Haryana Urban Development Authority, Panchkula V. CIT, Panchkula

ITA 628/CHANDI/2004

• Counselvise Citation: 62821514 RSA 2004
• Duration Of Justice: 11 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 21-05-2004
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNIL VERMA
• Assessee Lawyers: A K JINDAL; RATTAN KAUR
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.628/CHD/2004 (ASSESSMENT YEAR : 2003-04) M/S HARYANA URBAN DEVELOPMENT VS. THE C.I.T., PANCHKULA. PANCHKULA. PAN: AAAAH0087M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.JINDAL & MS.RATTAN KAUR RESPONDENT BY : SHRI SUNIL VERMA, DR DATE OF HEARING : 03.09.2015 DATE OF PRONOUNCEMENT : 10.09.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX, PANCHKULA DATED NIL FOR ASSESSMENT YEAR 2003-04. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL: 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX , PANCHKULA IS BAD, ILLEGAL AND AGAINST THE FACTS & LA W AND DESERVES TO BE CANCELLED. 2. THAT THE COMMISSIONER OF INCOME TAX, PANCHKULA HAS ERRED BY NOT CONDONING THE DELAY FOR FILING OF APPLICA TION U/S 12A (A) OF INCOME TAX ACT IN FORM NO. 10A OF INCOME TAX A CT. 2 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX, PA NCHKULA HAS ERRED BY NOT GRANTING REGISTRATION U/S 12AA OF INCOME TAX ACT, 1961. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS ERR ED BY TREATING THE APPELLANT, AT PAR WITH PRIVATE COLONI ZERS. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX, PA NCHKULA HAS ERRED BY IGNORING THE FACT THAT THE APPELLANT AUTHORITY WA S ENACTED UNDER THE ACT FOR THE PURPOSES OF DEALING AND SATISFYING THE NEED FOR HOUSING ACCOMMODATION OR FOR THE PURPOSES OF PLANNING AND DEVELOPMENT OR IMPROVEMENT OF CITIES, TOWNS AND VILLAGE OR BOTH, THEREFORE THE OBJECT OF HU DA IS FOR ADVANCEMENT OF GENERAL PUBLIC, UTILITY AND NOT TO EAR N PROFIT. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX, PANCHKULA HAS ERRED BY NOT TREATING THE OBJECT OF HUDA AS FOR CHARITABLE PURPOSE WITHIN THE MEANING OF SECTI ON 2(15) OF INCOME TAX ACT. 7. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OFF. 3. IN SUBSTANCE, ALL THE GROUNDS RAISED AS ABOVE A RE AGAINST THE ACTION OF THE LEARNED COMMISSIONER OF I NCOME TAX IN REJECTING THE APPLICATION OF THE ASSESSEE FOR GR ANT OF REGISTRATION UNDER SECTION 12A(A) OF THE IIA1, 1961 (IN SHORT THE ACT). 4. DURING THE COURSE OF HEARING, THE LEARNED COU NSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE CH ANDIGARH BENCH OF THE ITAT IN THE CASE OF PUNJAB URBAN PLAN NING & DEVELOPMENT AUTHORITY VS. CIT, REPORTED IN (2006) 1 03 TTJ (CHD), 988, DATED 1.6.2006. IT WAS ALSO SUBMITTED THAT THE 3 AIMS AND OBJECTS OF THE ASSESSEE BEING SIMILAR TO T HAT OF PUDA, THE REGISTRATION UNDER SECTION 12A OF THE ACT CANNOT BE GRANTED TO THE ASSESSEE. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE P UNJAB URBAN PLANNING & DEVELOPMENT AUTHORITY (SUPRA) AND PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX REJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION UNDER SECTION 12A(A) OF THE ACT MAY BE CONFIRMED. 6. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE ORDER IN THE CASE OF PUDA (SUPRA), AS THE AIMS AND OBJECTS OF PUDA ARE SIMILAR TO THE AIMS AND OBJECTS OF THE ASS ESSEE, THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE CHAND IGARH BENCH OF THE TRIBUNAL. THE RELEVANT FINDINGS OF T HE TRIBUNAL ARE AS UNDER : IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS , WE ARE SUPPOSED TO SEE THE PREDOMINANT OBJECT OF THE ASSES SEE. IF ALL THE OBJECTS AND ACTIVITIES ACTUALLY CARRIED OUT BY THE ASSESSEE ARE ANALYSED AND KEPT IN JUXTAPOSITION WITH THE AFO RESAID JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VIEW THAT ACTI VITIES OF THE ASSESSEE ARE MORE OF COMMERCIAL NATURE WITH PROFIT- ORIENTED INTENT, SO RID LENIENCY SHOULD BE SHOWN TO THE ASSESSE E. THE DEPARTMENT MAY ALSO GET SUPPORT FROM THE DECISION O F THE HON'BLE PATNA HIGH COURT AS PRONOUNCED IN THE CASE O F BIHAR STATE FOREST DEVELOPMENT CORPORATION VS. CIT (1997) 224 ITR 757 (PAT) WHERE THE GOVERNMENT COMPANY WAS FORMED F OR PROMOTION AND DEVELOPMENT OF FORESTRY. THE ASSESSEE - CORPORATION WAS PERMITTED UNDER MEMORANDUM OF ASSOC IATION TO ENGAGE IN COMMERCIAL ACTIVITIES AND THERE WAS NO RESTRICTION ON APPLICATION OF MONEY, THE CORPORATION WAS NOT HE LD TO BE A CHARITABLE TRUST AND CONSEQUENTLY NOT ENTITLED TO E XEMPTION. SIMILAR IS THE CASE IN THE PRESENT APPEAL OF THE AS SESSEE. 4 DURING ARGUMENTS, THE LEARNED COUNSEL FOR THE ASSES SEE INVITED OUR ATTENTION TO THE CASE OF MAHARASHTRA HO USING & AREA DEVELOPMENT AUTHORITY WHEREIN REGISTRATION WAS GRANTED. THE LEARNED CIT-DEPARTMENTAL REPRESENTATIVE CONTEND ED THAT IN THE CASE OF MARKET COMMITTEE, THE OWNERSHIP REMAINS WITH THE COMMITTEE BUT IN THE CASE OF THE ASSESSEE IT GOES TO INDIVIDUAL AND THE LEARNED CIT WAS NOT SATISFIED WITH THE EXPL ANATION OF THE ASSESSEE. LIKEWISE IN THE JUDICIAL PRONOUNCEMENT S IN NEW LIFE IN CHRIST EVANGELISTIC ASSOCIATION (NLC) VS. CIT (2 001) 165 CTR (MAD) 446 : (2000) 246 ITR 532 (MAD) AS RELIED B Y THE ASSESSEE, IT CAN BE SAID THAT IT IS A RELIGIOUS TRU ST, SO NOT APPLICABLE TO THE PRESENT FACTS AS THE ASSESSEE IS AUCTIONING THE PLOTS ON HUGE PROFITS AND EVEN THE HON'BLE COUR TS ARE INTERVENING TO ENHANCE COMPENSATION ON PETITIONS FI LED BY LAND OWNERS. HOWEVER, IF THE ARGUMENT OF THE ASSESSEE IS ANALYSED ON POINT OF GENERAL PUBLIC UTILITY, STILL IT CAN BE SAID THAT COMMERCIAL ANGLE WITH PROFIT MOTIVE IS INVOLVED WHI CH HAS BECOME PREDOMINANT OBJECT OF THE ASSESSEE. EVEN IF THIS ISSUE IS ANALYSED AS CONTENDED BY THE LEARNED COUNSEL FOR TH E ASSESSEE THAT APPLICATION OF INCOME IS NOT THE CRITERIA IN T HE LIGHT OF THE DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF FIFTH GENERATION EDUCATION SOCIETY VS. CIT (1990) 87 CTR (ALL) 169 : (1990) 185 ITR 634 (ALL), STILL WE ARE OF THE VIEW THAT IF THE OBJECTS AND REAL SITUATION IS ANALYSED, THE OBJECTS ARE NOT OF CHARITABLE NATURE. ALMOST IN EVERY ACTIVITY THERE I S A SCENT OF COMMERCIALIZATION/PROFIT MOTIVE BUT IN THE CHARITAB LE INSTITUTION NO PROFIT MOTIVE IS INVOLVED AND THE SERVICE IS DON E MAINLY WITH THE INTENT OF SOCIAL/RELIGIOUS UPLIFTMENT OF T HE MASSES IN GENERAL. ADMITTEDLY, THE ASSESSEE IS DOING SOME ACTIV ITIES LIKE HOUSING/INFRASTRUCTURE DEVELOPMENT AND THE PUBLIC IS AL SO BENEFITED BUT FOR THE SAME THE ASSESSEE HAS ALREADY CHARGED IN THE FORM OF HIDDEN COST. RATHER THE ASSESSEE IS GEN ERATING INCOME, SO NO CHARITY IS INVOLVED. WE AGREE WITH TH E CONCLUSION OF THE LEARNED CIT, AS CONTENDED BY LEARNED CIT-DEP ARTMENTAL REPRESENTATIVE, THAT A CHARITABLE INSTITUTION PROVI DES SERVICES FOR CHARITABLE PURPOSES FREE OF COST AND FOR NO GAI N AND ARE FOR THE BENEFIT OF PUBLIC AT LARGE. AS WE HAVE DISCUSSE D IN THE 5 PRECEDING PARA, THE ASSESSEE ACQUIRES LAND AT NOMINAL RATES AND AFTER DEVELOPING THE SAME, THE SAME LAND (IS SOLD) ON HIGH PROFIT WHICH CANNOT BE SAID TO BE A CHARITABLE ACTIVITY. E VEN JUST FOR ARGUMENT SAKE, UNDER THE PRESENT FACTS, IF REGISTRA TION IS GRANTED, THEN EVERY PRIVATE COLONIZER WILL CLAIM CH ARITY. THE FACILITIES WHICH ARE PROVIDED TO THE PLOT HOLDERS AR E INCIDENTAL TO THE COMMERCIAL ACTIVITY CARRIED OUT BY THE PUDA AND IF CERTAIN FACILITIES LIKE PARKS, COMMUNITY CENTER, SCHOOL ARE PROVIDED IS NOT ONLY BASIC REQUIREMENT, RATHER A TOOL OF ATTRAC TING THE INVESTORS WHEREIN THE HIDDEN COST OF THESE FACILITI ES IS ALREADY INCLUDED. IN THE ABSENCE OF THESE FACILITIES, NORMA LLY THE PURCHASER MAY NOT INVEST AND THE PRICES MAY BE LESS. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VIEW THAT THE APPLICATION OF THE ASSESSEE HAS BE EN RIGHTLY REJECTED BY LEARNED CIT. THE STAND OF THE LEARNED CIT IS UPHELD. APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED. 7. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L, WE UPHOLD THE ORDER OF THE LEARNED COMMISSIONER OF INC OME TAX REJECTING THE APPLICATION OF THE ASSESSEE FOR REGIS TRATION UNDER SECTION 12A OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF SEPTEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 10 TH SEPTEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6