008 A.P. HOUSING BOARD, HYDERABAD PAN ALZPG0232L VS. DIRECTOR OF INCOME TAX (EXEMPTION), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHURAM REVENUE BY : SMT. G. APARNA RAO DATE OF HEARING 01-05-2015 DATE OF PRONOUNCEMENT 03 -06-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11/02/2005 PASSED BY LD. DIT(E), HYDERABAD RE JECTING ASSESSEES APPLICATION SEEKING REGISTRATION U/S 12A OF THE ACT. 2. BRIEFLY STATED, ASSESSEE IS A BOARD CONSTITUTED BY THE LEGISLATURE UNDER A.P. HOUSING BOARD ACT, 1956. ALL ALONG ASSESSEE HAD BEEN FILING ITS RETURN OF INCOME TREATING ITSEL F AS A LOCAL AUTHORITY AND CLAIMED EXEMPTION U/S 10(20) OF THE ACT. HOWEVE R, ONCE ASSESSEE LOST THE BENEFIT OF EXEMPTION AFTER AMENDM ENT OF SECTION 10(20) W.E.F. 01/04/2003, ASSESSEE MADE AN APPLICAT ION IN FORM NO. 10A ON 23/08/2004 SEEKING REGISTRATION U/S 12A OF T HE ACT. IN COURSE OF PROCEEDING FOR GRANT OF REGISTRATION, LD. DIT(E) CALLED UPON ASSESSEE TO FURNISH CERTAIN INFORMATION/EVIDENCES T O SUBSTANTIATE ITS CLAIM THAT IT IS ENGAGED IN CHARITABLE ACTIVITY. AF TER VERIFYING THE INFORMATION SUBMITTED AS WELL AS CONSIDERING THE SU BMISSIONS MADE 2 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD BY ASSESSEE, LD. DIT(E) HELD THAT EXEMPTION U/S 11 CANNOT BE A SUBSTITUTE OR ALTERNATIVE FOR EXEMPTION EARLIER GRA NTED U/S 10(20) OF THE ACT TO A LOCAL AUTHORITY. FURTHER, LD. DIT(E) H ELD THAT ASSESSEE IS MERELY ENGAGED IN CONSTRUCTION OF HOUSING PROJECTS AND SELLING THEM TO PROSPECTIVE BUYERS, THEREFORE, THE ACTIVITY OF A SSESSEE IS MORE OR LESS LIKE ANY OTHER REAL ESTATE DEVELOPER/BUILDER, HENCE, THE ACTIVITY/OBJECT OF ASSESSEE CANNOT BE CONSIDERED TO BE A CHARITABLE IN NATURE. ON THE AFORESAID BASIS, LD. DIT(E) HELD TH AT ASSESSEE IS NOT ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT. 3. BEING AGGRIEVED OF THE AFORESAID ORDER OF LD. DI T(E), ASSESSEE FILED APPEAL BEFORE THE ITAT. HOWEVER, APPEAL WAS F ILED WITH A DELAY OF 1013 DAYS. THOUGH, ASSESSEE BEFORE THE TRIBUNAL PLEADED FOR CONDONATION OF DELAY, BUT, THE ITAT ON CONSIDERING SUBMISSIONS OF ASSESSEE ALONG WITH THE CAUSE SHOWN FOR DELAY WERE NOT SATISFIED WITH THE REASON SHOWN AND ACCORDINGLY DISMISSED THE APPE AL OF ASSESSEE VIDE ORDER DATED 14/05/2010 PASSED IN ITA NO. 110/H YD/2008 WITHOUT CONDONING THE DELAY. THE AFORESAID ORDER OF THE ITA T WAS CHALLENGED BY ASSESSEE BEFORE THE HONBLE A.P. HIGH COURT. THE HONBLE HIGH COURT AFTER CONSIDERING THE SUBMISSIONS OF THE PART IES CONDONED THE DELAY AND DIRECTED ITAT TO DECIDE THE APPEAL OF ASS ESSEE ON MERIT. THUS, AT THE DIRECTION OF THE HONBLE A.P. HIGH COU RT, THE APPEAL IS BEING REHEARD. 4. LD. AR MORE OR LESS REITERATING THE SUBMISSIONS MADE BEFORE LD. DIT(E) STATED THAT ASSESSEE A STATUTORY BODY HAS BE EN CREATED FOR PROVIDING HOUSING FACILITIES TO DIFFERENT INCOME GR OUPS AND AS SUCH IS DOING A CHARITABLE ACTIVITY OF MITIGATING THE HOUSI NG PROBLEM OF THE GENERAL PUBLIC. LD. AR REFERRING TO THE OBJECTS OF ASSESSEE BY TAKING US THROUGH DIFFERENT PROVISIONS OF THE A.P. HOUSING BOARD ACT SUBMITTED, ASSESSEE IS PROVIDING HOUSING FACILITY T O THE GENERAL PUBLIC AT MUCH CONCESSIONAL RATE, HENCE, CANNOT BE COMPARE D WITH PRIVATE REAL ESTATE DEVELOPERS/BUILDERS WHOSE SOLE MOTTO IS TO EARN PROFIT 3 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD WHEREAS ASSESSEE IS NOT CARRYING ON ITS ACTIVITY ON LY FOR PROFIT MOTIVE. CONTESTING THE REASONING OF LD. DIT(E) ON WHICH REG ISTRATION WAS DENIED, LD. AR SUBMITTED, ONLY BECAUSE ASSESSEE EAR LIER WAS CLAIMING BENEFIT U/S 10(20) AS A LOCAL AUTHORITY THAT CANNOT BE A GROUND TO HOLD THAT ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11, HENCE, NOT ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT. LD. AR SUBMITT ED, THE REASONING ON WHICH LD. DIT(E) DENIED REGISTRATION TO ASSESSEE AR E NOT AT ALL RELEVANT, HENCE, ORDER OF LD. DIT(E) DESERVES TO BE SET ASIDE. 5. LD. DR, ON THE OTHER HAND, STRONGLY RELYING UPON THE REASONINGS OF LD. DIT(E) SUBMITTED BEFORE US, THE NATURE OF AC TIVITIES CARRIED ON BY ASSESSEE WOULD REVEAL NO ROOM FOR DOUBT THAT IT IS ONLY ENGAGED IN SELLING HOUSES TO THE GENERAL PUBLIC AT A PRICE LIK E ANY OTHER BUILDER/DEVELOPER. THUS, THERE IS NO CHARITY INVOLV ED IN SUCH ACTIVITY. LD. DR SUBMITTED, WHILE CARRYING OUT SUCH ACTIVITY, ASSESSEE IS ALSO DERIVING PROFIT THOUGH AT A LESSER FIGURE THAN THE PROFIT OF BUILDERS/DEVELOPERS, BUT, THAT CANNOT TAKE AWAY FRO M THE BASIC FACT THAT ASSESSEE IS ENGAGED IN A COMMERCIAL ACTIVITY A ND DERIVING PROFIT THEREFROM. THEREFORE, ASSESSEE IS NOT BEING A TRUST /INSTITUTION ENGAGED IN CHARITABLE ACTIVITY OR CREATED FOR CHARI TABLE PURPOSE IS NOT ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT. IN SU PPORT OF HER CONTENTION, LD. DR RELIED ON THE FOLLOWING DECISION S: 1. JALANDHAR DEVELOPMENT AUTHORITY VS. CIT [2009] 1 24 TTJ (ASR.) 598 2. PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY VS. CIT, [2006] 103 TTJ 988 3. AP STATE HOUSING CORPORATION LTD. VS. DIT(E), IT A NO. 1845/H/12, DT. 19/04/2013. 6. IN THE REJOINDER, LD. AR SUBMITTED, DECISIONS RE LIED UPON BY LD. DR ARE FULLY DISTINGUISHABLE AS THEY DO NOT RELATE TO HOUSING BOARD AND UNLIKE ASSESSEE THEY ARE ENGAGED IN VARIOUS OTH ER ACTIVITIES APART FROM BUILDING HOUSING PROJECTS. FURTHER, LD. AR SUB MITTED, THERE ARE MANY CASES WHERE REGISTRATION U/S 12A HAS BEEN GRAN TED TO 4 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD AUTHORITIES UNDERTAKING SIMILAR ACTIVITY. IN SUPPOR T OF SUCH PROPOSITION, LD. AR RELIED UPON THE FOLLOWING DECISIONS: 1. RAJASTHAN HOUSING BOARD VS. CIT, 51 SOT 383 2. MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORI TY VS. ADIT(E), 58 SOT 196 3. JODHPUR DEVELOPMENT AUTHORITY VS. CIT, 145 TTJ ( JD) 221 FURTHER, LD. AR RELYING UPON A DECISION OF ITAT, MU MBAI IN CASE OF CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHA RASHTRA LTD. VS. ACIT, 2012, 138 ITD 381 (MUM.) SUBMITTED BEFORE US, HOUSING BOARD IS ACTUALLY CARRYING ON THE ACTIVITY OF BUILDING HO USING PROJECTS AS AN AGENT OF THE STATE GOVERNMENT, HENCE, IT CANNOT BE SAID THAT ACTIVITIES UNDERTAKEN BY ASSESSEE ARE OF COMMERCIAL NATURE. TH US, IT WAS SUBMITTED BY LD. AR, ASSESSEE , SINCE, IS CARRYING OUT CHARITABLE ACTIVITY IS ELIGIBLE FOR REGISTRATION U/S 12A OF TH E ACT. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY APP LIED OUR MIND TO THE DECISIONS CITED BY BOTH THE PARTIES. ON PERUSAL OF THE A.P. HOUSING BOARD ACT AS WELL AS OTHER MATERIALS ON REC ORD, IT IS SEEN THAT THE AP HOUSING BOARD HAS BEEN CREATED FOR THE PURPO SE OF DEVELOPING HOUSING PROJECTS AND SELLING THEM TO DIFFERENT INCO ME GROUPS, SUCH AS, LOWER INCOME GROUP (LIG), MIDDLE INCOME GROUP (MIG) AND HIGHER INCOME GROUP (HIG). IT IS ALSO A FACT ON RECORD THA T ASSESSEE DOES NOT SELL HOUSING UNITS TO THE GENERAL PUBLIC AT COS T-TO-COST BASIS, BUT, CERTAINLY AT A PROFIT. THOUGH, IT MAY BE A FACT THA T COMPARED TO THE PRIVATE BUILDERS/DEVELOPERS, PROFIT RATIO OF ASSESS EE IS AT A LOWER LEVEL. HOWEVER, THAT MAY BE DUE TO THE REASON THAT ASSESSEE BEING A STATUTORY AUTHORITY, GETS SOME CONCESSIONS FROM THE GOVERNMENT ON ACCOUNT OF TRANSFER OF LAND AND TOWARDS REGISTRATIO N OF THE PROPERTY IN THE NAME OF BUYERS AS FAR AS STAMP DUTY IS CONCERNE D, AS A RESULT OF WHICH, THE PRICE CHARGED FOR THE HOUSING UNIT TO TH E PROSPECTIVE BUYERS IS LESSER THAN COMPARED TO THE PRIVATE BUILD ERS/DEVELOPERS. HOWEVER, THAT DOES NOT TAKE AWAY FROM THE FACT THAT ASSESSEE IS 5 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD PRINCIPALLY ENGAGED IN A COMMERCIAL ACTIVITY WHEREI N NO CHARITY IS INVOLVED. AS CAN BE SEEN, LD. DIT(E) HAS DENIED RE GISTRATION TO ASSESSEE BASICALLY FOR TWO REASONS. FIRSTLY, BECAUS E ASSESSEE EARLIER WAS AVAILING EXEMPTION AS A LOCAL AUTHORITY U/S 10( 20), HENCE, IT CANNOT MAKE ALTERNATIVE CLAIM U/S 11 OF THE ACT FOR CLAIMING EXEMPTION AS TRUST OR INSTITUTION. THE SECOND REASO NING IS, THE ACTIVITY CARRIED ON BY ASSESSEE BEING PURELY COMMERCIAL NATU RE, IT CANNOT BE CONSIDERED AS A CHARITABLE ACTIVITY. AS FAR AS THE FIRST REASONING OF LD. DIT(E) IS CONCERNED, WE DO NOT AGREE WITH THE SAME. ON CAREFUL READING OF THE RELEVANT STATUTORY PROVISIONS WE DO NOT FIND ANY BAR EITHER U/S 12A OR U/S 11 TO PREVENT AN INSTITUTION LIKE ASSESSEE FROM GETTING REGISTERED U/S 12A. HOWEVER, FOR BECOMING E LIGIBLE FOR REGISTRATION U/S 12A ASSESSEE HAS TO FULFILL THE CO NDITIONS MENTIONED THEREIN, THE FIRST OF WHICH IS ASSESSEE MUST HAVE B EEN CREATED FOR CHARITABLE PURPOSE. THE EXPRESSION CHARITABLE PURP OSE HAS BEEN DEFINED U/S 2(15) OF THE ACT AND IT IS INCLUSIVE ON E. AS PER THE SAID PROVISION, CHARITABLE PURPOSE INCLUDES EDUCATION, M EDICAL RELIEF, RELIEF TO POOR OR ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY. IN THE PRESENT CASE, AS HELD BY LD. DIT(E) ASSESSEE IS MERELY ENGAGED IN THE ACTIVITY OF BUILDING HOUSING PROJECTS AND SE LLING THEM TO THE PROSPECTIVE BUYERS HAVING A DIFFERENT ECONOMIC STAT US. THUS, THE ACTIVITIES OF ASSESSEE IS IN NO WAY DIFFERENT FROM THE ACTIVITIES CARRIED ON BY A PRIVATE BUILDER/DEVELOPER ENGAGED IN SIMILA R ACTIVITY OF BUILDING HOUSING PROJECTS AND SELLING THEM TO PROSP ECTIVE CUSTOMERS. THOUGH, IT MAY BE A FACT THAT ASSESSEE IS ABLE TO S ELL HOUSING PROJECTS AT A LESSER COST DUE TO SOME CONCESSIONS GRANTED BY GOVERNMENT, BUT, THAT ITSELF CANNOT BE CONSIDERED TO BE A CHARI TABLE ACTIVITY AS ASSESSEE IS DERIVING PROFIT FROM SUCH ACTIVITY OF S ELLING HOUSING PROJECTS. IT IS NOT THE CASE OF ASSESSEE THAT IT IS PROVIDING SUCH HOUSING PROJECTS EITHER FREE OF COST OR ON COST TO COST BASIS. THAT BEING THE CASE, ASSESSEE HAS TO BE TREATED AT PAR W ITH ANY OTHER PRIVATE BUILDER/DEVELOPER INVOLVED IN SUCH ACTIVITY . MOREOVER, THE ACTIVITY OF THE ASSESSEE IF AT ALL CAN BE CONSIDERE D TO BE FOR CHARITABLE 6 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD PURPOSE, IT WILL COME WITHIN THE RESIDUARY CLAUSE ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY. HOWEVER, THE 1 ST PROVISO TO SECTION 2(15) DEBARS ADVANCEMENT OF ANY OTHER OBJECT OF GEN ERAL PUBLIC UTILITY FROM BEING CONSIDERED TO BE A CHARITABLE PURPOSE, I F IT INVOLVES CARRYING OF ANY ACTIVITY IN THE NATURE OF TRADE, CO MMERCE OR BUSINESS OR ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR CONSIDERATION. FURTHE R, ON GOING THROUGH THE MATERIALS ON RECORD THERE CANNOT BE ANY DOUBT THAT ASSESSEE IS ENGAGED IN A PURELY COMMERCIAL ACTIVITY AND THE PRE DOMINANT OBJECT OF THE ASSESSEE IS TO EARN PROFIT. THEREFORE, RESTRICT IONS IMPOSED UNDER THE FIRST PROVISO TO SECTION 2(15) CLEARLY APPLY TO ASSESSEE. IN FACT, ITAT, HYDERABAD BENCH WHILE CONSIDERING REFUSAL OF REGISTRATION U/S 12A OF THE ACT TO AP HOUSING CORPORATION LTD., WHIC H IS MORE OR LESS INVOLVED IN SIMILAR ACTIVITY AS ASSESSEE, FOLLOWED ITS OWN DECISION IN CASE OF TIRUPATHI URBAN DEVELOPMENT AUTHORITY AND U PHELD THE REJECTION OF ASSESSEES APPLICATION FOR GRANT OF RE GISTRATION U/S 12A OF THE ACT. FOR BETTER CLARITY, THE FINDING OF ITAT IN CASE OF AP STATE HOUSING CORPORATION LTD. VS. DIT(E) (SUPRA) IS EXTR ACTED HEREUNDER IN ITS ENTIRETY. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORD AND GONE THROUGH THE ORDER OF THE DIT(E). IN THIS CONNECTION , WE REFER TO THE DECISION OF THE COORDINATE BENCH B, WHERE THE AM WAS THE A UTHOR OF THE ORDER, IN ITA NO. 230/H/10 FOR AY 2003-04 IN TIRUPATHI URBAN DEVELOPMENT AUTHORITY, TIRUPATHI ORDER DATED 28/03/2013 WHEREIN THE COORDINATE BENCH HELD AS UNDER: 10. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED O RDER OF THE COMMISSIONER OF INCOME-TAX AND OTHER MATERIAL ON RE CORD. ADMITTEDLY, THE ASSESSEE HAS BEEN CONSTITUTED BY THE GOVERNMENT OF ANDHRA PR ADESH UNDER ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975. S.3 OF THE SAI D ACT ENABLING THE CONSTITUTION OF AN URBAN DEVELOPMENT AUTHORITY, TO THE EXTENT RELEV ANT FOR OUR PURPOSE, READS AS FOLLOWS- 3. CONSTITUTION OF URBAN DEVELOPMENT AUTHORITY:- ( 1) AS SOON AS MAY BE AFTER AN URBAN AREA OR A GROUP OF URBAN AREA IS DEC LARED TO BE A DEVELOPMENT AREA, UNDER SUB-SECTION (1) OF SECTION 13 THE GOVER NMENT SHALL, BY NOTIFICATION, CONSTITUTE FOR THE SAID DEVELOPMENT AREA, AN URBAN DEVELOPMENT AUTHORITY WITH EFFECT FROM SUCH DATE AS MAY BE SPECIFIED THEREIN. 7 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD (2) (3)EVERY AUTHORITY SO CONSTITUTED SHALL BE A BODY C ORPORATE BY THE NAME OF THE DEVELOPMENT AREA FOR WHICH IT IS CONSTITUTED HAVING PERPETUAL SUCCESSION AND A COMMON SEAL WITH POWER TO ACQUIRE, HOLD AND DISPOSE OF PROPERTY, BOTH MOVABLE, IMMOVABLE AND TO CONTRACT; AND SHALL BY TH E SAID NAME SUE AND BE SUED. SECTION 5 OF THE SAID ACT DEALING WITH THE OBJECTS AND POWERS OF AN AUTHORITY SO CONSTITUTED, READS AS FOLLOWS- 5. OBJECTS AND POWERS OF THE AUTHORITY - THE OBJEC T OF AUTHORITY SHALL BE TO PROMOTE AND SECURE THE DEVELOPMENT OF ALL OR ANY OF THE AREAS COMPRISED IN THE DEVELOPMENT AREA CONCERNED ACCORDING TO PLAN AND FO R THAT PURPOSE, THE AUTHORITY SHALL HAVE THE POWER TO ACQUIRE, BY WAY O F PURCHASE OR OTHERWISE, HOLD, MANAGE, PLAN, DEVELOP AND MORTGAGE OR OTHERWI SE DISPOSE OF LAND AND OTHER PROPERTY, TO CARRY OUT BY OR ON ITS BEHALF BU ILDING, ENGINEERING, MINING AND OTHER OPERATIONS, TO EXECUTE WORKS IN CONNECTION WI TH SUPPLY OF WATER AND ELECTRICITY, DISPOSAL OF SEWERAGE AND CONTROL OF PO LLUTION, OTHER SERVICES AND AMENITIES AND GENERALLY TO DO ANYTHING NECESSARY OR EXPEDIENT FOR PURPOSES INCIDENTAL THEREOF. (2) THE AUTHORITY MAY, FOR THE PURPOSE OF EFFICIENT PERFORMANCE OF ITS FUNCTIONS, CONSTITUTE AS MANY COMMITTEES AS IT THIN KS FIT, IN SUCH MANNER AS MAY BE PRESCRIBED, AND PROVIDE BY REGULATIONS MADE IN THIS BEHALF FOR RULES OF PROCEDURE AT THE MEETING OF THE COMMITTEES AND ALLO WANCES TO MEMBERS THEREOF. AS NOTED ABOVE, THE TRIBUNAL, IN ITS EARLIER ROUND HAS SET ASIDE THE MATTER TO THE FILE OF THE COMMISSIONER OF INCOME-TAX FOR CONSIDER ATION OF THE ASSESSEES APPLICATION FOR REGISTRATION UNDER S.12AA OF THE AC T AFRESH, IN THE LIGHT OF THE CASE-LAW IN FAVOUR AND AGAINST THE ASSESSEE, BROUGH T TO ITS NOTICE, AS IN GUJARAT MARITIME BOARD (SUPRA) AND ADITYAPUR INDUSTRIAL ARE A DEVELOPMENT AUTHORITY (SUPRA). 11. IN THE FRESH ROUND OF PROCEEDINGS BEFORE HIM, AFTER TAKING NOTE OF THE ABOVE TWO DECISIONS, THE COMMISSIONER OF INCOME-TAX FOLLOWED THE DECISION OF PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY V/S. CIT ( SUPRA), IN WHICH CASE ALSO, THE ASSESSEE WAS AN URBAN DEVELOPMENT AUTHORITY CONSTIT UTED UNDER PUNJAB REGIONAL AND TOWN PLANNING AND DEVELOPMENT ACT, 1995, WHICH IS A NALOGOUS TO ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975 UNDER WHICH THE ASSESSEE BEFORE US WAS CONSTITUTED, AND DECLINED TO GRANT REGISTRATION TO THE ASSESSEE, VIDE ORDER DATED 16.12.2009. IN THAT CASE OF PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY (SUPRA), FOLLOWED BY THE COMMISSIONER OF INCOME-TAX IN THE I MPUGNED ORDER, THE CHANDIGARH BENCH OF THE TRIBUNAL HAS HELD AS FOLLOWS- 4. IN THE PRESENT APPEAL THERE IS NO DISPUTE TO TH E FACT THAT THE ASSESSEE MOVED APPLICATION IN FORM NO. 10A AND FURNISHED RELEVANT INFORMATION TO THE LEARNED. ASSTT. CIT, THERE IS ALSO NO DISPUTE THAT THE ASSESSEE WAS CONSTITUTED UNDER THE ACT OF THE GOVERNMENT FOR MAKING BETTER PLANNING AND REGULATIN G DEVELOPMENT AND USE OF LAND IN PLANNING AREAS DELINEATED FOR THE PURPOSE, PREPARAT ION OF REGIONAL PLANS/MASTER PLANS AND IMPLEMENTATION THEREOF AND ALSO FOR GUIDING AND DIRECTING THE PLANNING AND DEVELOPMENT PROCESS IN THE STATE. THE MAJOR THRUST OF ARGUMENT ON BEHALF OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT PUDA IS OF GENERAL PUBLIC UTILITY AND WAS 8 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD ESTABLISHED TO SATISFY THE NEED FOR HOUSING ACCOMMO DATION OF VARIOUS SECTIONS OF THE PEOPLE OF PUNJAB AND SPECIALLY FOR PLANNING AND DEV ELOPMENT IN THE CITIES, TOWN AND VILLAGES AND IS OF CHARITABLE NATURE. 5. BEFORE COMING TO ANY CONCLUSION, WE ARE SUPPOSED TO SEE THE MEANING OF THE WORD 'CHARITABLE PURPOSE' WHICH HAS BEEN DEFINED IN SECT ION 2(15) OF THE ACT WHICH INCLUDES RELIEF TO THE POOR, EDUCATION, MEDICAL RELIEF AND A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. A STRONG CONTENTION WAS RAI SED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE/PUDA IS ALSO EXECUTING T HE DEVELOPMENT OF FOLLOWING WORKS/INFRASTRUCTURES: (A) DEVELOPMENT OF REHRI MARKET (B) WATER SUPPLY AND SEWERAGE (C) DEVELOPMENT OF SPORTS COMPLEXES (D) BRIDGES (E) BUS QUEUE SHELTERS (F) BUS STANDS (G) SWIMMING POOLS (H) COMMUNITY CENTRES (I) PUBLIC TOILETS (J) DEVELOPMENT OF PARKS (K) CREMATION GROUNDS (L) CONSTRUCTION OF SCHOOLS, ETC. REGARDING THE PURPOSE OF THE ACT, WHICH IS AVAILABL E AT P. 13 OF THE PAPER BOOK OF THE ASSESSEE AND TO WHICH OUR ATTENTION WAS ALSO DRAWN, IT SPEAKS ABOUT VARIOUS AMENITIES AND UTILITIES AS HAS BEEN MENTIONED IN SECTION 2(B) OF THE SAID ACT. THE LEARNED COUNSEL FOR THE ASSESSEE DURING ARGUMENT TOOK A STR ONG PLEA THAT ON IDENTICAL FACTS REGISTRATION UNDER SECTION 12A OF THE ACT WAS ACCOR DED TO PATIALA URBAN PLANNING & DEVELOPMENT AUTHORITY, PATIALA, VIDE ORDER UNDER SE CTION 12AA OF THE ACT, DT. 28TH SEPT., 2005 BY THE CIT, PATIALA, THE OBJECTS OF WHI CH ARE ' IDENTICAL TO THE PRESENT ASSESSEE. IF THE ACT UNDER WHICH THE ASSESSEE WAS C ONSTITUTED IS ANALYSED, IT INCLUDES THE STATE OF PUNJAB EXCLUDING PATIALA. SHRI AJAY VO HRA CONTENDED THAT IT CAN BE SAID THAT PATIALA AUTHORITY IS PART OF THE STATE AND WHE N REGISTRATION HAS BEEN GRANTED TO PATIALA AUTHORITY, THEN NO TWO YARDSTICKS SHOULD BE ADOPTED. AT THE OUTSET, WE ARE OF THE VIEW THAT WE ARE NOT AGREEABLE WITH THE CONTENTION OF THE LEARNED COUNSEL BECAUSE IF THE INTENTION OF CREATING PATIALA AUTHORITY WAS THE SAME THEN THERE WAS NO NEED OF ITS CREATION AS THE SAME OBJECTS WOULD HAVE BEEN FULFIL LED BY THE BIGGER UNIT, I.E., THE ASSESSEE. AT THE SAME TIME, RES JUDICATA IS NOT APP LICABLE IN INCOME-TAX PROCEEDINGS. WE DO NOT WANT TO COMMENT AS TO WHY AND HOW THE REG ISTRATION WAS GRANTED TO PATIALA AUTHORITY AS THE SAME IS NOT PENDING BEFORE US FOR ADJUDICATION. RELIANCE CAN BE PLACED UPON THE DECISION PRONOUNCED BY THE HON'BLE APEX CO URT IN THE CASE OF DISTRIBUTORS (BARODA) (P) LTD. V. UNION OF INDIA AND ORS. WHEREI N THE HON'BLE APEX COURT HELD THAT 'IT IS ALMOST AS IMPORTANT THAT THE LAW SHOULD BE SETTL ED PERMANENTLY AS THAT IT SHOULD BE SETTLED CORRECTLY BUT THERE MAY BE CIRCUMSTANCES WH ERE PUBLIC INTEREST DEMANDS THAT THE PREVIOUS DECISION BE REVIEWED AND RECONSIDERED. THE DOCTRINE OF STARE DECISES SHOULD NOT DETER THE COURT FROM OVERRULING AN EARLI ER DECISION, IF IT IS SATISFIED THAT SUCH DECISION IS MANIFESTLY WRONG OR PRECEDES UPON A MIS TAKEN ASSUMPTION IN REGARD TO THE EXISTENCE OR CONTINUATION OF A STATUTORY PROVISION OR IS CONTRARY TO ANOTHER DECISION OF THE COURT.' HOWEVER, TWO VIEWS REASONABLY MAY BE PO SSIBLE. PERPETUATION OF ERROR IS NOT A HEROISM. HOWEVER, WE MAKE IT CLEAR THAT THIS OBSERVATION OF OURS SHOULD NOT BE TREATED TO BEAR ANY EFFECT IN THE CASE OF PATIALA A UTHORITY. AT THE SAME TIME, THE ORDER PASSED BY A LOWER AUTHORITY IS NOT BINDING ON THE T RIBUNAL. HOWEVER, IT MAY BE A GOOD ARGUABLE POINT BY THE PARTIES. THIS ISSUE REQUIRES DELIBERATION FROM A DIFFERENT A NGLE WHETHER THE ASSESSEE WAS CONSTITUTED TO PROVIDE ANY CHARITY TO THE PUBLIC AT LARGE OR TO SATISFY THE NEEDS FOR HOUSING ACCOMMODATION FOR THE PEOPLE OF PUNJAB AND ALSO PLANNING AND DEVELOPMENT OF THE CITIES, TOWNS AND VILLAGES OR WHETHER THE DE VELOPMENT IN SUCH A WAY IS OF CHARITABLE NATURE. A PLEA WAS RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT FUNDS ARE PROVIDED BY THE PUNJAB GOVERNMENT OR GENERATED BY THE ASSESSEE ITSELF. TO GENERATE ITS FUNDS FOR CARRYING OUT ITS OBJECTS, TH E ASSESSEE IS ACQUIRING LANDS, DEVELOPING THEM AND SELLING THE PLOTS TO THE GENERA L PUBLIC WHO APPLY FOR THE SAME. EVEN THE ECONOMICALLY WEAKER STRATA OF THE SOCIETY IS GENERALLY APPLYING. IT IS NOT THE 9 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD CASE THAT THE ASSESSEE IS ALLOTTING HOUSES TO THE P OOR MASSES FREE OF COST. THE HON'BLE APEX COURT IN THE CASE OF ASSTT. CIT V. THANTHI TRU ST (2001) 165 CTR (SC) 681 : (2001) 247 ITR 785 (SC) HAS DELIBERATED UPON THE ISSUE OF CHARITABLE PURPOSES WHEREIN THE FOUNDER OF A DAILY NEWSPAPER CREATED A TRUST IN MAR CH, 1954 AND THE OBJECTS OF THE TRUST WERE ORIGINALLY TO ESTABLISH NEWSPAPER AS AN ORGAN OF EDUCATED PUBLIC OPINION FOR THE TAMIL READING PUBLIC. IN JULY, 1957, A SUPPLEMENTAR Y DEED MAKING THE TRUST IRREVOCABLE AND ANR. SUPPLEMENTARY DEED FOR ESTABLISHING AND RU NNING A SCHOOL/COLLEGE FOR TEACHING JOURNALISM WERE ADDED. THE QUESTION BEFORE THE HON' BLE COURT WAS WHETHER THE INCOME OF THE TRUST WAS EXEMPT FROM INCOME-TAX DURING THE RELEVANT PERIOD, THE HON'BLE APEX COURT WHILE COMING TO A PARTICULAR CONCLUSION REVER SED THE DECISION OF THE HON'BLE HIGH COURT OF MADRAS AND HELD THAT THE TRUST DID NOT FAL L WITHIN THE PROVISIONS OF SECTION 11(4A), AS IT THEN STOOD, AND WAS NOT ENTITLED TO E XEMPTION FROM TAX. THE HON'BLE APEX COURT ALSO CONSIDERED VARIOUS JUDI CIAL PRONOUNCEMENTS WHICH WERE REFERRED TO IT BY THE RESPECTIVE COUNSEL AS ARE AVA ILABLE IN THE SAID ORDER SPECIALLY AT P. 787. HOWEVER, THERE IS A MAJOR SHIFT IN THE LAW WIT H REGARD TO INSTITUTIONS WHO ARE CLAIMING CHARITIES. IT IS A WELL KNOWN FACT THAT IN SOME OF THE SITUATIONS THE PROVISIONS OF LAW IS MISUSED IN THE NAMES OF CHARITIES. IF AN EXP ANDED/BROADER LATITUDE IS EXTENDED TO THE WORD CHARITY, THEN THERE ARE SO MANY INSTITUTIO NS/DEPARTMENTS WHO WILL TRY TO COME UNDER THE UMBRELLA OF THIS PROVISION TO MISUSE THE PROVISION. THEREFORE, FOR THE BROAD DEVELOPMENT OF THE NATION/SOCIETY A STRICT AND POSI TIVE VIGIL IS REQUIRED SO THAT THE PROVISION CAN BE SAVED FROM ITS MISUSE IN ANY MANNE R. WE ARE AWARE THAT NO ACTIVITY CAN BE CARRIED ON EFFICIENTLY, PROPERLY UNLESS AND UNTIL IT IS CARRIED OUT ON BUSINESS PRINCIPLE BUT IT DOES NOT MEAN THAT THE PROVISION I S MISUSED IN ANY MANNER UNDER THE GARB OF CHARITY AND ANY INSTITUTION BE ALLOWED TO B ECOME RICHER AND RICHER UNDER THE GARB OF CHARITY BY MAKING IT A NON-TAX PAYABLE ORGA NIZATION. IN THE CASES OF ADDL. CIT V. SURAT SILK CLOTH MANUFACTURERS ASSOCIATION AND CIT V. BAR COUNCIL OF MAHARASHTRA , IT WAS HELD THAT WHAT IS PREDOMINANT OBJECT OF THE ACT IVITY- WHETHER, IT IS TO CARRY OUT A CHARITABLE PURPOSE AND NOT TO EARN PROFIT-THE PURPO SE SHOULD BE THAT IT SHOULD NOT LOSE ITS CHARITABLE CHARACTER- THE MAJOR THRUST OF THE LEARNED COUNSEL FOR THE ASS ESSEE IS THAT PUDA IS OF GENERAL PUBLIC UTILITY AS IT SATISFIES THE NEED FOR HOUSING ACCOMMODATION FOR THE SECTION OF THE PEOPLE OF STATE OF PUNJAB AND IS ALSO DOING PLANNIN G AND DEVELOPMENT OF THE CITIES, TOWNS AND VILLAGES. WE ARE NOT AGREEABLE WITH THE A RGUMENT OF THE LEARNED COUNSEL BECAUSE A CHARITABLE INSTITUTION PROVIDES SERVICES FOR CHARITABLE PURPOSES FREE OF COST AND NOT FOR A GAIN. IN THE PRESENT SCENARIO, THE SI MILAR ACTIVITIES ARE PERFORMED BY BIG COLONIZERS/DEVELOPERS WHO ARE EARNING A HUGE PROFIT . IF THIS REGISTRATION IS GRANTED, THEN WE WILL OPEN A PANDORA BOX AND ANYBODY WILL CLAIM T HE EXEMPTION FROM TAX. IF THE ACCOUNTS OF THE ASSESSEE ARE ANALYSED, IT HAS TURNE D INTO A HUGE PROFIT-MAKING AGENCY FOR WHICH IT IS TAKING MONEY FROM THE GENERAL PUBLI C. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT NO CHARITY IS INVOLVED AND IF ANY INSTITU TION OF PUBLIC IMPORTANCE LIKE SCHOOLS, COMMUNITY CENTERS ARE CREATED/DEVELOPED, THE ASSESS EE IS CHARGING THE COST OF IT FROM THE PUBLIC AT LARGE AND THE MONEY IS COMING FROM TH E COFFER OF THE GOVERNMENT. IT CAN BE SAID THAT OBJECTS/ACTIVITIES OF THE ASSESSEE ARE MORE OF COMMERCIALIZED NATURE AND WE DO NOT FIND ANY CHARITY IN IT. AT THE SAME TIME, IF THESE FACILITIES ARE NOT PROVIDED, THEN NOBODY WILL PURCHASE A PLOT. IT CAN BE SAID TH AT IT IS A MEANS OF ATTRACTING THE PEOPLE SO THAT MAXIMUM PEOPLE MAY APPLY FOR THE SAM E AND THE HIDDEN COST IS ALREADY ADDED, SO NO CHARITY IS INVOLVED. AT BEST, THE ASSE SSEE CAN BE SAID TO BE AN AUTHORITY CREATED TO HELP IT TO ACHIEVE CERTAIN OBJECTS. IT C AN BE SAID THAT IT IS THE DUTY OF THE GOVERNMENT TO CREATE/PROVIDE ALL THESE FACILITIES T O PUBLIC AT LARGE, WHICH IS BEING DONE THROUGH HIS AGENCY IN A PARTICULAR AREA. AT THE SAM E TIME, THE FUNDS WHICH ARE PROVIDED TO THE ASSESSEE BY THE GOVERNMENT IS AGAIN A PUBLIC MONEY OR GENERATED FROM THE PUBLIC ITSELF, SO WHERE IS THE CHARITY? IF THE ACTI VITIES OF THE ASSESSEE AND THE ARGUMENTS OF BOTH THE LEARNED COUNSEL ARE PUT IN A JUXTAPOSIT ION, IT CAN BE SAID THAT THE OBJECTS OF THE ASSESSEE, THOUGH CLAIMED TO BE CHARITABLE, BUT ACTUALLY ARE OF PURELY COMMERCIAL NATURE WHERE PROFIT MOTIVE IS INVOLVED. IT IS A KNO WN FACT THAT THE ASSESSEE IS ACQUIRING THE LAND AT VERY LOW PRICES AND SELLING THE SAME LA ND ON VERY HIGHER RATES AND IS EARNING A PROFIT THEREFROM. A NEW TREND HAS ALSO EM ERGED THAT PUDA, I.E., THE ASSESSEE HAS STARTED AUCTIONING THE PLOTS BY WAY OF BIDDING AT THE MARKET RATE AND SOMETIMES MORE THAN THAT AND CHARGING INTEREST ON BELATED PAY MENTS. IN SUCH A SITUATION, WE ARE 10 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD OF THE VIEW THAT NO CHARITY IS INVOLVED. RATHER THE ASSESSEE HAS CONVERTED ITSELF INTO A BIG BUSINESSMAN. SIMILAR DEVELOPMENT/INFRASTRUCTURE /FACILITIES ARE ALSO PROVIDED BY PRIVATE DEVELOPERS THESE DAYS, THEN THEY WILL ALSO CLAIM THE STATUS OF A CHARITABLE INSTITUTION. DURING ARGUMENT, THE LEARNED COUNSEL RELIED UPON TH E DECISION OF THE HON'BLE APEX COURT PRONOUNCED IN THE CASE OF ADDL. CIT V. SURAT ART SILK CLOTH MANUFACTURES ASSOCIATION (SUPRA) WHERE THE ASSESSEE WAS INCORPOR ATED UNDER THE COMPANIES ACT WHEREIN THE DOMINANT OR THE PRIMARY PURPOSE OF THE ASSESSEE WAS TO PROMOTE COMMERCE AND TRADE IN ART SILK YARN, RAW SILK, COTT ON YARN, ART SILK CLOTH, SILK CLOTH AND COTTON CLOTH AS SET OUT IN CLAUSE (A) AND THE OBJEC T SPECIFIED IN CLS. (B) TO (E) AND THE OBJECT WAS FOUND TO BE PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WITHIN THE MEANING OF SECTION 2(15), THE ASSESSEE W AS HELD TO BE ENTITLED FOR EXEMPTION UNDER SECTION 11(1)(A) OF THE ACT. HOWEVER, HON'BLE JUSTICE SEN PASSED A DISSENTING ORDER BUT IN THE PRESENT CASE THERE IS A PROFIT MOT IVE OF THE ASSESSEE, SO WILL NOT HELP IN ANY MANNER. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON 'BLE APEX COURT PRONOUNCED IN THE CASE OF CIT V. ANDHRA PRADESH STATE ROAD TRANSPORT CORPORAT ION WHEREIN THE OBJECT OF THE ASSESSEE WAS DEVELOPMENT OF ROADS, IMPROVING FA CILITIES FOR ROAD TRANSPORT AND PROVIDING EFFICIENT AND ECONOMICAL SYSTEM OF ROAD T RANSPORT SERVICE, THE ENTIRE CAPITAL WAS PROVIDED BY THE STATE GOVERNMENT AND THE PROFIT S WERE UTILIZED FOR PROVIDING AMENITIES TO THE PASSENGERS AND WELFARE OF LABOUR A ND APPROVED EXPANSION PROGRAM AND THE REMAINDER TO BE MADE OVER TO THE STATE GOVE RNMENT FOR ROAD DEVELOPMENT, IT WAS HELD TO BE OF CHARITABLE PURPOSES AND THUS INCO ME WAS EXEMPTED BUT IT IS NOT SO IN THE CASE OF THE PRESENT ASSESSEE. THE HON'BLE APEX COURT IN THE CASE OF CIT V. BAR COUNCIL OF MAHARASHTRA (SUPRA) WHERE THE PRIME DOMI NANT PURPOSE WAS FOR THE ADVANCEMENT OF OBJECT OF PUBLIC UTILITY, IT WAS HEL D TO BE ENTITLED TO EXEMPTION. THE LEARNED COUNSEL FOR THE ASSESSEE, DURING ARGUME NT RAISED A PLEA THAT TOTALITY OF CIRCUMSTANCES HAS TO BE SEEN SPECIALLY THAT ALL MON EY GOES WITH THE STATE GOVERNMENT AND NOT IN PRIVATE HANDS, THE PRICES ARE FIXED AND THE ASSESSEE IS NOT A COMMERCIAL ORGANIZATION AND THE PREDOMINANT ACTIVITY OF THE AS SESSEE IS TO DEVELOP INFRASTRUCTURE AND CONTENDED THAT RULE OF CONSISTENCY HAS TO BE SE EN FOR WHICH RELIANCE WAS PLACED UPON THE DECISIONS PRONOUNCED IN UNION OF INDIA AND ORS. V. KAUMUDINI NARAYAN DALAI AND ANR. ,CTT V. SHIVSAGAR ESTATE , CIT V. FEDERATION OF IN DIAN CHAMBERS OF COMMERCE AND INDUSTRY AND ALSO THE DECISION IN THE CASE OF DY. CIT V. UNITED VANASPATI LTD. (2004) 83 TTJ (CHD)(TM) 201 : (2004) 88 ITD 313 (CHD)(TM). WE ARE OF THE VIEW THAT PRINCIPLES OF RES JUDICATA DO NOT APP LY TO INCOME-TAX PROCEEDINGS. HOWEVER, WE AGREE WITH THE LEARNED COUNSEL TO THE E XTENT THAT EQUALLY IMPORTANT IS THE RULE OF CONSISTENCY. WE ARE OF THE VIEW THAT CONSIS TENCY HAS TO BE SEEN IN TOTALITY OF CIRCUMSTANCES WHICH DEPENDS UPON FACTS OF EACH CASE IN THE LIGHT OF PRIMARY OBJECT AND REAL ACTIVITIES DONE BY THE ASSESSEE, SO THESE JUDI CIAL PRONOUNCEMENTS IN OUR HUMBLE OPINION ARE NOT GOING TO HELP THE ASSESSEE. THE HON 'BLE HIGH COURT OF DELHI IN THE CASE OF DAULAT RAM PUBLIC TRUST V. CIT WHEREIN ON SCRUTINY OF OBJECTS; OF THE ASSESSEE-TR UST, THERE WAS NO DEFINED DOMINANT CHARITABLE PURPOSE IN THE TRUST DEED TO WHICH THE SAID OBJECTS WOULD SERVE AS ANCILLARY OBJECTS AND WHICH WERE MEANT TO FEED THE DOMINANT PURPOSE. CLAUSE 21 OF THE TRUST DEED EMPOWERED THE CHAIRMAN OF THE TRUST TO SPEND THE FUNDS OF THE TRUST FOR THE PURCHASE OF IMMOVABLE PR OPERTY AND SINCE NO PART OF THE INCOME OF THE TRUST WAS APPLIED ON ANY SPECIFIC CHA RITABLE PURPOSES, THE EXEMPTION UNDER SECTION 11 OF THE ACT WAS DENIED. THE HON'BLE COURT RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS WHICH ARE AVAILABLE AT P. 515 OF THE SAID ORDER AND THEN CAME TO A PARTICULAR CONCLUSION. IN VIEW OF THESE FACTS AND J UDICIAL PRONOUNCEMENTS, WE ARE SUPPOSED TO SEE THE PREDOMINANT OBJECT OF THE ASSES SEE. IF ALL THE OBJECTS AND ACTIVITIES ACTUALLY CARRIED OUT BY THE ASSESSEE ARE ANALYSED A ND KEPT IN JUXTAPOSITION WITH THE AFORESAID JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VI EW THAT ACTIVITIES OF THE ASSESSEE ARE MORE OF COMMERCIAL NATURE WITH PROFIT-ORIENTED INTENT, SO NO LENIENCY SHOULD BE SHOWN TO THE ASSESSEE. THE DEPARTMENT MAY ALSO GET SUPPORT FROM THE DECISION OF THE HON'BLE PATNA HIGH COURT AS PRONOUNCED IN THE CASE OF BIHAR STATE FOREST DEVELOPMENT CORPORATION V. CIT WHERE THE GOVERNMENT COMPANY WAS FORMED FOR PROMOTION AND DEVELOPMENT OF FORESTRY. THE ASSESSEE -CORPORATION WAS PERMITTED UNDER MEMORANDUM OF ASSOCIATION TO ENGAGE IN COMMERCIAL A CTIVITIES AND THERE WAS NO 11 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD RESTRICTION ON APPLICATION OF MONEY, THE CORPORATIO N WAS NOT HELD TO BE A CHARITABLE TRUST AND CONSEQUENTLY NOT ENTITLED TO EXEMPTION. SIMILAR IS THE CASE IN THE PRESENT APPEAL OF THE ASSESSEE. DURING ARGUMENTS, THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE CASE OF MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORITY WHEREIN REGISTRATION WAS GRANTED. THE LEARNED CIT-DEPARTMEN TAL REPRESENTATIVE CONTENDED THAT IN THE CASE OF MARKET COMMITTEE, THE OWNERSHIP REMA INS WITH THE COMMITTEE BUT IN THE CASE OF THE ASSESSEE IT GOES TO INDIVIDUAL AND THE LEARNED CIT WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. LIKEWISE IN THE JUDICI AL PRONOUNCEMENTS IN NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION (NLC) V. CIT AS REL IED BY THE ASSESSEE, IT CAN BE SAID THAT IT IS A RELIGIOUS TRUST, SO NOT APPLICABLE TO THE PRESENT FACTS AS THE ASSESSEE IS AUCTIONING THE PLOTS ON HUGE PROFITS AND EVEN THE H ON'BLE COURTS ARE INTERVENING TO ENHANCE COMPENSATION ON PETITIONS FILED BY LAND OWN ERS. HOWEVER, IF THE ARGUMENT OF THE ASSESSEE IS ANALYSED ON POINT OF GENERAL PUBLIC UTILITY, STILL IT CAN BE SAID THAT COMMERCIAL ANGLE WITH PROFIT MOTIVE IS INVOLVED WHI CH HAS BECOME PREDOMINANT OBJECT OF THE ASSESSEE. EVEN IF THIS ISSUE IS ANALYSED AS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT APPLICATION OF INCOME IS NOT THE CRITERIA IN THE LIGHT OF THE DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF FIFT H GENERATION EDUCATION SOCIETY V. CIT , STILL WE ARE OF THE VIEW THAT IF THE OBJECTS AND REAL SITUATION IS ANALYSED, THE OBJECTS ARE NOT OF CHARITABLE NATURE, ALMOST IN EVERY ACTIV ITY THERE IS A SCENT OF COMMERCIALIZATION/PROFIT MOTIVE BUT IN THE CHARITAB LE INSTITUTION NO PROFIT MOTIVE IS INVOLVED AND THE SERVICE IS DONE MAINLY WITH THE IN TENT OF SOCIAL/RELIGIOUS UPLIFTMENT OF THE MASSES IN GENERAL. ADMITTEDLY, THE ASSESSEE IS DOING SOME ACTIVITIES LIKE HOUSING/INFRASTRUCTURE DEVELOPMENT AND THE PUBLIC I S ALSO BENEFITED BUT FOR THE SAME THE ASSESSEE HAS ALREADY CHARGED IN THE FORM OF HIDDEN COST. RATHER THE ASSESSEE IS GENERATING INCOME, SO NO CHARITY IS INVOLVED. WE AG REE WITH THE CONCLUSION OF THE LEARNED GIT, AS CONTENDED BY LEARNED CIT-DEPARTMENT AL REPRESENTATIVE, THAT A CHARITABLE INSTITUTION PROVIDES SERVICES FOR CHARIT ABLE PURPOSES FREE OF COST AND FOR NO GAIN AND ARE FOR THE BENEFIT OF PUBLIC AT LARGE. AS WE HAVE DISCUSSED IN THE PRECEDING PARA, THE ASSESSEE ACQUIRES LAND AT NOMINAL RATES A ND AFTER DEVELOPING THE SAME, THE SAME LAND (IS SOLD) ON HIGH PROFIT WHICH CANNOT BE SAID TO BE A CHARITABLE ACTIVITY. EVEN JUST FOR ARGUMENT SAKE, UNDER THE PRESENT FACTS, IF REGISTRATION IS GRANTED, THEN EVERY PRIVATE COLONIZER WILL CLAIM CHARITY. THE FACILITIE S WHICH ARE PROVIDED TO THE PLOT HOLDERS ARE INCIDENTAL TO THE COMMERCIAL ACTIVITY CARRIED O UT BY THE PUDA AND IF CERTAIN FACILITIES LIKE PARKS, COMMUNITY CENTER, SCHOOL ARE PROVIDED I S NOT ONLY BASIC REQUIREMENT, RATHER A TOOL OF ATTRACTING THE INVESTORS WHEREIN THE HIDD EN COST OF THESE FACILITIES IS ALREADY INCLUDED. IN THE ABSENCE OF THESE FACILITIES, NORMA LLY THE PURCHASER MAY NOT INVEST AND THE PRICES MAY BE LESS. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VIEW THAT THE APPLICATION OF THE ASSESSEE HAS BEEN RIGHTLY REJECT ED BY LEARNED CIT. THE STAND OF THE LEARNED CIT IS UPHELD. APPEAL OF THE ASSESSEE IS, T HEREFORE, DISMISSED. 12. THE COORDINATE BENCH OF THE TRIBUNAL AT AMRI TSAR, FOLLOWING THE DECISION IN THE CASE OF PUNJAB URBAN PLANNING AND A REA DEVELOPMENT AUTHORITY(SUPRA), HELD, IN THE CASE OF JALANDHAR DEVELOPMENT AUTHORIT Y V/S.CIT (2009)124 TTJ (ASR) 598, TO WHICH ONE OF US, VIZ. AUTHOR MEMBER, IS A PARTY, THAT DENIAL OF REGISTRATION UNDER S.12AA(A) OF THE ACT TO THAT ASSESSEE, WHICH WAS AL SO CONSTITUTED UNDER PUNJAB REGIONAL AND TOWN PLANNING AND DEVELOPMENT ACT, 199 5, WAS JUSTIFIED. THE OBJECTS OF THE AUTHORITY IN THAT CASE AS NOTED BY THE TRIBU NAL IN PARA 3 OF ITS ORDER READS AS FOLLOWS- THE OBJECTS OF THE AUTHORITY SHALL BE TO PROMOTE A ND SECURE BETTER PLANNING AND DEVELOPMENT OF ANY AREA OF THE STATE AND FOR THAT P URPOSE THE AUTHORITY SHALL HAVE THE POWERS TO ACQUIRE BY WAY OF PURCHASE TRANSFER, EXCH ANGE OR GIFT OR TO HOLD, MANAGE, PLAN, DEVELOP AND MORTGAGEE OR OTHERWISE DISPOSE OF LAND OR OTHER PROPERTY OR TO CARRY OUT ITSELF OR IN COLLABORATION WITH ANY OTHER AGENC Y OR THROUGH ANY OTHER AGENCY ON ITS BEHALF, BUILDING, ENGINEERING, MINING AND OTHER OPE RATIONS TO EXECUTE WORKS IN CONNECTION WITH SUPPLY OF WATER, DISPOSAL OF SEWERA GE, CONTROL OF POLLUTION AND OTHER SERVICES AND AMENITIES AND GENERALLY TO DO ANYTHING WITH THE PRIOR APPROVAL OR ON DIRECTION OF THE STATE GOVERNMENT, FOR CARRYING OUT THE PURPOSES OF THE ACT. 13. AT THIS JUNCTURE, IT MAY BE OBSERVED THAT THE ABOVE OBJECTS NOTED BY THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CONTEXT OF JA LANDHAR DEVELOPMENT AUTHORITY, IS 12 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD ALMOST IDENTICAL TO S.5 OF THE ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975, UNDER WHICH THE ASSESSEE WAS CREATED, AND WHICH WE HAVE ALREADY EXTRACTED HEREINABOVE. CONSIDERING THE CONTENTION OF THE ASS ESSEE WITH REGARD TO THE CHARITABLE NATURE INVOLVED IN ITS ACTIVITIES, AND ALSO TAKING INTO ACCOUNT THE CASE-LAW CITED BEFORE IT IN THAT BEHALF, HELD IN CONCLUSIVE PORTION OF PARA 6.1 OF ITS ORDER AS FOLLOWS- 'IT IS A WELL KNOWN FACT THAT IN SOME OF THE SITUAT IONS THE PROVISIONS OF LAW ARE MISUSED IN THE NAMES OF CHARITIES. IF AN EXPANDED /BROADER LATITUDE IS EXTENDED TO THE WORD CHARITY, THEN THERE ARE SO MANY INSTITUTIONS / DEPA RTMENTS WHO WILL TRY TO COME UNDER THE UMBRELLA OF THIS PROVISION TO MISUSE THE PROVISION. THEREFORE, FOR THE BROAD DEVELOPMENT OF THE NATION / SOCIETY, A STRICT AND POSITIVE VIGI L IS REQUIRED SO THAT THE PROVISION CAN BE SAVED FROM ITS MISUSE IN ANY MANNER. NO ACTIVITY CA N BE CARRIED ON EFFICIENTLY, PROPERLY UNLESS AND UNTIL IT IS CARRIED OUT ON BUSINESS PRIN CIPLE BUT IT DOES NOT MEAN THAT THE PROVISION IS MISUSED IN ANY MANNER UNDER THE GRAB O F CHARITY AND ANY INSTITUTION BE ALLOWED TO BECOME RICHER AND RICHER UNDER THE GRAB OF CHARITY BY MAKING IT A NON-TAX PAYABLE ORGANIZATION. A CHARITABLE INSTITUTION PROV IDES SERVICES FOR CHARITABLE PURPOSES FREE OF COST AND NOT FOR A GAIN. IN THE PRESENT SCE NARIO, SIMILAR ACTIVITIES ARE PERFORMED BY BIG COLONIZERS/DEVELOPERS WHO ARE EARNING A HUGE PROFIT. IF THIS REGISTRATION IS GRANTED, THEN ANYBODY WILL CLAIM THE EXEMPTION FROM TAX. IF THE ACCOUNTS OF THE ASSESSEE ARE ANALYSED, IT HAS TURNED INTO A HUGE PR OFIT-MAKING AGENCY FOR WHICH IT IS TAKING MONEY FROM THE GENERAL PUBLIC. IF ANY INSTIT UTION OF PUBLIC IMPORTANCE LIKE SCHOOLS, COMMUNITY CENTERS ARE CREATED /DEVELOPED, THE ASSESSEE IS CHARGING THE COST OF IT FROM THE PUBLIC AT LARGE AND THE MONEY IS COM ING FROM THE COFFER OF THE GOVERNMENT. IT CAN BE SAID THAT OBJECTS/ACTIVITIES OF THE ASSESSEE ARE MORE OF COMMERCIALIZED NATURE AND NO CHARITY IS INVOLVED IN IT. AT THE TIME, IF THESE FACILITIES ARE NOT PROVIDED, THEN NOBODY WILL PURCHASE A PLOT. IT CAN BE SAID THAT IT IS A MEANS OF ATTRACTING THE PEOPLE SO THAT MAXIMUM PEOPLE MAY AP PLY FOR THE SAME AND THE HIDDEN COST IS ALREADY ADDED, SO NO CHARITY IS INVOLVED. A T BEST, THE ASSESSEE CAN BE SAID TO BE AN AUTHORITY CREATED TO HELP IT TO ACHIEVE CERTAIN OBJECTS. IT CAN BE SAID THAT IT IS THE DUTY OF THE GOVERNMENT TO CREATE / PROVIDE ALL THESE FAC ILITIES TO PUBLIC LARGE, WHICH IS BEING DONE THROUGH IS AGENCY IN A PARTICULAR AREA. AT THE SAME TIME, THE FUNDS WHICH ARE PROVIDED TO THE ASSESSEE BY THE GOVERNMENT IS AGAIN A PUBLIC MONEY OR GENERATED FROM PUBLIC ITSELF. THE OBJECTS OF THE ASSESSEE, TH OUGH CLAIMED TO BE CHARITABLE, BUT ACTUALLY ARE OF PURELY COMMERCIAL NATURE WHERE PROF IT MOTIVE IS INVOLVED. IT IS A KNOWN FACT THAT THE ASSESSEE IS ACQUIRING THE LAND AT VER Y LOW PRICES AND SELLING THE SAME LAND ON VERY HIGHER RATES AND IS EARNING AS PROFIT THERE FROM. A NEW TREND HAS ALSO EMERGED THAT THE ASSESSEE HAS STARTED AUCTIONING THE PLOTS BY WAY OF BIDDING AT THE MARKET RATE AND SOMETIMES MORE THAN THAT AND CHARGING INTEREST ON BELATED PAYMENTS IN SUCH A SITUATION, NO CHARITY IS INVOLVED. RATHER THE ASSES SEE HAS CONVERTED ITSELF INTO A BIG BUSINESSMAN. SIMILAR DEVELOPMENT/INFRASTRUCTURE/FAC ILITIES ARE ALSO PROVIDED BY PRIVATE DEVELOPERS THESE DAYS, THEN THEY WILL ALSO CLAIM TH E STATUS OF A CHARITABLE INSTITUTION. THE FACILITIES WHICH ARE PROVIDED TO THE PLOT HOLDE RS ARE INCIDENTAL TO THE COMMERCIAL ACTIVITY CARRIED OUT BY THE ASSESSEE AND IF CERTAIN FACILITIES LIKE PARKS, COMMUNITY CENTER, SCHOOL ARE PROVIDED, IT IS NOT ONLY BASIC REQUIREME NT, RATHER A TOOL ATTRACTING THE INVESTORS WHEREIN THE HIDDEN COST OF THESE FACILITI ES IS ALREADY INCLUDED. IN THE ABSENCE OF THESE FACILITIES, NORMALLY THE PURCHASER MAY NOT INVEST AND THE PRICES MAY BE LESS. IN VIEW OF THESE FACTS, THE ASSESSEE'S ACTIVITIES NOT BEING OF CHARITABLE NATURE, THE APPLICATION OF REGISTRATION UNDER S. 12A HAS BEEN R IGHTLY REJECTED BY CIT, - ASSTT. CIT VS THANTHI TRUST (2001), 165 CTR (SC) 681: (2001) 247 ITR 785 (SC) AND BIHAR STATE FOREST DEVELOPMENT CORPORATION VS CIT (1997) 224 IT R 757 (PAT) RELINE ON : ADDL. CIT VS SURAT SILK CLOTH MANUFACTURERS ASSOCIATION (1979 ) 13 CTR (SC) 378: (1980) 121 ITR 1 (SC), CIT VS ANDHRA PRADESH STATE ROAD TRANSP ORT CORPORATION (1986) 52 CTR (SC) 75: (1986) 159 ITR 1 (SC) AND NEW LIFE IN CHRI ST EVANGELISTIC ASSOCIATION (NLC) VS CIT (2001) 165 CTR (MAD) 446: (2000) 246 ITR 532 (MAD) DISTINGUISHED.' THE TRIBUNAL, DISTINGUISHING AMONG OTHERS, THE DECI SION OF THE APEX COURT IN THE CASE OF GUJARAT MARITIME BOARD (SUPRA), THE TRIBUNAL IN THA T CASE OBSERVED IN PARA 6.4 OF ITS ORDER AS FOLLOWS- 6.4 THE MAJOR TRUST OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT JDA IS A GENERAL PUBLIC UTILITY AS IT SATISFIES THE NEED FOR HOUSIN G ACCOMMODATION. FOR THE SECTION (SECTION) OF THE PEOPLE OF STATE OF PUNJAB AND IS A LSO DOING PLANNING AND DEVELOPMENT 13 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD OF THE CITIES, TOWNS AND VILLAGES. WE ARE NOT AGREE ABLE WITH THE ARGUMENT OF THE LEARNED COUNSEL BECAUSE A CHARITABLE INSTITUTION PROVIDES S ERVICES FOR CHARITABLE PURPOSES FREE OF COST AND NOT FOR A GAIN. IN THE PRESENT SCENARI O, THE SIMILAR ACTIVITIES ARE PERFORMED, BY BIG COLONIZERS/DEVELOPERS WHO ARE EARNING A HUGE PROFIT. IF THIS REGISTRATION IS GRANTED, THEN WE WILL OPEN A PANDORA BOX AND ANYBO DY WILL CLAIM THE EXEMPTION FROM TAX. IF THE OBJECTS OF THE ASSESSEE ARE ANALYSED, IT HAS TURNED INTO A HUGE PROFIT MAKING AGENCY FOR WHICH IT IS TAKING MONEY FROM THE GENERA L PUBLIC. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT NO CHARITY IS INVOLVED AND IF ANY INSTITUTION OF PUBLIC IMPORTANCE LIKE SCHOOLS, COMMUNITY CENTRES ARE CRATED/DEVELOPED, TH E ASSESSEE IS CHARGING THE COST OF IT FROM THE PUBLIC AT LARGE AND THE MONEY IS COMING FROM THE COFFER OF THE GOVERNMENT. IT CAN BE SAID THAT OBJECTS/ACTIVITIES OF THE ASSESSEE ARE MORE OF COMMERCIALIZED NATURE AND WE DO NOT, FIND ANY CHARITY IN IT. AT THE SAME TIME, IF THESE FACILITIES ARE NOT PROVIDED, THEN NOBODY WILL PURCHASE A PLOT. IT CA N BE SAID THAT IT IS A MEANS OF ATTRACTING THE PEOPLE SO THAT MAXIMUM PEOPLE MAY AP PLY FOR THE SAME AND THE HIDDEN COST IS ALREADY ADDED. SO NO CHARITY IS INVOLVED. A T BEST, THE ASSESSEE CAN BE SAID TO BE AN AUTHORITY CRATED TO HELP IT TO ACHIEVE CERTAIN OBJECTS. IT CAN BE SAID THAT IT IS THE DUTY OF THE GOVERNMENT TO CREATE/PROVIDE ALL THESE FACIL ITIES TO PUBLIC AT LARGE, WHICH IS BEING DONE THROUGH HIS AGENCY IN A PARTICULAR AREA. AT T HE SAME TIME, THE FUNDS WHICH ARE PROVIDED TO THE ASSESSEE BY THE GOVERNMENT IS AGAIN A PUBLIC MONEY OR GENERATED FORM THE PUBLIC ITSELF, SO WHERE IS THE CHARITY? I F THE ACTIVITIES OF THE ASSESSEE AND THE ARGUMENTS OF BOTH THE LEARNED COUNSEL ARE PUT IN A JUXTAPOSITION, IT CAN BE SAID THAT THE OBJECTS OF THE ASSESSEE, THOUGH CLAIMED TO BE CHARI TABLE; BUT ACTUALLY ARE OF PURELY COMMERCIAL NATURE WHERE PROFIT MOTIVE IS INVOLVED. IT IS A KNOWN FACT THAT THE ASSESSEE IS ACQUIRING THE LAND AT VERY LOW PRICES AND SELLIN G THE SAME LAND ON VERY HIGH RATES AND IS EARNING A PROFIT THEREFROM. A NEW TREND HAS AL SO EMERGED THAT JDA, I.E. THE ASSESSEE HAS STARTED AUCTIONING THE PLOTS BY WAY OF BIDDING AT THE MARKET RATE AND SOMETIMES MORE THAN THAT AND CHARGING INTEREST ON B ELATED PAYMENTS. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT NO CHARITY IS I NVOLVED. RATHER THE ASSESSEE HAS CONVERTED ITSELF INTO A BIG BUSINESSMAN. SIMILAR DE VELOPMENT /INFRASTRUCTURE/- FACILITIES ARE ALSO PROVIDED BY PRIVATE DEVELOPERS THESE DAYS , THEN THEY WILL ALSO CLAIM THE STATUS OF A CHARITABLE INSTITUTION. FOR THE ABOVE REASONS, AMONG OTHERS, DISCUSSED AT L ENGTH AND ALSO OBSERVING THAT THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF PUN JAB URBAN PLANNING AND DEVELOPMENT AUTHORITY V/S. CIT (SUPRA) SQUARELY APP LIES TO THE FACTS OF THAT CASE, THE TRIBUNAL IN THAT CASE HELD THAT THE ASSESSEE WAS N OT ENTITLED FOR REGISTRATION UNDER S.12AA OF THE ACT. 14. SIMILARLY, FOLLOWING THE ORDER OF THE TRIBU NAL IN THE CASE OF JALANDHAR DEVELOPMENT AUTHORITY (SUPRA), IN SIMILAR CIRCUMSTA NCES, IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY V/S. CIT (ITA 30/ASR/2011), T HE AMRITSAR BENCH OF THE TRIBUNAL, VIDE ITS ORDER DATED 14.6.2012, THE TRIBUNAL CONSID ERED THE LEGALITY AND VALIDITY OF THE ACTION OF THE COMMISSIONER OF INCOME-TAX IN WITHDRA WING THE REGISTRATION GRANTED IN FAVOUR OF THE ASSESSEE, BY INVOKING THE PROVISIONS OF S.12AA(3) OF THE ACT. THE TRIBUNAL, BESIDES FOLLOWING THE COORDINATE BENCH DE CISION IN THE CASE OF JALANDHAR DEVELOPMENT AUTHORITY (SUPRA), CONSIDERED AT LENGTH THE VARIOUS CONTENTIONS URGED BEFORE IT IN THE LIGHT OF THE CASE LAW RELIED UPON BY THE PARTIES, AND ULTIMATELY UPHELD THE ACTION OF THE COMMISSIONER OF INCOME-TAX IN WITHDR AWING THE REGISTRATION. RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 14.6.201 2 IN THAT CASE IS REPRODUCED BELOW- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE FACTS OF THE CASE, INCLUDING SECTION 12AA(3) OF THE ACT, WHERE TRUST OR INSTITUT ION HAS BEEN GRANTED REGISTRATION AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION OF SUCH TRUST OR INSTITUTION, AS THE CASE MAY BE , HE SHALL, PASS AN ORDER IN WRITING CANCELING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. SECTION 2(15) OF THE ACT 14 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD DEFINES 'CHARITABLE PURPOSE' TO INCLUDE THE ADVANCE MENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IT IS ALSO NOT DISPUTED THAT THE LD . CIT WHILE GRANTING REGISTRATION U/S 12AA(3) OF THE ACT TO THE ASSESSEE HAD OBSERVED THA T HE IS SATISFIED THAT INSTRUMENT DOES NOT EXIST IN ANY TRADE, COMMERCE OR BUSINESS. THE ORDER IS DATED 30.09.2009 WHEREAS THE AMENDMENT BY FINANCE ACT, 2008 IS W.E.F . 01.04.2009, WHERE AS PER FINANCE ACT, 2008, FOLLOWING PROVISO HAD BEEN ADDED W.E.F. 01.04.2009: 'PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERALLY PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY AC TIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OF APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY.' 7.1. FURTHER, AS PER FINANCE ACT, 2010, AFTER FIRST PROVISO, SECOND PROVISO HAS BEEN ADDED W.E.F. 01.04.2009, WHICH IS READ AS UNDER: 'PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREI N IS TEN LAKH RUPEES OR LESS IN THE PREVIOUS YEAR'. 7.2 AS A MATTER OF FACT FROM THE PERUSAL OF THE ORD ER OF THE LD. CIT, IT APPEARS THAT FIRST PROVISO SO INSERTED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2009 WAS NOT TAKEN INTO CONSIDERATION WHILE GRANTING REGISTRATION VIDE ORDE R DATED 30.09.2009. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONCUR WITH THE VIEWS OF THE LD. CIT, WHO HAD PLACED RELIANCE ON THE DECISION OF FIVE MEMBER BENC H OF HON'BLE SUPREME COURT IN THE CASE OF A DISTRIBUTORS (BARODA) P. LTD. VS. UNION O F INDIA & ORS. REPORTED IN 155 ITR120 (SC), WHEREIN IT HAS BEEN HELD TO PERPETUATE AN ERR OR IS NO HEROISM. TO RECTIFY IT IS THE COMPULSION OF THE JUDICIAL CONSCIENCE. IN THIS, WE DERIVED COMFORT AND STRENGTH FROM THE WISE AND INSPIRING WORDS OF JUSTICE BRONSON IN PIER CE V. DELAMETER (A.M.Y AT PAGE 18). THEREFORE, THE LD. CIT IN VIEW OF THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF A DISTRIBUTORS (BARODA) P. LTD. VS. UNION OF IND IA & ORS.(SUPRA) IS WITHIN HIS POWER TO DECIDE THE ISSUE AS PER INSERTION OF THE FIRST PROV ISO BY THE FINANCE ACT, 2008 W.E.F. 01.04.2009 AND ALSO THE SECOND PROVISO INSERTED BY THE FINANCE ACT, 2010 W.E.F. 01.04.2009 WHEREAS THE AGGREGATE VALUE OF THE RECEI PTS IN THE PRESENT ASSESSEE ARE RS. 10 LAKHS. ALSO ON THE PRINCIPLE OF CONSISTENCY, WE CONCUR WITH THE VIEWS OF THE LD. CIT RELYING UPON THE DECISIONS OF VARIOUS COURTS OF LAW THAT AN ERRONEOUS VIEW IN LAW COULD NOT BE ALLOWED TO BE PERPETUATED ON THE GROUN D OF CONSISTENCY. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE LD . COUNSEL FOR THE ASSESSEE WAS PUT A QUESTION BY THE BENCH HOW THE FACTS IN THE PRESEN T CASE ARE DIFFERENT FROM THE FACTS IN THE CASE OF M/S. JALANDHAR DEVELOPMENT AUTHORITY. T HE LD. COUNSEL FOR THE ASSESSEE ARGUED AND REPLIED THAT THE DIFFERENCE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WITH M/S.JALANDHAR DEVELOPMENT AUTHORITY IS NO T THERE EXCEPT THAT THE REGISTRATION HAD BEEN GRANTED IN THE CASE OF M/S. JALANDHAR DEVE LOPMENT AUTHORITY WHEREAS IN THE PRESENT CASE, REGISTRATION HAVING BEEN GRANTED CANN OT BE CANCELLED. SINCE THE ORDER OF THE CIT DATED 30.09.2009 IN THE PRESENT CASE IS AFT ER AMENDMENT TO SECTION 2(15) I.E. INTRODUCTION OF THE FIRST PROVISO WAS WELL BEFORE T HE LD. CIT. 7.3. CONSIDERING THE ARGUMENTS OF THE LD. COUNSEL F OR THE ASSESSEE AND ON PERUSAL OF THE FACTS OF THE PRESENT CASE WITH THE FACTS IN M/S . JALANDHAR DEVELOPMENT AUTHORITY (SUPRA), WE ARE OF THE VIEW THAT FACTS IN THE PRESE NT CASE ARE IDENTICAL TO THE FACTS AS IN THE CASE OF JALANDHAR DEVELOPMENT AUTHORITY. AS REG ARDS THE FIRST PROVISO INSERTED IN SECTION 2(15) OF THE ACT, WE HAVE GIVEN OUR VIEWS H EREINABOVE THAT THE LD. CIT HAD NOT CONSIDERED THE FIRST PROVISO TO SECTION 2(15) AS WE LL AS THE SECOND PROVISO TO SECTION 2(15) WHILE MAKING THE ORDER FOR GRANT OF REGISTRAT ION ON 30.09.2009. THEREFORE, THE LD. CIT IS WELL WITHIN HIS POWER TO DECIDE THE ISSUE BY HIS ORDER IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF A. DISTRIB UTORS (BARODA) P. LTD. VS. UNION OF INDIA AND ORS. 155 ITR 120 (SC). THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND FOLLOWING OUR ORDER IN THE CASE OF M/S. JALANDHAR DEVELOPMENT AUTHORITY (SUPRA) BEING ON IDENTICAL FACTS, THE REG ISTRATION U/S 12AA CANNOT BE GRANTED TO THE ASSESSEE AND THE LD. CIT HAS RIGHTLY CANCELLED THE REGISTRATION SO GRANTED. 15 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD 7.4. ALSO, WE CONCUR WITH THE VIEWS OF THE LD. CIT( A) VIDE PARA 3.2 TO 6.2 OF HIS ORDER THAT PRIOR TO INSERTION OF THESE PROVISOS I.E. FIRS T AND SECOND PROVISO TO SECTION 2(15) OF THE ACT, CERTAIN BODIES WERE TREATED AS 'CHARITABLE ' ON THE GROUND OF ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY. HOWEVER, AFTER TH E INSERTION OF THE ABOVE PROVISO, THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE A 'CHARITABLE PURPOSES' IF IT INVOLVES THE CARRYING ON OF :- A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS; B) ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATIO N TO ANY TRADE, COMMERCE OR BUSINESS. D) FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IR RESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF INCOME FROM SUCH ACT IVITY. 7.4.1. THEREFORE, THE INSTITUTIONS/TRUSTS/SOCIETIES WHICH ARE INVOLVED IN THE ACTIVITIES IN (A)(, (B) & (C) MENTIONED HEREINABOVE AND AGGREGATE VALUE OF THE RECEIPT OF THE ACTIVITIES REFERRED TO IN THE FIRST AND SECOND PROVISO IS MORE THAN RS. TEN LAKHS IN THE PREVIOUS YEAR, THEY SHALL NOT BE ELIGIBLE TO CONTINUE WITH R EGISTRATION U/S 12A AND THE SAME IS REQUIRED TO BE WITHDRAWN. 7.5. THE MAIN OBJECTS OF THE ASSESSEE'S INSTITUTION HAS BEEN MENTIONED IN PARA 4.1. OF LD. CIT'S ORDER, AS MENTIONED HEREINABOVE. IT HAS R IGHTLY BEEN MENTIONED BY THE LD. CIT IN PARA 4.2 MENTIONED HEREINABOVE THAT TILL THE FINANCIAL YEAR 2002-03, THE INCOME OF SUCH AUTHORITIES WERE EXEMPT U/S 10(20A) OF THE ACT. HOWEVER, IN VIEW OF OMISSION OF SECTION 10(20A) OF THE ACT, AN EXPLANATION WAS ADDE D TO SECTION 10(20), WHICH HAS BEEN MENTIONED HEREINABOVE. THE INCOME OF LOCAL AUT HORITY IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', 'CAPITAL GAINS' OR 'INCOME FROM OTHER SOURCES' OR FROM A TRADE OR BUSINESS CARRIED ON BY IT WAS EARLI ER EXCLUDED IN COMPUTING THE TOTAL INCOME OF THE AUTHORITY OF A PREVIOUS YEAR. HOWEVER , IN VIEW OF THE AMENDMENT, WITH EFFECT FROM 01.04.2003, THE EXPLANATION 'LOCAL AUTH ORITY' WAS DEFINED TO INCLUDE ONLY THE AUTHORITIES ENUMERATED IN THE EXPLANATION TO IN CLUDE PANCHAYAT, MUNICIPAL COMMITTEE AND DISTRICT BOARD AND CANTONMENT BOARD A S REFERRED IN THE SAID EXPLANATION. 7.6. ALSO, AT THE SAME TIME, SECTION 10(20A) WHICH RELATED TO INCOME OF AND AUTHORITY CONSTITUTED IN INDIA BY OR UNDER ANY LAW ENACTED FO R THE PURPOSE OF DEALING WITH AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FO R THE PURPOSE OF PLANNING, DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VIL LAGES WHICH BEFORE THE AMENDMENT WAS NOT INCLUDED IN COMPUTING THE TOTAL INCOME, WAS OMITTED. CONSEQUENTLY, THE BENEFIT CONFERRED BY CLAUSE (20A) ON SUCH AN AUTHORITY WAS TAKEN AWAY. THUS, IN VIEW OF THE FACT THAT SECTION 10(20A) WAS OMITTED AND AN EXPLAN ATION WAS ADDED TO SECTION 10(20) OF THE ACT, ENUMERATING THE 'LOCAL AUTHORITIES' CON TEMPLATED BY SECTION 10(20), THE ASSESSEE COULD NOT CLAIM ANY BENEFIT UNDER THOSE PR OVISIONS AFTER APRIL 1, 2003. THE ASSESSEE SUBSEQUENTLY CLAIMED THAT ITS OBJECTS FALL S UNDER THE PROVISIONS OF SECTION 2(15) OF THE ACT AND HAS COMPLIED WITH ALL THE ELIG IBILITY CRITERIA FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT, WHICH WAS ALLOWED VID E ORDER DATED 30.09.2009. IT IS AT THIS JUNCTURE THAT THE FIRST PROVISO AND SECOND PRO VISO WERE ADDED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2009, AS MENTIONED HEREINABOVE. T HEREFORE, AFTER INSERTION OF THE SAID PROVISO, ANY INSTITUTION CARRYING ON OF ANY AC TIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC. AS