Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 6943 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 8 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-07-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
E
Next Hearing Date
01-03-2016
Assessment Year
misc
Appeal Filed On
13-01-2016
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SH. C.M. GARG, J.M AND SH. O.P. KANT, A.M APPEAL NO. 172/DEL/2016 APPELLANT BY: SH. BALBIR SINGH, SR. ADV ALONGWITH SH. ABINASH MEHROTRA, ADV, SH. SUNIL KUMAR GUPTA, CA, SH. DINESH VERMA, CA, AN D MS. RAJ RANI LAKRA, CA, RESPONDENT BY: SHRI RAJESH KUMAR, CIT- DR. DATE OF FINAL HEARING : 18/05/2016 DATE OF PRONOUNCEMENT : 22 /07/2016 ORDER PER C.M. GARG, JM . THIS APPEAL HAS BEEN FILED AGAINST THE ORDER OF THE COMMISSION OF THE INCOME TAX (EXEMPTIONS) LUCKNOW DATED 19.11.2015 BY WHICH APPLICATION OF THE APPELLANT FOR GRANT OF REGISTRATION UNDER SE CTION 12A OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) HAS BEEN DISMISSE D. NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY ADMINISTRATIVE BLOCK, SECTOR-06, DISTRICT- GAUTAM BUDH NAGAR, NOIDA VS CIT(E) LUCKNOW APPELLANT RESPONDENT PAN NO. AAALN0120A 2 2. THE GROUNDS RAISED BY THE APPELLANT READ AS FOLL OWS: 1. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (EXEMPTION), GROSSLY ERRED IN THE LAW AND O N FACTS IN REJECTING THE APPLICATION FILED BY THE ASSESSEE SEE KING GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961, WITHOUT LAWFULLY APPRECIATING THE TRUE AND CORRECT FACTS OF THE CASE AND HENCE THE ORDER IS LIABLE TO BE QUASHED. 2. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD CIT (EXEMPTION,) GROSSLY ERRE4D IN LAW AND FACTS IN REJECTING THE APPLICATION FILED BY THE ASSESSEE, WI THOUT LAWFULLY APPRECIATING THAT THE ASSESSEE IS A STATUTORY AUTHO RITY CONSTITUTED UNDER SECTION 3 OF THE UTTAR PRADESH IN DUSTRIAL DEVELOPMENT ACT, 1976 (UPIDA) AND IS DULY NOTIFIED BY THE HONBLE GOVERNOR OF UTTAR PRADESH AS AN INDUSTRI9AL TOWNSHIP UNDER ARTICLE 243Q OF THE CONSTITUTION OF INDIA; A ND IS STATUTORILY MANDATED BY SECTION 6 OF UPIDA FOR REND ERING PUBLIC UTILITY SERVICES, SATISFYING THE REQUIREMENT S OF SECTION 2(15) OF THE INCOME TAX ACT AND HENCE ENTITLED TO B E G RANTED REGISTRATION UNDER SECTION 12AA OF THE ACT. 3. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (EXEMPTION), GROSSLY ERRED IN LAW AND ON FA CTS IN TREATING THE ASSESSEE AS A COMMERCIAL BUSINESS ENTI TY, WHEREAS THE ASSESSEE, BEING A STATUTORY AUTHORITY NOTIFIED UNDER ARTICLE 243Q OF THE CONSTITUTION OF INDIA, IS OBLIGED TO PE RFORM ITS FUNCTIONS AS DECLARED UNDER SCHEDULE XII PRESCRIBED UNDER ARTICLE 243W OF THE CONSTITUTION OF INDIA AND HENCE CANNOT BE TREATED AS COMMERCIAL/BUSINESS ENTITY AND HENCE THE ACTIVITIES OF THE AUTHORITY BEING IN ACCORDANCE WITH SECTION 2 (15) OF THE INCOME TAX ACT, IS LIABLE TO BE GRANTED REGISTRATIO N UNDER SECTION 12AA OF THE INCOME TAX ACT. 4. BECAUSE, THE LD CIT (EXEMPTION), GROSSLY ERRED IN L AW AND ON FACTS IN TREATING THE ASSESSEE AS A COMMERCIAL BUSI NESS ENTITY, WITHOUT APPRECIATING THAT MERE EARNING OF SURPLUS R ECEIPTS FROM THE ACTIVITIES OF THE ASSESSEE FOR THE PURPOSE OF S ELF- SUSTAINANCE, CANNOT BE REGARDED AS PROFIT-MOTIVE; HENCE SUCH OBSERVATIONS OF THE LD CIT (EXEMPTION) B EING IN DIRECT CONFLICT OF THE VERDICT OF THE HONBLE APEX COURT IN THE 3 CASES OF SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY 1971 SCR(1) 719, GUJARAT MARITIME BOARD [2008] 166 TAXMAN 58 (SC) AND ANDHRA PRADESH ROAD TRANSPORT CORPORATION 25 TAXMAN 63A (SC) IS LIABLE TO BE REPELLED BEING INFERIOR OBSERVATIONS I N VIEW OF THE FINAL VERDICT OF THE SUPREME COURT AND THE ASSESSEE BE GRANTED REGISTRATION U/S 12AA. 5. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD CIT (EXEMPTION) GROSSLY ERRED IN LAW IN FAILING TO APPLY AND FOLLOW THE BINDING JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LUCKNOW DEVELOPMENT AUTHORITY AND THAT OF THE HONBLE JURISDICTIONAL ITAT DELHI IN THE CASE OF HARIDWAR DEVELOPMENT AUTHORITY BY CITING IRRELEVANT/ EXTRANEOUS REASONS AND WHICH JUDGMENTS ARE SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE IN STANT CASE AND ON SUCH COUNT THE IMPUGNED ORDER, BEING UNSUSTA INABLE IN LAW, DESERVES TO BE QUASHED. 6. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD CIT (EXEMPTION), GROSSLY ERRED IN LAW AND ON FAC TS IN TREATING THE ASSESSEE AS A COMMERCIAL BUSINESS ENTI TY, WITHOUT APPRECIATING THAT THE OBJECTS/ ACTIVITIES OF THE AS SESSEE ARE IN FURTHERANCE OF PUBLIC POLICY AND ACTIVITIES OF THE ASSESSEE HAVE NOT BEEN ACKNOWLEDGED/ TAKEN NOTE-OFF OF THE LD CIT (EXEMPTION), WHILE ADJUDICATING THE CLAIM OF THE AS SESSEE AND HENCE THE ORDER IS LIABLE TO BE QUASHED. 7. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD CIT (EXEMPTION), GROSSLY ERRED IN LAW AND ON FAC TS, WHILE PASSING THE IMPUGNED ORDER IN PLACING RELIANCE UPON CASE LAW AUTHORITIES THAT ARE CLEARLY DISTINGUISHABLE AND IN APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE AS IN NONE OF THE CASES CITED BY THE LD CIT (EXEMPTION) THE PROVISION S OF CHAPTER IXA OF THE CONSTITUTION OF INDIA, GET ATTRA CTED OR HAVE BEEN INCORRECTLY INTERPRETED BY THE LD CIT (EXEMPTI ON) AND HENCE ON SUCH PREMISE THE ORDER BEING BASED UPON RE LEVANT CONSIDERATIONS, DESERVES TO BE QUASHED. 8. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE IMPUGNED ORDER OF THE LD CIT (EXEMPTION), IS LIABLE TO BE QUASHED AS THE SAME IS MADE BY INCORRECTLY OBSERVIN G THAT 4 PROPER DETAILS WERE NOT SUPPLIED BY THE ASSESSEE, W HEREAS IN CONTRAST, ALL REQUISITE DETAILS WERE SUPPLIED BY TH E ASSESSEE BEFORE THE LD CIT (EXEMPTION) AND THE LD CIT (EXEMP TIONS) HAS RATHER PASSED HE IMPUGNED ORDER IN A PREMEDITAT ED AND BIASED MANNER, VIOLATING THE PRINCIPLES OF NATURAL JUSTICE, AS THE ORDER IS PASSED ON THE SAME DATE ON WHICH THE H EARING WAS FIXED AND HENCE THE ORDER IS LIABLE TO BE QUASHED O N THIS COURT. 9. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD CIT (EXEMPTION), GROSSLY ERRED IN LAW AND ON FAC TS IN REJECTING THE APPLICATION FILED BY THE ASSESSEE SEE KING GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THAT THE BOOKS OF ACCOUNT OF THE ASSES SEE ARE DULY AUDITED BY THE STATE GOVERNMENT AUDITOR (LOCAL FUND AUDITOR) AND THAT NO EXPENSE CAN BE INCURRED BY THE ASSESSEE WITHOUT THE AUTHORITY OF LAW OR FOR A PURPOSE OTHERWISE THAN TH OSE ENUMERATED UNDER SECTION 6 OF THE UPIDA; HENCE THE OBSERVATIONS OF THE CIT (EXEMPTIONS) TO THE CONTRAR Y ARE LIABLE TO BE REJECTED. 10. THAT THE ORDER PASSED BY THE LD CIT (EXEMPTION) IS FURTHER LIABLE TO BE QUASHED AS THE SAME IS MADE IN VIOLATI ON TO THE PRINCIPLES OF NATURAL JUSTICE AS THE LD CIT (EXEMPT IONS) DID NOT PROVIDE DUE AND PROPER OPPORTUNITY OF HEARING T O THE ASSESSEE AND HENCE THE ORDER IS LIABLE TO BE QUASHE D ON THIS COUNT AS WELL. 11. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD CIT (EXEMPTIONS), FAILED TO PERFORM ITS BOUNDEN LEGAL OBLIGATION TO FOLLOW AND APPLY THE DECISIONS OF THE HONBLE JURISDICTIONAL COURT AND THE HONBLE JURISDICTIONAL TRIBUNAL, IN IDENTICAL FACTS AND CIRCUMSTANCES, RATHER THAN T O FRIVOLOUSLY COMPEL THE ASSESSEE TO PURSUE LITIGATION AND FOR WH ICH REASON, COSTS ARE LIABLE TO BE AWARDED TO THE ASSESSEE. 12. THE HUMBLE APPLICANT CRAVES FOR LEAVE TO RAISE ANY OTHER OR FURTHER GROUND OF APPEAL WITH THE PERMISSION OF THE HONBLE INCOME TAX APPELLANT TRIBUNAL 5 3. WE HAVE HEARD THE ARGUMENTS OF THE BOTH THE SIDE S AND CAREFULLY PERUSAL RELEVANT MATERIALS PLACED ON RECORD OF THE TRIBUNAL INTER-ALIA, IMPUGNED ORDER OF THE CIT(E) PAPERS BOOKS FILED BY THE ASSESSEE AND OTHER RELEVANT RECORD. 4. THE LD SENIOR COUNSEL FIRST OF ALL SUBMITTED T HAT THE MAIN GRIEVANCE OF THE APPELLANT IS COVERED BY THE ORDER OF THE ITAT N EW DELHI IN THE CASE OF HARIDWAR DEVELOPMENT AUTHORITY, VS CIT(E) DEHRADUN, ORDER DATED 25.07.2014 (ASSESSEE PAPER BOOK PAGE 52-67) WHEREIN PARA 7 AND 7.1 IT HAS BEEN CATEGORICALLY HELD THAT THE ACTIVITY CARRIED O UT BY THE ASSESSEE COMES WITHIN THE LAST LIMB OF SECTION 2(15) OF THE ACT VI S ADVANCEMENT OF OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THEREFORE, IT HAS TO BE EXAMINED WHETHER THE SAME DOES NOT INVOLVE THE CARRYING ON OF ACTIVI TY IN THE NATURE OF TRADE, COMMERCE, BUSINESS OR ANY ACTIVITY OF RENDERING OF ANY SERVICES IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS OR CESS OF FEE OR A NY OTHER CONSIDERATIONS IRRESPECTIVE OF THE NATURE OF THE HUGE OR APPLICATI ON OF REDUCTION OF THE INCOME FROM SUCH ACTIVITY. 5. THE LD SENIOR COUNSEL FURTHER POINTED OUT TH AT THE PRAYER OF THE ASSESSEE FURTHER GET SUPPORT FROM THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD, IN THE CASE OF CIT(E) VS L UCKNOW DEVELOPMENT AUTHORITY, (LDA) DATED 16.09.2013 PASSED IN ITA NO. 149 OF 2009 AND OTHER RELATED APPEALS. THE LD. SENIOR COUNSEL, FURT HER DRAWN OUR ATTENTION TOWARDS RELEVANT OPERATIVE PART OF THE SAID DECISIO N AND POINTED OUT THAT IN THAT CASE IT WAS HELD THAT THE APPELLANT (LDA) WAS ESTABLISHED UNDER THE PROVISIONS OF THE UTTAR PRADESH PLANNING AND DEVELO PMENT ACT, 1973 (FOR SHORT UPUPDA) AND THUS IT WAS STATUTORY AUTHORITY AND PRIOR TO 6 01.04.2003 THE APPELLANT WAS ENJOYING EXEMPTION UND ER SECTION 10 (20A) AND SECTION 10 (29) OF THE ACT, AND WHEN THESE PROV ISIONS WERE AMENDED WITH EFFECT FROM 01.04.2003 THEN THE NECESSITY ARO SE TO REGISTRAR THE AUTHORITY UNDER SECTION 12A OF THE ACT. THE LD. COU NSEL FURTHER POINTED OUT THAT THE PRESENT APPELLANT HAS BEEN CREATED UNDER T HE PROVISIONS OF (UP) INDUSTRIAL AREA DEVELOPMENT ACT, 1976 (FOR SHORT UP IDA) AND IN THIS ACT THE PROVISIONS OF UTTAR PRADESH URBAN PLANNING AND DEVELOPMENT ACT, 1973 HAS BEEN BORROWED AND USED BY THE LEGISLATION AND T HE ACT OF 1976 BY WHICH PRESENT APPELLANT HAS BEEN CREATED AND THE PROVISIO NS IN BOTH THE ACTS ARE PERIMATERIA THEREFORE, AS PER OBJECTS MENTIONED IN SECTION 6 T HAT THE AUTHORITY SHALL SECURE THE PLANNED DEVELOPMENT OF INDUSTRIAL DEVELOPMENT AREAS WHICH IS AN OBJECT OF GENERAL PUBLIC UTILITY AS PROVIDED IN THE LAST LIMB OF SECTION 2(15) OF THE ACT. 6. THE LD. SENIOR COUNSEL ALSO POINTED OUT THAT A S PER RATIO OF THE DECISION OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF C IT(TDS) VS CANARA BANK, REPORTED AS (2016) 69 TAXMAN.COM 204 (ALLAHAB AD) IT HAS BEEN HELD THAT NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY, I. E. APPELLANT OF THE PRESENT APPEAL IS A CORPORATION ESTABLISHED BY A ST ATE ACT, AND IS, THEREFORE, ENTITLED TO EXEMPTION OF PAYMENT OF TAX AT SOURCE U NDER SECTION 194-A (1 OF THE ACT). THE LD SENIOR COUNSEL SPECIALLY DRAWN OUR ATTENTION TOWARDS PARAGRAPHS NO. 39 AND 40 OF THE SAID DECISION AND C ONTENDED THAT THE APPELLANT HAS BEEN GRANTED A STATUS OF MUNICIPALITY UNDER ARTICLE 243-Q OF THE CONSTITUTION OF INDIA, WHICH DEALS WITH THE CON STITUTION OF A MUNICIPALITY. IT WAS ALSO CONTENDED THAT THE UP, ST ATE GOVERNMENT ISSUED A NOTIFICATION DATED 24.12.2001 IN EXERCISE OF POWER CONFERRED UNDER THE PROVISO TO CLAUSE 1 OF ARTICLE 243-Q OF THE CONSTIT UTION WHICH PROVIDES THAT 7 HAVING REGARD TO THE SIZE OF NOIDA WHICH HAS BEEN D ECLARED TO BE AN INDUSTRIAL DEVELOPMENT AREA BY NOTIFICATION DATED 1 7.04.1976 AND THE MUNICIPAL SERVICES BEING PROVIDED BY THE NOIDA, THE GOVERNOR IS PLEASED TO SPECIFY THAT THE NOIDA, WOULD BE AN INDUSTRIAL TOW NSHIP WITH EFFECT FROM THE DATE OF PUBLICATION OF THE NOTIFICATION WHICH C LEARLY MEANS THAT INSTEAD OF MUNICIPAL CORPORATION PROVIDING SERVICES, NOIDA WOU LD PROVIDE THE SAID SERVICES. THE LD COUNSEL FURTHER POINTED OUT THAT I N THE LIGHT OF OBSERVATIONS OF HONBLE HIGH COURT OF ALLAHABAD, AND AS PER RATI O OF DECISION OF HONBLE APEX COURT IN THE CASE OF S.S. DHANOA VS MUNICIPAL CORPORATION DELHI, AIR 1981 SC 1395 IT HAS TO BE ACCEPTED THAT THE APP ELLANT WILL OWE ITS EXISTENCE TO AN ACT OF THE STATE I.E. UPIDA, 1976. 7. THE LD SENIOR COUNSEL FURTHER CONTENDED THAT AS PER DECISION OF HONBLE SUPREME COURT, IN THE CASE OF SHRI RAMSETU CORPORATIVE VS STATE OF MAHARASHTRA AIR 1970 SC 1771, IT HAS BEEN HELD THAT THE CORPORATION IS ESTABLISHED FOR THE PURPOSE OF SECURING AND ASSISTI NG THE RAPID AND ORDERLY ESTABLISHMENT AND ORGANIZATION OF INDUSTRIES IN THE INDUSTRIAL AREAS, AND IN THE INDUSTRIAL STATES IN THE STATE OF MAHARASHTRA S ELECTED BY THE STATE GOVERNMENT FOR THE PURPOSE AND MAKE THEM AVAILABLE FOR UNDERTAKINGS TO ESTABLISH THEMSELVES IS NOT A GOVERNMENT COMPANY WI THIN THE MEANING SECTION 617 OF THE COMPANIES ACT, 1956 NOR THE PROV ISIONS OF SAID ACT, CAN BE SAID TO APPLY TO THE CORPORATION BECAUSE UNDER T HE PROVISIONS CONTAINED IN SECTION 616 OF THE COMPANIES ACT, THE PROVISIONS OF THAT ACT WILL APPLY TO A COMPANY GOVERNED BY ANY SPECIAL ACT. THE LD COUNSEL VEHEMENTLY CONTENDED THAT FOR THE PURPOSE OF EVALUATION OF OB JECTS AND ACTIVITIES OF THE PRESENT APPELLANT THE PROVISIONS OF UPIDA, HAS TO B E SEEN AND THE FUNCTIONS AND POWERS OF THE APPELLANT ARE TO BE GATHERED FROM THE SAID ACT, WHICH 8 CREATED THE EXISTENCE OF APPELLANT FOR THE DEVELOPM ENT OF INDUSTRIES IN THE UP STATE. 8. THE LD SENIOR COUNSEL FURTHER POINTED OUT THA T THE CIT(E) REJECTED APPLICATION OF THE APPELLANT FOR GRANT OF REGISTRAT ION UNDER SECTION 12A OF THE ACT HAS BEEN DISMISSED BY DRAWING A CONCLUSION WHIC H IS CLEARLY AGAINST THE RATIO OF THE RELEVANT DECISIONS AND THUS THE SAME C ANNOT BE HELD AS SUSTAINABLE. THE LD SENIOR COUNSEL VEHEMENTLY POINT ED OUT THAT OBSERVATIONS IN PARA 9 TO 13 OF THE IMPUGNED ORDER THE CIT(E) HAS CONSIDERED IRRELEVANT FACTS FOR DISMISSING APPLICAT ION OF THE ASSESSEE AND HE HAS IGNORED ALL RELEVANT FACTS AND CIRCUMSTANCES RE GARDING OBJECTS AND ACTIVITIES OF THE APPELLANT WHICH HAS BEEN CREATED BY THE SPECIAL ACT OF UP STATE I.E. UPIDA 1976 WHICH IS PAREMATIREA TO THE P ROVISIONS OF EARLIER UPUPDA ACT OF 1973. THE LD SENIOR COUNSEL ALSO POIN TED OUT THAT THE APPELLANT IS CONTROL BY UP GOVERNMENT AND AFTER DIS SOLUTION OF AUTHORITY ALL PROPERTIES AND FUNDS SHALL VEST IN OR WE RELEASED B Y THE STATE GOVERNMENT OF UP, THEREFORE, APPELLANT IS QUITE DISSIMILAR WITH T HE OTHER PROFIT MAKING COMPANIES AND FIRMS. THE LD SENIOR COUNSEL LASTLY P OINTED OUT THAT APPELLANT MAY KINDLY BE GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT, AND IF ANY DISCREPANCIES OR PROFIT MOTIVE OBJECTS I S FOUND THEM HE MAY DENIED EXEMPTION UNDER SECTION 11, 13 AND OTHER PRO VISIONS OF THE ACT. 9. REPLYING TO THE ABOVE THE LD DEPARTMENTAL RE PRESENTATIVE (DR) DRAWN OUR ATTENTION TOWARDS OBSERVATIONS AND CONCLUSION R ECORDED BY THE CIT(E) IN THE IMPUGNED ORDER. FIRST OF ALL HE TOOK US THROUGH PARA 3 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE APPELLANT COULD NOT PR ODUCE DETAILS OF ACTIVITIES UNDERTAKEN DURING AY 2014-15 DESPITE OF MANY OPPORT UNITIES GIVEN TO THE 9 APPELLANT. THE LD DR FURTHER POINTED OUT THAT IN OR DER TO FIND OUT THE FACTS REGARDING CHARITABLE ACTIVITIES OF THE APPELLANT TH E CIT(E) GRANTED SEVERAL OPPORTUNITIES TO PROVIDE THE BASIS OF COSTING OF VA RIOUS PLOTS/FLATS DEVELOPED AND SOLED BY THE APPELLANT ALONG WITH ITS SALE PRIC E IN ORDER TO ASCERTAIN THE CLAIM OF THE APPELLANT REGARDING CHARITABLE ACTIVIT IES BUT THE DIRECTION OF THE CIT(E) COULD NOT BE COMPLIED AND HENCE ADVERSE PRES UMPTION WAS DRAWN AGAINST THE APPELLANT. THE LD DR FURTHER POINTED OU T THAT IN THE INCOME TAX RETURN FOR AY 2015-16 THE APPELLANT CLAIM EXEMPTION UNDER SECTION 10(20) OF THE ACT AND AT THE SAME TIME IT WAS SEEKING REGI STRATION UNDER SECTION 12AA OF THE ACT, BY FILING THE APPLICATION BEFORE C IT(E) WHICH IS NOT A BONA-FIDE ACT OF THE APPELLANT. 10. THE LD DR FURTHER DRAWN OUR ATTENTION TOWA RDS PARA 5 OF THE IMPUGNED ORDER AND CONTENDED THAT THE APPELLANT IS NOT CARRYING OUT ANY ACTIVITY FOR ADVANCEMENT OF ANY OBJECT OF GENERAL P UBLIC UTILITY AND IS PURELY INVOLVED IN COMMERCIAL ACTIVITIES FOR THE PURPOSE O F MAKING PROFIT BY ACQUIRING LANDS FROM THE FARMERS AND OTHERS AT A LO W PRICE AND AFTER DEVELOPMENT THE SAME LAND IS BEING SOLD AT A PREMIU M AT HIGH PRICE TO THE PERSPECTIVE BUYERS, THEREFORE IT IS CLEAR THAT THE ACTIVITIES OF THE APPELLANT ARE PROFIT MOTIVE WHICH CANNOT BE SAID TO A ACTIVITY OF CHARITABLE PURPOSE OF GENERAL PUBLIC UTILITY. THE LD DR FURTHER POINTED O UT THAT HOWEVER, ON DISSOLUTION OF THE AUTHORITY ALL ASSETS SHALL BE TR ANSFERRED TO THE GOVERNMENT AND THERE IS NO RESTRICTION ON THE FURTHER USE OF T HESE ASSETS BY THE GOVERNMENT AND THERE IS NO RESTRICTION REGARDING UT ILIZATION OF THE LEFT PROPERTY ONLY FOR CHARITABLE PURPOSES THEREFORE THE APPELLANT CANNOT BE TERM AS A CHARITABLE ORGANIZATION. 10 11. THE LD DR ALSO DRAWN OUR ATTENTION TOWARDS S ECOND PART OF PARA 7 OF THE IMPUGNED ORDER AND SUBMITTED THAT ALTHOUGH OBJE CTS OF THE APPELLANT CLAIMED TO BE CHARITABLE, BUT IN FACT SAME ARE PURE LY OF COMMERCIAL NATURE WITH A PROFIT MOTIVE BECAUSE THE ASSESSEE HAS BEEN ACQUIRING LAND AT A VERY LOW PRICE SELLING DEVELOPED PROPERTIES AT A VERY HI GH RATE BY ADDING THE PREMIUM, THEREFORE MOTIVE OF PROFIT EARNING IS CLEA R FROM SUCH ACTIVITY. THE LD DR STRENUOUSLY POINTED OUT THAT AFTER ANALYZING ALL FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF RELEVANT PROVISIONS THE CIT(E) RIGHTLY CONCLUDED THAT THE ASSESSEE IS NOT INVOLVED IN ANY CHARITABLE ACTIVITY OF GENERAL PUBLIC UTILITY AND THEREFORE NOT ELIGIBL E FOR REGISTRATION UNDER SECTION 12A OF THE ACT. THE LD DR CONCLUDED HIS ARG UMENT BY SUBMITTING THAT THE ACTIVITIES OF THE APPELLANT ARE OF COMMERC IAL IN NATURE WITH A PROFIT MOTIVE WHICH CANNOT BE SAID FOR CHARITABLE PURPOSE OF GENERAL PUBLIC UTILITY AND DESPITE OF SEVERAL OPPORTUNITIES, THE APPELLANT COULD NOT FURNISHED REQUIRED DETAILS REGARDING ITS ACTIVITIES TO ESTAB LISH THAT IT IS UNDERTAKING CHARITABLE ACTIVITIES OF THE NATURE OF GENERAL PUBL IC UTILITY, THEREFORE APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT, WAS RIGHTLY DISMISSED BY THE CIT(E). 12. DURING THE SUBSEQUENT HEARING ON BEHALF OF T HE REVENUE A COPY OF DECISION OF HONBLE HIGH COURT OF ALLAHABAD, IN THE CASE OF NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY VS CCIT IN CIVIL M ISC. WRIT PETITION NO. 1338/2005 DATED 28.02.2011 WAS SUBMITTED AND IT WAS CONTENDED BY THE LD DR THAT AFTER 01.03.2003 THE APPELLANT IS NOT A LOC AL AUTHORITY WITHIN THE MEANING OF SECTION 10(20) OF THE ACT. THE LD DR ALS O FILE COPY OF THE ORDER OF HONBLE HIGH COURT OF ALLAHABAD WHEREIN REVIEW P ETITION OF THE APPELLANT REQUESTING TO RECALL EARLIER ORDER DATED 28.02.2011 HAS BEEN 11 DISMISSED. THE LD DR FURTHER DRAWN OUR ATTENTION TO WARDS COPY OF ORDER OF HONBLE SUPREME COURT IN SPECIAL WRIT PETITION (CIV IL) NO. 1820-1821/2011 DATED 17.01.2014 AND SUBMITTED THAT EVEN IN THE SLP FILED BY THE APPELLANT PRAYER OF INTERIM RELIEF HAS BEEN REJECTED AND THE SITUATION TILL DATE IS THAT THE APPELLANT IS NOT A LOCAL AUTHORITY WITHIN THE MEANI NG OF SECTION 10(20) OF THE ACT. 13. THE LD DR REITERATED WRITTEN SYNOPSIS FILED B Y THE REVENUE AND VEHEMENTLY ARGUED THAT DESPITE BEING REPEATEDLY CAL LED FOR INFORMATION, THE APPELLANT DID NOT PROVIDE CERTAIN INFORMATION, AND ALSO FAILED TO SUPPORT ITS CONTENTION THAT THE ACTIVITY CARRIED OUT WAS CHARIT ABLE IN NATURE. THE LD DR POINTED OUT THAT THE APPELLANT DID NOT PRODUCE ANY BOOKS OF ACCOUNTS AND VOUCHER ON THE PRETEXT OF BEING VOLUMINOUS AND HE NCE, THE CONTENTION OF NOT APPRECIATING THE BOOKS OF ACCOUNTS DOES NOT ARI SE AND THIS CONDUCT OF ASSESSEE CANNOT BE SAID TO BE A BONA-FIDE ACT OF AN APPLICANT SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT EVEN IF T HE CONTENTION OF THE APPELLANT IS ACCEPTED THAT IT HAD FILED PROPER AND COMPLETE DETAILS, IT IS SUBMITTED THAT THE DETAILS PUT ON RECORD HAVE BEEN THOROUGHLY CONSIDERED BY THE LD. COMMISSIONER. THE LD DR ALSO CONTENDED THAT A SPEAKING ORDER HAS BEEN PASSED REFUSING THE REGISTRATION AND GIVING TH E DETAILS OF BUSINESS ACTIVITY CARRIED ON BY THE APPELLANT AND REASONS AS TO WHY THE ACTIVITY OF THE APPELLANT CANNOT BE CONSIDERED TO BE A CHARITABLE A CTIVITY. 14. DURING THE LAST ROUND OF HEARING THE LD DR POINTED OUT THAT AS PER DECISION OF HONBLE JURISDICTIONAL HIGH COURT DATED 28.02.2011 (SUPRA) THE APPELLANT IS NOT A LOCAL AUTHORITY UNDER SECTION 10 (20) OF THE ACT, AND THE ASSESSEE IS FILING INCOME TAX RETURN BY CLAIMING EX EMPTION UNDER SECTION 12 10 (20) OF THE ACT, WHICH SHOWS THE FALSITY ON THE PART OF THE ASSESSEE. THE LD DR ALSO POINTED OUT THAT THE ASSESSEE FILED APPL ICATION SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT ON 15.05. 2015 BEFORE CIT(E) LUCKNOW AND IT SHOULD HAVE BEEN FILED WITH PRINCIPL E COMMISSIONER OF INCOME TAX (PCIT) NOIDA AS THE ASSESSING OFFICER OF THE APPELLANT IS DCIT CIRCLE 6, NOIDA WHICH FALLS WITHIN THE ADMINISTRATI VE CONTROL OF PCIT NOIDA AND THUS APPLICATION HAS BEEN FILED BY THE APPELLAN T BEFORE CIT(E) LUCKNOW, WHO HAS NO VALID JURISDICTION TO ENTERTAIN THE SAME , COULD NOT BE ALLOWED AND THE SAME WAS RIGHTLY DISMISSED. 15. HOWEVER, ON SPECIFIC QUERY FROM THE BENCH T HE LD DR FAIRLY ACCEPTED THAT IN THE IMPUGNED ORDER THERE IS NO MENTION OF J URISDICTION ISSUE AND APPLICATION OF THE APPELLANT HAS NOT BEEN REJECTED ON THE JURISDICTION GROUND. THE LD DR ALSO FAIRLY ACCEPTED THAT THE ASSESSEE CA NNOT FILE ITS RETURN OF INCOME BY CLAIMING EXEMPTION UNDER SECTION 11, 13 A ND OTHER RELEVANT PROVISIONS OF THE ACT, WITHOUT GETTING REGISTRATION UNDER SECTION 12A OF THE ACT. 16. REPLYING TO THE ABOVE THE LD SENIOR COUNSEL ALSO PLACED REJOINDER TO THE ABOVE SUBMISSIONS OF THE LD DR ON BEHALF OF THE REVENUE AND CONTENDED THAT THERE IS NO MENTION OF ANY OBSERVATIONS IN THE IMPUGNED ORDER BY THE CIT(E) THAT HE HAS NO JURISDICTION TO ENTERTAIN APP LICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT AND IT WAS NOT THE BASIS FOR DENIAL OF REGISTRATION BY THE CIT(E) THEREFORE, THIS ISSUE CANNOT BE AGITATED BY THE REVENUE. THE LD SENIOR COUNSEL ALSO PLACED RELIANCE ON THE RECENT DECISION OF HONBLE HIGH COURT OF DELHI IN T HE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS DGIT(E) REPORTED AS 371 I TR 333 (DELHI) AND 13 CONTENDED THAT THE AMENDMENT OF SECTION 2(15) OF TH E ACT, INSERTED BY THE FINANCE ACT, 2008 HAS BEEN READ DOWN BY THE HIGH CO URT BY OBSERVING THAT WHEN PRIMARY AND DOMINANT OBJECT OF THE INSTITUTION IS TO ADVANCE GENERAL PUBLIC UTILITY ACTIVITIES THEN INCOME GENERATED BY INCIDENTAL COMMERCIAL ACTIVITIES DOES NOT DISENTITLE THE APPLICANT/APPELL ANT FOR REGISTRATION 12A OF THE ACT, AS CHARITABLE INSTITUTION IS ENTITLED TO E XEMPTION. 17. THE LD SENIOR COUNSEL DRAWING OUR ATTENTION TOWARDS PARA 58 OF THE SAID DECISION POINTED OUT THAT IT HAS BEEN HELD BY THEIR LORDSHIP THAT THE DOMINANT AND THE PRIME OBJECTIVE HAVE TO BE SEEN. I F THE DOMINANT AND THE PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSE, IS PROFIT MAKING, WHETHER ITS A CTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM ITS OBJECT TO BE A CHARITABLE PU RPOSE ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMARILY BY A D ESIRE OR MOTIVE TO EARN PROFITS BUT TO DO CHARITY THROUGH THE ADVANCEMENT O F AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INS TITUTION ESTABLISHED FOR CHARITABLE PURPOSES. 18. THE LD SENIOR COUNSEL ALSO POINTED OUT THAT AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT(E) VS GUJARAT MARI TIME BOARD REPORTED AS (2008) 166 TAXMAN 58 (SC) AND CONTENDED THAT IN THI S CASE IT WAS HELD THAT WHEN ASSESSEE WAS STATUTORY AUTHORITY ESTABLISHED U NDER SPECIAL ACT OF STATE OF GUJARAT AND MANAGEMENT AND CONTROL OF THE ASSESS EE WAS ESSENTIALLY WITH THE STATE GOVERNMENT HAVING NO PROFIT MOTIVE THEN T HE ASSESSEE CANNOT BE PRECLUDED FROM CLAMING EXEMPTION UNDER SECTION 11(1 ) OF THE ACT, IN THE 14 LIGHT OF DEFINITION OF WORDS CHARITABLE PURPOSES AS DEFINED UNDER SECTION 12 (15) OF THE ACT, EVEN IF IT HAS CEASED TO BE A L OCAL AUTHORITIES UNDER SECTION 10(20) OF THE ACT, AND IN THE SIMILAR FACTS AND CIRCUMSTANCES OF THE PRESENT CASE THE APPELLANT IS CEASED TO BE EXIST AS A LOCAL AUTHORITY UNDER SECTION 10(20) OF THE ACT, BY THE ORDER OF HONBLE HIGH COURT DATED 28.02.2011 BUT IT IS ENTITLED FOR EXEMPTION UNDER S ECTION 11(1) OF THE ACT, BY ESTABLISHING THAT THE PREDOMINANT PURPOSE OF THE AP PELLANT IS DEVELOPMENT OF INDUSTRIAL AREAS AND INDUSTRIALS ZONES IN THE STATE S, WHICH HAS BEEN CREATED BY THE SPECIAL ACT, I.E. UPIDA 1976, UNDER THE MANAGEM ENT AND CONTROL OF THE UP STATE HAVING NO PROFIT MOTIVE AND ITS ACTIVITIES ARE OF CHARITABLE PURPOSES OF GENERAL PUBLIC UTILITY. THE LD SENIOR COUNSEL LA STLY POINTED OUT THAT FOR SECURING AND GETTING EXEMPTION UNDER SECTION 11(1) AND OTHER RELEVANT PROVISIONS OF THE ACT, IT IS NECESSARY TO GET REGIS TERED UNDER SECTION 12A OF THE ACT WHICH HAS BEEN DENIED ON THE BASIS OF INCOR RECT AND IRRELEVANT REASONS. THE LD SENIOR COUNSEL STRENUOUSLY ARGUED T HAT AFTER ESTABLISHING ITS POSITION OF AN STATUTORY AUTHORITY CREATED BY THE S PECIAL ACT OF THE STATE FOR CHARITABLE PURPOSE WITHOUT ANY PROFIT MOTIVE FOR DE VELOPMENT OF INDUSTRIAL AREAS IN UP STATE, WHICH IS A GENERAL PUBLIC UTILIT Y ACTIVITY, THE APPELLANT CANNOT BE PRECLUDED FROM GETTING REGISTERED UNDER S ECTION 12A OF THE ACT. THE LD SENIOR COUNSEL AGAIN PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS CANARA BANK (SUPRA) AND SUBMITTED THAT APPELLANT IS A CORPORATI ON ESTABLISHED BY A STATE ACT, THEREFORE, IT SHOULD BE GRANTED REGISTRATION U NDER SECTION 12A OF THE ACT. 19. THE LD SENIOR COUNSEL ALSO DRAWN OUR ATTENT ION TOWARDS DECISION OF HONBLE SUPREME COURT IN CASE OF M.D. H.S.I.D.C AND ORS VS. M/S HARI 15 OM ENTERPRISE AND ANR PASSED IN CIVIL APPEAL NO. 10 89/2008 DATED 16.05.2008 AND CONTENDED THAT CORPORATION IS A PUBL IC SECTOR UNDERTAKING WHICH DEVELOPS INFRASTRUCTURE FOR SETTING UP OF IND USTRIAL UNITS AND IN VIEW OF THE OBJECT AND PURPORT FOR WHICH THE CORPORATION HA D BEEN CONSTITUTED AND INCORPORATED IT MUST BE HELD TO BE A GOVERNMENT FUN CTION FOR CHARITABLE PURPOSES OF GENERAL PUBLIC UTILITY. THE LD SENIOR C OUNSEL POINTED OUT THAT THE ACTIVITIES OF THE APPELLANT ARE UNDER COMPLETE CONTROL OF STATE GOVERNMENT HAVING NO PROFIT MOTIVE AND FOR THE PURP OSE OF CHARITABLE ACTIVITIES OF GENERAL PUBLIC UTILITIES THEREFORE, T HE CIT(E) WAS NOT JUSTIFIED AND CORRECT IN DISMISSING APPLICATION OF THE ASSESS EE. NO ANY OTHER ARGUMENT HAS BEEN SUBMITTED BY BOTH THE PARTIES. 20. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIO NS AT THE VERY OUTSET, WE MAY POINT OUT THAT THE MAIN CONTROVERSY IN THIS APP EAL IS REGARDING DENIAL OF REGISTRATION UNDER SECTION 12A OF THE ACT TO THE AP PELLANT. FROM THE RELEVANT OPERATIVE PART OF THE IMPUGNED ORDER WE OBSERVED TH AT THE APPLICATION OF THE APPELLANT HAS BEEN REJECTED MAINLY ON THE FOLLOWING GROUNDS: (I) THAT THE APPLICANT AUTHORITY COULD NOT PRODUCE, BOO K, BANK STATEMENT AND VOUCHERS IN RESPECT OF EXPENSES CLAIM ED BY THE APPLICANT FOR VERIFICATION OF THE ACTIVITIES OF THE TRUST AND IN ABSENCE OF SAME IT COULD NOT BE ASCERTAINED IF THE APPLICANT IS INVOLVED IN ANY CHARITABLE ACTIVITIES AS CLAIMED BY IT. (II) THE CIT(E) ALSO OBSERVED THAT THE APPLICANT AUTHORI TY IS NOT CARRYING ANY CHARITABLE ACTIVITY AS THE APPLICANT H AS GOT INCOME FROM LEASE RENT, PROCESSING FEE, TIME EXTENSION CHA RGES, TRANSFER CHARGES, RENT PERMISSION CHARGES, BUILDING PLAN FEE , PARKING, TOLL BRIDGE, FORFEITURE CHARGES, WATER, SWEAR CHARGES, F ORMS AND PENALTY ETC. LIKE OTHER PRIVATE BUILDERS/COLONIZERS. 16 (III) THE ASSESSEE COULD NOT PRODUCE DETAILS OF ACTIVITY UNDERTAKEN DURING FY 2014-15 IN SPITE OF MANY OPPORTUNITIES PR OVIDED TO IT TO SUBMIT BASIS OF COSTING OF VARIOUS PLOTS/FLATS ALON G WITH ITS SALE PRICE IN ORDER TO ASCERTAIN CLAIM OF THE APPLICANT REGARDING CHARITABLE ACTIVITIES BUT THE ASSESSEE FAILED TO RE PLY IN THIS REGARD. (IV) IT WAS ALSO OBSERVED BY THE CIT(E) THAT IN THE RETU RN OF INCOME THE ASSESSEE/APPLICANT HAS SHOWN NILL INCOME BY MAKING A PROVISION FOR DEVELOPMENT AND MAINTENANCE OF INFRASTRUCTURE O F UTILITIES AND CLAIMING EXEMPTION UNDER SECTION 10(20) OF THE ACT, WHICH WAS NOT ADMISSIBLE TO THE ASSESSEE AND AT THE SAME TIME APPLICANT IS SEEKING REGISTRATION UNDER SECTION 12A OF THE ACT, WHICH CANNOT BE ALLOWED. (V) IT WAS ALSO ALLEGED THAT FROM THE FINANCIAL STATEME NT FILED BY THE APPLICANT FOR FY 2013-14 THE APPLICANT GOT PROPERTY DEVELOPMENT INCOME WHICH COMPRISES OF SALE OF DEVELOP LAND AND SALE OF CONSTRUCTED PROPERTY AND IN VIEW OF BUSINESS ACTIVI TIES OF THE ASSESSEE IT SHOWS THAT THE APPLICANT IS IN INTO THE BUSINESS DEVELOPMENT AND SALE OF PROPERTY FOR EARNING PROFIT ON THE COMMERCIAL LINES WITHOUT ANY INTENTION OF CHARITABL E PURPOSE OF PUBLIC UTILITY AND THERE IS NO CHARITABLE ACTIVITIE S BEING DONE BY THE APPLICANT AT ALL. (VI) IT WAS ALSO ALLEGED THAT THE APPLICANT HAS BEEN ACQ UIRING LAND AT A VERY LOW PRICE AND SELLING PLOTS/ FLATS AT A VERY H IGH RATE AND IS THEREFORE EARNING PROFIT FROM SUCH ACTIVITY AND THU S IT CAN BE CLEARLY INFERRED THAT THE APPLICANT IS NOT INVOLVED IN ANY CHARITABLE ACTIVITY AND THUS NOT ELIGIBLE FOR REGISTRATION UND ER SECTION 12A OF THE ACT. (VII) THE LD CIT(E) LASTLY ALLEGED THAT THE APPLICANT IS PRIMARILY CARRYING OUT ITS BUSINESS ACTIVITIES FOR MAKING PRO FIT JUST LIKE ANY OTHER PRIVATE BUILDER/DEVELOPER AND APPLICANT IS NE ITHER A LOCAL AUTHORITY NOR CARRYING OUT ANY CHARITABLE ACTIVITY, THEREFORE IT IS NOT ELIGIBLE FOR REGISTRATION UNDER SECTION 12A OF THE ACT. (VIII) THE ACTIVITIES OF THE AUTHORITIES ARE HIT BY NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT BECAUSE THE APPELLANT IS P RIMARILY RUNNING 17 ITS BUSINESS ON PURELY COMMERCIAL LINES WITHOUT ANY INTENTION OF CHARITABLE ACTIVITIES. 21. FIRST OF ALL WE MAY POINT THAT AS PER PROVIS ION OF SECTION 12A OF THE ACT, THAT THE PRE-CONDITION FOR APPLICABILITY OF SE CTION 11 AND 12 OF THE ACT, IS THAT THE CLAIMANT/ASSESSEE SHOULD BE REGISTERED UNDER SECTION 12A OF THE ACT, AND PROCEDURE FOR GRANT OF REGISTRATION HAS BE EN PROVIDED IN SECTION 12AA OF THE ACT, WHICH READS AS FOLLOWS: [ PROCEDURE FOR REGISTRATION. 12AA. (1) THE [ PRINCIPAL COMMISSIONER OR] COMMISSIONER ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR IN STITUTION MADE UNDER CLAUSE OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A, SHALL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES H E- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; (II) SHALL IF HE IS NOT SO SATISFIED, PASS AN ORDER IN W RITING REFUSING TO REGISTER THE TRUST OR INSTITUTION. AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: 22. IN VIEW OF ABOVE PROVISION, IN OUR HUMBLE UND ERSTANDING FOR ADJUDICATION OF APPLICATION SEEKING REGISTRATION UN DER SECTION 12A OF THE ACT, THE GRANTING AUTHORITY HAS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE APPLICANT AND HE MAY ALSO MAK E SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS 18 OF THE APPLICANT AND GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER IN WRITING REGISTERING THE APPLICANT UNDER SECTION 12A OF THE ACT. THUS, IN THE LIGHT OF ABOVE MANDATE, FIRST OF ALL, THE REGISTRAT ION GRANTING AUTHORITY IS REQUIRED TO SATISFY HIMSELF ABOUT THE OBJECTS OF TH E APPLICANT AND GENUINENESS OF THE ACTIVITIES AND THEREAFTER, IF REQUIRED, IN O RDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES HE MAY ALSO MAKE SUCH ENQUIRIES AS HE MAY DEEM NECESSARY ON THIS BEHALF. IN THE PRESENT CASE , THE CIT(E) FIRST OF ALL, PROCEEDED TO DIRECT THE ASSESSEE TO PROVIDE THE BAS IS OF COSTING OF VARIOUS FLATS/PLOTS ALONGWITH SALE PRICE IN ORDER TO ASCERT AIN THE CLAIM OF THE ASSESSEE REGARDING CHARITABLE ACTIVITIES. THEREAFTER, HE OB SERVED THAT DESPITE OF SEVERAL OPPORTUNITIES THE ASSESSEE FAILED TO PRODUC E THE REQUIRED DETAILS AND DOCUMENTS. IN OUR UNDERSTANDING OF RELEVANT PROVISI ON PERTAINING TO PROCEDURE FOR GRANT OF REGISTRATION, FIRST OF ALL T HE GRANTING AUTHORITY IS REQUIRED TO SATISFY HIMSELF ABOUT THE OBJECTS OF TH E TRUST BEING CLAIMED TO BE CHARITABLE AND THEREAFTER GENUINENESS OF THE ACTIVI TIES AND IF HE MAY DEEM FIT, THEN, IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINE NESS OF THE ACTIVITIES MAY ALSO MAKE ENQUIRIES. IN THE PRESENT CASE, THE CIT( E), WITHOUT LOOKING INTO THE SOURCE AND BASIS OF CREATION OF THE APPELLANT A UTHORITY AND WITHOUT LOOKING INTO ITS OBJECTS AND FINANCIAL RESOURCES, I TS UTILIZATION AND APPLICATION OF SURPLUS AND INCIDENTAL PROFITS PROCEEDED TO VERI FY THE DOCUMENT AND EVIDENCES PERTAINING TO THE ACTIVITIES CONDUCTED BY THE APPLICANT IN THE A.Y. 20014-15 WHICH IS NOT A PROPER AND JUSTIFIED APPROA CH AS PER MANDATE OF RELEVANT PROVISIONS. 22.1 BE THAT AS IT MAY, WE HAVE NO HESITATION TO HOLD THAT THE CIT(E) PUT CART BEFORE THE HORSE BY MAKING ENQUIRIES REGARDING ACTIVITIES OF THE APPELLANT AND WITHOUT GIVING HEEL OF ATTENTION TO T HE STATUTORY PROVISIONS AND 19 ACT WHICH CREATED THE EXISTENCE OF THE APPELLANT AN D WITHOUT LOOKING INTO THE OBJECTS AND FINANCIAL RESOURCES, ITS APPLICATION AN D UTILIZATION, FURTHER UTILIZATION OF SURPLUS AND INCIDENTAL PROFITS, IF A NY, AND WITHOUT VERIFYING ABOUT THE FURTHER DIVERSION OF FUNDS IN THE CASE OF DISSOLUTION OF THE AUTHORITY BY CONSIDERING THE RELEVANT PROVISIONS OF THE ACT O F UPIDA, 1976. THUS, THE IMPUGNED ORDER HAS NOT BEEN PASSED AS PER LETTER AN D SPIRIT OF THE MANDATE OF SECTION 12AA OF THE ACT WHICH PROVIDES PROCEDURE FO R REGISTRATION AND ADJUDICATION OF APPLICATION FOR REGISTRATION U/S 12 A OF THE ACT. 23. IN THE LIGHT OF ABOVE NOTED MANDATE WHEN WE PROCEED TO ANALYZE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE THEN WE FIND THAT THE MAIN CONTENTION OF LD CIT DR IS THAT AS PER ORDER OF HONBLE HIGH C OURT OF ALLAHABAD DATED 28.02.2011 (SUPRA) AFTER 01.03.2003 APPLICANT AUTHO RITY IS NOT A LOCAL AUTHORITY WITHIN THE MEANING OF SECTION 10(20) OF THE ACT. ON THIS LEGAL CONTENTION IT HAS BEEN SUBMITTED BY THE LD SENIOR C OUNSEL APPEARING ON BEHALF OF THE APPELLANT, THAT IN THE CASE OF CIT VS GUJARAT MARITIME BOARD (SUPRA) THE HONBLE SUPREME COURT HAS HELD THAT SEC TION 10(20) AND SECTION 11 OF THE ACT OPERATE IN TOTALLY DIFFERENT SPARES A ND EVEN IF THE BOARD (APPLICANT OF THAT CASE) HAS SEIZED TO BE A LOCAL A UTHORITY, THEN ALSO IT IS NOT PRECLUDED FROM CLAIMING EXEMPTION UNDER SECTION 11( 1) OF THE ACT, AND THEREFORE, WE HAVE TO READ SECTION 11(1) OF THE ACT , IN THE LIGHT OF