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TMI Blog2012 (8) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - Decided against Revenue - ITA Nos. 5584 and 5062/2009 - - - Dated:- 29-6-2012 - B. Ramakotaiah And Vivek Varma, JJ. Department by: Sasmita Misra, CIT (DR) Assessee by: Niraj Sheth Ronak G. Doshi ORDER Per B. Ramakotaiah, A.M. These are the cross appeals by Revenue and Assessee for the assessment year 2006-07. 2. We have considered the rival arguments of the learned DR and the Ld.Counsel. Learned Counsel also placed on record the Coordinate Bench decision in the case of Slum Rehabilitation Authority, Mumbai in ITA No.5150/Mum/2010 dated 30.9.2011 and Maharashtra Housing Area Development Authority in ITA No.5758/Mum/2010 dated 16-11-2011. 3. Briefly stated, the issue in this appeal is whether assessee is entitled for exemption under section 11 of the Act. The Mumbai Metropolitan Region Development Authority (MMRDA) was a local authority created by the Government of Maharashtra as per the MMRDA Act, 1974. Assessee was claiming exemption of its income as per section 10 (20A) of the IT. Act till A.Y.2002-03. Section 10(20A) was removed from the statute w.e.f. AY.2003-04. Furthermore, section 10(20) which defined local autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MMRDA hitherto belonging to the State Government is considered not to have created a lawful Trust within the meaning of term Trust used for the purpose of section 11, 12, 12A, 12AA and 13 of the I.T. Act, 1961. (2) The MMRDA was created as a Local Authority within the meaning of term person for the purpose of Income Tax Act, 1961 and w.e.f. its inception to 2002, the MMRDA continues to be Local Authority in the eyes of law. It cannot be considered as a Public Trust or Charitable Trust or Trust of any other kind. (3) On a proper interpretation of the intention behind the enactment of the provision of section 11, 12, 12A, 12AA and 13 of the I.T. Act, 1961, it appears that the tax incentive proposed in the scheme of exemption from charge of income tax is more applicable to the case of private individual and groups and association who create valid Public Trust and dedicate its income for the purpose of general public welfare,. The scheme of section 11 to 13 specifically the restrictive provision of section 13 cannot be made applicable to the case of public enterprises/public sector undertakings/public sector utility service provider. The basic incentive provided in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of income of such Trust or Institutions or accumulation of such income in accordance with section 11. He also distinguished the decision of the Hon'ble Allahabad High Court in the case of Fifty Generation Educational Society vs. CIT, 185 ITR 634 (Allahabad) relied upon by AO to concluded that reliance decision by AO is incorrect. The CIT (A) analyzed the said decision and came to the conclusion that decision in this case is consistent with the other decisions quoted above that only the issue of application of income of the Trust or Institution has to be examined by AO in section 11, whereas whether the Trust is created for charitable purposes or not has to be examined by the CIT/DIT under section 12A. For the reasons mentioned in the order, he held that AO wrongly assumed the jurisdiction to examine whether the Trust or Institution was created wholly for charitable or various purposes and whether the registration granted under section 12A was right or wrong. 9. The CIT (A) also held on the issue whether a local authority is entitled to exemption under section 11, 12 and 13. Following the decision of the ITAT Ahmedabad Bench in the case of Gujarat Maritime Board vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um Rehabilitation Authority (Supra) and Maharashtra Housing Area Development Authority (Supra) whereas the learned CIT (DR) relied on the orders of AO. 13. We have heard the rival submissions and perused the records and gone through the case laws relied upon by the parties. So far as the merits of the case are concerned, in our opinion, the principles laid down by the Hon'ble Supreme Court in the case of Gujarat Maritime Board 259 ITR 561 (SC) are squarely applicable to assessee s case. The Coordinate Bench in the case of Slum Rehabilitation Authority (Supra) has considered the similar issue held as under:- 4. We have heard the rival submissions of the parties, perused the records and gone through the case laws relied on by the parties. We find that, in the preceding years, when the revenue s appeals were dismissed for want of the COD approval. So far as merits of the case is concerned, in our opinion, the principles laid down by the Hon ble Supreme Court in the case of Gujarat Maritime Boards (supra) are squarely applicable to the assessee s case. 5. It is necessary to reproduce sub-sec. (15) of Sec. 2 of the Act, which defines term charitable purpose which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution from being a valid charity-Addl. CIT v. Surat Art Silk Cloth Mfrs. Association 121 ITR 1 (SC). 15. The present case in our view is squarely covered by the judgment of this Court in the case of CIT v. Andhra Pradesh State Road Transport Corpn. 159 ITR 1 in which it has been held that since the Corporation was established for the purpose of providing efficient transport system, having no profit motive, though it earns income in the process, it is not liable to income tax. In the present case, the Slum Development Authorities is established for providing residential settlements to the slum dwellers without any profit motive. Moreover, primary purpose and the predominant object are to promote the welfare of the general public by providing better residential accommodations to slum dwellers and economically deprived class of society and said purpose would be charitable in nature only. Hence, in our humble opinion assessee s case is squarely covered by the principles laid down by the Hon ble Supreme Court of India in the case of Gujarat Maritime Boards (supra). 7. In our opinion, the activities of the SRA, present assessee are charitable in nature and hence, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 062/Mum/2009. 15. In this appeal assessee is contesting the following two grounds: 1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals)- XXXII, Mumbai ( the CIT (A) ) erred in not adjudicating the action of the Asstt. Director Income Tax (Exemptions)-1(1), Mumbai ( AO ) in making notional addition on account of interest aggregating to Rs..124.24 crore on loans given and deposits made with various Public Sector Undertakings (PSU)/ Govt. of Maharashtra. 2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in upholding the action of AO in not allowing exemption to the Appellant under section 10(20) of the Act . 16. Briefly stated, AO while denying the benefit of section 11 to assessee held that assessee is not a local authority and further also held that assessee has not accounted for the amount of ₹ 124.24 crores of interest on loans given and deposits made with various public sector undertakings/Govt. of Maharashtra. After considering the submissions of assessee, the CIT (A) considered that as assessee is entitled for exemption of income, the ground of bringing to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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