2017 (7) TMI 1388 - HC - Income Tax

Exemption u/s 11 denied - Applicability of amended provisions of section 2(15) - ITAT holding that in this case proviso to section 2 (15) is not applicable because assessee authority is not carrying out activity with any profit motive but the predominant object is welfare of people at large - whether Tribunal was justified in restoring the registration u/s 12AA to the assessee by holding that the assessee authority has been cheated with the object of general public utility within the meaning of Section 2 (15) of the Income Tax Act ? - HELD THAT - Issue raised in this appeal is squarely covered by this Court s judgment in M/s Yamuna Expressway Industrial Development Authority 2017 (4) TMI 1154 - ALLAHABAD HIGH COURT and other two connected appeals decided on 21.04.2017 2017 (4) TMI 1154 - ALLAHABAD HIGH COURT - Decided against Revenue.

Summary

Issues Involved:
1. Interpretation of Section 12AA of the Income Tax Act, 1961 regarding restoration of registration.
2. Application of Section 2(15) of the Income Tax Act in determining the tax-exempt status of an entity.

Analysis:
1. The appeal in question arose from a judgment by the Income Tax Appellate Tribunal, Lucknow Bench, regarding the restoration of registration under Section 12AA of the Income Tax Act, 1961. The substantial questions of law raised pertained to whether the Tribunal was justified in restoring the registration to the assessee authority, which was alleged to have been cheated with the object of general public utility as defined in Section 2(15) of the Act. The Tribunal's decision was challenged on the grounds of factual and legal interpretation.

2. The Court noted that the issue raised in the present appeal was similar to a previous judgment delivered in Income Tax Appeal No. 107 of 2016 involving Commissioner of Income Tax, Lucknow Vs. M/s Yamuna Expressway Industrial Development Authority. In that case, it was determined that the proviso to Section 2(15) was not applicable as the assessee authority was not operating with a profit motive but with the predominant objective of promoting the welfare of the public. The Court relied on the reasoning and decision from the earlier judgment to answer the questions raised in the current appeal against the Revenue.

3. Based on the precedent set in the earlier judgment and the interpretation of relevant sections of the Income Tax Act, the Court dismissed the appeal, affirming the Tribunal's decision to restore the registration to the assessee authority. The dismissal was grounded in the understanding that the entity's activities were primarily geared towards the welfare of the public, aligning with the objectives outlined in Section 2(15) of the Act. The decision highlighted the importance of the predominant purpose and motive behind an entity's operations in determining its tax-exempt status under the law.