DEFINITION OF THE WORDS CHARITABLE PURPOSES AS DEFINED UNDER SECTION 2(15) OF THE ACT. IN THIS DECISION HONBLE SUPREME COURT HELD THAT TH E ASSESSEE WAS ESTABLISH FOR THE PREDOMINANT PURPOSE OF DEVELOPMENT OF MINOR PORTS IN THE STATE OF GUJARAT, THE MANAGEMENT OF CONTROL WHICH WAS ESSENT IALLY WITH THE STATE GOVERNMENT AND THERE WAS NO PROFIT MOTIVE, AS PER P ROVISIONS OF SECTION 73, 74 AND 75 OF THE GUJARAT MARITIME BOARD ACT, 1981. IT WAS ALSO NOTICED BY 20 THEIR LORDSHIP THAT THE INCOME EARNED BY THE BOARD HAS TO BE DEPLETED AND USED FOR THE DEVELOPMENT MINOR PORTS IN INDIA AND A FTER CONSIDERING ENTIRE FACTS IT WAS HELD THAT THE ASSESSEE WAS UNDER LEGAL OBLIGATION TO APPLY THE INCOME WHICH WOULD ARISE DIRECTLY AND SUBSTANTIALLY FROM THE BUSINESS HELD UNDER THE TRUST FOR THE DEVELOPMENT OF MINOR PORT I N THE STATE OF GUJARAT, THEREFORE IT WAS ENTITLED TO BE REGISTERED AS CHARI TABLE TRUST UNDER SECTION 12A OF THE ACT. ON RESPECTFUL CONSIDERATION OF THE RATI O OF THIS JUDGMENT RENDERED BY HONBLE APEX COURT OF INDIA, WE ARE OF THE VIEW THAT THE ORDER OF HONBLE HIGH COURT DATED 18.02.2011 DOES NOT, IN AN Y WAY, DISENTITLE THE APPLICANT FOR SEEKING REGISTRATION UNDER SECTION 12 A OF THE ACT AS THE CIT(E) COULD NOT CONTROVERTED THESE FACTS THAT EVEN IF THE APPELLANT HAS SEIZED TO BE A LOCAL AUTHORITY UNDER SECTION 10(20) OF THE ACT, THEN ALSO IT IS ENTITLED FOR REGISTRATION UNDER SECTION 12A OF THE ACT, PROVIDED IT FULFILLS ALL REQUIRED CONDITIONS AS MANDATED BY THE SAID PROVISION. 24. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO CON SIDER THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF AL LAHABAD IN THE CASE OF CIT VS KANARA BANK WHEREAS IT HAS BEEN HELD THAT TH E APPLICANT NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY, IS A CORPORATION ESTABLISHED BY A STATE ACT, VIS, UTTAR PRADESH INDUSTRIAL AREA DEVELOPMENT ACT 1976, AND THEREFORE IT IS ENTITLED TO EXEMPTION OF PAYMENT OF TAX AT SO URCE UNDER SECTION 194- A(1) OF THE ACT. THE RELEVANT OPERATIVE PART OF THI S DECISION IN PARA 39 AND 40 READ AS FOLLOWS: 39. NOIDA HAS BEEN GRANTED A STATUS OF A MUNICIPAL ITY UNDER ARTICLE 243-Q OF THE CONSTITUTION OF INDIA WH ICH DEALS WITH THE CONSTITUTION OF MUNICIPALITY. THE SAID ART ICLE PROVIDES THAT THERE SHALL BE CONSTITUTED IN EVERY STATE,- (A ) A NAGAR PANCHAYAT FOR A TRANSITIONAL AREA, THAT IS TO SAY, AN AREA IN 21 TRANSITION FROM A RURAL AREA TO AN URBAN AREA (B) A MUNICIPAL COUNCIL FOR A SMALLER URBAN AREA AND (C) A MUNICIPA L CORPORATION FOR A LARGER URBAN AREA. THE PROVISO TO ARTICLE 243-Q, HOWEVER, STIPULATES THAT A MUNICIPALITY UNDE R THIS CLAUSE MAY NOT BE CONSTITUTED IN SUCH URBAN AREA OR PART THEREOF AS THE GOVERNOR MAY, HAVING REGARD TO THE S IZE OF THE AREA AND THE MUNICIPAL SERVICES BEING PROVIDED OR P ROPOSED TO BE PROVIDED BY AN INDUSTRIAL ESTABLISHMENT IN THAT AREA AND SUCH OTHER FACTORS AS HE MAY DEEM FIT, SPECIFY TO B E AN INDUSTRIAL TOWNSHIP. 40.THE STATE GOVERNMENT HAS ISSUED A NOTIFICATION D ATED 24 DECEMBER 2001 IN EXERCISE OF THE POWERS CONFERRED U NDER THE PROVISO TO CLAUSE (1) OF THE ARTICLE 243-Q OF THE C ONSTITUTION. THE SAID NOTIFICATION PROVIDES THAT HAVING REGARD T O THE SIZE OF NOIDA WHICH HAS BEEN DECLARED TO BE AN INDUSTRIAL DEVELOPMENT AREA BY A NOTIFICATION DATED 17 APRIL 1 976 AND THE MUNICIPAL SERVICES BEING PROVIDED BY NOIDA, TH E GOVERNOR IS PLEASED TO SPECIFY THAT NOIDA WOULD BE AN INDUSTRIAL TOWNSHIP WITH EFFECT FROM THE DATE OF PUBLICATION OF THE NOTIFICATION. THIS CLEARLY MEANS THAT INSTEA D OF MUNICIPAL CORPORATION PROVIDING SERVICES, NOIDA WOULD PROVIDE THE SAID SERVICES AND IF THAT BE SO, THEN AS OBSERVED BY THE SUPREME COURT IN S.S. DHANOA (SUPRA), NOIDA WILL OWE ITS EX ISTENCE TO AN ACT OF THE STATE. 25. IN THE LIGHT OF ABOVE OBSERVATIONS OF HON BLE JURISDICTIONAL HIGH COURT, THE CREATION AND EXISTENCE OF PRESENT APPLIC ANT IS UNDER THE ACT OF UP STATE I.E. UPIDA 1976, WHICH IS PROVIDING SERVICES OF PUBLIC UTILITIES AS A CORPORATION AKIN TO THE SERVICES OF A MUNICIPAL COR PORATION. IT WAS ALSO OBSERVED BY THEIR LORDSHIP THAT THE UP STATE GOVERN MENT HAS ISSUED A NOTIFICATION DATED 20.04.2011 IN EXERCISE OF THE PO WERS CONFERRED UNDER THE PROVISO TO CLAUSE 1 OF ARTICLE 243-Q OF THE CONSTIT UTION AND THE SAID NOTIFICATION PROVIDES THAT HAVING REGARD TO THE SIZ E OF NOIDA I.E. APPLICANT WHICH HAS BEEN DECLARED TO BE AN INDUSTRIAL DEVELOP MENT AREA BY A 22 NOTIFICATION DATED 17.04.1976 AND THE MUNICIPAL SER VICES BEING PROVIDED BY IT THUS THE GOVERNOR IS PLEASED TO SPECIFIED THAT T HE NOIDA WOULD BE AN INDUSTRIAL TOWNSHIP WITH EFFECT FROM THE DATE OF PU BLICATION OF THE NOTIFICATION. 26. WE MAY FURTHER POINTED OUT THAT IN THE CASE OF CIT VS LUCKNOW DEVELOPMENT AUTHORITY (SUPRA) THE HONBLE JURISDICT IONAL HIGH COURT OF ALLAHABAD, HAS DECIDED THE ISSUE IN FAVOUR OF THE A SSESSEE AUTHORITY UPHOLDING THE ORDER OF THE TRIBUNAL THAT THE INCOME OF THE ASSESSEE IS EXEMPTED UNDER SECTION 11 OF THE ACT, THOUGH THERE WAS NO CONDITION THAT NO PROFIT SHOULD BE EARNED BY ITS ACTIVITIES AND THE P ROFIT EARNED WILL NOT BE DISTRIBUTED AMONGST THE STAKEHOLDERS. IN THIS CASE IT WAS THE CONTENTION OF THE REVENUE THAT ASSESSEE IS NOT ON DIFFERENT FOOTING F ROM PRIVATE COLONIZER AND WAS MAKING HUGE PROFITS BY GIVING COMPENSATION FOR LAND WHICH IS LESS THAN THE MARKET VALUE OF THE ACTUAL LAND OWNERS. AS REGA RDS THE CLAIM OF PROVIDING PUBLIC AMENITIES, PRIVATE COLONIZERS WERE ALSO PROVIDING SIMILAR FACILITIES. IT WAS CONTENDED THAT; ASSESSEE IS A HU GE PROFIT MAKING AGENCY FOR WHICH IT IS TAKING MONEY FROM GENERAL PUBIC; ASSESS EE DID NOT ENGAGE IN ANY CHARITABLE AND IF ASSESSEE DEVELOPED ANY INSTITUTIO N OF PUBLIC IMPORTANCE, THE COST WAS RECOUPED FROM THE PUBLIC AT LARGE; THE OBJ ECTS/ACTIVITIES OF THE ASSESSEE WERE COMMERCIAL IN NATURE AND THEY DID NOT INVOLVE ANY CHARITY; ASSESSEE ALSO AUCTIONS PLOT AT MARKET RATE AND THIS DOES NOT INVOLVE ANY CHARITY AND; IN EVERY ACTIVITY OF THE ASSESSEE, THE RE WAS A SCENT OF COMMERCIALIZATION /PROFIT MOTIVE AND INTRA-STRUCTUR E/FACILITY PROVIDED BY THE ASSESSEE ARE ALSO PROVIDED BY PRIVATE BUILDERS. IT WAS CONTENDED BY THE REVENUE HAT THE ITAT HAS GROSSLY ERRED IN HOLDING T HAT THE ASSESSEE AUTHORITY WAS NOT ESTABLISHED FOR COMMERCIAL PURPOS ES, BUT FOR CHARITABLE 23 PURPOSES. THE SUBMISSION OF THE ASSESSEE ON THE OTH ER HAND REMAINED THAT AS PER SECTION 4 OF THE UTTAR PRADESH PLANNING & DEVEL OPMENT ACT, 1973, THE ASSESSEES OBJECT IS AN ACT TO PROVIDE FOR THE DEV ELOPMENT OF CERTAIN AREAS OF UTTAR PRADESH ACCORDING TO PLAN AND FOR MATTER ANCI LLARY THERETO. THE OBJECTS OF THE DEVELOPMENT AUTHORITY WERE REFERRED AS PER SECTION 7 OF THE SAID 1973 ACT. THE OBJECTS SHALL BE TO PROMOTE AND SECURE THE DEVELOPMENT OF THE AREA ACCORDING TO PLAN AND FOR THAT PURPOSE THE AUTHORITY SHALL HAVE THE POWER TO ACQUIRE, HOLD MANAGE AND DISPOSED OFF LAND AND OTHER PROPERTY TO CARRY OUT BUILDING, ENGINEERING, MINING AND OTHER O PERATIONS TO EXECUTE WORKS IN CONNECTION WITH THE SUPPLY OF WATER AND EL ECTRICITY, TO DISPOSE OF SEWAGE AND TO PROVIDE AND MAINTAIN OTHER SERVICES A ND AMENITIES AND GENERALLY TO DO ANYTHING NECESSARY OR EXPEDIENT FOR PURPOSES OF SUCH DEVELOPMENT AND FOR PURPOSES INCIDENTAL THERETO. 27. IN THAT CASE OF LUCKNOW DEVELOPMENT AUTHORIT Y, (SUPRA) IT WAS ALSO POINTED OUT THAT AS PER SECTION 58 OF THE SAID ACT OF 1973, IN CASE OF DISSOLUTION OF THE AUTHORITY THE ENTIRE ASSETS WILL BE VESTED IN THE STATE GOVERNMENT SO NO PROFIT OF INTEREST IS INVOLVE. IT WAS ALSO NOTICED THAT UPTO AY 2002-03 THE AUTHORITY WAS ENJOYING EXEMPTION UND ER SECTION 10 (20A) OF THE ACT, AND IN CONSEQUENT TO THE DELETION OF SA ID PROVISION AND INSERTION OF EXPLANATION TO SECTION 10(20) OF THE ACT, BY THE FINANCE ACT 2002, WITH EFFECT FROM 01.04.2003, THE ASSESSEE WAS ADVISED TO OBTAIN REGISTRATION UNDER SECTION 12A OF THE ACT. SUPPORTING THE APPLICATION OF REGISTRATION UNDER SECTION 12A OF THE ACT, IT WAS SUBMITTED THAT ASSES SEES INCOME IS FOR CHARITABLE PURPOSES AS DEFINED IN SECTION 2(15) O F THE ACT, WHICH COVERS THE OBJECTS FOR ADVANCEMENT OF ANY OTHER OBJECTS F OR GENERAL PUBLIC UTILITY. IT WAS SUBMITTED BY THE ASSESSEE THAT THE TERM OBJ ECTS OF GENERAL PUBLIC 24 UTILITY HAD BEEN EXTENSIVELY DEALT WITH AND DEFINE D, TO MEANT THAT WHERE THE OBJECTS OF AN INSTITUTION COVER THE PUBLIC AT LARGE OR A SECTION OF PUBLIC, THE OBJECTS ARE TO BE HELD TO THE OBJECTS OF GENERAL P UBLIC UTILITY AS MEANT IN SECTION 2(15) OF THE ACT. 28. THE RELEVANT OPERATIVE PART OF THE DECISION O F HONBLE ALLAHABAD HIGH COURT IN THE SAID CASE ARE BEING RESPECTFULLY REPRO DUCED AS FOLLOWS: WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE IS A 'STATUTORY AUTHORITY' WHICH WAS 18 ESTABLISHED UNDER THE PROVI SIONS OF THE UTTAR PRADESH PLANNING AND DEVELOPMENT ACT, 1973. IN THE INSTANT CASE, PRIOR TO 1ST APRIL, 2003, THE ASSESSEE WERE ENJOYING EXEMPTION UNDER SECTION 10(20A) AND SECTION 10(29). WHEN THESE PROVISIONS WERE AMENDED W.E.F. 1ST APRIL , 2003, THEN THE NECESSITY AROSE TO REGISTER THESE INSTITUTIONS UNDER SECTION 12A. IN VIEW OF THE OBJECTS, THERE IS NO GOOD REASON FOR HOLDING THAT STATUTORY BODIES COULD NOT BE TREATED AS 'CHARITABLE' WITHIN THE MEANING OF SECTION 2(15). T HE OBJECT OF THE 'AUTHORITY' IS TO PROVIDE SHELTER TO THE HOMELESS PEOPLE, THEREFOR E, THERE IS NO OBJECTIONABLE MATERIAL TO TREAT THESE INSTITUTIONS AS NON-CHARITA BLE. THE REGISTRATION UNDER SECTION 12A IS MANDATORY TO CLAIM EXEMPTION UNDER S ECTIONS 11 & 13, BUT REGISTRATION ALONE CANNOT BE TREATED AS CONCLUSIVE. IT IS ALWAYS OPEN TO REVENUE AUTHORITIES, WHILE PROCESSING RETURN OF INCOME OF T HESE ASSESSEES, TO EXAMINE THE CLAIM OF THE ASSESSEES UNDER SECTIONS 11 & 13 AND G IVE SUCH TREATED TO THESE INSTITUTIONS AS IS WARRANTED BY THE FACTS OF THE CA SE. REVENUE AUTHORITIES ARE ALWAYS AT LIBERTY TO CANCEL THE REGISTRATION UNDER SECTION 12AA(3). MOREOVER, IT MAY BE MENTIONED THAT THE BENEFIT OF SECTION 11 IS NOT ABSOLUTE OR CONCLUSIVE. IT IS SUBJECT TO CONTROL OF SECTIONS 60 TO 63. IF IT IS F OUND BY KEEPING IN VIEW THE PROVISIONS OF SECTIONS 60 TO 63 THAT IT IS NOT SO I NCLUDIBLE THEN SUCH INCOME DOES NOT QUALIFY FOR ANY RELIEF. THE CONTENTION THAT THE ASSESSEE ARE EARNING PROFIT HAS NO MERIT AS PER THE RATIO LAID DOWN IN THE CASE SAR AFA ASSOCIATION VS. CIT, [2007] 294 ITR 19 262 (MP), WHERE IT WAS OBSERVED THAT 'TH E PROMOTION OF COMMERCIAL TRADE IS A CHARITABLE PURPOSE UNDER SECTION 2(15) O F THE ACT'. IN THE CASE OF DIRECTOR, ITO VS. GOVINDA, 315 ITR 237 (MAD), IT WA S OBSERVED THAT THE CONSTRUCTION OF COMMERCIAL COMPLEX BY CHARITABLE TR UST IS ELIGIBLE. IF THE OBJECTS OF THE 'AUTHORITY' IS CHARITABLE AS PUBLIC UTILITY THEN THE BENEFIT BEING A CHARITABLE TRUST IS ELIGIBLE AS PER THE RATIO LAID DOWN IN THE CASE OF CIT VS. GUJARAT MARITIME BOARD, [2007] 295 ITR 561 (SC), WHERE IT WAS OBSERV ED THAT: '... IN SECTION 2(15), NAMELY, 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY '. FROM THE SAID DECISIONS IT EMERGES THAT THE SAID EXPRESSION IS OF THE WIDEST C ONNOTATION. THE WORD 'GENERAL' IN THE SAID EXPRESSION MEANS PERTAINING TO A WHOLE CLASS. THEREFORE, ADVANCEMENT 25 OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM BENEFIT TO AN INDIVIDUAL OR A GROUP OF INDIVID UALS WOULD BE A CHARITABLE PURPOSE [CIT VS. AHMEDABAD RANA CASTE ASSOCIATION, [1983] 140 ITR 1 (SC)]. THE SAID EXPRESSION WOULD PRIMA FACIE INCLUDE ALL O BJECTS WHICH PROMOTE THE WELFARE OF THE GENERAL PUBLIC. IT CANNOT BE SAID TH AT A PURPOSE WOULD CEASE TO BE CHARITABLE EVEN IF PUBLIC WELFARE IS INTENDED TO BE SERVED. IF THE PRIMARY PURPOSE AND THE PREDOMINANT OBJECT ARE TO PROMOTE THE WELFA RE OF THE GENERAL PUBLIC THE PURPOSE WOULD BE CHARITABLE PURPOSE. WHEN AN OBJECT IS TO PROMOTE OR PROTECT THE INTEREST OF A PARTICULAR TRADE OR INDUSTRY THAT OBJ ECT BECOMES AN OBJECT OF PUBLIC UTILITY, BUT NOT SO, IF IT SEEKS TO PROMOTE THE INT EREST OF THOSE WHO CONDUCT THE SAID TRADE OR INDUSTRY [CIT VS. ANDHRA CHAMBER OF COMMER CE [1965] 55 ITR 722 (SC)]. IF THE PRIMARY OR PREDOMINANT OBJECT OF AN I NSTITUTION IS CHARITABLE, ANY OTHER OBJECT WHICH MIGHT NOT BE CHARITABLE BUT WHIC H IS ANCILLARY OR INCIDENTAL TO THE DOMINANT PURPOSE, WOULD NOT PREVENT THE INSTITU TION FROM BEING A VALID CHARITY [ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURER AS SOCIATION [1980] 121 ITR 1 (SC)].' 20 APPLYING THE RATIO LAID DOWN IN THE CASE OF CIT VS. ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION [1986] 159 ITR 1 ( SC), WHERE OF IN THE PRESENT CASE, THE 'AUTONOMOUS AUTHORITY' WAS ESTABLISHED FO R THE PURPOSE OF PREDOMINANT OF DEVELOPMENT THE AREA AND PROVIDE TO SHELTER TO T HE HOMELESS PEOPLE WITHIN THE STATE OF U.P. THE MANAGEMENT AND CONTROL OF THE AUT HORITY IS ESSENTIALLY WITH THE STATE GOVERNMENT AND THERE IS NO PROFIT MOTIVE AS T HE INCOME EARNED BY THE AUTHORITY IS DEPLOYED FOR THE DEVELOPMENT OF THE ST ATE. FURTHER, IT MAY BE MENTIONED THAT SECTION 12AA OF THE ACT LAYS DOWN TH E PROCEDURE FOR REGISTRATION IN RELATION TO THE CONDITIONS FOR APPLICABILITY OF SECTIONS 11 & 12 AS PROVIDED IN SECTION 12A. THEREFORE, ONCE THE PROCEDURE IS COMPL ETE AS PROVIDED IN SUB- SECTION (1) OF SECTION 12AA AND A CERTIFICATE IS IS SUED GRANTING REGISTRATION TO THE TRUST OR INSTITUTION THE CERTIFICATE IS A DOCUMENT EVIDENCING SATISFACTION ABOUT (I) THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION, AND (II) ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION. SECTION 12A ST IPULATES THAT THE PROVISIONS OF SECTIONS 11 & 12 SHALL NOT APPLY IN RELATION TO INC OME OF A TRUST OR AN INSTITUTION UNLESS THE CONDITIONS STIPULATED THEREIN ARE FULFIL LED. THUS, GRANTING OF REGISTRATION UNDER SECTION 12AA DENOTES THAT THE CONDITIONS LAID DOWN IN SECTION 12A STAND FULFILLED. THE EFFECT OF SUCH A CERTIFICATE OF REGI STRATION UNDER SECTION 12AAA, THEREFORE, CANNOT BE IGNORED OR WISHED AWAY BY THE ASSESSING OFFICER BY ADOPTING A STAND THAT THE TRUST OR INSTITUTION IS NOT FULFIL LING THE CONDITIONS FOR APPLICABILITY OF SECTIONS 11 & 12. IN THE CASE OF GESTETNER DUPLI CATORS P. LTD. VS. CIT [1979] 117 ITR 1 (SC), THE APEX COURT WAS CALLED UPON TO D ETERMINE AS TO WHETHER THE CONTRIBUTION MADE BY THE EMPLOYER SHOULD BE TREATED AS A BUSINESS EXPENDITURE, THE REQUIREMENT BEING CONTRIBUTION SHOULD BE MADE T O A RECOGNIZED PROVIDENT FUND. NEEDLESS TO MENTION THAT THIS HON'BLE COURT I N THE CASE OF CIT VS. M/S. U.P. FOREST CORPORATION LTD., IN INCOME TAX APPEAL NO. 7 0 OF 2009 OBSERVED THAT THE FOREST CORPORATION BEING AN STATUTORY ENTITY IS ENT ITLED 21 FOR THE REGISTRATION UNDER SECTION 12A OF THE ACT. THE SAID OBSERVATIONS WAS UPHELD BY THE HON'BLE APEX COURT VIDE ITS ORDER DATED 12.05.2011 IN SPECI AL LEAVE PETITION NO. (CIVIL) NO. 2590/2011. WE MAY ALSO LIKE TO REFER A C.B.D.T. CIRCULAR NO. 11/2008 DATED 19.12.2008, WHEREIN THE APPLICABILITY OF THE COMMER CIAL ACTIVITIES IN RESPECT OF 26 CHARITABLE PURPOSE HAS BEEN CLARIFIED. THE SAID CIR CULAR IS REPRODUCED AS BELOW: '2.2. 'RELIEF OF THE POOR' ENCOMPASSES A WIDE RANGE OF OBJECTS FOR THE WELFARE OF THE ECONOMICALLY AND SOCIALLY DISADVANTAGED OR NEED Y. IT WILL, THEREFORE, INCLUDE WITHIN ITS AMBIT PURPOSES SUCH AS RELIEF TO DESTITU TE, ORPHANS OR THE HANDICAPPED, DISADVANTAGED WOMEN OR CHILDREN, SMALL AND MARGINAL FARMERS, INDIGENT ARTISANS OR SENIOR CITIZENS IN NEED OF AID. ENTITIES WHO HAV E THESE OBJECTS WILL CONTINUE TO BE ELIGIBLE FOR EXEMPTION EVEN IF THEY INCIDENTALLY CARRY ON A COMMERCIAL ACTIVITY, SUBJECT, HOWEVER, TO THE CONDITIONS STIPULATED UNDE R SECTION 11(4A) OR THE SEVENTH PROVISO TO SECTION 10(23C), WHICH ARE THAT - (I) TH E BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE ENTITY, AND (II) SEPARATE BOOKS OF ACCOUNTS SHOULD BE MAINTAINED IN RESPECT OF SUCH BU SINESS.' FOR THE APPLICABILITY OF PROVISO TO SECTION 2(15), THE ACTIVITIES OF THE TRUST SHOULD BE CARRIED OUT ON COMMERCIAL LINES WITH INTENTION TO MAKE PROFIT. WHE RE THE TRUST IS CARRYING OUT ITS ACTIVITIES ON NON-COMMERCIAL LINES WITH NO MOTIVE T O EARN PROFITS, FOR FULFILLMENT OF ITS AIMS AND OBJECTIVES, WHICH ARE CHARITABLE IN NA TURE AND IN THE PROCESS EARN SOME PROFITS, THE SAME WOULD NOT BE HIT BY PROVISO TO SECTION 2(15). THE AIMS AND OBJECTS OF THE ASSESSEE-TRUST ARE ADMITTEDLY CHARIT ABLE IN NATURE. MERE SELLING SOME PRODUCT AT A PROFIT WILL NOT IPSO FACTO HIT AS SESSEE BY APPLYING PROVISO TO SECTION 2(15) AND DENY EXEMPTION AVAILABLE UNDER 22 SECTION 11. THE INTENTION OF THE TRUSTEES AND THE MANNER IN WHICH THE ACTIVITIES OF THE CHARITABLE TRUST INSTITUTION ARE UNDERTAKEN ARE HIGHLY RELEVANT TO D ECIDE THE ISSUE OF APPLICABILITY OF PROVISO TO SECTION 2(15). THERE IS NO MATERIAL/E VIDENCE BROUGHT ON RECORD BY THE REVENUE WHICH MAY SUGGEST THAT THE ASSESSEE WAS CONDUCTING ITS AFFAIRS ON COMMERCIAL LINES WITH MOTIVE TO EARN PROFIT OR HAS DEVIATED FROM ITS OBJECTS AS DETAILED IN THE TRUST DEED OF THE ASSESSEE. IN THES E FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISO TO SECTION 2(15) IS NOT APPLICABL E TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THE ASSESSEE WAS ENTITLED TO EXEMP TION PROVIDED UNDER SECTION 11 FOR THE RELEVANT ASSESSMENT YEAR. FROM THE RECORD, IT ALSO APPEARS THAT THE 'AUTHORITY' HAD BEEN MAINTAINING INFRASTRUCTURE, DE VELOPMENT AND RESERVE FUND IDRF AS PER THE NOTIFICATION DATED 15.01.1998, THE MONEY TRANSFERRED TO THIS FUNDS IS TO BE UTILIZED FOR THE PURPOSE OF PROJECT AS SPECIFIED BY THE COMMITTED HAVING CONSTITUTED BY THE STATE GOVERNMENT UNDER TH E SAID NOTIFICATION AND THE SAME COULD NOT BE TREATED TO BE BELONGING TO THE 'A UTHORITY' OR THE RECEIPT IS TAXABLE NATURE IN ITS HANDS. FOR THIS REASON ALSO, IT APPEARS THAT THE FUNDS ARE UTILIZED FOR GENERAL UTILITY. MOREOVER, IN THE INST ANT CASE, THE ASSESSING OFFICER HAS NOT GIVEN ANY DEFECTIVE IN COMPUTATION OF INCOM E AS PER SECTION 11 AS SUBMITTED IN FORM-XB, BUT OBSERVED THAT THE ACTIVIT IES OF THE ASSESSEE ARE NOT CHARITABLE. THE ACTIVITIES OF THE ASSESSEES ARE GEN UINE. SO, THEN IT IS SO, THEN WE FIND NO REASON TO INTERFERE WITH IMPUGNED ORDERS PA SSED BY THE TRIBUNAL. THE SAME ARE HEREBY SUSTAINED ALONG WITH REASONS MENTIO NED THEREIN. THE ANSWER TO THE SUBSTANTIAL QUESTIONS OF LAW ARE IN FAVOUR OF T HE ASSESSEE AND AGAINST THE DEPARTMENT. 23 IN VIEW OF ABOVE, ALL THE APPEALS FI LED BY THE DEPARTMENT ARE DISMISSED, AS STATED ABOVE. ORDERDATE:16/09/2013. 27 29. IN THE CASE OF CIT VS ANDHRA PRADESH STATE RO AD TRANSPORT CORPORATION 1986, 25 TAXMAN 63A (SC) THE ASSESSEE W AS A ROAD TRANSPORT CORPORATION ESTABLISHED FOR DEVELOPMENT OF ROAD TRA NSPORT AND THE ROAD CORPORATION WAS ESTABLISHED UNDER THE ROAD TRANSPOR T CORPORATION ACT, AND IT WAS REQUIRED TO CARRY ON ITS ACTIVITIES ON THE B USINESS PRINCIPALS AND ITS INCOME WAS TO BE UTILIZED FOR ROAD DEVELOPMENT AND EXPANSION OF THE CORPORATION. UNDER THESE FACTS IT WAS HELD BY THE H ONBLE APEX COURT, THAT THE ASSESSEE DID NOT CARRY ITS ACTIVITIES WITH THE OBJECT OF MAKING PROFIT AND ITS OBJECT BEING ONE OF THE GENERAL PUBLIC UTILITY FOR CHARITABLE PURPOSES THEN IT WAS ENTITLE TO EXEMPTION UNDER SECTION 4(3) (I) OF THE INCOME TAX ACT, 1922 WHICH IS PAREMATERIA TO THE PROVISIONS OF SECT ION 11 OF THE ACT OF 1961 NOTWITHSTANDING THAT IN CARRYING ON ITS ACTIVITIES THE ASSESSEE WOULD ACT ON BUSINESS PRINCIPALS. 30. DURING THE ARGUMENTS A COPY OF THE RELEVANT NOTIFICATIONS DATED 24.12.2001 AND 17.04.1976 HAS BEEN PLACED ON RECORD ALONG WITH UP INDUSTRIAL AREA DEVELOPMENT ACT 1976, AND SCHEDULE TWELFTH TO ARTICLE 243- W AND 243-Q OF CONSTITUTION OF INDIA, AT PAGES 1 TO 26 OF ASSESSEES PAPER BOOK FILED ON 01.03.2016. AS PER THESE NOTIFICATION S AND SECTION 6 OF RELEVANT ACT OF 1976 THE FUNCTIONS OF THE AUTHORITY AND ITS OBJECTS READ AS FOLLOWS: (1) THE OBJECT OF THE AUTHORITY SHALL BE TO SECURE THE PLANNED DEVELOPMENT OF THE INDUSTRIAL DEVELOPMENT AREA. (2) WITHOUT PREJUDICE TO THE GENERALITY OF THE OBJECTS OF THE AUTHORITY, THE AUTHORITY SHALL PERFORM THE FOLLOWING FUNCTIONS:- (B) TO PREPARE A PLAN FOR THE DEVELOPMENT OF THE INDUSTRIAL DEVELOPMENT AREA; 28 (C) TO DEMARCATE AND DEVELOP SITES FOR INDUSTRIAL, COMMERCIAL AND RESIDENTIAL PURPOSE ACCORDING TO THE PLAN; (D) TO PROVIDE INFRASTRUCTURE FOR INDUSTRIAL, COMMERCIAL AND RESIDENTIAL PURPOSES; (E) TO PROVIDE AMENITIES; (F) TO ALLOCATE AND TRANSFER EITHER BY WAY OF SALE OR LEASE OR OTHERWISE PLOTS OF LAND FOR INDUSTRIAL, COMMERCIAL OR RESIDENTIAL PURPOSES; (G) TO REGULATE THE ERECTION OF BUILDING AND SETTIN G UP OF INDUSTRIES; AND (H) TO LAY DOWN THE PURPOSE FOR WHICH A PARTICULAR SITE OR PLOT OF LAND SHALL BE USED, NAMELY FOR INDUSTRIAL OR COMMERCIAL OR RESIDENTIAL PURPOSE OR ANY OTHER SPECIFIED PURPOSE IN SUCH AREA. 31. IN VIEW OF ABOVE THE MAIN OBJECT OF THE AUT HORITY SHALL BE TO SECURE OR ENSURE THE PLANT DEVELOPMENT OF THE INDUSTRIAL DEVE LOPMENT AREA WHICH WOULD BE UNDERTAKEN BY THE AUTHORITY WORKING AS A M UNICIPAL CORPORATION IN THE SPECIFIED AREA GIVEN FOR THE PURPOSE OF INDUSTR IAL AREA DEVELOPMENT IN THE STATE. 32. AS PER SECTION 20 OF THE UPIDA 1976, THE FIN ANCIAL ACTIVITIES OF THE AUTHORITY REGARDING ITS FUNDS WOULD BE CONDUCTED AN D OPERATED IN FOLLOWING MANNER: 20. FUND OF THE AUTHORITY- (1) THE AUTHORITY SHALL HAVE AND MAINTAIN ITS OWN F UND TO WHICH SHALL BE CREDITED- 29 (A) ALL MONEYS RECEIVED BY THE AUTHORITY FROM THE S TATE GOVERNMENT BY WAY TO GRANTS, LOANS ADVANCES OR OTHERWISE; (B) ALL MONEYS BORROWED BY THE AUTHORITY FROM SOURC ES OTHER THAN THE STATE GOVERNMENT BY WAY OF LOANS OR DEBENTURES; (C) ALL FEE, TOLLS AND CHARGES RECEIVED BY THE AUTH ORITY UNDER THIS ACT; (D) ALL MONEYS RECEIVED BY THE AUTHORITY FROM THE DISPOSAL OF LANDS, BUILDINGS AND OTHER PROPERTIES M OVABLE AND IMMOVABLE; AND (E) ALL MONEYS RECEIVED BY THE AUTHORITY BY WAY OF RENTS AND PROFITS OR IN ANY OTHER MANNER OR FROM ANY OTHE R SOURCES (2) THE FUND SHALL BE APPLIED TOWARDS MEETING THE E XPENSES INCURRED BY THE AUTHORITY IN THE ADMINISTRATION OF THIS ACT FOR NO OTHER PURPOSES. (3) SUBJECT TO ANY DIRECTIONS OF THE STAGE GOVERNME NT, THE AUTHORITY MAY KEEP IN CURRENT ACCOUNT OF ANY SCHEDU LED BANK SUCH SUM OF MONEY OUT OF ITS FUNDS AS IT MAY THINK NECESSARY FOR MEETING ITS EXPECTED CURRENT REQUIREMENTS AND INVES T ANY SURPLUS MONEY IN SUCH MANNER AS IT THINKS FIT. (4) THE STATE GOVERNMENT MAY AFTER DUE APPROPRIATIO N MADE BY LEGISLATURE BY LAW IN THAT BEHALF, MAKE SUCH GRANTS , ADVANCE AND LOANS TO THE AUTHORITY AS THAT GOVERNMENT MAY D EEM NECESSARY FOR THE PERFORMANCE OF THE FUNCTIONS OF T HE AUTHORITY UNDER THIS ACT, AND ALL GRANTS, LOANS AND ADVANCES, MADE SHALL BE ON SUCH TERMS AND CONDITIONS AS THE STATE GOVERN MENT MAY DETERMINE. (5) THE AUTHORITY SHALL MAINTAIN A SINKING FUND FOR THE REPAYMENT OF MONEYS BORROWED UNDER SUB-SECTION(5), AND SHALL PAY EVERY YEAR INTO THE SINKING FUND SUCH SUM AS MA Y BE 30 SUFFICIENT FOR REPAYMENT WITHIN THE PERIOD FIXED OF ALL MONEYS SO BORROWED. (6) THE SINKING FUND OR ANY PART THEREOF SHALL BE A PPLIED IN ,OR TOWARDS THE DISCHARGE OF THE LOAN FOR WHICH SUCH FU ND WAS CREATED, AND UNTIL SUCH LOAN IS WHOLLY DISCHARGED I T SHALL NOT BE APPLIED FOR ANY OTHER PURPOSE. 33. IN THE LIST OF ABOVE PROVISION REGARDING MAN AGEMENT OF THE FUNDS OF THE AUTHORITY IT IS AMPLY CLEAR THAT THE FUNDS OF THE A UTHORITY SHALL BE APPLIED TOWARDS MEETING OF EXPENSES INCURRED BY THE ASSESSE E FOR THE ADMINISTRATION OF THE AFFAIRS OF THE AUTHORITY UNDER THE SAID ACT AND NOT FOR ANY OTHER PURPOSES. AS PER SECTION 58 OF THE UPIDA, 1976 WHER E THE STATE GOVERNMENT IS SATISFIED THAT THE PURPOSES FOR WHICH THE AUTHORITY WAS ESTABLISHED UNDER THE ACT HAVE BEEN SUBSTANTIALLY A CHIEVED SO AS TO RENDER THE CONTINUED EXISTENCE OF THE AUTHORITY IN THE OPI NION OF THE STATE GOVERNMENT UNNECESSARY THAT GOVERNMENT MAY BY NOTIF ICATION IN THE GAZETTEE DECLARE THAT THE AUTHORITY SHALL BE DISSOL VED W.E.F. SUCH DATE AS MAY BE SPECIFIED IN THE NOTIFICATION AND THE AUTHORITIE S SHALL BE DEEMED TO BE DISSOLVED ACCORDINGLY. IN SUB-SECTION (2) OF THAT S ECTION 58 OF THE ACT, IT HAS BEEN PROVIDED THAT FROM THE DATE OF SUCH DISSOLUTIO N, ALL PROPERTIES, FUNDS AND DUES WHICH ARE VESTED IN OR REALIZED BY THE AUT HORITY SHALL WASTE IN OR BE REALIZED BY THE STATE GOVERNMENT. IT IS ALSO PROVI DED THAT THE ENTIRE NAZUL LANDS PLACED AT THE DISPOSAL OF THE AUTHORITY SHALL REVERT TO THE STATE GOVERNMENT. IT HAS BEEN FURTHER PROVIDED THAT ALL L IABILITIES WHICH ARE ENFORCEABLE AGAINST THE AUTHORITY SHALL BE ENFORCEA BLE AGAINST THE STATE GOVERNMENT AND FOR THE PURPOSE OF CARRYING OUT ANY DEVELOPMENT WHICH HAS NOT BEEN DULY CARRIED OUT BY THE AUTHORITY AND FOR THE PURPOSE OF REALIZING 31 PROPERTIES, FUNDS AND DUES REFERRED IN CLAUSE (A), THE FUNCTIONS OF THE AUTHORITY SHALL BE DISCHARGED BY THE STATE GOVERNME NT. 34. WE MAY POINT OUT THAT UNDER ARTICLE 243-P C LAUSE (E) OF THE CONSTITUTION OF INDIA MUNICIPALITY HAS BEEN DEFIN ED AS MEANS AN INSTITUTION OF SELF-GOVERNMENT CONSTITUTED UNDER AR TICLE 243-Q AND UNDER ARTICLE 243-W THE LEGISLATOR OF THE STATE MAY BY PA SSING LAWS BESTOW AND EMPOWER THE MUNICIPALITIES WITH SUCH POWERS AND AU THORITY AS MAY BE NECESSARY TO ENABLE THEM TO FUNCTIONS AS A ENTITY O F SELF-GOVERNMENT AND SUCH LAW MAY ALSO CONTENDS PROVISIONS FOR THE DEVOL UTION OF THE POWERS AND RESPONSIBILITIES IMPOSED UPON THE MUNICIPALITIES, S UBJECT TO SUCH CONDITIONS AS MAY BE PRESCRIBED THEIR WITH RESPECT TO THE PRE PARATION OF PLANS FOR THE ECONOMIC DEVELOPMENT AND SOCIAL JUSTICE FOR THE PUB LIC AT LARGE. IT HAS BEEN ALSO PROVIDED THAT THE PERFORMANCE OF FUNCTIONS AND IMPLEMENTATION OF THE SCHEMES AS MAY BE ENTRUSTED TO THEM INCLUDING THOSE IN RELATION TO THE MATTERS LISTED IN THE TWELFTH SCHEDULE AND WITH SUC H POWERS THE AUTHORITY WOULD BE ENABLE TO CARRYOUT THE RESPONSIBILITIES CO NFERRED UPON THEM INCLUDING THOSE LISTED IN THE TWELFTH SCHEDULE. 35. WE ALSO NOTE THAT VIDE NOTIFICATION NO. 6710 /77-4-2001-56BHA/99 DATED 24.12.2001, THE STATE GOVERNMENT IN EXERCISE OF POWERS UNDER THE PROVISO TO CLAUSE (I) OF ARTICLE 243Q OF THE CONSTI TUTION OF INDIA HAS SPECIFIED THE GREATER NEW OKHLA INDUSTRIAL DEVELOPM ENT AREA TO BE AN INDUSTRIAL TOWN-SHIP W.E.F. THE DATE OF THE PUBLICA TION OF THE SAID NOTIFICATION IN THE OFFICIAL GAZETTE. IN THIS NOTIF ICATION, IT HAS BEEN MENTIONED THAT HAVING REGARD TO THE SIZE OF GREATER NEW OKHLA INDUSTRIAL DEVELOPMENT AREA WHICH HAS BEEN DECLARED AS AN INDUSTRIAL DEVEL OPMENT AREA BY THE 32 GOVERNMENT NOTIFICATION DATED 28.01.1991 AND THE MU NICIPAL SERVICES ARE BEING PROVIDED BY THE GREATER NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY IN THAT AREA. 36. IN VIEW OF ABOVE NOTIFICATION AND PROVISIONS OF THE UPIDA, 1976, IT IS AMPLY CLEAR THAT THE APPELLANT HAS BEEN CREATED BY THE STATE ACT AND IT HAS BEEN ASSIGNED THE OBJECT OF DEVELOPMENT OF INDUSTRI AL AREA IN THE UP STATE, ALONG WITH DEVELOPMENT AND INDUSTRIAL TOWNSHIP AND IT IS EMPOWERED TO PROVIDE SERVICES IN THAT SPECIFIED AREA AS A MUNICI PAL CORPORATION THEREFORE, THE OBJECTS OF THE APPELLANT, AS NOTED ABOVE, ARE I N THE NATURE OF CHARITABLE PURPOSES OF GENERAL PUBLIC UTILITY. IT IS NOT THE A LLEGATION OF THE CIT(E) THAT PROFITS OR SURPLUS ACCRUED TO THE AUTHORITY ARE NOT BEING UTILIZED AS PER OBJECTS OF THE AUTHORITY THEN IT CANNOT BE ALLEGED THAT THE ASSESSEE IS CARRYING OUT ACTIVITIES LIKE A PRIVATE BUILDER OR DEVELOPER WHO IS CONDUCTING ACTIVITIES WITH THE PROFIT MOTIVE. WE MAY ALSO POINT OUT THAT THE ASSESSEE DURING CONDUCT OF ITS ACTIVITIES IN PURSUANT TO THE OBJECT S MANDATED BY THE ACT, MIGHT BE ACQUIRING AND PURCHASING LANDS AND SUBSEQU ENTLY SELLING THE SAME TO THE RESPECTIVE BENEFICIARIES AT THE PREVAILING M ARKET RATE THROUGH OPTION AFTER THE REQUIRED DEVELOPMENT BUT IT IS NOT THE MA IN OBJECT OF THE AUTHORITY AND AS WE HAVE NOTED EARLIER THE PREDOMINANT OBJECT OF THE AUTHORITIES TO CARRYOUT DEVELOPMENT OF INDUSTRIAL AREA IN THE STAT E OF UP TO PROVIDE BASIC INFRASTRUCTURE TO THE UPCOMING INDUSTRIES IN THE ST ATE OF UP AND ACQUIRING OF THE LAND AND IT SELLING AFTER DEVELOPMENT IS NOT A PREDOMIENT OBJECT OF THE AUTHORITY AKIN TO THE PRIVATE DEVELOPERS AND WE HAV E NO HESITATION TO HOLD THAT SUCH ACTIVITY AS ALLEGED BY THE CIT(E) IS NOT A MAIN ACTIVITY WITH THE PROFIT MOTIVE BUT THE SAME AN INCIDENTAL ACTIVITY T O SUB-SERVE AND TO ACHIEVE 33 THE CHARITABLE OBJECTS OF GENERAL PUBLIC UTILITY AS PER MANDATE OF THE UPIDA ACT, 1976. 37. AT THIS JUNCTURE, THE RATIO OF THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF INDIA TRADE PROMOTION ORGANIZA TION VS DGIT(E) (SUPRA), AS RELIED BY THE APPELLANT, SUPPORTS THE C ONTENTIONS OF THE ASSESSEE WHEREIN IT HAS BEEN HELD THAT THE AMENDMENT OF SECT ION 2(15) OF THE ACT, INSERTED BY THE FINANCE ACT, 2008 HAS BEEN READ DOW N BY THE HIGH COURT BY OBSERVING THAT WHEN PRIMARY AND DOMINANT OBJECT OF THE INSTITUTION IS TO ADVANCE GENERAL PUBLIC UTILITY ACTIVITIES THEN INCO ME GENERATED BY INCIDENTAL COMMERCIAL ACTIVITIES DOES NOT DISENTITLE THE APPLI CANT/APPELLANT FOR REGISTRATION 12A OF THE ACT, AS CHARITABLE INSTITUT ION IS ENTITLED TO EXEMPTION. IN THE PRESENT CASE THE DOMINANT AND PRIME OBJECTS OF THE APPLICANT WAS TO BE SEEN BY THE CIT(E) BUT HE HAS DISMISSED APPLICATION OF THE AUTHORITY BY CONSIDERING IRRELEVANT FACTS AND CONCLUSION DRAWN T HEREAFTER CANNOT BE HELD AS SUSTAINABLE. IN OUR CONSIDER PINION IF THE DOMIN ANT AND THE MAIN OBJECT OF THE AUTHORITY IS TO DEVELOP INDUSTRIAL AREAS IN TH E STATE WORKING AS A MUNICIPAL CORPORATION FOR THAT SPECIFIED AREA WITH CHARITABLE PURPOSES AND WITH THE OBJECT OF CREATION OF INFRASTRUCTURE OF GE NERAL PUBLIC UTILITY THEN THE AUTHORITY SHOULD BE REGARDED AS ESTABLISHED FOR CHA RITABLE PURPOSES AND THUS THE SAME WOULD BE ENTITLED FOR REGISTRATION UNDER S ECTION 12A OF THE ACT. 38. IN OUR CONSIDERED OPINION, THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M.D. H.S.I.D.C AND ORS VS. M/S HARI OM ENTERPRISE AND ANR (SUPRA), AS RELIED BY THE APPELL ANT, EXPLAINS THAT THE CORPORATION IS A PUBLIC SECTOR UNDERTAKING WHICH DE VELOPS INFRASTRUCTURE FOR SETTING UP OF INDUSTRIAL UNITS AND IN VIEW OF THE O BJECT AND PURPORT FOR WHICH 34 THE CORPORATION HAD BEEN CONSTITUTED AND INCORPORAT ED IT MUST BE HELD TO BE A GOVERNMENT FUNCTION FOR CHARITABLE PURPOSES OF GENE RAL PUBLIC UTILITY. THUS WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD S ENIOR COUNSEL OF THE APPELLANT THAT THE ACTIVITIES OF THE APPELLANT ARE UNDER COMPLETE CONTROL OF STATE GOVERNMENT HAVING NO PROFIT MOTIVE AND FOR TH E PURPOSE OF CHARITABLE ACTIVITIES OF GENERAL PUBLIC UTILITIES THEREFORE, T HE CIT(E) WAS NOT JUSTIFIED AND CORRECT IN DISMISSING APPLICATION OF THE ASSESS EE. 39. IT WILL ALSO BE RELEVANT TO CONSIDER RATIO O F THE DECISIONS OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS LUCKN OW DEVELOPMENT AUTHORITY (SUPRA) AND ORDER OF THE ITAT NEW DELHI I N THE CASE HARIDWAR DEVELOPMENT AUTHORITY VS CIT(E) (SUPRA) WHEREIN IT HAS BEEN HELD THAT THE APPELLANT AUTHORITY HAS BEEN CREATED WITH OBJECT OF GENERAL PUBLIC UTILITY WITH THE CHARITABLE OBJECTS WITHIN THE MEANING OF SECTIO N 2(15) OF THE ACT, AND THUS THE PROVISO OF SECTION 2(15) OF THE ACT IS NOT APPLICABLE BECAUSE APPELLANT AUTHORITY IS NOT CARRYING OUT ANY ACTIVIT Y WITH ANY PROFIT MOTIVE BUT PREDOMINANT OBJECT OF THE APPELLANT IS THE DEVELOPM ENT OF THE SPECIFIED AREA OF THE DISTRICT BY PROVIDING HOUSING, ROADS, DEVELO PMENT AND MAINTENANCE OF ROADS, PARKS SEWERAGE SYSTEM AND PLANTATION OF THE SPECIFIED AREA AND ALL THESE ACTIVITIES ARE BEING CARRIED OUT FOR THE WELF ARE OF THE PUPIL OF THE SPECIFIED AREA WITH THE CHARITABLE PURPOSES FOR DEV ELOPMENT OF INFRASTRUCTURE FACILITIES OF GENERAL PUBLIC UTILITY WITHOUT ANY PR OFIT MOTIVE THEREFORE IT WAS HELD THAT THE PREDOMINANT OBJECT OF THE AUTHORITY C REATED UNDER UPUPDA ACT, 1973, IS NOT PROFIT EARNING THEREFORE IT WAS H ELD THAT IT IS ENTITLED FOR REGISTRATION OF UNDER SECTION 12A OF THE ACT. WE FU RTHER OBSERVED THAT THE LD CIT DR HAS NOT DISPUTED THIS FACTUM THAT THE PROVIS IONS OF UPUPDA, ACT 1973 ARE PAREMATERIA TO THE PROVISIONS OF UPIDA ACT , 1976 AND THUS RATIO OF 35 THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF LUCKNOW DEVELOPMENT AUTHORITY (SUPRA) AND ORDER OF THE TRIB UNAL IN THE CASE OF HARIDWAR DEVELOPMENT AUTHORITY (SUPRA) ARE APPLICAB LE IN FAVOUR OF THE ASSESSEE. 40. ON THE BASIS OF FORGOING DISCUSSION, WE REAC H TO A LOGICAL CONCLUSION THAT THE CIT(E) DISMISSED APPLICATION OF ASSESSEE F OR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT, BY CONSIDERING THE IR RELEVANT FACT AND BY TAKING A HYPER TECHNICAL APPROACH AND HE HAS NOT FO LLOWED PROCEDURE FOR GRANT OF REGISTRATION AS PRESCRIBED UNDER SECTION 1 2AA OF THE ACT. AT THE SAME, WE OBSERVED THAT THE APPELLANT SUCCESSFULLY D EMONSTRATED THAT IT HAS BEEN CREATED BY THE SPECIAL ACT OF THE STATE I.E. U PIDA 1976 FOR THE PURPOSE OF THE DEVELOPMENT OF INFRASTRUCTURE OF A SPECIFIED INDUSTRIAL AREA WITH A PREDOMINANT PURPOSE OF CREATING AND DEVELOPING FACI LITY FOR DEVELOPMENT OF INDUSTRIES IN THE STATE AND ITS LEGAL EXISTENCE IS AKIN TO A MUNICIPAL CORPORATION FOR DEVELOPMENT OF FACILITIES IN THE SP ECIFIED AREA WHICH IS A CHARITABLE ACTIVITY FOR THE WELFARE OF PUBLIC AT LA RGE AND THUS THE SAME IS AN ACTIVITY OF GENERAL PUBLIC UTILITY. WE ARE SATISFIE D THAT THERE IS NO PRIME OBJECT OR ALIMENT OF EARNING PROFIT AS PRIVATE DEVE LOPER OR BUILDER AND ACTIVITIES ACQUIRING OF LAND AND SELLING DEVELOPED PROPERTY IS AN INCIDENTAL AND PROFIT EARNED THEREFROM HAS TO BE USED TOWARDS OBJECTS OF THE APPELLANT WHICH ARE OF CHARITABLE PURPOSES AND THUS NEWLY INS ERTED PROVISO TO SECTION 2(15) OF THE ACT, CANNOT BE PRESSED INTO SERVICE FO R DENIAL OF REGISTRATION UNDER SECTION 12A OF THE ACT. 36 41. FINALLY, WE ARE INCLINED TO HOLD THAT THE A PPELLANT IS ENTITLED FOR REGISTRATION UNDER SECTION 12A (1) (A) OF THE ACT, AND THUS IMPUGNED ORDER OF THE CIT(E) IS DISMISSED AND HE IS DIRECTED TO GRANT REGISTRATION UNDER SECTION 12A OF THE ACT TO THE APPELLANT AUTHORITY. 42. IN THE RESULT, APPEAL IS ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2016. SD/- SD/- (O.P. KANT) (C.M GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND JULY, 2016 VL/RES. DESKTOP COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (APPEALS) 5. DR: ITAT
