ACIT, Jaipur V. JAIPUR DEVELOPMENT AUTHORITY, Jaipur

ITA 380/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4906 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K GUPTA CIT DHK
• Keywords: Capital asset; Depreciation; Charitable institution; Retrospective amendment; Question of law; Benefit of exemption; Cancellation of registration; Capital expenditure
• Section: 12A; 12AA; 54; 12; 144; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.380/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 THE ACIT (EXEMPTION), CIRCLE- JAIPUR, JAIPUR CUKE VS. M/S JAIPUR DEVELOPMENT AUTHORITY, JLN MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATJ 4598 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.381/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ACIT (EXEMPTION), CIRCLE- JAIPUR, JAIPUR CUKE VS. M/S JAIPUR DEVELOPMENT AUTHORITY, JLN MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATJ 4598 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO.382/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE ACIT (EXEMPTION), CIRCLE- JAIPUR, JAIPUR CUKE VS. M/S JAIPUR DEVELOPMENT AUTHORITY, JLN MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATJ 4598 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHYAMLAL AGARWAL (CA) SHRI TARUN AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI B.K. GUPTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 22/11/2016. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 2 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE THREE COMMON APPEALS FILED BY THE REVENUE AGAINST SEPARATE ORDERS PASSED BY THE LD CIT(A)- 3, JAIPUR DATED 19. 01.2016 FOR AY 2010-11, 2011-12 AND 2012-13 RESPECTIVELY. GIVEN THAT THESE APPEALS CONTAIN IDENTICAL FACTS AND COMMON SET OF GROUNDS OF APPEAL, THE SAME WERE TAKEN UP FOR HEARING TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. IN ITS APPEAL OF A.Y. 2010-11, THE GROUNDS TAKEN BY THE REVENUE ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-3, JAIPUR HAS ERRED IN : (1). ALLOWING THE EXEMPTION U/S 11 OF THE ACT BY HO LDING THAT THE ACTIVITIES OF THE APPELLANT AUTHORITY ARE CHARITABLE EVEN THOUGH THE AMENDED PROVISION OF SECTION 2(15) OF THE ACT ARE ATTRACTED . (2) HOLDING THAT THE AO ERRED IN APPLYING THE PROV ISIONS OF SECTION 145(3) AND ASSESS IN THE MANNER AS PROVIDED IN SEC. 144 OF THE ACT. (3) ALLOWING THE DEVELOPMENT EXPENDITURE OF RS. 1,5 2,05,67,555/- BY RELYING ON THE DECISION OF HONBLE ITAT INSPITE OF THE FA CT THE ASSESSEE HAS CHANGED ACCOUNTING METHOD. (4) ALLOWING A SUM OF RS.16,07,46,832/- ON ACCOUNT OF DISALLOWING 5% OF DEVELOPMENT EXPENDITURE OUT OF ESTABLISHMENT AND AD MINISTRATIVE EXPENDITURE RELATED TO CHANGE IN ACCOUNTING POLICY. (5) ALLOWING OF RS.1,05,752/- ON ACCOUNT OF EXPENSE S ON SHOOTING RANGE IN SPITE OF THE FACT THAT THESE EXPENSES ARE NOT FOR E ARNING ANY INCOME. (6) ALLOWING OF RS.6,32,10,322/- BEING EXPENDITURE ON GRANTS/CONTRIBUTIONS TO CHARITABLE INSTITUTION EVEN THOUGH THE ASSESSEE S ACTIVITIES IS COMMERCIAL IN NATURE AND EXEMPTION U/S 11 IS DENIED . ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 3 (7) ALLOWING RS. 1,81,89,705/- ON ACCOUNT OF DEPREC IATION OF FIXED ASSET WITHOUT APPRECIATING THE FACT THAT THE APPLICATION OF 100% EXPENDITURE OF THE CAPITAL ASSETS IS ALREADY ALLOWED AS CAPITAL EXPENDITURE HENCE FURTHER ALLOWANCE OF THE DEPRECIATION ON SAME CAPIT AL ASSET WOULD TANTAMOUNT TO DOUBLE DEDUCTION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT IS A GOVERNMENT AUTHORITY FORMED UNDER THE JAIPUR DEVELOPMENT AUTHO RITY ACT, 1982 AND IS WHOLLY OWNED AND CONTROLLED BY THE GOVERNMENT OF RA JASTHAN. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FILED ITS RE TURN OF INCOME ON 12.10.2010 DECLARING LOSS OF RS.85,28,13,194/- AND CLAIMED EX EMPTION UNDER SECTION 11, 12 & 13 OF THE ACT CONSIDERING IT TO BE CHARITABLE ORGANIZATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT THERE HAS BEEN CHANGE IN THE DEFINITION OF CHARITABLE PUR POSES W.E.F. 01.04.2009 I.E. AY 2009-10. THE ASSESSEE WAS GRANTED REGISTRATION U /S 12AA OF THE ACT THROUGH ORDER DATED 21.11.2008 W.E.F. 14.03.2007, LATER ON IN COMPLIANCE OF HONBLE ITATS ORDER DATED 30.01.2009, IT WAS MADE EFFECTI VE FROM 12.10.1982, BUT THIS REGISTRATION WAS LATERON WITHDRAWN BY ORDER NO. 126 4 DATED 29.12.2011 OF CIT- II. JAIPUR. THE AO FURTHER OBSERVED THAT IN VIEW OF THE SPECIFIC MANDATE OF THE IT ACT AS NO REGISTRATION U/S 12AA IS EFFECTIVE FRO M A.Y. 2010-11, THE ASSESSEE WOULD NOT BE ENTITLED FOR ANY EXEMPTION U/S 11, 12 & 13 OF THE ACT FOR A.Y. 2010-11 AND INCOME OF THE ASSESSEE IS TO BE COMPUTE D AS PER INCOME TAX ACT CONSIDERING IT TO BE INCOME AS PER NORMAL PROVISION S OF THE IT ACT. THE AO THEREAFTER, AFTER GOING THROUGH THE INCOME AND EXPE NDITURE STATEMENT AND OTHER DETAILS/INFORMATION FILED BY THE ASSESEE OBSE RVED THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNT S MAINTAINED BY THE ASSESSEE AS THE ASSESSEE IS NOT FOLLOWING ACCEPTED ACCOUNTING PRINCIPLES. HE INVOKED THE PROVISIONS OF SECTION 145(3) AND REJECT ED THE BOOKS OF ACCOUNTS. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 4 OF THE ASSESSEE AND THE ASSESSMENT WAS THEREAFTER C OMPLETED U/S 144 AND THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 92,59,18 ,500/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO ALLOWED THE RELIEF TO THE ASSESSEE AND H ER RELEVANT FINDINGS WHICH ARE UNDER CHALLENGE BY THE REVENUE BEFORE US ARE AS UNDER: I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO AS ALSO ARGUMENTS OF THE LD. AR OF THE APPELLANT. IT IS SEEN THAT ALL T HE ISSUES RAISED IN THIS APPEAL ARE COVERED BY THE DECISION OF HONBLE ITAT JAIPUR IN ITA NO. 427/JP/13 AND ITA NO. 447/JP/2013 FOR A.Y. 2009-10 DATED 04.01.2016. THE HONBLE ITAT JAIPUR HAS HELD AS UNDER: THE ASSESSEE HAS BEEN GRANTED REGISTRATION BY THE ORDER OF THE COORDINATE BENCH IN ITA NO. 927/JP/2007 ORDER DATED 30/05/2008 W.E.F. 14/3/2007 WHEREIN THE COORDINATE BENCH HAS HELD THA T THE ASSESSEES ACTIVITIES ARE CHARITABLE AND ARE NOT COVERED U/S 2 (15) OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO GIV E BENEFIT OF SECTION 11 AND 12 OF THE ACT TO THE ASSESSEE. THE INCOME OF TH E ASSESSEE IS TO BE ASSESSED ON THE REAL INCOME BASIS WHICH HAS BEEN AC CRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE A PPELLANT HAD CHANGED METHOD OF ACCOUNTING DURING THE YEAR UNDER CONSIDERATION BUT THE SAME HAS BEEN FOUND MORE ACCURATE AND SCIENTIFI C TO DETERMINE THE ASSESSEES INCOME. THEREFORE, CHANGE OF ACCOUNTING IS BONAFIDE AND SAME CANNOT BE REJECTED ON THE GROUND THAT THE ASSE SSEE HAD CLAIMED MORE EXPENSES DURING THE YEAR UNDER CONSIDERATION. THE CASE LAW RELIED BY THE ASSESSEE IS SQUARELY APPLICABLE. A CHANGE IN THE METHOD OF ACCOUNTING SHOULD NOT BE REJECTED FOR REASONS THAT IT WOULD RESULT IN BRINGING INTO ACCOUNTS IN ONE YEAR THE LOSSES OF SE VERAL YEARS AS HELD IN THE CASE OF CIT VS. EASTERN BENGAL JUTE TRADING CO. LTD. (1978) 112 ITR 575 (CAL.) ACCORDINGLY CHANGE OF THE ACCOUNTING POL ICY IS ALLOWED. THE ASSESSEE HAS CLAIMED DEPRECIATION ON FIXED ASSE TS WHICH IS ALSO ALLOWABLE AS HELD BY THE VARIOUS COURTS IN CASE OF TRUST WHERE THE ASSESSEE FIRST MADE INCOME FOR APPLICATION OF ACQUI RING OF ASSETS AND THEREAFTER CLAIMING DEPRECIATION ON IT. ACCORDINGLY , WE ALLOW THE ASSESSEES APPEAL AND DISMISS THE REVENUES APPEAL. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 5 RESPECTFULLY FOLLOWING THE ORDER OF ITAT JAIPUR BE NCH, THE AO IS DIRECTED TO ALLOW THE BENEFIT OF SEC. 11 AND 12 TO THE ASSES SEE. DISALLOWANCE OF DEVELOPMENT EXPENDITURE OF RS. 1520 567555/- IS DELETED AS ITAT HAS ACCEPTED THE CHANGE IN METHOD OF ACCOUN TING. IN RESPECT OF DISALLOWANCE OF RS.160746832/- ON ACCOUNT OF ESTABL ISHMENT AND ADMINISTRATIVE EXPENDITURE, RS. 105752/- ON ACCOUNT OF EXPENSES OF SHOOTING RANGE, RS.63210322/-BEING EXPENDITURE ON G RANTS/CONTRIBUTIONS IS ALLOWED AS APPLICATION OF INCOME SINCE BENEFIT O F SEC. 11 IS GRANTED. THE CLAIM OF DEPRECIATION IS ALSO ALLOWED IN VIEW O F DECISION OF ITAT REPORTED SUPRA. HOWEVER, THE DISALLOWANCE OF RS. 1 5756523/- IN RESPECT OF AMORTIZATION OF EXPENSE IS CONFIRMED AS THE SAM E IS ALREADY ALLOWED IN EARLIER YEARS AS HELD BY THE AO AND NOT CONTROVE RTED BY THE ASSESSEE. IT IS FURTHER SEEN THAT THE AO AFTER DISALLOWING T HE CLAIM OF EXEMPTION U/S 11 RE-CASTED THE PROFIT AND LOSS ACCOUNT BY MAK ING VARIOUS ADDITIONS/DISALLOWANCES. HOWEVER SINCE I HAVE ACCE PTED THE CLAIM OF THE ASSESSEE IN ALLOWING THE EXEMPTION U/S 11, THE VARI OUS ADDITIONS/DISALLOWANCES MADE BY THE AO BY RECASTING P&L ACCOUNT HAS NO RELEVANCES AND THE SAME ARE DELETED. 5. THE LD CIT DR VEHEMENTLY ARGUED THE MATTER AND S UBMITTED THAT THE ORDER OF LD CIT(A) IS NOT ACCEPTABLE TO THE REVENUE FOR THE REASONS THAT THE ASSESSEES ACTIVITIES ARE COMMERCIAL IN NATURE AND COVERED BY 1 ST AND 2 ND PROVISO OF SEC. 2(15) OF THE IT ACT, 1961. EVEN TH OUGH THE ASSESSEE IS REGISTERED U/S 12AA, NO BENEFIT OF SEC. 11 & 12 CAN BE PROVIDED TO THE ASSESSEE TRUST VIDE AMENDED PROVISIONS OF SEC. 13(8) (EFFECT IVE FROM 01.04.2009) READ WITH 1 ST AND 2 ND PROVISO OF SECT. 2(15). THUS, THE FACT THAT THE A SSESSEE, JAIPUR DEVELOPMENT AUTHORITY IS REGISTERED U/S 12AA OR NOT DOES NOT MAKE ANY DIFFERENCE AS THE FIRST AND SECOND PROVISO OF SECTI ON 2(15) AND THE AMENDED PROVISIONS OF SEC. 13(8) ARE APPLICABLE. IT WAS FURTHER SUBMITTED THAT THOUGH SECTION 12AA REGISTRATION HAS BEEN ALLOWED TO THE ASSESSEE BY THE HONBLE ITAT BY ITS ORDER IN ITA NO.182/JP/2012 ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 6 DATED 30.09.2014, THE DEPARTMENT HAS CHALLENGED THE ORDER OF THE ITAT BEFORE THE HONBLE HIGH COURT AGAINST THE ALLOWING OF REG ISTRATION U/S 12AA WHICH IS CURRENTLY PENDING ADJUDICATION. IT WAS FURTHER SUBMITTED THAT ON THE ISSUE OF DEPR ECIATION, LD CIT(A)S DECISION IS NOT ACCEPTABLE IN VIEW OF THAT THE INVE STMENT MADE IN PURCHASE OF FIXED ASSETS HAS ALREADY BEEN ALLOWED AS APPLICATIO N OF INCOME IN THE YEAR OF INVESTMENT MADE AS PER PROVISIONS OF SECTION 11, TH EREFORE, IF ANY DEDUCTION IS ALLOWED ON THE SAME AMOUNT THEN IT WILL TANTAMOUNT TO DOUBLE DEDUCTION. 6. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AP PELLANT IS A GOVERNMENT AUTHORITY WHOLLY OWNED AND CONTROLLED BY THE STATE GOVERNMENT. THE MAIN PURPOSE OF FORMING THE JDA UNDER JDA ACT, 1982 AS G IVEN IN THE JDA ACT, WHICH SAYS IN BRIEF SETTING UP AN AUTHORITY FOR PLANNING , COORDINATING AND SUPERVISING FOR PROPER, ORDERLY AND RAPID DEVELOPME NT OF THE AREAS IN JAIPUR REGION AND OF EXECUTING PLANS, PROJECTS AND SCHEMES FOR SUCH DEVELOPMENT AND TO PROVIDE FOR THE MATTERS CONNECTED THEREWITH, SO THAT HOUSING, COMMUNITY FACILITIES, CIVIC AMENITIES AND OTHER INFRASTRUCTUR AL FACILITIES ARE CREATED. THE MAIN FUNCTIONS OF THE AUTHORITY ARE MOSTLY THOS E AS MENTIONED IN SCHEDULE XII OF ARTICLE 243 W OF THE CONSTITUTIONS FOR THE M UNICIPALITIES. ALL ACTIVITIES OF URBAN PLANNING, TOWN PLANNING, INFRASTRUCTURE DEVEL OPMENT AND LAND & BUILDING REGULATIONS ETC ARE CARRIED TO ACHIEVE THE MAIN OBJECTS. AS SUCH ALL THE FUNCTIONS OF THE AUTHORITY ARE FOR THE ADVANCEMENT OF GENERAL PUBLIC UTILITY. MOST OF THE LAND IS STATE GOVERNMENT LAND AND IF AN Y ACQUISITION OF LAND IS MADE, IT IS MADE ONLY FOR THE PURPOSE OF GENERAL PU BLIC UTILITY SERVICES. 7. THE LD AR FURTHER SUBMITTED THAT THE AUTHORITY W AS EXEMPTED UNDER SECTION 10(20)/ 10(20A), HOWEVER AFTER AMENDMENT IN 10(20) AND ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 7 WITHDRAWAL OF SECTION 10(20A), THE AUTHORITY WAS RE QUIRED TO FILE RETURN OF INCOME. 7.1. THE REGISTRATION WAS GRANTED TO THE AUTHORITY BY THE ORDER OF THIS HONOURABLE JAIPUR BENCH OF ITAT, AFTER CONSIDERING ALL ISSUES THERETO WITH RETROSPECTIVE EFFECT. (ITA NO. 927/JP/2007 AND ITA NO. 1615/JP/2008). 7.2. LD. CIT-II, JAIPUR ISSUED AN ORDER DATED 29/12 /2011 WITHDRAWING THE REGISTRATION GRANTED UNDER SECTION 12AA W.E.F. AY 2009-10. THE WHOLE ORDER OF WITHDRAWAL WAS ON THE WRONG CONSIDERATION THAT T HE ACTIVITIES ARE IN THE NATURE OF TRADE COMMERCE OR BUSINESS ONLY BECAUSE T HE TOTAL RECEIPTS SIDE OF THE AUTHORITY IS MORE THAN THE AMOUNT PRESCRIBED IN THE PROVISO TO SECTION 2(15) APPLIES. 7.3 ON APPEAL BEFORE THIS HONOURABLE JAIPUR BENCH OF ITAT, ITA NO. 182/JP/2012 ORDER DATED 30/9/2014, IT HAS BEEN HELD THAT THE PREDOMINANT OBJECT OF JDA ARE CHARITABLE AND THEREFORE THE PROV ISO TO SEC 2(15) OF THE IT ACT DOES NOT APPLY TO THE JDA . THE HONBLE BENCH HAS DISCUSSED IN DETAIL ALL THE R ELEVANT CASE LAWS AND FACTS OF THE CASE WITH THE FUNCTIONS AND OBJECTS OF THE A UTHORITY AND CONSIDERING ALL THESE, THE DETAILED ORDER HAS BEEN PASSED. IN ORDER TO GIVE EFFECT TO THE DIRECTIONS OF THE HO NBLE BENCH, THE LD. CIT (EXEMPTIONS) ISSUED THE REGISTRATION CERTIFICATE U/ S 12 AA, CLEARLY MENTIONING THEREIN THAT ASSESSMENT HAS TO BE MADE AFTER GIVING BENEFITS OF SECTION 11 AND 12 OF THE INCOME TAX ACT, TO THE ASSESSEE. 7.4. FOR THE ASSESSMENT YEAR 2009-10, WHICH WAS PAS SED BY THE LD. ACIT PRIOR TO THE ORDER OF THE HONBLE COORDINATE BENCH DECISION( 182/JP/2012), AN APPEAL WAS FILED BY THE AUTHORITY BEFORE THE HONBL E COORDINATE BENCH (ITA ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 8 NO. 427 & 447/JP/2013) WHEREIN ALL THE SUBMISSIONS WERE CONSIDERED AND AFTER DETAILED DISCUSSIONS ON THE GROUNDS AND FOR ALLOWIN G THE BENEFITS OF SECTION 11 AND 12, IT WAS HELD ON PARA 6 OF THE ORDER THAT WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS BEEN GRANTED REGISTRATION BY THE O RDER OF THE COORDINATE BENCH IN ITA NO.927/JP/2007 ORDER DATED 30/05/2008 W.E.F. 14/3/2007, ITA NO. 182/JP/2012 DATED 30/09/2014 WHEREIN THE COORDI NATE BENCH HAS HELD THAT THE ASSESSEES ACTIVITIES ARE CHARITABLE AND A RE NOT COVERED BY PROVISO TO SECTION 2(15) OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO GIVE BENEFIT OF SECTION 11 AND 12 OF THE ACT TO THE ASSE SSEE. 7.5 IT WAS FURTHER HELD IN THE SAID ORDER THAT THE APPELLANT HAD CHANGED METHOD OF ACCOUNTING DURING THE YEAR UNDER CONSIDER ATION BUT THE SAME HAS BEEN FOUND MORE ACCURATE AND SCIENTIFIC TO DETERMIN E THE ASSESSEES INCOME. THEREFORE, CHANGE OF ACCOUNTING IS BONAFIDE AND SAM E CANNOT BE REJECTED ON THE GROUND THAT THE ASSESSEE HAD CLAIMED MORE EXPEN SES DURING THE YEAR UNDER CONSIDERATION. THE CASE LAW RELIED BY THE ASS ESSEE IS SQUARELY APPLICABLE. A CHANGE IN THE METHOD OF ACCOUNTING SHOULD NOT BE REJECTED FOR REASONS THAT IT WOULD RESULT IN BRINGING INTO ACCOUNTS IN ONE YE AR THE LOSSES OF SEVERAL YEARS AS HELD IN THE CASE OF CIT VS. EASTERN BENGAL JUTE TRADING CO. LTD. (1978) 112 ITR 575 (CAL.) ACCORDINGLY CHANGE OF THE ACCOUNTING POLICY IS ALLOWED.FURTHER AT LAST PARA IT WAS FINALLY HELD IN THE RESULT APP EAL OF THE ASSESSEE IS ALLOWED AND REVENUES APPEAL IS DISMISSED. 7.6 IN VIEW OF GIVING EFFECT TO THE ORDER OF THE CO ORDINATE BENCH, THE LD. ACIT (EXEMPTIONS) HAS MADE THE REQUIRED COMPUTATION AND ASSESSED THE DEMAND TO RS. NIL FOR AY 2009-10 AFTER CONSIDERING THE PROVIS IONS OF SECTION 11 AND 12 OF THE INCOME TAX ACT AS DISCUSSED BY THE HONBLE BENC H. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 9 8. IT IS TO SUBMIT FURTHER TO SUPPORT THAT THE PROV ISO TO SECTION 2(15) IS NOT HIT BY THE APPELLANT SINCE THE ACTIVITIES CARRI ED OUT BY IT ARE NOT IN THE NATURE OF TRADE SINCE THERE IS NO PREDOMINANT PURPO SE TO EARN PROFIT. HONBLE HIGH COURT OF JUDICATURE AT ALLAHABAD , LUC KNOW BENCH IN CASE OF LUCKNOW DEVELOPMENT AUTHORITY HAS HELD AT LAST PAGE OF THE ORDER THAT: THAT MERE SELLING SOME PRODUCT AT PROFIT WILL NOT IPSO FACTO HIT ASSESSEE BY APPLYING PROVISO TO SECTION 2(15) AND DENY EXEMP TION AVAILABLE UNDER SECTION 11. THE INTENTION OF THE TRUSTEES AND THE MANNER IN WHICH THE ACTIVITIES OF THE CHARITABLE TRUST INSTITUTION ARE UNDERTAKEN ARE HIGHLY RELEVANT TO DECIDE THE ISSUE OF APPLICABILIT Y OF THE PROVISO TO SECTION 2(15). THERE IS NO MATERIAL/EVIDENCE BROUGH T ON RECORD BY THE REVENUE WHICH MAY SUGGEST THAT THE ASSESSEE WAS CON DUCTING ITS AFFAIRS ON COMMERCIAL LINES WITH MOTIVE TO EARN PROFIT OR H AS DEVIATED FROM ITS OBJECTS AS DETAILED IN THE TRUST DEED OF THE ASSESS EE. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISO OF SECTION 2 (15) IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THE ASSESSEE WAS ENTITLED TO EXEMPTION PROVIDED UNDER SECTION 11 OF THE RELEVANT ASSESSMENT YEAR THE SAME WAS ALSO RELIED UPON BY THIS HONBLE BENCH OF ITAT IN ITS ORDER FOR AY 200-10. 9. IN THE RECENT SIMILAR LANDMARK CASE, THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JODHPUR DEVELOPMENT AUTHORITY HAS PASSE D THE ORDER HOLDING AT PARA 27 THAT FROM VARIOUS DECISIONS OF THE HONBLE SUPREME COURT DISCUSSED HEREINABOVE, THE SETTLED POSITION OF LAW EMERGES IS THAT IF THE PRIMARY OR PREDOMINANT OBJECT OF AN INSTITUTION IS CHARITABLE, ANY OTHER OBJECT WHICH MIGHT NOT BE CHARITABLE BUT WHICH IS ANCILLARY OR INCIDENTAL TO THE DOMINANT PURPOSE, MAY BE INVOLVING ELEMENT OF PROFIT, WOULD NOT PREVENT THE INSTITUTION FROM BEING A VALID CHARITABLE TRUST. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 10 9.1 IT WAS FURTHER HELD AT PARA 28 ON PAGE 27,28 AN D 29 THAT IT MIGHT BE EARNING INCOME BUT THE PRIMARY OBJECT OF THE JDA CE RTAINLY DOES NOT INVOLVE ANY PROFIT MOTIVE WHATSOEVER. SUFFICE IT TO SAY THA T THE ENTIRE FUNDS OF THE JDA IS MANDATORILY REQUIRED TO BE UTILIZED FOR DISCARCH ING THE FUNCTIONS TO ACHIEVE THE OBJECT OF INTEGRATED DEVELOPMENT OF JODHPUR REG ION. THUS, PREDOMINATE OBJECT OF THE JDA BEING TO SECURE THE INTEGRATED DE VELOPMENT OF THE JODHPUR REGION WHICH IS UNDOUBTEDLY FALLS WITHIN THE EXPRES SION ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. SOME OF T HE ACTIVITIES, UNDERTAKEN BY IT, WHICH ARE ANCILLARY OR INCIDENTAL TO THE MAIN OBJEC T OF GENERAL PUBLIC UTILITY, IT DOES NOT CEASE TO BE CHARITABLE IN CHARACTER SO AS TO RENDER IT INTELLIGIBLE TO CLAIM REGISTRATION UNDER SECTION 12A READ WITH SECT ION 12AA OF THE ACT OF 1961. IT IS IMMATERIAL IF SOME INCOME IS EARNED BY ANCILL ARY AND INCIDENTAL ACTIVITIES, WHICH AS PER THE MANDATE OF THE RELEVANT STATUTE, I S USED FOR ACHIEVING OR IMPLEMENTING SUCH OBJECT. THEREBY HOLDING THAT THE PROVISO TO SECTION 2(15) IS NOT APPLICABLE. 9.2 IN THE SAME CASE, THE ORDER WAS ALSO PASSED REG ARDING THE UIT, SRIGANGANAGAR, WHERE ALLOWING APPLICATION FOR ASSES SMENT U/S 11 AND 12, THE HONBLE RAJASTHAN HIGH COURT HAS HELD ON PAGE 31 OF THE ORDER THAT UNDOUBTEDLY, THE AFORESAID STATUTORY FUNCTIONS WHI CH ARE BEING DISCHARGED BY THE UIT, ARE THE ACTIVITIES UNDERTAKEN FOR WELFARE OF THE PUBLIC AT LARGE AND CERTAINLY, ACHIEVE ITS PREDOMINANT OBJECT OF IMPROV EMENT OF THE URBAN AREA SPECIFIED, THE UIT, SRI GANGANAGAR IS ALSO ENGAGED IN SALE, LETTING OR EXCHANGE OF ANY PROPERTY OF LAND COMPRISED IN THE S CHEME AND IT IS ALSO EMPOWERED TO LEVY BETTERMENT CHARGES IN TERMS OF SE CTION 62 OF THE UIT ACT, INCIDENTAL AND ANCILLARY TO ITS MAIN OBJECT OF IMP ROVEMENT OF SPECIFIED URBAN AREA. RESTORING THE MATTERS BACK TO THE FILES OF A SSESSING OFFICER FOR THE ASSESSMENT YEAR 2004-05 2006-07 AND 2010-11, FOR PA SSING THE ASSESSMENT ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 11 ORDERS AFRESH, ALSO DESERVE TO BE DISMISSED. THE AP PEAL NOS.95/13,96/13 AND 98/13, DIRECTED AGAINST A COMMON ORDER OF THE ITAT DATED 18.01.13 OF THE ITAT, JODHPUR AND APPEAL NO. 12/15 DIRECTED AGAINST ORDER DATED 23.07.14 OF THE ITAT, JODHPUR, ARE ALSO DISMISSED . 9.3 FURTHER, THE HONBLE HIGH COURT HAS CONSIDERED THE JUDGMENT PASSED BY THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY AND HAS HELD AT PARA 26 ON PAGE 24 THAT COMING TO THE DECISION OF JAMMU &KASHMIR HIGH COURT IN JAMMU DEVELOPMENT AUTH ORITYS CASE (SUPRA), RELIED UPON BY LEARNED COUNSEL FOR THE REVENUE, RE VEALS THAT THE APPEAL PREFERRED BY THE JAMMU DEVELOPMENT AUTHORITY WAS DI SMISSED BY THE COURT OBSERVING THAT THERE ARE FINDINGS OF FACTS THAT THE ASSESSEE- APPELLANT HAS NOT BEEN ACTING TO ADVANCE ANY OF THE OBJECT CONCERNING GENERAL PUBLIC UTILITY. FURTHER WHILE REFERRING TO FIRST PROVISO TO SECTION 2(15), THE COURT HAS OBSERVED THAT WE FIND THAT NO SUBSTANTIAL QUESTION OF LAW M UCH LESS A SUBSTANTIAL QUESTION OF LAW WOULD EMERGE FROM THE IMPUGNED ORDE R OF INCOME TAX APPELLATE TRIBUNAL WARRANTING ADMISSION OF THE APPE AL. A BARE PERUSAL OF THE ORDER REVEALS THAT THE CATENA OF DECISION OF THE HO NBLE SUPREME COURT REFERRED TO HEREINABOVE, INTERPRETING THE EFFECT OF FIRST PROVISO IN CONTEXT OF THE MAIN PROVISION OF SECTION 2(15), WHICH DEFINES CHARITABLE PURPOSE, WERE NOT BROUGHT TO THE NOTICE OF THE COURT AND THEREFOR E, THE SAID ORDER PASSED BY THE COURT BY MERELY RECORDING ITS IPSE DIXIT DOES N OT HELP THE REVENUE IN ANY MANNER. 10. THE LD AR FURTHER SUBMITTED THAT ALL THE GROUND S OF APPEAL RAISED BEFORE YOUR GOOD SELVES BY THE DEPARTMENT FOR THE A SSESSMENT YEAR 2010- 11 ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, I.E. RESPONDENT BY THE DECISION OF THE HONBLE COORDINATE BENCH FOR THE AS SESSMENT YEAR 2009-10. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 12 10.1 THE SUBMISSIONS MADE BY US TO THE LD. CIT (APP EALS), JAIPUR ON 08.01.2016 GIVING FULL DETAILS, HAVE BEEN DULY DISC USSED IN THE ORDER OF LD. CIT (APPEALS). THE TABLE BELOW SHOWS THE GROUND OF APPEAL RAISED BEFORE YOUR GOOD SELVES BY THE DEPARTMENT UNDER THIS APPEA L, AND THE DECISION OF LD. CIT(APPEALS) WITH REFERENCE TO ORDER OF THE HON BLE BENCH: GROUNDS TAKEN BY REVENUE IN AY 10-11 DECIDED BY THE LD. CIT(A) IN ITS ORDER DATED 19.01.2016 1. THE LEARNED CIT (APPEALS)-3, JAIPUR HAS ERRED IN ALLOWING THE EXEMPTION U/S 11 OF THE ACT BY HOLDING THAT THE ACTIVITIES OF THE APPELLANT AUTHORITY ARE CHARITABLE EVEN THOUGH THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT ARE ATTRACTED. THE LD. CIT (A) HELD THAT THE ISSUE RAISED IN THIS APPEAL ARE SQUARELY COVERED BY THE DECISION OF THE HONBLE JAIPUR BENCH OF ITAT IN ITA NO. 427 AND 447/JP/2013 FOR AY 2009-10, WHICH IS CLEAR AND JUSTIFIED IN FACTS AS WELL AS IN LAW. THE LD. CIT (A) HAS HELD AT FIRST PARA ON PAGE 11 OF THE ORDER THAT RESPECTFULLY FOLLOWING THE ORDER OF ITAT JAIPUR BENCH THE AO IS DIRECTED TO ALLOW THE BENEFITS OF SEC. 11 AND 12 TO THE ASSESSEE. 2. THE LEARNED CIT (APPEALS)-3, JAIPUR HAS ERRED IN HOLDING THAT THE AO ERRED IN APPLYING THE PROVISIONS OF SECTION 145(3) AND ASSESS IN THE MANNER AS PROVIDED IN SEC 144 OF THE INCOME TAX ACT, 1961. THE LD. CIT (A) HELD THAT THE ISSUE RAISED IN THIS APPEAL ARE SQUARELY COVERED BY THE DECISION OF THE HONBLE JAIPUR BENCH OF ITAT IN ITA NO. 427 AND 447/JP/2013 FOR AY 2009-10, WHICH IS CLEAR AND JUSTIFIED IN FACTS AS WELL AS IN LAW. THE LD. CIT (A) HAS HELD ON PAGE 11 OF THE ORDER THAT RESPECTFULLY FOLLOWING THE ORDER OF ITAT JAIPUR BENCH THE AO IS DIRECTED TO ALLOW THE BENEFITS OF SEC. 11 AND 12 TO THE ASSESSEE. AND THE CHANGE IN METHOD OF ACCOUNTING HAS BEEN HELD IN ORDER. 4. THE LEARNED CIT (APPEALS)-3, JAIPUR HAS ERRED IN ALLOWING A SUM OF RS. 16,07,46,832/- ON ACCOUNT OF DISALLOWING 5% OF THE LD. CIT (A) HELD THAT THE ISSUE RAISED IN THIS APPEAL ARE SQUARELY COVERED BY THE DECISION OF THE HONBLE JAIPUR BENCH OF ITAT IN ITA NO. 427 AND 447/JP/2013 ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 13 DEVELOPMENT EXPENDITURE OUT OF ESTABLISHMENT AND ADMINISTRATIVE EXPENDITURE RELATED TO CHANGE IN ACCOUNTING POLICY. 5. THE LEARNED CIT (APPEALS)-3, JAIPUR HAS ERRED IN ALLOWING OF RS. 1,05,752/- ON ACCOUNT OF EXPENSES ON SHOOTING RANGE IN SPITE OF THE FACT THAT THESE EXPENSES ARE NOT FOR EARNING ANY INCOME. 6. THE LEARNED CIT (APPEALS)-3, JAIPUR HAS ERRED IN ALLOWING OF RS. 6,32,10,322/- BEING EXPENDITURE ON GRANT /CONTRIBUTION OF CHARITABLE INSTITUTIONS EVEN THOUGH THE ASSESSEES ACTIVITIES IS COMMERCIAL IN NATURE AND EXEMPTION U/S 11 IS DENIED. 7. THE LEARNED CIT (APPEALS)-3, JAIPUR HAS ERRED IN ALLOWING RS. 1,81,89,705/- ON ACCOUNT OF DEPRECIATION OF THE FIXED ASSETS WITHOUT APPRECIATING THE FACT THAT THE APPLICATION OF 100% EXPENDITURE OF THE CAPITAL ASSETS IS ALREADY ALLOWED AS CAPITAL EXPENDITURE HENCE FURTHER ALLOWANCE OF THE DEPRECIATION ON SAME CAPITAL ASSET WOULD TANTAMOUNT TO DOUBLE DEDUCTION. FOR AY 2009-10, WHICH IS CLEAR AND JUSTIFIED IN FACTS AS WELL AS IN LAW. THE LD. CIT (A) HAS HELD AT SECOND PARA ON PAGE 11 OF THE ORDER THAT RESPECTFULLY FOLLOWING THE ORDER OF ITAT JAIPUR BENCH THE AO IS DIRECTED TO ALLOW THE BENEFITS OF SEC. 11 AND 12 TO THE ASSESSEE. DISALLOWANCE OF DEVELOPMENT EXPENDITURE OF RS. 1520567555/- IS DELETED AS ITAT HAS ACCEPTED THE CHANGE IN METHOD OF ACCOUNTING. IN RESPECT OF DISALLOWANCE OF RS. 160746832/- ON ACCOUNT OF ESTABLISHMENT AND ADMINISTRATIVE EXPENDITURE, RS. 105752/- ON ACCOUNT OF EXPENSES OF SHOOTING RANGE, RS. 63210322/- BEING EXPENDITURE ON GRANT/CONTRIBUTION IS ALLOWED AS APPLICATION OF INCOME SINCE BENEFIT OF SECTION 11 IS GRANTED. THE CLAIM OF DEPRECIATION IS ALSO ALLOWED IN VIEW OF DECISION OF ITAT REPORTED SUPRA ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 14 10.2 FROM THE SUBMISSIONS ABOVE, IT IS APPARENTLY C LEAR THAT: 1) ALL THE ISSUES RAISED BY THE DEPARTMENT UNDER TH IS APPEAL ARE DIRECTLY RELATED TO THE REGISTRATION OF ASSESSEE AS CHARITAB LE TRUST AND THE DETAILED DECISIONS AND FINDINGS OF THE HONBLE COORDINATE BE NCH IN THE ITA NO. 182/JP/2012 THAT THE PROVISO TO SECTION 2(15) IS NO T APPLICABLE ARE IN PLACE. FURTHER THE BENEFITS OF SECTION 11 &12 SHALL BE ALL OWED AND ASSESSMENT HAS TO BE MADE ACCORDINGLY. THIS HAS BEEN DULY MENTIONE D IN THE REGISTRATION CERTIFICATE ISSUED BY THE INCOME TAX DEPARTMENT IN COMPLIANCE OF THE DECISION OF HONBLE JAIPUR BENCH OF ITAT. FURTHER THE ORDER FOR AY 2009-10 AS DECIDED BY HON BLE THIS BENCH OF ITAT CLEARLY DIRECTED TO THE AO TO GIVE BENEFIT OF SECTI ON 11 AND 12 OF THE IT ACT TO THE ASSESSEE AND ACCORDINGLY 2009-10 HAS BEEN AS SESSED AND ALSO LD. CIT (A) HAS DECIDED 2010-11 IN THE SAME MANNER. 2) FURTHER HONBLE RAJASTHAN HIGH COURT HAS ALSO HE LD IN CASE OF JODHPUR DEVELOPMENT AUTHORITY AND UIT, SRIGANGANAGAR THAT T HE PROVISO TO THE SECTION 2(15) IS NOT APPLICABLE AND HOLDING THAT IF THE PREDOMINANT PURPOSE OF THE ENTITY IS CHARITABLE, THEN THEY ARE VALID CH ARITABLE TRUST AND BENEFITS OF SECTION 11 AND 12 ARE AVAILABLE TO THEM. 11. WE NOW REFER TO THE DECISION OF THE COORDINAT E BENCH IN ITA NO. 182/JP/2012 DATED 30.09.2014 WHEREBY THE ASSESSEES REGISTRATION U/S 12AA WAS RESTORED WITH EFFECT FROM AY 2009-10. THE RELEV ANT FINDINGS ARE CONTAINED AT PARA 6 OF ITS ORDER WHICH IS REPRODUCED AS UNDER : WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE JDA WAS ESTAB LISHED IN OCTOBER, ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 15 1982 BY JDA ACT. PURPOSE OF JDA IS FOR PLANNING, CO ORDINATING AND SUPERVISING FOR PROPER, ORDERLY AND RAPID DEVELOPME NT OF THE AREAS IN JAIPUR REGION, IN WHICH SEVERAL GOVERNMENT DEPARTME NTS, LOCAL AUTHORITIES AND OTHER ORGANIZATION ARE AT PRESENT E NGAGED WITHIN THEIR OWN JURISDICTIONS TO PROVIDE ALSO THAT SUCH AUTHROT Y BE ENABLED EITHER ITSELF OR THROUGH OTHER AUTHORITY TO FORMULATE AND EXECUTE PLANS, PROJECTS AND SCHEMES FOR THE DEVELOPMENT OF JAIPUR REGION. S O THAT HOUSING, COMMUNITY FACILITIES, CIVIC AMENITIES AND OTHER INF RASTRUCTURE ARE PROPERLY CREATED FOR THE POPULATION OF JAIPUR REGIO N IN THE PROSPECTIVE OF 2001 AD OR THEREAFTER INCLUDING THE INTERMEDIATE ST AGE AND TO PROVIDE FOR MATTERS CONNECTED WITH THE PURPOSE OF AFORESAID . LATER ON THIS ACT FURTHER AMENDED FROM TIME TO TIME AS PER NEED OF JA IPUR REGION. AS PER CHAPTER (VI), FUNCTIONS OF THE AUTHORITIES HAVE BEE N DEFINED IN ITEM NO. (A) TO (S). AS PER ITEM-(H), THE AUTHORITY IS AUTHO RIZED TO DEVELOP AGRICULTURE, HORTICULTURE, FLORICULTURE, FORESTRY, DAIRY DEVELOPMENT, TRANSPORT, COMMUNICATION, SCHOOLING, CULTURAL ACTIV ITIES, SPORTS, MEDICARE, TOURISM, ENTERTAINMENT AND SIMILAR OTHER ACTIVITIES. AS PER ITEM-(N), IT PERFORMS IN THE AREA OF URBAN RENEWAL, ENVIRONMENT AND ECOLOGY DIRECTLY OR THROUGH ITS FUNCTIONAL BOARDS, THEREFORE, THE JDA NOT ONLY PLANNING THE URBAN AREA WITH MASTER DEVELOPMEN T PLAN AND ZONAL DEVELOPMENT PLAN BUT ALSO SANCTION PROJECTS AND SCH EMES FOR DEVELOPMENT. THE JDA IS A TOOL OF STATE GOVERNMENT FOR COORDINATED AND PLANNED DEVELOPMENT IN JAIPUR REGION. IN PRACTICAL, THE MAIN WORK OF JDA IS CONSTRUCTION OF ROADS, SEWERAGE, PARKS, PLAY GRO UNDS, PROVIDE PLOTS FOR EDUCATIONAL, HEALTH AND CULTURAL INSTITUTION FOR OV ER ALL DEVELOPMENT OF THE COMMUNITY. BY MAKING PLANNED DEVELOPMENT IT PRO VIDES SMOOTH TRANSPORTATION SO THAT AIR POLLUTION CAN BE MINIMIZ ED AND SAVE TIME OF ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 16 THE PUBLIC. IF IT IS LEFT IN THE HANDS OF PRIVATE O PERATOR, THESE FACILITIES WOULD NOT BE PROVIDED ON SIMILAR PRICE AS PROVIDED BY THE JDA. WHATEVER, THE REVENUE IS GENERATED THROUGH THESE ACTIVITIES A RE FINALLY UTILIZED FOR THE BENEFIT OF THE PUBLIC. THE INTENTION OF THE INS TITUTION IS NOT TO EARN PROFIT BUT RECOVER THE COST OF THE ESTABLISHMENT AS WELL AS OTHER EXPENDITURE TO IMPLEMENT THE OBJECT OF THE JDA. THE STATE GOVERNMENT ALSO GIVE THE GRANT TO IT. AS PER RAJASTHAN TENANCY ACT, THE LAND IS OWNED BY THE STATE GOVT. BUT FARMERS ARE LESSEE FOR 99 YE ARS IN PERPETUITY. IT CAN BE ACQUIRED FOR THE PUBLIC PURPOSES. VARIOUS SPORTS AS WELL AS COMMUNITY FACILITIES PROVIDED BY THE JDA ARE NOT FOR PROFIT M OTIVE BUT FOR THE DEVELOPMENT OF THE WHOLE URBAN COMMUNITY. THE LEARN ED DR AS WELL AS LEARNED AR CITED VARIOUS CASE LAWS AGAINST AND IN F AVOUR OF THE ASSESSEE BUT RECENTLY HONBLE ALLAHABAD HIGH COURT IN THE CA SE OF LUCKNOW DEVELOPMENT AUTHORITY HAS HELD THAT MERE SELLING SO ME PRODUCT AT PROFIT WILL NOT IPSO FACTO HIT ASSESSEE BY APPLYING PROVIS O TO SECTION 2(15) AND DENY EXEMPTION AVAILABLE UNDER SECTION 11. THE INTE NTION AND MANNER OF THE ASSESSEE WAS NOT TO EARN PROFIT. FURTHER THE AM ENDMENT MADE IN SECTION 2(15) IS EFFECTIVE FROM 2011-12 AS CLARIFIE D BY THE CBDT IN ITS CIRCULAR MENTIONED ABOVE. THE ITAT A BENCH OF LUC KNOW IN THE CASE OF UTTAR PRADESH AVAS EVAM VIKAS PARISHAD VS. CIT-1, L UCKNOW HAS HELD THAT AS PER SECTION 12AA THAT THE CIT IS SATISFIED THAT THE ACTIVITY OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST OR INSTITUT ION, AS THE CASE MAY BE. THE CIT SHALL PASS AN ORDER IN WRITING CANCELLI NG THE REGISTRATION OF SUCH TRUST OR INSTITUTION. IT IS ESSENTIAL THAT ONE OF THESE TWO CONDITIONS MUST BE SATISFIED THAT EITHER THE ACTIVITIES OF SUC H TRUST ARE NOT GENUINE OR THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCO RDANCE WITH THE OBJECT ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 17 OF THE TRUST. THE BENCH DID NOT FIND ANY CONDITION IN ASSESSEES CASE. THEREFORE, THE ITAT A BENCH OF LUCKNOW ALLOWED TH E APPEAL IN FAVOUR OF THE ASSESSEE. IN OUR CASE, THE CONDITIONS ARE NOT F OUND BY THE CIT, HE SIMPLY APPLIED SECTION 2(15) OF THE ACT FOR CANCELL ING THE REGISTRATION OF THE INSTITUTION. THE HONBLE DELHI HIGH COURT IN C ASE OF M/S GS1 INDIA VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTION) & ANR. H AS CONSIDERED AMENDED SECTION 2(15) OF THE ACT AND HELD THAT WITH REGARD TO SCENARIO PRIOR TO 2008 AMENDMENT APPLIED TEST OF PREDOMINANT OBJECT OF ACTIVITY ENUNCIATED BY THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. SURAT CLOTH MANUFACTURING ASSOCIATION TO DETERMINE WHETHE R PRIMARY OBJECT OF THE ACTIVITY INVOLVED IN CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY IS TO BE SUBSERVED THE CHARITABLE PURPOSE OR TO EARN P ROFIT. IN CASE WHERE THE PREDOMINANT OBJECT OF THE ACTIVITY IS TO CARRY OUT CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT DOES NOT LOSE ITS CHARAC TER OF CHARITABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM SUCH ACTIVIT IES. THEREFORE, MONEY EARNED FROM BUSINESS HELD UNDER TRUST OR OTHERWISE, TO FEED THE CHARITY WOULD NOT DISENTITLE OR NEGATE THE CLAIM OF ENGAGEM ENT IN CHARITABLE PURPOSE DEFINED UNDER SECTION 2(15) OF THE ACT. IT FURTHER HELD THAT CBDT CIRCULAR NO. 11/2008 EMPHASIZED THAT 2008 AMENDMENT IS ONLY APPLICABLE TO RESIDUAL CATEGORY, CHARITABLE ENTITY WHEN IT CARRIES ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, ON ANY ACTIVITY AND TO DETERMINE WHETHER SUCH ACTIVITY IS COMMERCIAL WI LL BE DECIDED ON ITS OWN FACTS AND NO GENERALIZATION IS POSSIBLE. HOWEVE R, THE TAX AUTHORITIES IN THE CONTEXT OF THE ABOVE CIRCULAR DENIED TAX EXE MPTIONS ON THE PREMISES THAT CHARITABLE ACTIVITY WAS ONLY A MASK TO COVER BUSINESS ACTIVITY OF THE CHARITABLE ENTITY TO DETERMINE WHET HER THE RESIDUAL CATEGORY, CHARITABLE ENTITY IS ENGAGED IN ANY BUSIN ESS ACTIVITY, THE ISSUE ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 18 OF THE SELF ENRICHMENT AND SELF GAIN SHOULD BE CARE FULLY LOOKED INTO. A SMALL CONTRIBUTION BY WAY OF FEES SHOULD NOT BE EMU LATED THE TRANSACTION OR THE GIVE ACTIVITY TO BE COMMERCIAL IN NATURE. AS PER SECTION 2(15), THE CHARITABLE ACTIVITY TEST MEANS ACTIVITY WITH A VIEW TO MAKE OR EARNS PROFIT. THE FOUR INTEGRATES LAID DOWN ARE (A) PROFI T MOTIVE IS A CRITICAL FACTOR TO DISCERN WHETHER THE ACTIVITY IS BUSINESS, TRADE OR COMMERCE, (B) CHARITABLE ACTIVITY SHOULD BE DEVOID OF SELFISHNESS OR ILLIBERAL SPIRIT, (C) THE UNDERLINE PROPELLING MOTIVE IS NOT FOR COMMERCIAL E XPLOITATION BUT GENERAL PUBLIC GOOD AND (D) FEES CHARGED IF ANY SHO ULD BE NOMINAL AND BASED ON COMMERCIAL PRINCIPLE. APPLYING THE ABOVE TEST, THE HONBLE DELHI HIGH CO URT OPINED THAT A MERE LEVY OF FEES IS NEITHER REFLECTIVE OF BUSINE SS APTITUDE NOR INDICATIVE OF PROFIT ORIENTED INTENT. THE HONBLE DELHI HIGH C OURT HELD THAT WHEN PROPELLING MOTIVE IS NOT TO EARN PROFIT BUT GENERAL PUBLIC GOOD, THE CHARITABLE ENTITY WILL FAIL THE BUSINESS TEST AND M EET THE TOUCHSTONE OF CHARITY. THE HONBLE DELHI HIGH COURT FURTHER HELD THAT CHARGING FEES ON IPR SENSE PROFIT MOTIVE DOES NOT AMOUNT TO COMMERCI AL EXPLOITATION. MOREOVER, WHEN THE FEES CHARGED IS COMMENSURATE BAS ED ON COMMERCIAL OR BUSINESS PRINCIPLES, THE CHARITY ACTIVITY TEST I S FULFILLED. THE HONBLE DELHI HIGH COURT RULED AS PRIMARY AND PREDOMINANT A CTIVITY IS CHARITABLE IN NATURE. THE NOMINAL FEES CHARGED ARE IMPORTANT F OR COVERING OPERATIONAL COST OF THE PETITIONER. THUS, KEEPING I N VIEW OF THE CHARITABLE ACTIVITY TEST, IT WAS HELD THAT BUSINESS ACTIVITY O F THE PETITIONER IS INTEGRAL TO ITS CHARITABLE PURPOSE AND QUESTION OF REQUIREME NT OF SEPARATE BOOKS OF ACCOUNT FOR THE BUSINESS ACTIVITY SEEMS REDUNDAN T. THE HONBLE DELHI HIGH COURTS FINDINGS IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT. FURTHER PROVISO TO SECTION 2(15) OF THE IT ACT HAS HELD BY THE HONBLE ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 19 ITAT, MUMBAI BENCH IN THE CASE OF INDIAN PLASTIC AS SOCIATION (SUPRA), IS TO COVER THOSE, WHICH UNDER THE GARB OF GENERAL PUB LIC UTILITY CARRY ON BUSINESS ON COMMERCIAL ACTIVITIES TO ESCAPE THE LIA BILITY UNDER THE ACT GAINING EXEMPTION U/S 11 OF THE ACT, WE ALSO FEEL T HAT THIS SECTION APPLIED ON SUCH TYPE OF TRUST OR INSTITUTION WHO GE T REGISTRATION U/S 12A OF THE ACT FOR CLAIMING THE EXEMPTION U/S 11 OF THE ACT. THE APPELLANT IS A GOVERNMENT AGENCY AND ENGAGED IN THE COORDINATE A ND PLANNED DEVELOPMENT OF JAIPUR REGION AND WHICH IS PREDOMINA NT OBJECT OF IT. THE LEARNED CIT ALSO ERRED IN APPLYING THE PROVISIONS O F SECTION 293(C) OF THE ACT, IN THIS CASE, WHICH APPLIED WITHDRAWAL OF APPR OVAL GRANTED UNDER ANY PROVISION OF THIS ACT, NOTWITHSTANDING THAT A P ROVISION TO WITHDRAW SUCH APPROVAL HAS NOT BEEN SPECIFICALLY PROVIDED FO R IN SUCH PROVISION. FOR CANCELLATION OF REGISTRATION, THE SPECIFIC PROVISIO N U/S 12AA IS PROVIDED. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT LEARN ED CIT WAS NO RIGHT TO WITHDRAW THE REGISTRATION OF THE APPELLANT FROM A.Y . 2009-10. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECTED TO GRANT THE REGISTRATION TO THE JDA. 12. WE NOW REFER TO THE SUBSEQUENT DECISION OF THE COORDINATE BENCH IN ITA NO. 427/JP/13 AND ITA NO. 447/JP/2013 FOR A.Y. 2009 -10 DATED 04.01.2016 WHICH WAS PRONOUNCED SUBSEQUENT TO RESTORATION OF R EGISTRATION UNDER SECTION 12AA AND WHEREBY THE COORDINATE BENCH HAS DISPOSED OFF IDENTICAL GROUNDS OF APPEAL AS RAISED BEFORE US. THE RELEVANT FINDINGS ARE REPRODUCED AS UNDER: THE ASSESSEE HAS BEEN GRANTED REGISTRATION BY THE ORDER OF THE COORDINATE BENCH IN ITA NO. 927/JP/2007 ORDER DATED 30/05/2008 W.E.F. 14/3/2007 WHEREIN THE COORDINATE BENCH HAS HELD THA T THE ASSESSEES ACTIVITIES ARE CHARITABLE AND ARE NOT COVERED U/S 2 (15) OF THE ACT. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO GIV E BENEFIT OF SECTION 11 ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 20 AND 12 OF THE ACT TO THE ASSESSEE. THE INCOME OF TH E ASSESSEE IS TO BE ASSESSED ON THE REAL INCOME BASIS WHICH HAS BEEN AC CRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE A PPELLANT HAD CHANGED METHOD OF ACCOUNTING DURING THE YEAR UNDER CONSIDERATION BUT THE SAME HAS BEEN FOUND MORE ACCURATE AND SCIENTIFI C TO DETERMINE THE ASSESSEES INCOME. THEREFORE, CHANGE OF ACCOUNTING IS BONAFIDE AND SAME CANNOT BE REJECTED ON THE GROUND THAT THE ASSE SSEE HAD CLAIMED MORE EXPENSES DURING THE YEAR UNDER CONSIDERATION. THE CASE LAW RELIED BY THE ASSESSEE IS SQUARELY APPLICABLE. A CHANGE IN THE METHOD OF ACCOUNTING SHOULD NOT BE REJECTED FOR REASONS THAT IT WOULD RESULT IN BRINGING INTO ACCOUNTS IN ONE YEAR THE LOSSES OF SE VERAL YEARS AS HELD IN THE CASE OF CIT VS. EASTERN BENGAL JUTE TRADING CO. LTD. (1978) 112 ITR 575 (CAL.) ACCORDINGLY CHANGE OF THE ACCOUNTING POL ICY IS ALLOWED. THE ASSESSEE HAS CLAIMED DEPRECIATION ON FIXED ASSE TS WHICH IS ALSO ALLOWABLE AS HELD BY THE VARIOUS COURTS IN CASE OF TRUST WHERE THE ASSESSEE FIRST MADE INCOME FOR APPLICATION OF ACQUI RING OF ASSETS AND THEREAFTER CLAIMING DEPRECIATION ON IT. ACCORDINGLY , WE ALLOW THE ASSESSEES APPEAL AND DISMISS THE REVENUES APPEAL. 13. WE NOW REFER TO THE RECENT DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT-1, JODHPUR VS JODHPUR DEVELOPMENT AUTHO RITY, JODHPUR AND OTHERS DATED 5TH JULY, 2016 (D.B. INCOME TAX APPEALS NO. 6 3/12 AND FIVE CONNECTED MATTERS) AS BROUGHT TO OUR NOTICE BY THE LD AR. 13.1 THE QUESTION FOR CONSIDERATION BEFORE THE HON BLE HIGH COURT WAS WHETHER THE ACTIVITIES OF JDA, JODHPUR AND UIT, SRI GANGANAGAR, WHICH HAVE BEEN CONSTITUTED AND ESTABLISHED BY THE GOVERNMENT OF RAJASTHAN UNDER THE PROVISIONS OF JODHPUR DEVELOPMENT AUTHORITY ACT, 20 09 (JDA ACT) AND URBAN IMPROVEMENT TRUST ACT 1959 (UIT ACT) FOR THE PURPOS ES OF PLANNING, COORDINATING AND SUPERVISING THE PROPER, ORDERLY AN D RAPID DEVELOPMENT OF ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 21 JODHPUR REGION AND FOR THE PURPOSES OF IMPROVEMENT AND EXPANSION OF THE URBAN AREA OF SRIGANGANAGAR AS SPECIFIED, RESPECTIV ELY, FALL WITHIN THE DEFINITION OF CHARITABLE PURPOSES AS DEFINED U/S 2(15) OF THE ACT OF 1961 SO AS TO MAKE THEM ENTITLED TO REGISTRATION UNDER THE PROVISIONS OF SECTION 12A READ WITH SECTION 12AA OF THE IT ACT, 1961, FOR CLAIMING THE BENEFIT OF EXEMPTION U/S 11 AND 12 READ WITH SECTION 13 OF THE ACT, OF 1961. 13.2 THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT WHILE DISPOSING OFF THE ABOVE QUESTION ARE REFERRED AS UNDER: 15. IT IS TO BE NOTICED THAT THE REGISTRATION OF T HE TRUST OR INSTITUTION U/S 12A IS CONDITION PRECEDENT FOR CLAI MING EXEMPTION U/S 11 & 12 OF THE ACT BUT THE REGISTRATION U/S 12A BY ITS ELF DOES NOT MAKE A TRUST OR INSTITUTION ENTITLED TO CLAIM EXEMPTION UN DER SECTION 11 & 12 OF THE ACT UNLESS, THE CONDITIONS FOR CLAIMING EXEMPTI ON AS ENVISAGED U/S 11 & 12 OF THE ACT, ARE SATISFIED. OBVIOUSLY, THE ENT ITLEMENT OF THE PERSON OR THE TRUST CLAIMING EXCLUSION OF THE INCOME UNDER SE CTION 11 OR 12 HAS TO BE DETERMINED BY THE AO AFTER MAKING NECESSARY INQU IRIES REGARDING THE FULFILMENT OF THE REQUISITE CONDITIONS AS ENUMERATE D UNDER THE AFORESAID PROVISIONS. BUT THE FACT REMAINS THAT UNDER SECTIO N 12AA THE SCOPE OF THE ENQUIRY UNDER SECTION 12AA FOR THE PURPOSE OF G RANT OF REGISTRATION U/ 12A SHALL BE CONFINED WITH REGARD TO THE OBJECTS OF THE TRUST OR INSTITUTION AND GENUINENESS OF ITS ACTIVITIES AND IT CANNOT TRAVEL TO THE EXTENT THAT WHETHER THE INCOME OF THE TRUST IN RESP ECT WHEREOF EXEMPTION IS CLAIMED, IS WHOLLY APPLIED FOR THE REL IGIOUS OR CHARITABLE PURPOSE OR NOT SO AS TO MAKE THEM ENTITLE TO CLAIM EXEMPTION U/S 11 & 12 OF THE ACT OF 1961. 16. AS NOTICED HEREINABOVE, THE CONTENTION OF THE REVENUE IS THAT SINCE THE ASSESSES ARE INVOLVED IN CARRYING ON ACTI VITIES IN THE NATURE OF TRADE AND COMMERCE, BY VIRTUE OF FIRST PROVISO TO S ECTION 2(15), THEIR ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 22 ACTIVITY/OBJECTS CANNOT BE RECOGNIZED AS FOR CHARIT ABLE PURPOSES SO AS TO MAKE THEM ENTITLED FOR REGISTRATION UNDER SECTION 1 2A OF THE ACT OF 1961. 17. SECTION 2(15) OF THE ACT 1961 WHICH DEFINES CHARITABLE PURPOSES READ AS UNDER: (15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE P OOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATE RSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R 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 GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT I NVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMENCE OR BU SINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE, OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE 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 AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR. 18. THE CHARITABLE PURPOSE AS DEFINED U/S 2(15 ) AND PARTICULARLY, THE EXPRESSION ANY OTHER OBJECT OF GENERAL PUBLIC UTIL ITY USED THEREIN, HAVE BEEN INTERPRETED BY THE HONBLE SUPREME COURT AND V ARIOUS HIGH COURTS IN CATENA OF DECISIONS, WHICH MAY BE BENEFICIALLY REFERRED. 27. FROM THE VARIOUS DECISIONS OF HONBLE SUPREME COURT DISCUSSED HEREINABOVE, THE SETTLED POSITION OF LAW EMERGES I S THAT IF THE PRIMARY OR PREDOMINANT OBJECT OF AN INSTITUTION IS CHARITABLE, ANY OTHER OBJECT WHICH MIGHT NOT BE CHARITABLE BUT WHICH IS ANCILLARY OR I NCIDENTAL TO THE DOMINANT PURPOSE, MAY BE INVOLVING ELEMENT OF PROFI T, WOULD NOT PREVENT THE INSTITUTION FROM BEING A VALID CHARITABLE TRUST . 28 IN THE BACKDROP OF SETTLED POSITION OF LAW DIS CUSSED HEREINABOVE, ADVERTING TO THE FACTS OF THE PRESENT CASE, INDUBIT ABLY, JDA IS A STATUTORY BODY CONSTITUTED AND ESTABLISHED UNDER THE PROVISIO NS OF SECTION 3 OF THE JDA ACT WITH A MAIN OBJECT TO SECURE THE INTEGRATE D DEVELOPMENT OF ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 23 JODHPUR REGION AND FOR THAT PURPOSE TO DISCHARGE IN TER ALIA THE FUNCTIONS OF URBAN PLANNING INCLUDING PREPARATION OF MASTER D EVELOPMENT PLAN AND ZONAL DEVELOPMENT PLANS; FORMULATION AND SANCTI ON OF THE PROJECTS AND SCHEMES FOR THE DEVELOPMENT OF JODHPUR REGION O R ANY PART THEREOF, EXECUTION OF THE PROJECT AND SCHEMES DIRECTLY BY IT SELF OR THROUGH A LOCAL AUTHORITY OR OTHER AGENCY, COORDINATING EXECUTION O F PROJECTS OR SCHEMES FOR THE DEVELOPMENT OF JODHPUR REGION SUPERVISION O R OTHERWISE ENSURING ADEQUATE SUPERVISION OVER THE PLANNING AND EXECUTIO N OF ANY PROJECT OR SCHEMES THE EXPENSES OF WHICH IN WHOLE OR IN PART A RE TO BE MET FROM JODHPUR REGION DEVELOPMENT FUNDS; PREPARING SCHEMES AND ADVISING THE CONCERNED AUTHORITIES DEPARTMENT AND AGENCIES IN FO RMULATING AND UNDERTAKING SCHEMES FOR DEVELOPMENT OF AGRICULTURE HORTICULTURE, FORESTRY, DAIRY DEVELOPMENT, TRANSPORT COMMUNICATI ON, SCHOOLING, CULTURAL ACTIVITIES, SPORTS, MEDICINE, TOURISM AND SIMILAR OTHER ACTIVITIES, TO PREPARE MASTER PLAN FOR TRAFFIC CONTROL AND MANA GEMENT, DEVISE POLICY AND PROGRAMMES OF ACTION FOR SMOOTH FLOW OF TRAFFIC AND MATTERS CONNECTED THEREWITH, UNDERTAKING HOUSING ACTIVITY I N JODHPUR REGION ETC. ARE ESSENTIALLY THE FUNCTIONS, WHICH PROMOTE THE WE LFARE OF THE GENERAL PUBLIC. OF COURSE, WHILE DISCHARGING THE SAID FUNCT IONS, THE JDA ALSO DISCHARGES FUNCTION TO ACQUIRE, HOLD, MANAGE AND DI SPOSE OF PROPERTY MOVABLE OR IMMOVABLE AS MAY BE DEEMED NECESSARY AND ALSO ENTERS INTO CONTRACT, AGREEMENTS OR ARRANGEMENTS WITH ANY PERSO N OR ORGANIZATION AND DEEM NECESSARY FOR PERFORMING ITS FUNCTION AND IN THIS PROCESS, IT MIGHT BE EARNING INCOME BUT THE PRIMARY OBJECT OF T HE JDA CERTAINLY DOES NOT INVOLVE ANY PROFIT MOTIVE WHATSOEVER. IT IS P ERTINENT TO NOTE THAT AS PER THE PROVISIONS OF SECTION 51 OF JDA ACT, FOR T HE PURPOSE OF DISCHARGING THE STATUTORY FUNCTIONS, THE JODHPUR R EGION DEVELOPMENT FUND IS CREATED TO WHICH ALL MONEY RECEIVED BY TH E AUTHORITY IS CREDITED INCLUDING AMOUNT OF CONTRIBUTION TO BE MADE BY THE STATE GOVERNMENT, SUCH OTHER MONEY AS MAY BE PAID TO THE AUTHORITY B Y THE STATE GOVERNMENT, CENTRAL GOVERNMENT OR ANY OTHER AUTHORI TY OR AGENCY BY WAY OF GRANT, LOANS ADVANCES OR OTHERWISE INCOME DE RIVED FROM PREMIUM ON SECOND AND SUBSEQUENT SALE OF VACANT LAND, INCOM E FROM LEVY ON VACANT LAND, ALL FEES, COSTS AND CHARES RECEIVED B Y THE JDA UNDER THE JDA ACT OR ANY OTHER LAW FOR TIME BEING IN FORCE, ALL MONEY RECEIVED BY JDA ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 24 FROM THE DISPOSAL OF LAND BUILDINGS AND OTHER PROPE RTY MOVABLE AND IMMOVABLE AND OTHER TRANSACTIONS INCLUDING LEASE MO NEY, URBAN ASSESSMENT DEVELOPMENT CHARGES AND OTHER SIMILAR CH ARGES AND ALL MONEY RECEIVED BY WAY OF RENTS AND PROFITS OR IN AN Y OTHER MANNER OR FROM ANY OTHER SOURCE. A FORTIORI, AS PER THE MAN DATE OF SECTION 54 OF THE JDA ACT, ALL PROPERTY FUNDS AND OTHER ASSETS VE STING IN THE JDA SHALL BE HELD AND APPLIED BY IT FOR THE PURPOSES AND SUBJ ECT TO THE PROVISIONS OF THE ACT. SUFFICE IT TO SAY THAT THE ENTIRE FUNDS O F THE JDA IS MANDATORILY REQUIRED TO BE UTILIZED FOR DISCHARGING THE FUNCTIO NS TO ACHIEVE THE OBJECT OF INTEGRATED DEVELOPMENT OF JODHPUR REGION. THUS, PREDOMINANT OBJECT OF THE JDA BEING TO SECURE THE INTEGRATED DEVELOPME NT OF THE JODHPUR REGION WHICH IS UNDOUBTEDLY FALLS WITHIN THE EXPRES SION ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY WITHIN THE DEFINITION OF SECTION 2(15) OF THE ACT OF 1961 AND THEREFORE, ON ACCOUNT OF PROFIT BEING EARNED BY IT THROUGH SOME OF THE ACTIVITIES UNDERTAKEN BY IT, WHICH ARE ANCILLARY OR INCIDENTAL TO THE MAIN OBJECT OF GENERAL PUBLIC UTILITY, IT DOES NOT CEASE TO BE CHARITABLE IN CHARACTER SO AS TO RENDER IT IN ELIGIBLE TO CLAIM REGISTRATION UNDER SECTION 12A READ WITH SECTION 12 AA OF THE ACT OF 1961. AS A MATTER OF FACT, IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE OBJECT OF GENERAL PUBLIC UTILITY SOUGHT TO BE ACHIEVED BY CONSTITUTION AND ESTABLISHMENT OF THE JDA AS SUCH INVOLVE CARRYING O N OF ANY ACTIVITY FOR PROFIT AND THEREFORE, IT IS IMMATERIAL IF SOME INCO ME IS EARNED BY ANCILLARY AND INCIDENTAL ACTIVITIES WHICH AS PER TH E MANDATE OF THE RELEVANT STATUTE, IS USED FOR ACHIEVING OR IMPLEMEN TING SUCH OBJECT. THE GENUINENESS OF THE ACTIVITIES OF THE JDA WHICH ARE REGULATED BY THE PROVISIONS OF THE JDA ACT AND THE RULES MADE THEREU NDER, CANNOT BE DOUBTED. THUS THE ORDER PASSED BY THE ITAT HOLDING THE JDA, JODHPUR ENTITLED FOR REGISTRATION UNDER SECTION 12A READ WI TH SECTION 12AA OF THE ACT OF 1961, DOES NOT SUFFER FROM ANY INFIRMITY OR ILLEGALITY. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL ON RECORD. IT IS MANIFESTLY CLEAR THAT THE ASSEESSEE HAS BEEN DULY REGISTERED AS A CHARITABLE ORGANISATION UNDER SECTION 12AA OF THE ACT FOR THE IMPUGNED ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 25 ASSESSMENT YEAR, A CONDITION PRECEDENT FOR AVAILING EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. THE COORDINATE BENCH WHILE RESTORING THE REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ITS ORDER DATED 30.9.2014 (IN ITA NO. 182/JP/2012) HAS ALSO EXAMINED THE MATTER F ROM THE PERSPECTIVE OF APPLICABILITY OF PROVISO TO SECTION 2(15) OF THE AC T WHICH WAS THE MAIN CONTENTION RAISED BY THE REVENUE WHILE WITHDRAWING THE REGISTRATION. AFTER TAKING INTO CONSIDERATION THE RIVAL CONTENTIONS, TH E COORDINATE BENCH HAS GIVEN A FINDING THAT THE PROVISO TO SECTION 2(15) O F THE ACT IS NOT APPLICABLE TO THE ASSESSEE AS THE APPELLANT IS A GOVERNMENT A GENCY AND ENGAGED IN THE COORDINATE AND PLANNED DEVELOPMENT OF JAIPUR RE GION AND WHICH IS PREDOMINANT OBJECT OF IT. THE SAID ORDER OF THE CO ORDINATE BENCH HAS SINCE BEEN FOLLOWED BY THE COORDINATE BENCH IN ITS SUBSEQ UENT ORDER DATED 4.01. 2016 (REFERRED SUPRA) WHILE DISPOSING OFF IDENTICAL GROUNDS OF APPEAL AS IN THE INSTANT CASE RAISED BY THE REVENUE IN RESPECT O F EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. THEREFORE, THE ARGUM ENT RAISED BY THE LD CIT DR THAT EVEN THOUGH THE ASSESSEE IS REGISTERED U/S 12AA, BENEFIT OF SEC. 11 & 12 CANNOT BE PROVIDED TO THE ASSESSEE IN VIEW OF THE PROVISO OF SECTION 2(15) DOESNT SUPPORT THE CASE OF THE REVENUE AS TH E SAID ARGUMENT/CONTENTION HAS ALREADY BEEN CONSIDERED BY THE COORDINATE BENCHES AND HELD NOT APPLICABLE AND WE SEE NO JUSTI FIABLE REASON TO DEVIATE FROM THE SAID POSITION. 13. FURTHER, THE FACT THAT THE REVENUE HAS NOT ACCE PTED THE SAID DECISION OF THE COORDINATE BENCH AND HAS SINCE FILED AN APPE AL BEFORE THE HONBLE HIGH COURT, MERE FILING OF AN APPEAL CANNOT BE HELD A REASON SUFFICIENT ENOUGH TO DISREGARD THE COORDINATE BENCH RULING. T HE JUDICIAL DISCIPLINE REQUIRES THE ASSESSING OFFICER AND THE CIT TO FOLLO W THE ORDER OF THE JURISDICTIONAL TRIBUNAL UNLESS THE OPERATION OF THE SAID DECISION HAS BEEN STAYED BY THE HONBLE HIGH COURT WHICH IS NOT THE C ASE BEFORE US. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 26 14. FURTHER, THE LD AR HAS DRAWN OUR REFERENCE TO R ECENT JURISDICTIONAL HIGH COURT DECISION IN CASE OF JODHPUR DEVELOPMENT AUTHO RITY (SUPRA) AND SUBMITTED THAT THE RATIO OF THE SAID DECISION SQUAR ELY APPLIES IN THE INSTANT CASE. IN ORDER TO DETERMINE WHETHER THE FACTS OF T HE INSTANT CASE ARE PARI- MATERIA WITH THE FACTS BROUGHT UP BEFORE THE HONBL E HIGH COURT, WE HAVE GONE THROUGH THE JAIPUR DEVELOPMENT AUTHORITY ACT, 1982. SECTION 16 OF THE JDA ACT PROVIDES THAT THE MAIN OBJECTS OF THE A UTHORITY SHALL BE TO SECURE INTEGRATED DEVELOPMENT OF THE JAIPUR REGION AND FOR THAT PURPOSE FUNCTIONS OF THE AUTHORITY SHALL INTER-ALIA INCLUDE URBAN PLANNING INCLUDING PREPARATION OF MASTER DEVELOPMENT PLAN AND ZONAL DE VELOPMENT PLANS AND CARRYING OUT SURVEYS FOR THE PURPOSE AND ALSO MAKIN G ALTERATIONS THEREIN AS MAY BE DEEMED NECESSARY; FORMULATION AND SANCTION O F THE PROJECTS AND SCHEMES FOR THE DEVELOPMENT OF JAIPUR REGION OR ANY PART THEREOF, EXECUTION OF THE PROJECT AND SCHEMES DIRECTLY BY IT SELF OR THROUGH A LOCAL AUTHORITY OR OTHER AGENCY, COORDINATING EXECUTION O F PROJECTS OR SCHEMES FOR THE DEVELOPMENT OF JAIPUR REGION; SUPERVISION O R OTHERWISE ENSURING ADEQUATE SUPERVISION OVER THE PLANNING AND EXECUTIO N OF ANY PROJECT OR SCHEMES THE EXPENSES OF WHICH IN WHOLE OR IN PART A RE TO BE MET FROM JAIPUR REGION DEVELOPMENT FUNDS; PREPARING SCHEMES AND ADVISING THE CONCERNED AUTHORITIES DEPARTMENT AND AGENCIES IN FO RMULATING AND UNDERTAKING SCHEMES FOR DEVELOPMENT OF AGRICULTURE, HORTICULTURE, FLORICULTURE, FORESTRY, DAIRY DEVELOPMENT, TRANSPOR T COMMUNICATION, SCHOOLING, CULTURAL ACTIVITIES, SPORTS, MEDICINE, T OURISM AND SIMILAR OTHER ACTIVITIES; UNDERTAKING HOUSING ACTIVITY IN JAIPUR REGION PROVIDED THAT THE DELINEATION OF RESPONSIBILITY FOR HOUSING BETWEEN R AJASTHAN HOUSING BOARD AND THE AUTHORITY WILL BE MADE BY STATE GOVERNMENT EFFECTIVE FROM THE DATE FIX BY IT; TO ACQUIRE, HOLD, MANAGE AND DISPOSE OF PROPERTY, MOVABLE OR ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 27 IMMOVABLE AS MAY BE DEEMED NECESSARY; TO ENTER INTO CONTRACTS, AGREEMENTS OR ARRANGEMENTS WITH ANY PERSON OR ORGAN IZATION AS IT DEEM NECESSARY; TO PREPARE MASTER PLAN FOR TRAFFIC CONTR OL AND MANAGEMENT, DEVISE POLICY AND PROGRAMMES OF ACTION FOR SMOOTH F LOW OF TRAFFIC AND MATTERS CONNECTED THEREWITH; AND TO DO ALL SUCH ACT S AND THINGS WHICH ARE NECESSARY FOR THE FURTHERANCE OF THE OBJECTS FOR WH ICH THE AUTHORITY IS ESTABLISHED. FURTHER, AS PER THE PROVISIONS OF SE CTION 55 OF JDA ACT, FOR THE PURPOSE OF DISCHARGING THE STATUTORY FUNCTIONS, TH E JAIPUR REGION DEVELOPMENT FUND IS CREATED TO WHICH ALL MONEY RE CEIVED BY THE AUTHORITY IS CREDITED INCLUDING AMOUNT OF CONTRIBUT ION TO BE MADE BY THE STATE GOVERNMENT, SUCH OTHER MONEY AS MAY BE PAID T O THE AUTHORITY BY THE STATE GOVERNMENT, CENTRAL GOVERNMENT OR ANY OTH ER AUTHORITY OR AGENCY BY WAY OF GRANT, LOANS ADVANCES OR OTHERWISE , 90% SHARE OF TAX RECOVERED ON LAND AND BUILDING SITUATED WITHIN THE JAIPUR REGION, INCOME DERIVED FROM PREMIUM ON SECOND AND SUBSEQUENT SALE OF VACANT LAND, INCOME FROM LEVY ON VACANT LAND, ALL FEES, COSTS A ND CHARGES RECEIVED BY THE AUTHORITY UNDER THIS ACT OR ANY OTHER LAW FOR TIME BEING IN FORCE, ALL MONEY RECEIVED BY AUTHORITY FROM THE DISPOSAL OF LA ND BUILDINGS AND OTHER PROPERTY MOVABLE AND IMMOVABLE AND OTHER TRANSACTIO NS INCLUDING LEASE MONEY, URBAN ASSESSMENT, DEVELOPMENT CHARGES AND OT HER SIMILAR CHARGES AND ALL MONEY RECEIVED BY WAY OF RENTS AND PROFITS OR IN ANY OTHER MANNER OR FROM ANY OTHER SOURCE OR FROM DONATIONS. FURTHE R, SECTION 58 OF THE JDA ACT PROVIDES THAT ALL PROPERTY, FUNDS AND OTHER ASS ETS VESTING IN THE AUTHORITY SHALL BE HELD AND APPLIED BY IT FOR THE P URPOSES AND SUBJECT TO THE PROVISIONS OF THE ACT. 14.1 IT IS THUS NOTED THAT THE MAIN OBJECTS OF THE JAIPUR DEVELOPMENT AUTHORITY AND THE FUNCTIONS/ACTIVITIES TO ACHIEVE S UCH OBJECTIVES ARE PARI- ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 28 MATERIA WITH THAT OF THE JODHPUR DEVELOPMENT AUTHOR ITY. FURTHER, THE ENTIRE FUNDS OF THE JAIPUR DEVELOPMENT AUTHORITY IS MANDATORILY REQUIRED TO BE UTILIZED FOR DISCHARGING THE FUNCTIONS TO ACHIEV E THE OBJECT OF INTEGRATED DEVELOPMENT OF JAIPUR REGION. IN LIGHT OF ABOVE, TH E DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF JODHPUR DEVELOPMENT AUTHORITY AND OTHERS (SUPRA) SQUARELY APPLIES TO THE JAIPUR DEVELOPMENT AUTHORITY WHERE THE HONBLE HIGH COURT HAS HELD THAT THE PREDOMINANT O BJECT OF THE JDA BEING TO SECURE THE INTEGRATED DEVELOPMENT OF THE JODHPUR REGION WHICH IS UNDOUBTEDLY FALLS WITHIN THE EXPRESSION ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY WITHIN THE DEFINITION OF SECTION 2(15) OF THE ACT OF 1961 AND THEREFORE, ON ACCOUNT OF PROFIT BEING EARN ED BY IT THROUGH SOME OF THE ACTIVITIES UNDERTAKEN BY IT, WHICH ARE ANCIL LARY OR INCIDENTAL TO THE MAIN OBJECT OF GENERAL PUBLIC UTILITY, IT DOES NOT CEASE TO BE CHARITABLE IN CHARACTER SO AS TO RENDER IT INELIGIBLE TO CLAIM RE GISTRATION UNDER SECTION 12A READ WITH SECTION 12AA OF THE ACT OF 1961. THE SAI D DECISION THUS SUPPORT THE CASE OF THE JAIPUR DEVELOPMENT AUTHORITY FOR BE ING ELIGIBLE TO CLAIM EXEMPTION U/S 11 & 12 OF THE ACT. 15. FURTHER, ON PERUSAL OF ASSESSMENT ORDER, IT IS OBSERVED THAT LIMITED GROUND ON WHICH EXEMPTION UNDER SECTION 11 AND 12 O F THE ACT WAS DENIED WAS ON ACCOUNT OF NON-REGISTRATION UNDER SECTION 12 AA OF THE ACT. NOTHING HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT BESIDES NON-REGISTRATION UNDER SECTION 12AA, THE ASSESSEE HAS FAILED TO FULFIL ANY OTHER CONDITIONS AS ENVISAGED U/S 11, 12 AND 13 OF THE ACT BY VIRTUE OF WHICH IT SHALL BE DENIED THE EXEMPTION UNDER SECTION 11 & 12 OF THE ACT. IN FACT, ON PERUSAL OF ASSESSMENT ORDER, IT IS NOTED THAT THE ASSESSING OF FICER HAS NOTED IN CONTEXT OF GRANT OF RS 2,50,00,000 TO AMBER DEVELOPMENT AUT HORITY AND OF RS 3,82,10,322 TO JAIPUR METRO RAIL CORPORATION LIM ITED THAT THESE EXPENSES WOULD BE ADMISSIBLE AS APPLICATION OF INCO ME IF IT WAS TO BE CONSIDERED EXEMPTED UNDER SECTION 11, 12 AND 13 AND AS THE BENEFIT OF ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 29 SECTION 11 IS NOT ADMISSIBLE, THE SUM PAID TO THESE TWO INSTITUTIONS AS GRANT WOULD NOT BE ADMISSIBLE AND HENCE ADDED BACK TO AS SESSEES INCOME. SIMILAR IS THE POSITION IN RESPECT OF OTHER DISALLO WANCES EXCEPT FOR AN AMOUNT OF RS 1,57,56,523 WHICH HAS BEEN ALLOWED IN THE EARLIER YEARS AND DISALLOWANCE THEREOF CONFIRMED BY THE LD CIT(A). I T IS THUS CLEAR THAT THE REVENUE HAS NOT DISPUTED ANY OF THESE EXPENSES AS A PPLICATION OF INCOME (EXCEPT RS 1,57,56,523 WHICH WAS ALREADY ALLOWED IN EARLIER YEARS) FOR WANT OF FULFILMENT OF ANY OF THE CONDITIONS SPECIFIED UN DER SECTION 11, 12 AND 13 OF THE ACT. REGARDING APPLICABILITY OF SECTION 13( 8), WE HAVE ALREADY HELD ABOVE THAT IN VIEW OF PROVISO TO SECTION 2(15) NOT APPLICABLE IN THE CASE OF THE ASSESSEE, PROVISIONS OF SECTION 13(8) WOULD NOT BE APPLICABLE. 16. NOW, COMING TO THE REJECTION OF BOOKS OF ACCOUN TS U/S 145(3) OF THE ACT ON ACCOUNT OF CHANGE IN THE ACCOUNTING POLICY A ND THE CONSEQUENT ADDITIONS OF RS 152,05,67,555 AND RS 16,07,46,832 M ADE BY THE AO, THE COORDINATE BENCH HAS ALREADY EXAMINED THIS MATTER I N THE YEAR OF CHANGE OF ACCOUNTING POLICY IE. AY 2009-10 AND HAS HELD THAT THE APPELLANT HAD CHANGED METHOD OF ACCOUNTING DURING THE YEAR UNDER CONSIDERATION BUT THE SAME HAS BEEN FOUND MORE ACCURATE AND SCIENTIFIC TO DETERMINE THE ASSESSEES INCOME. THEREFORE, CHANGE OF ACCOUNTING IS BONAFIDE AND SAME CANNOT BE REJECTED ON THE GROUND THAT THE ASSESSEE HAD CLAIMED MORE EXPENSES DURING THE YEAR UNDER CONSIDERATION. ON T HE ISSUE OF DEPRECIATION AND DOUBLE DEDUCTION, THE MATTER HAS A GAIN BEEN EXAMINED BY THE COORDINATE BENCH EARLIER AND DECIDED IN FAVOUR OF THE ASSESSEE. NOTHING HAS BEEN BROUGHT TO OUR NOTICE WHICH CONTRO VERT THE SAID FINDINGS OF THE COORDINATE BENCH AND WE ACCORDINGLY, DO NOT SEE ANY INFIRMITY IN LD CIT(A) FOLLOWING THE SAID DECISION OF THE COORDINAT E BENCH. ITA NOS. 380, 381 & 382/JP/16 ACIT (E) CIRCLE, JAIPUR VS. JDA, JAIPUR 30 17. IN LIGHT OF ABOVE DISCUSSIONS, IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CASE OF JODHPUR DEVELOPMENT AUTHORITY AND COORDINATE BENCHES (REFERRED SUPRA), WE DISMISS THE GROUNDS OF APPEAL TAKEN BY THE REVENUE. 18. IN ITA NO. 381 & 382/JP/16, ADMITTEDLY THE FACT S AND CIRCUMSTANCES OF THE MATTER ARE IDENTICAL TO ITA NO. 380/JP/16, THE ABOVE DISCUSSION AND FINDING GIVEN BY US IN ITA NO. 380/JP/16 SHALL APPL Y MUTATIS MUTANDIS TO THESE TWO APPEALS AS WELL. IN THE RESULT ALL THE THREE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/11/ 2016. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 22/11/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT (E), CIRCLE, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- JAIPUR DEVELOPMENT AUTHORITY, JAIP UR 3. VK;DJ VK;QDR@ CIT ( EXEMPTIONS) JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-III, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 380-382/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.