9911796707
TMI Blog2012 (11) TMI 1286X X X X Extracts X X X X X X X X Extracts X X X X ..... regulate and enforce the orderly growth of Visakhapatnam, Anakapalli, Gajuwaka, Bheemli and Vizianagaram municipalities under the name and style Visakhapatnam Urban Development Authority . The assessee is also called in short form as VUDA . The assessee was registered as a charitable institution u/s 12AA of the Income tax Act. Accordingly, the assessee filed its returns of income for both the years under consideration declaring NIL income, after claiming exemption u/s 11 of the Act. The AO, during the course of assessment proceeding relating to the assessment year 2009-10, noticed that the activities carried on by the assessee are in the nature of trade, commerce or business. According to the proviso inserted by the Finance Act 2008 to sec. 2(15) of the Act, the advancement of any other object of general public utility shall not be a charitable purpose if it involves the carrying on any activity in the nature of 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. Since the objects of the assessee falls in the category of advancement of any other object of gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the assessee. It was noticed that the assessee had incurred certain expenses in the sale process and hence, after deducting such related expenses, if any, the AO assessed the net sale proceeds as the income of the assessee. The amount so assessed for the two years under consideration are given below:- Assessment year 2008-09 - ₹ 1002.11 crores Assessment year 2009-10 - ₹ 49.07 crores. Aggrieved by the said assessment orders, the assessee preferred appeals before Ld CIT(A), but could not succeed. Hence, the assessee has filed these appeals before us. 6. The Ld Counsel for the assessee submitted that the Government of Andhra Pradesh, with the objective of mobilizing resources for its budgetary support, decided to sell certain Government lands. For that purpose, the Government appointed the assessee as the agent to sell the lands through the process of auctioning. The Learned Counsel invited our attention to a Government Order, bearing G.O.Ms. No.120 dated 8-2-1994, which is placed at page 1276 of the paper book filed by the assessee and submitted that the Government has never given its land at free of cost to the assessee and whenever the lands were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, Visakhapatnam Rural and Urban Mandals and Bheemunipatnam Mandal. The Ld D.R submitted that the assessee became absolute owner of the 13 projects mentioned above and it started selling those lands by way of auction after developing them into housing plots. The Ld D.R submitted the sale proceeds realized on sale of such own lands are liable for taxation under the Act, since the assessee is under no obligation to remit the proceeds of such sales to the Government. 8. We have heard the rival contentions and perused the record. The discussion about the sale of Government lands finds place in the order passed by Ld CIT(A) at pages 26 to 48 of his order. The Ld CIT(A) has extracted the contents of GOMS No.1401 dated 02-11-2007 in page 29 of his order, since the assessee took support of the said order to contend that the Government has undertaken the sale of its lands through the assessee for resource mobilization to support its budget requirements. The Para 2 and Para 3 of GOMS No.1401 extracted by Ld CIT(A) speaks about the intention of the Government to mobilize 1000 crores in support of State Budget through Sale of land. Para 5 to 7 of the said GOMS appear to be relevant and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. Extent Ac. Cts. Recommendation of the Empowered Committee Anandapuram Mandal, Gudilova village 62/2, 28/2, 13/1 13-05 Not agreed to alienate the Lands to V.U.D.A. The Collector, Visakhpatnam is permitted to dispose the Lands by way of auction for Resource Mobilisation. Anandapuram Mandal, Sontyam Village 357/4, 348/4, 348/6, 348/3 33-64 Recommended for alienation to V.U.D.A. for Resource Mobilisation 11. From a careful reading of GOMS 1401 dated 02.11.2007 and the decisions taken by the Empowered Committee, we notice the following:- In respect of Category (i) assets, the VUDA is acting as an agent only on behalf of the Government of Andhra Pradesh. The said position is very clear for the following reasons:- (i) The lands are not alienated to VUDA, the assessee herein. (ii) Only the Collector is permitted to dispose of the land through Auction. (iii) The said auction shall be conducted through VUDA. (iv) The VUDA is entitled to receive only service charges on such sales. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as categorized those lands, which are not intended to be developed in a planned manner as Category (i) and those lands, which are intended to be developed in a planned manner as Cagegory (ii). Since the development is undertaken by the VUDA, the Government might have thought it fit to alienate the said lands in favour of VUDA. We may caution here that we are not rendering any decision on the above said lines and the said observations have been made to show the uncertainty prevailing over the lands categorized as category (ii). Then the purpose of insertion of words resource mobilization causes confusion here. It is possible to interpret that the VUDA is required to develop those lands, sell them and generate funds for the purposes of Government s resource mobilization initiative. This interpretation is in accordance with the contentions of the assessee. Alternatively it is also possible to argue that it is the responsibility of the Government to equip the assessee with sufficient resources in order to achieve the objective of harmonized development of townships and hence the Government has alienated the lands in favour of VUDA for mobilizing resources, which shall be used by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to achieve the social objective for which the assessee was created. 17. The Ld D.R, during the course of his arguments, drew our attention to the copies of conveyance deeds to drive the point that the assessee herein was shown as the owner of the lands. In our view, merely because the assessee was shown as the owner for the purpose of execution of Conveyance deeds, the assessee would not automatically be considered as the owner of such lands. The principles of Rules of interpretation have emerged only because that the language used in a statute cannot be interpreted by its plain meaning, because the Language is an imperfect instrument for expression of human thoughts. 18. Hence, as stated earlier, the deciding factor to be considered to resolve the issue before us is to find out the intention of the Government in categorising the lands into two categorises. However, no material was brought on record by the assessee to bring out the intention of the Government in this regard, which would have enabled the tax authorities also to decide about the taxability of the sale proceeds. There cannot be any doubt that it is the responsibility of the assessee to furnish n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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