DY C.I.T..1(1), RAIPUR (CG) V. M/S RAIPUR DEVELOPMENT AUTHORITY, RAIPUR (CG)

ITA 212/BIL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3529 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 18-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: RAJESH KUMAR CHABRAC A
• Keywords: Capital asset; Charitable institution; Retrospective amendment
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER) ITA. NO: 212/RPR/2014 (ASSESSMENT YEAR: 2011-12) DY.CIT 1(1), RAIPUR (C.G) V/S RAIPUR DEVELOPMENT AUTHORITY BAJRANG MARKET, G.E. ROAD, RAIPUR (C.G) (APPELLANT) (RESPONDENT) PAN: AAALR0107R APPELLANT BY : SHRI P.K. MISHRA, D.R. RESPONDENT BY : SHRI RAJESH KUMAR CHABRA,C.A . ( )/ ORDER DATE OF HEARING : 07 -04-201 8 DATE OF PRONOUNCEMENT : 16 -04-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A), RAIPUR DATED 03.07.2014 PERTAINING TO A.Y. 2010-11. ITA NO. 212/ RPR/2014 . A.Y. 2011-12 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE ADDITION OF RS. 21.62 CRORES MADE BY THE A.O. BY DI SALLOWING THE CLAIM OF BENEFITS OF SECTION 11 OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS A LOCAL AUTHORITY WHO IS ENGAGED IN THE BUSINESS OF BUYING, DEVELOPING AN D SELLING OF LANDS, PLOTS, FLATS AND DEVELOPED PROPERTIES. IT ALSO RECEIVES RENT FRO M COMMERCIAL PROPERTIES AND OTHER PLACES. THE ASSESSEE RECEIVED ITS REGISTRATIO N U/S.12AA OF THE ACT ON 16.01.2008. 4. THE RETURN FOR THE YEAR WAS FILED ON 31.03.2012 DEC LARING TOTAL INCOME AT RS. NIL. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMEN T AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. EXAMINED THE OBJECTS OF THE ASSESSEE. THE A.O. WAS OF THE OP INION THAT THE NATURE OF ACTIVITIES CARRIED ON BY THE ASSESSEE ARE HIT BY TH E AMENDMENT BROUGHT TO THE PROVISIONS OF SECTION 2(15) OF THE ACT. DRAWING SUP PORT FROM THE SAID SECTION, THE A.O. TREATED THE ENTIRE SURPLUS OF RS. 21.62 CR ORES AS THE INCOME TAXABLE FOR THE YEAR. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A D VEHEMENTLY CONTENDED THAT THE A.O. HAS GROSSLY ERRED IN DRAWING SUPPORT FROM THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT AS THE PRE D OMINANT OBJECT OF THE ASSESSEE IS TO CARRY OUT CHARITABLE ACTIVITIES AND NOT TO EARN PROFIT. THE LD. CIT(A) WAS CONVINCED AND DIRECTED THE A.O. TO DELET E THE ADDITION OF RS. 21.62 CRORES. ITA NO. 212/ RPR/2014 . A.Y. 2011-12 3 7. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. REPRES ENTATIVES OF BOTH SIDES WERE HEARD AT LENGTH. CASE RECORDS CAREFULLY PERUSED. 8. THE OBJECTS OF THE ASSESSEE LOCAL AUTHORITY IS MENT IONED IN THE MP & CG NAGAR TATHA GRAM NIVESH ADHINIYAM, 1973 WHICH IS AS UNDER :- 'SECTION 38(2) - THE DUTY OF IMPLEMENTING THE PROPO SAL IN THE DEVELOPMENT PLAN, PREPARING ONE OR MORE TOWN DEVELOPMENT SCHEMES AND ACQUISITION AND DEVELOPMENT OF LAND FOR THE PURPOSE OF EXPANSION OR IMPLEMENTATION OF THE AREA SPECIFIED IN THE NOTIFICATION UNDER SUB-SECTION (1) SHALL, SUBJECT TO THE PROVISION OF THIS ACT VEST IN THE TOWN AND COUNTRY DEVELOPMENT A UTHORITY FOR THE SAID AREA.' 9. IT IS ON THESE OBJECTS REGISTRATION U/S. 12AA OF TH E ACT WAS GRANTED TO THE ASSESSEE. 10. THE BONE OF CONTENTION IS THE APPLICABILITY OF THE PROVISO TO SECTION 2(15) OF THE ACT. SECTION 2(15) AS IT STOOD IN THE STATUTE A FTER THE REPEAL OF THE 1922 ACT READ AS UNDER:- SECTION 2(15) - 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY OF PR OFIT. THIS PROVISION REMAINED UNCHANGED TILL ITS AMENDMEN T BY THE FINANCE ACT, 1983 AND WITH EFFECT FROM 1.4.1984 'NOT INVOLVING THE CAR RYING ON OF ANY ACTIVITY OF PROFIT' WAS OMITTED. THE SECTION REMAINED UNCHANGED TILL IT WAS AMENDED BY THE FINANCE ACT, 2008 W.E.F 1.4.2009. THIS MEANS THAT TILL THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2008 THE REVENUE WAS CONVINCED THAT THE ASSESSEE-TR UST WAS NOT CARRYING OUT ITA NO. 212/ RPR/2014 . A.Y. 2011-12 4 ANY COMMERCIAL ACTIVITY IN THE GARB OF CHARITABLE P URPOSE. THE ACTIVITIES OF THE TRUST WERE GENUINE AND WERE FOR THE CHARITABLE PURP OSE. 11. ALL THAT HAS TO BE DECIDED NOW IS WHETHER THE ACTIV ITIES OF THE ASSESSEE CONSTITUTES CARRYING ON OF ANY ACTIVITY IN THE NATU RE OF TRADE, COMMERCE OR BUSINESS TO COME WITHIN THE PURVIEW OF THE PROVISO TO SECTION 2(15) OF THE ACT. 12. THE HONBLE SUPREME COURT IN THE CASE OF THE ASSESS EE GIDC IN 227 ITR 414 HAD THE OCCASION TO CONSIDER THE OBJECTS OF THE GID C QUA THE CLAIM OF EXEMPTION U/S. 10(20A) OF THE ACT. THE RELEVANT OBS ERVATIONS OF THE HONBLE SUPREME COURT READS AS UNDER:- 7. THE DIVISION BENCH OF THE HIGH COURT WHILE AGREEING THAT 'INDUSTRIAL ACTIVITY IS ONE OF THE FACETS OF GENERAL DEVELOPMENT' ADOPTED A REASONING THAT SINCE DEVELOPMENT OF AN AREA WOULD REQUIRE ROADS, BUILDIN GS, SANITATION, PARKS, SPORTS, EDUCATIONAL INSTITUTIONS AND SEVERAL OTHER AMENITIE S 'A CITY OR TOWN OR VILLAGE COULD BE WELL DEVELOPED WITHOUT ANY INDUSTRY'. THE DIVISION BENCH POSED A QUESTION AND ANSWERED IT IN THE FOLLOWING MANNER: 'THE QUESTION, THEREFORE, IS WHETHER WHEN A PARTICUL AR CORPORATION IS ESTABLISHED FOR THE PURPOSE OF DEVELOPING OR ESTABLISHING INDUS TRIES IN ANY PARTICULAR AREA, CAN ANY ONE SAY THAT IT IS FOR THE PURPOSE OF PLANN ING, DEVELOPING OR IMPROVING A PARTICULAR CITY, TOWN OR VILLAGE OR A PARTICULAR AR EA ? ONE MAY ESTABLISH AN INDUSTRY IN A GIVEN AREA. THAT AREA FOR THE PURPOSE OF INDUSTRY MAY DEVELOP. BUT IT DOES NOT NECESSARILY MEAN THAT PARTICULAR AREA DEVE LOPS BY THAT INDUSTRY ALONE. THERE MAY BE ADVANTAGES AND DISADVANTAGES. ON THE O NE HAND, BECAUSE THERE ARE INDUSTRIAL ACTIVITIES IN THE AREA, SOME TRADE A ND COMMERCE MAY GROW, BUT THAT DOES NOT NECESSARILY MEAN THAT IT WOULD DEVELO P THAT PARTICULAR AREA. IT MAY ALSO CREATE POLLUTION AND SEVERAL OTHER PROBLEMS. A PART FROM THAT, THE QUESTION WHICH IS REQUIRED TO BE CONSIDERED IS AS TO WHETHER THE PURPOSE OF THE ITA NO. 212/ RPR/2014 . A.Y. 2011-12 5 CORPORATION OR THE OBJECT OF THE CORPORATION IS TO DEVELOP ANY CITY, ANY TOWN OR ANY PARTICULAR AREA. THE ANSWER WOULD BE IN THE NEG ATIVE.' 8. THE GUJARAT ACT WAS ENACTED 'TO MAKE SPECIAL PRO VISION FOR SECURING THE ORDERLY ESTABLISHMENT OF INDUSTRIES IN INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE STATE OF GUJARAT, AND TO ASSIST GENERALLY IN THE ORGANIZA TION THEREOF, AND FOR THAT PURPOSE TO ESTABLISH AN INDUSTRIAL DEVELOPMENT CORP ORATION AND FOR PURPOSES CONNECTED WITH THE MATTERS AFORESAID' AS CAN BE DIS CERNED FROM THE PREAMBLE THEREOF. 9. SECTION 2(G) OF THE ACT DEFINES 'INDUSTRIAL AREA 1 AS ANY AREA DECLARED TO BE AN INDUSTRIAL AREA BY THE STATE GOVERNMENT BY NOTIFICA TION IN THE OFFICIAL GAZETTE WHICH IS TO BE DEVELOPED AND WHERE INDUSTRIES ARE T O BE ACCOMMODATED. SECTION 2(H) DEFINES 'INDUSTRIAL ESTATE' AS ANY SITE SELECT ED BY THE STATE GOVERNMENT WHERE THE CORPORATION BUILDS FACTORIES AND OTHER BU ILDINGS AND MAKES THEM AVAILABLE FOR ANY INDUSTRIES OR CLASS OF INDUSTRIES . SECTION 13 OF THE GUJARAT ACT ENUMERATES THE FUNCTIONS OF THE CORPORATION AND THE Y CONTAIN, INTER ALIA, 'TO PROMOTE AND ASSIST IN THE RAPID AND ORDERLY ESTABLI SHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES IN THE STATE OF GUJARAT'. 10. WE HAVE NO DOUBT THAT A PROPER PLANNING IS ABSO LUTELY NECESSARY FOR CREATION OF AN INDUSTRIAL AREA. INSIDE ROADS, SUB-ROADS, BUI LDINGS, SANITATION, PARKS AND OTHER AMENITIES HAVE ALSO TO BE PROVIDED IN A PLANN ED INDUSTRIAL AREA AS PER THE MODERN CONCEPT OF ANY INDUSTRIAL COMPLEX. EVEN EDUC ATIONAL INSTITUTIONS MAY HAVE TO BE PROVIDED IN SUCH COMPLEX. THEREFORE, DEV ELOPMENT OF INDUSTRIAL AREA WOULD HAVE ITS DIRECT IMPACT ON THE DEVELOPMENT OR IMPROVEMENT OF THAT PART OF THE CITY OR TOWN OR VILLAGE WHERE SUCH AREA IS LOCA TED. DELINKING INDUSTRIAL AREA FROM THE SCOPE OF DEVELOPMENT OF ANY AREA IS THUS, WITHOUT ANY PRACTICAL SENSE. 11. IN THIS CONTEXT, A REFERENCE TO THE MAHARASHTRA INDUSTRIAL DEVELOP MENT ACT, 1 962, WHICH IS ALMOST ANALOGOUS TO THE GUJARAT ACT, IS OF SOME USE. WHILE EXAMINING ISSUES RELATING TO THE VALIDITY OF THE MA HARASHTRA ACT, A DIVISION BENCH ITA NO. 212/ RPR/2014 . A.Y. 2011-12 6 OF THIS COURT HAS SAID IN SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY LTD .V. STATE OF MAHARASHTRA [1 970] 3 SCC 323 : 'THE FUNCTIONS AND POWERS OF THE CORPORATION INDICAT E THAT THE CORPORATION IS ACTING AS A WING OF THE STATE GOVERNMENT IN ESTABLI SHING INDUSTRIAL ESTATES AND DEVELOPING INDUSTRIAL AREAS, ACQUIRING PROPERTY FOR THOSE PURPOSES, CONSTRUCTING BUILDING, ALLOTTING BUILDINGS, FACTORY SHEDS TO IND USTRIALISTS OR INDUSTRIAL UNDERTAKINGS. IT IS OBVIOUS THAT THE CORPORATION WI LL RECEIVE MONEYS FOR DISPOSAL OF LAND, BUILDINGS AND OTHER PROPERTIES AND ALSO/TH AT THE CORPORATION WOULD RECEIVE RENTS AND PROFITS IN APPROPRIATE CASES. REC EIPTS OF THESE MONEYS ARISE NOT OUT OF ANY BUSINESS OR TRADE BUT OUT OF ~THE SOLE P URPOSE OF ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES. THE CORPORATI ON HAS TO PROVIDE AMENITIES AND FACILITIES IN INDUSTRIAL ESTATES AND INDUSTRIAL AREAS. AMENITIES OF ROAD, ELECTRICITY, SEWERAGE AND OTHER FACILITIES IN INDUS TRIAL ESTATES AND INDUSTRIAL AREAS ARE WITHIN THE PROGRAMME OF THE WORK OF THE CORPORA TION.' 12. THE SCHEME OF THE GUJARAT ACT, AS IS SEEN FROM A SURVEY OF THE RELEVANT PROVISIONS REFERRED TO ABOVE, WOULD INDICATE THAT T HE CORPORATION SET UP THEREUNDER IS TO CHALK OUT PLANS FOR DEVELOPMENT OF INDUSTRIAL AREA AND INDUSTRIAL ESTATE IN DIFFERENT PLACES WHICH MAY LOCATE IN CITI ES OR TOWNS OR VILLAGES. SUCH SCHEMES WOULD NORMALLY INVOLVE PLANNING AND DEVELOP MENT OF SUCH AREAS. 13. THE WORD 'DEVELOPMENT' IN SECTION 10(20A) SHOUL D BE UNDERSTOOD IN ITS WIDE SENSE. THERE IS NO WARRANT TO EXCLUDE ALL DEVELOPME NT PROGRAMMERS RELATING TO ANY INDUSTRY FROM THE PURVIEW OF THE WORD 'DEVELOPM ENT' IN THE SAID SUB-SECTION. THERE IS NO INDICATION IN THE ACT THAT DEVELOPMENT ENVISAGED THEREIN SHOULD CONFINE TO NON-INDUSTRIAL ACTIVITIES. DEVELOPMENT O F A PLACE CAN BE ACCELERATED THROUGH VARIETIES OF SCHEMES AND ESTABLISHMENT OF I NDUSTRIES IS ONE OF THE MODES OF DEVELOPING AN AREA. ONE OF THE REASONS FOR INCORPORATING A SPECIFIC PRO VISION OF EXEMPTION FROM INCOME-TAX SUCH AS SECTION 10(20A) IS TO PROTECT PU BLIC BODIES CREATED UNDER LAW FOR ACHIEVING THE PURPOSE OF DEVELOPING URBAN OR RU RAL AREAS FOR PUBLIC GOOD. ITA NO. 212/ RPR/2014 . A.Y. 2011-12 7 WHEN THE OBJECT IS SUCH, AN INTERPRETATION WHICH WO ULD PRESERVE IT SHOULD BE ACCEPTED EVEN IF THE PROVISION IS CAPABLE OF MORE T HAN ONE INTERPRETATION. THAT PRINCIPLE OF INTERPRETATION IS VERY MUCH APPLICABLE TO FISCAL STATUTES ALSO, [VIDE STATE OF TAMIL NADU V. M.K. KANDASWAMI 1976 (1) SCR 38]. THIS COURT HAS REITERATED THE SAID PRINCIPLE IN CALCUTTA JUTE MANU FACTURING CO. V. CTO JT L997(5) SC 690. 15. THE POSITION IS, THEREFORE, CLEAR THAT THE AUTHORIT IES CONSTITUTED BY LAW FOR FACILITATING ALL KINDS OF DEVELOPMENT OF CITIES, TO WNS AND VILLAGES FOR PUBLIC PURPOSES SHALL NOT BE SUBJECTED TO THE LIABILITY TO PAY INCOME-TAX. THE DIVISION BENCH OF THE HIGH COURT SEEMS TO HAVE INTERPRETED T HE EXEMPTION CLAUSE TOO RIGIDLY AND NARROWLY WHICH RESULTED IN THE ANOMALY OF BRINGING AUTHORITIES LIKE THE APPELLANT-CORPORATION WITHIN THE TENTACLES OF THE I NCOME-TAX LIABILITY WHILE THE AUTHORITIES DEALING WITH THE HOUSING SCHEMES WHICH PROVIDE HOUSES TO PRIVATE INDIVIDUALS WOULD STAND OUTSIDE THE TAXING SPHERE. 16. IN THE/ RESULT, WE ALLOW THESE APPEALS, 'SET AS IDE THE JUDGMENT UNDER CHALLENGE. THE ANSWER TO THE QUESTION WILL, THEREFO RE, BE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 13. THE CONSTITUTIONAL VALIDITY OF THE MAHARASHTRA ACT WAS CHALLENGED BEFORE THE HONBLE SUPREME COURT BY A WRIT AND THE HONBLE APEX COURT DISMISSED THE WRIT PETITION. THE RELEVANT OBSERVATIONS OF THE HONBLE SUPREME COURT READS AS UNDER:- 3. THE TRUE CHARACTER, SCOPE AND INTENT OF THE ACT IS TO BE ASCERTAINED 'WITH REFERENCE TO THE PURPOSES AND THE PROVISIONS OF THE ACT. THE ACT IS ONE TO MAKE A SPECIAL PROVISION FOR SECURING THE ORDERLY ESTABLIS HMENT IN INDUSTRIAL AREAS AND INDUSTRIAL ESTATES OF INDUSTRIES IN THE STATE OF MA HARASHTRA, AND TO ASSIST GENERALLY IN THE ORGANISATION THEREOF, AND FOR THAT PURPOSE TO ESTABLISH AN INDUSTRIAL DEVELOPMENT CORPORATION, AND FOR PURPOSE S CONNECTED WITH THE MATTERS AFORESAID. ITA NO. 212/ RPR/2014 . A.Y. 2011-12 8 4. THE CORPORATION IS ESTABLISHED FOR THE PURPOSE O F SECURING AND ASSISTING THE RAPID AND ORDERLY ESTABLISHMENT AND ORGANISATION OF INDUSTRIES IN INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE STATE OF MAHARASHTRA. THE CORPORATION CONSISTS OF 8 MEMBERS TWO OF WHOM ARE NOMINATED BY THE STATE GOVE RNMENT OF WHOM ONE SHALL BE THE FINANCIAL ADVISER TO THE CORPORATION, ONE MEMBER NOMINATED BY THE STATE ELECTRICITY BOARD, ONE MEMBER NOMINATED BY TH E HOUSING BOARD AND THREE MEMBERS NOMINATED BY THE STATE GOVERNMENT, FROM AMO NGST PERSONS APPEARING TO GOVERNMENT TO BE QUALIFIED AS HAVING HAD EXPERIE NCE OF, AND HAVING SHOWN CAPACITY IN INDUSTRY OR TRADE OR FINANCE OR WHO ARE IN THE OPINION OF THE GOVERNMENT CAPABLE OF REPRESENTING THE INTEREST OF PERSONS ENGAGED OR EMPLOYED THEREIN, AND THE CHIEF EXECUTIVE OFFICER O F THE CORPORATION, WHO SHALL BE THE SECRETARY OF THE CORPORATION. 7. WE HAVE REFERRED TO THESE EXPRESSIONS, 'INDUSTRIA L AREA', 'INDUSTRIAL ESTATE', 'DEVELOPMENT' AND 'AMENITY' IN ORDER TO APPRECIATE THE GENERAL POWERS OF THE CORPORATION TO DISCHARGE THE FUNCTIONS OF THE CORPO RATION IN REGARD TO THE ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES IN THE STATE. THESE POWERS ARE TO ACQUIRE AND HOLD PROPERTY, MOVABLE AND IMMOV ABLE FOR THE PERFORMANCE OF ANY OF ITS ACTIVITIES, AND TO LEASE, SELL, EXCHA NGE OR OTHERWISE TRANSFER ANY PROPERTY HELD BY THE CORPORATION ON SUCH CONDITIONS AS MAY BE DEEMED PROPER BY THE CORPORATION AND ALSO TO PURCHASE BY AGREEMENT O R TO TAKE ON LEASE OR UNDER ANY FORM OF TENANCY ANY LAND, TO ERECT SUCH BUILDIN GS ARID TO EXECUTE SUCH OTHER WORKS AS MAY BE NECESSARY FOR THE PURPOSE OF CARRYI NG OUT ITS DUTIES AND FUNCTIONS, TO PROVIDE OR CAUSE TO BE PROVIDED AMENI TIES AND COMMON FACILITIES IN INDUSTRIAL ESTATES AND INDUSTRIAL AREAS AND CONSTRU CT AND MAINTAIN OR CAUSE TO BE MAINTAINED WORKS AND BUILDINGS THEREFORE, TO MAKE A VAILABLE BUILDINGS ON HIRE OR SALE TO INDUSTRIALISTS OR PERSONS INTENDING TO STAR T INDUSTRIAL UNDERTAKINGS TO CONSTRUCT BUILDINGS FOR THE HOUSING OF THE EMPLOYEE S OF SUCH INDUSTRIES, TO ALLOT FACTORY SHEDS OR SUCH BUILDINGS OR PARTS OF BUILDIN GS, INCLUDING RESIDENTIAL TENEMENTS TO SUITABLE PERSONS IN THE INDUSTRIAL EST ATES ESTABLISHED OR DEVELOPED BY THE CORPORATION AND TO DO SUCH OTHER THINGS AND PERFORM SUCH ACTS AS IT MAY THINK NECESSARY OR EXPEDIENT FOR THE PROPER CONDUCT OF ITS FUNCTIONS, AND THE CARRYING INTO EFFECT THE PURPOSES OF THIS ACT. 8.BROADLY STATED THE FUNCTIONS AND POWERS OF THE CO RPORATION ARE TO DEVELOP INDUSTRIAL AREAS AND INDUSTRIAL ESTATES BY PROVIDIN G AMENITIES OF ROAD., SUPPLY OF WATER OR ELECTRICITY, STREET LIGHTING, DRAINAGE, SE WERAGE, CONSERVANCY AND OTHER CONVENIENCES, SECONDLY TO CONSTRUCT WORKS AND BUILD INGS, FACTORY SHEDS AND ITA NO. 212/ RPR/2014 . A.Y. 2011-12 9 THIRDLY, TO MAKE AVAILABLE BUILDINGS ON HIRE OR SAL E TO INDUSTRIALISTS OR PERSONS INTENDING TO START INDUSTRIAL UNDERTAKINGS AND TO A LLOT FACTORY SHEDS, BUILDINGS, RESIDENTIAL TENEMENTS TO SUITABLE PERSONS IN INDUST RIAL ESTATES ESTABLISHED OR DEVELOPED BY THE CORPORATION AND TO LEASE, SELL, EX CHANGE OR OTHERWISE TRANSFER ANY PROPERTY HELD BY THE CORPORATION ON SUCH CONDIT IONS AS MAY BE DEEMED PROPER BY THE CORPORATION. 9. THE DEVELOPMENT OF INDUSTRIAL AREAS AND INDUSTRI AL ESTATES IS INTENDED TO SERVE TWO OBJECTS. IN THE FIRST PLACE, THERE IS TO BE AN ORDERLY ESTABLISHMENT AND GROWTH OF INDUSTRIES IN THE BOMBAY POONA SECTOR. THE SECON D OBJECT IS TO SECURE DISPERSAL OF INDUSTRIES FROM THE CONGESTED AREAS OF THE BOMBA Y POONA SECTOR TO THE UNDERDEVELOPED PARTS OF THE STATE. THE INDUSTRIAL A REAS ARE BROADLY CLASSIFIED INTO TWO CATEGORIES, NAMELY, FIRST, THOSE MEANT FOR ENGI NEERING AND OTHER INDUSTRIES WHICH ARE NOT OBNOXIOUS AND SECONDLY THOSE MEANT FO R CHEMICAL INDUSTRIES. THE ESTABLISHMENT AND GROWTH OF INDUSTRIES IN THE STATE IS INEXTRICABLY BOUND UP WITH AVAILABILITY OF LAND. AVAILABLE LAND IS LIMITED. SU CH LIMITED SUPPLY LEADS TO SPECULATION IN LAND. POWER IS THEREFORE REQUIRED FO R COMPULSORY ACQUISITION OF LAND TO ACHIEVE THE PURPOSES OF THE ACT. AT THE SAM E TIME, LAND OWNERS ARE NOT TO BE DEPRIVED OF THE LEGITIMATE BENEFIT OF REASONABLE INCREASE IN LAND VALUES IN A DEVELOPING ECONOMY. 11. THE PRINCIPAL FUNCTIONS OF THE CORPORATION IN REGAR D TO THE ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES IN THE STATE A RE FIRST TO ESTABLISH AND MANAGE INDUSTRIAL ESTATES AT SELECTED PLACES AND SE CONDLY TO DEVELOP INDUSTRIAL AREAS SELECTED BY THE STATE GOVERNMENT. WHEN INDUST RIAL AREAS ARE SELECTED THE NECESSITY OF ACQUISITION OF LAND IN THOSE AREAS IS APPARENT. THE ACT, THEREFORE, CONTEMPLATES THAT THE STATE GOVERNMENT MAY ACQUIRE LAND BY PUBLISHING A NOTICE SPECIFYING THE PARTICULAR PURPOSE FOR WHICH SUCH LA ND IS REQUIRED. BEFORE THE PUBLICATION OF THE NOTICE, THE OWNER OF THE LAND IS GIVEN AN OPPORTUNITY TO SHOW CAUSE AS TO WHY THE LAND SHOULD NOT BE ACQUIRED. AF TER CONSIDERING THE CAUSE SHOWN BY THE OWNER THE STATE GOVERNMENT MAY PASS SU CH ORDERS AS IT DEEMS FIT. WHEN A NOTICE IS PUBLISHED FOR ACQUISITION OF LAND, THE LAND SHALL, ON AND FROM THE DATE OF SUCH PUBLICATION, VEST ABSOLUTELY IN THE ST ATE GOVERNMENT FREE FROM ALL ENCUMBRANCES. WHERE THE LAND HAS BEEN ACQUIRED FOR THE CORPORATION OR ANY LOCAL AUTHORITY, THE STATE GOVERNMENT SHALL, AFTER IT HAS TAKEN POSSESSION OF THE LAND, TRANSFER THE LAND TO THE CORPORATION OR THAT LOCAL AUTHORITY, FOR THE PURPOSES FOR WHICH THE LAND HAS BEEN ACQUIRED SUBJECT TO SUC H TERMS AND CONDITIONS WHICH THE STATE GOVERNMENT MAY DEEM FIT TO IMPOSE. WE HAV E ALREADY NOTICED THAT FOR ITA NO. 212/ RPR/2014 . A.Y. 2011-12 10 THE PURPOSE OF THE ACT, NAMELY, THE ESTABLISHMENT A ND DEVELOPMENT OF INDUSTRIES THE STATE THE CORPORATION WILL ESTABLISH INDUSTRIAL ESTATES AND DEVELOP INDUSTRIAL AREAS. 12. APART FROM ESTABLISHING INDUSTRIAL ESTATES AND DEVE LOPING INDUSTRIAL AREAS THE CORPORATION MAY DISPOSE OF ANY LAND ACQUIRED BY THE STATE GOVERNMENT AND TRANSFER TO THE CORPORATION WITHOUT UNDERTAKING OR CARRYING OUT ANY DEVELOPMENT THEREOF OR TRANSFER SUCH LAND AFTER UNDERTAKING OR CARRYING OUT ANY DEVELOPMENT AS IT THINKS FIT. THESE POWERS OF THE CORPORATION W ITH RESPECT TO THE DISPOSAL OF LAND ARE TO BE EXERCISED SO FAR AS PRACTICABLE, THA T WHERE THE CORPORATION PROPOSES TO DISPOSE OF BY SALE ANY SUCH LAND WITHOU T ANY DEVELOPMENT HAVING BEEN UNDERTAKEN OR CARRIED OUT THEREON, THE CORPORA TION SHALL OFFER THE LAND IN THE FIRST INSTANCE TO THE PERSONS FROM WHOM IT WAS ACQUIRED IF THEY DESIRE TO PURCHASE IT SUBJECT TO SUCH REQUIREMENTS AS TO ITS DEVELOPMENT AND USE AS THE CORPORATION MAY THINK FIT TO IMPOSE. AGAIN, THE PER SONS WHO ARE RESIDING OR CARRYING ON BUSINESS OR OTHER ACTIVITIES ON ANY SUC H LAND SHALL, IF THEY DESIRE TO OBTAIN ACCOMMODATION ON LAND BELONGING TO THE CORPO RATION AND ARE WILLING TO COMPLY WITH ANY REQUIREMENTS OF THE CORPORATION AS TO ITS DEVELOPMENT AND USE, HAVE AN OPPORTUNITY TO OBTAIN THEREON ACCOMMODATION SUITABLE TO THEIR REASONABLE REQUIREMENTS ON TERMS SETTLED WITH DUE R EGARD TO THE PRICE AT WHICH ANY SUCH LAND HAS BEEN ACQUIRED FROM THEM. 16. THE PETITIONERS CONTENDED THAT THE CORPORATION WAS A TRADING ONE. THE REASONS GIVEN WERE THAT THE CORPORATION COULD SELL PROPERTY, NAMELY, TRANSFER LAND THAT THE CORPORATION HAD BORROWING POWERS ; A ND THAT THE CORPORATION WAS ENTITLED TO MONEYS BY WAY OF RENTS AND PROFITS. REL IANCE WAS PLACED ON THE REPORT OF THE CORPORATION AND IN PARTICULAR ON THE INCOME AND EXPENDITURE OF THE CORPORATION TO SHOW THAT IT WAS MAKING PROFITS. THE SE FEATURES OF TRANSFER OF LAND OR BORROWING OF MONEYS OR RECEIPT OF RENTS AND PROF ITS WILL BY THEMSELVES NEITHER BE THE INDICIA NOR THE DECISIVE ATTRIBUTES OF THE T RADING CHARACTER OF THE CORPORATION. ORDINARILY, A CORPORATION IS ESTABLISH ED BY SHAREHOLDERS WITH THEIR CAPITAL. THE SHAREHOLDERS HAVE THEIR DIRECTORS FOR THE REGULATION AND MANAGEMENT OF THE CORPORATION. SUCH A CORPORATION S ET UP BY THE SHAREHOLDERS CARRIES ON BUSINESS AND IS INTENDED FOR MAKING PROF ITS. WHEN PROFITS ARE EARNED BY SUCH A CORPORATION THEY ARE DISTRIBUTED TO SHARE HOLDERS BY WAY OF DIVIDENDS OR KEPT IN RESERVE FUNDS. IN THE PRESENT CASE, THESE A TTRIBUTES OF A TRADING CORPORATION CORPORATION ARE ABSENT. THE CORPORATION IS ESTABLISHED BY THE ACT FOR CARRYING OUT THE PURPOSES' OF THE ACT. THE PURPOSES OF THE ACT ARE DEVELOPMENT ITA NO. 212/ RPR/2014 . A.Y. 2011-12 11 OF INDUSTRIES IN THE STATE. THE CORPORATION CONSIST S OF NOMINEES OF THE STATE GOVERNMENT, STATE ELECTRICITY BOARD AND THE HOUSING BOARD. THE FUNCTIONS AND POWERS OF THE CORPORATION INDICATE THAT THE CORPORA TION IS ACTING AS A WING OF THE STATE GOVERNMENT IN ESTABLISHING INDUSTRIAL ESTATES AND DEVELOPING INDUSTRIAL AREAS, ACQUIRING PROPERTY FOR THOSE PURPOSES, CONST RUCTING BUILDINGS, ALLOTTING BUILDINGS, FACTORY SHEDS TO INDUSTRIALISTS OR INDUS TRIAL UNDERTAKINGS. IT IS OBVIOUS THAT THE CORPORATION WILL RECEIVE MONEYS FOR DISPOS AL OF LAND, BUILDINGS AND OTHER PROPERTIES AND ALSO THAT THE CORPORATION WOULD RECE IVE RENTS AND PROFITS IN APPROPRIATE CASES. RECEIPTS OF THESE MONEYS ARISE N OT OUT OF ANY BUSINESS OR TRADE BUT OUT OF SOLE PURPOSE OF ESTABLISHMENT, GRO WTH AND DEVELOPMENT OF INDUSTRIES. 18.THE CORPORATION HAS TO PROVIDE AMENITIES AND FAC ILITIES IN INDUSTRIAL ESTATES AND INDUSTRIAL AREAS. AMENITIES OF ROAD, ELECTRICIT Y, SEWERAGE AND OTHER FACILITIES IN INDUSTRIAL ESTATES AND INDUSTRIAL AREAS ARE WITH IN THE PROGRAMME OF WORK OF THE CORPORATION. THE FUND OF THE CORPORATION CONSISTS O F MONEYS RECEIVED FROM THE STATE GOVERNMENT, ALL FEES, COSTS AND CHARGES RECEI VED BY THE CORPORATION, ALL MONEYS RECEIVED BY THE CORPORATION FROM THE DISPOSA L OF LANDS, BUILDINGS AND OTHER PROPERTIES AND ALL MONEYS RECEIVED BY THE COR PORATION BY WAY OF RENTS AND PROFITS OR IN ANY OTHER MANNER. THE CORPORATION SHA LL HAVE THE AUTHORITY TO SPEND SUCH SUMS OUT OF THE GENERAL FUNDS OF THE CORPORATI ON OR FROM RESERVE AND OTHER FUNDS. THE CORPORATION IS TO MAKE PROVISION FOR RES ERVE AND OTHER SPECIALLY DENOMINATED FUNDS AS THE STATE GOVERNMENT MAY DIREC T. THE CORPORATION ACCEPTS DEPOSITS FROM PERSONS, AUTHORITIES OR INSTITUTIONS TO WHOM ALLOTMENT OR SALE OF LAND, BUILDINGS, OR SHEDS IS MADE OR IS LIKELY TO B E MADE IN FURTHERANCE OF THE OBJECT OF THE ACT. A BUDGET IS PREPARED SHOWING THE ESTIMATED RECEIPTS AND EXPENDITURE. THE ACCOUNTS OF THE CORPORATION ARE AU DITED BY AN AUDITOR APPOINTED BY THE STATE GOVERNMENT. THESE PROVISIONS IN REGARD TO THE FINANCE OF THE CORPORATION INDICATE THE REAL ROLE OF THE CORPO RATION, VIZ., THE AGENCY OF THE GOVERNMENT IN CARRYING OUT THE PURPOSE AND OBJECT O F THE ACT WHICH IS THE DEVELOPMENT OF INDUSTRIES. IF IN THE ULTIMATE ANALY SIS THERE IS EXCESS OF INCOME OVER EXPENDITURE THAT WILL NOT ESTABLISH THE TRADIN G CHARACTER OF THE CORPORATION. THERE ARE VARIOUS DEPARTMENTS OF THE GOVERNMENT WHI CH MAY HAVE EXCESS OF INCOME OVER EXPENDITURE. 19. THERE ARE TWO PROVISIONS OF THE ACT WHICH ARE NOT TO BE FOUND IN ANY TRADING CORPORATION. IN THE FIRST PLACE, THE SUMS PAYABLE B Y ANY PERSON TO THE CORPORATION ARE RECOVERABLE BY IT UNDER THIS ACT AS AN ARREAR O F LAND REVENUE ON THE ITA NO. 212/ RPR/2014 . A.Y. 2011-12 12 APPLICATION OF THE CORPORATION. 'SECONDLY ON DISSOL UTION OF THE CORPORATION THE ASSETS VEST IN AND THE LIABILITIES BECOME ENFORCEAB LE AGAINST THE STATE GOVERNMENT. 20. THE UNDERLYING CONCEPT OF A TRADING CORPORATION IS BUYING AND SELLING. THERE IS NO ASPECT OF BUYING OR SELLING BY THE CORPORATION I N THE PRESENT CASE. THE CORPORATION CARRIES OUT THE PURPOSES OF THE ACT, NA MELY, DEVELOPMENT OF INDUSTRIES IN THE STATE. THE CONSTRUCTION OF BUILDI NGS, THE ESTABLISHMENT OF INDUSTRIES BY LETTING BUILDINGS ON HIRE OR SALE, TH E ACQUISITION AND TRANSFER OF LAND IN RELATION TO ESTABLISHMENT OF INDUSTRIAL ESTATE O R DEVELOPMENT OF INDUSTRIAL AREAS AND OF SETTING UP OF INDUSTRIES CANNOT BE SAI D TO BE DEALING IN LAND OR BUILDINGS FOR THE OBVIOUS REASON THAT THE STATE IS CARRYING OUT THE OBJECTS OF THE ACT WITH THE CORPORATION AS AN AGENT IN SETTING UP INDUSTRIES IN THE STATE. THE ACT AIMS AT BUILDING AN INDUSTRIAL TOWN AND THE CORPORA TION CARRIES OUT THE OBJECTS OF THE ACT. THE HARD CORE OF A TRADING CORPORATION IS ITS COMMERCIAL CHARACTER. COMMERCE CONNOTES TRANSACTIONS OF PURCHASE AND SALE OF COMMODITIES, DEALING IN GOODS. THE FORMS OF BUSINESS TRANSACTIONS MAY BE VA RIED BUT THE REAL CHARACTER IS BUYING AND SELLING. THE TRUE CHARACTER OF THE CORPO RATION IN THE PRESENT CASE IS TO ACT AS AN ARCHITECTURAL AGENT OF THE DEVELOPMENT AN D GROWTH OF INDUSTRIAL TOWNS BY ESTABLISHING AND DEVELOPING INDUSTRIAL ESTATES A ND INDUSTRIAL AREAS. WE ARE OF OPINION THAT THE CORPORATION IS NOT A TRADING ONE. 14. IN THE LIGHT OF THE AFOREMENTIONED JUDICIAL DECISIO NS OF THE HONBLE SUPREME COURT, IT IS SETTLED THAT THE ASSESSEE IS NOT A TRA DING CORPORATION. LET US NOW CONSIDER THE VARIOUS ASPECT OF THE IMPUGNED PROVISI ON. GENERAL MEANS PERTAINING TO WHOLE CLASS, 'PUBLIC' MEANS THE BODY OF PEOPLE AT LARGE INCLUDIN G ANY CLASS OF THE PUBLIC, 'UTILITY' MEANS USEFULNESS. THEREFORE, THE ADVANCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM INDIVID UAL AND GROUP OF INDIVIDUALS WOULD BE A CHARITABLE PURPOSE. AN OBJEC T OF PUBLIC UTILITY ITA NO. 212/ RPR/2014 . A.Y. 2011-12 13 NEED NOT BE AN OBJECT IN WHICH THE WHOLE OF THE PUB LIC IS INTERESTED. IT IS SUFFICIENT IF WELL DEFINED SECTION OF THE PUBLIC BE NEFITS BY THE OBJECTS WHICH MEANS THAT THE EXPRESSION 'OBJECT OF GENERAL PUBLIC UTILITY' IS NOT RESTRICTED TO OBJECTS BENEFICIAL TO THE WHOLE MANKI ND. AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. IN THE CASE OF CIT VS SWASTIK TRADING CO. LTD. 113 ITR 852, THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT ESTABLISHI NG AND MAINTAINING GAUSHALAS AND PANJRAPOLE CONSTITUTES CHARITABLE PUR POSE. 16. THE HON'BLE FINANCE MINISTER WHILE PRESENTI NG THE FINANCE ACT 2008 IN HIS BUDGET SPEECH STATED AS FOLLOWS: 'CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, ED UCATION, MEDICAL RELIEF AND ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. TH ESE ACTIVITIES ARE TAX EXEMPT AS THEY SHOULD BE. HOWEVER, SOME ENTITIES CARRYING ON REGULAR TRADE, COMMERCE OR BUSINESS OR PROVIDING SERVICES I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS AND EARNING INCOMES HAV E SOUGHT TO CLAIM THAT THEIR PURPOSE WOULD ALSO FALL UNDER 'CHARITABL E PURPOSE'. OBVIOUSLY, THIS WAS NOT THE INTENTION OF THE PARLIA MENT AND HENCE, I PROPOSE TO AMEND THE LAW TO EXCLUDE THE AFORESAID C ASES. GENUINE CHARITABLE ORGANIZATIONS WILL NOT IN ANY WAY BE AFF ECTED. 18. THE CBDT CIRCULAR NO. 11/2008 DT. 19.12.2008 HA S EXPLAINED THE IMPLICATIONS ARISING FROM THE AMENDMENT BROUGHT TO THE PROVISIONS OF SEC 2(15) OF THE ACT. THE CBDT CLARIFIES THAT THE N EWLY INSERTED PROVISO TO SEC. 2(15) WILL NOT APPLY IN RESPECT OF THE FIRS T THREE LIMBS OF SEC. 2(15) I.E. RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. CONSEQUENTLY WHERE THE PURPOSE OF A TRUST OR INSTITUTION IS RELI EF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE CHARITABLE PU RPOSE, EVEN IF IT IS ITA NO. 212/ RPR/2014 . A.Y. 2011-12 14 INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITY. THE BOARD FURTHER CLARIFIED THAT ' THE NEWLY INSERTED PROVISO TO SEC. 2( 15) WILL APPLY ONLY TO ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY I.E. 4 LH LIMB OF THE DEFINITION OF THE CHARITABLE PURPOSE CONTAINED IN SEC. 2(15). THE CIRCULAR FURTH ER CLARIFIED 'IN THE FINAL ANALYSIS, WHETHER THE ASSESSEE HAS FOR ITS OB JECTS THE ADVANCEMENT OF ANY OTHER OBJECT OR GENERAL PUBLIC UTILITY IS A QUESTION OF FACT. IF SUCH ASSESSEE IS ENGAGED IN ANY ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS OR RENDERS ANY SERVICE IN RELATION TO TRAD E, COMMERCE OR BUSINESS, IT WOULD NOT BE ENTITLED TO CLAIM THAT IT S OBJECT IS CHARITABLE PURPOSE. IN SUCH A CASE, THE OBJECT OF GENERAL PUBL IC UTILITY WILL BE ONLY A MASK OR DEVICE TO HIDE THE TRUE PURPOSE WHICH IS TR ADE COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATIO N TO TRADE, COMMERCE OR BUSINESS. EACH CASE WOULD THEREFORE BE DECIDED ON ITS OWN FAC TS AND NO GENERALIZATION IS POSSIBLE. 19. THUS, EVEN THE CBDT DOES NOT LAY DOWN ANY GUIDE LINES FOR DETERMINING WHETHER THE ENTITY IS CARRYING ON ANY C OMMERCIAL ACTIVITY. EACH CASE WOULD THEREFORE TO BE DECIDED ON ITS OWN FACTS AND AS THE CBDT HAS CLARIFIED GENERALIZATION IS NOT POSSIB LE. 15. IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST V S. CIT 101 ITR 234, THE HONBLE JUSTICE J. BAIG SPEAKING FOR THE APEX COURT THUS SAID THAT: ' IF THE PROFITS MUST NECESSARILY FEED A CHARITABLE PURPOSE, UNDER THE TERMS OF THE TRUST, THE MERE FACT THAT THE ACTIVITIES OF THE TRU ST YIELD PROFIT WILL NOT ALTER THE CHARITABLE CHARACTER OF THE TRUST. THE TEST NOW IS, MORE CLEARLY THAN IN THE PAST, THE GENUINENESS OF THE PURPOSE TESTED BY THE OBLIGA TION CREATED TO SPEND THE MONEY EXCLUSIVELY OR ESSENTIALLY ON CHARITY'. ITA NO. 212/ RPR/2014 . A.Y. 2011-12 15 16. THE TEST FOR CARRYING ON OF ANY ACTIVITY IN THE NAT URE OF TRADE, COMMERCE OR BUSINESS AS MENTIONED IN THE FIRST PROVISO TO SEC. 2(15) WOULD BE SATISFIED IF PROFIT MAKING IS NOT THE REAL OBJECT. THE HON'BLE D ELHI HIGH COURT IN THE CASE OF ICAI VS DIRECTOR GENERAL OF INCOME TAX (EXEM) 34 7 ITR 99 HAD THE OCCASION TO CONSIDER THE GRIEVANCE OF THE ICAI WHIC H WAS DENIED EXEMPTION U/S. 10(23C)(IV) OF THE ACT BECAUSE IN THE OPINION OF THE DGIT (EXEM.) THE INSTITUTE WAS HOLDING COACHING CLASSES AND THEREFOR E WAS NOT AN EDUCATIONAL INSTITUTION, CONSEQUENTLY THE INSTITUTE WAS COVERED UNDER THE LAST LIMB OF CHARITABLE PURPOSE I.E. ADVANCE OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IN THE LIGHT OF THE AMENDMENT BROUGHT O SEC. 2(15) OF THE ACT AS THE INSTITUTE WAS CHARGING FEES FOR CONDUCTING COACHING CLAUSES AND M AKING HUGE MONEY IN A SYSTEMATIC AND ORGANIZED MANNER. CONSIDERING THE FA CTS IN THE LIGHT OF THE AMENDED PROVISIONS OF SEC. 2(15), THE HON'BLE DELHI HIGH COURT HELD THAT THE ORDER DENYING THE EXEMPTION WAS NOT VALID. 17. AFTER CONSIDERING THE ENTIRE FACTS IN TOTALITY, IN THE LIGHT OF THE DECISIONS DISCUSSED HEREINABOVE AND ALSO DRAWING SUPPORT FROM THE SPEECH OF THE HON'BLE FINANCE MINISTER AND SUBSEQUENT CLARIFICATI ONS ISSUED BY THE CBDT WITHIN THE FRAME WORK OF THE AMENDED PROVISIONS OF SEC. 2(15) OF THE ACT, IN OUR CONSIDERED VIEW, THERE WAS NO MATERIAL WHICH MA Y SUGGEST THAT THE ASSESSEE WAS CONDUCTING ITS AFFAIRS SOLELY ON COMMERCIAL LIN ES WITH A MOTIVE TO EARN PROFIT. THERE IS ALSO NO MATERIAL BROUGHT ON RECORD WHICH COULD SUGGEST THAT THE APPELLANT COMPANY DEVIATED FROM ITS OBJECTS FOR WHI CH IT HAS BEEN CONSTITUTED. IN OUR HUMBLE OPINION AND UNDERSTANDING OF LAW, THE PROVISO TO SEC. 2(15) OF THE ACT IS NOT APPLICABLE ON THE FACTS OF THE CASE. ITA NO. 212/ RPR/2014 . A.Y. 2011-12 16 18. ACCORDINGLY, WE UPHOLD THE ORDER OF THE FIRST APPEL LATE AUTHORITY. APPEAL DISMISSED. 19. BEFORE PARTING, THE REVENUE RELIED UPON ANOTHER AME NDMENT IN THE ACT BY WAY OF INTRODUCTION OF SECTION 13(8) WHICH CAME THROUGH FINANCE ACT OF 2012 WITH RETROSPECTIVE EFFECT FROM 01.04.2009 WHICH PROVIDED THAT THE BENEFIT OF SECTION 11 OR SECTION 12 WOULD NOT BE AVAILABLE IF THE RECE IPTS FROM THE ACTIVITY IN THE NATURE OF TRADE OR BUSINESS EXCEEDED THE THRESHOLD PROVIDED FOR IN THE PROVISO TO SECTION 2(15) OF THE ACT. SECTION 13 (8) OF THE ACT READS AS UNDER:- [(8)NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YE AR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO C LAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID P REVIOUS.] 20. A PERUSAL OF THE AFOREMENTIONED SECTION SHOWS THAT IT WOULD BE APPLICABLE IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE. HOWEVER, WE HAVE HELD THAT THE FIRST PR OVISO TO SECTION 2(15) IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE ON THE FACTS OF THE CASE. ORDER PRONOUNCED IN OPEN COURT ON 16 - 04- 2018 SD/- SD/- (RAM LAL NEGI) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUN TANT MEMBER RAIPUR: DATED /04/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)