MENTIONED HEREINABOVE, SHALL NO T BE A CHARITABLE PURPOSE. AS PER OBJECTS OF THE ASSESSEE, IT IS OBSERVED THAT THE MA IN OBJECT OF THE ASSESSEE IS TO PROMOTE AND SECURE THE DEVELOPMENT OF LOCAL AREA AN D THERE IS NO CHARITABLE PURPOSE OR ANY ACTIVITY FOR GENERAL PUBLIC UTILITY. THE ACT IVITIES OF THE ASSESSEE ARE AIMED AT EARNING PROFIT AS IT IS CARRYING ON ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. FURTHER PROFIT MAKING BY THE ASSESSEE IS NOT MERE I NCIDENTAL OR BY PRODUCT OF THE ASSESSEE. THERE IS NO REAL OBJECT OF THE ASSESSEE A ND THERE IS NO SPENDING OF THE INCOME EXCLUSIVELY FOR THE PURPOSE OF CHARITABLE AC TIVITIES AND PROFITS OF THE ASSESSEE ARE NOT USED FOR CHARITABLE PURPOSE UNDER THE TERMS OF THE OBJECT AND THERE IS NO OBLIGATION ON THE PART OF THE ASSESSEE TO SPEND ON 'CHARITABLE PURPOSE' ONLY. ALSO AS PER CLAUSE 53 OF THE JAMMU & KASHMIR DEVELOPMENT ACT, O N DISSOLUTION OF ALL PROPERTIES AND FUNDS TO VEST IN THE GOVERNMENT AND FOR THE PUR POSE OF REALIZING PROPERTIES, THE FUNCTION OF THE AUTHORITY SHALL BE DISCHARGED BY TH E GOVERNMENT. WE CONCUR WITH THE VIEWS OF THE LD. CIT ON TRANSFER OF THE PROPERTIES, FUNDS AND DUES AND LIABILITIES ETC. WILL VEST IN THE GOVT. THERE IS NO RESTRICTION, HOW THE SAME ARE TO BE UTILIZED BY THE 16 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD GOVERNMENT. THERE ARE OTHER OBJECTS LIKE SALE AND P URCHASE, WHICH MAKES THE AUTHORITY A COMMERCIAL ORGANIZATION. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, EVEN ON DISSOLUTION OR WINDING UP BY NOT HAVI NG ANY RESTRICTION ON APPLICATION OF ASSET FOR CHARITABLE PURPOSE, THE OBJECTS PURSUED B Y THE ASSESSEE CANNOT BE SAID TO BE A CHARITABLE IN NATURE. 7.7 AS REGARDS THE RELIANCE ON THE DECISIONS OF VAR IOUS COURTS OF LAW BY THE LD. CIT, MOST OF THE DECISIONS HAVE BEEN DEALT BY THE TRIBUN AL IN THE CASE OF M/S. JALANDHAR DEVELOPMENT AUTHORITY VS. ITO (SUPRA). IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE CONCUR WITH THE VIEWS OF THE LD. CIT THAT JAMMU DEVELOPMENT AUTHORITY IS AN AUTHORITY ESTABLISHED WITH THE MOTIVE OF PROFIT CON STITUTED UNDER THE JAMMU & KASHMIR DEVELOPMENT ACT, 1970 AND THAT THE ACTIVITIES OF SU CH AUTHORITY ARE HIT BY SECTION 2(15) OF THE ACT READ WITH FIRST AND SECOND PROVISO AND A RE NOT IN LINE WITH THE OBJECTS OF THE AUTHORITY/TRUST SO FAR AS THE ACTIVITIES RELATING T O PURCHASE AND SALE OF PROPERTIES, AS MENTIONED HEREINABOVE. HENCE, THE ACTIVITIES ARE NO T GENUINE TO THE EXTENT, MENTIONED HEREINABOVE AND THE LD. CIT, JAMMU, HAS RIGHTLY BEI NG SATISFIED HELD THAT THE JAMMU DEVELOPMENT AUTHORITY IS NOT ENTITLED TO REGISTRATI ON AND ACCORDINGLY CANCELLED THE REGISTRATION SO GRANTED. 15. IN THE LIGHT OF THE FOREGOING DISCUSSION, FOLL OWING THE CONSISTENT VIEW TAKEN BY THE VARIOUS BENCHES OF THE TRIBUNAL IN THE CASES OF VARIOUS OTHER URBAN DEVELOPMENT AUTHORITIES CONSTITUTED UNDER ANALOGOUS STATUTES, WE UPHOLD THE ACTION OF THE COMMISSIONER OF INCOME-TAX IN REJECTING THE ASS ESSEES APPLICATION FOR REGISTRATION UNDER S.12AA OF THE ACT, AS THE PRIMARY OBJECTS OF ASSESSEE ARE OF PROFIT MOTIVE AS CONSIDERED BY THE TRIBUNAL IN SIMILAR CASES DISCUSS ED ABOVE, AND THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOM E-TAX, TIRUPATHI. WE ACCORDINGLY UPHOLD HIS ORDER AND REJECT THE GROUNDS OF THE ASSE SSEE IN THIS APPEAL. 11. THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO T HAT OF THE SAID CASE DECIDED BY THE COORDINATE BENCH IN THE CASE OF TIRU PATHI URBAN DEVELOPMENT AUTHROITY (SUPRA). FURTHER, AS SEEN FRO M THE MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION FILED BY TH E ASSESSEE BEFORE US, THE OBJECT OF THE ASSESSEE CANNOT BE SAID THAT IT IS IN THE NATURE OF GENERAL PUBLIC UTILITY AND THE OBJECTS STATED THERE IN MAKE THE ASSESSEE A COMMERCIAL ORGINSATION AND THERE IS NO STIPULATION ON UTILIZATION OF INCOME ONLY FOR THE PURPOSE OF CHARITABLE ACTIVITIES. THE ASSESSEE BEING A COMMERCIAL ORGANISATION JUST LIKE ANY BUSINESS ENTI TY ENGAGED IN THE REAL ESTATE BUSINESS. THE SURPLUS FUNDS GENERATED BY THE ASSESSEE THROUGHOUT VARIOUS ACTIVITIES COULD BE DISTRIBUTED AS DIVIDEN D AND THERE IS NO RESTRICTION FOR DECLARATION OF DIVIDEND TO THE MEMB ERS OF THE ASSESSEE COMPANY AS IS EVIDENT FROM THE CLAUSE NO. 99 OF THE ARTICLES OF ASSOCIATION. AS THE DOMINANT OBJECT OF THE ASSESSE E WAS NOT CHARITY, EITHER ITS COMMERCIAL ACTIVITY CARRIED ON WITH PROF IT MOTIVE AND ALSO THERE IS NO CLAUSE FOR APPLICATION OF INCOME FOR CHARITABLE ACTIVITIES INCLUDING RELIEF TO POOR, EDUCATION OR MEDICAL RELIEF AND ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THERE IS NOTHING IN THIS CASE WHICH PROVIDES SERVICES TO THE MANKIND ON CHARITY BASIS. THE ARGUM ENT OF THE LEARNED COUNSEL IS NOT TENABLE BECAUSE A CHARITABLE INSTITU TION PROVIDES SERVICES FOR CHARITABLE PURPOSES FREE OF COST AND NOT FOR GA IN. THE OBJECT OF THE ASSESSEE IS SIMILAR TO ACTIVITIES PERFORMED BY BIG DEVELOPERS, WHO ARE EARNING PROFIT . IF THE REGISTRATION IS GRANTED TO THE ASSESSEE U/S 12A OF THE ACT, THEN, IT WILL OPEN PANDORAS BOX AND EVERYBOD Y WILL CLAIM EXEMPTION FROM TAX, WHO ARE INCIDENTALLY DOING SOME CHARITABL E ACTIVITIES IN PROVIDING PARKS OR ROADS. THE ACTIVITIES OF THE ASSESSEE IS N OTHING BUT PROFIT MAKING ACTIVITIES FOR WHICH IT IS TAKING MONEY FROM GENERA L PUBLIC AND NO CHARITY ACTIVITIES ARE CARRIED ON FOR THE PUBLIC. CONSIDER ING ALL THESE FACTS BROUGHT ON RECORD BY THE DIT(E), IN OUR CONSIDERED VIEW, TH E ASSESSEE IS NOT ENTITLED FOR GRANT OF REGISTRATION U/S 12A OF THE A CT. BEING SO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE DITE) IN REF USING TO GRANT REGISTRATION U/S 12A TO THE ASSESSEE AND ACCORDINGLY, THE ORDER OF THE DIT(E) IS HEREBY CONFIRMED DISMISSING THE APPEAL OF THE ASSESSEE. 17 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD THE PRINCIPLES LAID DOWN BY THE COORDINATE BENCH AS AFORESAID, CLEARLY APPLY TO THE FACTS OF THE PRESENT CASE. AS FAR AS T HE DECISIONS RELIED UPON BY LD. AR ARE CONCERNED, ON CAREFUL EXAMINATIO N OF THE SAME, WE FIND THEM TO BE FACTUALLY DISTINGUISHABLE, HENCE , WILL NOT BE OF ANY HELP TO ASSESSEE. IN CASE OF RAJASTHAN HOUSING BOAR D VS. CIT (SUPRA), REGISTRATION U/S 12A WAS GRANTED TO ASSESS EE EARLIER. AFTER INSERTION OF FIRST PROVISO TO SECTION 2(15) WHEN RE GISTRATION WAS CANCELLED, TRIBUNAL HELD IF TO BE INVALID ON THE RE ASONING THAT FINDING THE OBJECT OF ASSESSEE CHARITABLE, DEPARTMENT HAD G RANTED IT REGISTRATION U/S 12A EARLIER. SIMILAR IS THE CASE W ITH MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORITY VS. ADIT (E) ( SUPRA). IN CASE OF JODHPUR DEVELOPMENT AUTHORITY VS. CIT (SUPRA), T RIBUNAL ALLOWED REGISTRATION U/S 12A BEING OF THE VIEW THAT OBJECT OF ASSESSEE IS FOR GENERAL PUBLIC UTILITY AND WITHOUT PROFIT MOTIVE. W HEREAS IN THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT ASSESSEE I S ENGAGED IN A PURELY COMMERCIAL ACTIVITY WITH PROFIT MOTIVE, HEN CE, RATIO OF THE DECISIONS RELIED UPON BY LD. DR ARE CLEARLY APPLICA BLE. IN THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY ME RIT IN THE SUBMISSIONS OF ASSESSEE AND ACCORDINGLY UPHOLD THE ORDER OF LD. DIT(E) BY DISMISSING THE GROUNDS RAISED BY ASSESSEE . 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICI AL MEMBER HYDERABAD, DATED: 3 RD JUNE, 2015 KV 18 ITA NO. 110/HYD/2008 AP HOUSING BOARD, HYDERABAD COPY TO:- 1) ANDHRA PRADESH HOUSING BOARD, GRUHAKALPA, M.J. R OAD, HYDERABAD. 2) DIT(E), HYDERABAD. 3) ADIT(E), HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.