JAIPUR DEVELOPMENT AUTHORITY, Jaipur V. CIT, Jaipur

ITA 182/JPR/2012

• Counselvise Citation: 18223114 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-08-2012
• Assessment Year: misc
• Appeal Filed On: 28-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Charitable institution; Retrospective amendment; Question of law; Cancellation of registration
• Section: 12A; 12AA; 10; 11

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 182/JP/2012 ASSTT. YEAR- PAN NO. AAFAS 3422 G JAIPUR DEVELOPMENT AUTHORITY, THE C.I.T.-II J.L.N. MARG, JAIPUR. VRS. JAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI SHYAM LAL AGARWAL. DEPARTMENT BY :- SHRI SUBHASH CHANDRA. DATE OF HEARING : 18/09/2014 DATE OF PRONOUNCEMENT : 30/09/2014 O R D E R PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29/12/2011 OF THE LEARNED CIT(A)-II, JAIPUR. THE SOL E GROUND OF APPEAL IS AGAINST THE LEARNED CIT HAS WITHDRAWN THE REGISTR ATION OF TRUST AND HOLD OUT THAT THE ASSESSEE IS CARRYING OUT ACTIVITI ES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND ACTIVITIES AND OBJECTS ARE NOT CHARITABLE. 2. THE LEARNED COMMISSIONER OF INCOME TAX, JAIPUR OBS ERVED THAT JAIPUR DEVELOPMENT AUTHORITY (IN SHORT JDA) WAS GRAN TED REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED AS THE ACT) ON 21/11/2008 W.E.F. 14/3/2007. LATER ON IN COMPLIANCE OF ITATS ORDER DATED 30/01/2009, IT WAS MADE EFFECTIVE FRO. 12/10/1 982. THE OBJECTS OF ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 2 INSTITUTION ARE GIVEN IN CHAPTER-IV OF JDA ACT 1982 , WHICH REGULATES THE FUNCTION OF INSTITUTION. THE OBJECTIONS ARE REPRODUC ED AS UNDER:- POWER AND FUNCTIONS OF THE AUTHORITY. 16. FUNCTION OF THE AUTHORITY- THE MAIN OBJECT OF THE AUTHORITY SHALL BE SECURE THE INTEGRATED DEVELOPMENT OF THE JAIPUR REGION AND FOR THAT PURPOSE THE FUNCTIONS OF THE AUTHORITY SHALL BE:- (A) URBAN PLANNING INCLUDING THE PREPARATION OF MASTER DEVELOPMENT PLAN AND ZONAL DEVELOPMENT PLANS AND CARRYING OUT S URVEYS FOR THE PURPOSE AND ALSO MAKING ALTERATIONS THEREIN AS MAY BE DEEMED NECESSARY. (B) FORMULATION AND SANCTION OF THE PROJECTS AND SCHEME S FOR THE DEVELOPMENT OF THE JAIPUR REGION OR ANY PART THEREO F. (C) EXECUTION OF PROJECTS AND SCHEMES DIRECTLY BY ITSELF OR THROUGH A LOCAL AUTHORITY OR ANY OTHER AGENCY. (D) TO MAKE RECOMMENDATIONS TO THE STATE GOVERNMENT ON ANY MATTER OR PROPOSAL REQUIRING ACTION BY THE STATE GO VERNMENT, CENTRAL GOVERNMENT, ANY LOCAL AUTHORITY OR ANY OTHE R AUTHORITY FOR OVERALL DEVELOPMENT OF THE JAIPUR REGION. (E) PARTICIPATION WITH ANY OTHER AUTHORITY FOR THE DEVE LOPMENT OF THE JAIPUR REGION. (F) COORDINATING EXECUTION OF PROJECTS OR SCHEMES FOR T HE DEVELOPMENT OF THE JAIPUR REGION. (G) SUPERVISION OR OTHERWISE ENSURING ADEQUATE SUPERVIS ION OVER THE PLANNING AND EXECUTION OF ANY PROJECT OR SCHEME, TH E EXPENSES OF WHICH, IN WHOLE OR IN PART ARE TO BE MET FROM THE J AIPUR REGION DEVELOPMENT FUND. (H) PREPARING SCHEMES AND ADVISING THE CONCERNED AUTHOR ITIES DEPARTMENTS AND AGENCIES IN FORMULATING AND UNDERTA KING SCHEMES FOR DEVELOPMENT OF AGRICULTURE, HORTICULTUR E, FLORICULTURE, FORESTRY, DAIRY DEVELOPMENT, TRANSPORT, COMMUNICATI ON, SCHOOLING, CULTURAL ACTIVITIES, SPORTS, MEDICARE, TOURISM, ENT ERTAINMENT AND SIMILAR OTHER ACTIVITIES. (I) EXECUTION OF PROJECTS AND SCHEMES ON THE DIRECTIONS OF THE STATE GOVERNMENT. (J) UNDERTAKING HOUSING ACTIVITY IN JAIPUR REGION, PROV IDED THAT THE DELINEATION OF RESPONSIBILITY FOR HOUSING BETWEEN R AJASTHAN ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 3 HOUSING BOARD AND THE AUTHORITY WILL BE MADE BY STA TE GOVERNMENT EFFECTIVE FROM THE DATE TO BE FIXED BY I T. (K) TO ACQUIRE, HOLD, MANAGE AND DISPOSE OF PROPERTY, M OVABLE OR IMMOVABLE, AS IT MAY DEEM NECESSARY. (L) TO ENTER INTO CONTRACTS, AGREEMENTS OR ARRANGEMENTS WITH ANY PERSON OR ORGANIZATION AS THE AUTHORITY MAY DEEM NE CESSARY FOR PERFORMING ITS FUNCTIONS. (M) TO PREPARE MASTER PLAN FOR TRAFFIC, CONTROL AND MAN AGEMENT, DEVISE POLICY AND PROGRAMME OR ACTION FOR SMOOTH FL OW OF TRAFFIC AND MATTERS CONNECTED THEREWITH. (N) TO PERFORM FUNCTIONS DESIGNATED BY THE STATE GOVERN MENT IN THE AREAS OF URBAN RENEWAL, ENVIRONMENT AND ECOLOGY, TR ANSPORT AND COMMUNICATION, WATER ENERGY RESOURCE MANAGEMENT DIR ECTLY OR THROUGH ITS FUNCTIONAL BOARDS OR OTHER DEPARTMENTS/ AGENCIES AS THE STATE GOVT. MAY SPECIFY. (O) REGULATING THE POSTING OF BILLS, ADVERTISEMENT HORD INGS, SIGNPOST, AND NAME BOARDS IN JAIPUR REGION OR IN ANY PART THE REOF AS SPECIFIED BY THE AUTHORITY. (P) REGULATING THE ERECTION OR RE-ERECTION OF BUILDINGS AND PROJECTIONS, MAKING MATERIAL ALTERNATIONS THEREIN AND PROVIDING FOR OPEN SPACES IN JAIPUR REGION OR IN ANY PART THEREOF AS S PECIFIED BY THE AUTHORITY. (Q) REMOVING OBSTRUCTIONS AND ENCROACHMENTS UPON PUBLIC STREETS, OPEN SPACES AND PROPERTIES VESTING IN THE GOVERNMEN T OR THE AUTHORITY. (R) TO DO ALL SUCH OTHER ACTS AND THINGS WHICH MAY BE N ECESSARY FOR OR INCIDENTAL OR CONDUCIVE TO, ANY MATTERS WHICH AR ISE ON ACCOUNT OR ITS ACTIVITY AND WHICH ARE NECESSARY FOR FURTHER ANCE OF THE OBJECTS FOR WHICH THE AUTHORITY IS ESTABLISHED, AND (S) TO PERFORM ANY OTHER FUNCTIONS THAT THE STATE GOVER NMENT MAY DESIGNATE IN FURTHERANCE OF THE OBJECTIVES OR THIS ACT. IT HAS BEEN HELD THAT THESE OBJECTS ARE COVERED UND ER THE LAST LIMB OF SECTION 2(15) OF THE ACT I.E. ADVANCEMENT OF ANY OT HER OBJECTS OF GENERAL PUBLIC UTILITY. THE INSTITUTION WAS GRANTED REGISTRAT ION ON ACCOUNT OF CARRYING OUT WORK OF CHARITABLE PURPOSE BY WAY OF ADV ANCEMENT OF ANY ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 4 OTHER OBJECT OF GENERAL PUBLIC UTILITY AS PER PREVA ILING PROVISIONS. HOWEVER, IN VIEW OF AMENDMENT IN SECTION 2(15) OF THE ACT BY FINANCE ACT, 2008 W.E.F. 01/4/2009, THE ADVANCEMENT OF ANY O THER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE IN CERTAIN CIRCUMSTANCES. HE REPRODUCED THE SECTION AS UNDER:- 2. DEFINITIONS- (15) CHARITABLE PURPOSE- INCLUD ES RELIEF OF POOR, EDUCATION MEDICAL RELIEF, [PRESERVATION OF ENVIRONM ENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECTS OR GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY 2.2 THE MEMORANDUM EXPLAINING THE INTRODUCTION OF ABOVE PROVISO IS AS UNDER:- 5.1 SUB-SECTION (15) OF SECTION 2 OF THE ACT DEFI NES CHARITABLE PURPOSE TO INCLUDE RELIEF OF THE POOR, EDUCATION, MEDICAL R ELIEF, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IT HAS BEEN NOTICED THAT A NUMBER OF ENTITIES OPERATING ON COMMERCIAL LINES ARE CLAIMING EXEMPTION ON THEIR INCOME EITHER UNDER SUB-SECTION (23C) OF SECTION 10 OR SEC TION 11 OF THE ACT ON THE GROUND THAT THEY ARE CHARITABLE INSTITUTIONS. THIS IS BASED ON THE ARGUMENT THAT THEY ARE ENGAGED IN THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY AS IS INCLUDED IN THE FOURTH LIMB OF THE CURRENT DEFINITI ON OF CHARITABLE PURPOSE. SUCH A CLAIM, WHEN MADE IN RESPECT OF AN ACTIVITY CARRIE D OUT ON COMMERCIAL LINES, IS CONTRARY TO THE INTENTION OF THE PROVISIONS. 5.2 WITH A VIEW TO LIMITING THE SCOPE OF THE PHRAS E ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, SUB-SEC TION (15) OF SECTION 2 HAS BEEN AMENDED TO PROVIDE THAT THE ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OR THE NATURE OF USE OR ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 5 APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. SCOPE OF THIS AMENDMENT HAS FURTHER BEEN EXPLAINED BY THE CBDT VI DE ITS CIRCULAR NO. 11/2008, DATED 19 TH DECEMBER, 2008. 2.3 FURTHER SECOND PROVISO WAS INSERTED BY FINANCE ACT, 2010 RETROSPECTIVELY W.E.F. 01/04/2009 AS UNDER:- PROVIDED FURTHER THAT THE PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THE REIN IS TEN LAKH RUPEES OR LESS IN THE PREVISIONS YEAR. VIDE FINANCE ACT, 2011 W.E.F. 01/04/20012, THE LIM IT OF RS. 10 LAKH WAS RAISED TO RS. 25 LAKH. 2.4 IT HAS BEEN HELD THAT AS PER NEWLY ADDED PROVI SO TO SECTION 2(15), THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR A NY OTHER CONSIDERATION, IRRESPECTIVE OR THE NATURE OF USE OR APPLICATION, O R RETENTION OF THE INCOME FROM SUCH ACTIVITY, IF SUCH RECEIPTS EXCEEDS RS. 10/25 L AKH. 3. THE LEARNED CIT HAD GIVEN DETAILS OF VARIOUS RECE IPTS FOR F.Y. 2008- 09, WHICH INCLUDES RECEIPT FROM SALE OF PLOT, RECEIP TS FROM BUILT UP PROPERTIES, SEWERAGE INC., CONVERSION CHARGES, URBAN ASSESSMENT (LEASE MONEY), MAP RELEASE, TRANSFER FEE AND PENALTIES, RE NT, INTEREST ON FDR, MISC. RECEIPTS. THE LEARNED CIT GAVE REASONABLE OPPOR TUNITY OF BEING HEARD TO THE APPELLANT. IT WAS SUBMITTED BY THE INST ITUTION THAT TO MEET THE OBJECTIVE, JDA COLLECT THE DEVELOPMENT AND OTHE R CHARGES FROM THE RESIDENT OF THE JDA REGION. THE GOVERNMENT LAND IN T HE JDA REGION VEST TO THE JDA OTHER THAN THOSE WHICH ARE HELD/TRANSFERR ED/ALLOTTED TO THE OTHER AGENCIES/BOARD/DEPARTMENT OF THE GOVERNMENT B Y THE STATE GOVERNMENT. NO AMOUNT IS PAID AS COST OF SUCH LANDS TRANSFERRED/VESTED BY THE STATE GOVERNMENT TO JDA AND THEREFORE NO STO CK OF LAND IS ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 6 ACCOUNTED FOR BEING NO COST. IT WAS FURTHER SUBMITTE D THAT ON SALE OF GOVERNMENT LAND, JDA HAS BEEN DIRECTED TO PAY THE 1 5% OF THE LAND SALE AMOUNT TO JAIPUR NAGAR NIGAM, 20% TO THE STATE GOVE RNMENT AND REMAINING IS WITH JDA FOR THE DEVELOPMENT WORKS. THE J DA ALSO COLLECT THE OTHER CHARGES LIKE THE URBAN ASSESSMENT FEE (GR OUND RENT) BEING KNOWN AS LEASE MONEY, CONVERSION CHARGES AND INTERES T/PENALTY OR LATE PAYMENT THEREOF. ALL AMOUNT OF LEASE MONEY AND 60% OF THE CONVERSION CHARGES ARE RETAINED WITH JDA FOR DEVELOPMENT. 40% O F THE CONVERSION CHARGES ARE PAID TO THE STATE GOVERNMENT. THE LEARN ED CIT CONCLUDED THAT MAJOR SOURCE OF INCOME IS SALE OF PLOTS AND BU ILT UP PROPERTIES. REMAINING INCOME IS RECEIVED FROM VARIOUS CHARGES, FEES AND PENALTIES LEVIED AND COLLECTED BY THE INSTITUTION. THESE CHAR GES/FEES/PENALTIES ARE RELATED TO CERTAIN POWERS GIVEN TO THE INSTITUTION B Y STATE GOVERNMENT AND RELEVANT ACTS AND RULES TO REGULATE VARIOUS ACT IVITIES IN ITS REGION. THESE ARE SEWERAGE CHARGES, CONVERSION CHARGES FOR CO NVERTING RESIDENTIAL LAND TO COMMERCIAL LAND, LEASE MONEY, M AP RELEASE CHARGES, TRANSFER FEE FOR TRANSFER OF PROPERTY, SUB-DIVISION CHARGES FOR DIVISION OF A LAND INTO VARIOUS PLOTS, FEE FOR SITE PLAN ETC.. THE SE CHARGES ARE RECEIVED FOR PROVIDING CERTAIN SERVICES BY THE INSTITUTION T O THE PERSONS. REGARDING SALE OF PLOTS AND BUILT UP PROPERTIES, I T WAS OBSERVED THAT MOST OF THE PROPERTIES ARE SOLD THROUGH OPEN A UCTION WHERE THE ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 7 PROPERTY IS SOLD TO THE PERSON WHO IS HIGHEST BIDDE R. IN AUCTION, ALL TYPE OF PROPERTIES SUCH AS RESIDENTIAL AND COMMERCIAL AR E SOLD. FOR AUCTION, MINIMUM SALE PRICE IS DETERMINED BY DIRECTOR (FINAN CE) OF THE INSTITUTION ON THE RECOMMENDATION OF MINIMUM SALE PRICE ASSESSM ENT COMMITTEE AND IN AUCTION, PROPERTY IS SOLD TO THE HIGHEST BID DER. DETAILS OF PROPERTIES SOLD THROUGH AUCTION IN LAST THREE YEARS WERE SUBMITTED BY THE INSTITUTION DURING THE COURSE OF HEARING. SUMMARY O F THE SAME IS AS UNDER:- F.Y. AMOUNT RECEIVED THROUGH AUCTION (IN CRORES) 2008-09 81.22 2009-10 86.06 2010-11 169.36 TOTAL 336.65 THE LEARNED CIT CONCLUDED THAT IN TERMS OF NUMBER, T OTAL 603 PROPERTIES WERE SOLD THROUGH OPEN AUCTION. THE NUMBER OF THE PRO PERTIES SOLD AND AMOUNT RECEIVED SHOWS THE MAGNITUDE AND NATURE OF TH E MAIN ACTIVITY CARRIED OUT BY THE INSTITUTION. SELLING OF THE PROP ERTY THROUGH AUCTION TO THE PERSONS, WHO PAYS THE HIGHEST AMOUNT, SHOWS THE COMMERCIAL NATURE OF THE ACTIVITY OF THE INSTITUTION. COMMERCIAL PRIN CIPAL OF BUSINESS IS TO DERIVE MAXIMUM PRICE OF THE PRODUCT/SERVICE OF THE BUSINESS AND THE ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 8 INSTITUTION IS FOLLOWING THE SAME PRINCIPAL BY SELLI NG PROPERTY IN AUCTION TO THE HIGHEST PAYER. BUILDER OR REAL ESTATE DEVELOPER S DO THE SAME ACTIVITY WHICH IS BEING DONE BY THE ASSESSEE SUCH AS PURCHASE AND SALE OF LAND AT COMMERCIAL PRINCIPLES AND RATES, DEVELOPMENT OF LAN D AND CONSTRUCTION BUILDING AND SALE BY AUCTION OR OTHERWISE. THERE IS N O DIFFERENCE IN ANY ACTIVITY OF THE ASSESSEE AND BUSINESS MAN AS BOTH T RY TO SELL THE PROPERTY AT THE MAXIMUM RATE WHICH IS EVIDENCED BY THE ACT OF ASSESSEE I.E. SELL THROUGH OPEN AUCTION. IF THE ASSESSEE WERE NOT DOING ACTIVITIES IN THE NATURE OF BUSINESS/COMMERCE, IT WOULD HAVE BEEN SELL ING THE PROPERTY AT COST PLUS SOME REASONABLE PERCENTAGE FOR MAINTENANC E AND ADMINISTRATIVE EXPENSES AND NOT THROUGH OPEN AUCTIO N AT THE MAXIMUM PRICE. IF IT WERE NOT DOING ACTIVITIES IN THE NATURE OF BUSINESS, IT WOULD HAVE BEEN SELLING PROPERTY AT LESSER RATE TO PUBLIC CHARITABLE TRUST/INSTITUTIONS BUT THIS IS NOT THE CASE. IN THE AUCTION, NO CONCESSION IS GIVEN CONSIDERING THE PURPOSE OF THE PURCHASER, WHIC H MAY BE CHARITY OR PERSONAL USE OR COMMERCIAL. THE SAME PRINCIPAL IS FO LLOWED BY THE BUSINESS MAN THEN HOW THE ASSESSEE CAN CLAIM THAT IT S ACTIVITIES ARE NOT IN THE NATURE OF TRADE, BUSINESS OR COMMERCE. FROM THE POINT TO VIEW OF COMMON MAN AND GENERAL PUBLIC THE INSTITUTION IS DO ING SAME ACTIVITY WHICH IS BEING DONE BY A BUILDER OR DEVELOPER. THE IN STITUTION IS ALSO PURCHASING/ACQUIRING LAND, DEVELOPING IT, MAKING CO NSTRUCTION OVER IT AND ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 9 SELLING IT TO FETCH THE MAXIMUM PRICE. THIS ACTIVITY IS CONSIDERED BY GENERAL PUBLIC AS BUSINESS, TRADE OR COMMERCE. SO T HIS ACTIVITY IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. REGARDING OT HER ACTIVITIES, MENTIONED ABOVE, IT HAS BEEN HELD THAT, IT HAVE NAT URE OF TRADE, COMMERCE OR BUSINESS. THE LEARNED AR FOR THE ASSESSE E REPLIED ON 18/10/2010, WHICH HAS BEEN REPRODUCED BY THE LEARNE D CIT ON PAGES 11,12 AND 13 OF HIS ORDER. AFTER CONSIDERING THE AS SESSEES REPLY, IT HAS BEEN HELD THAT THE ACTIVITIES OF THE INSTITUTION CO ME UNDER THE PURVIEW OF LAST LIMB OF SECTION 2(15) OF THE ACT I.E. ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. WHEREIN THE LIMITATION H AS BEEN PRESCRIBED BY AMENDING THIS SECTION I.E. 25 LACS. THE ASSESSEES PLEA THAT IT IS NOT DOING BUSINESS OR TRADE OR COMMERCE BUT DOING CHARITABLE ACTIVITIES BY PROVIDING HOUSING AND COMMUNITY FACILITIES, CIVIL AMENITIES A ND OTHER INFRASTRUCTURE FOR THE POPULATION OF JAIPUR REGION WAS NOT FOUND CO NVINCING I.E. THERE WAS NO QUESTION OF PROFIT MOTIVE IN ANY OTHER ACTIV ITY AND THEREFORE, THE AMENDED PART OF SECTION 2(15) DOES NOT APPLY ON IT ON THE GROUND THAT IT IS ACCEPTED THAT OBJECTS OF THE ASSESSEE ARE CHARIT ABLE BUT THE ISSUE IS WHETHER THE ACTIVITIES ARE IN THE NATURE OF TRADE, C OMMERCE OR BUSINESS OR NOT. HE HAS ALSO NOT CONVINCED WITH THE FINDING GIVE N BY THE ITAT IN ITS EARLIER ORDER THAT THE PRIMARY PURPOSE AND THE PRED OMINANT OBJECT OF THE ASSESSEE IS NOT EARNING THE PROFIT BUT TO SECURE IN TEGRATED DEVELOPMENT ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 10 OF JAIPUR, IT IS INVOLVED IN SEVERAL OTHER FUNCTION S AND THE EARNING OF THE PROFIT IN THE PROCESS IS INCIDENTAL THERETO. IT IS OBSERVED BY THE ITAT THAT AFTER AMENDMENT IN SECTION 2(15) OF THE ACT, THERE REMAINS NO DIFFERENCE BETWEEN MAIN AND PRIMARY OBJECT AND OTHER OBJECTS AN D EVEN IF THERE IS NO PROFIT MOTIVE MENTIONED IN ANY OF THE OBJECTS BU T IT THE ASSESSEE CARRIES OUT ITS ACTIVITY IN THE NATURE OF TRADE, CO MMERCE OR BUSINESS THEN IT WILL NOT REMAIN CHARITABLE. THE ARGUMENT OF THE AR THAT BY INTRODUCING PROVISION 2(15) OF THE ACT IS FOR EXCLUSION FROM CH ARITABLE PURPOSE IS LIMITED TO THOSE INSTITUTIONS, WHOSE MAIN ACTIVITY I S IN THE NATURE OF TRADE, COMMERCE BUSINESS, WAS NOT FOUND ACCEPTABLE TO THE C IT. THE LEARNED CIT OBSERVED THAT INSERTION OF SECOND PROVISO IS FOR ABSOLUTE RESTRICTION ON ANY RECEIPT OF COMMERCIAL NATURE FOR WHICH A LIMI T HAS BEEN PRESCRIBED IN SECOND PROVISO. HE FURTHER REPRODUCED THE HONBL E ITATS ORDER ON PAGE 17 AND IT HAS BEEN CONCLUDED THAT AFTER AMENDM ENT MADE IN SECTION 2(15), THE ASSESSEE DOES NOT REMAIN CHARITA BLE INSTITUTION. HE ALSO DISTINGUISHED HON'BLE SUPREME COURT DECISION I N THE CASE OF ADDL. CIT VS. SURAT SILK CLOTH MANUFACTURES ASSOCIATION (1 979) 2 TAXMAN 501/(1980) 121 ITR 1 (SC). THE ASSESSEES PLEA THAT REGISTRATION U/S 12AA(3) CAN BE WITHDRAWN ONLY IN TWO CONDITIONS (I) TH E ACTIVITIES ARE NOT GENUINE OR (2) THE ACTIVITIES ARE NOT AS PER THE OB JECTS OF THE ASSESSEE. SINCE NONE OF THESE CONDITIONS IS ATTRACTED IN THIS CASE, REGISTRATION ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 11 CANNOT BE WITHDRAWN U/S 12AA(3) OF THE ACT. AS PER L EARNED CIT, THE ACTIVITIES OF THE ASSESSEE WAS NOT FOUND CHARITABLE IN VIEW OF SECTION 2(15) OF THE ACT. HE FURTHER APPLIED SECTION 293(C) OF THE ACT AND HELD THAT IF THE REGISTRATION CANNOT BE WITHDRAWN U/S 12AA , HE HAS POWER U/S 293(C) OF THE ACT TO WITHDRAW THE REGISTRATION. IT IS OBSERVED THAT TOTAL VALUE OF RECEIPTS OF THE ASSESSEE IS MUCH MORE THAN RS. 10 LACS AND IN VIEW OF THE SPECIFIC MANDATE OF PROVISO OF SECTION 2 (15), THE ASSESSEE INSTITUTIONS OBJECTS CANNOT BE CONSIDERED AS CHARI TABLE FROM A.Y. 2009-10 AND ONWARD. ACCORDINGLY, THE REGISTRATION GRANTED U/ S 12AA HAS BEEN WITHDRAWN U/S 12AA(3) READ WITH SECTION 293(C) OF THE ACT W.E.F. 1/4/2009 I.E. A.Y. 2009-10 ONWARD. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT- II, JAIPUR, THE ASSESSEE IS IN APPEAL BEFORE US. HE SUBMITTED BRIEF FACTS OF APPELLANT, WHICH IS A GOVERNMENT AUTHORITY WHOLLY, OWNED AND CONT ROLLED OF GOVERNMENT OF RAJASTHAN. THE MAIN PURPOSE OF FORMING THE JDA ACT, 1982 FOR SETTING UP AN AUTHORITY FOR PLANNING, COOR DINATING AND SUPERVISING FOR PROPER, ORDERLY AND RAPID DEVELOPME NT OF THE AREAS IN JAIPUR REGION AND OF EXECUTING PLANS, PROJECTS AND SCHEMES FOR SUCH DEVELOPMENT AND TO PROVIDE FOR THE MATTERS CONNECTE D THEREWITH, SO THAT HOUSING, COMMUNITY FACILITIES, CIVIL AMENITIES AND OTHER INFRASTRUCTURAL FACILITIES ARE CREATED. THE MAIN FUNCTIONS OF THE AU THORITY ARE MOSTLY ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 12 THOSE AS MENTIONED IN SCHEDULE-XII OF ARTICLE 243W OF THE CONSTITUTION FOR THE MUNICIPALITIES. THE POWERS AND FUNCTIONS OF T HE AUTHORITY ARE GIVEN IN PARA 16 OF CHAPTER IV OF THE JDA ACT FROM SERIAL NO. (A) TO (S). AUTHORITY WAS EXEMPTED U/S 10(20/10(20A) OF THE ACT. HOWEVER, AFTER AMENDMENT IN SECTION 10(20), 10(20A), THE AUTHORITY WAS REQUIRED TO FILE RETURN AND GET REGISTRATION U/S 12AA OF THE ACT. TH E REGISTRATION WAS GRANTED TO THE AUTHORITY BY THE DIRECTION OF THE HO NBLE ITAT, JAIPUR BENCH WITH RETROSPECTIVE EFFECT. THE LEARNED CIT HAS WI THDRAWN THE REGISTRATION OF JDA BY OBSERVING THAT THE OBJECTS O F THE INSTITUTION ARE NOT CHARITABLE BUT COMES UNDER THE PURVIEW OF LAST LIMB OF SECTION 2(15) OF THE ACT I.E. ADVANCEMENT OF ANY OTHER OBJECT OF GEN ERAL PUBLIC UTILITY. THE WHOLE ORDER OF WITHDRAWAL IS ON THE WRONG CONSIDERATION THAT THE ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ONLY BECAUSE THE SECOND PROVISO TO SECTION 2(15) APPLIES AS PER SECTION 12AA(3) OF THE ACT WHERE THE TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE(B) OF SUB-SECTION (1) OF SECTION 12AA OF THE ACT. THE LEARNED CIT CAN CANCEL THE REGISTRATION IN TWO SITUATIONS (I) IF THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE AND (II) THE ACTIVITIES ASSESSEE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION. F URTHER IT HAS BEEN ARGUED THAT THE WITHDRAWN U/S 12AA(3) OF THE ACT IS A PPLIED W.E.F. 01/6/2010 EFFECTIVE FROM A.Y. 2010-11 IT MEANS PROS PECTIVE. THE OBJECTS ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 13 ARE GENUINE AND ACTIVITIES ARE CARRIED OUT AS PER T HE OBJECTS. AS THE AUTHORITY IS A GOVERNMENT AUTHORITY, ITS OBJECT IS TO PROVE CIVIL AMENITIES AND INFRASTRUCTURE AND NO TRADE OR BUSINESS, THEREF ORE, WITHDRAWN OF REGISTRATION BY THE LEARNED CIT WAS NOT JUSTIFIED. TH E SECOND PROVISO TO SECTION 2(15) OF THE ACT IS NOT APPLICABLE TO THE A SSESSEE EVEN IN THOSE CASES, WHERE IT IS APPLICABLE, THE NEW SECTION 13(8 ) WAS INSERTED IN BUDGET 2012 W.E.F. 01/4/2009 WHERE ALSO THE WITHDRAWN OF REGISTRATION IS NOT REQUIRED TO BE MADE. HE FURTHER RELIED ON THE D ECISION OF HONBLE ITAT MUMBAI BENCH IN CASE OF INDIAN PLASTIC ASSOCIAT ION IN ITA NO. 308/MUM/2012 A.Y. 2009-10 WHEREIN IT HAS BEEN HELD B Y THE HONBLE BENCH THAT INSERTION OF FIRST PROVISO TO SECTION 2( 15) IS TO COVER THOSE, WHICH UNDER THE GARB OF GENERAL PUBLIC UTILITY CARRY ON BUSINESS ON COMMERCIAL ACTIVITIES TO ESCAPE THE LIABILITY UNDER THE ACT GAINING EXEMPTION U/S 11 OF THE ACT. THE HONBLE MADRAS HIGH COURT IN THE CASE OF TAMILNADU CRICKET ASSOCIATION VS. DIT EXEMPTION IN APPEAL NO. 450 OF 2013 DATED 21/10/2013 HAS HELD THAT CONSIDERING THE PROVISIONS OF SECTION 12AA(3) OF THE ACT, THE CANCELLATION OR REG ISTRATION IN A GIVEN CASE COULD BE DONE ONLY UNDER THE STATED CIRCUMSTANCES U /S 12AA(3) OF THE ACT. IN THE CASE OF LUCKNOW DEVELOPMENT AUTHORITY, T HE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATED 16/9/2013 HEL D THAT MERE SELLING SOME PRODUCT AT PROFIT WILL NOT IPSO FACTO HIT ASSES SEE BY APPLYING PROVISO ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 14 TO SECTION 2(15) AND DENY EXEMPTION AVAILABLE UNDER SECTION 11. THE INTENTION OF THE TRUSTEES AND THE MANNER IN WHICH TH E ACTIVITIES OF THE CHARITABLE TRUST INSTITUTION ARE UNDERTAKEN ARE HIG HLY RELEVANT TO DECIDE THE ISSUE OF APPLICABILITY OF THE PROVISION TO SECT ION 2(15). THE ACTIVITIES OF THE TRUST SHOULD BE CARRIED OUT ON COMMERCIAL LINES WITH INTENTION TO MAKE PROFIT. WHERE THE TRUST IS CARRYING OUT ITS AC TIVITIES ON COMMERCIAL LINES WITH NO MOTIVE TO EARN PROFITS FOR FULFILLMENT OF ITS AIMS AND OBJECTIVES WHICH ARE CHARITABLE IN NATURE AND IN THE PROCESS EARN SOME PROFITS, THE SAME WOULD NOT BE HIT BY PROVISO TO SEC TION 2(15) OF THE ACT. IN CASE OF SARVODAYA ILAKKIYA PANNAI VS CIT 343 ITR 3 00 THE HONBLE MADRAS HIGH COURT VIDE ORDER DATED 25/1/2012 HAS HE LD THAT UNDER SECTION 12AA, THE COMMISSIONER IS EMPOWERED TO GRANT OR REFUSE THE REGISTRATION AND AFTER GRANTING REGISTRATION, WOULD BE EMPOWERED TO CANCEL AND THAT TOO, ONLY ON TWO CONDITIONS LAID DOWN UNDER SECTION 12AA(3) OF THE ACT. WHETHER THE INCOME DERIVED FROM SUCH TRANSACTION WOULD BE ASSESSED FOR TAX AND ALSO WHETHER THE TRUST WOULD BE ENTITLED TO EXEMPTION UNDER SECTION 11 ARE ENTIRELY THE MATTERS LEFT TO THE ASSESSING OFFICER TO DECIDE AS TO WHETHER IT SHOULD BE ASSESSE D OR EXEMPTED. IN PARA 10 OF THE ORDER, IT HAS BEEN HELD THAT NONE OF THE CONDITIONS U/S 12AA(3) WERE VIOLATED BY THE APPELLANT. THE HONBLE J ODHPUR BENCH OF ITAT IN CASE OF JODHPUR DEVELOPMENT AUTHORITY VS. CI T IN ITA NO. ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 15 508/JODH/2010 WHEREIN THE HONBLE BENCH HAD ALLOWED T HE REGISTRATION U/S 12AA TO IT. IN ANOTHER CASE OF RAJASTHAN HOUSIN G BOARD VS. CIT, THE HONBLE ITAT, JAIPUR BENCHY, JAIPUR IN GRANTING REGI STRATION U/S 12AA HELD THAT PROVISO TO SECTION 2(15) ARE TOTALLY DIFF ERENT. THE EXEMPTION U/S 11 IS TO BE EXAMINED ON YEARLY BASIS, THEREFORE, TH E EXEMPTION U/S 11 HAS NO EFFECT FOR GRANTING REGISTRATION U/S 12AA. I N SIMILAR CASE OF GUJARAT CRICKET ASSOCIATION, ITAT A BENCH, AHMADAB AD IN ITA NO. 93/AHMADABAD/2011 HAS HELD THAT THE REGISTRATION CA NCELLED BY DIT(E) ON THE BASIS OF AMENDED PROVISION OF SECTION 2(15) OF THE ACT WAS NOT JUSTIFIED AS AMENDED PROVISION DOES NOT FALL WITH TH E PERMISSIBLE LIMIT OF SECTION 12AA(3) OF THE ACT. THE HONBLE ITAT AGRA BEN CH IN CASE OF AGRA DEVELOPMENT AUTHORITY VS. CIT IN ITA NO. 166/AGR/201 2 DATED 11/01/2013 HAS HELD THAT THE LEARNED CIT CANCELLED R EGISTRATION U/S 12A W.E.F. 2009-10, WHICH IS THE PERIOD PRIOR TO 01/6/201 0, THE CBDT HAS ALSO CLARIFIED CIRCULAR NO. 762 DATED 18/2/1989 THAT THE AMENDED PROVISION U/S 12AA(3) OF THE ACT IS APPLICABLE ON A.Y. 2011-12. N O OPINION HAS BEEN EXPRESSED WHETHER AGRA DEVELOPMENT AUTHORITYS WORKS WAS CHARITABLE OR NOT. HE ALSO RELIED ON THE FOLLOWING CASE LAWS: (I) THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTION), 347 ITR 99 (DELHI ) ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 16 (II) DIRECTOR OF INCOME TAX (EXEMPTION) VS. SABARMA TI ASHRAM GAUSHALA TRUST 362 ITR 539 (GUJ). (III) CIT VS. IMPROVEMENT TRUST, 308 ITR 361 (P&H) (IV) UIT IMPROVEMENT TRUST VS. CIT, SRIGANGANAGAR, I TA NO. 169/JODH/2011. (V) GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS .CIT ITA NO. 175/AHD/2011 ORDER DATED 13/1/2012. IN CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPORATI ON VS.CIT IN ITA NO. 175/AHD/2011 ORDER DATED 13/1/2012, THE HONBLE ITA T HAS HELD THAT THE REGISTRATION CANCELLED ON THE BASIS OF DEFINITION O F CHARITABLE PURPOSE U/S 2(15) NOT INVOKING THE PROVISIONS OF SECTION 12AA(3 ) OF THE IT ACT. THUS, CANCELLATION OF REGISTRATION WAS NOT FOUND JUSTIFIED . THE LEARNED AR PRAYED TO DIRECT THE CIT TO WITHDRAW THE CANCELLATION OF REGISTRATION GRANTED TO THE JDA. 5. THE LEARNED DR ARGUED THAT EARLIER JDA IS COVERE D U/S 10(20A) OF THE ACT, WHICH HAS BEEN AMENDED FROM 01/4/2003. AS PER EXPLANATION OF SECTION 10(20), THE JDA IS NOT ALSO COVERED AS LOCA L AUTHORITY. THEREAFTER, THE ASSESSEE HAS TO FILE RETURN AS PER INCOME TAX L AW. THE ASSESSEE APPLIED FOR REGISTRATION U/S 12A OF THE ACT, WHICH WA S ALLOWED ON THE DIRECTION OF HONBLE ITAT, JAIPUR BENCH FROM 1982. S ECTION 2(15) ALSO CHANGED THE SCENARIO OF THE AUTHORITIES FROM 01/4/2 009 AND DEFINITION OF ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 17 CHARITABLE PURPOSE HAD BEEN LIMITED FOR CERTAIN TRU ST WHO WERE INVOLVING IN CARRYING ON OF ANY ACTIVITY IN NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEES OR ANY OTHER CONSIDE RATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION, OF T HE INCOME FROM SUCH ACTIVITY. THERE WAS ALSO A LIMIT PRESCRIBED BY SECOND PROVISO OF THIS SECTION I.E. 10 LACS LATER ON 25 LACS IN PREVIOUS Y EAR. THE LEARNED CIT HAS THOROUGHLY DISCUSSED THE ASPECTS OF SECTION 2(15) O F THE ACT AND ALSO CITED VARIOUS CASE LAWS AND NOW IT IS CLEAR THAT JDA IS NOT A CHARITABLE INSTITUTION BUT THE EARNING MONEY LIKE A BUILDER, WH ICH CAN BE CONCLUDED ON THE BASIS OF OBJECTS AND FUNCTIONS OF THE INSTIT UTION. THE DETAIL OF RECEIPTS OF DIFFERENT NATURE HAS BEEN ELABORATELY M ENTIONED BY THE LEARNED CIT IN HIS CANCELLATION ORDER, WHICH DOES NO T INCLUDE ANY CHARITABLE ACTIVITY, FOR WHICH HE RELIED UPON THE DE CISION IN CASE OF PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY VS. CIT BY THE HONBLE ITAT CHANDIGARH B BENCH IN ITA NO. 764/CHANDIGARH/2003 ORDER DATED 01/6/2006 WHEREIN IDENTICAL ISSUE HAD DECIDED BY THE BENCH BY UPHOLDING THAT DEVELOPMENT AUTHORITY IS NOT A CHARITABLE INST ITUTION AND LEARNED CIT RIGHTLY REJECTED THE 12A. HE FURTHER RELIED THE DEC ISION IN CASE OF JAMMU DEVELOPMENT AUTHORITY IN ITA NO. 164/JAMMU/2012, TH E HONBLE JAMMU HIGH COURT HAD NOT FOUND ANY QUESTION OF LAW. THE HON BLE ITAT AMRITSAR ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 18 BENCH HAD DECIDED THE JAMMU DEVELOPMENT AUTHORITYS CASE AGAINST THE ASSESSEE AND BY UPHOLDING THAT AMENDMENT BROUGHT IN SECTION 2(15) BY THE FINANCE ACT, 2008, THAT JAMMU DEVELOPMENT AUTHO RITY IS AN AUTHORITY ESTABLISHED WITH THE MOTIVE OF PROFIT CONSTITUTED UN DER JAMMU & KASHMIR DEVELOPMENT ACT, 1970 AND THAT THE ACTIVITIES OF SU CH AUTHORITY ARE HIT BY SECTION 2(15) OF THE ACT. THEREFORE, HE PRAYED TO CO NFIRM THE ORDER OF THE LEARNED CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE JD A WAS ESTABLISHED IN OCTOBER, 1982 BY JDA ACT. PURPOSE OF JDA IS FOR PLA NNING, COORDINATING AND SUPERVISING FOR PROPER, ORDERLY AND RAPID DEVEL OPMENT OF THE AREAS IN JAIPUR REGION, IN WHICH SEVERAL GOVERNMENT DEPARTMEN TS, LOCAL AUTHORITIES AND OTHER ORGANIZATION ARE AT PRESENT ENGAGED WITHIN THEIR OWN JURISDICTIONS TO PROVIDE ALSO THAT SUCH AUTHROTY BE ENABLED EITHER ITSELF OR THROUGH OTHER AUTHORITY TO FORMULATE AND EXECUTE PL ANS, PROJECTS AND SCHEMES FOR THE DEVELOPMENT OF JAIPUR REGION. SO TH AT HOUSING, COMMUNITY FACILITIES, CIVIC AMENITIES AND OTHER INF RASTRUCTURE ARE PROPERLY CREATED FOR THE POPULATION OF JAIPUR REGION IN THE PROSPECTIVE OF 2001 AD OR THEREAFTER INCLUDING THE INTERMEDIATE STAGE AND TO PROVIDE FOR MATTERS CONNECTED WITH THE PURPOSE OF AFORESAID. LATER ON TH IS ACT FURTHER AMENDED FROM TIME TO TIME AS PER NEED OF JAIPUR REG ION. AS PER CHAPTER ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 19 (VI), FUNCTIONS OF THE AUTHORITIES HAVE BEEN DEFINE D IN ITEM NO. (A) TO (S). AS PER ITEM-(H), THE AUTHORITY IS AUTHORIZED TO DEV ELOP AGRICULTURE, HORTICULTURE, FLORICULTURE, FORESTRY, DAIRY DEVELOP MENT, TRANSPORT, COMMUNICATION, SCHOOLING, CULTURAL ACTIVITIES, SPOR TS, MEDICARE, TOURISM, ENTERTAINMENT AND SIMILAR OTHER ACTIVITIES. AS PER ITEM-(N), IT PERFORMS IN THE AREA OF URBAN RENEWAL, ENVIRONMENT AND ECOLOGY D IRECTLY OR THROUGH ITS FUNCTIONAL BOARDS, THEREFORE, THE JDA NOT ONLY PLANNING THE URBAN AREA WITH MASTER DEVELOPMENT PLAN AND ZONAL DEVELOPMENT P LAN BUT ALSO SANCTION PROJECTS AND SCHEMES FOR DEVELOPMENT. THE J DA IS A TOOL OF STATE GOVERNMENT FOR COORDINATED AND PLANNED DEVELO PMENT IN JAIPUR REGION. IN PRACTICAL, THE MAIN WORK OF JDA IS CONSTR UCTION OF ROADS, SEWERAGE, PARKS, PLAY GROUNDS, PROVIDE PLOTS FOR EDU CATIONAL, HEALTH AND CULTURAL INSTITUTION FOR OVER ALL DEVELOPMENT OF TH E COMMUNITY. BY MAKING PLANNED DEVELOPMENT IT PROVIDES SMOOTH TRANSPORTATI ON SO THAT AIR POLLUTION CAN BE MINIMIZED AND SAVE TIME OF THE PUB LIC. IF IT IS LEFT IN THE HANDS OF PRIVATE OPERATOR, THESE FACILITIES WOULD NO T BE PROVIDED ON SIMILAR PRICE AS PROVIDED BY THE JDA. WHATEVER, THE REVENUE IS GENERATED THROUGH THESE ACTIVITIES ARE FINALLY UTILIZED FOR T HE BENEFIT OF THE PUBLIC. THE INTENTION OF THE INSTITUTION IS NOT TO EARN PROF IT BUT RECOVER THE COST OF THE ESTABLISHMENT AS WELL AS OTHER EXPENDITURE TO IM PLEMENT THE OBJECT OF THE JDA. THE STATE GOVERNMENT ALSO GIVE THE GRANT TO IT. AS PER ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 20 RAJASTHAN TENANCY ACT, THE LAND IS OWNED BY THE STAT E GOVT. BUT FARMERS ARE LESSEE FOR 99 YEARS IN PERPETUITY. IT CAN BE AC QUIRED FOR THE PUBLIC PURPOSES. VARIOUS SPORTS AS WELL AS COMMUNITY FACILI TIES PROVIDED BY THE JDA ARE NOT FOR PROFIT MOTIVE BUT FOR THE DEVELOPME NT OF THE WHOLE URBAN COMMUNITY. THE LEARNED DR AS WELL AS LEARNED AR CITED VARIOUS CASE LAWS AGAINST AND IN FAVOUR OF THE ASSESSEE BUT RECENTLY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF LUCKNOW DEVELOPMENT AUTHORITY H AS HELD THAT MERE SELLING SOME PRODUCT AT PROFIT WILL NOT IPSO FACTO H IT ASSESSEE BY APPLYING PROVISO TO SECTION 2(15) AND DENY EXEMPTION AVAILAB LE UNDER SECTION 11. THE INTENTION AND MANNER OF THE ASSESSEE WAS NOT TO E ARN PROFIT. FURTHER THE AMENDMENT MADE IN SECTION 2(15) IS EFFECTIVE FR OM 2011-12 AS CLARIFIED BY THE CBDT IN ITS CIRCULAR MENTIONED ABO VE. THE ITAT A BENCH OF LUCKNOW IN THE CASE OF UTTAR PRADESH AVAS EVAM VI KAS PARISHAD VS. CIT-1, LUCKNOW HAS HELD THAT AS PER SECTION 12AA THA T THE CIT IS SATISFIED THAT THE ACTIVITY OF SUCH TRUST OR INSTITU TION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJ ECT OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE. THE CIT SHALL PASS A N ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITU TION. IT IS ESSENTIAL THAT ONE OF THESE TWO CONDITIONS MUST BE SATISFIED THAT E ITHER THE ACTIVITIES OF SUCH TRUST ARE NOT GENUINE OR THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST. THE BENCH DID NOT FIND ANY ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 21 CONDITION IN ASSESSEES CASE. THEREFORE, THE ITAT A BENCH OF LUCKNOW ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. IN OUR CASE, THE CONDITIONS ARE NOT FOUND BY THE CIT, HE SIMPLY APPLIED SECTION 2(15) OF THE ACT FOR CANCELLING THE REGISTRATION OF THE INSTITUTION. THE HONBLE DELHI HIGH COURT IN CASE OF M/S GS1 INDIA VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTION) & ANR. HAS CONSIDERED AMENDED SECTION 2 (15) OF THE ACT AND HELD THAT WITH REGARD TO SCENARIO PRIOR TO 2008 AMEN DMENT APPLIED TEST OF PREDOMINANT OBJECT OF ACTIVITY ENUNCIATED BY THE HO N'BLE SUPREME COURT IN THE CASE OF ACIT VS. SURAT CLOTH MANUFACTURING AS SOCIATION TO DETERMINE WHETHER PRIMARY OBJECT OF THE ACTIVITY INV OLVED IN CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY IS TO BE SUBSE RVED THE CHARITABLE PURPOSE OR TO EARN PROFIT. IN CASE WHERE THE PREDOMI NANT OBJECT OF THE ACTIVITY IS TO CARRY OUT CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT DOES NOT LOSE ITS CHARACTER OF CHARITABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM SUCH ACTIVITIES. THEREFORE, MONEY EARNED FROM BUSINESS HELD UNDER TRUST OR OTHERWISE, TO FEED THE CHARITY WOULD N OT DISENTITLE OR NEGATE THE CLAIM OF ENGAGEMENT IN CHARITABLE PURPOS E DEFINED UNDER SECTION 2(15) OF THE ACT. IT FURTHER HELD THAT CBDT CIRCULAR NO. 11/2008 EMPHASIZED THAT 2008 AMENDMENT IS ONLY APPLICABLE T O RESIDUAL CATEGORY , CHARITABLE ENTITY WHEN IT CARRIES ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, ON ANY ACTIVITY AND TO DETERM INE WHETHER SUCH ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 22 ACTIVITY IS COMMERCIAL WILL BE DECIDED ON ITS OWN FAC TS AND NO GENERALIZATION IS POSSIBLE. HOWEVER, THE TAX AUTHORI TIES IN THE CONTEXT OF THE ABOVE CIRCULAR DENIED TAX EXEMPTIONS ON THE PRE MISES THAT CHARITABLE ACTIVITY WAS ONLY A MASK TO COVER BUSINESS ACTIVITY OF THE CHARITABLE ENTITY TO DETERMINE WHETHER THE RESIDUAL CATEGORY, CHARITAB LE ENTITY IS ENGAGED IN ANY BUSINESS ACTIVITY, THE ISSUE OF THE SELF ENR ICHMENT AND SELF GAIN SHOULD BE CAREFULLY LOOKED INTO. A SMALL CONTRIBUTI ON BY WAY OF FEES SHOULD NOT BE EMULATED THE TRANSACTION OR THE GIVE ACTIVITY TO BE COMMERCIAL IN NATURE. AS PER SECTION 2(15), THE CHA RITABLE ACTIVITY TEST MEANS ACTIVITY WITH A VIEW TO MAKE OR EARNS PROFIT. T HE FOUR INTEGRATES LAID DOWN ARE (A) PROFIT MOTIVE IS A CRITICAL FACTOR TO DISCERN WHETHER THE ACTIVITY IS BUSINESS, TRADE OR COMMERCE, (B) CHARIT ABLE ACTIVITY SHOULD BE DEVOID OF SELFISHNESS OR ILLIBERAL SPIRIT, (C) THE UNDERLINE PROPELLING MOTIVE IS NOT FOR COMMERCIAL EXPLOITATION BUT GENERAL PUBL IC GOOD AND (D) FEES CHARGED IF ANY SHOULD BE NOMINAL AND BASED ON COMME RCIAL PRINCIPLE. APPLYING THE ABOVE TEST, THE HONBLE DELHI HIGH CO URT OPINED THAT A MERE LEVY OF FEES IS NEITHER REFLECTIVE OF BUSINESS APTITUDE NOR INDICATIVE OF PROFIT ORIENTED INTENT. THE HONBLE DELHI HIGH CO URT HELD THAT WHEN PROPELLING MOTIVE IS NOT TO EARN PROFIT BUT GENERAL PUBLIC GOOD, THE CHARITABLE ENTITY WILL FAIL THE BUSINESS TEST AND ME ET THE TOUCHSTONE OF CHARITY. THE HONBLE DELHI HIGH COURT FURTHER HELD T HAT CHARGING FEES ON ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 23 IPR SENSE PROFIT MOTIVE DOES NOT AMOUNT TO COMMERCI AL EXPLOITATION. MOREOVER, WHEN THE FEES CHARGED IS COMMENSURATE BASE D ON COMMERCIAL OR BUSINESS PRINCIPLES, THE CHARITY ACTIVITY TEST I S FULFILLED. THE HONBLE DELHI HIGH COURT RULED AS PRIMARY AND PREDOMINANT A CTIVITY IS CHARITABLE IN NATURE. THE NOMINAL FEES CHARGED ARE IMPORTANT FO R COVERING OPERATIONAL COST OF THE PETITIONER. THUS, KEEPING IN VIEW OF THE CHARITABLE ACTIVITY TEST, IT WAS HELD THAT BUSINESS ACTIVITY OF THE PETITIONER IS INTEGRAL TO ITS CHARITABLE PURPOSE AND QUESTION OF REQUIREME NT OF SEPARATE BOOKS OF ACCOUNT FOR THE BUSINESS ACTIVITY SEEMS REDUNDAN T. THE HONBLE DELHI HIGH COURTS FINDINGS IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT. FURTHER PROVISO TO SECTION 2(15) OF THE IT ACT HAS H ELD BY THE HONBLE ITAT, MUMBAI BENCH IN THE CASE OF INDIAN PLASTIC ASS OCIATION (SUPRA), IS TO COVER THOSE, WHICH UNDER THE GARB OF GENERAL PUBL IC UTILITY CARRY ON BUSINESS ON COMMERCIAL ACTIVITIES TO ESCAPE THE LIA BILITY UNDER THE ACT GAINING EXEMPTION U/S 11 OF THE ACT, WE ALSO FEEL TH AT THIS SECTION APPLIED ON SUCH TYPE OF TRUST OR INSTITUTION WHO GET REGISTR ATION U/S 12A OF THE ACT FOR CLAIMING THE EXEMPTION U/S 11 OF THE ACT. THE A PPELLANT IS A GOVERNMENT AGENCY AND ENGAGED IN THE COORDINATE AND PLANNED DEVELOPMENT OF JAIPUR REGION AND WHICH IS PREDOMINAN T OBJECT OF IT. THE LEARNED CIT ALSO ERRED IN APPLYING THE PROVISIONS O F SECTION 293(C) OF THE ACT, IN THIS CASE, WHICH APPLIED WITHDRAWAL OF APPROVA L GRANTED UNDER ANY ITA 182/JP/2012 JAIPUR DEVELOPMENT AUTHORITY VS. CIT 24 PROVISION OF THIS ACT, NOTWITHSTANDING THAT A PROVIS ION TO WITHDRAW SUCH APPROVAL HAS NOT BEEN SPECIFICALLY PROVIDED FOR IN SUCH PROVISION. FOR CANCELLATION OF REGISTRATION, THE SPECIFIC PROVISIO N U/S 12AA IS PROVIDED. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT LEARNED CIT WAS NO RIGHT TO WITHDRAW THE REGISTRATION OF THE APPELLANT FROM A.Y. 2009-10. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED C IT(A) AND DIRECTED TO GRANT THE REGISTRATION TO THE JDA. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 30 TH SEPTEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. THE JAIPUR DEVELOPMENT AUTHORITY, JAIPUR. 2. THE CIT-II, JAIPUR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 182/JP/2012) BY ORDER, AR ITAT JAIPUR.