The Dy. Commissioner of Income Tax (Exemptions), Circle-2, Ahmedabad V. Vadodara Urban Development Authority (VUDA), Vadodara

ITA 2435/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5464 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Depreciation; Charitable institution
• Section: 12; 28; 11; 143(3); 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NOS.1692 & 1693/AHD/2017 (ASSESSMENT YEARS : 2012-13 & 2013-14) VADODARA URBAN DEVELOPMENT AUTHORITY (VUDA), VUDA BHAVAN, VIP ROAD, NR.LT CIRCLE, KARELIBAUG, VADODARA. VS. DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), CIRCLE 2, AAYAKAR BHAVAN, AHMEDABAD. I.T.A. NOS. 2435, 2436 & 2437/AHD/2017 (ASSESSMENT YEARS : 2009-10, 2011-12 & 2014-15) DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), CIRCLE 2, AHMEDABAD. VS. VADODARA URBAN DEVELOPMENT AUTHORITY (VUDA), VADODARA. [PAN NO. AAABV 0141 M] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI BANDISH SOPARKAR, A.R. RESPONDENT BY : SHRI O. P. VAISHNAV, CIT D.R. DATE OF HEARING 30.01.2019 DATE OF PRONOUNCEMENT 05.02.2019 O R D E R PER MS. MADHUMITA ROY - JM: THE BUNCH OF APPEALS FILED BY THE ASSESSEE AND REVE NUE ARE AGAINST THE ORDERS DATED 28.04.2017 & 11.08.2017 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS)-9, AHMEDABAD ARISING OUT OF THE DIFFERENT ORDERS FOR T HE ASSESSMENT YEARS 2012-13, 2013- 14, 2009-10, 2011-12 & 2014-15 RESPECTIVELY UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). - 2 - ITA NOS.1692, 1693, 2435, 2436 & 2437 /AHD/2017 VADODARA URBAN DEVELOPMENT AUTHORITY ASST.YEARS-2012-13, 2013-14, 2009-10, 2010-11 & 201 4-15 SINCE THE ISSUES INVOLVED IN THESE CASES ARE IDENTI CAL THE SAME ARE HEARD ANALOGOUSLY AND ARE BEING DISPOSED OF BY A COMMON ORDER. ITA NO.169 2/AHD/2017 IS TAKEN AS THE LEAD CASE. 2. THE ORDER PASSED BY THE LEARNED AO IN DETERMININ G THE TOTAL INCOME TO THE TUNE OF RS.2,38,37,730/- AFTER DISALLOWING THE CLAIM U/S 11 (1) AND 11(1)(A) OF THE ACT FOR A.Y. 2012-13. 3. THE BRIEF FACTS LEADING TO THIS CASE IS THIS THA T THE ASSESSEE, AN AUTHORITY NOTIFIED BY THE GOVERNMENT OF GUJARAT UNDER GUJARAT TOWN PLANNI NG AND URBAN DEVELOPMENT ACT, 1976 FILED ITS RETURN ON 14.10.2010 DECLARING TOTAL INCOME AT RS. NIL WHICH WAS PROCESSED U/S 143(3) OF THE ACT. UNDER SCRUTINY NOTICE U/S 14 3(2) OF THE ACT DATED 28.09.2013 WAS SERVED FOLLOWED BY A DETAILED QUESTIONNAIRE DATED 0 3.11.2014. ULTIMATELY, THE ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) OF THE ACT ON 18 .03.2015; TOTAL INCOME WAS DETERMINED AT RS.2,38,37,730/- DENYING THE EXEMPTION U/S 11 AN D SECTION 11(1)(A) OF THE ACT. TILL THE FINANCIAL YEAR 2002-03, THE INCOME OF AUTHORITIES L IKE URBAN DEVELOPMENT AUTHORITY WAS EXEMPTED U/S 10(20A) OF THE ACT IN VIEW OF THE OMIS SION OF SECTION 10(20A) OF THE ACT AND THE ADDITION OF SECTION 10(20) W.E.F 01.04.2003 THE BENEFIT CONFIRMED BY SECTION 10(20)(A) OF THE ACT ON THE ASSESSEE UPTO THE A.Y. 2002-03 HAS BEEN EXPRESSLY TAKEN AWAY AND THE EXPLANATION ADDED TO SECTION 10(20) ENUMERA TES THE LOCAL AUTHORITY WHICH DOES NOT COVER THE VUDA. SUBSEQUENTLY, THE ASSESSEE CLAI MED THAT ITS OBJECTS FALLS UNDER THE PROVISIONS OF SECTION 2(15) OF THE ACT AND HAS COMP LIED WITH ALL THE ELIGIBILITY CRITERIA FOR GRANT OF REGISTRATION U/S 12A OF THE ACT, WHICH WAS ALLOWED BY CIT-I, BARODA ON 29.11.2005 SUBJECT TO FULFILLMENT OF CONDITIONS LAI D DOWN IN THE ACT. IT IS RELEVANT TO MENTION THAT PROVISOS OF SECTION 2(15) WERE NOT EXI STED AT THAT MATERIAL POINT OF TIME. IT IS THE CASE OF THE ASSESSEE THAT IT IS AN INSTITUTION REGISTERED U/S 12AA OF THE ACT ENGAGED IN THE ACTIVITY OF GENERAL PUBLIC UTILITY AFTER VERIFY ING THE NATURE OF ACTIVITY OF THE INSTITUTIONS AND HENCE ELIGIBLE U/S 11(1) OF THE ACT FOR CLAIMIN G EXEMPTION. HOWEVER, SUCH PLEA OF THE - 3 - ITA NOS.1692, 1693, 2435, 2436 & 2437 /AHD/2017 VADODARA URBAN DEVELOPMENT AUTHORITY ASST.YEARS-2012-13, 2013-14, 2009-10, 2010-11 & 201 4-15 ASSESSEE WAS NOT ACCEPTED BY THE LEARNED AO. THE LE ARNED AO DID NOT ACCEDE TO THE CLAIM AS PRAYED FOR AND THE INCOME OF RS.2,38,37,730/- WA S ADDED IN THE HANDS OF THE ASSESSEE REJECTING THE CLAIM OF EXEMPTION U/S 11 OF THE ACT BY THE ASSESSEE WHICH WAS REJECTED UNDER SECTION 13(8) OF THE ACT. 4. IN APPEAL, THE ASSESSEE ALLEGED BEFORE THE LEARN ED CIT(A) THAT THE LEARNED AO WRONGLY DISALLOWED THE CLAIM AND STEPPED INTO THE S HOES OF THE POWERS OF THE LEARNED CIT WHO HAS GRANTED REGISTRATION U/S 12AA EVEN HE HAS F OUND ANY ACTIVITY OF THE INSTITUTIONS TO BE CONTRARY TO THE OBJECTS OF THE TRUST OR NOT IN T HE NATURE OF FOLLOWING WITHIN THE PURVIEW OF THE CHARITABLE. 5. THE LEARNED CIT(A) HOWEVER DISMISSED THE APPEAL WITH THE OBSERVATION THAT THE ASSESSEE IS COVERED WITH THE PROVISO TO SECTION 2(1 5) OF THE ACT AND THEREFORE, THE PROVISION OF SECTION 13(8) OF THE ACT SHALL BE APPL ICABLE TO THE ASSESSEE. THE CLAIM OF THE BENEFIT OF SECTION 11 AND 12 OF THE ACT WAS THEREFO RE ULTIMATELY REJECTED BY THE LEARNED CIT(A) WITH THE FOLLOWING OBSERVATION: 27. ACCORDINGLY, I HEREBY CONFIRM THE POSITION TAKE N BY AO THAT VUDA IS COVERED BY FIRST AND SECOND PROVISO TO SECTION 2(15) OF THE ACT THER EBY THE PROVISIONS OF SECTION 13(8) OF THE ACT SHALL BE APPLICABLE TO THE APPELLANT. I AGREE W ITH THE AO AND CONFIRM THAT HE HAS RIGHTLY APPLIED SECTION 13(8) OF THE ACT TO VUDA. THE AO IS DIRECTED TO RECOMPUTE THE INCOME OF THE APPELLANT BASED ON OBSERVATIONS MADE ABOVE. WHILE R ECOMPUTING THE INCOME THE AO WOULD TAKEN INTO ACCOUNT THE RECEIPTS BY VUDA REFLECTED U NDER VARIOUS SCHEDULES OF THE BALANCE SHEET RECEIVED DURING THE YEAR UNDER CONSIDERATION. THESE ARE THE RECEIPTS OF VUDA RECEIVED AS PER THE GTPUD ACT AND THE GDCR. AT THE SAME TIME THE AO IS ALSO DIRECTED TO GIVE DEDUCTION OF EXPENSES INCURRED BY VUIDA WHILE FULFI LLING ITS OBJECTS UNDER THE GTPUD ACT. THESE WOULD INCLUDE EXPENSES ON VUDA ROAD ETC. THUS THE APPELLANT WOULD BE ASSESSED AS AN AOP UNDER SECTION 28 TO 44 OF THE ACT. THE APPEL LANT WOULD ALSO BE ELIGIBLE TO CLAIM DEPRECIATION ON THE FIXED ASSETS THAT ARE REFLECTED IN ITS INVENTORY/SCHEDULE AND CREATED OUT OF ITS FUNDS AND NOT FROM THE GRANTS. AS THE AO HAS RI GHTLY INVOKED PROVISO TO SECTION 2(15) OF THE ACT R.W.S. 13(8) OF THE ACT THE APPELLANT WILL NOT BE ELIGIBLE TO CLAIM ANY BENEFIT OF SECTION 11 & 12 OF THE ACT. THUS THE FIRST GROUND OF APPEAL STANDS DISMISSED. 6. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE CASE IS COVER ED BY THE JUDGMENTS OF JURISDICTIONAL - 4 - ITA NOS.1692, 1693, 2435, 2436 & 2437 /AHD/2017 VADODARA URBAN DEVELOPMENT AUTHORITY ASST.YEARS-2012-13, 2013-14, 2009-10, 2010-11 & 201 4-15 HIGH COURT PASSED IN THE MATTER OF AHMEDABAD URBAN DEVELOPMENT AUTHORITY-VS- ACIT 396 ITR 323 (GUJ.) AND CIT-VS-GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION [2017] 89 TAXMANN.COM 366 (GUJ.) WHERE THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED I N ITS PROPER PROSPECTIVE. HE FURTHER RELIED UPON THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2010-11 WHERE THE C LAIM OF THE ASSESSEE WAS UPHELD. THE LEARNED DR HOWEVER, RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 7. HEARD THE RESPECTIVE PARTIES AND PERUSED THE REL EVANT MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE ORDER PASSED BY THE CO-ORD INATE BENCH IN ITA NO.2751/AHD/2014 FOR ASST. YEAR 2010-11, RELEVANT P ORTION WHEREOF IS AS FOLLOWS: WE FIND THAT IN SIMILAR SET OF FACTS THE JURISDICT IONAL HIGH COURT PASSED THE ORDERS IN THE CASE OF URBAN DEVELOPMENT AUTHORITY-VS-ACIT , WHERE IT WAS HELD AS FOLLOWS: HELD, THAT THE OBJECT AND PURPOSE OF PERMITTING TH E AUTHORITY TO SELL THE PLOTS TO A MAXIMUM EXTENT OF 15% OF THE TOTAL AREA, WAS TO MEET THE EXPENDITURE FOR PROVIDING INFRASTRUCTURAL FACILITIE S LIKE GARDENS, ROADS, LIGHTING, WATER SUPPLY, DRAINAGE SYSTEM, ETC. THE R EASONS FOR SELLING THE PLOTS BY HOLDING PUBLIC AUCTION WERE; (A) TO AVOID ANY FURTHER ALLEGATION OF FAVORITISM AND NEPOTISM AND (B) SO THAT THE MAXIMUM MARKET PRICE COULD BE FETCHED, WHICH COULD BE USED FOR THE DEVELOPMENT OF THE URBAN DEVELOPMENT AREA. CONSIDERING THE FACT THAT THE ASSESSEE WAS A STATUTORY BODY, AN AUTHORITY CONSTITUTED UNDER THE PROVISIONS OF THE A CT, TO CARRY OUT THE OBJECT AND PURPOSE OF TOWN PLANNING ACT AND COLLECTED REGU LATORY FEES FOR THE OBJECT OF THE ACTS, NO SERVICES WERE RENDERED TO AN Y PARTICULAR TRADE, COMMERCE OR BUSINESS; AND WHATEVER INCOME WAS EARNE D BY THE ASSESSEE EVEN WHILE SELLING THE PLOTS (TO THE EXTENT OF 15% OF THE TOTAL AREA COVERED UNDER THE TOWN PLANNING SCHEME) WAS REQUIRED TO BE USED ONLY FOR THE PURPOSE TO CARRY OUT THE OBJECT AND PURPOSE OF THE TOWN PLANNING ACT AND TO MEET THE EXPENDITURE OF PROVIDING GENERAL UTILIT Y SERVICE TO THE PUBLIC SUCH AS ELECTRICITY, ROAD, DRAINAGE, WATER ETC. AND THE ENTIRE CONTROL WAS WITH THE STATE GOVERNMENT AND ACCOUNTS WERE ALSO SU BJECTED TO AUDIT AND THERE WAS NO ELEMENT OF PROFITEERING AT ALL. THE AC TIVITIES OF THE ASSESSEE COULD NOT BE SAID TO BE IN THE NATURE OF TRADE, COM MERCE AND BUSINESS AND THEREFORE, THE PROVISO TO SECTION 2(15) OF THE ACT WAS NOT APPLICABLE SO FAR - 5 - ITA NOS.1692, 1693, 2435, 2436 & 2437 /AHD/2017 VADODARA URBAN DEVELOPMENT AUTHORITY ASST.YEARS-2012-13, 2013-14, 2009-10, 2010-11 & 201 4-15 AS THE ASSESSEE WAS CONCERNED. THEREFORE, THE ASSES SEE WAS ENTITLED TO EXEMPTION UNDER SECTION 11. APART FROM THAT CIT-VS.-GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION , WHEREIN IT WAS HELD AS FOLLOWS: SECTION 2(15), READ WITH SECTION 11, OF THE INCOME -TAX ACT, 1961 CHARITABLE PURPOSE (OBJECTS OF GENERAL PUBLIC UTILI TY) ASSESSMENT YEAR 2009-10 WHETHER WHERE ASSESSEE CORPORATION WAS CONSTITUTED UNDER GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962, FOR PURPO SE OF SECURING AND ASSISTING RAPID AND ORDERLY ESTABLISHMENT AND ORGAN IZATION OF INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN STATE OF GUJARAT, A ND FOR PURPOSE OF ESTABLISHING COMMERCIAL CENTERS IN CONNECTION WITH ESTABLISHMENT AND ORGANIZATION OF SUCH INDUSTRIES IT COULD NOT BE SAI D THAT ACTIVITIES CARRIED OUT BY ASSESSEE WERE EITHER IN NATURE OF TRADE, COM MERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION SO AS TO ATT RACT PROVISO TO SECTION 2(15) AND SAME COULD BE SAID TO BE FOR CHARITABLE P URPOSE AND, CONSEQUENTLY,. ASSESSEE WAS ENTITLED TO EXEMPTION U NDER SECTION 11- HELD, YES (PARAS 15 AND 17)[IN FAVOUR OF ASSESSEE] 8. WE FIND THAT THE ISSUE INVOLVED IN THIS MATTER I S SQUARELY COVERED BY THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 2751/AHD /2014 IS NARRATED HEREINABOVE AND RESPECTFULLY FOLLOWING THE SAME WE ALLOW THE CLAIM OF THE ASSESSEE TOWARDS EXEMPTION U/S 11 OF THE ACT AND DELETE THE ORDER OF DISALLOWANCE OF EXEMPTION AND AN ADDITION OF RS.2,38,37,730/-. 9. IN THE RESULT, ALL THE FIVE APPEALS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05/02/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05/02/2019 PRITI YADAV, SR.PS - 6 - ITA NOS.1692, 1693, 2435, 2436 & 2437 /AHD/2017 VADODARA URBAN DEVELOPMENT AUTHORITY ASST.YEARS-2012-13, 2013-14, 2009-10, 2010-11 & 201 4-15 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-9, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 01/02/2018 (DICTATION PAGE-5) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : 01/02/2019 3. OTHER MEMBER.. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT.. 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 10. DATE OF DESPATCH OF THE ORDER