2024 (6) TMI 1232 - HC - Income Tax

Eligibility of exemption from realisation of process fee development charges in view of the Niyamavali 2014 - said relief has also been pressed on the ground that the Society has already got benefits under Section 12A and 80G - petitioner which is a charitable society applied for sanction of map for construction of temple and cremation site which was so accorded by the SDA - refusal to grant exemption to the petitioner Society on the ground that from time to time notices were sent to the petitioner and at the time of sanction of map the petitioner Society was not accorded exemption under Section 12A and 80G HELD THAT - It is not in dispute that at the time of sanction of map the applications of the petitioner Society for registration under Section 12-A and 80-G of the Act 1961 were pending for approval and the same was approved by the SDA on 17.11.2014. Thereafter CIT (Exemption) Lucknow had accorded exemption to the petitioner Society under Sections 12-A and 80G of the Act 1961 on 29.03.2016 with effect from 01.04.2014. The Government order dated 19.10.2002 provides that the religious institutions which work for public and charitable purpose without earning any profit or loss and do not indulge in any business activity are exempted from development charge etc. The subsequent Government order dated 19.10.2002 had amended the previous Government order dated dated 21.05.1998. In view of the Niyamavali 2014 and the successive Government orders the petitioner Society is entitled for concession for payment of process fee development fee etc. as provided under Section 53 of the Act 1973 in the light of the exemptions so accorded by the Income Tax Department on 29.03.2016 w.e.f. 01.04.2014. Thus the impugned orders cannot sustain and the same are accordingly set aside. Writ petition is allowed and the matter is relegated to the Vice Chairman SDA to take a fresh decision within a period of six weeks from the date of production of certified copy of this order but certainly considering the Niyamavali 2014 and the exemption under Section 12A and 80G.

Summary

Issues:
- Exemption from realisation of process fee and development charges under Niyamavali, 2014
- Entitlement to concession under Section 53 of the Act, 1973
- Refusal of exemption by respondent no.3 based on lack of approval under Section 12A and 80G of the Act, 1961

Exemption from realisation of process fee and development charges under Niyamavali, 2014:
The petitioner, a Charitable Society, sought exemption from demand notices issued by respondent no.3 under Niyamavali, 2014. The Society maintained various charitable facilities and had applied for construction approvals from the Saharanpur Development Authority (SDA). The Society claimed entitlement to exemption based on its charitable status and the benefits received under Section 12A and 80G of the Income Tax Act, 1961. The High Court noted the Society's compliance with the provisions and the exemptions granted by the Income Tax Department, ultimately setting aside the demand notices and directing a fresh decision by the SDA, considering the Niyamavali, 2014, and the Income Tax exemptions.

Entitlement to concession under Section 53 of the Act, 1973:
The petitioner Society had applied for map sanction for construction projects, which were approved by the SDA. Subsequently, the Society claimed concessions for process fee and development charges under Section 53 of the Act, 1973. The Society also obtained exemptions under Section 12A and 80G of the Income Tax Act, 1961. Despite initial deposits made under protest, the respondent no.3 issued demand notices, citing lack of exemption approval at the time of map sanction. The High Court analyzed the Society's compliance with the relevant provisions and granted relief, emphasizing the entitlement to concessions under the Act, 1973, and the Income Tax exemptions.

Refusal of exemption by respondent no.3 based on lack of approval under Section 12A and 80G of the Act, 1961:
The respondent no.3 refused to grant exemption to the petitioner Society, asserting that no exemption was accorded by the Income Tax Department at the time of map sanction. The respondent no.3 issued demand notices, challenging the Society's claim for exemptions under Section 12A and 80G of the Income Tax Act, 1961. However, the High Court found that the Society's applications for Income Tax exemptions were pending at the time of map sanction, and subsequently approved, making the Society eligible for concessions under the Act, 1973. The Court set aside the impugned orders and directed a fresh decision by the SDA, considering the Society's entitlement to exemptions under the relevant laws.

This detailed analysis of the judgment showcases the issues involved, the arguments presented by the parties, and the High Court's decision based on the legal provisions and factual circumstances of the case.