2021 (9) TMI 175 - AT - Income Tax

Exemption u/s 11 - Charitable object u/s 2(15) - whether the activity of the assessee as engaged in the development of urban area of Gandhinagar which is in the nature of advancement of general public utility not hit by the newly introduced first and second proviso to sec. 2(15) ? - HELD THAT - After following the decision in the cases of Ahmedabad Urban Development Authority 2017 (5) TMI 1468 - GUJARAT HIGH COURT and CIT Vs. Gujarat Industrial Development Corporation 2017 (7) TMI 811 - GUJARAT HIGH COURT the Co-ordinate Bench of the ITAT has adjudicated the similar issue on identical fact in the case of the assessee itself 2019 (7) TMI 1608 - ITAT AHMEDABAD wherein the claim of the assessee has been allowed - Decided in favour of assessee.

Summary

Issues Involved:
Interpretation of proviso to section 2(15) of the Income Tax Act, 1961 regarding exemption u/s. 11, accumulation of funds u/s. 11(1)(2), capital expenditure, and applicability of judicial pronouncements on similar cases.

Detailed Analysis:
1. Interpretation of Proviso to Section 2(15): The case involved determining whether the activities of the assessee, an urban development authority, fell under the category of "advancement of any other object of general public utility," impacting the eligibility for exemption u/s. 11 of the Act. The assessing officer argued that the fees charged by the authority for infrastructural facilities constituted commercial activities, triggering the proviso to section 2(15) and disallowing deductions u/s. 11 and 12.

2. Accumulation of Funds and Capital Expenditure: The assessing officer disallowed the accumulation of funds and capital expenditure, citing the applicability of the proviso to section 2(15). The officer contended that once the proviso applied, the benefits under sections 11 and 12 could not be extended further. The dispute centered on whether the activities of the authority qualified for exemptions under these sections.

3. Judicial Pronouncements and Precedents: The appellant cited previous decisions by the Co-ordinate Bench of ITAT Ahmedabad and the Hon'ble Jurisdictional High Court of Gujarat in similar cases involving urban development authorities. These decisions, such as Ahmedabad Urban Development Authority vs. ACIT and CIT vs. Gujarat Industrial Development Corporation, supported the appellant's claim for exemption u/s. 11 based on the nature of the activities carried out by the authority.

4. Applicability of Precedents and Dismissal of Appeal: The Tribunal, after reviewing the cited judicial pronouncements and precedents, upheld the appellant's claim for exemption u/s. 11. Relying on the decisions of the Co-ordinate Bench and the Jurisdictional High Court, the Tribunal dismissed the revenue's appeal, affirming the allowance of the appellant's claim. The decision was based on the similarity of facts and issues with the previous cases, leading to the dismissal of the revenue's appeal.

In conclusion, the judgment revolved around the interpretation of the proviso to section 2(15) of the Income Tax Act, the eligibility for exemptions u/s. 11, accumulation of funds, and capital expenditure by an urban development authority. The decision was influenced by previous judicial pronouncements and precedents, leading to the dismissal of the revenue's appeal in favor of the appellant.