Improvement Trust, Malerkotla V. CIT II, Ludhiana

ITA 380/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73542 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: S K MUKHI
• Keywords: Charitable institution; Question of law
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.380/CHD/2013 ASSESSMENT YEAR : 2009-10 THE IMPROVEMENT TRUST, VS THE COMMISSIONER OF INCO ME TAX,-II MALERKOTLA, AYAKAR BHAWAN, PUNJAB. RISHI NAGAR, LUDHIANA. PAN : AAALI0020Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 10.03.2014 DATE OF PRONOUNCEMENT : 27.03.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-II, LUDHIANA DATED 12.02 .2013 AGAINST THE ORDER PASSED UNDER SECTION 12AA OF THE INCOME-T AX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL : 1. THAT THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX-II, LUDHIANA U/S 12AA OF INCOME TAX ACT, 1961 IS ARBITR ARY BASED ON EXTRANEOUS CONSIDERATIONS, DEVOID OF FACTS ON RECOR D, AGAINST PRINCIPLES OF JUSTICE THEREFORE ILLEGAL, ERRONEOUS, PERVERSE AND THUS UNCALLED FOR. 2. THAT THE LD. COMMISSIONER OF INCOME TAX-II, LUDH IANA IS NOT JUSTIFIED IN PASSING THE IMPUGNED ORDER U/S 12A A OF INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS, REPLIES, CONTENTIONS AND EVIDENCES FILED BY THE APPELLANT WHICH NEEDS D UE CONSIDERATION BY THE HON'BLE TRIBUNAL. 3. THAT THE LD. COMMISSIONER OF INCOME TAX-II, LUDH IANA IS NOT JUSTIFIED IN HOLDING THAT THE ACTIVITIES OF THE APPELLANT 2 TRUST DO NOT FALL WITHIN THE MEANING OF 'CHARITABLE PURPOSE' AS PER THE AMENDED PROVISIONS OF SECTION 2(15) OF T HE INCOME TAX ACT, 1961 AND THEREBY WITHD RAWING THE REGISTRATION U/S 12A WITH RETROSPECTIVE EFFEC T FROM A.Y. 2009-10 ONWARDS IS AGAINST ESTABLISHED PRINCIPLES OF LAW AN D THUS PERVERSE. 4. THAT THE APPELLANT CHALLENGES THE APPLICABILITY OF IMPUGNED AMENDMENT QUA THE APPELLANT SINCE THE A PPELLANT IS PROVIDING CHARITABLE SERVICES ONLY AND THE FINDING OF CIT-II, LUDHIANA HOLDING THE ACTIVITIES OF APPELLANT TRUST IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND OF ACTIVI TY OF RENDERING SERVICE IN RELATION TO THE TRADE, COMMERC E OR BUSINESS FOR A FEE IS AGAINST ESTABLISHED LEGAL PROVISIONS A ND FACTS ON RECORD AND THUS PERVERSE. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE WITHDRAWAL OF EXEMPTION GRANTED UNDER SECTION 12AA OF THE ACT VIDE ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT REGISTRATIO N UNDER SECTION 12AA(1)(B)(II) OF THE ACT WAS ALLOWED BY THE HON'BL E PUNJAB & HARYANA HIGH COURT VIDE JUDGEMENT DATED 16.01.2009 IN IT APPEAL NO. 619 & 620 OF 2008 BUT THE COMMISSIONER OF INCOM E TAX NOTED THAT FINANCE ACT, 2008 HAD AMENDED THE DEFINITION O F CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT W.E.F. 01.0 4.2009. THE COMMISSIONER OF INCOME TAX-II, LUDHIANA WAS OF THE VIEW THAT CASE OF THE ASSESSEE FELL WITHIN THE PURVIEW OF FIR ST PROVISO TO THE AMENDED SECTION 2(15) OF THE ACT AND THE ASSESSEE W AS SHOW CAUSED TO EXPLAIN AS TO WHY THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT MAY NOT BE WITHDRAWN FROM ASSESSMENT YEAR 2 009-10 ONWARDS. THE REPLY OF THE ASSESSEE IS INCORPORATED UNDER PARA 2 OF THE ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT. THE COMMISSIONER OF INCOME TAX-II LUDHIANA, IN VIEW OF THE RATIO LAID DOWN BY THE AMRITSAR BENCH OF TRIBUNAL IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY IN IT APPEAL NO. 30(ASR) OF 2 011 VIDE ORDER DATED 14.06.2012 NOTED THAT THE ASSESSEE TRUS T WAS FUNCTIONING WITHIN THE AMBIT OF PUNJAB TOWN IMPROVE MENT ACT AND 3 WAS CARRYING ON NUMBER OF ACTIVITIES OF DEVELOPMENT AND PROVISION OF VARIOUS FACILITIES FOR THE BENEFIT OF PUBLIC. T HE ASSESSEE WAS FOUND TO BE ENGAGED IN ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL PUBLIC. HOWEVER, THE CASE OF THE ASSESSEE FELL WIT HIN THE PURVIEW OF THE FIRST PROVISION OF SECTION 2(15) OF THE ACT AND THE ACTIVITIES CARRIED ON BY THE ASSESSEE TRUST WERE NOT FOR CHARI TABLE PURPOSE AS DEFINED UNDER THE AMENDED SECTION 2(15) OF THE ACT. THE CASE OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX THAT ITS ACTIVITY DID NOT CONSTITUTE TRADE, WAS FOUND TO BE INCORRECT BY THE COMMISSIONER OF INCOME TAX LUDHIANA AS THE ASSESSEE TRUST WAS ACQUIRING LARGE CHUNKS OF LAND AT THROUGH AWAY PRIC ES AND PART OF THIS WAS USED FOR ROADS, PARKS AND OTHER AMENITIES AND THE OTHER PART WAS CUT INTO PLOTS, BOTH FOR RESIDENTIAL AND C OMMERCIAL PURPOSES. THE COMMERCIAL SITES WERE SOLD THROUGH O PEN AUCTION TO THE HIGHEST BIDDERS AND CONSTITUTED SUBSTANTIAL PAR T OF THE REVENUE GENERATED BY THE ASSESSEE TRUST. THE RESIDENTIAL PL OTS, ON THE OTHER HAND, WERE EITHER SOLD THROUGH AUCTION OR THROUGH D RAW OF LOTS. THOUGH THE ACTIVITIES CARRIED ON BY THE ASSESSEE WE RE AT A NOMINAL COST BUT THEY MADE VALUE ADDITION IN THE LAND AND T HE SAME WAS BROUGHT AT PAR WITH THE REAL ESTATE PROJECTS AVAILA BLE IN THE MARKET OFFERED BY OTHER COLONIZERS AND OTHER REAL ESTATE A GENTS AND SUCH EXERCISE OF SELLING THE PLOTS THROUGH BIDDING RESUL TED IN GENERATION OF HUGE PROFITS, WAS HELD BY COMMISSIONER OF INCOME TAX. IN ADDITION, THE ASSESSEE WAS CHARGING VARIOUS FEES UN DER DIFFERENT HEADS LIKE BUILDING APPLICATION FEE, TRANSFER FEE, ROAD CUTTING FEE, NON-CONSTRUCTION CHARGES, ETC. AND THE COMMISSIONER OF INCOME TAX THUS HELD THAT SUCH ACTIVITY OF THE ASSESSEE TRUST WAS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ACTIVITY OF RENDE RING SERVICES IN RELATION TO TRADE, COMMERCE OR BUSINESS. EVEN THE OBJECT OF THE 4 INSTITUTION I.E. PROPER DEVELOPMENT OR THE AREA FAL LING IN AND AROUND MALERKOTLA CITY DID NOT ESTABLISH THAT THE ACTIVITI ES UNDERTAKEN BY THE ASSESSEE WERE PHILANTHROPIC AND CHARITABLE IN N ATURE. LEVY OF FINES AND PENALTIES BY THE ASSESSEE TRUST IMPLIED A N ELEMENT OF FORCEFUL ACCEPTANCE OF MONEY AND CONDITION TO AVAIL OF ANY BENEFIT. IN VIEW OF THE RATIO LAID DOWN BY THE AMRITSAR BENC H OF THE TRIBUNAL IN JAMMU DEVELOPMENT AUTHORITY (SUPRA) WHE REIN IT WAS HELD THAT THE ACTIVITIES AMOUNTED TO TRADE, COMMERC E OR BUSINESS FOR FEE, CESS OR OTHER CONSIDERATION AND THE AMOUNT BEI NG MORE THAN THE AMOUNT SPECIFIED IN SECOND PROVISO TO SECTION 2(15) OF THE ACT, THE ASSESSEE THEREIN WAS HELD TO BE NOT ELIGIBLE TO REG ISTRATION UNDER SECTION 12A OF THE ACT. AS THE NATURE AND EXTENT OF THE ACTIVITIES OF THE ASSESSEE TRUST WERE QUITE SIMILAR TO THOSE OF J AMMU DEVELOPMENT AUTHORITY, THE RATIO OF THE ORDER OF TH E AMRITSAR BENCH OF THE TRIBUNAL WAS HELD TO BE SQUARELY APPLI CABLE AND REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT W AS WITHDRAWN W.E.F. 01.04.2009 BY THE COMMISSIONER OF INCOME TAX . 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS CONSTITUTED UNDER THE PUNJAB TOWN IMPR OVEMENT ACT AND THE AIMS AND OBJECTS OF THE TRUST WERE TO MAKE PROVISION FOR IMPROVEMENT AND EXPANSION OF TOWNS IN PUNJAB FOR WH ICH THE PUNJAB TOWN IMPROVEMENT ACT, 1922 WAS INCORPORATED. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE PUNJAB TOWN IMPROVEMENT RULES WERE FORMULATED BY THE STATE GOVERNMENT FOR THE PURPOSE AND THE ASSESSEE WAS CARRYING ON IT S BUSINESS AS PER THE SAID RULES. THE LD. AR FOR THE ASSESSEE FURTHE R SUBMITTED THAT THE INTENTION OF THE ASSESSEE HAD TO BE SEEN TO COM E TO THE CONCLUSION THAT WHETHER THE ASSESSEE WAS DOING ANY BUSINESS. IT 5 WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE TRUST WAS FORMED UNDER THE PUNJAB TOWN IMPROVEMENT ACT FOR TH E IMPROVEMENT OF A PARTICULAR AREA AND EVEN THE CHARG ES WERE SETTLED BY THE PUNJAB GOVERNMENT AND THE ASSESSEE COULD NOT TAKE CHARGES BEYOND THE SAME AND HENCE, NO INCOME ARISING TO THE ASSESSEE. HOWEVER, THE ASSESSEE WAS SELLING UNSOLD PLOTS AT P ROFITS BECAUSE OF THE ENHANCED PRICE OF LAND IN THE AREA AND SUCH ACT IVITY CARRIED ON BY THE ASSESSEE COULD NOT ESTABLISH THAT THE ASSESS EE WAS DOING TRADE, COMMERCE OR BUSINESS AS THE ASSESSEE WAS NEV ER SET UP TO CARRY ON ANY TRADE, COMMERCE OR BUSINESS. 6. THE NEXT PLEA OF THE LD. AR FOR THE ASSESSEE WAS THAT SECTION 2(15) OF THE ACT WAS AMENDED TO CHECK ENTITIES WHO WERE ENGAGED IN THE BUSINESS. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE DELHI HIGH COURT IN BUREAU OF INDIAN STANDARDS VS D IRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS) 89 DTR 93 (DEL). FURTHER RELIANCE WAS PLACED ON THE CIRCULAR NO. 11/2008 DAT ED 19.12.2008 ISSUED BY THE CBDT WHEREIN IT IS PROVIDED THAT THE INTENTION IS TO BE SEEN WHEN THE TRUST WAS ESTABLISHED. 7. THE LD. DR FOR THE REVENUE, IN REPLY POINTED OUT THAT THE ISSUE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE A MRITSAR BENCH OF THE TRIBUNAL IN IMPROVEMENT TRUST, BATHINDA VS CIT, BATHINDA ITA NO. 366/ASR/2012 ORDER DATED 18.12.2012. IT WAS FU RTHER POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE COMMISSI ONER OF INCOME TAX HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY T HE TRIBUNAL IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY WHICH HAS B EEN CONFIRMED BY THE HON'BLE HIGH COURT OF JAMMU & KAS HMIR IN JAMMU DEVELOPMENT AUTHORITY VS UNION OF INDIA & ANO THER ITA NO. 164/2012 CMA NO. 2/2012 VIDE JUDGEMENT DATED 07 .11.2013. 6 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE TRUST HAD ORIGINALLY FILED AN APPLICAT ION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 25.5. 2006 AND AS THE ASSESSEE WAS FOUND NOT TO HAVE FULFILLED THE CONDIT IONS UNDER SECTION 2(15) OF THE ACT, THE COMMISSIONER OF INCOM E TAX REJECTED THE GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE APPEAL OF THE ASSESSEE BEFORE THE TRIBUNAL WAS ALSO DISMIS SED IN ITA NO. 640/CHD/2006 VIDE ORDER DATED 28.09.2007. THE HON' BLE PUNJAB & HARYANA HIGH COURT, IN VIEW OF THE ORDER PASSED IN THE CASE OF THE IMPROVEMENT TRUST, MOGA IN IT APPEAL NO. 620 OF 200 8 VIDE ORDER DATED 16.01.2009 GRANTED REGISTRATION TO THE ASSESS EE UNDER SECTION 12A OF THE ACT. PURSUANT TO THE DIRECTIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE COMMISSIONER OF INCOME TAX ISSUED ORDER GRANTING REGISTRATION TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT. THEREAFTER, NOTICE WAS ISSUED BY THE COMMISSIONER O F INCOME TAX- II LUDHIANA DATED 08.09.2011, COPY OF WHICH IS PLAC ED AT PAGES 11- 12 OF THE PAPER BOOK AS TO WHY THE REGISTRATION GRA NTED UNDER SECTION 12AA OF THE ACT SHOULD NOT BE WITHDRAWN IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT. TH E ASSESSEE CLAIMS THAT IT WAS CONSTITUTED UNDER THE PROVISIONS OF PUNJAB TOWN IMPROVEMENT TRUST ACT, 1922 IN ORDER TO BRING ABOUT PLANNED DEVELOPMENTS IN THE TOWN OF MALERKOTLA BY WAY OF PR OVIDING STREETS, HOUSING FACILITIES OR MAKING PROVISIONS FO R OTHER PUBLIC UTILITY SERVICES. THE ACTIVITIES ENLISTED TO THE AS SESSEE WERE IN CONSONANCE WITH THE STATUTORY SCHEME FORMULATED UND ER THE PUNJAB TOWN IMPROVEMENT TRUST ACT AND THE ASSESSEE CLAIMED THAT ITS OBJECTS WERE TO PROVIDE BENEFITS TO THE PUBLIC WITH IN ITS LOCAL LIMITS RATHER THAN ANY BENEFITS TO THE TRUST ITSELF. THE ASSESSEE FURTHER CLAIMED THAT IT WAS NOT CARRYING ON ANY TRADE, COMM ERCE OR BUSINESS 7 AS IT WAS ACQUIRING THE LAND FROM TIME TO TIME UNDE R THE ACQUISITION ACT AND THEREAFTER THE LAND WAS UTILIZED FOR MAKING ROADS, PARKS, COMMUNITY HALLS ETC. AND OUT OF THE REMAINING AREA, PROVISIONS FOR SHOPS AND PLOTS WAS MADE. THE ASSESSEE ADMITS THAT IT WAS AUCTIONING ITS PLOTS OF LAND AND COMMERCIAL AREA AT RESERVE PRICE AND THE RECEIPTS COMPRISED OF THE PROFITS BECAUSE O F INCREASE IN THE MARKET PRICE AND ALSO ON ACCOUNT OF OTHER CHARGES R ECEIVED UNDER VARIOUS SCHEMES. 9. THE ASSESSEE WAS SHOW CAUSED BY THE COMMISSIONER OF INCOME TAX-II LUDHIANA TO EXPLAIN AS TO WHY THE REG ISTRATION GRANTED UNDER SECTION 12AA OF THE ACT SHOULD NOT BE WITHDRAWN IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT. THE FINANCE ACT, 2008 HAS INTRODUCED THE PROVISO TO SEC TION 2(15) OF THE ACT WHICH READS AS UNDER : 2(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WAT ERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CAR RYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIV ITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [ PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGR EGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREI N IS [TWENTY-FIVE LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] 10. THE ISSUE ARISING BEFORE US IS IN RELATION TO T HE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT UNDER WHICH THE PROVISO I & II ARE INTRODUCED W.E.F. 01.04.2009 AND IN CASE THE TRUST IS FOUND TO BE ENGAGED IN THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY, THEN SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL 8 PUBLIC UTILITY SHALL NOT BE FOR CHARITABLE PURPOSE WHEREIN IT INVOLVES THE CARRYING ON OF SUCH ACTIVITY IN THE NA TURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. THE SECOND PROVISO PROVID ES THAT THE FIRST PROVISO WOULD NOT APPLY IF AGGREGATE VALUE OF RECEI PTS IS RS. 25 LACS OR LESS. ADMITTEDLY IN THE CASE OF ASSESSEE, THE RECEIPTS WERE MORE THAN RS. 25 LACS. 11. WE FIND THAT SIMILAR ISSUE OF WITHDRAWAL OF REG ISTRATION UNDER SECTION 12AA(3) OF THE ACT IN THE CASE OF IMPROVEME NT TRUST, BATHINDA VS CIT, BATHINDA (SUPRA) AND THE TRIBUNAL VIDE ORDER DATED 18.12.2012 HELD THE SAID IMPROVEMENT TRUST, B ATHINDA TO BE NOT ENGAGED IN CHARITABLE ACTIVITIES IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT AND THE REGI STRATION GRANTED UNDER SECTION 12AA OF THE ACT WAS WITHDRAWN BY ORDE R PASSED UNDER SECTION 12AA(3) OF THE ACT, WAS UPHELD BY THE TRIBUNAL. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER : 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE WITH US AS WELL AS DECISIONS CIT ED BY LD, COUNSEL FOR THE ASSESSEE ALONGWITH OTHER DOCUMENTAR Y EVIDENCES FILED BY HIM. AS PER IMPUGNED ORDER AND SUBMISSIONS OF THE ASSESSEE. THE MAIN ACTIVITIES OF THE ASSESSEE TRUST AT THAT TO PURCHASE LAND, TO ENHANCE AND DEVELOP THE LAND BY C UTTING IT INTO PLOTS ETC., TO ADVERTISE FOR SALE OF PLOTS IN THE D EVELOPED LAND AND TO SELL OFF THE LAND THROUGH AUCTION, MEANING THERE BY THAT THE ASSESSEE TRUST WAS BUYING UNDEVELOPED LAND AT A LOW PRICE AND DEVELOPED IT AND PROVIDES THE SOME BASIC FACILITIES I.E. LEVELLING AND CLEARING THE LAND, CUTTING IT INTO PLOTS, PROVI DING ACCESS ROADS, ELECTRICITY, PROVIDING WATER AND SEWERAGE FA CILITIES ETC. THE ASSESSEE-TRUST ENHANCED COST OF LAND FROM COST OF PURCHASE BY IT. THE ASSESSEE-TRUST IS ALSO CHARGING FEES AND FINES FROM SELLING OF FORMS, LAND ENHANCEMENT FEES, BUILDING P LAN FEES, ROAD CUTTING FEES, TRANSFER FEE3S. FINE AND PENALTI ES AND NON- CONSTRUCTION CHARGES AND THUS EARNING HUGE PROFITS WHICH IS CONTRARY TO THE PROVISIONS OF SECTION 2(15) OF THE ACT, AMENDED W.E.F. 01.04.2009. FOR THE SAKE OF CONVENIENCE PROV ISION OF SECTION 2(15) F THE ACT IS PRODUCED AS UNDER: 9 '2(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF A NY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED TH AT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE A CHAR/TABLE PURPOSE, IF IT INVOLVES T HE 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, IRRESPECT IVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY.' 7.1. KEEPING IN VIEW THE AFORESAID PROVISIONS, THE CHARITABLE PURPOSE INCLUDE RELIEF TO THE POOR, EDUCATION, MEDI CAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. IN THE PRESENT CASE, WE FOUND THAT THE ASSESSEE-TRUST IS C ARRYING ON VARIOUS ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND RENDERING ITS SERVICES FOR THE PURPOSE OF TRADE , COMMERCE AND BUSINESS BECAUSE AS STATED ABOVE, THE ASSESSEE- TRUST IS CHARGING HUGE FEES ON ACCOUNT OF VARIOUS FACTS, AS MENTIONED ABOVE. NO DOUBT, THE ASSESSEE HAS GIVEN SOME EXPLAN ATION FOR CHARGING FEES FOR THE AFORE-MENTIONED ACTIVITIES BY STATING THAT THE ASSESSEE-TRUST IS CHARGING FEES AS PER RULES FR AMED BY THE PUNJAB LOCAL BODIES GOVT. WHICH IS CLEARLY THE ADMI SSION BY THE ASSESSEE-TRUST THAT THE ASSESSEE-TRUST IS DOING ACT IVITIES NOT FOR CHARITABLE PURPOSE BUT FOR BUSINESS PURPOSE ONLY. N O DOUBT, THESE PENALTIES CHARGED BY THE ASSESSEE-TRUST ARE I N THE NATURE OF COMPENSATORY BUT THAT IS NOT PERMISSIBLE FOR THE CH ARITABLE INSTITUTION. SOME OF THE ACTIVITIES UNDERTAKEN BY T HE ASSESSEE TRUST, THE ID. CIT(A) HAS REPRODUCED AT PAGES 7 TO 9 OF HIS ORDER, WHICH ARE REPRODUCED AS UNDER: (A) TO DEVELOP SEWERAGE IN THE CITY COSTING ABUT RS.5H. 36 CRORES VIDE RESOLUTION NO.49 DATED 05.09.2008 (WITHOUT CHA RGES OR RECOVERY). (B) THE TRUST HAS RESERVED 18.27 ACRES LAND FOR BUS STA ND FOR GENERAL PUBLIC VIDE RESOLUTION NO.18, DATED 03.10.2 007 FREE OF COST). (C) LAND MEASURING J .30 ACRES FOR CIA STAFF (POLICED DEPARTMENT) VIDE RESOLUTION NO.7L DATED 12.12.2008 (FREE OF COST). (D) COMMUNITY HALL, MEASURING 2000 SQ.YDS TO BE ERECTED & BUILT IN RAJIV GANDHI NAGAR, GURUKUL ROAD. BA THINDA. VIDE RESOLUTION NO.75 DATED 30.09.2005 (FREE OF COS T). (E) THE TRUST IS TO PROVIDE SERVICE LANE 16 WIDE WITH P ARKING AND FOOTPATH. THE AMOUNT TO BE SPENT IS RS. ONE CRORE VIDE RESOLUTION NO.48 DATED 26.08.2008 (FREE OF COST). (F) THE TRUST HAS GIVEN AS CHARITY OF TOWN CLEANING MAC HINE, (VACCUM MACHINE) TO THE MUNICIPAL CORPORATION, BATH INDA FOR RS,64.86 LAKHS VIDE RESOLUTION NO.56 (APP. RS.T EN LACS) VIDE LETTER NO. 1.1.46 DATED 24.09.2007 (FREE OF CO ST). (G) TO PROVIDE LAND AS WELL AS CONSTRUCTION OF BUILDING FOR 14 PLOTS MEASURING 1512 S. YDS VALUING RS.45.2 LACS AN D 10 CONSTRUCTION COST RS.64.86 LAKHS VIDE RESOLUTION NO .56 DATED 31.08.2006 AND WERE HANDED OVER TO THE POOR (FREE O F COST). (H) TO CONSTRUCT 'ROAD DIVIDER' AND DEVELOPMENT & RENOV ATION OF GONIANA BATHINDA- MANSA - G.T.ROAD, COSTING RS. 10.64 CRORE VIDE RESOLUTION NO.41 DATED 31.12.2007 (FREE OF COST). (I) DONATION OF RS. 5 LACS TO : DEAF & DUMB SCHOOL' FOR THE WELFARE OF SUCH HANDICAP STUDENTS, VIDE RESOLUTION NO.81 DATED 31.10.2005. (J) LAND FOR 'VRIDH ASHRAM (REST HOUSE FOR SENIOR CITIZENS) MEASURING 2038 SQ. YDS IN TRANSPORT NAGAR (FREE OF COST). (K) LAND MEASURING 2055 SQ.YDS LOR CHILDREN & LA DIES WELFARE ASSOCIATION IN TRANSPORT NAGAR VIDE RESOLUTION NO. 107 DATED 30.12.2005 (TREE OF COST). (L) LAND FOR 'PUBLIC HEALTH CARE CENTRE' MEASURIN G 1825 SQ. YDS IN KARNLA NEHRU VIDE RESOLUTION NO.23, DATED 03.06.2009. (M) CONSTRUCTION OF RS.25 LAKH FOR CONSTRUCTION O F DIVIDER & ROAD FROM 'BRIDGE TO N.F.L. CHOWK.' PAYMENT WAS MADE IN 21.11 .2001 BY CHEQUE TO PWD (B&R) FOR PUBLIC USE. (O) GRANT OF RS.1.25 LAKHS TO 'DEAF AND DUMB SCH OOL' BATHINDA VIDE RESOLUTION NO. 11 DATED 14.04.2007 FOR THE WELFARE OF SUCH HANDICAP STUDENTS. (P) LAND RESERVED FOR 'YATRI NIWAS' IN BATHIND A NEAR TO NEW BUS STAND IN 49.5 ACRE (FREE OF COST). (Q) LAND PROVIDED FOR 'APPROACH ROAD' NEARLY 60 W IDE 382.4 SQ. MTR. CONSTRUCTION COST IS NEARLY RS.23.67 LACS APPROVED VIDE RESOLUTION NO.2L DATED 11.10.2007 (FREE OF COST). AFTER PERUSING THE AFORESAID ACTIVITIES, WE ARE OF THE VIEW THAT-THE ID. APPELLATE AUTHORITY HAS RIGHTLY HELD THAT THE LAND OF THE ASS ESSEE TRUST IS THE SAME CATEGORY OF OTHER REAL ESTATE PRODUCTS AVAILABLE IN THE MARK ET OFFERED BY THE PRIVATE COLONIZERS AND REAL ESTATE AGENTS. BECAUSE THE ASS ESSEE ADVERTISED THIS VALUE ADDED PRODUCT WIDELY IN PRINT AS WELL AS ELEC TRONIC MEDIA SO AS TO ATTRACT A LARGE NUMBER OF CUSTOMERS/CLIENTS FROM AL L THE GENERAL PUBLIC INCLUDING THE FINANCIALLY SOUND PERSONS FROM THE PU BLIC. 12. THE ASSESSEE TRUST BEFORE US IS THE IMPROVEMENT TRUST, MALERKOTLA AND THE FACTS OF THE PRESENT CASE ARE ID ENTICAL TO THE FACTS OF IMPROVEMENT TRUST, BATHINDA WHICH IS ALSO FORMULATED UNDER THE PUNJAB TOWN IMPROVEMENT TRUST ACT. IT WA S FAIRLY ADMITTED BY THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF HEARING THAT THE APPEALS IN THE CASE OF VARIOUS IMPROVEMENT TRUSTS UNDER THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT W.E.F. 01.04.2009 WERE PENDING BEFORE THE HON'BLE PUNJAB & HARYANA 11 HIGH COURT. AS THE FACTS OF THE PRESENT CASE ARE I DENTICAL TO THE FACTS BEFORE THE AMRITSAR BENCH OF THE TRIBUNAL IN IMPROVEMENT TRUST, BATHINDA VS CIT, BATHINDA (SUPRA) AND FOLLOW ING THE SAME PARITY OF REASONING, WE UPHOLD THE ORDER OF COMMISS IONER OF INCOME TAX IN WITHDRAWING THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT. 13. THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN BUREAU OF I NDIAN STANDARDS VS DIRECTOR GENERAL OF INCOME-TAX (EXEMPT IONS) (SUPRA). IN THE FACTS OF THE CASE BEFORE THE HON'BLE DELHI H IGH COURT, THE ASSESSEE WAS PERFORMING FUNCTIONS IN THE CAPACITY O F AN INSTRUMENTALITY OF THE STATE AND THE ISSUE WAS WHET HER IT WAS RENDERING SERVICES IN RELATION TO TRADE, COMMERCE O R BUSINESS BY GRANTING CERTIFICATION/QUALITY MARKS IN RETURN OF L ICENCING FEE. THE ASSESSEE THEREIN HAD CLAIMED EXEMPTION UNDER SECTIO N 10(23C)(4) OF THE INCOME TAX ACT AND IT WAS HELD THAT THE ASSESSE E WAS STATUTORY BODY ESTABLISHED UNDER THE BIS ACT AND WAS BROUGHT INTO EXISTENCE FOR THE HARMONIOUS DEVELOPMENT OF THE ACTIVITIES OF STANDARDIZATION AND MARKETING AND QUALITY CERTIFICATION OF GOODS. THE LICENCE FEE CHARGED BY THE ASSESSEE FOR SUCH ACTIVITIES WAS HEL D NOT TO BE FOR THE PURPOSE OF PROFIT AND IT WAS HELD THAT IT WAS N OT INVOLVED IN CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. HOWEVER, IN THE FACTS OF THE PRESENT CAS E, THE ASSESSEE WAS PURCHASING LARGE CHUNK OF LAND AND AFTER DEVELO PING THE SAME, PART OF THE LAND WAS UTILIZED FOR SELLING AS PLOTS FOR RESIDENTIAL OR COMMERCIAL PURPOSES AND PROFITS WERE GENERATED OUT OF SUCH ACTIVITIES AS PER THE MARKET TRENDS AND THE SAME WA S HELD TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS BY THE AM RITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ANOTHER IMPROVEMENT TRU ST AT BATHINDA 12 (SUPRA). AS THE FACTS OF THE ASSESSEE BEFORE US ARE IDENTICAL TO THE FACTS OF THE CASE BEFORE THE AMRITSAR BENCH OF THE TRIBUNAL IN IMPROVEMENT TRUST, BATHINDA VS CIT, BATHINDA (SUPRA ), THE SAME PARITY OF REASONING IS SQUARELY APPLICABLE AND THE RELIANCE PLACED UPON BY THE ASSESSEE ON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IS MISPLACED. 14. WE FURTHER FIND THAT THE COMMISSIONER OF INCOME TAX, IN THE ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT HAD R ELIED UPON THE RATIO LAID DOWN BY THE AMRITSAR BENCH OF TRIBUNAL I N THE CASE OF JAMMU DEVELOPMENT AUTHORITY (SUPRA), WHICH HAS BEEN CONFIRMED BY THE HON'BLE JAMMU & KASHMIR HIGH COURT (SUPRA) W HEREIN IT HAS BEEN HELD AS UNDER : 1. THE INSTANT APPEAL UNDER SECTION 260- A OF THE INCOME TAX ACT, 1961 (FOR BREVITY, THE ACT) I S DIRECTED AGAINST ORDER DATED 14.06.2012 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'AMRITSAR, UPHOLDING THE ORDER WITHDRAWING THE STATUS OF CHARITABLE INSTITUTION GIVEN TO THE APPELLANT-ASSESSEE UNDER SECTION 12AA(L)(B)( I) OF THE ACT, THE TRIBUNAL HAS REACHED A CATEGORICAL CONCLUS ION THAT THE ASSESSEE-JAMMU DEVELOPMENT AUTHORITY CANNOT BE REGARDED AS AN INSTITUTION OR TRUST WHICH MAY HA VE BEEN SET UP TO ACHIEVE THE OBJECTS ENUMERATED UNDER SECT ION 2 OF THE ACT PARTICULARLY IN VIEW OF THE ADDITION OF FI RST AND SECOND PROVISO MADE BY THE FINANCE ACT, 2008 W.E.F, 01.04.2009 TO SECTION 12 AA OF THE ACT. THERE ARE F INDINGS OF FACT THAT THE ASSESSEE-APPELLANT HAS RIOT BEEN ACTING TO ADVANCE ANY OF THE OBJECT CONCERNING GENERA] PUBLIC UTILITY. EVEN OTHERWISE THE PROVISO WHICH HAS BEEN ADDED BY THE FINANCE ACT, 20 08 W.E.F 01.04.2009 STIPULATES THAT THE ADVANCEMENT OF ANY O THER OBJECT OF THE GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABL E PURPOSE, IF IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OF BUSINESS OR ANY ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS OR A CE SS OR FEE OR ANY OTHER CONSIDERATION. 2. WE FIND THAT NO QUESTION OF LAW MUCH LESS A SUBSTANTIAL QUESTION OF LAW WOULD EMERGE FROM THE IMPUGNED ORDER OF THE INCOME TAX. APPELLATE TRIBUN AL WARRANTING ADMISSION, OF THE APPEAL. THE APPEAL IS WHOLLY WITHOUT MERIT AND IS THUS LIABLE TO BE DISMISSED. 3. FOR THE REASONS AFOREMENTIONED, THIS APPEAL F AILS AND SAME IS DISMISSED ALONG WITH .CONNECTED APPLICATION(S). 13 15. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE J AMMU & KASHMIR HIGH COURT IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY VS UNION OF INDIA & ANOTHER (SUPRA) AND AMRITSAR BE NCH OF TRIBUNAL IN IMPROVEMENT TRUST, BATHINDA VS CIT, BAT HINDA (SUPRA), WE ARE IN CONFORMITY WITH THE ORDER OF THE COMMISSI ONER OF INCOME TAX IN WITHDRAWING THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT. THE GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE ARE THUS, DISMISSED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 27YH MARCH,20 14. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH MARCH,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.