2018 (9) TMI 78 - HC - Income Tax

Exemption u/s 11 - advancement of general public utility - Held that - The first issue referred to above is covered by the judgment of the Division Bench of this Court in case of Commissioner of Income tax v. Gujarat Industrial Development Corporation 2017 (7) TMI 811 - GUJARAT HIGH COURT it cannot be said that the activities carried out by the assessee can be said to be for advancement of any other object of general public utility . Considering the object and purpose for which the assessee has been established under the provisions of the Act and the activities carried out by the assessee, it cannot be said that the activities carried out by the assessee can be said to be either in the nature of trade, commerce or business, or rendering any services in relation to any trade, commerce or business for a Cess or Fee or any other consideration so as to attract proviso to Section 2 15 of the IT Act Depreciation on roads - Held that - The Tribunal observed that income from properties held under Trust would have to be arrived at in normally commercial manner without classification under various heads stated out in section 14 of the Act. The expression income has to be understood in popular or general sense. The Tribunal relied on the judgment of this Court in case of Commissioner of IncomeTax v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust 1992 (2) TMI 51 - GUJARAT HIGH COURT . The view taken by the High Court in the said judgment is approved by the Supreme Court in case of Commissioner of Income Tax v. Rajasthan and Gujarati Charitable Foundation reported in 2017 (12) TMI 1067 - SUPREME COURT

Summary

Issues:
1. Interpretation of provisions of section 2(15) of the Income Tax Act regarding the activities of the assessee trust.
2. Allowance of depreciation on roads.
3. Deletion of disallowance made under section 40(a)(ia) considering income computation under section 11(1)(a) of the Act.

Issue 1: Interpretation of Section 2(15) of the Income Tax Act:
The case involved a dispute regarding whether the activities of the respondent assessee, Gujarat Industrial Development Corporation Limited (GIDC), fell under the expression "advancement of general public utility." The High Court referred to a previous judgment where it was observed that the activities of GIDC did not align with the advancement of any other object of general public utility as per the provisions of the Act. The court noted that the purpose for which GIDC was established did not fall under the specified criteria to be considered as activities for general public utility, trade, commerce, or business.

Issue 2: Allowance of Depreciation on Roads:
The second issue revolved around the allowance of depreciation on roads amounting to a specific sum. The Tribunal analyzed the income from properties held under Trust and emphasized the need to arrive at the income in a commercial manner without classification under various heads as per section 14 of the Act. The Tribunal referred to a previous judgment by the High Court and noted that the expression "income" should be understood in a general sense. The Tribunal's decision was supported by the Supreme Court in another case, thereby affirming the approach taken by the Tribunal.

Issue 3: Deletion of Disallowance under Section 40(a)(ia):
The third issue pertained to the deletion of disallowance made under section 40(a)(ia) of a specific amount, considering the income computation under section 11(1)(a) of the Act. The Tribunal discussed this issue at length, emphasizing the need to compute income from Trust properties in a commercial manner without specific classifications. Ultimately, the High Court found no question of law arising from the issues presented and dismissed the Tax Appeal.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the need to interpret the Income Tax Act provisions in alignment with the specific activities and purposes of the assessee trust, while also considering the commercial approach to income computation from Trust properties.