M/S. M P AUDYOGIK KENDRA VIKAS NIGAM (BHOPAL), Bhopal V. THE CIT (EXEMPTION), Bhopal

ITA 217/IND/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6180 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-12-2018
• Assessment Year: misc
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: PRAVEE N N SURANGE
• Keywords: Charitable institution; Question of law; Set aside
• Section: 12A; 12AA; 195; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.217/IND/2015 ASSESSMENT YEAR: M.P. AUDYOGIK KENDRA VIKAS NIGAM, BHOPAL / VS. CIT(EXEMPTION) BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AACCM6048F APPELLANT BY SHRI PRAVEE N N. SURANGE, ADV. REVENUE BY SMT. ASHIMA GUPTA , CIT - DR DATE OF HEARING: 28.12.2018 DATE OF PRONOUNCEMENT: 22.01.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL, M.P . DATED 30.01.2015. THE ASSESSEE HAS RAISED FOLLOWING REVIS ED GROUNDS OF APPEAL: THE PRESENT APPEAL IS BEING FILED INTER ALIA ON TH E FOLLOWING GROUNDS: A.BECAUSE THE IMPUGHNED ORDER IF ERRONEIOUS, UNSUSTA INABLE AND ON WHOLLY ILLEGAL GROUND AND HENCE LIABLE TO BE REJECTED . B. BECAUSE REGISTRATION CANNOT BE DENIED ON AN ERRON EIOUS GROUND THAT ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN N ATURE. FOR INVOKING SECTION 12AA READ WITH 2(15), REVENUE HAS TO SHOW T HAT ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE ASSOC IATION. C. BECAUSE THE LD. CIT HAS NOT HELD THAT ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE OR THAT THE ACTIVITIES ARE NOT BEIN G CARRIED OUT IN M.P. AUDYOGIK KEN DRA VIKAS NIGAM 2 ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE. THE AS SESSE IS A NON- PROFIT ORGANIZATION AND REGISTERED UNDER SECTION 25 OF THE COMPANIES ACT, 1956 AND HENCE THE ASSESSEE IS A CHARITABLE ORG ANIZATION AND ENTITLED FOR THE BENEFIT OF REGISTRATION UNDER SECTIO N 12A OF THE INCOME TAX ACT. D. BECAUSE THE CORE ACTIVITIES OF THE ASSESSEE ARE NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. MERE CHARGING OF FE ES DOES NOT MEAN THAT THE ASSESSEE IS CARRYING OUT ITS ACTIVITY IN T HE NATURE OF TRADE, COMMERCE AND BUSINESS AND THUS THE PROVISO TO 5.2(1 5) IS NOT AUTOMATICALLY ATTRACTED. E. BECAUSE IT IS SETTLED POSITION OF LAW THAT FOR ACHIEVING IT S MAIN CHARITABLE OBJECT, IF AN INSTITUTION CARRIES ON SOM E COMMERCIAL ACTIVITY AND THERE IS PROFIT, IT CANNOT BE CONSIDERED TO BE A BUSINESS ACTIVITY, WITH PROFIT MOTIVE, SO LONG AS, THE PROFIT EARNED IS UTILIZED FOR THE PURPOSE OF ACHIEVING THE MAIN CHARITABLE OBJECT. LE ARNED CIT (E) ALSO OVERLOOKED THE FACT THAT AS PER ARTICLES OF ASSOCIAT ION OF THE APPELLANT COMPANY THERE IS RESTRICTION TO DISTRIBUTE ANY DIVI DEND AND/OR PROFIT BY THE APPELLANT HENCE THE CONCLUSI N DRAWN IS WHOLL Y DEVOID OF MERITS. APART FROM THIS AS PER MAI OBJECT OF THE AP PELLANT COMPANY AS CONTAINED IN THE MEMORANDUM OF ASSOCIATION, THE APPEL LANT SHALL APPLY ITS PROFIT, IF ANY OR OTHER INCOME IN PROMOTI NG ITS OBJECT AND PROHIBIT PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. F. THAT, THE FINDING OF THE LEARNED CIT (E) THAT IF THE CONTENTION OF ASSESSEE IS CONSIDERED FOR THE SAKE OF ARGUMENTS THEN SIMILARLY PLACED ALL PUBLIC SECTOR UNITS WHICH ARE OWNED AND CONTROLLED BY STATE SHOULD BE OUT OF THE PURVIEW OF TAXATION IS WH OLLY ERRONEOUS AND OUTSIDE THE JURISDICTION OF LEARNED CIT (E) WHILE DECIDING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION UNDER S ECTION 12AA OF THE INCOME TAX ACT. G. THAT, LEARNED CIT (E) HAS DECIDED THE APPLICATION OF THE ASSESSEE BY RELYING ON THE ORDER PASSED BY LEARNED ITAT, JAIPU R IN APPEAL NO. 17ITA182/JP/2012 (JAIPUR DEVELOPMENT AUTHORITY -V- CIT), JAMMU DEVELOPMENT AUTHORITY VS. CIT, ITA NO. 164/JAMMU/20 12 AND JUDGMENT PASSED BY LEARNED ITAT CHANDIGARH IN PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY VS. CIT IN APPEAL NO. 764/CHANDIGARH/2003 WHICH IS BASED ON THE WRONG INT ERPRETATION OF JUDGMENTS WHILE THE APPELLANT ASSESSEE IS NOT A HOU SING DEVELOPMENT AUTHORITY HENCE THE FACTS ON THE BASIS OF WHICH RELIANCE HAS BEEN PLACED BY LEARNED CIT (E) IS NOT APPLICABLE IN THE CASE OF APPELLANT. HON'BLE ITAT, JAIPUR IN ITA NO. 182/JP/2 012 (JAIPUR DEVELOPMENT AUTHORITY VS. CIT) DECIDED ON 30.09.2014 HAS TAKEN A M.P. AUDYOGIK KEN DRA VIKAS NIGAM 3 DIFFERENT VIEW WHILE REJECTING THE DECISION PASSER: IN ITA NO. 164/JAMMU/2012 & ITA NO. 764/CHANDIGARH/2003 AND ON THIS SOLE GROUND THE IMPUGNED ORDER IS LIABLE TO BE SET AS IDE BY ALLOWING THE PRESENT APPEAL. H. BECAUSE LD. CIT (E) IN PARA 7 OF THE IMPUGNED ORDER HAS OBSERVED AS UNDER: THAT IF THE ARGUMENT OF ASSESSEE IS ANALYSED FROM THE POINT OF GENERAL PUBLIC UTILITY, STILL IT CAN BE SAID THAT COMMERCIAL ANGLED WITH PROFIT MOTIVE IS INVOLVED WHICH HAS BECOME PREDOMINANT OBJECT OF ASSESSEE. THE SAID FINDING IS WHOLLY CONTRARY TO FACTS AND MA TERIALS ON RECORD. ADMITTEDLY THE ASSESSEE COMPANY IS A CHARITABLE AND NON-PROFITABLE ORGANIZATION REGISTERED UNDER SECTION 25 OF COMPANI ES ACT, 195 6 . ON PERUSAL OF THE OBJECT CLAUSE OF MEMORANDUM OF ASSOC IATION OF THE ASSESSEE COMPANY IT IS CLEAR THAT OBJECT IS FOR GENERAL PUBL IC UTILITY AND THERE IS NO ELEMENT OF PROFIT INVOLVED IN THE ACTIVITY OF ASSES SEE. I. BECAUSE THE IMPUGNED ORDER PASSED BY LD. CIT (E) IS WITHOUT CONSIDERING THE JUDGMENT PASSED BY HON'BLE APEX COU RT IN COMMISSIONER OF INCOME TAX VS. GUJRAT MARITIME BOARD REPORTED, IN ( 2 00 7) 14 SCC 7 0 4 WHICH HOLD A GOOD LAW EVEN AFTER AMENDMENT IN SECTION 2(1 5) OF THE INCOME TAX ACT AND STILL FOLLOWED BY VARIOUS HIGH COURTS AS WELL AS ITAT. J. BECAUSE IMPUGNED ORDER IS CONTRARY TO ORDER PASSED BY HON'B LE GUJRAT HIGH COURT IN COMMISSIONER OF INCOME TAX VS. KANDLA PORT TRUST REPORTED IN (2 01 4) 364 ITR 164 (GUJ), RELYING ON THE JUDGMENT PASSED BY HON'BLE APEX COURT IN C.I.T. V. ANDHRA CHAMBER OF COMMERCE REPORTED IN (1965) 55 ITR 722 (SC), (.I.T. V. ANDHRA PRADESH ST ATE ROAD TRANSPORT CORPORATION REPORTED IN (1986) 159 ITR 1 (SC), SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION'S CASE (1980) 120 ITR 1 (SC) AND THE BAR COUNCIL OF MAHARASHTRA'S CASE (1981) 130 ITR 28 (SC). K. BECAUSE LD. CIT (E) HAS AVOIDED HIMSELF TO CONSIDER THE MOS T IMPORTANT AND CORE ISSUE RAISED IN THE APPLICATION THAT IN THE SIMILAR CIRCUMSTANCES CIT HAD ALREADY GRANTED REGISTRATION TO TWO SISTER CONCERNS NAMELY MP AUDYOGIK KENDRA VIKAS NIGAM (GWALIOR) LTD A ND MP AUDYOGIK KENDRA VIKAS NIGAM (JABALPUR) LIMITED WHO WE RE ESTABLISHED UNDER SAME CIRCULAR AND ARE HUNDRED PER CEN T STATE GOVERNMENT ENTITIES AND ARE SUBSIDIARIES OF M P TRA DE AND INVESTMENT FACILITATION CORPORATION LIMITED, ANOTHE R WHOLLY OWNED GOVERNMENT CORPORATION: L. BECAUSE LD CIT (E) HAS ALSO OVERLOOK THE FACT THAT HON'BLE H IGH COURT OF MADHYA PRADESH HAS ALREADY HELD THAT ACTIVITIES OF THE MP AUDYOGIK KENDRA VIKAS NIGAM (GWALIOR) LTD IS CHARITABL E PURPOSE AND THE RATIO OF THE SAID DECISIONS IS SQUARELY COV ERED IN THE PRESENT M.P. AUDYOGIK KEN DRA VIKAS NIGAM 4 FACTS AND CIRCUMSTANCES OF THE CASE AND THE SAID JUDGM ENT IS ATTAIN FINALITY AND HENCE ON THIS GROUND ALSO THE IMPUGNED OR DER IS LIABLE TO BE SET ASIDE. M. THAT, AS PER ARTICLE 289 OF THE CONSTITUTION OF IND IA, THE PROPERTY AND INCOME OF THE STATE SHALL BE EXEMPT FROM UNION TAXATION. IT IS ADMITTED POSITION THAT THE LAND IS OWNED BY STATE GOVE RNMENT, THE LEASE DEED WAS EXECUTED FOR AND ON BEHALF OF GOVERNOR OF STATE AND ALL THE RECEIPT BELONGS TO THE STATE GOVERNMENT, TH E ASSESSEE/APPELLANT IS ACTED AS AGENT OF THE STATE HE NCE THE INCOME/RECEIPT IS NOT TAXABLE AT ALL IN THE HANDS O F APPELLANT. N. THE LD. CIT (E) HAS ACTED IN EXCESS OF ITS POWER S IN THE NARROW SENSE, HE HAS ABUSED ITS POWERS BY ACTING IN BAD FAIT H OR FOR AN INADMISSIBLE PURPOSE OR AN IRRELEVANT GROUND OR WITH OUT REGARDS TO RELEVANT CONSIDERATION OR WITH GROSS UNREASONABLENES S. 2. THE ONLY EFFECTIVE GROUND IN THE APPEAL IS AGAIN ST REJECTING THE APPLICATION SEEKING FOR EXEMPTION U/S 12AA(1)(B) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 3. THE FACTS GIVING RISE TO PRESENT APPEAL ARE THAT THE ASSESSEE HAD MADE AN APPLICATION SEEKING EXEMPTION U/S 12AA(1)(B ) OF THE ACT ON 23.07.2014 IN FORM NO.10A. IN RESPONSE TO THE NOTIC E OF THE LD. CIT(E), THE AUTHORIZED REPRESENTATIVES OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS AS CALL ED FOR, AFTER CONSIDERING EXPLANATION OF THE MATERIAL ON RECORD. THE LD. CIT(A) REJECTED THE APPLICATION HOWEVER, THE LD. CIT(A) RE JECTED THE APPLICATION BY OBSERVING AS UNDER: ALL THE CASE LAWS QUOTED BY THE NIGAM IN ITS VARIOU S REPLIES INCLUDING THE REPLY DATED 27.01.2014 ARE PRIOR TO TH E AMENDMENT OF SECTION 2( 15) OF THE IT ACT. 1961 (0 BE PRECISE PRIOR TO FINANCE ACT,2008, THROUGH WHICH THE PROVISO HAS BEEN ADDED W HEREBY ANY OBJECT OF THE GENERAL PUBLIC UTILITY HAS BEEN REDEF INED BY BRINGING INVOLVEMENT OF CARRYING ON ANY TRADE, COMMERCE OR B USINESS. I HAVE CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THIS CAS E THE ONLY ISSUE INVOLVED IS TO ASCERTAIN WHETHER THE ACTIVITIES CARR IED OUT BY THE M.P. AUDYOGIK KEN DRA VIKAS NIGAM 5 NIGAM IS IN THE NATURE OF CHARITABLE ACTIVITY AS CL AIMED BY THE COMPANY. BEFORE DISCUSSING THE MAIN ISSUE I WOULD LIK E TO CLARIFY THAT FROM THE ABOVE MENTIONED GIST OF REPLY FROM THE ASSESSEE, IT IS SEEN THAT ASSESSEE IS A WHOLLY OWNED GOVERNMENT COMP ANY, FUNDED BY THE GOVT. AND WORKING ON BEHALF OF IT AS AN AGENT. THE ACTIVITIES DONE PRIMARILY REVOLVE AROUND PROMOTION OF INDUSTRIALIZATION IN THE JURISDICTION OF THE COMPANY . IN OTHER WORDS IT IS ONE OF THE INFRASTRUCTURE DEVELOPMENT AGENCY OF THE STATE LIKE JAMMU DEVELOPMENT AUTHORITY, HYDERABAD URBAN DEVELOP MENT AUTHORITY, PUNJAB URBAN PLANNING & DEVELOPMENT AUTHORITY ETC., I WOULD ALSO LIKE TO CLARIFY THAT THE ASSESSEE KEEPS O N STRESSING THE POINT ABOUT THE OWNERSHIP AND MANAGEMENT AND CONTROL BY THE STATE GOVT SO THE ACTIVITIES ARE ARGUED TO BE OF GENERAL PUBLIC UTILITY, HENCE TO BE CONSIDERED AS CHARITY IN TERMS OF SECTION 2(15 ) OF THE INCOME TAX ACT 1961. IF THE CONTENTION OF THE ASSESSEE IS CONSIDERED EVEN FOR SAKE OF ARGUMENT THEN SIMILARLY, PLACED ALL PUBLIC S ECTOR UNITS WHICH ARE OWNED AND CONTROLLED BY THE STATE SHOULD BE OUT OF PURVIEW OF THE TAXATION BUT IN REALITY THAT IS NOT HAPPENING I N THE INSTANT CASE, THE COMPANY IS AN INDEPENDENT TAXABLE ENTITY HAVING SEPARATE LEGAL STATUS AND SEAL. THEREFORE THE ARGUMENT OF THE ASSES SEE THAT OWNERSHIP, MANAGEMENT AND CONTROL BEING THAT OF THE STATE SHOULD RENDER THE ACTIVITY OF THE NIGAM AS CHARITABLE IS N OT ACCEPTABLE. HAVING DISCUSSED ABOVE, NOW I PROCEED TO DISCUSS THE MAIN ISSUE OF ACTIVITIES CARRIED ON BY THE NIGAM AND THEIR RELEVANC E IN TERMS OF AMENDMENT TO SECTION 2( 15) OF IT ACT. 5. FINANCE ACT, 2008 HAS REDEFINED THE EXPRESSION 'C HARITABLE PURPOSE' AS DEFINED U/S 2(15) OF THE LT. ACT, 1961. PROVISO TO THAT SECTION READS AS UNDER;- 'PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDE RATION, IRRESPECTIVE OF THE NATURE OR USE OF APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY'. 5.1 THE REASON FOR THIS CHANGE WAS EXPLAINED IN THE EXPLANATORY MEMORANDUM THUS' ' ..... IT HAS BEEN NOTICED THAT A NUMBER OF ENTITIE S OPERATING ON COMMERCIAL LINES ARE CLAIMING EXEMPTION ON THEIR IN COME EITHER UNDER SECTION 10(23C) OR SECTION 11 OF THE ACT ON TH E GROUND THAT THEY ARE CHARITABLE INSTITUTIONS. THIS IS BASED ON T HE ARGUMENTS THAT THEY ARE ENGAGED IN THE 'ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC M.P. AUDYOGIK KEN DRA VIKAS NIGAM 6 UTILITY' AS IS INCLUDED IN THE FOURTH LIMB OF THE CU RRENT DEFINITION OF 'CHARITABLE PURPOSE'. SUCH A CLAIM, WHEN MADE IN RES PECT OF AN ACTIVITY CARRIED OUT ON COMMERCIAL LINE, IS CONTRARY TO THE INTENTION OF THE PROVISION. WITH THE VIEW TO LIMITING THE SCOPE OF THE PHRASE { ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' IT IS P ROPOSED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS OR, B) ANY ACTIVITY OF RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR CESS OR FEE OR ANY OTHER C ONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY'. CHARITABLE PURPOSE HAS BEEN DEFINED IN SECTION 2(15) HAS FOUR KIND OF DIFFERENT OBJECTS (PURPOSES). THESE ARE (1) RELIE F TO POOR (2) EDUCATION, (3) MEDICAL RELIEF AND (4) ADVANCE OF ANY O THER OBJECT OF GENERAL PUBLIC UTILITY. IT IS ONLY THE LAST WHICH W ILL NOT BE TAKEN AS CHARITABLE OBJECT, IF IT INVOLVES CARRYING ON THE A CTIVITY OF THE NATURE OF TRADE, COMMERCE OR BUSINESS OR RENDERING ANY SERV ICE IN RELATION THERETO FOR A CONSIDERATION. THE OBJECT OF ADVANCEMEN T IN GENERAL PUBLIC UTILITY IS A CHARITABLE PURPOSES BUT WILL NOT BE SO IF - A. IT INVOLVES THE CARRYING ON. B. OF AN ACTIVITY C. IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING ANY SERVICE RELATED THERETO FOR A CONSIDERA TION. ADVANCEMENT OF ANY OBJECT OF PUBLIC UTILITY IS NOT T O BE TAKEN AS CHARITABLE PURPOSES IF IT INVOLVES THE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIV ITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS FOR CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF T HE NATURE OF USE OR APPLICATION OR RETENTION OF INCOME FROM SUCH ACTIVI TY. IN ANOTHER CASE THE ASSESSEE APPLIED FOR REGISTRATIO N ULS 12A OF THE IT ACT, WHICH WAS ALLOWED ON THE DIRECTION OF HON'BL E IT AT, JAIPUR BENCH W.E.F. 1982. SUBSEQUENTLY FROM 01.04.2009 AMEN DMENT TO SECTION 2(15) OF THE IT ACT, 1961 CHANGED THE SCENARI O OF THE AUTHORITIES AND DEFINITION OF CHARITABLE ACTIVITY IN RELATION TO ANY GENERAL PUBLIC UTILITY AS DISCUSSED IN A CASE DECIDED BY LEARNED ITAT JAIPUR HAVING APPEAL NO. 17 ITA 182/JP/2012 I.E. JAIPUR DEVELOPMENT AUTHORITY VS CIT IN WHICH CHARITABLE PU RPOSES HAD BEEN LIMITED FOR CERTAIN TRUSTS WHO WERE INVOLVED IN CARRYING ON ANY ACTIVITY IN NATURE OF TRADE, COMMERCE OR BUSINESS O R ANY OTHER M.P. AUDYOGIK KEN DRA VIKAS NIGAM 7 ACTIVITY RENDERING ANY SERVICE IN RELATION TO ANY T RADE, COMMERCE OR BUSINESS FOR A CESS OR FEES OR ANY OTHER CONSIDERATI ON, IRRESPECTIVE OF THE NATURE OF USE I.E. APPLICATION OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. THERE WAS ALSO A LIMIT PRESCRIBED BY SECOND PROVISO OF THIS SECTION I.E 100ACS LATER ON 25 LACS IN PREVIOU S YEAR. THE LEARNED CIT, N THAT CASE THOROUGHLY DISCUSSED VARIOUS ASPECT S OF SECTION 2(15) OF THE IT ACT AND ALSO CITED VARIOUS CASE LAWS AND MADE IT CLEAR THAT JDA WAS NOT A CHARITABLE INSTITUTION BUT EARNING MONEY LIKE A BUILDER OR LIKE ANY BUSINESS MAN, WHICH CAN B E CONCLUDED ON THE BASIS OF OBJECTS AND FUNCTION OF THE INSTITUTION . THE DETAILS OF RECEIPTS OF DIFFERENT NATURE WERE ELABORATELY MENTIO NED IN THE ORDER REFERRED ABOVE- AND DID NOT INCLUDE CHARITABLE ACTIVIT Y, FOR WHICH IT RELIED UPON THE DECISION IN THE CASE OF PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY VS. CIT(ITAT, CHD.) BY THE LD. I TAT CHANDIGARH B BENCH I.T.A.T. APPEAL NO.764/CHANDIGAR H/2003 ORDER DATED 01.06.2006 WHEREIN IDENTICAL ISSUE HAD B EEN DECIDED BY THE BENCH BY AFFIRMING THAT DEVELOPMENT AUTHORIT Y IS NOT A CHARITABLE INSTITUTION AND LEARNED IN ITANO.164/JAMM U/2012 THE HON'BLE JUMMU HIGH COURT ALSO HAD NOT FOUND ANY QUES TION OF LAW AGAINST THE ORDER OF I.T.A.T. AMRITSAR BENCH IN APP EAL NO.OF ITANO.30/ASR/ 2011 IN WHICH 12A REGISTRATION WAS RE FUSED. FURTHER, IN THE INSTANT CASE ON PERUSAL OFP & L STATEMENT FOR THE YEAR ENDED 31.03.2013, IT IS SEEN THAT THE NIGAM REC EIVES INCOME FROM TWO SOURCES BROADLY. ONE, REVENUE FROM OPERATI ONS LIKE SALE OF SERVICES WHICH INCLUDE PERMISSION FEES, LAND PROCESS ING FEES, RENT FROM GUMTEES/SHOPS ETC. WATER CHARGES WITH CONNECTI ON CHARGES, ROYALTY CHARGES, MAINTENANCE CHARGES, INTEREST ON MAINTENANCE CHARGE S AND INTEREST ON LEASE RENT AND PREMIUM FROM ALLOTTED LAND FOR INDUS TRIAL UNITS UNDER GROWTH CENTRE, FUND SANCTIONED FROM GOVT. OF IND IA! STATE GOVT. DEPOSIT / ASIDE WORKS ALLOTTED BY GOVERNMENT, SECONDLY, INCOME FROM OTHER SOURCES LIKE INTEREST ON FIXED DEP OSIT RECEIPT ETC. THE NIGAM IS EARNING A SUBSTANTIAL PROFIT OF RS. 3, 94,11,460/-(WHICH REPRESENTS 21.78% OF THE GROSS RECEIPT FOR THE CURR ENT YEAR) SIMILARLY, THE VERIFICATION OF EXPENSES SHOWS THAT THE NIGAM HAS CLAIMED A SUBSTANTIAL AMOUNT OFRS. 85,50,476/- TOWAR DS ADVERTISEMENT AND PUBLICITY WHICH CLEARLY INDICATES THAT IT IS INVOLVED IN COMMERCIAL ACTIVITIES TO EARN FURTHER P ROFIT AND NOT OF CHARITABLE IN NATURE. 7. IF THE ARGUMENT OF THE ASSESSEE IS ANALYZED FROM THE POINT OF GENERAL PUBLIC UTILITY, STILL IT CAN BE SAID THAT CO MMERCIAL ANGLE WITH PROFIT MOTIVE IS INVOLVED WHICH HAS BECOME PREDOMINA NT OBJECT OF M.P. AUDYOGIK KEN DRA VIKAS NIGAM 8 THE ASSESSEE . EVEN IF THIS ISSUE IS ANALYZED AS CON TENDED BY THE ASSESSEE THAT APPLICATION OF INCOME FOR FURTHER DEV ELOPMENT OF INDUSTRIAL INFRASTRUCTURE, IS NOT THE CRITERIA EVEN THEN THE OBJECTS ARE NOT OF CHARITABLE NATURE IN THE LIGHT OF DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF FIFTH GENERATION EDUCATIO N SOCIETY VS. CIT(L990 ) 185 ITR 634 (ALL.) WHERE THEIR LORDSHIPS WERE OF THE VIEW THAT IF THE OBJECT AND REAL SITUATION IS ANALYZED, TH E OBJECT ARE NOT FOUND TO BE OF CHARITABLE NATURE. 'ALMOST IN EVERY A CTIVITY THERE IS SENT OF COMMERCIALIZATION/PROFIT MOTIVE BUT IN THE CHARITABLE INSTITUTION NO PROFIT MOTIVE IS INVOLVED AND THE SER VICE IS DONE MAINLY WITH THE INTENT OF SOCIAVRELIGIOUS UPLIFTMENT OF MA SSES IN GENERAL.' ADMIRABLY, THE ASSESSEE IS DOING SOME ACTIVITY LIKE INFRASTRUCTURE DEVELOPMENT AND THE ' PUBLIC IS ALSO BENEFITED BUT FOR THE SAME THE ASSESSEE HAS BEEN CHARGING IN THE FORM OF CHARGES, CESS, ROYALTY, FEES AND OTHER HIDDEN COSTS. RATHER THE ASSESSEE IS G ENERATING INCOME, SO NO CHARITY IS INVOLVED. A CHARITABLE INST ITUTION SHOULD PROVIDE SERVICES FOR CHARITABLE PURPOSES FREE OF CO ST AND FOR NO GAIN AND ARE FOR THE BENEFIT OF PUBLIC AT LARGE. AS IT WAS DISCUSSED IN PRECEEDING PARAS THE ASSESSEE IS ALLOTTED LAND BY THE GOVT. AND AFTER DEVELOPING THE SAME, IT IS G IVEN TO THE ENTREPRENEURS/INDUSTRIALISTS WITH PREMIUM WHICH CAN NOT BE SAID TO BE A CHARITABLE ACTIVITY. EVEN IF FOR THE SAKE OF A RGUMENTS, UNDER THE PRESENT FACTS, REGISTRATION IS GRANTED, THEN EVERY PRIVATE INFRASTRUCTURE DEVELOPER MAY CLAIM CHARITY. THE FAC ILITIES WHICH ARE PROVIDED TO THE INDUSTRIAL UNIT ARE INCIDENTAL TO THE COMMERCIAL ACTIVITY CARRIED OUT BY THE NIGAM AND IF CERTAIN FAC ILITIES LIKE SEWERAGE, WATER SUPPLY, COMMUNITY CENTER, SCHOOL, PARK ETC. ARE PRO VIDED, THEY ARE NOT ONLY BASIC REQUIREMENTS, RATHER A TOOL OF ATTRA CTING THE INVESTORS, THE HIDDEN COST OF THE SAME ( FACILITIES) BEING ALREA DY INCL DED IN THE SERVICE CHARGES ETC. BEING CHARGED BY THE NIGAM. IN THE ABSENCE OF THESE FACILITIES NORMALLY ANY INDUSTRIALIST MAY NOT SHOW THE INTEREST TO INVEST. 8. THE CONTENTION OF THE NIGAM IS THAT INSTITUTIONS HAVING SIMILAR OBJECTIVES HAVE BEEN GRANTED REGISTRATION U/S 12A OF IT ACT, 1961 AND PLACED RELIANCE ON THE DECISION OF THE HON'BLE H IGH COURT OF MP JUDICATURE JABALPUR WITH BENCH AT GWALIOR IN THE CA SE OF MP AUDHOYOGIK KENDRA VIKAS NIGAM LIMITED IN MA IT 18/06 DATED 14.03.2007 WHICH WAS DECIDED IN FAVOUR OF ASSESSEE. HO WEVER THIS DECISION WAS DELIVERED BY THE HON'BLE HIGH COURT OF M .P, BEFORE THE ABOVE DISCUSSED AMENDMENT TO THE SECTION 2(15) OF IT ACT AND M.P. AUDYOGIK KEN DRA VIKAS NIGAM 9 WHERE IN IT CONFIRMED THE DECISION OF LD. ITA T SAYING THAT IT WAS QUESTION OF FACTS AND WHERE WAS NO INVOLVEMENT OF AN Y QUESTION OF LAW. SUBSEQUENTLY, ON SIMILAR GROUNDS, EARLIER DISCUSSED THE HON'BLE HIGH COURT OF JAMMU & KASHMIR VS. UNION OF INDIA AMRITSAR, IN ITA NO. 164 OF 2012 DATED 07.11.2013 HA S DISMISSED THE APPEAL OF THE ASSESSEE. 9. IT WILL NOT BE OUT OF PLACE TO MENTION THAT HON' BLE APEX COURT WAY BACK IN A CASE OF INDIAN CHAMBER OF COMMERCE VS CIT (SC) AS REPORTED IN 101 ITR 796 CLEARLY OBSERVED AND WHICH IS APPLICABLE TO THE FACTS OF THE PRESENT CASE AS WELL THAT 'IF THE INSTITUTION RUNS CERTAIN SPECIFIC TYPES OF SERVICES AND CHARGES REMUNERATION, IT IS UNDOUBTEDLY AN ACTIVITY WHICH, IF CARRIED ON BY PRIVATE AGENCY, WOULD BE TAXABLE- ASSESSEE CANNOT B E GRANTED EXEMPTION FOR MAKING INCOME BY METHODS WHICH IN THE HANDS OF OTHER PEOPLE WOULD HAVE BEEN ELIGIBLE TO TAX-DENIAL OF EXEMPTION U/S 11 UPHELD. THUS FOLLOWING THE LATEST PRONOUNCEMENTS OF THE HON 'BLE HIGH COURT OF THE JAMMU & KASHMIR WHICH IS AFTER THE AMENDMENT TO THE SECTION 2(15) OF IT ACT. AND OTHER PRONOUNCEMENTS OF TRIBUNALS AND WITH DUE RESPECT AND WITHOUT PREJUDICE TO THE DECISIO N OF JURISDICTIONAL HIGH COURT, FAVORING THE ASSESSEE WH ICH IS PRIOR TO THE AMENDMENT, AND IN VIEW OF ABOVE DETAILED DISCUSSION OF FACTS AND CIRCUMSTANCES OF THIS CASE, THE ACTIVITIES OF THE A SSESSEE IS NOT HELD AS CHARITABLE. HENCE THE REGISTRATION U/S 12A CANNOT BE GRANTED TO THE NIGAM. IN VIEW OF THE ABOVE, I AM THEREFORE, OF THE CONSIDERED OPINION THAT THE ACTIVITIES OF THE APPLICANT ARE NO T CHARITABLE. CONSEQUENTLY, THE APPLICATION FILED UNDER SECTION 12A OF THE ACT IS HEREBY REJECTED AND REGISTRATION SOUGHT BY THE APPLIC ANT UNDER SECTION 12AA OF THE ACT IS REFUSED. 4. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED T HAT THE ACTION OF THE LD. CIT(E) IS UNJUSTIFIED, HE SUBMITTED THAT TH E ASSESSEE IS REGISTERED U/S 25 OF THE COMPANIES ACT, 1956. HE FU RTHER SUBMITTED UNDER THE IDENTICAL FACTS, REGISTRATION HAS BEEN GR ANTED TO MP AUDYOGIK KENDRA VIKAS NIGAM GWALIOR & JABALPUR RESP ECTIVELY. HE FURTHER SUBMITTED THAT THE REASONING OF THE LD. CIT (E) THAT THE ASSESSEE IS EARNING A SUBSTANTIAL PROFIT AND SUBSEQ UENT AMOUNT OF RS.85,50,476/- HAS BEEN INCURRED TOWARDS ADVERTISEM ENT AND M.P. AUDYOGIK KEN DRA VIKAS NIGAM 10 PUBLICITY WHICH CLEARLY INDICATES THAT IT IS INVOLV ED IN COMMERCIAL ACTIVITIES TO EARN FURTHER PROFIT AND NOT OF CHARIT ABLE IN NATURE. 5. LD. COUNSEL SUBMITTED THAT THIS REASONING OF THE LD. CIT(E) IS CONTRARY TO VARIOUS JUDICIAL PRONOUNCEMENTS OF VARI OUS HON'BLE HIGH COURTS. HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE HIGH COURT OF RAJASTHAN RENDERED IN THE CASE OF CIT VS. JAIPUR DEVELOPMENT AUTHORITY. HE ALSO SUBMITTED THAT IN TW O OTHER SIMILAR SITUATIONS, ASSESSEES HAVE BEEN GRANTED REGISTRATIO N U/S 12AA OF THE ACT. IT IS ALSO FURTHER SUBMITTED THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MPAKVN GWALIOR HELD THAT THE A CTIVITIES ARE CHARITABLE. 6. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE(DR) O PPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE LD. CIT( E). LD. DR RELIED ON THE DECISION OF THIS BENCH RENDERED IN TH E CASE OF MPAKVN IN ITANO.347 TO 351/IND/2013 TO BUTTRESS THE ARGUME NT THAT THE ACTIVITIES OF THE ASSESSEE ARE HELD TO BE ACTIVITY OF A CONTRACTOR. LD. DR SUBMITTED THAT THE ACTIVITIES ARE EX-FACIA C OMMERCIAL IN TERMS OF SECTION 2(15) OF THE REGISTRATION HAS BEEN RIGHTLY DECLINED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF T HE AUTHORITIES BELOW. THE REVENUE HAS NOT DISPUTED THE FACT THAT M PAKVN, JABALPUR & GWALIOR HAVE BEEN GRANTED REGISTRATION B Y THE CONCERNED AUTHORITIES. IT IS STATED BY THE LD. COUN SEL FOR THE ASSESSEE THAT THE OBJECTIVES OF THE ASSESSE AND OTH ER SISTER CONCERNS ARE SAME AND SIMILAR. HOWEVER, OBJECTIVES OF THESE TWO SISTER CONCERN HAVE NOT BEEN PLACED BEFORE US. UNDER THESE FACTS, WE DEEM M.P. AUDYOGIK KEN DRA VIKAS NIGAM 11 IT PROPER TO RESTORE THE ISSUE OF REGISTRATION U/S 12AA OF THE ACT TO THE FILE OF LD. CIT(E) FOR DECISION AFRESH. HE MAY GRANT REGISTRATION AFTER VERIFYING WHETHER MPAKVN, GWALIOR AND JABALPU R HAVE BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT AND FURTHE R THE OBJECTIVES OF THESE TWO ENTITIES, AND CONSIDERING THE CASE LAW S AS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE AND THE REASON FOR GRA NTING REGISTRATION TO OTHER ENTITIES IF FACTS ARE SIMILAR. IN OUR VIEW IT IS NOT JUSTIFIABLE ON THE PART OF REVENUE TO HAVE A DIFFERENT VIEW POI NT ON THE SAME ISSUE. THUS, GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IN ITANO.217 /IND/2015 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 .01.2 019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 22/01/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE