Gujarat Industrial Development Corpn.Ltd., Gandhinagar V. The ACIT.,GNR Circle, Ahmedabad

ITA 278/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9592 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P.M. MEHTA
• Keywords: Capital asset; Business income; Rectification of order; Charitable institution; Retrospective amendment; Capital expenditure
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 12A; 201; 113; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NOS: 278 /AHD/2013,493 & 2346AHD/2014 (ASSESSMENT YEARS: 2009-10 TO 2010-12) GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION, 2 ND FLOOR, BLOCK NO. 3,4,5, UDHYOG BHAVAN, GANDHINAGAR-382017 V/S ASSTT. COMMISSIONER OF INCOME TAX GANDHINAGAR CIRCLE, GANDHINAGAR & DY. CIT, GANDHINAGAR CIRCLE, GANDHINAGAR (APPELLANT) (RESPONDENT) PAN: AABCG 8033D APPELLANT BY : SHRI S. N. SOPARKAR, P.M. MEHT A & PARIN SHAH, A.R. RESPONDENT BY : SHRI G. C. SRIVASTAVA, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 04 -01-201 7 DATE OF PRONOUNCEMENT : 10 -01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 278/AHD/2013, 493 & 2346/AHD/2014 ARE APPE ALS BY THE ASSESSEE PREFERRED AGAINST THREE SEPARATE ORDERS OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD PERTAINING TO A.Y. 2009-10, 2010-11 & 201 1-12. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 2 2. ALTHOUGH THE APPEALS OF THE ASSESSEE ARE AGAINST TH REE SEPARATE ORDERS, THE UNDERLYING ISSUES IN ALL THESE APPEALS ARE IDENTICA L AND, THEREFORE, ALL THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR TH E SAKE OF CONVENIENCE. 3. WE HEARD THE APPEAL IN ITA NO. 278/AHD/2013 PERTAIN ING TO A.Y. 2009-10 AND IT WAS AGREED BY THE REPRESENTATIVES OF BOTH SI DES THAT THE UNDERLYING FACTS IN ISSUES ARE IDENTICAL IN ALL THE CAPTIONED APPEALS. 4. THE APPELLANT COMPANY WAS CONSTITUTED PURSUANT TO T HE STATE LEGISLATURE ACT NAMELY THE GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962. THE PREAMBLE OF THE ACT READS AS UNDER:- AN ACT TO MAKE SPECIAL PROVISION SECURING THE ORDER LY ESTABLISHMENT AND ORGANIZATION OF INDUSTRIES IN INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE STATE OF GUJARAT AND FOR THE PURPOSE OF ESTABLISHING COMMERC IAL CENTERS IN CONNECTION WITH THE ESTABLISHMENT AND ORGANIZATION OF SUCH IND USTRIES AND FOR THAT PURPOSE TO ESTABLISH AN INDUSTRIAL DEVELOPMENT CORPORATION, AN D FOR PURPOSES CONNECTED WITH THE MATTERS AFORESAID. 5. FOR THE ASSESSMENT YEAR 2009-10, THE APPELLANT COMP ANY FILED RETURN OF INCOME SHOWING TOTAL DEFICIT AT RS. 607.87 CRORES. IN THE STATEMENT OF INCOME, THE ASSESSEE HAS SHOWN GROSS TOTAL INCOME A T RS. 393.15 CRORES. TOTAL APPLICATION OF FUNDS WAS SHOWN AT RS. 1045.86 CRORES AND TOTAL LOSS WAS WORKED OUT AT RS. 607.87 CRORES. THE A.O. DENIE D THE CLAIMS MADE BY THE ASSESSEE BY MAKING THE FOLLOWING OBSERVATIONS. 5. IT IS FURTHER OBSERVED THAT THE MAIN OBJECTS OF THE ASSESSEE COMPANY IS TO ESTABLISH AND MANAGE INDUSTRIAL ESTATES AT PLACES S ELECTED BY STATE GOVERNMENT, TO DEVELOP INDUSTRIAL AREAS SELECTED BY THE GOVERNM ENT FOR THE PURPOSE AND MAKE ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 3 THEM AVAILABLE FOR UNDERTAKINGS TO ESTABLISH THEMSE LVES TO DEVELOP LAND ON ITS OWN COST OR FOR THE STATE GOVERNMENT FOR THE PURPOSE OF FACILITATING THE LOCATION OF INDUSTRIES. IN SHORT, THE ASSESSEE'S BUSINESS IS TO DEVELOP LAND AND TO ALLOT THESE FOR INDUSTRIAL USE AND TO FACILITATE THE ALLOTTEES FOR ESTABLISHING INDUSTRIES. THE ASSESSEE CLAIMS ITS INCOME TO BE EXEMPT U/S. 11 OF THE ACT; THEREFORE, ITS INCOME IS ASSESSABLE U/S 11(4) OF THE INCOME TAX ACT. THEREFO RE, THE ASSESSEE WAS SHOW CAUSED AS TO WHY ITS INCOME SHOULD NOT BE ASSESSED U/S. 11 (4) OF THE ACT. 5.1 IT IS OBSERVED THAT THE ASSESSEE HAS MADE SUBMI SSION ON THE SIMILAR LINE AS THAT IN EARLIER YEARS. THE ISSUES IN HAND WERE SERI OUSLY CONSIDERED BY THE AO'S IN EARLIER YEARS TOO. IN THE PRESENT ASSESSMENT PROCEE DING TOO, THE ISSUE IS EXAMINED IN DETAIL. IT REQUIRES TO BE SCRUTINIZED WHETHER TH E ASSESSEE IS PERSUING BUSINESS ACTIVITIES DURING F.Y.2008-09 OR NOT. THE ASSESSEE HAS CARRIED ON THE ACTIVITIES OF ACQUIRING, DEVELOPING AND LEASING AND SELLING LAND AND STRUCTURES, WHICH GENERATES SURPLUS INCOME. THE ACTIVITIES ARE ORGANI ZED ON A COMPLETE BASIS MOULD. LANDS ARE BEING ACQUIRED AND DEVELOPED AND L EASED OUT FOR WHICH ADEQUATE CONSIDERATION IS OBTAINED. THE CASH SURPLU S GENERATED IN THE PROCESS IS INVESTED IN OTHER INCOME YIELDING ASSETS. IT HAS AL SO INVESTED IN A NUMBER OF COMPANIES AND HAS ALSO PURCHASED BONDS AND FIXED DE POSITS. IN THE INCOME AND EXPENDITURE ACCOUNT, THE ASSESSEE HAS SHOWN INTERES T FROM INVESTMENT AND DEPOSITS WITH BANKS, COMPANIES ETC. AT RS.195,45,52 ,106/-. IT HAS ALSO INCOME FROM RENT AND BUILDING, WATER CHARGES ETC. AT RS.17 3,78,00,353/-. THE TOTAL INCOME AS PER INCOME & EXPENDITURE ACCOUNT ARRIVES AT RS.393,15,12,238/- AND EXPENDITURE IS SHOWN AT RS.228,09,47,407/-, LEAVING A NET SURPLUS OF RS . 165,05,64,831/-. 5.2 FROM THE ABOVE DESCRIPTION, IT IS CLEAR THAT TH E ASSESSEE IS INVOLVED IN COMMERCIAL ACTIVITIES ONLY WHETHER IT IS USE OF LAN D AS STOCK IN TRADE OR USE OF ITS MOVABLE ASSETS. IT ALSO MAINTAINS ITS ACCOUNTS IN T HE SPIRIT OF A COMMERCIAL ORGANIZATION. THE ASSESSEE'S RELIANCE ON VARIOUS CA SE LAWS IS OF NO RELEVANCE, AS THEY ARE DISTINGUISHABLE ON FACTS OF THE PRESENT CA SE. THEREFORE, THE ASSESSEE'S CONTENTIONS ARE NOT ACCEPTABLE AS THE ASSESSEE IS E NJOYING INCOME FROM BUSINESS OF DEVELOPING LAND FOR INDUSTRIAL PURPOSES AND ALLO TTING LAND TO INDUSTRIALISTS ON ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 4 LEASE AND IS ALSO CHARGING CONSIDERATION FOR LAND T RANSFERRED TO THEM AND IS ALSO CLAIMING ITS INCOME TO BE EXEMPT U/S. 11 OF THE ACT . THEREFORE, IN MY OPINION ITS INCOME IS ASSESSABLE U/S. 11(4) OF THE ACT FOR A.Y. 2009-10. IT IS PERTINENT TO NOTE HERE THAT THIS VIEW HAS BEEN CONFIRMED BY LD. CIT(A ) IN THE ASSESSEES OWN CASE FOR THE A.Y. 2006-07. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) AND REITERATED ITS CLAIM OF EXEMPTION. TAKING A LEAF OUT OF THE OBSER VATIONS OF THE A.O. DISCUSSED IN PARA 7 OF THE ASSESSMENT ORDER, THE FI RST APPELLATE AUTHORITY WAS OF THE STRONG BELIEF THAT THE PROVISO TO SECTIO N 2(15) SQUARELY APPLY ON THE FACTS OF THE CASE. THE FIRST APPELLATE AUTHORIT Y ACCORDINGLY ISSUED A SPECIFIC SHOW CAUSE VIDE LETTER DATED 28.09.2012 TO SHOW CAUSE WHY CONSEQUENT TO THE DECISION OF THE A.O. IT SHOULD NO T BE HELD THAT NO INCOME IS EVEN ASSESSABLE U/S. 11(4), IT WAS ALSO REQUIRED TO SHOW CAUSE WHY GIDC SHOULD NOT BE DENIED ANY BENEFIT OF SECTION 11 AND, THEREAFTER ITS INCOME BE NOT COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT. 7. THE ASSESSEE REQUESTED TO RAISE AN ADDITIONAL GROUN D CHALLENGING THE APPLICABILITY OF THE PROVISO TO SECTION 2(15) OF TH E ACT. 8. AFTER CONSIDERING THE FACTS AND THE DETAILED SUBMIS SIONS MADE BY THE ASSESSEE, THE LD. CIT(A) OBSERVED AS UNDER:- 6. THE MAIN ISSUE THAT REQUIRES TO BE DISCUSSED AND DECIDED AND WHICH ARISES OUT OF THE SHOW CAUSE NOTICE ISSUED TO THE APPELLANT UN DERSIGNED (REFER PARA 5.1 OF THIS ORDER) IS THAT WHETHER OR NOT GIDC, THE APPELL ANT IS INELIGIBLE FOR ANY BENEFIT OF SECTION 11 AND THEREAFTER ITS INCOME BE COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT: THE ISSUE HAS TO BE CONSIDERED ALSO IN VIEW OF AMEN DED PROVISIONS OF SECTION 13(8) AS EFFECTIVE FROM 1/4/2009. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 5 THE ISSUE ALONG WITH ADDITIONAL GROUND NO. 1 (REFER PARA 5.1 OF THIS ORDER) ARE REQUIRED TO BE DECIDED. 6.1 HAVING CONSIDERED THE CONTENTIONS OF THE APPELL ANT, ON THE ISSUES ABOVE, IT IS CLEAR THAT IT IS RELYING MAINLY ON THE FOLLOWING TW O ARGUMENTS: (I) IT IS DOING THE ACTIVITY OF DEVELOPING INDUSTR IAL ESTATES AND INDUSTRY ACCORDING TO THE MANDATE OF THE GOVERNMENT OF GUJARAT. (II) IT IS NOT A TRADING CORPORATION AS DEFINED U NDER SECTION 2(49) OF THE COMPANIES ACT AND THEREFORE, CANNOT BE SAID TO BE E NGAGED IN BUSINESS. IT HAS TO BE UNDERSTOOD THAT THE REVENUE IS NOT CON TENDING THAT THE APPELLANT IS NOT ENGAGED IN ACTIVITIES WHOSE OBJECT IS OF GENERAL PU BLIC UTILITY. HOWEVER/THERE IS NO DISPUTE THAT THE PURPOSE OF THE ASSESSEE IS NOT AMO NGST RELIEF OF THE 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. THE CONTENTION OF THE AO AND THAT FROM THE SIDE OF THE REVENUE RAISED THROUGH THE SPECIFIC SHOW CAUSE NOTI CE ISSUED IN THE PRESENT PROCEEDINGS IS THAT ITS ACTIVITIES FALL IN FIRST PR OVISO TO SECTION 2(15) OF THE IT ACT. THE PROVISO READS AS UNDER: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINES S, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF U SE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY A CAREFUL READING OF THE PROVISO SHOWS THAT IT EXCL UDES FROM CHARITABLE PURPOSE WHEN THE ACTIVITIES OF THE ASSESSEE CONCERNED EVEN THOUGH FOR 'THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' INVOLVE S THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. THE DEFINITION IS MUCH BROADER THAN BEING ENGAGED IN TRADE OR BUSINESS. WHAT IT ENVISAGES AND PROHIBITS IS EVE N CARRYING OUT ACTIVITIES OF THAT 'NATURE' FOR A CESS OR FEE OR ANY OTHER CONSIDERATI ON. CLEARLY, THE LEGISLATION IS EXCLUDING THE CARRYING OUT OF THESE ACTIVITIES (NOT ONLY COMPLETE BUSINESS OR TRADE ETC.) EVEN THOUGH THEY M AY BE FOR PUBLIC UTILITY, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION, OF THE INCOME FROM SUCH ACTIVITY. THE AVERMENT OF THE ASSESSEE THAT TH E PROFITS THOUGH EARNED ARE FOR PUBLIC USE OR MAY ULTIMATELY VEST IN THE GOVERNMENT OF GUJARAT AFTER THE CORPORATION IS DISSOLVED ETC., THEREFORE, DOES NOT MAKE A DIFFERENCE, TO THE ASSESSEE'S CASE HERE, I WOULD LIKE TO MENTION THAT THE ASSESSEE IS ADMITTEDLY APHORIZED TO DEVELOP LAND ON ITS OWN ACCOUNT (REFER TO SECTION 13 OF THE GID ACT). ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 6 HERE, IT WOULD BE WORTHWHILE TO REPRODUCE SOME OF T HE IMPORTANT OBSERVATIONS AND CONCLUSIONS OF THE HON'BLE ITAT IN THE ASSESSEE 'S OWN CASE BY THE HON'BLE ITAT, BENCH 'C', AHMEDABAD DATED 03/12/2010 IN ITA NO.3252/AHD/2009 FOR A.Y.2006-07 (THE DECISION WAS GIVEN WHEN THE PROVIS O TO SECTION 2(15) WERE NOT ON THE STATUTE): 8.11. THE CRUX OF THE DECISION IS THAT EVEN IF A BU SINESS UNDERTAKING IS A PROPERTY OF THE TRUST BUT IF THE BUSINESS CARRIED ON IS NOT MEANT TO FULFILL THE OBJECTS OF THE TRUST, THEN ALSO SUCH A BUSINESS INCOME IS OUT OF T HE EXEMPTION CLAUSE. WE THINK THIS IS THE PURPOSE OF THE ENACTMENT OF THIS SECTIO N THAT OUT OF THE SEVERAL PROPERTIES OF A TRUST, IF THERE IS A PROPERTY HELD BY THE TRUST CARRYING ON BUSINESS WHICH IS FOUND TO BE NOT FOR THE PURPOSES OF THE CH ARITABLE OBJECTS, THEN BY INVOKING SECTION 11(4) THAT INCOME CAN BE TAXED. .. THEREFORE NOW WE HAVE TO EXAMINE WHETHER THE ACTIVI TIES OF THIS ASSESSEE CAN BE SAID TO BE GOVERNED BY SECTION 2(15) WHEREIN AN EXP RESSION IS 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. THIS EXPRESSION WOULD PRIMA-FACIE INCLUDE ALL OBJEC TS WHICH PROMOTE THE WELFARE OF THE GENERAL PUBLIC. ON E HAS TO EXAMINE THE PRIMARY PURPOSE AND THE DOMINANT OBJECT FOR WHICH THIS CORP ORATION CAME INTO EXISTENCE. UNDISPUTEDLY IT WAS FORMED TO PROMOTE THE WELFARE O F THE GENERAL PUBLIC. AS FAR AS THIS ASPECT IS CONCERNED, WE HAVE NOTHING MUCH TO A DD BUT TO FOLLOW THE FINDINGS OF HON'BLE SUPREME COURT PRONOUNCED IN ASSESSEE'S OWN CASE(SUPRA) [227 ITR 414], THE HON'BLE APEX COURT HAS SAID THAT THE APPELLANT WAS CREATED UNDER THE GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962. THE APPEL LANT HAD THE RIGHT TO HOLD PROPERTIES AND THE RIGHT TO SUE AND BE SUED IN ITS OWN NAME. DESCRIBING THE FUNCTIONS OF THE CORPORATION, IT WAS MENTIONED THAT PROPER PLANNING IS ABSOLUTELY NECESSARY FOR CREATION OF AN INDUSTRIAL AREA. SUCH AS, ROADS, SANITATION, PARK, OTHER AMENITIES, ETC. ARE TO BE PROVIDED IN A PLANN ED MANNER IN AN INDUSTRIAL AREA. AS PER THE HON'BLE APEX COURT, EVEN AN EDUCAT IONAL INSTITUTION MAY HAVE TO BE PROVIDED IN SUCH INDUSTRIAL COMPLEX. THEREFORE, DEVELOPMENT OF AN INDUSTRIAL AREA WOULD HAVE ITS DIRECT IMPACT ON THE DEVELOPMEN T OR IMPROVEMENT OF THAT PART OF THE CITY WHERE SUCH AREAS ARE LOCATED. FINALLY I T WAS HELD THAT SUCH AUTHORITIES BEING CONSTITUTED BY LAW FOR FACILITATING ALL KINDS OF DEVELOPMENT OF CITIES, TOWNS AND VILLAGES FOR PUBLIC PURPOSES, THEREFORE SHOULD .NOT BE SUBJECTED TO THE LIABILITY TO PAY INCOME TAX, HENCE, ENTITLED TO EXE MPT FROM TAX U/S.L0(20A) OF THE I.T. ACT. THE PURPOSE OF CAREFUL READING OF THIS JU DGMENT IS TO ASCERTAIN THE OBJECTS OF THE TRUST AND ALSO TO VERIFY WHETHER SUC H OBJECTS HAD FALLEN UNDER THE DEFINITION OF SECTION 2(15) OF THE I.T. ACT. ACCORD ING TO US, THERE SHOULD NOT BE ANY DISPUTE OR MISUNDERSTANDING THAT THE OBJECTS OF THI S, APPELLANT ARE VERY MUCH COVERED, AS HELD ABOVE, UNDER THE DEFINITION OF SEC TION 2(15) OF THE I.T. ACT. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 7 11..THIS IS THE MAIN CAUSE OF GRIEVANCE THAT THO UGH THE ACTIVITY OF THE ASSESSEE IS TO PROMOTE INDUSTRY FOR THE BENEFIT OF PUBLIC AT LARGE AND THE INCOME SO GENERATED ON LEASING OUT OF THE PLOTS/LAND, THE SAM E HAS ALSO BEEN EXCLUSIVELY UTILIZED FOR THOSE LISTED OBJECTS OF THE INSTITUTIO N, THEREFORE, THERE WAS NO SCOPE TO INVOKE SECTION 11(4) OF THE I.T.ACT. THERE IS NO AL LEGATION OF THE REVENUE DEPARTMENT THAT ANY PART OF THE INCOME/OF THE GIDC WAS MISAPPROPRIATED OR EXPLOITED OTHER THAN THE OBJ4CTS OF THE TRUST. ONLY UNDER A DEEMING PROVISION IT WAS HELD SO. THE FALLACY ON THE PART OF THE REVENUE IN HOLDING SO, AS PER OUR OBSERVATION, IS THAT FIRST IT WAS PRESUMED THAT IT WAS A BUSINESS UNDERTAKING AND THEN UNDER A FICTION THE INCOME WAS DEEMED AS NOT APPLIED FOR PU BLIC BENEFIT. 12. BEFORE WE CONCLUDE LET US SEE WHETHER AT ALL TH ERE WAS AN ELEMENT OF 'BUSINESS' IN THE ACTIVITY OF THIS CORPORATION. THE DEFINITION OF THE TERM ' BUSINESS' AS PER SEC. 2(13) IS AS UNDER:- SECTION 2(13) 'BUSINESS' INCLUDES ANY TRADE, COMMERCE OR MANUF ACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMER CE OR MANUFACTURE; 13. THE FERVENT ARGUMENT OF LD.CIT DEPARTMENTAL REPRESE NTATIVE MR. JINDAL, IN THIS REGARD, WERE THAT THE DEFINITION OF BUSINESS I S VERY WIDE AS DEFINED IN THE ACT AND THIS DEFINITION IS ALSO NOT EXHAUSTIVE. AS PER HIS ARGUMENTS THIS CLAUSE BEING AN INCLUSIVE CLAUSE, THEREFORE, NOT ONLY THE FOUR I TEMS AS ENUMERATED IN THE DEFINITION, BUT THE OTHER ACTIVITIES IF OF THE LIKE NATURE SHALL ALSO BE RECKONED IN BUSINESS. THERE IS NO DISPUTE ABOUT THIS PRIMARY AR GUMENT BECAUSE THE WORD 'BUSINESS' CONNOTES A LARGE IMPORT. THERE ARE SEVER AL DECISIONS ON THE BASIS OF WHICH NOW IT IS SETTLED THAT ANY ACTIVITY OF COMMER CE AND ANY ADVENTURE IN THE NATURE OF TRADE DOES FALL WITHIN THIS DEFINITION. A T PRESENT, THERE IS NO NECESSITY TO EXHAUSTIBLY DEAL WITH THIS DEFINITION AND WE ARE BO UND TO ACCEPT THAT THE ASSESSEE CAN BE SAID TO BE AN UNDERTAKING WHI CH HAS CARRIED OUT AN ADVENTURE IN THE NATURE OF TRADE. PURCHASE OF LAND AND SALE OF LAND BEING THE PRIMARY ACTIVITY OF THIS ORGANIZATION CAN BE S AID TO BE A BUSINESS ACTIVITY (EMPHASIS SUPPLIED) BUT MERELY BY HOLDING THAT THE UNDERTAKING IS A 'BUSINESS UNDERTAKING' WHETHER THE PROFITS ARISIN G THEREFROM CAN BE SUBJECTED TO TAX BY INVOKING SECTION 11(4) OF THE I.T. ACT? .... .... APPLYING THIS TEST ON THE PRESENT SET OF FACTS OF THE CASE, IT IS EVIDENT THAT THOUGH THE AS SESSING OFFICER HAS COMPUTED THE PROFITS ON TRANSFER OF LAND OR PLO TS BUT IT WAS NOT THE CASE THAT THE PROFITS SO GENERATED WERE NOT WITHIN THE MAIN P ROVISIONS OF SECTION 11 OF THE L.T.ACT. (EMPHASIS SUPPLIED). EVEN IF THE ASSESSEE HAS EARNE D PREMIUM PRICE ON LEASE OF PLOT AND LAND FOR SALE BUT IF THE ENTIRE E XPENDITURE AND THE PROFIT EARNED THERE FROM WAS EXCLUSIVELY USED FOR THE LAID DOWN O BJECTS THEN TO BE COVERED BY THE MAIN SEC.11. ......... THEREFORE, WE ARE OF THE CONSCIENTIOUS VIEW THAT EVEN IF THIS UNDERTAKING MAY COME WITHIN THE PURVIEW OF 'BUSINESS UNDERTAKING' BUT BEING NO EXCESS INCOME WAS FOUND UTILISED OTHER THA N FOR THE PURPOSES OF THE ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 8 OBJECT OF THE TRUST, HENCE, OUT OF THE AMBITS OF THE PROVISION OF SECTION 11(4) OF THE L.T.ACT. (EMPHASIS SUPPLIED)' IT IS CLEAR THAT THE HON'BLE ITAT ALSO CONSIDERED T HE ACTIVITIES OF THE APPELLANT TO BE 'BUSINESS ACTIVITY' BUT STATED THAT THE PROFITS OF BUSINESS WERE UTILIZED FOR THE OBJECTS AND IN THAT YEAR THE CHARITABLE ACTIVITY IN CLUDED BUSINESS ACTIVITIES FOR THE PURPOSE OF THE GENERAL PUBLIC UTILITY ALSO. THE APPELLANT HAS RELIED ON THE DECISION OF THE HON 'BLE SUPREME COURT IN THE FOLLOWING CASES: I) IN THE CASE OF THE APPELLANT ITSELF I.E. GIDC & ORS V. CIT[227 ITR 414 (SC)] II) SHRI RAMTANU CO.OP. HOUSING SOCIETY LTD. V. STATE OF MAHARASHTRA [(1970) AIR 1970 SC 1771] [(1970)-003)-SCC-0323-SC ] HAVING GONE THROUGH THE JUDGMENTS CAREFULLY, I FIND THAT THESE ARE OF NO HELP, TO THE ASSESSEE IN THE PRESENT CONTEXT. THE FIRST JUDG MENT WAS GIVEN IN THE CONTEXT OF APPLICABILITY OF SECTION 10(20A) OF THE IT ACT. THE QUESTION WAS WHETHER THE OBJECT OF THE ASSESSEE WAS URBAN AND RURAL DEVELOPMENT OR NOT. THE ISSUE IS NOT DISPUTED AT ALL. THE JUDGMENTS OF THE COURTS ARE TO BE UNDER STOOD AND APPLIED IN THE CONTEXT OF THE FACTS. (CIT VS SUN ENGG. WORKS PVT LTD- 198 ITR 327). SIMILARLY, THE DECISION IN THE CASE OF SHRI RAMTANU CO.OP. HOUSING SOCIETY LTD.(SUPRA) WAS ON THE ISSUE OF LEGALITY OF LAND ACQUISITION UNDER THA T ACT AND WHAT WAS CONSIDERED WAS WHETHER IT IS A TRADING COMPANY UNDER SECTION 2 (49) OF THE COMPANIES ACT. AS DISCUSSED EARLIER, THE SCOPE OF EXCLUSION IN THE FI RST PROVISO TO SECTION 2(15) OF THE ACT IS MUCH LARGER AND THE DEFINITION HAS NOTHING T O DO WITH THAT OF A TRADING COMPANY IN THE COMPANIES ACT. ONE NEED NOT GO BEYON D THE LITERAL MEANING OF THE LAW IF THERE IS NO AMBIGUITY. IN THE JUDGMENT OF THE-HON'BLE SUPREME COURT RELIED UPON BY THE: APPELLANT, IN ITS OWN CASE, THE FOLLOWING OBSERVATIONS WITH REGARD TO ACTIVITIES OF THE TWO CONCERNS ARE THERE: 'IT IS OBVIOUS THAT THE CORPORATION WILL RECEIVE MO NEYS FOR DISPOSAL OF LAND, BUILDINGS AND OTHER PROPERTIES AND ALSO THAT THE CO RPORATION WOULD RECEIVE RENTS AND PROFITS IN APPROPRIATE CASES' CLEARLY, THE ACTIVITIES OF THE APPELLANT FALL IN TH E NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATI ON TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION. THE ACTIVITIES OF THE APPELLANT THEREFORE, DOES NOT QUALIFY TO BE CONSIDERED AS CHARITABLE UNDER ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 9 THE PROVISIONS OF SECTION 2(15) READ WITH THE PROVI SO. THE FOLLOWING ARE THE RECEIPTS OF THE APPELLANT IN THE YEAR: SR NO. HEAD BALANCE AS ON 31.03.2007 BALANCE AS ON 31.03.2008 RECEIPTS DURING YEAR (3- 4) 1 2 3 4 5 1 PREMIUM PRICE ON LEASE OF PLOT AND LAND FOR SALE AS PER SCHEDULE-'G' '. 18,82,06,90,986 23,06,58,35,738 424,51,44,752 2 RECOVERY TOWARDS FACTORIES SHEDS 18,329,35,330 1,93,30,85,281 10,01,49,951 3 RECOVERY TOWARDS WORKERS' QUARTERS 38,73,56,885 38,85,40,080 11,83,195 TOTAL 434,64,77,848 THEREFORE, WHEN THE RECEIPTS ARE OVER 430 CRORE, TH E SECOND PROVISO TO SECTION 2(15) DOES NOT COME TO THE RESCUE OF THE APPELLANT. THEREFORE, IT IS HELD THAT THE ACTIVITIES OF THE AS SESSEE, FOR THE ASSESSMENT YEAR UNDER APPEAL ARE NOT FOR CHARITABLE PURPOSE AS DEFI NED UNDER SECTION 2(15) OF THE ACT. THE PROVISIONS OF SECTION 13(8) OF THE I.T. AC T, AS AMENDED WITH EFFECT FROM 01/04/2009, READ AS UNDER: '8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 S HALL 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 YEAR.' THEREFORE, NO INCOME OF THE ASSESSEE FOR THE PREVIO US YEAR WOULD BE ELIGIBLE TO BE EXCLUDED FROM THE TOTAL INCOME UNDER THE PROVISIONS OF SECTION 11 OR SECTION 12 OF THE IT ACT. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 10 9. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE L D. SENIOR COUNSEL VEHEMENTLY SUBMITTED THAT THE FIRST APPELLATE AUTHO RITY HAVE GROSSLY ERRED IN NOT APPRECIATING THE FACTS OF THE CASE QUA THE D ECISIONS RELIED UPON BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. 10. IT IS THE SAY OF THE LD. COUNSEL THAT THE HONBLE S UPREME COURT IN ASSESSEES OWN CASE IN 227 ITR 414 HAS CATEGORICALLY HELD THAT THE ASSESSEE IS NOT A TRADING CORPORATION. THE LD. COUNSEL FURTHER RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT GIVEN IN THE CASE OF SHRI RAM TANU COOPERATIVE HOUSING SOCIETY LTD. AND ANOTHER VS. STATE OF MAHAR ASHTRA AND OTHERS 1970(3) SUPREME COURT CASES 323. IT IS SAY OF THE L D. SENIOR COUNSEL THAT THE WRIT PETITIONS CHALLENGING THE CONSTITUTIONAL V ALIDITY OF MAHARASHTRA INDUSTRIAL DEVELOPMENT ACT, 3 OF 1962 WAS DISMISSED BY THE HONBLE SUPREME COURT. THE LD. COUNSEL STATED THAT THE GUJA RAT INDUSTRIAL DEVELOPMENT ACT IS IN PARI MATERIA TO MAHARASHTRA I NDUSTRIAL DEVELOPMENT ACT. 11. THE LD. SENIOR COUNSEL VEHEMENTLY STATED THAT THE ASSESSEE IS NOT CONSTITUTED WITH A PRE-DOMINANT OBJECT OF MAKING PR OFIT; THEREFORE, PROVISO TO SECTION 2(15) OF THE ACT DOES NOT APPLY. RELIANC E WAS PLACED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF ICAI 35 TAXMANN.COM 140 AND 13 TAXMANN.COM 175. RELIANCE WAS ALSO PLACE D ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF GS1 IND IA 38 TAXMANN.COM 364, HONBLE GUJARAT HIGH COURT IN THE CASE OF SABARMATI ASHRAM GAUSHALA TRUST 44 TAXMANN.COM 141. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 11 12. THE LD. SPECIAL COUNSEL SHRI G.C. SRIVASTVA REPRESE NTING THE REVENUE DREW OUR ATTENTION TO THE LEGISLATIVE INTENT. IT IS THE SAY OF THE LD. D.R. THAT EARLIER THERE WAS A SPECIFIC PROVISION TO SECTION 10(20A) I N THE STATUTE BY WHICH SUCH CORPORATION (LIKE THE ASSESSEE) WERE GIVEN BLA NKET EXEMPTION UNDER THE INCOME TAX ACT. IT IS THE SAY OF THE LD. D.R. T HAT THIS SPECIFIC EXEMPTION WAS LATER ON WITHDRAWN WITH EFFECT FROM 01.04.2003 WHICH MEANS THAT IT WAS NEVER A LEGISLATIVE INTENT TO TREAT SUCH INSTIT UTIONS (LIKE ASSESSEE) AS CHARITABLE INSTITUTION. THE LD. D.R. FURTHER DREW OUR ATTENTION TO THE PROVISIONS OF SECTION 10(20) OF THE ACT WHICH CONTA INS DEFINITION OF LOCAL AUTHORITY AND STATED THAT EVEN UNDER THIS PROVISION , THE ASSESSEE DOES NOT FIT. SHRI G.C. SRIVASTAVA CONTINUED BY STATING THAT UNDER THE PROVISO TO SECTION 2(15) OF THE ACT, IT IS THE ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVIC E IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS IS HIT. IT IS THE SAY OF THE L D. D.R. THAT IT IS SPECIFICALLY PROVIDED IN SECTION 2(15) OF THE ACT BY WHICH UTILI ZATION OF THE FUNDS IS NOT RELEVANT. IN SUPPORT FIRM RELIANCE WAS PLACED ON TH E DECISION OF THE TRIBUNAL AHMEDABAD BENCH IN THE CASE OF AHMEDABAD URBAN DEVE LOPMENT AUTHORITY IN ITA NO. 712 & 711/AHD/2013 FOR A.Y. 20 09-10 AND ITA NOS. 647 & 2335/AHD/2014 FOR A.Y. 2010-11 & 2011-12. THE LD. D.R. RELIED UPON THE DECISION OF THE CO-ORDINATE BENCHES OF AMRITSAR IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY IN ITA NO. 30/ASR/2011 WHICH WAS LATER ON DECIDED BY THE HONBLE HIGH COURT OF JAMMU & KASHMIR IN TAX APPEAL NO. 164 OF 2012. THE LD. D.R. FURTHER RELIED UPON THE DECISION IN THE CASE OF GIVE FOUNDATION IN ITA NO. 1465 /AHD/2013, ENTERTAINMENT SOCIETY OF GOA IN ITA ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 12 NO. 90/PANJ/2012 AND BELGAUM URBAN DEVELOPMENT AUTH ORITY IN ITA NO. 214/PANJ/2011. 13. HAVING HEARD RIVAL CONTENTIONS, WE HAVE CAREFULLY P ERUSED THE ORDERS OF THE AUTHORITIES BELOW AND WITH THE ASSISTANCE OF THE LD . REPRESENTATIVES OF BOTH SIDES; WE HAVE GONE THROUGH THE RELATED DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM PAPER BOOKS IN THE LIGHT OF R ULE 18(6) OF THE ITAT RULES. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE DECISIONS RELIED UPON BY THE RIVAL REPRESENTATIVES. 14. 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 RELIE F 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 CA RRYING 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. 15. ALL THAT HAS TO BE DECIDED NOW IS WHETHER THE ACTIV ITIES OF THE APPELLANT COMPANY CONSTITUTES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS TO COME WITHIN THE PURVIEW OF THE PROVISO TO SECTION ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 13 2(15) OF THE ACT. LET US NOW CONSIDER THE RELEVAN T PROVISIONS OF THE GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962 AND THE SAME READS AS UNDER:- 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIR ES,- (A) 'AMENITY' INCLUDES ROAD, SUPPLY OF WATER OR ELE CTRICITY, STREET LIGHTING, DRAINAGE, SEWERAGE, CONSERVANCY AND SUCH OTHER CONV ENIENCE AS THE STATE GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZ ETTE, SPECIFY TO BE AN AMENITY FOR THE PURPOSES OF THIS ACT; (B) 'BUILDING' MEANS ANY STRUCTURE OR ERECTION, OR PART OF A STRUCTURE OR ERECTION, WHICH IS INTENDED TO BE USED FOR RESIDENTIAL, INDUS TRIAL, COMMERCIAL OR OTHER PURPOSES, WHETHER IN ACTUAL USE OR NOT; (C) 'COLLECTOR' MEANS THE COLLECTOR OF A DISTRICT, AND INCLUDES ANY OFFICER SPECIALLY APPOINTED BY THE STATE GOVERNMENT TO PERF ORM THE FUNCTIONS OF A COLLECTOR UNDER THIS ACT; 3 [(CA) 'COMMERCIAL CENTRE' IN RELATION TO ANY INDUST RIAL AREA OR INDUSTRIAL ESTATE MEANS ANY SITE SELECTED BY THE STATE GOVERNMENT WHE RE THE CORPORATION BUILDS SHOPS AND OTHER BUILDINGS AND MAKES THEM AVAILABLE FOR ANY COMMERCIAL ACTIVITY,] (D) 'CORPORATION' MEANS THE GUJARAT INDUSTRIAL DEVE LOPMENT CORPORATION ESTABLISHED UNDER SECTION 3; (E) 'DEVELOPMENT' WITH ITS GRAMMATICAL VARIATIONS, MEANS THE CARRYING OUT OF BUILDING, ENGINEERING, QUARRYING OR OTHER OPERATION S IN, ON. OVER OR UNDER LAND, OR THE MAKING OF ANY MATERIAL CHANGE IN ANY BUILDIN G OR LAND, AND INCLUDES RE- DEVELOPMENT, BUT DOES NOT INCLUDE MINING OPERATIONS ; AND 'TO DEVELOP' SHALL BE CONSTRUCTED ACCORDINGLY; (F) 'ENGINEERING OPERATIONS' INCLUDE THE FORMATION OF LAYING OUT OF MEANS OF ACCESS TO A ROAD OR THE LAYING OUT OF MEANS OF ACCE SS TO A ROAD OR THE LAYING OUT OF WATER SUPPLY; (G) 'INDUSTRIAL AREA' MEANS ANY AREA DECLARED TO BE AN INDUSTRIAL AREA BY THE STATE GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GA ZETTE, WHICH IS TO BE DEVELOPED AND WHERE INDUSTRIES ARE TO BE ACCOMMODATED; (H) 'INDUSTRIAL ESTATE' MEANS ANY SITE SELECTED BY THE STATE GOVERNMENT, WHERE THE CORPORATION BUILDS FACTORIES AND OTHER BUILDING S AND MAKES THEM AVAILABLE FOR INDUSTRIES OR CLASS OF INDUSTRIES; (I) 'MEANS OF ACCESS' INCLUDES A ROAD FOR ANY MEANS OF ACCESS, WHETHER PRIVATE OR PUBLIC, FOR VEHICLES OR FOR PEDESTRIANS; (J) 'PREMISES' MEANS ANY LAND OR BUILDING OR PART O F A BUILDING AND INCLUDES- (I) THE GARDEN, GROUNDS AND OUT-HOUSES, IF ANY, APP ERTAINING TO SUCH BUILDING OR PART OF A BUILDING; AND (II) ANY FITTINGS AFFIXED TO SUCH BUILDING OR PAR T OF A BUILDING FOR THE MORE BENEFICIAL ENJOYMENT THEREOF; ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 14 (K) 'PRESCRIBED' MEANS PRESCRIBED BY RULES, MADE UN DER THIS ACT; (1) 'REGULATION' MEANS REGULATION MADE UNDER SECTIO N 54 (M) 'RELEVANT LAND ACQUISITION LAW' MEANS- (I) IN THE BOMBAY AREA OF THE KUTCH AREA OF THE STA TE OF GUJARAT, THE LAND ACQUISITION ACT 1894 AS IN I OF 1894. FORCE IN THOSE AREAS; (II) IN THE SAURASHTRA AREA OF THE STATE OF GUJARAT , THE LAND ACQUISITION ACT, 1894 AS APPLIED TO THAT AREA; AND (III) THE GUJARAT LAND ACQUISITION (INDUSTRIAL AREA S) ACT 1961; (N) THE EXPRESSION 'LAND' AND THE EXPRESSION 'PERSO N INTERESTED' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN THE RELEV ANT LAND ACQUISITION LAW. ESTABLISHMENT AND CONSTITUTI ON OF THE CORPORATION 3. (1) FOR THE PURPOSE OF SECURING AND ASSISTING IN THE RAPID AND ORDERLY ESTABLISHMENT, AND ORGANIZATION OF INDUSTRIES IN IN DUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE STATE OF GUJARAT L[AND FOR THE PURPO SE OF ESTABLISHING COMMERCIAL CENTERS IN CONNECTION WITH THE ESTABLISHMENT AND OR GANIZATION OF SUCH INDUSTRIES], THERE SHALL BE ESTABLISHED BY THE STATE GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE, A CORPORATION BY THE NAME OF THE GUJARAT I NDUSTRIAL DEVELOPMENT CORPORATION. (2) THE CORPORATION SHALL BE A BODY CORPORATE WITH PERPETUAL SUCCESSION AND A COMMON SEAL, AND MAY SUE AND BE SUED IN ITS CORPORA TE NAME, AND SHALL BE COMPETENT TO ACQUIRE, HOLD AND DISPOSE OF PROPERTY, BOTH MOVABLE AND IMMOVABLE, AND TO CONTRACT, AND DO ALL THINGS NECESSARY, FOR T HE PURPOSE OF THIS ACT. FUNCTIIONS AND POWERS OF THE CORPORATION 13. THE FUNCTIONS OF THE CORPORATION SHALL BE- (I) GENERALLY TO PROMOTE AND ASSIST IN THE RAPID AN D ORDERLY ESTABLISHMENT, GROWTH AND DEVELOPMENT OF INDUSTRIES IN THE STATE OF GUJAR AT, AND (II) IN PARTICULAR AND WITHOUT PREJUDICE TO THE GEN ERALITY OF CLAUSE (I) TO- (A) ESTABLISH AND MANAGE INDUSTRIAL ESTATES AT PLACE SE LECTED BY THE STATE GOVERNMENT; (B) (B) DEVELOP INDUSTRIAL AREA SELECTED BY THE STATE G OVERNMENT FOR THE PURPOSE AND MAKE THEM AVAILABLE FOR UNDERTAKINGS TO ESTABLISH T HEMSELVES; (C) (C) DEVELOP LAND ON ITS OWN ACCOUNT OR FOR THE STAT E GOVERNMENT FOR THE PURPOSE OF FACILITATING THE LOCATION OF INDUSTRIES 2 [AND COMMERCIAL CENTRES] THEREON: (D) (C) DEVELOP LAND ON ITS OWN ACCOUNT OR FOR THE STAT E GOVERNMENT FOR THE PURPOSE OF FACILITATING THE LOCATION OF INDUSTRIES 2 [AND COMMERCIAL CENTRES] THEREON: ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 15 3 [(DA) UNDERTAKE SCHEMES FOR PROVIDING INDUSTRIAL U NITS AND COMMERCIAL ESTABLISHMENTS WITH SUCH STRUCTURES AND FACILITIES AS MAY BE NECESSARY FOR THEIR ORDERLY ESTABLISHMENT, GROWTH AND DEVELOPMENT;] (E) '[PROMOTE, ORGANIZE, SPONSOR OR UNDERTAKE SCHEMES] OR WORKS, EITHER JOINTLY WITH OTHER CORPORATE BODIES OR INSTITUTIONS, OR WITH GOV ERNMENT OR LOCAL AUTHORITIES, OR ON AN AGENCY BASIS, IN FURTHERANCE OF THE PURPOSES FOR WHICH THE CORPORATION IS ESTABLISHED AND ALL MATTERS CONNECTED THEREWITH. 14. SUBJECT TO THE PROVISIONS OF THIS ACT THE CORPO RATION SHALL HAVE POWER- (A) TO.ACQUIRE AND HOLD SUCH PROPERTY, BOTH MOVABLE AND IMMOVABLE AS THE CORPORATION MAY DEEM NECESSARY FOR THE PERFORMANCE OF ANY OF ITS ACTIVITIES, AND TO LEASE, SELL, EXCHANGE OR OTHERWISE TRANSFER ANY PRO PERTY HELD BY IT ON SUCH CONDITIONS AS MAY BE DEEMED PROPER BY THE CORPORATION; (B) TO PURCHASE BY AGREEMENT OR TO TAKE ON LEASE OR UNDER ANY FORM OF TENANCY ANY LAND, TO ERECT SUCH BUILDINGS AND TO EXECUTE SUCH O THER WORKS AS MAY BE NECESSARY' FOR THE PURPOSE OF CARRYING OUT ITS DUTIES AND FUNC TIONS; (C) TO PROVIDE OR CAUSE TO BE PROVIDED AMENITIES AN D COMMON FACILITIES IN 5[INDUSTRIAL ESTATES, COMMERCIAL CENTRES AND INDUSTRIAL AREAS] A ND CONSTRUCT AND MAINTAIN OR CAUSE TO BE MAINTAINED 6[WORKS, BUILDINGS, AMENITIE S AND COMMON FACILITIES] THEREFORE; 7 [(CC) TO LEVY AND COLLECT DEVELOPMENT CHARGES ON TH E LAND WHICH IS NOT VESTED IN OR UNDER THE CONTROL OF THE CORPORATION AND WHICH IS B ENEFITED OR LIKELY TO BE BENEFITED BY THE DEVELOPMENT OR SCHEME OR THE WORK UNDERTAKEN BY THE CORPORATION] (D) TO MAKE AVAILABLE BUILDINGS N HIRE OR SALE TO I NDUSTRIALISTS OR PERSONS INTENDING TO START INDUSTRIAL UNDERTAKINGS '[OR, COMMERCIAL ESTA BLISHMENTS OR BOTH THE INDUSTRIAL UNDERTAKINGS AND COMMERCIAL ESTABLISHMENTS;] (E) TO CONSTRUCT BUILDINGS FOR THE HOUSING OF THE E MPLOYEES IF SUCH INDUSTRIES, 2 [OR COMMERCIAL ESTABLISHMENTS]; (F) (I) TO ALLOT FACTORY SHEDS OR SUCH BUILDINGS OR PARTS OF BUILDINGS, INCLUDING RESIDENTIAL TENEMENTS TO SUITABLE PERSONS IN THE IN DUSTRIAL ESTATES ESTABLISHED OR THE INDUSTRIAL AREAS DEVELOPED BY THE CORPORATION: 3[(IA) TO ALLOT SHOPS AND OTHER BUILDINGS TO SUITAB LE PERSONS IN COMMERCIAL CENTRES ESTABLISHED BY THE CORPORATION;] (II) TO MODIFY OR RESCIND SUCH ALLOTMENTS, INCLUDIN G THE RIGHT AND POWER TO EVICT THE ALLOTTEES CONCERNED ON BREACH OF ANY OF THE TERMS O R CONDITIONS OF THEIR ALLOTMENT; (H) TO CONSTITUTE COMMITTEES FROM AMONGST ITS 4[DIRECTO RS] TO PERFORM ANY OF ITS FUNCTIONS; (I) TO ENGAGE SUITABLE CONSULTANTS OR PERSONS HAVING SP ECIAL KNOWLEDGE OR SKILL TO ASSIST THE CORPORATION IN THE PERFORMANCE OF ITS FU NCTIONS; ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 16 (J) 5 [********] [T O DELEGATE ANY OF ITS POWERS GENERALLY OR SPECIALLY TO ANY OF ITS COMMITTEES OR OFFICERS AND TO PERMIT THEM TO RE-DEL EGATE SPECIFIC POWERS TO THEIR SUBORDINATES; (K) TO ENTER INTO AND PERFORM ALL SUCH CONTRACTS AS IT MAY CONSIDER NECESSARY OR EXPEDIENT FOR CARRYING OUT ANY OF ITS FUNCTIONS; AN D; (L) TO DO SUCH OTHER THINGS AND PERFORM SUCH ACTS AS IT MAY THINK NECESSARY OR EXPEDIENT FOR THE PROPER CONDUCT OF ITS BUSINESS AN D THE CARRYING IN TO EFFECT THE PURPOSES OF THIS ACT. FINANC E, ACCOUNTS AND AUDIT 18. ALL PROPERTY FUNDS AND OTHER ASSETS VESTING IN THE CORPORATION SHALL BE HELD AND APPLIED BY IT, SUBJECT TO THE PROVISIONS OF THE PUR POSES OF THE ACT. 24. (1) THE CORPORATION SHALL HAVE THE AUTHORITY TO SPEND SUCH SUMS AS IT THINKS FIT FOR THE PURPOSES AUTHORISED UNDER THIS ACT FROM OUT OF THE GENERAL FUND OF THE CORPORATION REFERRED TO IN SECTION 19 OR FROM THE R EVERSE AND OTHER FUNDS REFERRED TO IN SECTION 23, AS THE CASE MAY BE. (2) WITHOUT PREJUDICE TO THE GENERALITY OF THE POWE R CONFERRED BY SUB-SECTION (1), THE CORPORATION MAY CONTRIBUTE SUCH SUMS AS IT THINKS F IT TOWARDS EXPENDITURE INCURRED OR TO BE INCURRED BY ANY LOCAL AUTHORITY OR STATUTO RY PUBLIC UNDERTAKING IN THE PERFORMANCE, IN RELATION TO ANY OF ITS INDUSTRIAL E STATES OR INDUSTRIAL AREAS, OF ANY OF THE STATUTORY FUNCTIONS OF SUCH AUTHORITY OR UNDERT AKING, INCLUDING EXPENDITURE INCURRED IN THE ACQUISITION OF LAND. (3) NO EXPENDITURE OTHER THAN CAPITAL EXPENDITURE S HALL BE INCURRED BY THE CORPORATION OUT OF MONEYS BORROWED OR RECEIVED BY W AY OF DEPOSITS. ACQUISIT ION AND DISPOSAL OF LAND 30,(1) WHEREVER ANY LAND IS REQUIRED BY THE CORPORA TION FOR ANY PURPOSE IN FURTHERANCE OF THE OBJECTS OF THE ACT, BUT THE CORP ORATION IS UNABLE TO ACQUIRE IT BY AGREEMENT, THE STATE GOVERNMENT MAY, UPON AN APP LICATION OF THE CORPORATION IN THAT BEHALF, ORDER PROCEEDINGS TO BE TAKEN UNDER THE RELEVANT LAND ACQUISITION LAW FOR ACQUIRING THE SAME O N BEHALF OF THE CORPOR ATION AS IF SUCH LANDS WERE NEEDED FOR A PUBLIC PURPOSE WITHIN THE MEANING OF T HE RELEVANT LAND ACQUISITION LAW. (2) THE AMOUNT OF COMPENSATION AWARDED AND ALL OTHE R CHARGES INCURRED IN THE ACQUISITION OF ANY SUCH LAND SHALL BE FORTHWITH PAI D BY THE CORPORATION AND THEREUPON THE LAND SHALL VEST IN THE CORPORATION. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 17 (32) (1) FOR THE FURTHERANCE OF THE OBJECTS OF THIS ACT, THE STATE GOVERNMENT MAY, UPON SUCH CONDITIONS AS MAY BE AGREED UPON BETWEEN IT AND THE CORPORATION, PLACE AT THE DISPOSAL OF THE CORPORATION ANY LANDS VESTED IN THE STATE GOVERNMENT. (2) AFTER ANY SUCH LAND HAS BEEN DEVELOPED BY, OR U NDER THE CONTROL AND SUPERVISION OF THE CORPORATION, IT SHALL BE DEALT W ITH BY THE CORPORATION IN ACCORDANCE WITH THE REGULATIONS MADE, AND DIRECTION S GIVEN BY THE STATE GOVERNMENT IN THIS BEHALF. (3) IF ANY LAND PLACED AT THE DISPOSAL OF THE CORPO RATION UNDER SUB-SECTION (1) IS REQUIRED AT ANY TIME THEREAFTER BY THE STATE GOVERN MENT, THE CORPORATION SHALL REPLACE IT AT THE DISPOSAL OF THE STATE GOVERNMENT UPON SUCH TERMS AND CONDITIONS AS THE STATE GOVERNMENT MAY AFTER CONSULTATION WITH THE CORPORATION DETERMINE. 41. ALL SUMS PAYABLE BY ANY PERSON TO THE CORPORATI ON OR RECOVERABLE BY IT BY OR UNDER THIS ACT AND ALL CHARGES OR EXPENSES INCURRED IN CONNECTION THEREWITH SHALL, WITHOUT PREJUDICE TO ANY OTHER MODE OR RECOVER, BE RECOVERABLE AS AN ARREARS OF LAND REVENUE ON THE APPLICATION OF THE CORPORATION. 48(1) (1) THE STATE GOVERNMENT IF SATISFIED THAT TH E PURPOSES FOR WHICH THE CORPORATION WAS ESTABLISHED UNDER THIS ACT HAS BEEN SUBSTANTIALLY ACHIEVED SO AS TO RENDER ITS CONTINUANCE UNNECESSARY, IT MAY BY NO TIFICATION IN THE OFFICIAL GAZETTE DECLARE THAT THE CORPORATION SHALL BE DISSO LVED WITH EFFECT FROM SUCH DATE AS MAY BE SPECIFIED IN THE NOTIFICATION, AND THEREU PON THE CORPORATION SHALL STAND DISSOLVED ACCORDINGLY. (2) FROM THE SAID DATE- (A) ALL PROPERTIES, FUNDS AND DUES WHICH ARE VESTED IN, OR REALIZABLE BY, THE CORPORATION SHALL VEST IN OR BE REALISABLE BY STATE GOVERNMENT; AND (B) ALL LIABILITIES WHICH ARE ENFORCEABLE AGAINST T HE CORPORATION SHALL BE ENFORCEABLE AGAINST THE STATE GOVERNMENT. 54.(1) THE CORPORATION MAY, WITH THE PREVIOUS APPRO VAL OF THE STATE GOVERNMENT MAKE REGULATIONS CONSISTENT WITH THIS ACT AND THE R ULES MADE THEREUNDER, AND TO CARRY OUT THE PURPOSES OF THIS ACT (2) IN PARTICULAR AND WITHOUT PREJUDICE TO THE GENE RALITY OF THE FOREGOING POWER SUCH REGULATIONS MAY PROVIDE FOR ALL MATTERS EXPRES SLY REQUIRED OR ALLOWED BY THIS ACT TO BE PROVIDED BY REGULATIONS. (3) ALL REGULATIONS MADE UNDER THIS SECTION SHALL B E PUBLISHED IN THE OFFICIAL GAZETTE AND SHALL BE LAID FOR NOT LESS THAN THIRTY DAYS BEFORE THE STATE LEGISLATURE, AS SOON AS POSSIBLE, AFTER THEY ARE MADE, AND SHALL BE SUBJECT TO RESCISSION BY THE LEGISLATURE, OR TO SUCH MODIFICATION AS THE LEGISLA TURE MAY MAKE, DURING THE SESSION IN WHICH THEY ARE SO LAID, OR THE SESSION I MMEDIATELY FOLLOWING. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 18 (4) ANY RESCISSION OR MODIFICATION SO MADE BY THE S TATE LEGISLATURE SHALL BE PUBLISHED IN THE OFFICIAL GAZETTE AND SHALL THEREUP ON TAKE EFFECT. 16. THE HONBLE SUPREME COURT IN THE CASE OF THE ASSESS EE IN 227 ITR 414 HAD THE OCCASION TO CONSIDER THE OBJECTS OF THE ASSESSE E 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 PARTICU LAR 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 AND C OMMERCE MAY GROW, BUT THAT DOES NOT NECESSARILY MEAN THAT IT WOULD DEVELOP THA T PARTICULAR AREA. IT MAY ALSO CREATE POLLUTION AND SEVERAL OTHER PROBLEMS. APART FROM THAT, THE QUESTION WHICH IS REQUIRED TO BE CONSIDERED IS AS TO WHETHER THE P URPOSE OF THE CORPORATION OR THE OBJECT OF THE CORPORATION IS TO DEVELOP ANY CITY, A NY TOWN OR ANY PARTICULAR AREA. THE ANSWER WOULD BE IN THE NEGATIVE.' 8. THE GUJARAT ACT WAS ENACTED 'TO MAKE SPECIAL PRO VISION FOR SECURING THE ORDERLY ESTABLISHMENT OF INDUSTRIES IN INDUSTRIAL A REAS AND INDUSTRIAL ESTATES IN THE STATE OF GUJARAT, AND TO ASSIST GENERALLY IN THE OR GANIZATION 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 ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 19 2(H) DEFINES 'INDUSTRIAL ESTATE' AS ANY SITE SELECT ED BY THE STATE GOVERNMENT WHERE THE CORPORATION BUILDS FACTORIES AND OTHER BUILDING S AND MAKES THEM AVAILABLE FOR ANY INDUSTRIES OR CLASS OF INDUSTRIES. SECTION 13 OF THE GUJARAT ACT ENUMERATES THE FUNCTIONS OF THE CORPORATION AND THEY CONTAIN, INTER ALIA, 'TO PROMOTE AND ASSIST IN THE RAPID AND ORDERLY ESTABLISHMENT, GROW TH 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 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 INDICA TE THAT THE CORPORATION IS ACTING AS A WING OF THE STATE GOVERN MENT IN ESTABLISHING INDUSTRIAL ESTATES AND DEVELOPING INDUSTRIAL AREAS, ACQUIRING PROPERTY FOR THOSE PURPOSES, CONSTRUCTING BUILDING, ALLOTTING BU ILDINGS, FACTORY SHEDS TO INDUSTRIALISTS OR INDUSTRIAL UNDERTAKINGS. IT IS OB VIOUS THAT THE CORPORATION WILL RECEIVE MONEYS FOR DISPOSAL OF LAND, BUILDINGS AND OTHER PROPERTIES AND ALSO/THAT THE CORPORATION WOULD RECEIVE RENTS A ND PROFITS IN APPROPRIATE CASES. RECEIPTS OF THESE MONEYS ARISE N OT OUT OF ANY BUSINESS OR TRADE BUT OUT OF ~THE SOLE PURPOSE OF ESTABLISHM ENT, GROWTH AND DEVELOPMENT OF INDUSTRIES. THE CORPORATION HAS TO P ROVIDE AMENITIES AND FACILITIES IN INDUSTRIAL ESTATES AND INDUSTRIAL ARE AS. AMENITIES OF ROAD, ELECTRICITY, SEWERAGE AND OTHER FACILITIES IN INDUS TRIAL ESTATES AND INDUSTRIAL AREAS ARE WITHIN THE PROGRAMME OF THE WO RK OF THE CORPORATION.' 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 ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 20 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 PROGRAMMES 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. 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 T HE INCOME-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, THEREFORE, BE IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 17. AS MENTIONED ELSEWHERE, THE GUJARAT INDUSTRIAL DEVE LOPMENT ACT, 1962 IS IN PARI MATERIA TO MAHARASHTRA INDUSTRIAL DEVELOPME NT ACT, 1962. THE CONSTITUTIONAL VALIDITY OF THE MAHARASHTRA ACT WAS CHALLENGED BEFORE THE HONBLE SUPREME COURT BY A WRIT AND THE HONBLE APE X COURT DISMISSED THE ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 21 WRIT PETITION. THE RELEVANT OBSERVATIONS OF THE HON BLE 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 T O ESTABLISH AN INDUSTRIAL DEVELOPMENT CORPORATION, AND FOR PURPOSES CONNECTED WITH THE MATTERS AFORESAID. 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 ME MBER NOMINATED BY THE STATE ELECTRICITY BOARD, ONE MEMBER NOMINATED BY THE HOUS ING BOARD AND THREE MEMBERS NOMINATED BY THE STATE GOVERNMENT, FROM AMO NGST PERSONS APPEARING TO GOVERNMENT TO BE QUALIFIED AS HAVING HAD EXPERIENCE 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 OF THE COR PORATION, WHO SHALL BE THE SECRETARY OF THE CORPORATION. 7. WE HAVE REFERRED TO THESE EXPRESSIONS, 'INDUSTRI AL 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, EXCHANGE 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 ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 22 TENEMENTS TO SUITABLE PERSONS IN THE INDUSTRIAL EST ATES ESTABLISHED OR DEVELOPED BY THE CORPORATION AND TO DO SUCH OTHER THINGS AND PER FORM SUCH ACTS AS IT MAY THINK NECESSARY OR EXPEDIENT FOR THE PROPER CONDUCT OF IT S 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 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. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 23 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 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 ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 24 CARRIES ON BUSINESS AND IS INTENDED FOR MAKING PROF ITS. WHEN PROFITS ARE EARNED BY SUCH A CORPORATION THEY ARE DISTRIBUTED TO SHAREHOL DERS 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 ESTABLIS HED BY THE ACT FOR CARRYING OUT THE PURPOSES' OF THE ACT. THE PURPOSES OF THE A CT ARE DEVELOPMENT OF INDUSTRIES IN THE STATE. THE CORPORATION CONSISTS O F 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, GROWTH AN D 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 CORPORATI ON, 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. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 25 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 OF LAND REVENUE ON THE APPLICATION OF THE CORPORATION. 'SECONDLY ON DI SSOLUTION OF THE CORPORATION THE ASSETS VEST IN AND THE LIABILITIES BECOME ENFOR CEABLE 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 CORPORATIO N IN 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 SAID TO B E DEALING IN LAND OR BUILDINGS FOR THE OBVIOUS REASON THAT THE STATE IS CARRYING O UT 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 CORPORATION CAR RIES OUT THE OBJECTS OF THE ACT. THE HARD CORE OF A TRADING CORPORATION IS ITS COMME RCIAL CHARACTER. COMMERCE CONNOTES TRANSACTIONS OF PURCHASE AND SALE OF COMMO DITIES, DEALING IN GOODS. THE FORMS OF BUSINESS TRANSACTIONS MAY BE VARIED BUT TH E REAL CHARACTER IS BUYING AND SELLING. THE TRUE CHARACTER OF THE CORPORATION IN T HE PRESENT CASE IS TO ACT AS AN ARCHITECTURAL AGENT OF THE DEVELOPMENT AND GROWTH O F INDUSTRIAL TOWNS BY ESTABLISHING AND DEVELOPING INDUSTRIAL ESTATES AND INDUSTRIAL AREAS. WE ARE OF OPINION THAT THE CORPORATION IS NOT A TRADING ONE. 18. IN THE LIGHT OF THE AFOREMENTIONED JUDICIAL DECISIO NS OF THE HONBLE SUPREME COURT, IT IS SETTLED THAT THE ASSESSEE IS N OT A TRADING CORPORATION. LET US NOW CONSIDER THE VARIOUS ASPECT OF THE IMPUG NED PROVISION. GENERAL MEANS PERTAINING TO WHOLE CLASS, 'PUBLIC' MEANS THE BODY OF PEOPLE AT LARGE INCLUDIN G ANY CLASS OF THE PUBLIC, 'UTILITY' MEANS USEFULNESS. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 26 THEREFORE, THE ADVANCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM INDIV IDUAL AND GROUP OF INDIVIDUALS WOULD BE A CHARITABLE PURPOSE. AN OBJEC T OF PUBLIC UTILITY NEED NOT BE AN OBJECT IN WHICH THE WHOLE OF THE PUB LIC IS INTERESTED. IT IS SUFFICIENT IF WELL DEFINED SECTION OF THE PUB LIC BENEFITS BY THE OBJECTS WHICH MEANS THAT THE EXPRESSION 'OBJECT OF GENERAL PUBLIC UTILITY' IS NOT RESTRICTED TO OBJECTS BENEFICIAL TO THE WHOLE MANKIND. AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. IN THE CASE OF CIT VS SWASTIK TRADI NG CO. LTD. 113 ITR 852, THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT E STABLISHING AND MAINTAINING GAUSHALAS AND PANJRAPOLE CONSTITUTES CH ARITABLE PURPOSE. 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. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 27 17 . THUS THE INTENTION OF THE HON'BLE FINANCE MIN ISTER WAS ONLY TO EXCLUDE FROM EXEMPTION, ENTITIES CARRYING ON BU SINESS AND EARNING INCOMES FOR WHICH EXEMPTION WAS CLAIMED ON THE BASIS THAT THE PURPOSE WOULD FALL UNDER CHARITABLE PURPOSE. 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 TH E NEWLY INSERTED PROVISO TO SEC. 2(15) WILL NOT APPLY IN RESPECT OF THE FIRST THREE LIMBS OF SEC. 2(15) I.E. RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. CONSEQUENTLY WHERE THE PURPOSE OF A TRUST OR INSTIT UTION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WILL CONS TITUTE CHARITABLE PURPOSE, EVEN IF IT IS INCIDENTALLY INVOLVES THE CA RRYING ON OF COMMERCIAL ACTIVITY. THE BOARD FURTHER CLARIFIED TH AT ' THE NEWLY INSERTED PROVISO TO SEC. 2( 15) WILL APPLY ONLY TO ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY I.E. 4 LH LIMB OF THE DEFINITION OF THE CHARITABLE PURPOSE C ONTAINED IN SEC. 2(15). THE CIRCULAR FURTHER CLARIFIED 'IN THE FINAL ANALYSIS, WHETHER THE ASSESSEE HAS FOR ITS OBJECTS 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 OF TRADE, COM MERCE OR BUSINESS OR RENDERS ANY SERVICE IN RELATION TO TRADE, COMMER CE OR BUSINESS, IT WOULD NOT BE ENTITLED TO CLAIM THAT ITS OBJECT IS C HARITABLE PURPOSE. IN SUCH A CASE, THE OBJECT OF GENERAL PUBLIC UTILITY W ILL BE ONLY A MASK OR DEVICE TO HIDE THE TRUE PURPOSE WHICH IS TRADE COMM ERCE OR BUSINESS ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 28 OR THE RENDERING OF ANY SERVICE IN RELATION TO TRAD E, 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 POSSIBLE. 19. COMING BACK TO THE ENACTMENT OF THE STATE ACT FOR T HE CONSTITUTION OF THE APPELLANT COMPANY, WE FIND THAT THE APPELLANT COMPA NY HAS BEEN CONSTITUTED FOR THE PURPOSE OF SECURING AND ASSISTI NG IN THE RAPID AND ORDERLY ESTABLISHMENT AND ORGANIZATION OF INDUSTRIE S IN INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN THE STATE OF GUJARAT. 20. 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'. 21. 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 ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 29 CASE OF ICAI VS DIRECTOR GENERAL OF INCOME TAX (EXE M) 347 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 MAKING HUGE MONEY IN A SYSTEMATIC AND ORGANIZED MANNER. CO NSIDERING THE FACTS 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. 22. THE TRIBUNAL IN THE CASE OF SABARMATI ASHRAM GAUSHA LA TRUST (SUPRA), ON IDENTICAL FACTS HAS HELD THAT THE ASSESSEE WAS NOT CONDUCTING ITS AFFAIRS ON COMMERCIAL LINES WITH A MOTIVE TO EARN PROFITS OR H AS DEVIATED FROM ITS OBJECTS AS DETAILED IN THE TRUST DEED OF THE ASSESS EE. THE PROVISO TO SEC. 2(15) WAS NOT APPLICABLE. 23. THE RELIANCE BY THE LD. DR ON THE DECISION OF THE T RIBUNAL IN THE CASE OF AMRITSAR BENCH IN THE CASE OF IMPROVEMENT TRUST (SU PRA) BY THE LD. DR IS MISPLACED INASMUCH AS IN THAT CASE THE DOMINANT ACT IVITY OF THE TRUST WAS TO PURCHASE LAND AT NOMINAL COST, THEN LEVEL AND CLEAR IT. CUT INTO PLOTS AND SELL AT MUCH HIGHER PRICES. ON THIS, THE TRIBUNAL HAS HE LD THAT THE ACTIVITIES OF THE ASSESSEE ARE AIMED AT EARNING PROFITS. SIMILAR WERE THE FACTS BEFORE THE ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 30 HON'BLE HIGH COURT OF JAMMU AND KASHMIR IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY (SUPRA). 24. THE DR HAS ALSO RELIED UPON THE DECISION OF THE TRI BUNAL PANAJI BENCH IN THE CASE OF BELGAUM URBAN DEVELOPMENT AUTHORITY VS CIT( SUPRA). HOWEVER, WE FIND THAT IN THAT CASE THE TRIBUNAL WAS REFERRING T O THE REGISTRATION CERTIFICATE ISSUED U/S. 12A TO BELGAUM URBAN DEVELO PMENT AUTHORITY BY THE DIT (EXEM) BANGALORE AND WHILE REFERRING TO THE SAI D CERTIFICATE, THE TRIBUNAL OBSERVED THAT WHILE GRANTING REGISTRATION, THE CIT HAD NO CHANCE TO EXAMINE THE NEWLY INSERTED PROVISO TO SEC. 2(15) OF THE ACT AND THE TRIBUNAL WAS NOT AWARE WHAT HAPPENED SUBSEQUENTLY I N THAT CASE AFTER THE COMING INTO FORCE THE PROVISO TO SEC. 2(15) AND WHE THER ANY RECTIFICATION ORDER HAS BEEN PASSED BY THE DEPARTMENT OR NOT AS T HERE BEING MISTAKE OF LAW AFTER COMING INTO FORCE THE FIRST PROVISO TO SE C. 2(15) OF THE ACT. THE FACTS OF THE CASE IN HAND ARE NOT EVEN REMOTELY CON NECTED WITH THE FACTS OF THE CASE RELIED UPON BY THE LD. D.R. 25. WITHOUT GOING INTO THE MERITS OF THE DECISION GIVEN IN THE CASE OF AHMEDABAD URBAN DEVELOPMENT AUTHORITY (SUPRA), WE F IND THAT THE SAID DECISION OF THE CO-ORDINATE BENCH HAS BEEN STAYED B Y THE HONBLE HIGH COURT OF GUJARAT IN TAX APPEAL NO. 423 & 424 OF 201 6 WITH CIVIL APPLICATION NO. 212 & 213 OF 2016. THE RELEVANT PART READS AS U NDER:- UNDER THE CIRCUMSTANCES, ISSUE NOTICE RETURNABLE O N 06.06.2016. BY WAY OF AD- INTERIM RELIEF, THE IMPUGNED ORDER DATED 19.04.2016 PASSED BY THE ITAT IN ITA NO. 712/AHD/2013 AND ITA NOS. 647 AND 2335/AHD/201 4 IS HEREBY STAYED. ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 31 26. REFERRING TO THIS ORDER OF THE HONBLE HIGH COURT O F GUJARAT, THE LD. D.R. REFERRED TO THE JUDGMENT OF THE HONBLE CALCUTTA HI GH COURT IN THE CASE OF PIJUSH KANTI CHOWDHURY VS. STATE OF WEST BENGAL (2 007) 2 CALLT 577 (HC). IT IS SAY OF THE LD. D.R. THAT THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT SUCH INTERIM ORDER IS BINDING UPON THE PARTIES TO THE PROCEEDINGS BUT THE LAW IS EQUALLY SETTLED THAT BY MERE PASSING OF AN INTERIM ORDER ST AYING THE OPERATING OF A JUDGMENT WITH CERTAIN FURTHER CONDITIONS, THE EXISTENCE OF THE SA ID JUDGMENT IS NOT WIPED OUT AND AT THE SAME TIME, FOR SUCH INTERIM ORDERS INTER PARTIES, T HE AUTHORITY OF A DECISION AS A PRECEDENT IS NEVER UNDERMINED. 27. REBUTTING TO THE AFORE-STATED SUBMISSIONS OF THE L D. D.R., THE LD. SENIOR COUNSEL REFERRED TO THE DECISION OF THE HONBLE SUP REME COURT GIVEN IN THE CASE OF SHREE CHAMUNDI MOPEDS LTD. VS. CHURCH OF SO UTH INDIA TRUST ASSOCIATION IN CIVIL APPEAL NO. 2553 OF 1991 (1992 ) 3 SUPREME COURT CASES 1. 28. THE LD. SENIOR COUNSEL REFERRED TO THE FOLLOWING OB SERVATIONS OF THE HONBLE SUPREME COURT IN THE SAID ORDER:- WHILE CONSIDERING THE EFFECT OF AN INTERIM ORDER ST AYING THE OPERATION OF THE ORDER UNDER CHALLENGE, A DISTINCTION HAS TO BE MADE BETWE EN QUASHING OF AN ORDER AND STAY OF OPERATION OF AN ORDER. QUASHING OF AN ORDER RESULTS IN THE RESTORATION OF THE POSITION AS IT STOOD ON THE DATE OF THE PASSING OF THE ORDER WHICH HAS BEEN QUASHED. THE STAY OF OPERATION OF AN ORDER DOES NOT , HOWEVER, LEAD TO SUCH A RESULT. IT ONLY MEANS THAT THE ORDER WHICH HAS BEEN STAYED WOULD NOT BE OPERATIVE FROM THE DATE OF THE PASSING OF THE STAY ORDER AND IT DOES NOT MEAN THAT THE SAID ORDER HAS BEEN WIPED OUT FROM EXISTENCE. THIS MEANS THAT IF AN ORDER PASSED BY THE APPELLATE AUTHORITY IS QUASHED AND THE MATTER I S REMANDED, THE RESULT WOULD BE THAT THE APPEAL WHICH HAD BEEN DISPOSED OF BY TH E SAID ORDER OF THE APPELLATE ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 32 AUTHORITY WOULD BE RESTORED AND IT CAN BE SAID TO B E PENDING BEFORE THE APPELLATE AUTHORITY AFTER THE QUASHING OF THE ORDER OF THE AP PELLATE AUTHORITY. THE SAME CANNOT BE SAID WITH REGARD TO AN ORDER STAYING THE OPERATION OF THE ORDER OF THE APPELLATE AUTHORITY BECAUSE IN SPITE OF THE SAID OR DER, THE ORDER OF THE APPELLATE AUTHORITY CONTINUES TO EXIST IN LAW AND SO LONG AS IT EXISTS, IT CANNOT BE SAID THAT THE APPEAL WHICH HAS BEEN DISPOSED OF BY THE SAID O RDER HAS NOT BEEN DISPOSED OF AND IS STILL PENDING. WE ARE, THEREFORE, OF THE OPI NION THAT THE PASSING OF THE INTERIM ORDER DATED FEBRUARY 21, 1991 BY THE DELHI HIGH COURT STAYING THE OPERATION OF THE ORDER OF THE APPELLATE AUTHORITY D ATED JANUARY 7, 1991 DOES NOT HAVE THE EFFECT OF REVIVING THE APPEAL WHICH HAD BE EN DISMISSED BY THE APPELLATE AUTHORITY BY ITS ORDER DATED JANUARY 7, 1991 AND IT CANNOT BE SAID THAT AFTER FEBRUARY 21, 1991, THE SAID APPEAL STOOD REVIVED AN D WAS PENDING BEFORE THE APPELLATE AUTHORITY. IN THAT VIEW OF THE MATTER, IT CANNOT BE SAID THAT ANY PROCEEDINGS UNDER THE ACT WERE PENDING BEFORE THE B OARD OR THE APPELLATE AUTHORITY ON THE DATE OF THE PASSING OF THE ORDER D ATED AUGUST 14, 1991 BY THE LEARNED SINGLE JUDGE OF THE KARNATAKA HIGH COURT FO R WINDING UP OF THE COMPANY OR ON NOVEMBER 6, 1991 WHEN THE DIVISION BENCH PASS ED THE ORDER DISMISSING O.S.A. NO. 16 OF 1991 FILED BY THE APPELLANT-COMPAN Y AGAINST THE ORDER OF THE LEARNED SINGLE JUDGE DATED AUGUST 14, 1991. SECTION 22(1) OF THE ACT COULD NOT, THEREFORE, BE INVOKED AND THERE WAS NO IMPEDIMENT I N THE HIGH COURT DEALING WITH THE WINDING UP PETITION FILED BY THE RESPONDEN TS. THIS IS THE ONLY QUESTION THAT HAS BEEN CANVASSED IN CIVIL APPEAL NO. 126 OF 1992, DIRECTED AGAINST THE ORDER FOR WINDING UP OF THE APPELLANT-COMPANY. THE SAID APPEAL, THEREFORE, FAILS AND IS LIABLE TO BE DISMISSED. 29. 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 MAY SUGGEST THAT THE ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 33 APPELLANT COMPANY WAS CONDUCTING ITS AFFAIRS SOLELY ON COMMERCIAL LINES WITH A MOTIVE TO EARN PROFIT. THERE IS ALSO NO MATE RIAL BROUGHT ON RECORD WHICH COULD SUGGEST THAT THE APPELLANT COMPANY DEVI ATED FROM ITS OBJECTS FOR WHICH IT HAS BEEN CONSTITUTED. IN OUR HUMBLE OP INION AND UNDERSTANDING OF LAW, THE PROVISO TO SEC. 2(15) OF THE ACT IS NOT APPLICABLE ON THE FACTS OF THE CASE. 30. ACCORDINGLY, WE HOLD THAT THE ORDER OF THE FIRST AP PELLATE AUTHORITY IS ERRONEOUS AND BAD IN LAW. THE APPELLANT SUCCEEDS. 31. WE DIRECT THE A.O. TO DECIDE THE CLAIM OF DEDUCTION S MADE BY THE ASSESSEE IN THE LIGHT OF OUR FINDING THAT THE PROVISO TO SEC TION 2(15) OF THE ACT DOES NOT APPLY IN THE CASE OF THE ASSESSEE. WE DIRECT AC CORDINGLY. 32. BEFORE PARTING, THE LD. D.R. HEAVILY RELIED UPON AN OTHER AMENDMENT IN THE ACT BY WAY OF INTRODUCTION OF SECTION 13(8) WHICH C AME THROUGH FINANCE ACT OF 2012 WITH RETROSPECTIVE EFFECT FROM 01.04.2009 W HICH PROVIDED THAT THE BENEFIT OF SECTION 11 OR SECTION 12 WOULD NOT BE AV AILABLE IF THE RECEIPTS FROM THE ACTIVITY IN THE NATURE OF TRADE OR BUSINES S 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.] ITA NOS. 278 /AHD/13, 493 & 2346/A/14 . A.YS. 2009-1 0 TO 2011-12 34 33. 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. SINCE, WE HAVE HELD THAT THE FIRST PROV ISO TO SECTION 2(15) IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE ON THE FACTS OF THE CASE. 34. AS MENTIONED ELSEWHERE, THE FACTS OF ITA NO. 493/AH D/2014 FOR A.Y. 2010- 11, ITA NO. 2346/AHD/2014 FOR A.Y. 2011-12 ARE IDEN TICAL TO THE FACTS OF THE APPEAL DECIDED BY US IN ITA NO. 278/AHD/2013 FOR A. Y. 2009-10, FOR ASSESSMENT YEAR 2010-11 & 2011-12. WE HOLD ACCORDIN GLY WITH SIMILAR DIRECTIONS TO THE A.O. 35. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 01- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 10 /01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR