Gandhinagar Urban Development Authority, Gandhinagar V. The Dy.CIT, Gandhinagar Circle, Gandhinagar

ITA 3621/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7316 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: MEHUL K PATEL
• Keywords: Business income; Charitable institution
• Section: 234B; 27; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER GANDHINAGAR URBAN DEVELOPMENT AUTHORITY, 4 TH FLOOR, UDHYOG BHAVAN, SECTOR 11, GANDHINAGAR PAN: AAALG0992K (APPELLANT) VS THE D CIT , GANDHINAGAR CIRCLE , GANDHINAGAR (RESPONDENT) REVENUE BY : S H RI L.P. JAIN , SR. D . R. ASSESSEE BY: SHRI MEHUL K. PATEL , A.R. DATE OF HEARING : 10 - 07 - 2 019 DATE OF PRONOUNCEMENT : 23 - 07 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A) , GANDHINAGAR, AHMEDABAD DATED 1 5 - 10 - 2 015 , IN PROCEEDINGS UNDER SECTION 1 4 3(3 ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUN DS OF APPEAL: - 1. COMMISSIONER OF APPEALS (GANDHINAGAR), HAS ERRED IN LAW BY STATING THAT ASSESSE TRUST IS RENDERING ITS SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. THE SAME SHOULD BE DELETED. I T A NO . 3 621 / A HD/20 15 A SS ESSMENT YEAR 2011 - 12 I.T.A NO. 3621 /AHD /20 15 A.Y. 2011 - 12 PAGE NO GANDHINAGAR URBAN DEVELOPMENT AUTHORITY VS. D CIT 2 2. COMMISSIONER OF APPEALS (GANDHINAGAR), HAS ERR ED IN LAW BY NOT CONSIDERING THE INCOME TAX DEAPRTMENT CIRCULAR THAT EACH TRUST COLLECTING FEES ARE NOT COVERED BY THE NEW PROVISONS OF SECTION 2(15) OF THE ACT. ASSESSEE PRAY TO DELETE THE ADDITION MADE ON THIS COUNT. 3. COMMISSIONER OF APPEALS (GANDHINA GAR), HAS ERRED IN LAW BY NOT CONSIDERING THE ASSESSEE TRUST AS LOCAL AUTHORITY. THE ASSESSEE SHOULD GET EXEMPTION ON THIS COUNT. 4. ASSESSING OFFICER HAS ERRED IN CHARGING INTEREST U/S 234A, 234B AND 234C OF THE ACT. 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARING LOSS OF RS. 24 , 320 WAS FILED ON 30 TH SEP, 2011. THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 10 TH SEP, 2012. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER OBSERVED THAT THE MAIN OBJECTIVE O F THE ASSESSEE WAS PLANNED AND CONTROL LED DEVELOPMENT FOR THE ENTIRE URBAN DEVELOPMENT AREA WHICH WAS OF THE NATURE OF ADVANCEMENT OF OBJECT OF PUBLIC UTILITY. THEREFORE, ASSESSEE WAS SHOW CAUSE D TO EXPLAIN WHY NOT THE EXEMPTION CLAIMED U/ S. 11 OF THE IT ACT SHO ULD BE DENIED AND WHY NOT THE PROVISO TO SECTION 2(15) OF THE ACT SHOULD BE APPLIED IN THE CASE OF THE ASSESSEE. THE ASSESSEE EXPLAINED THAT IT IS A AUTHORITY ESTABLISHED BY THE GOVERNMENT OF GUJARAT U/S. 27 OF THE GUJARAT TOWN PLAN NING ACT WITH AN OBJECT TO DEVELOP GANDHINAGAR URBAN AREA IN CONTROLLED AND DISCIPLINED MANNER. THE SOURCE OF INCOME OF THE AUTHORITY WAS MAINLY GRANTS EITHER FROM GOVERNMENT OF GUJARAT OR CENTRAL GOVERNMENT AND VARIOUS KINDS OF LEVIES IN THE FORM OF FEES AS FIXED BY THE GOVERNMENT AT APPROVED RATE. THE FUNDS ARE USED FOR DEVELOPMENT OF VARIOUS PUBLIC PROJECTS AND OTHER PUBLIC DETAIL I S ALSO THE BENEFICIARIES. THE SUBMISSION OF THE ASSESSEE ALONG WITH THE JUDICIAL PRONOUNCEMENT S HAS BEEN REPORTED AT PAGE NO. 7 TO 12 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VI EW THAT THE ASSESSEE WAS CARRYING OUT ACTIVITIES OF PROVIDING INFRASTRUCTURAL FACILITIES TO THE PUBLIC AND TA KING VARIOUS FEES LIKE BETTERMENT CHARGES, DEVELOPMENT CHARGES WHICH WAS I.T.A NO. 3621 /AHD /20 15 A.Y. 2011 - 12 PAGE NO GANDHINAGAR URBAN DEVELOPMENT AUTHORITY VS. D CIT 3 IN THE NATURE OF ADVANCEMENT OF GENERAL PUBLIC UTILITY. THE ASSESSING OFFICER HAS STATED THAT ASSESSEE BEING URBAN DEVELOPMENT AUTHORITY CHARGES VARIOUS TYPES OF FEES FROM THE PUBLIC FOR PROVIDING CERTAIN AMENITIES LIKE ROADS, BRIDGES ETC . WHICH WAS RECOVERED FROM THE BENEFICIARIES WHO GET BENEFIT OUT OF DEVELOPMENT OF SUCH COMMON INFRASTRUCTURE . THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE S ACTIVITIES WERE OUT OF THE PURVIEW OF P ROVISIONS OF SECTION 2(15) OF THE ACT, THEREFORE , ITS INCOME WAS CALCULATED AS A NORMAL BUSINESS INCOME AND NO DEDUCTION U/S. 11 AND 12 WERE ALLOWED TO IT. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE A PPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT CO - ORDIN ATE BENCH OF THE ITAT AHMEDABAD HAS ADJUDICATED THE IDENTICAL ISSUE ON SIMILAR FACT IN THE CASE OF THE VODADARA URBAN DEVELOPMENT AUTHORITY VS. ITO VIDE ITA NO. 2751/AHD/2014 DATED 28 - 01 - 2019 IN FAVOUR OF THE AS SESSEE, A FTER FOLLOWING THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF GUJARAT ON IDENTICAL ISSUE AND FACT IN THE CASE OF AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. ACIT 396 ITR 323 (GUJARAT) AND CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION (2017) T AXMAN.COM 366 (GUJ). ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LOWER AUTHORITIES AND COULD NOT CONTR ADICT THE AFORESAID SUBMISSION OF TH E LD. COU N SEL. 6. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE AFORESAID JURISDICTIONAL PRONOUNCEMENT S REFERRED BY THE LD. COUNSEL AND IT IS I.T.A NO. 3621 /AHD /20 15 A.Y. 2011 - 12 PAGE NO GANDHINAGAR URBAN DEVELOPMENT AUTHORITY VS. D CIT 4 NOTICED THAT AFTER FOLLOWING THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE S OF AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. ACIT 396 ITR 323 (GUJARAT) AND CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION (2017) TAXMAN.COM 366 (GUJ) THE CO - ORDINATE BENCH OF THE ITAT HAS ADJUDICATED THE SIMILAR ISSUE ON IDENTICAL FACT IN THE CASE OF T HE VODADARA URBAN DEVELOPMENT AUTHORITY VS. ITO VIDE ITA NO. 2751/AHD/2014 DATED 28 - 01 - 2019 WHEREIN THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. RELEVANT PART OF DECISION OF CO - ORDINATE BENCH IS REPRODUCED AS UNDER: - 4. WE HAVE HEARD THE RESPECTIVE PARTIE S, PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND THAT IN SIMILAR SET OF FACTS THE JURISDICTIONAL HIGH COURT PASSED THE ORDERS IN THE CASE OF URBAN DEVELOPMENT AUTHORITY - VS - ACIT , WHERE IT WAS HELD AS FOLLOWS: HELD, THAT THE OBJECT AND PURPOSE OF PERMITTING THE AUTHORITY TO SELL THE PLOTS TO A MAXIMUM EXTENT OF 15% OF THE TOTAL AREA, WAS TO MEET THE EXPENDITURE FOR PROVIDING INFRASTRUCTURAL FACILITIES LIKE GARDENS, ROADS, LIGHTING, WATER SUPPLY, DRAINAGE SYSTEM, ETC. THE REASONS FOR SELLING THE PLOTS BY HOLDING PUBLIC AUCTION WERE; (A) TO AVOID ANY FURTHER ALLEGATION OF FAVORITISM AND NEPOTISM AND (B) SO THAT THE MAXIMUM MARKET PRICE COULD BE FETCHED, WHICH COULD BE USED FOR THE DEVELOPMENT OF THE URBAN DEVELOPMENT AREA. CONSIDERING THE FACT THA T THE ASSESSEE WAS A STATUTORY BODY, AN AUTHORITY CONSTITUTED UNDER THE PROVISIONS OF THE ACT, TO CARRY OUT THE OBJECT AND PURPOSE OF TOWN PLANNING ACT AND COLLECTED REGULATORY FEES FOR THE OBJECT OF THE ACTS, NO SERVICES WERE RENDERED TO ANY PARTICULAR TR ADE, COMMERCE OR BUSINESS; AND WHATEVER INCOME WAS EARNED BY THE ASSESSEE EVEN WHILE SELLING THE PLOTS (TO THE EXTENT OF 15% OF THE TOTAL AREA COVERED UNDER THE TOWN PLANNING SCHEME) WAS REQUIRED TO BE USED ONLY FOR THE PURPOSE TO CARRY OUT THE OBJECT AND PURPOSE OF THE TOWN PLANNING ACT AND TO MEET THE EXPENDITURE OF PROVIDING GENERAL UTILITY SERVICE TO THE PUBLIC SUCH AS ELECTRICITY, ROAD, DRAINAGE, WATER ETC. AND THE ENTIRE CONTROL WAS WITH THE STATE GOVERNMENT AND ACCOUNTS WERE ALSO SUBJECTED TO AUDIT A ND 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 CONCER NED. THEREFORE, THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 11. APART FROM THAT CIT - VS. - GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION, WHEREIN IT WAS HELD AS FOLLOWS: SECTION 2(15), READ WITH SECTION 11, OF THE INCOME - TAX ACT, 1961 CHARITABLE P URPOSE (OBJECTS OF GENERAL PUBLIC UTILITY) ASSESSMENT 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 ORGANIZATI ON OF INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN STATE OF GUJARAT, AND FOR PURPOSE OF ESTABLISHING COMMERCIAL CENTERS IN CONNECTION WITH ESTABLISHMENT AND ORGANIZATION OF SUCH INDUSTRIES IT COULD NOT BE SAID THAT ACTIVITIES CARRIED OUT BY ASSESSEE WERE EIT HER IN NATURE OF TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION SO AS TO ATTRACT PROVISO TO SECTION 2(15) AND SAME COULD BE SAID TO BE FOR CHARITABLE PURPOSE AND, CONSEQUENTLY,. ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 11 - HELD, YES (PARAS 15 AND 17)[IN FAVOUR OF ASSESSEE] I.T.A NO. 3621 /AHD /20 15 A.Y. 2011 - 12 PAGE NO GANDHINAGAR URBAN DEVELOPMENT AUTHORITY VS. D CIT 5 5. WE FIND THAT THE OBJECT OF THE ASSESSEE IS SIMILAR TO THAT OF THE CORPORATION BEFORE THE JURISDICTIONAL HIGH COURT AND ON THE SIMILAR SET OF FACTS THE APPEAL WAS ALLOWED IN FAVOUR OF THE ASSESSEE H ENCE RELYING UPON THE SAME WE ALLOW THE CLAIM OF THE ASSESSEE AND THE DISALLOWANCE OF EXEMPTION AS CLAIMED BY THE ASSESSEE U/S 11 OF THE ACT TO THE TUNE OF RS.70,73,005/ - IS HEREBY QUASHED AND ADDITION MADE THEREON IS THUS DELETED. RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH AS ABOVE ON SIMILAR ISSUE AND IDENTICAL FACTS , THE CLAIM OF THE ASSESSEE IS ALLOWED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 23 - 07 - 201 9 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 23 /07 /2019 / COPY OF ORDER FORWARDED TO : - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,