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TMI Blog2011 (7) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... ant authority are undertaken/carried on in a totally commercial nature and hence the authority is not entitled to registration u/s 12A(a) of the Income Tax Act, 1961. 2. The relevant facts of the case are that the assessee made an application for registration u/s 12A(a) along with certain enclosures. Considering the same the CIT(A) required the assessee to furnish deed/instruments evidencing creation of the organization. The assessee was required to explain whether the organization is for charitable purpose and whether it was constituted to provide any charity to the public at large and whether it was free of cost. Assessee was further required to state as to how the development and other activities undertaken by the Mussorie Dehradun Development Authority (MDDA) could be considered to be of charitable nature. The assessee was also required to explain as to how the funds of MDDA were generated and the modus operandi of acquiring the land and how the same was sold out. The assessee was specifically required to address and explain as to at what rate the land was acquired and at what rate it was sold out during the A.Ys 2007-08, 2008-09, 2009-10. Further more the assessee was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Uttar Pradesh Urban Planning and Development Act no.11 of 1973 (based on Delhi Development Act, 1957) with an objective of development of Mussorie Dehradun and all developmental schemes as well as beautification of the District comes under its purview. Thus it is an organisjation set up by the State government with the specific objective of development of the area coming under the district and launching schemes for the welfare of people of district and not earning profit. If any surplus arises in any of the schemes it is also used for the purpose of development and no part of it is distributed to members or employees. 2) The Authority was set up with an objective of development of area which comes under its purview by providing housing, roads, electric installation, development and maintenance of parks (boost to environment), plantation of trees (again pertaining to environment), providing sewerage system (clean and healthy environment) are objects of general public utility (Annexure II). The objects/acts are all in the nature of charitable purpose as defined in sub section 15 of section 2 of the Act and not linked with any activity in the nature of trade, commerce or busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication for exemption u/s12AA of the Income Tax Act, 1961 was filed and your goodself has granted exemption u/s 12AA. To conclude, it is submitted that the MDDA is engaged in activities enshrined in definition of Charitable Purpose given in S.15(2) of the Income Tax Act and is entitled to a certificate of exemption u/s 12AA of the Income Tax Act and accordingly, it is most respectfully prayed that the same be granted. 5. Considering the submissions CIT was of the view that the assessee is not an Institution/organization established for charitable purposes and the assessee had failed to bring on record any documentary evidence to establish that the assessee institution/organization has come into existence with the object of charity or for a charitable purpose. The CIT was further of the view that merely because the assessee organization has been set up by the State Government to assist it in carrying on specific work does not in itself mean that the assessee organization is established for charitable purposes. The ld.authority was of the view that the development work per se is not synonymous with charity unless all the ingredients of charity are present. Reliance was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. CIT (2009) 124 TTJ (ASR) 598. 5.3. Accordingly it was considered that the facts of the case of MDDA and PUPDA along with JDA (Jalandhar Development Authority) were found to be having striking resemblances and it was concluded that the organization had not been brought into existence for charitable purposes and the activities of the organization did not render any charitable activities. On a perusal of assessee s account it was observed that the activities were commercial as interest from its customers on belated payments had been charged. Moreover assessee also recovered penalty from contractors for delay in work. These facts according to CIT prove that assessee was working commercially in absolute terms. The assertion of assessee that it was selling lands at circle rates, was considered to be not involving any charity in itself. The assesseee generate its funds by way of development fee, map fee, stamp duty, stacking fee etc. which was charged from the public. Thus, funds of the assessee institution were considered to be public money and no charity was involved. He was also of the view that even if some activities or institution of public importance like schools, community c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Coordinate Bench of the Delhi Bench of ITAT in case of MDA and the various orders relied upon therein it was his stand that the issue may be restored to the file of the CIT in line with the order of the Coordinate Bench. However specific reference to orders of Chandigarh and Amritsar Benches of the Tribunal which has been considered at length by the CIT may also be made as they may not be overlooked and the same may also be taken into consideration by the CIT while passing the order. 9. The parties before the Bench were required to address the fate of the order of the Tribunal in the case of PUPDA. However, the parties were unable to throw any light on its fate. 10. Accordingly having heard the rival contentions and perused the material available on record we are of the view that in the peculiar facts and circumstances of the case it is appropriate to restore the issue back to the file of the CIT with a direction to decide the issue de novo. The orders of Coordinate Benches referred to by the Delhi Bench in its order dt. 1.2.2010 shall be considered while passing the order for ready reference they are mentioned hereunder. 1. Aligarh Development Authority ITA no. ..... 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