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TMI Blog2016 (7) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 12A was in very much existence. Thus, the Revenue has not made out the case that the condition on which the registration was allowed has changed from earlier year or in subsequent year as well as in the present year. Allahabad High Court ruling in case of CIT vs. Lucknow Development Authority relied upon wherein it was held that the development authorities will not be hit by the proviso to Sec 2 (15). There was no change in the charitable purpose while doing the activity of development by the assessee. It is part of development only which is the object of the assessee since the beginning. - Decided against revenue - I.T.A. No. 3005/DEL/2013 - - - Dated:- 10-6-2016 - Shri G. D. Agrawal, Vice President And Smt Suchitra Kamble, Judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas the activities of the assessee during the year consideration are not in conformity with its main object and the decision of the Ld.CIT(A), Bareilly is against the amended provisions of Section 2(15) of the Income Tax Act, 1961. 4. That the Ld. Commissioner of Income Tax (appeal), Barreilly erred in holding that income of the assessee is exempt as it sis registered under section 12AA whereas the registration u/s 12AA does not confer blanket exemption of income. 5. Any other ground which may be taken during the course of the appellate proceedings. 3. The assessee was granted registration u/s 12AA of the Income Tax Act, 1961 w.e.f 1/4/2003. The A.O examined the eligibility of the assessee for exemption as per section 11 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome eligible for exemption u/s 11 of the Act and there was no change in the facts and circumstance of the cases during the year under consideration. The CIT(A) further observed that the A.O has never denied the fact that the assessee is registered u/s 12AA of the Income Tax Act. The CIT(A) partly allowed the appeal of the assessee vide instant order. 5. The Ld. AR submitted that the present matter is covered by the decision of Co- ordinate bench of ITAT in assessee s own case for the preceding year Assessment Year 2007-08 in ITA No. 2276/Del/2011 dated 21/10/2011 which has been thereafter followed by ITAT in assessee s own case on identical issue in the succeeding year i.e. Assessment Year 2008-09 vide order dated 25/01/2012 ITA No. 2579 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del.) held that the said proviso applies in a situation where the main objective is essentially to carry on business for the purpose of profit. But the situation is different in the assessee s case where the main objective of town planning has been held to be charitable. Registration u/s 12A was very much in existence during the subject year further the ITAT in assessee s own cases for the preceding years has held that the activity of construction sale of plots is only incidental to the objective of town planning which is a charitable activity as duly held by ITAT; 7. The Ld. AR further submitted that the Assessee being a development authority has been established under the UP Urban Planning Development Act 1973. Under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case. The Ld. DR further submitted that as per para 3 of the Circular, proviso to Section 2(15) will apply only to entities whose purpose is advancement of any other object of general public utility i.e. the fourth limb of the definition of charitable purpose contained in section 2(15). Hence, such entities will not be eligible for exemption under Section 11 or under Section 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 9. We have heard both the parties and perused all the records. The status of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 12A was in very much existence. Thus, the Revenue has not made out the case that the condition on which the registration was allowed has changed from earlier year or in subsequent year as well as in the present year. The reliance of the decision of the Jurisdictional High Court (Allahabad High Court) in case of CIT vs. Lucknow Development Authority vide its decision dated 16/9/2013 2013-TIOL-795-Hon'ble High Court-ALL is relevant. The Hon ble Allahabad High Court after examining the said objects in light of proviso to Sec 2(15) has held that development authorities will not be hit by the proviso to Sec 2 (15). The reliance on the judgments by the Ld. DR are on different footing altogether. The reliance of the Board Circular is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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