Vadodara Urban Development Authority, Ahmedabad V. The Income Tax Officer, Ward-5(1), Baroda

ITA 2751/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6081 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 2751/AHD/2014 (ASSESSMENT YEAR : 2010-11) VADODARA URBAN DEVELOPMENT AUTHORITY, VUDA BHAVAN, L&T CIRCLE, KARELIBAUG, VADODARA. VS. INCOME TAX OFFICER, WARD 5(1), BARODA [PAN NO. AAABV 0141 M] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI BANDISH SOPARKAR, A.R. RESPONDENT BY : SHRI VINOD TANWANI, SR.D.R. DATE OF HEARING 12/12/2018 DATE OF PRONOUNCEMENT 28/01/2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL PREFERRED BY THE ASSESSEE IS AGA INST THE ORDER DATED 14.07.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-V, BARODA FOR THE ASSESSMENT YEAR 2010-11 WITH THE FOLLOWING GROU NDS: 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN UPH OLDING THE ORDER OF ASSESSING OFFICER TAXING THE INCOME OF THE APPELLANT OF RS ,70,73,005/- CLAIMED AS EXEMPT U/S.11(1) OF THE I.T. ACT. 2. IT IS ALSO SUBMITTED BY YOUR APPELLANT THAT THE CIT (A) HAS ERRED IN HOLDING THAT THE AMENDED SEC.2(15) TO THE TERM 'CHARITABLE PURPOSES ' INSERTED TO THE ACT BY FINANCE ACT, 2012 IS RETROSPECTIVE FROM 1-4-2009 AN D THEREFORE YOUR APPELLANT IS NOT ENTITLED TO THE EXEMPTION THEREUNDER. 3. IT IS FURTHER SUBMITTED BY YOUR APPELLANT T HAT THE CIT(A) HAS ERRED IN HOLDING THAT SEC.2(15) OF THE ACT APPLIES AND THEREFORE IN VIEW OF SEC. 13(8) YOUR APPELLANT IS NO ENTITLED TO EXEMPTION U/S.11 & 12 OF THE ACT. IT IS THEREFORE SUBMITTED THAT RELIEF CLAIMED ABOVE BE ALLOWED AND THE ORDER OF THE - 2 - ITA NO.2751/AHD/2014 VADODARA URBAN DEVELOPMENT AUTHORITY VS. ITO ASST.YEAR 2010-11 ASSESSING OFFICER BE MODIFIED ACCORDINGLY. YOUR APPELLANT RESERVES RIGHT TO ADD, ALTER, AMEND TO WITHDRAW ANY OR ALL GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN AUTHORITY NOTIFIED BY THE GOV ERNMENT OF GUJARAT UNDER GUJARAT TOWN PLANNING AND URBAN DEVELOPMENT ACT, 19 76. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS ON 14.10.2010 DECLARING T OTAL INCOME AT RS. NIL WHICH WAS FINALIZED U/S 143(3) OF THE ACT ON 04.03.2013, TOTAL INCOME WAS DETERMINED AT RS.70,73,010/- DENYING EXEMPTION U/S 11 OF THE ACT. TILL THE FINANCIAL YEAR 2002- 03, THE INCOME OF AUTHORITIES LIKE URBAN DEVELOPMEN T AUTHORITY HAVE EXEMPTED U/S 10(20A) OF THE ACT IN VIEW OF THE OMISSION OF S ECTION 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) ENUMERATES THE LOCAL AUTHORITY WHICH DO NOT COVER THE VUDA. SUBSEQUENTL Y, THE ASSESSEE CLAIMED THAT ITS OBJECTS FALLS UNDER THE PROVISIONS OF SECTION 2 (15) OF THE ACT AND HAS COMPLIED WITH ALL THE ELIGIBILITY CRITERIA FOR GRANT OF REGI STRATION U/S 12A OF THE ACT, WHICH WAS ALLOWED BY CIT-I, BARODA ON 29.11.2005 SUBJECT TO FULFILLMENT OF CONDITIONS LAID DOWN IN THE ACT. IT IS RELEVANT TO MENTION THA T PROVISOS OF SECTION 2(15) WERE NOT EXISTED AT THAT TIME. IT IS THE CASE OF THE ASS ESSEE THAT IT IS AN INSTITUTIONS REGISTERED U/S 12AA OF THE ACT ENGAGED IN THE ACTIV ITY OF GENERAL PUBLIC UTILITY AFTER VERIFYING THE NATURE OF ACTIVITY OF THE INSTITUTION S AND HENCE ELIGIBLE U/S 11(1) OF THE ACT FOR CLAIMING EXEMPTION. HOWEVER, SUCH PLEA OF T HE ASSESSEE WAS NOT ACCEPTED BY THE LEARNED AO. THE LEARNED AO DID NOT ACCEED TO THE CLAIM AS PRAYED FOR AND THE INCOME OF RS.70,73,005/- WAS ADDED IN THE HANDS OF THE ASSESSEE REJECTING THE CLAIM OF EXEMPTION BY THE ASSESSEE U/S 11 OF THE AC T WHICH WAS REJECTED UNDER SECTION 13(8) OF THE ACT. IN APPEAL, THE ASSESSEE A LLEGED BEFORE THE LEARNED CIT(A) - 3 - ITA NO.2751/AHD/2014 VADODARA URBAN DEVELOPMENT AUTHORITY VS. ITO ASST.YEAR 2010-11 THAT THE LEARNED AO WRONGLY DISALLOWED THE CLAIM AN D STEPPED INTO THE SHOES OF THE POWERS OF THE LEARNED CIT WHO HAS GRANTED REGIS TRATION U/S 12AA EVEN HE HAS FOUND ANY ACTIVITY OF THE INSTITUTIONS TO BE CONTRA RY TO THE OBJECTS OF THE TRUST OR NOT IN THE NATURE OF FOLLOWING WITHIN THE PURVIEW OF TH E CHARITABLE. THE APPEAL, HOWEVER, WAS DISMISSED BY THE LEARNED CIT(A) WITH A VIEW THAT OBJECT OF GENERAL PUBLIC UTILITY WILL ONLY BE A MISTAKE OR A DEVICE T O HIDE THE TRUE PURPOSE WHICH IS TRADE/COMMERCE OR BUSINESS OR RENDERING OF ANY SERV ICE IN RELATION TO TRADE, BUSINESS. EACH CASE WOULD, THEREFORE, HAVE TO BE DE CIDED ON ITS OWN FACTS AND DECISIONS WERE NOT POSSIBLE. THE RELEVANT PORTION O F THE CIT OBSERVATION IS AS FOLLOWS: IN VIEW OF THESE FACTS AND THE POSITION OF LAW, I AM OF THE OPINION THAT THE APPELLANT IS HIT BY FIRST PROVISO TO SECTION 2(15) OF THE IT ACT AND ACCORDINGLY, IN VIEW OF PROVISION SECTION 13(8) OF THE IT ACT IT IS NOT ENTITLED FOR EXEMPTION U/S 11 AND 12 OF THE IT ACT. THEREFORE, ACTION OF THE AO I N DISALLOWING EXEMPTION IN RESPECT OF INCOME OF RS.70,73,010/- TO THE APPELLAN T U/S 11 OF THE IT ACT IS HEREBY UPHELD. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE CASE IS COVER ED BY THE JUDGMENTS OF JURISDICTIONAL 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 TAXMAN N.COM 366 (GUJ.) WHERE THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED IN IT PROPER PROSPECTIVE. THE LEARNED DR HOWEVER, RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED TH E RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND THAT IN SIMILAR SET OF FACTS THE JURISDICTIONAL HIGH - 4 - ITA NO.2751/AHD/2014 VADODARA URBAN DEVELOPMENT AUTHORITY VS. ITO ASST.YEAR 2010-11 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 MEE T THE EXPENDITURE FOR PROVIDING INFRASTRUCTURAL FACILITIES LIKE GARDENS, ROADS, LIGHTING, WATER SUPPLY, DRAINAGE SYSTEM, ETC. THE REASONS FOR SELLING THE P LOTS BY HOLDING PUBLIC AUCTION WERE; (A) TO AVOID ANY FURTHER ALLEGATION OF FAVORI TISM AND NEPOTISM AND (B) SO THAT THE MAXIMUM MARKET PRICE COULD BE FETCHED, WHI CH COULD BE USED FOR THE DEVELOPMENT OF THE URBAN DEVELOPMENT AREA. CONSIDER ING THE FACT THAT THE ASSESSEE WAS A STATUTORY BODY, AN AUTHORITY CONSTITUTED UNDE R THE PROVISIONS OF THE ACT, TO CARRY OUT THE OBJECT AND PURPOSE OF TOWN PLANNING A CT AND COLLECTED REGULATORY FEES FOR THE OBJECT OF THE ACTS, NO SERVICES WERE R ENDERED TO ANY 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 TH E 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 UTILITY SERVICE TO THE PUBLIC SUC H AS ELECTRICITY, ROAD, DRAINAGE, WATER ETC. AND THE ENTIRE CONTROL WAS WITH THE STAT E GOVERNMENT AND ACCOUNTS WERE ALSO SUBJECTED TO AUDIT AND THERE WAS NO ELEMENT OF PROFITEERING AT ALL. THE ACTIVITIES OF THE ASSESSEE COULD NOT BE SAID TO BE IN THE NATURE OF TRADE, COMMERCE AND BUSINESS AND THEREFORE, THE PROVISO TO SECTION 2(15) OF THE ACT WAS NOT APPLICABLE SO FAR AS THE ASSESSEE WAS CONCERNED. TH EREFORE, THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 11. APART FROM THAT CIT-VS.-GUJARAT INDUSTRIAL DEVELOPM ENT 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 UTILITY) ASSES SMENT YEAR 2009-10 WHETHER WHERE ASSESSEE CORPORATION WAS CONSTITUTED UNDER GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962, FOR PURPOSE OF SECURING AND ASSISTING RAPID AND ORDERLY ESTABLISHMENT AND ORGANIZATION OF INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN STATE OF GUJARAT, AND FOR PURPOSE OF ESTABLISHING COMMERC IAL CENTERS IN CONNECTION WITH ESTABLISHMENT AND ORGANIZATION OF SUCH INDUSTRIES I T COULD NOT BE SAID THAT ACTIVITIES CARRIED OUT BY ASSESSEE WERE EITHER IN N ATURE OF TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION SO AS TO ATTRACT PROVISO TO SECTION 2(15) AND SAME COULD BE SAID TO BE FOR CHAR ITABLE PURPOSE AND, CONSEQUENTLY,. ASSESSEE WAS ENTITLED TO EXEMPTION U NDER SECTION 11- HELD, YES (PARAS 15 AND 17)[IN FAVOUR OF ASSESSEE] - 5 - ITA NO.2751/AHD/2014 VADODARA URBAN DEVELOPMENT AUTHORITY VS. ITO ASST.YEAR 2010-11 5. WE FIND THAT THE OBJECT OF THE ASSESSEE IS SIMIL AR TO THAT OF THE CORPORATION BEFORE THE JURISDICTIONAL HIGH COURT AND ON THE SIM ILAR SET OF FACTS THE APPEAL WAS ALLOWED IN FAVOUR OF THE ASSESSEE HENCE RELYING UPO N THE SAME WE ALLOW THE CLAIM OF THE ASSESSEE AND THE DISALLOWANCE OF EXEMPTION A S CLAIMED BY THE ASSESSEE U/S 11 OF THE ACT TO THE TUNE OF RS.70,73,005/- IS HERE BY QUASHED AND ADDITION MADE THEREON IS THUS DELETED. 6. IN THE RESULT, ASSESSEES APPEAL IS THUS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 28/01/2019 SD/- SD/- ( PRAMOD KUMAR) ( MS. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 28/01/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE DCIT(A)-V, BARODA. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION21/12/2018 (DICTATION PAGE 5) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/12/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 25/01/2019 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