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TMI Blog2016 (7) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose or any activity for general public utility. The activities of the assessee are aimed at earning profit as it is carrying on activity in the nature of trade, commerce or business, and there is no obligation on the part of the assessee to spend income on 'charitable purpose' only - even on dissolution or winding up by not having any restriction on application of asset for charitable purpose, the objects pursued by the assessee cannot be said to be a charitable in nature - CIT, Jammu, has rightly being satisfied held that the Jammu Development Authority is not entitled to registration and accordingly cancelled the registration so granted - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... le purpose", if it involves the carrying on of:- a. Any activity in the nature of trade, commerce or business; b. Any activity of rendering any service in relation to any trade, Commerce or business; c. For access or fee or any other consideration, irrespective of the nature of use or application or retention of income from such activity. Thus, hence before the insertion of the above proviso, the Institutions/ Trusts/ Societies which were given registration u/s. 12A of the Act considering them under the head "advancement of any other object of general public utility", were eligible for exemption from tax u/s 11 of the I.T. Act, 1961, if they were not involved in any such commercial activities as brought out above (a)(b) and (c). However, in case they are involved in such commercial activities, and if the aggregate value of the receipt from the activities referred to in the 1st proviso is more than rupees ten lakhs in the previous year, they shall not be eligible to continue with registration u/s 12A and the same is required to be withdrawn. Here it may be mentioned that if any institution/ society or association is carrying on any activity in the nature of tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Kashmir Bank or any other bank approved by the State Government. Till the Financial Year 2002-03, the income of such Authorities were exempt under section 10(20A) of the Income tax Act, 1961. However, in view of omission of sec. 10(20A) of the I.T. Act, 1961 an Explanation was added to section 10(20), which is reproduced as under: - "Explanation:- For the purpose of this clause, the expression Local Authority" means- i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or ii) Municipality as referred to in clause (e) of article 243P of the Constitution, or iii) Municipal committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924). It would thus be seen that the income of a Local Authority chargeable under the head "income from house property", "Capital gains" or "Income from other sources" or from a trade or business carried on by it was earlier excluded in computing the total income of the Authority of a previous year However, in view of the amendment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he activity of the assessee. The main pre-dominant purpose of assessee is making profit, it is real object of the assessee and also there is no spending of the income exclusively for the purpose of charitable activities and profits of the assessee not used for charitable purpose under the terms of the object and there is no obligation on the part of the assessee to spent on "charitable purpose" only. As per clause 53 of the Jammu & Kashmir Development Act relating to dissolution of the Authority it is provided that: (1) Where the Government is satisfied that the purposes for which the Authority was established under this Act have been substantially achieved or that there are good grounds which render the continued existence of the Authority unnecessary, the Government Gazettee, declare that the Authority shall be dissolved with effect from such e as may be specified in the notification, and the Authority shall be deemed to be dissolved accordingly. (2) From the said date- a) all properties, funds and dues which are vested in, or realizable by, the Authority shall vest in, or be realizable by, the Government; b) All Nazul lands placed at the disposal of the Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, cannot be termed as a charitable organization. 4.4.4. Similarly, in the case of Andhra Pradesh State Road Transport Corporation, it has been held by the Hon'ble Supreme Court " the activity of assessee was not carried on with the object of making profit ….and the amount left over after utilization for the purpose set out in section is of the R..T.C. Act as amended was to be made over the state Government for the purpose of Road development and the amounts handed over to the state Government did not become part of the general revenue of the state but was impressed with an obligation that It should be utilized only for the purpose for which It was entrusted, namely Road development, which was an object of public utility". Again it may be appreciated that the that! the Srinagar development Authority does not qualify the above test laid down by the Hon'ble Supreme Court In view of the fact that properties left over to the government as per the provisions of section 53 of the J & K development Act, will become a part of general revenue of the state and the state Government Is not under any obligation to utilize the same for the purpose for which the Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decision of the Hon'ble ITAT, Chandigarh in the case of Punjab Urban Planning & Development Authority (PUPA) Vs CIT(Supra), wherein it has been held: "Plea that on Identical facts registration under S.12A was, accorded to Patiala urban Planning and development Authority by the CIT has no substance, if the Intention of creating Patiala Authority was the same then there was no need of Its creation, as the same objects would have been, fulfilled by the bigger unit, i.e., the assessee. At the same time, res judicata is not applicable in Income tax proceedings. Further, the order passed by a lower authority Is not binding on, the Tribunal. It Is a well-fen-known, fact that In, some of the situations the provisions of law are misused In the names of charities, if an expanded /broader latitudes Is extended to the word charity, then there are so many institutions / departments who will try to come under the umbrella of this provision to misuse the provision. Therefore, for the broad development of the nation/society, a strict and positive vigil is required so that the provision can be saved from Its Misuse In any manner. No activity can be carried on efficiently, properly u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 4.5.2. The object with which the assessee was formed may appear to be a general public utility, but then there were other objects as well which make the assessee a commercial organization. Considering the principle set out in the above decision, we find that the assessee is a commercial organization just like any business firm engaged m the real estate business. It can be said that the Authority have the power to acquire, hold, manage and dispose off land and other property, to carry out building, engineering and other operations, to execute works in connection with supply of water and electricity, disposal of sewerage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto, it is a means of attracting the people so that maximum people may apply for the same and the hidden cost is already added, so no charity is involved. At best, the assessee can be said to be an Authority created to help it to achieve certain objects. It can be said that it is the duty of the imminent to create/ provide all these facilities to public large, which is being done through its agency in a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities and profit of the assessee not used for charitable purposes under the terms of the object clause of Notification under which it was formed and, there is no obligation on the part of the assessee to spent on "charitable purpose". Hence the contention of the assessee is not accepted and applicant is thus not entitled to registration u/s 12A of the Income tax Act, 1961, therefore, the same is rejected. 5.1. So far as the argument of the counsel of the assessee that: - "That the Jammu Development Authority has already been granted recognition u/s Jl2AHdy your good offices after perusing thoroughly the objectives of the Authority as per the enactment. In the Registration Certificate Bearing No. CIT/J&K/2009-10/5211-13 dated 30th September, 2009 vide Para 3, your good office has already given the following conclusion: "3. After perusing the said Act of 1970,1 am satisfied that the instrument does not exist for any Trade, Commerce or business" is concerned, attention is invited to the five member Bench of Hon'ble Supreme Court of India in the case of A. Distributors (Baroda) P. Ltd. v/s Union of India and Ors. Reported at 155 ITR 120 (SC) wherein while reversing the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes abundantly clear that the Legislature clarified its intention. At this stage, it would not be out of place to consider the Heydon's Rule also known as the "Mischief Rule" which deals with ascertaining the correct intention of the legislature by looking into the mischief that was sought to be remedied by the legislature. This rule basically comprises four things to be considered; a) what was the common law before the making of the Act; b) what was the mischief and defect f or which the common law did not provide. c) what remedy the Parliament has appointed to cure the defect; and d) the true reasons of the remedy. This rule contemplates in considering the position prevailing anterior to the amendment, which was intended to be rectified by way of amendment or insertion of a section and then considering the amendment as overruling the hitherto legal position. If a particular provision is enacted for getting rid of the existing law, as it is or interpreted by the Courts, the new amendment would be construed as superseding the earlier prevalent view which was considered by the legislature as mischievous. The Mischief rule has been repeatedly approved by several Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind considerations: - The Assessee has taken Five grounds of Appeal but all the grounds relate to Grant of Exemption U/S 12A, hence a single submission is being made covering all the Grounds. It is humbly submitted that the Assessee had Applied for Grant of Registration U/S 12AA of the Income Tax Act 1.961 to worthy CIT Jammu & Kashmir which has been rejected and hence the Appeal before this Honorable Tribunal. Before proceeding with the Submissions, it is important to mention that another Authority which is the creation of the same legislature viz Jammu Development Authority had been Granted Exemption by the worthy CIT J & K which was withdrawn and as per the Available information JDA had filed appeals before this bench, Hon High Court of J & K which have not been considered and Accordingly Registration has not been granted to Jammu Development Authority. In view of the above the Assessee submits before this Honorable Bench that the following facts need to be considered while deciding the appeal of the Assessee. a) That, after the withdrawal of Exemption U/S 10(20) from the Assessment Year 2003-04 various Development Authorities applied for Registration U/S 12AA of Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Act provided for street schemes, development and mansion scheme, housing accommodation schemes and housing scheme he activities of the assessee trust are also in consonance with these statutory schemes. It is evident from this that the object of the assessee trust to - provide benefit to the public with its local limits, rather than to itself this apart, it is on record, that the same learned CIT as who has passed the impugned order, has, on similar facts and circumstances, granted registration: The Improvement Trust, Jalandhar, vide order dt. 12th/13th April, 2006. holding that the activities of that trust were with an object of "general public utility". Similarly, registration was also granted to the Improvement Trust, Sangrur and the Improvement Trust, Patiala." 3. We have heard learned counsel for the parties and perused the record. 4. Learned counsel for the assessee has drawn our attention to judgment of Hon'ble apex Court in the case of CIT vs. Gujarat Maritime Board (2008) 214 CTR (SC) 81: (2007) 295 ITR 561 (SC), wherein the question for consideration was the meaning to be assigned to expression "any other object of general public utility" in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of use or application, or retention, of the income from such activity; Provided further that the. first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year. 7.1 The assessee was set up as per U.P. Govt. G.O. dated 04/06/1986 under Uttar Pradesh Nagar Yojna Evam Vikas Adhiniyam 1973 (based on Delhi Development Act 1957) with an objective of development of Hardwar, Pauri, Tehri and part of Dehradun and all development schemes as well as beautification of the District came under its purview. In the objects, it is, inter alia, mentioned that the existing local bodies and other authorities inspite of their best efforts had not been able to cope with the problems of town planning and urban development and, therefore, to tackle the same resolutely the State Government considered it advisable that in such developing areas. Development Authorities patterned on the Delhi Development Authority be established. The entire activities are controlled/ administered through various government orders and notifications. 7.2. It is noticeable that in section 2(15) preservation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes incidental thereto. 7.5 Section 14 of the Act gives exclusive right to the Development Authority for development of land in respect of area which has been declared as development area u/s 3. After such declaration no development of land shall be undertaken or carried out or continued in that area by any person or body (including a department of government), unless permission of such development has been obtained in writing from the Vice Chairman in accordance with the provisions of the Act. 7.6. Further, the development has to be carried out as per the plans. Section 18 of the Act requires the State government to acquire the land and transfer the same to the Development Authority. The Authority is not entitled to gift the land but to dispose of the land by way of sale, exchange or lease or by the creation of any easement, right or privilege or otherwise. 7.7. Section 20 deals with the fund of the Authority, which is reproduced hereunder: "20. Fund of the Authority - (I) The Authority shall have and maintain its own fund to which shall he credited - (a) All moneys received by the Authority from the Stage Government by way of grants, loans, advances or otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere could not be said to be any profit motive. Unless there was a profit motive, it cannot be said that an entity was carrying on any trade, commerce or business. 7.11 We further find that in case of Krishi Utpadan Mandi Samity (supra), the Hon'ble Allahabad High Court, while dealing with the proviso to section 2(15), inter alia, observed that main object is to be considered and incidentally if some profit is made and the said profit is used for charitable purpose the said trust/ institution does not cease to be established for charitable purpose. 7.12. We further find that in the case of Muzaffamagar Development Authority (supra), the ITA T following the decisions in the case of U P. Avas Evam Vikas Parishad (supra); and M/s Khurja Development Authority Vs. CIT (supra), allowed the assessee's appeal. 7.13. Further in the case of Sabarmati Ashram Gaushala Trust Vs. ADIT (E) (supra), we find that Tribunal has held that profit motive is must for holding an activity to be in the nature of trade, commerce or business. 7.14 Since the decision of Hon'ble Allahabad High Court is in the case of U P. Avas Evam Vikas Parishad (supra) is applicable to the facts of the case, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority under sub-section 3. After any such Nazul land has been developed, by under the control and supervision of, the Authority, it shall be dealt with by the Authority in accordance with rules made and directions given by the Government in this behalf. 4. If any Nazul land placed at the disposal of the Authority under sub section (I) is required at any time thereafter by the Government, the Authority shall, by notification in the Government Gazette, place it at the disposal of the Government upon such terms and conditions as may be agreed upon between the Government and the Authority. The following undisputed facts emerge from the Act as discussed above. i) That the Nazool Land and Assets on it belongs to the J & k Govt. ii) That S.D.A as & when asked will develop the Land etc as per the direction of the J & K Govt. iii) After the Development the Land will be dealt by the S.D.A in the manner as directed by the J & K Govt. iv) The most important point to be noted is that that the Govt. can reclaim the Land etc any time as & when it decides by way of notification. v) Dissolution of the Authority: 1) Where the Government is satisfied that the purposes f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis that Authority has a Profit Motive without adducing any evidence to prove that the Appellant was pursuing any object which was not charitable purpose or that the property and funds of the appellant are not being applied in meeting the charitable objectives. The Ld. CIT ignored the facts that as per the Provisions of the Act the Funds can be applied only for the administration of this Act and for no other purpose." 6. Post passing of the impugned order, dated 28.09.2010, this Bench vide order dated 14.06.2012, passed in ITA No. 30(Asr)/2011, in the case of Jammu Development Authority vs. C.I.T. Jammu, decided the matter in favour of the Department, as follows: "3. The brief facts in this case are that registration under section 12A read with section 12AA of the Act, was granted to the assessee on 30.09.2009 as per certain conditions as envisaged in the said order. A show cause notice was issued to the assessee under section 12AA(3) of the Act on 14.10.2010. For the sake of clarity, the said show cause notice is reproduced as under: "Please refer to this office order under section 12A read with section 12AA of the Income-tax Act, 1961 issued under No. CIT/J&K/2009-10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 10,00,000/- or less in the previous year. However, after going through the returns of income filed by Jammu Development Authority, it is observed that the aggregate value of the receipts from the activities referred to in the Ist proviso is more than the prescribed limit, as such, it shall not be entitled to the benefit of exemption u/s 11 of the Income Tax Act, 1961. It has been noticed that Jammu Development Authority is operating on commercial lines and by taking recourse to the provisions of section 11 of the Act on the ground that it is charitable institution. This is based on the argument that Jammu Development Authority is engaged in the "advancement of an object of general public utility" as is included in the fourth limb of the current definition of "charitable purpose". Such a claim, when made in respect of an activity carried out on commercial lines is contrary to the intention of the provisions. With a view to limiting the scope of the phrase " advancement of any other object of general public utility, sub section (15) of section 2 has been amended to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were treated "charitable" on the ground of advancement of object of general public utility. However, after the insertion of the above provisos "the advancement of other object of general public utility shall not be a "charitable purpose", if it involves the carrying on of : a) Any activity in the nature of trade, commerce or business; b) Any activity of rendering any service in relation to any trade, commerce or business. c) For access or fee or any other consideration, irrespective of the nature of use or application or retention of income from such activity. 4.1. Therefore, before insertion of the above proviso, the Institutions/Trusts/Societies which were given registration u/s 12A of the Act considering them under the head "advancement of any other object of general public utility, were eligible for exemption from tax u/s 11 of the Act, if they were not involved in any such commercial activities as brought out in (a) (b) and (c). However, in case, they are involved in such commercial activities and if the aggregate value of the receipt from the activities referred to in the 1st proviso is more than rupees ten lakhs in the previous year, they shall not be eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority duly approved by the State Government. Unless the State Government otherwise, directs all moneys received by the Authority shall be credited to its funds which shall be kept with the Jammu& Kashmir Bank or any other bank approved by the State Government. 4.3. The Ld. CIT in para 4.2. of his order observed that till the financial year 2002-03, the income of such Authorities were exempt u/s 10(20A) of the Act. However, in view of omission of section 10(20A) of the Act an Explanation was added to section 10(20), which is reproduced as under: "Explanation: For the purpose of this clause, the expression "Local Authority" means - i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or ii) Municipality as referred to in clause (3) of article 243P of the Constitution; or iii) Municipal committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; of iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)". It would thus be seen that the income of a local Authority chargeable under the head "income from house property", "Capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the developed lands and the lands are sold with definite motive of profit and there is no charitable purpose or any activity for public utility, which is the primary requirement of section 2(15) of the Act. The activities of the assessee are aimed at earning profit as it is carrying on activity in the nature of trade, commerce or business. Further profit making by the assessee is not mere incidental or by product of the activity of the assessee. The main pre-dominant purpose of assessee is making profit, it is real object of the assessee and also there is no spending of the income exclusively for the purpose of charitable activities and profits of the assessee not used for charitable purpose under the terms of the object and there is no obligation on the part of the assessee to spent on "charitable purpose" only. The Ld. CIT referred to clause 53 of the Jammu & Kashmir Development Act relating to dissolution of the Authority. The said clause is reproduced in para 4.4 of CIT`s order at page-21 where it has been declared that such authority shall be dissolved w.e.f. such date as may be specified in the notification and tall the properties, funds and dues etc. shall vest in the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt as under: "The activity of assessee was not carried on with the object of making profit… and the amount left over after utilization for the purpose set out in section 13 of the R.T.C. Act as amended was to be made over the State Government for the purpose of Road Development and the amounts handed over to the State Government did not become part of the general revenue of the State but was impressed with an obligation that it should be utilized only for the purpose for which it was entrusted, namely Road Development, which was an object of public utility." 4.6. The assessee does not qualify by the test laid down by the Hon'ble Supreme Court in view of the fact that properties left over to the Government as per the provisions of section 53 of the J & K Development Act, 1970 will become a part of general revenue of the State and the State Government is not under any obligation to utilize the same for the purpose for which the Authority was set up. Therefore, the assessee does not fulfil the conditions required for claiming the status of charitable organization as envisaged under the fourth limb of the definition of charitable purposes contained in section 2(15) or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision can be saved from its misuse in any manner. No activity can be carried on efficiently, properly unless and until it is carried out on business principle but it does not mean that the provision is misused in any manner under the grab of charity and any institution be allowed to become richer and richer under the grab of charity by making it a non-tax payable organization. A charitable institution provides services for charitable purposes free of cost and not for a gain. In the present scenario, similar activities are performed by big colonizers/developers who are earning a huge profit. If this registration is granted, then anybody will claim the exemption from tax. If the accounts of the assessee are analysed, it has turned into a huge profit-making agency for which it is taking money from the general public. If any institution of public importance like schools, community centers are created /developed, the assessee is charging the cost of it from the public at large and the money is coming from the coffer of the Government. It can be said that objects/activities of the assessee are more of commercialized nature and no charity is involved in it. At the time, if these fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Evangelistic Association (NLC) Vs CIT (2001) 165 CTR (Mad) 446: (2000) 246 ITR 532 (Mad) distinguished ." 4.9. The Ld. CIT, vide para 5.1. of his order observed that there is no evidence to suggest that the assessee is not engaged in the activity of the profits and as such the assessee is not engaged in the activity of the profits and the registration granted u/s 12A of the Act is required to be cancelled within the meaning of section 12AA(3) of the Act, as the findings show that the activities of the assessee are aimed at earning profit as it is carrying on activity in the nature of trade, commerce and business. Further, for profit making by the assessee is not mere incidental or by product of the activity of the assessee. The main pre-dominant purpose of assessee's is making profit and it is the real object of the assessee and also there is no spending of the income exclusively for the purpose of charitable activities and profit of the assessee not used for charitable purposes only under the terms of the object clause of notification under which it was formed and there is no obligation on the part of the assessee to spend on "charitable purpose" and accordingly, the Ld. CIT c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision, the Hon'ble Supreme Court observed that the facts of this case being very special, nothing should be said in a manner which would have general application and would like to state in clear terms that the decision is confined to the facts of the case and may not be treated as an authority on aspects which have been decided for general application. Similarly, the Ld. CIT distinguished the other case relied upon in the case of H.A. Shah & Co. vs. CIT (195) 30 ITR 618 (Bom.) 4.12. Referring to various courts of law, the Ld. CIT finally while canceling the registration observed as under: "Thus from the above discussion it is clear that if a decision or order is contrary to law or not warranted in the facts and circumstances of the case or runs contrary to the reasoning and result reached, or a mistaken view of statutory provisions has been taken or the order is contrary to the law pronounced by the Hon'ble Supreme Court or jurisdictional High Court or Tribunal, then the rule of consistency has no application and merely because an illegal .unwarranted for erroneous view in law has been taken by an authority, such illegality or erroneous view cannot be allowed to be repeated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble institutions. This is based on the argument that they are engaged in the "advancement of an object of general public utility" as is included in the fourth limb of the current definition of "charitable purpose". Such a claim, when made in respect of an activity carried out on commercial lines is contrary to the intention of the provisions. With a view to limiting the scope of the phrase "advancement of any other object of general public utility", sub section (15) of section 2 has been amended to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. In view of the above, I am satisfied that Jammu Dev Development is an Authority established with the motive of profit constituted under the Jammu & Kashmir Development Act, 1970 and that the activities of such Authority are hit by sub section 15 of section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding section 12AA(3) of the Act, where Trust or Institution has been granted registration and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution of such trust or institution, as the case may be , he shall, pass an order in writing canceling the registration of such trust or institution. Section 2(15) of the Act defines "charitable purpose" to include the advancement of any other object of general public utility. It is also not disputed that the Ld. CIT while granting registration u/s 12AA(3) of the act to the assessee had observed that he is satisfied that instrument does not exist in any trade, commerce or business. The order is dated 30.09.2009 whereas the amendment by Finance Act, 2008 is w.e.f. 01.04.2009, whereas per Finance Act, 2008, following proviso had been added w.e.f. 01.04.2009: "Provided that the advancement of any other object of generally public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not there except that the registration had been granted in the case of M/s. Jalandhar Development Authority whereas in the present case, registration having been granted cannot be cancelled. Since the order of the CIT dated 30.09.2009 in the present case is after amendment to section 2(15) i.e. introduction of the first proviso was well before the Ld. CIT. 7.3. Considering the arguments of the ld. counsel for the assessee and on perusal of the facts of the present case with the facts in M/s. Jalandhar Development Authority (supra), we are of the view that facts in the present case are identical to the facts as in the case of Jalandhar Development Authority. As regards the first proviso inserted in section 2(15) of the Act, we have given our views hereinabove that the Ld. CIT had not considered the first proviso to section 2(15) as well as the second proviso to section 2(15) while making the order for grant of registration on 30.09.2009. Therefore, the Ld. CIT is well within his power to decide the issue by his order in view of the decision of the Hon'ble Supreme Court in the case of A. Distributors (Baroda) P. Ltd. vs. Union of India and Ors. 155 ITR 120 (SC). Therefore, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and District Board and Cantonment Board as referred in the said Explanation. 7.6. Also, at the same time, section 10(20A) which related to income of and Authority constituted in India by or under any law enacted for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages which before the amendment was not included in computing the total income, was omitted. Consequently, the benefit conferred by clause (20A) on such an Authority was taken away. Thus, in view of the fact that section 10(20A) was omitted and an Explanation was added to section 10(20) of the Act, enumerating the "Local Authorities" contemplated by section 10(20), the assessee could not claim any benefit under those provisions after April 1, 2003. The assessee subsequently claimed that its objects falls under the provisions of section 2(15) of the Act and has complied with all the eligibility criteria for grant of registration under section 12A of the Act, which was allowed vide order dated 30.09.2009. It is at this juncture that the first proviso and second proviso were added by the Finance Act, 2008 w.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he objects of the Authority/Trust so far as the activities relating to purchase and sale of properties, as mentioned hereinabove. Hence, the activities are not genuine to the extent, mentioned hereinabove and the Ld. CIT, Jammu, has rightly being satisfied held that the Jammu Development Authority is not entitled to registration and accordingly cancelled the registration so granted. We find no infirmity in the order of the Ld. CIT, Jammu and the same is upheld. Thus, all the grounds of the assessee are dismissed. 8. In the result, the appeal filed by the assessee in ITA No.30(Asr)/2011 is dismissed." 7. The order of this Bench in the case of "Jammu Development Authority" (supra) has undeniably been upheld right up to the Hon'ble Supreme Court. The factum of its being confirmed by the Hon'ble High Court stands noted in the written submissions filed by the assessee also. The ld. counsel for the assessee has reiterated these written submissions. The ld. DR, on the other hand, has also placed strong reliance on the impugned order and on "Jammu Development Authority" (supra). 8. "Jammu Development Authority" (supra), of this Bench is directly applicable to the present case. The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of omission of sec. 10(20A) of the I.T. Act, 1961 an Explanation was added to section 10(20), which is reproduced as under: - "Explanation: - For the purpose of this clause, the expression "Local Authority" means- i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or ii) Municipality as referred to in clause (e) of article 243P of the Constitution, or iii) Municipal committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924)". 11. The income of a Local Authority chargeable under the head "income from house property", "Capital gains" or "Income from other sources" or from a trade or business carried on by it was earlier excluded in computing the total income of the Authority of a previous year However, in view of the amendment, with effect from April 1, 2003, the Explanation "Local Authority" was defined to include only the Authorities enumerated in the Explanation. 12. At the same time section 10(20A), which related to income of an Authority constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal facts, the registration u/s 12AA could not be granted to the assessee and the Ld. CIT had rightly cancelled the registration granted. 9.1 In that case the Tribunal concurred with the views of the Ld. CIT(A) vide para 3.2 to 6.2 of his order, that prior to insertion of these provisos, i.e., the first and the second proviso to section 2(15) of the Act, certain bodies were treated as "charitable" on the ground of advancement of object of general public utility, that however, after the insertion of the above proviso, the advancement of any other object of general public utility shall not be a "charitable purposes" if it involves the carrying on of :- a) Any activity in the nature of trade, commerce or business. b) Any activity of rendering any service in relation to any trade, commerce or business. c) For a cess or fee or any other consideration, irrespective of the nature of use or application or retention of income from such activity, and therefore, the Institutions/Trusts/Societies which are involved in the activities in (a) (b) & (c) and whose aggregate value of the receipt of the activities referred to in the first and second proviso was more than Rs. ten lakhs in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc., shall not be for a charitable purpose, that as per the objects of the assessee, the main object of the assessee was to promote and secure the development of the local area and there was no charitable purpose or any activity for general public utility, that the activities of the assessee were aimed at earning profit, as it carrying on activity in the nature of trade, commerce or business, that further, the profit making by the assessee was not merely incidental, or a byproduct of the assessee, that there was no real object of the assessee and there was no spending of the income exclusively for the purpose of charitable activities and the profits of the assessee were not used for charitable purposes under the terms of the objects and there was no obligation on the part of the assesse to spend on "charitable purpose" only, that also as per clause 53 of the Jammu & Kashmir Development Act, on dissolution, all properties and funds were to vest in the Government and for the purpose of realizing properties, the function of the Authority shall be discharged by the Government, that the Bench concurred with the view of the Ld. CIT that on transfer of the properties, funds and dues and l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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