The Dy. CIT(Exemptions), Circle-2, Ahmedabad V. Rajkot Urban Development Authority, Rajkot

ITA 3/AHD/2020

AI Insights

The case involves the Deputy Commissioner of Income Tax (Exemptions), Circle-2, Ahmedabad as the appellant and the Rajkot Urban Development Authority as the respondent. The dispute centered on the eligibility of the Rajkot Urban Development Authority to claim exemptions under Sections 11 and 12 of the Income Tax Act, 1961, despite being engaged in activities that the Revenue argued constituted trade, commerce, or business. The Assessing Officer initially disallowed these claims, which were later contested and overturned by the CIT(A). The Revenue's appeal to the Tribunal challenged the CIT(A)'s decision, relying on the argument that the activities of the assessee fell under the first and second proviso to Section 2(15) of the Act. However, the Tribunal, referencing the Supreme Court's decision in a similar case, dismissed the Revenue's appeal, affirming the assessee's entitlement to the exemptions claimed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129356 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 31-12-2019
• Other Referred Cases: ACIT vs. Ahmedabad Urban Development Authority, 449 ITR 1
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK NATHA BHALEKAR
• Section: 11; 12AA

Judgement Text

ITA No.3/Ahd/2020 A.Y. 2015-16 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.3/Ahd/2020 Assessment Year: 2015-16 The Deputy Commissioner of Income Tax (Exemptions), Circle-2, Ahmedabad. Vs. Rajkot Urban Development Authority, Chimanlal Patel Vikas Bhavan, Jamnagar Road, Rajkot, Gujarat [PAN – AAALR 0044 H] (Appellant) (Respondent) Assessee by Shri Samir Bhuptani, AR Revenue by Shri Ashok Natha Bhalekar, Sr. DR Da te o f He a r in g 16.08.2023 Da te o f P ro n o u n ce m e n t 13.09.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Revenue against the order dated 01.10.2019 passed by the CIT(A)-9, Ahmedabad for the Assessment Year 2015-16. 2. The Revenue has raised the following grounds of appeal :- “i) Whether, on the facts and in the circumstances of the case and in law, it is justified in not appreciating that the activities of the assessee are covered by the First and Second Proviso to Section 2(15) of the Income Tax Act, 1961 and, thus, the assessee is not entitled to exemption under Sections 11 and 12 of the Act in view of the provisions of the Section 13(8) of the Act. ii) Whether, on the facts and in the circumstances of the case and in law, it is correct to not uphold following additions made by the learned Assessing Officer: a) Rs.4,55,52,661/- denying accumulation under Section 11(2) of the Act; b) Rs.80,38,705/- denying accumulation at 15% under Section 11(1)(a) of the Act. ITA No.3/Ahd/2020 A.Y. 2015-16 Page 2 of 5 iii) Whether on the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals) is justified in allowing benefit of Section 11 of the Act relying on the decisions of Hon’ble High Court in the case of AUDA dated 02.05.2017 without appreciating that issue has not attained finality as the Department has not accepted the said decision and SLP is pending before the Hon’ble Supreme Court.” 3. Rajkot Urban Development Authority, i.e. the assessee, is a local authority established under the Gujarat Town Planning and Urban Development Act, 1976. The assessee carries out planned development of areas as defined and designated by the Government of Gujarat and construction of roads, bridges, drainage systems, water supply services etc. for the general public’s utilization. The assessee is registered under Section 12AA of the Income Tax Act, 1961. During the course of assessment, the Assessing Officer disallowed the claim of the assessee under Sections 11 and 12 of the Act on the ground that the activities of the assessee are in the nature of trade, commerce or business and covered by the first and second proviso to section 2(15) of the Act and. Therefore, though the assessee is registered under Section 12AA of the Act, no benefit of Sections 11 & 12 of the Act is provided to the assessee. The Assessing Officer held that the assessee is engaged in the activities of earning profit from sale of plots/land. The assessee claimed under Section 11(2) of the Act of Rs.4,55,52,661/- and under Section 11(1)(a) of the Act of Rs.80,38,705/- during the year which was disallowed and added to the total income of the assessee by the Assessing Officer. 4. Aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) parlay allowed the appeal of the assessee. 5. The Ld. DR relied upon the Assessment Order and the Order of the CIT(A). 6. The Ld. AR submitted that as regards to ground nos.1 & 3 the same is now decided by the Hon’ble Supreme Court in favour of the assessee in assessee’s own case wherein the lead matter was decided in case of ACIT vs. Ahmedabad Urban Development Authority, 449 ITR 1. As far as ground no.2 is concerned, the same is consequential in nature to ground nos.1 & 3. ITA No.3/Ahd/2020 A.Y. 2015-16 Page 3 of 5 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the issue contested in the present appeal is decided by the Hon’ble Supreme Court in the case of ACIT vs. Ahmedabad Urban Development Authority (Supra) and the observations made by the Hon’ble Supreme Court are as follows :- “........254. In accordance with the foregoing discussion, and summary of conclusions the numerous appeals are disposed of as follows: (i) The revenue's appeals against the Improvement Trust, Moga, the Hoshiarpur Improvement Trust, Bathinda Improvement Trust, Fazilka Improvement Trust Sangrur Improvement Trust Patiala Improvement Trust Jalandhar Improvement Trust Kapurthala Improvement Trust, Pathankot Improvement Trust, Improvement Trust, Hansi, and the Special Leave Petitions filed against the Gujarat Maritime Board and Karnataka Water Supply and Drainage Board are rejected. (ii) The revenue's appeals against Ahmedabad Urban Development Authority, the Gujarat Housing Board, the Gandhinagar Urban Development Authority, Rajkot Urban Development Authority, Surat Urban Development, Development Authority, Jamnagar Area Development Authority, and the Gujarat Industrial Development Corporation are rejected. Likewise, the revenue's appeals against Agra Development Trust, UP Awas Evam Vikas Parishad, Raebareli Development Authority, Rajasthan Housing Board, Mangalore Urban Development Authority; Mathura Vrindavan Development Authority, Meerut Development Authority, Belgaum Development Authority. Moradabad Urban Development Authority, Yamuna Expressway Industrial Development Authority, Greater Noida Industrial Development Authority, New Okhla Industrial Development Authority and Karnataka Industrial Areas Development Board are rejected.” 8. As regards to factual aspects are concerned, the Hon’ble Apex Court has categorically mentioned that the activities are coming under the purview of Section 11(2) and Section 11(1)(a) of the Act and, therefore, the assessee therein including the assessee before us is entitled for claiming exemption under Section 11 & 12 of the Act. The relevant observations made by the Hon’ble Apex Court are as under :- “.........3. It was urged on behalf of the revenue, that the clarification it seeks is necessary, because in 'Para 253H and in Para 254, it has been precluded from examining the facts and assessing the concerned assessment years, in relation to the assesses in these appeals. It was urged that the conclusions recorded in the judgment and those in the said, two paragraphs, preclude it from dealing with the assessments of parties before this court and furthermore, the dismissal of the revenue's appeals will preclude an examination of the merits for these assesses in future, as well. ITA No.3/Ahd/2020 A.Y. 2015-16 Page 4 of 5 4. A plain reading of the conclusions recorded in Para 253 (A), (B), (C), (D) and (E) would disclose that this court consciously recorded its findings, with the intent of finally deciding the issues, for various organizations- Shin relation to the assessment years in question, whereas in Para 253 (F), the court remitted the matter for examination and orders by the assessing officer. Similarly, the conclusion in Para 253 G. was conclusive with respect to the claim of private trusts, the appeals were dismissed. These conclusions are accurately reflected in the final, operative directions in Para 254. In Para 254 (i) to (iv), the conclusions recorded are against the revenue. However, in Para 254 (v), (vi), (vii) and (vii), the conclusions, are in favour of the revenue. 5. The reference to application of the law declared by this court's judgment, therefore, has to be understood in the context, which is that they apply for the assessment years in question, which were before this court and were decided; wherever the appeals were decided against the revenue, they are to be treated as final. However, the reference to future application has to be understood in this context, which is that for the assessment years which this court was not called upon to decide, the concerned authorities will apply the law declared in the judgement, having regard to the facts of each such assessment year. In view of this discussion, no further clarification is necessary or called for.” 9. The Ld. DR could not point out any contradictory facts in the present appeal to that of the decision taken by the Hon’ble Apex Court in case of ACIT vs. Ahmedabad Urban Development Authority (supra). Therefore, appeal of the Revenue is dismissed. 10. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open Court on this 13 th September, 2023. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 13 th day of September, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File ITA No.3/Ahd/2020 A.Y. 2015-16 Page 5 of 5 By order UE COPY TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad