DDIT (E)-1(1), MUMBAI V. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY, MUMBAI

ITA 5584/MUM/2009

• Counselvise Citation: 558419914 RSA 2009
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SASMITA MISRA
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Charitable institution; Maximum Marginal Rate; Notional interest
• Section: 12A; 12AA; 10; 11

Judgement Text

ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO.5584/MUM/2009 (ASSESSMENT YEAR: 2006-07) DDIT (EXEMPTIONS)-1(1) ROOM NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI- 400012 (APPELLANT) VS. MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY PLOT NO;C-14 & C-15 BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400051 PAN AAATM 7106 R (RESPONDENT) ITA NO.5062/MUM/2009 (ASSESSMENT YEAR: 2006-07) MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY PLOT NO;C-14 & C-15 BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400051 PAN AAATM 7106 R (APPELLANT) VS. DDIT (EXEMPTIONS)-1(1) ROOM NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI-400012 (RESPONDENT) DEPARTMENT BY: SMT. SASMITA MISRA, CIT (DR) ASSESSEE BY: SHRI NIRAJ SHETH & SHRI RONAK G. DOSHI DATE OF HEARING: 25/06/2012 DATE OF PRONOUNCEMENT: 29/06/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THESE ARE THE CROSS APPEALS BY REVENUE AND ASSESSE E FOR THE ASSESSMENT YEAR 2006-07. 2. WE HAVE CONSIDERED THE RIVAL ARGUMENTS OF THE LEARN ED DR AND THE LD.COUNSEL. LEARNED COUNSEL ALSO PLACED ON RECORD THE COORDINATE BENCH DECISION IN THE CASE OF SLUM REHAB ILITATION ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 2 OF 12 AUTHORITY, MUMBAI IN ITA NO.5150/MUM/2010 DATED 30. 9.2011 AND MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORIT Y IN ITA NO.5758/MUM/2010 DATED 16-11-2011. ITA NO.5584/MUM/2009 3. BRIEFLY STATED, THE ISSUE IN THIS APPEAL IS WHETHER ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THE MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY (MMRDA) W AS A LOCAL AUTHORITY CREATED BY THE GOVERNMENT OF MAHARASHTRA AS PER THE MMRDA ACT, 1974. ASSESSEE WAS CLAIMING EXEMPTION OF ITS INCOME AS PER SECTION 10 (20A) OF THE IT. ACT TILL A.Y.200 2-03. SECTION 10(20A) WAS REMOVED FROM THE STATUTE W.E.F. AY.2003 -04. FURTHERMORE, SECTION 10(20) WHICH DEFINED LOCAL AUT HORITIES PLACED LIMITATIONS UNDER THIS SECTION. HENCE ASSESSEE NO M ORE ENJOYED EXEMPTION U/S 10(20A) OR SECTION 10(20). THEREFORE, ASSESSEE APPLIED FOR REGISTRATION UNDER SEC.12A WITH THE DIR ECTOR OF INCOME- TAX (EXEMPTION), MUMBAI, AND WAS GRANTED REGISTRATI ON U/S.12A VIDE ORDER OF DIT NO. DIT(E)/MCIL2A136714/2003 DTD. 22.07.2002. SUBSEQUENTLY, ATTEMPT WAS MADE TO CANCEL THE REGIST RATION GRANTED AND THE LEARNED DIT(E), MUMBAI, ISSUED A SHOW CAUSE NOTICE TO ASSESSEE DTD. 08/02/2006 VIDE LETTER NO. DIT(F)/MC/ SHOW CAUSE /05-06/295, IN RESPONSE TO WHICH, ASSESSEE FILED RE PLY THROUGH LETTER DTD.24.02.2006 TO THE DIT(E) OBJECTING TO CA NCELLATION OF REGISTRATION. NO ACTION BY THE DIT(E) HAS BEEN TAKE N SO FAR AND AS SUCH THE REGISTRATION GRANTED UJS.12A HAS NOT BEEN WITHDRAWN AS YET. 4. THE ASSESSING OFFICER EXAMINED THE WHOLE ISSUE IN T HE ASSESSMENT ORDER AND HELD THAT DESPITE THE REGISTRA TION UNDER SECTION 12A HAVING NOT BEEN WITHDRAWN BY THE DIT(E) , THE ASSESSING OFFICER IS ENTITLED TO GO BEYOND AND VERIFY WHETHER ASSESSEE IS ENGAGED IN CHARITABLE ACTIVITY AND WHETHER IT IS EN TITLED TO EXEMPTION OF INCOME UNDER SECTION 11 OF IT ACT. TH E A.O. CONCLUDED THAT AT THE TIME OF GRANTING OF REGISTRAT ION U/S.12A, THE ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 3 OF 12 CIT IS NOT REQUIRED TO VERIFY THE APPLICATION OF IN COME AND AS SUCH DESPITE REGISTRATION, AO CAN DENY THE EXEMPTION UND ER SECTION 11. THE A.O. THEREAFTER PROCEEDED TO EXAMINE WHETHER MM RDA IS A VALID TRUST WITHIN THE MEANING OF SEC. 11 TO 13 AND WHETHER IT IS ENTITLED TO CLAIM EXEMPTION. AO REFERRED TO THE DE CISION OF BOMBAY HIGH COURT IN THE CASE OF MADHAV PRASAD NATHURARN PANDIT VS. MOHILAL RAMCHAND MAHESEE 30 BOM LR 186 AIR 1928 BOM 97 : 108 IC 482. THE A O. ALSO REFERRED TO THE DECISION OF HON' BLE MADRAS HIGH COURT IN THE CASE OF R. VENUGOPALA REDDIAN VS. KRISHNA SWAMY REDDIAN AIR 1971 MAD. 262. AO FURTHER REFERRED TO HIS PREDECESSOR'S ORDER FOR A.Y. 2004-05. HE SPECIFICAL LY RELIED ON PAGES 2 TO 11 OF THAT ORDER AND CONCLUDED THAT MMRDA IS N OT A VALID TRUST AND CHANGE OF STATUS AS CLAIMED IS NOT PERMIS SIBLE. 5. AFTER CONCLUDING THAT THE FACTS AND CIRCUMSTANCES O F THE CASE ARE SIMILAR FOR THIS YEAR AT PAGE 2, THE AO CONCLUD ED THAT ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER SECTION L1 FOR T HE FOLLOWING REASONS: '(1) WITHIN THE MEANING OF PREAMBLE TO THE MMRDA A CT, 1974, THE HANDING OVER OF OWNERSHIP, CONTROL, MANAGEMENT OF THE MMRDA HITHERTO BELONGING TO THE STATE GOVERNMENT IS CONSIDERED NOT TO HAVE CREATED A LAWFUL TRUST WITHIN THE MEANING OF TERM TRUST USED FOR THE PURPOSE OF SECTION 11, 12, 12A, 12AA AND 13 OF THE I.T. ACT, 1961. (2) THE MMRDA WAS CREATED AS A LOCAL AUTHORITY WIT HIN THE MEANING OF TERM PERSON FOR THE PURPOSE OF INCO ME TAX ACT, 1961 AND W.E.F. ITS INCEPTION TO 2002, THE MMRDA CONTINUES TO BE LOCAL AUTHORITY IN THE EYES O F LAW. IT CANNOT BE CONSIDERED AS A PUBLIC TRUST OR CHARITABLE TRUST OR TRUST OF ANY OTHER KIND. (3) ON A PROPER INTERPRETATION OF THE INTENTION BE HIND THE ENACTMENT OF THE PROVISION OF SECTION 11, 12, 12A, 12AA ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 4 OF 12 AND 13 OF THE I.T. ACT, 1961, IT APPEARS THAT THE T AX INCENTIVE PROPOSED IN THE SCHEME OF EXEMPTION FROM CHARGE OF INCOME TAX IS MORE APPLICABLE TO THE CASE OF PRIVATE INDIVIDUAL AND GROUPS AND ASSOCIATION WHO CREATE VALID PUBLIC TRUST AND DEDICATE ITS INCOME F OR THE PURPOSE OF GENERAL PUBLIC WELFARE,. THE SCHEME OF SECTION 11 TO 13 SPECIFICALLY THE RESTRICTIVE PROVI SION OF SECTION 13 CANNOT BE MADE APPLICABLE TO THE CASE OF PUBLIC ENTERPRISES/PUBLIC SECTOR UNDERTAKINGS/PUBLI C SECTOR UTILITY SERVICE PROVIDER. THE BASIC INCENTIV E PROVIDED IN THE EXEMPTION SECTION CANNOT BE INTENDE D FOR UTILIZATION OF PUBLIC PROPERTY AND APPLICATION OF INCOME OF PUBLIC PROPERTY ADMINISTERED THROUGH GOVT . REACHING THE PEOPLE AS A WHOLE. (4) THE ABSENCE OF PROFIT MOTIVE IN THE FUNCTIONIN G OF THE MMRDA DOES NOT BY ITSELF CREATE A SITUATION OF TOTA L EXEMPTION FROM THE CHARGE OF INCOME TAX IN RESPECT OF INCOME WHICH HAS EARNED OR LIKELY TO EARN FROM ITS ACTIVITIES COMPRISING OF PROVIDING VARIOUS INFRASTR UCTURAL FACILITIES AND ALSO DERIVING INCOME ANCILLARY TO IT S PRINCIPAL ACTIVITIES SUCH AS RENTAL INCOME FROM LET OUT PROPERTY/SALE AND LEASING OUT OF COMMERCIAL PLOTS T O ITS CUSTOMERS, DEVELOPMENT CHARGES, INCOME FROM INVESTMENTS ETC. IN VIEW OF THE NATURE AND ACTIVITIES BEING CARRIE D OUT BY THE AUTHORITY AS WELL AS THE LEGAL STATUS DISCUSSED IN THE FOREGOING PARAGRAPHS, ITS CLAIM FOR EXEMPTION U NDER SECTION 11 OF THE I.T. ACT CANNOT BE ENTERTAINED. 6. BEFORE THE CIT (A) ASSESSEE RAISED CERTAIN FUNDAMEN TAL ISSUES I.E. (A) WHETHER DURING THE CURRENCY OF REGISTRATIO N GRANTED BY THE DIT (E), AO CANNOT DENY REGISTRATION AND REFUSE EXE MPTION AND (B) ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 5 OF 12 WHETHER ASSESSEE IS ENTITLED TO EXEMPTION UNDER SEC TION 11 TO 13 IF THE REGISTRATION GRANTED IN SECTION 12A WERE TO BE IGNORED BY AO. 7. AFTER CONSIDERING THE SUBMISSIONS THE CIT (A) UPHEL D ASSESSEES CONTENTION THAT AO IS NOT ENTITLED TO EX AMINE WHETHER SUCH TRUST OR INSTITUTION WAS CREATED FOR CHARITABL E OR RELIGIOUS PURPOSE OR NOT ONCE IT WAS REGISTERED UNDER SECTION 12A. THE LEARNED CIT (A) RELIED ON THE FOLLOWING DECISIONS: I) INCOME TAX OFFICER VS. MRS. DWARIKA PRASAD TRUST (1989), 30 ITD 84 (DELHI) II) AUDIT BUREAU OF CIRCULATION VS. ADIT, 55 ITD 408 (BOM.) III) U.S. SRIVASTAVA EDUCATIONAL MEMORIAL SOCIETY VS. AC IT, 30 SOT 151 (LUCKNLOW) IV) STOCK EXCHANGE OF AHMEDABAD VS. ACIT 74, ITD 1 V) SURAT CITY GYMKHANA VS. ACIT 106 TAXMANN, 114 AHD (MAG.) THE LEARNED CIT (A) ALSO RELIED ON THE FOLLOWING HI GH COURT JUDGMENTS: A) MADHYA PRADESH MADHYAM VS. CIT (2002), 256 ITR 277 (MP) B) HIRALAL BHAGWAT VS.CIT (2000) 246 ITR 188 (GUJ.) 8. FOLLOWING THE DECISIONS QUOTED ABOVE OF VARIOUS HIG H COURTS AND DIFFERENT BENCHES OF THE TRIBUNAL, THE CIT (A) HELD THAT IN THE ASSESSMENT PROCEEDINGS AO HAS TO GIVE EFFECT TO THE REGISTRATION GRANTED UNDER SECTION 12A AFTER SATISFYING HIMSELF TO THE CORRECTNESS OF APPLICATION OF INCOME OF SUCH TRUST OR INSTITUTI ONS OR ACCUMULATION OF SUCH INCOME IN ACCORDANCE WITH SECT ION 11. HE ALSO DISTINGUISHED THE DECISION OF THE HON'BLE ALLA HABAD HIGH COURT IN THE CASE OF FIFTY GENERATION EDUCATIONAL SOCIETY VS. CIT, 185 ITR 634 (ALLAHABAD) RELIED UPON BY AO TO CONCLUDED THAT RELIANCE DECISION BY AO IS INCORRECT. THE CIT (A) ANALYZED T HE SAID DECISION AND CAME TO THE CONCLUSION THAT DECISION IN THIS CA SE IS CONSISTENT WITH THE OTHER DECISIONS QUOTED ABOVE THAT ONLY THE ISSUE OF APPLICATION OF INCOME OF THE TRUST OR INSTITUTION H AS TO BE EXAMINED ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 6 OF 12 BY AO IN SECTION 11, WHEREAS WHETHER THE TRUST IS C REATED FOR CHARITABLE PURPOSES OR NOT HAS TO BE EXAMINED BY TH E CIT/DIT UNDER SECTION 12A. FOR THE REASONS MENTIONED IN THE ORDER, HE HELD THAT AO WRONGLY ASSUMED THE JURISDICTION TO EXAMINE WHETHER THE TRUST OR INSTITUTION WAS CREATED WHOLLY FOR CHARITA BLE OR VARIOUS PURPOSES AND WHETHER THE REGISTRATION GRANTED UNDER SECTION 12A WAS RIGHT OR WRONG. 9. THE CIT (A) ALSO HELD ON THE ISSUE WHETHER A LOCAL AUTHORITY IS ENTITLED TO EXEMPTION UNDER SECTION 11, 12 AND 13. FOLLOWING THE DECISION OF THE ITAT AHMEDABAD BENCH IN THE CASE OF GUJARAT MARITIME BOARD VS. CIT (2005) 147 TAXMAN 31 (MAG.) WHICH IN TURN WERE UPHELD BY THE HON'BLE GUJARAT HIGH COURT AND F URTHER AFFIRMED BY THE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT MARITIME BOARD 295 ITR 561 AND FURTHER ON THE CONCLUSIONS DERIVED FROM THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. AP STATE ROADWAYS TRANSPORT CORPORATION 159 ITR 1 AND DIT VS. BHARAT DIAMOND BOURSE 259 ITR 280 IT WAS HELD THAT FOR THE PURPOSE OF FALLING UNDER SECTION 11 IT IS NOT NECES SARY THAT THE STATUS OF ASSESSEE SHOULD BE THAT OF A TRUST AND A NY INSTITUTION OR TRUST IS ENTITLED TO CLAIM EXEMPTION, IF IT IS SATI SFIED THE CONDITIONS MENTIONED IN SECTION 11 TO 13. 10. THE CIT (A) FURTHER CONSIDERED IN GROUND NO.3 THE F INDINGS OF AO THAT THE ACTIVITIES OF ASSESSEE ARE NOT GENUINE AND THEY ARE NOT CHARITABLE IN NATURE. ON THIS ISSUE ALSO SINCE THE LIST OF PRESENT ACTIVITIES UNDERTAKEN BY ASSESSEE ARE FOR THE PUBLI C AT LARGE WHICH WAS ACCEPTED AT THE TIME OF GRANT OF REGISTRATION U NDER SECTION 12A, AO WAS PRECLUDED FROM MAKING INQUIRY ABOUT THE GENU INENESS OF THE INSTITUTION AND CORRECTNESS OF THE CERTIFICATE REGARDING THE ACTIVITIES OF THE INSTITUTIONS BEING CHARITABLE. HE HELD THAT AO WAS EMPOWERED TO VERIFY THE APPLICATION OF INCOME ONLY AND WAS PRECLUDED FROM MAKING INQUIRIES ABOUT THE GENUINENE SS OF THE INSTITUTION AS SUCH. ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 7 OF 12 11. THE REVENUE IS AGGRIEVED ON THE ABOVE AND RAISED TH E GROUNDS AS UNDER: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT (A) ERRED IN DIRECTING AO TO A LLOW EXEMPTION UNDER SECTION 11 OF THE IT ACT, 1961 IGNO RING THE ELABORATE DISCUSSION OF THE ISSUES AND FACTS AN D CIRCUMSTANCES OF THE CASE BY AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT (A) ERRED IN HOLDING THAT AO H AS WRONGLY HELD THAT THE APPELLANT IS NOT ENTITLED TO EXEMPTION BECAUSE IT IS NOT TRUST AND THAT BECAUSE IT IS NO LONGER A LOCAL AUTHORITY FOR THE PURPOSE OF SECTION 10(20) AND THEREFORE, BY EXCLUSION NOT ENTITLED TO EXEMPTI ON UNDER SECTION 11. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THE FINDINGS OF AO THAT THE ACTIVITIES OF THE APPELLANT ARE NOT GENUINE AND NOT CHARITABLE IN NATURE 12. THE LEARNED COUNSEL PLACED ON RECORD THE COORDINATE BENCH DECISION ON THE ISSUES IN ASSESSEES CASE SIMILARLY CONSIDERED IN THE CASE OF SLUM REHABILITATION AUTHORITY (SUPRA) AND M AHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORITY (SUPRA) WHEREA S THE LEARNED CIT (DR) RELIED ON THE ORDERS OF AO. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS AND GONE THROUGH THE CASE LAWS RELIED UPON BY THE P ARTIES. SO FAR AS THE MERITS OF THE CASE ARE CONCERNED, IN OUR OPINIO N, THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF GUJARAT MARITIME BOARD 259 ITR 561 (SC) ARE SQUARELY APPLIC ABLE TO ASSESSEES CASE. THE COORDINATE BENCH IN THE CASE O F SLUM REHABILITATION AUTHORITY (SUPRA) HAS CONSIDERED THE SIMILAR ISSUE HELD AS UNDER:- 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES, PERUSED THE RECORDS AND GONE THROUGH THE CASE LAWS RELIED ON BY THE PARTIES. WE FIND THAT, IN THE PREC EDING YEARS, WHEN THE REVENUES APPEALS WERE DISMISSED FO R WANT OF THE COD APPROVAL. SO FAR AS MERITS OF THE C ASE IS CONCERNED, IN OUR OPINION, THE PRINCIPLES LAID D OWN BY THE HONBLE SUPREME COURT IN THE CASE OF GUJARAT ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 8 OF 12 MARITIME BOARDS (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE. 5. IT IS NECESSARY TO REPRODUCE SUB-SEC. (15) OF SE C. 2 OF THE ACT, WHICH DEFINES TERM CHARITABLE PURPOSE WHICH READS AS UNDER:- CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONM ENT INCLUDING WATERSHEDS, FORESTS AND WILDLIFE AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN T HE 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 OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. 6. IN THE CASE OF GUJARAT MARITIME BOARDS (SUPRA) WHILE INTERPRETING THE EXPRESSION CHARITABLE PURPO SE IN SECTION 2(15) OF THE I.T. ACT, THE HONBLE SUPRE ME COURT HAS HELD AS UNDER:- 14. WE HAVE PERUSED NUMBER OF DECISIONS OF THIS COURT WHICH HAVE INTERPRETED THE WORDS, IN SECTION 2(15), NAMELY, ANY OTHER OBJECT OF GENERALLY PUBLI C UTILITY. FROM THE SAID DECISIONS IT EMERGES THAT T HE SAID EXPRESSION IS OF THE WIDEST CONNOTATION. THE WORD GENERAL IN THE SAID EXPRESSION MEANS PERTAINING TO A WHOLE CLASS. THEREFORE, ADVANCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM BENEFIT TO AN INDIVIDUAL OR A GROUP OF INDIVIDUALS WOULD BE A CHARITABLE PURPOSECIT V. AHMEDABAD RANA CASTE ASSOCIATION [1983] 140 ITR 1 (SC). THE SAID EXPRESSION WOULD PRIMA FACIE INCLUDE ALL OBJECTS WHICH PROMOTE THE WELFARE OF THE GENERAL PUBLIC. IT CANNOT BE SAID THAT A PURPOSE WOULD CEASE TO BE CHARITABLE EVEN IF PUBLIC WELFARE IS INTENDED TO BE SERVED. IF THE PRIMARY PURPOSE AND THE PREDOMINANT OBJECT ARE TO PROMOTE THE WELFARE OF THE GENERAL PUBLIC THE PURPOSE WOULD BE CHARITABLE PURPOSE. WHEN AN OBJECT IS TO PROMOTE OR PROTECT THE INTEREST OF A PARTICULAR TRADE OR INDUS TRY ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 9 OF 12 THAT OBJECT BECOMES AN OBJECT OF PUBLIC UTILITY, BU T NOT SO, IF IT SEEKS TO PROMOTE THE INTEREST OF THOS E WHO CONDUCT THE SAID TRADE OR INDUSTRY CIT V. ANDHRA CHAMBER OF COMMERCE 55 ITR722 (SC). 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, WOULD NOT PREVENT THE INSTITUTION FROM BEING A VALID CHARITYADDL. CIT V. SURAT ART SILK CLOTH MFRS. ASSOCIATION 121 ITR 1 (SC). 15. THE PRESENT CASE IN OUR VIEW IS SQUARELY COVERED BY THE JUDGMENT OF THIS COURT IN THE CASE O F CIT V. ANDHRA PRADESH STATE ROAD TRANSPORT CORPN. 159 ITR 1 IN WHICH IT HAS BEEN HELD THAT SINCE THE CORPORATION WAS ESTABLISHED FOR THE PURPOSE OF PROVIDING EFFICIENT TRANSPORT SYSTEM, HAVING NO PROFIT MOTIVE, THOUGH IT EARNS INCOME IN THE PROCESS, IT IS NOT LIABLE TO INCOME TAX. IN TH E PRESENT CASE, THE SLUM DEVELOPMENT AUTHORITIES IS ESTABLISHED FOR PROVIDING RESIDENTIAL SETTLEMENTS T O THE SLUM DWELLERS WITHOUT ANY PROFIT MOTIVE. MOREOVER, PRIMARY PURPOSE AND THE PREDOMINANT OBJECT ARE TO PROMOTE THE WELFARE OF THE GENERAL PUBLIC BY PROVIDING BETTER RESIDENTIAL ACCOMMODATIONS TO SLUM DWELLERS AND ECONOMICALLY DEPRIVED CLASS OF SOCIETY AND SAID PURPOSE WOULD BE CHARITABLE IN NATURE ONLY. HENCE, IN OUR HUMBLE OPINION ASSESSEES CASE IS SQUARELY COVERED BY THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GUJARAT MARITIME BOARDS (SUPRA). 7. IN OUR OPINION, THE ACTIVITIES OF THE SRA, PRESE NT ASSESSEE ARE CHARITABLE IN NATURE AND HENCE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S.11 OF THE I. T. ACT. MOREOVER, THE ASSESSEE HAS BEEN ALSO GRANTED T HE REGISTRATION U/S.12AA THAT HAS NOT BEEN CANCELLED. THEREFORE, IN OUR OPINION, IN THE LIGHT OF OUR ABOV E DISCUSSION NO INTERFERENCE IS CALLED IN THE ORDER U NDER CHALLENGED BEFORE US AND WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT (A) AND DISMISS THE GROUND TAK EN BY THE REVENUE. SIMILAR VIEW WAS ALSO EXPRESSED BY THE COORDINATE B ENCH IN THE CASE OF MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTH ORITY IN ITA NO.5758/MUM/2010 WHERE THE COORDINATE BENCH HELD AS UNDER: ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 10 OF 12 3. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABI LITY OF DEDUCTION UNDER SECTION 11 OF THE INCOME TAX ACT IN CASE OF THE ASSESSEE. THERE IS NO DISPUTE THAT THE ASSES SEE HAS BEEN REGISTERED UNDER SECTION 12AA OF THE INCOME TA X ACT BY THE DIT(E) WHICH MEANS THAT CHARITABLE CHARACTER OF THE ASSESSEE IS NOT IN DISPUTE. THEREFORE, EXEMPTION UN DER SECTION 11 IN CASE OF THE ASSESSEE CAN NOT BE DENIE D. WE ALSO FIND THAT IDENTICAL DISPUTE HAD ARISEN IN CASE OF SRA IN WHICH THE TRIBUNAL IN ITA NO.5150/MUM/2010 NOTED THAT CHARITABLE PURPOSE INCLUDED ADVANCEMENT OF ANY OTHER JOB OF GENERAL PUBLIC UTILITY. MOREOVER THE I NSTITUTION HAD ALSO BEEN REGISTERED UNDER SECTION 12A BY THE DEPARTMENT WHICH ALSO CONFIRMED ITS CHARITABLE STAT US. THE TRIBUNAL, THEREFORE, HELD THAT EXEMPTION UNDER SECTION 11 COULD NOT BE DENIED. THE FACTS IN CASE OF THE AS SESSEE ARE IDENTICAL, THEREFORE, RESPECTFULLY FOLLOWING TH E DECISION OF THE TRIBUNAL IN THE CASE OF SRA (SUPRA), WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) ALLOWING THE CLAIM OF EXEMPTION UNDER SECTION 11 TO THE ASSESSEE. ACCORDI NGLY THE ORDER OF CIT(A) IS UPHELD. 14. THE FACTS OF ASSESSEE ARE SIMILAR TO THE OTHER TWO INSTITUTIONS CONSIDERED BY THE COORDINATE BENCH, AS THEY WERE AL SO THE LOCAL AUTHORITY CREATED BY THE GOVT. OF MAHARASHTRA AND C ONSEQUENT TO THE AMENDMENT BROUGHT OUT IN FINANCIAL YEAR 2002 TO THE PROVISION OF SECTION 10(20) AND 10(20A), THE ENTITIES BECOME TAXABLE. SUBSEQUENTLY, ASSESSEES APPLIED FOR EXEMPTION AND G OT REGISTRATION UNDER SECTION 12AA. SINCE THE FACTS ARE SIMILAR, RE SPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION, WE UPHOLD THE ORDERS OF THE CIT (A) ON THIS ISSUE AND DISMISS THE REVENUE G ROUNDS. ACCORDINGLY THE REVENUE APPEAL IS DISMISSED. ITA NO.5062/MUM/2009. 15. IN THIS APPEAL ASSESSEE IS CONTESTING THE FOLLOWING TWO GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS )- XXXII, MUMBAI (THE CIT (A)) ERRED IN NOT ADJUDICA TING THE ACTION OF THE ASSTT. DIRECTOR INCOME TAX (EXEMPTIONS)-1(1), MUMBAI (AO) IN MAKING NOTIONAL ADDITION ON ACCOUNT OF INTEREST AGGREGATING TO ` .124.24 ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 11 OF 12 CRORE ON LOANS GIVEN AND DEPOSITS MADE WITH VARIOUS PUBLIC SECTOR UNDERTAKINGS (PSU)/ GOVT. OF MAHARASHTRA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) ERRED IN UPHOLDING THE ACTI ON OF AO IN NOT ALLOWING EXEMPTION TO THE APPELLANT UNDER SECTION 10(20) OF THE ACT . 16. BRIEFLY STATED, AO WHILE DENYING THE BENEFIT OF SEC TION 11 TO ASSESSEE HELD THAT ASSESSEE IS NOT A LOCAL AUTHORIT Y AND FURTHER ALSO HELD THAT ASSESSEE HAS NOT ACCOUNTED FOR THE AMOUNT OF ` 124.24 CRORES OF INTEREST ON LOANS GIVEN AND DEPOSITS MADE WITH VARIOUS PUBLIC SECTOR UNDERTAKINGS/GOVT. OF MAHARASHTRA. AF TER CONSIDERING THE SUBMISSIONS OF ASSESSEE, THE CIT (A) CONSIDERED THAT AS ASSESSEE IS ENTITLED FOR EXEMPTION OF INCOME, THE GROUND OF BRINGING TO TAX NOTIONAL INTEREST BECOMES INFRUCTUOUS. HOWEVER, HE ON THE ISSUE OF ASSESSEE BEING LOCAL AUTHORITY, AFTER DISCUSSION IN THE ORDER, HELD THAT ASSESSEE IS NOT A LOCAL AUTHORITY FOR THE PURP OSE OF SECTION 10(20). IN DOING SO HE RELIED ON THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF ADITYAPUR INDUSTRIAL AREA DEV ELOPMENT AUTHORITY, 283 ITR 97 (SC), U.P. STATE ROAD TRANSPO RT CORPORATION VS. CIT, 286 ITR 350, CALCUTTA STATE TRANSPORT CORPORATION - VS - CIT 219 ITR 515 (SC) AND CIT VS. U.P. FOREST CORPORATION, 230 ITR 945 (SC) WHEREIN IT HAS BEEN H ELD THAT INSTITUTIONS SET UP FOR THE SPECIFIC PURPOSES, DOES NOT AMOUNT TO LOCAL AUTHORITY FOR THE PURPOSE OF SECTION 10(20) OF THE I.T. ACT. 17. IN THE COURSE OF ARGUMENTS THE LEARNED COUNSEL SQUA RELY ADMITTED THAT THESE ISSUES BECAME ACADEMIC IN NATUR E AND CAN BE LEFT OPEN FOR ADJUDICATION AT THE RELEVANT POINT OF TIME IN VIEW OF THE GRANTING BENEFITS OF SECTION 11 TO ASSESSEE. HE FAI RLY ADMITTED THAT IN CASE THE REVENUE APPEAL IS DISMISSED, THERE IS N O NEED FOR ADJUDICATION OF THE GROUNDS RAISED BY ASSESSEE. SIN CE WE HAVE DISMISSED THE REVENUE APPEAL AND UPHELD THE ORDER O F THE CIT (A) GRANTING BENEFIT OF SECTION 11 TO ASSESSEE, THIS IS SUE BECOMES ACADEMIC IN NATURE AND SO NOT ADJUDICATED. ISSUES A RE LEFT OPEN FOR ITA NOS.5584 AND 5062 MMRDA MUMBAI-F-BENCH PAGE 12 OF 12 CONSIDERATION IN AN APPROPRIATE CASE AS AND WHEN RE QUIRED. THE GROUNDS ARE, THEREFORE CONSIDERED REJECTED. 18. IN THE RESULT, BOTH THE APPEALS FILED BY REVENUE AN D ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2012. SD/- SD/- (VIVEK VARMA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 29 TH JUNE, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI