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TMI Blog2014 (3) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Trust, Bath inda Vs CIT, Bathinda [ 2013 (2) TMI 577 - ITAT AMRITSAR] and following the same parity of reasoning, we uphold the order of Commissioner of Income Tax in withdrawing the registration granted to the assessee under section 12AA. In view of the ratio laid down by the Hon ble Jammu Kashmir High Court in the case of Jammu Development Authority Vs Union of India another [ 2013 (11) TMI 1578 - JAMMU AND KASHMIR HIGH COURT ] and Amritsar Bench of Tribunal in Improvement Trust, Bathinda Vs CIT, Bathinda [ 2013 (2) TMI 577 - ITAT AMRITSAR] , we are in conformity with the order of the Commissioner of Income Tax in withdrawing the registration granted to the assessee under section 12AA - Appeal of the assessee is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The Commissioner of Income Tax-Il Ludhiana, in view of the ratio laid down by the Amritsar Bench of Tribunal in the case of Jammu Development Authority in IT Appeal No. 30(ASR) of 2011 vide order dated 14.06.2012 noted that the assessee Trust was functioning within the ambit of Punjab Town Improvement Act and was carrying on number of activities of development and provision of various facilities for the benefit of public. The assessee was found to be engaged in advancement of any other object of general public. However, the case of the assessee fell within the purview of the first provision of section 2 (15) of the Act and the activities carried on by the assessee Trust were not for charitable purpose as defined under the amended section 2 (15) of the Act. The case of the assessee before the Commissioner of Income Tax that its activity did not constitute trade, was found to be incorrect by the Commissioner of Income Tax Ludhiana as the assessee Trust was acquiring large chunks of land at through away prices and part of this was used for roads, parks and other amenities and the other part was cut into plots, both for residential and commercial purposes. The commercial si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and expansion of towns in Punjab for which the Punjab Town Improvement Act, 1922 was incorporated. It was further pointed out by the Id. AR for the assessee that the Punjab Town Improvement Rules were formulated by the State Government for the purpose and the assessee was carrying on its business as per the said rules. The Id. AR for the assessee further submitted that the intention of the assessee had to be seen to come to the conclusion that whether the assessee was doing any business. It was pointed out by the Id. AR for the assessee that the Trust was formed under the Punjab Town Improvement Act for the improvement of a particular area and even the charges were settled by the Punjab Government and the assessee could not take charges beyond the same and hence, no income arising to the assessee. However, the assessee was selling unsold plots at profits because of the enhanced price of land in the area and such activity carried on by the assessee could not establish that the assessee was doing trade, commerce or business as the assessee was never set up to carry on any trade, commerce or business. 6. The next plea of the Id. AR for the assessee was that section 2 (15) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about planned developments in the town of Malerkotla by way of providing streets, housing facilities or making provisions for other public utility services. The activities enlisted to the assessee were in consonance with the statutory scheme formulated under the Punjab Town Improvement Trust Act and the assessee claimed that its objects were to provide benefits to the public within its local limits rather than any benefits to the Trust itself. The assessee further claimed that it was not carrying on any trade, commerce or business as it was acquiring the land from time to time under the Acquisition Act and thereafter the land was utilized for making roads, parks, community halls etc. and out of the remaining area, provisions for shops and plots was made. The assessee admits that it was auctioning its plots of land and commercial area at reserve price and the receipts comprised of the profits because of increase in the market price and also on account of other charges received under various schemes. 9. The assessee was show caused by the Commissioner of Income Tax-Il Ludhiana to explain as to why the registration granted under section 12AA of the Act should not be withdrawn in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 1 2 AA (3) of the Act, was upheld by the Tribunal. The relevant findings of the Tribunal are as under "7. We have heard the rival contentions and perused the material available with us as well as decisions cited by Ld, counsel for the assessee alongwith other documentary evidences filed by him. As per impugned order and submissions of the assessee. the main activities of the assessee trust at that to purchase land, to enhance and develop the land by cutting it into plots etc., to advertise for sale of plots in the developed land and to sell off the land through auction, meaning thereby that the assessee trust was buying undeveloped land at a low price and developed it and provides the some basic facilities i.e. levelling and clearing the land, cutting it into plots, providing access roads, electricity, providing water and sewerage facilities etc. The assessee-trust enhanced cost of land from cost of purchase by it. The assessee-trust is also charging fees and fines from selling of Forms, land enhancement fees, building plan fees, road cutting fees, transfer fee3s. fine and penalties and non- construction charges and thus earning huge profits which is contrary to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Rajiv Gandhi Nagar, Gurukul Road. Bathinda. Vide Resolution No.75 dated 30.09.2005 (free of cost). (e) The trust is to provide Service lane 16 wide with parking and footpath. The amount to be spent is Rs. One crore vide Resolution No.48 dated 26.08.2008 (free of cost). (f) The trust has given as charity of town cleaning machine, (Vaccum Machine) to the Municipal Corporation, Bathinda for Rs,64.86 lakhs vide Resolution No.56 (app. Rs.Ten lacs) vide letter No. 1.1.46 dated 24.09.2007 (free of cost). (g) To provide land as well as construction of building for 14 plots measuring 1512 s. yds valuing ₹ 45.2 lacs and construction cost ₹ 64.86 lakhs vide Resolution No.56 dated 31.08.2006 and were handed over to the poor (free of cost). (h) To construct 'Road Divider' and development & Renovation of Goniana Bathinda- Mansa - G.T.Road, costing ₹ 10.64 crore vide Resolution No.41 dated 31.12.2007 (free of cost). (i) Donation of ₹ 5 lacs to : Deaf & Dumb School" for the welfare of such handicap students, vide Resolution No.81 dated 31.10.2005. (j) Land for "Vridh Ashram (Rest house for Senior citizens) measuring 2038 sq. yds in Transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down by the Hon'ble Delhi High Court in Bureau of Indian Standards Vs Director General of Income-tax (Exemptions) (supra). In the facts of the case before the Hon'ble Delhi High Court, the assessee was performing functions in the capacity of an instrumentality of the State and the issue was whether it was rendering services in relation to trade, commerce or business by granting certification/quality marks in return of licencing fee. The assessee therein had claimed exemption under section IO(23C)(4) of the Income Tax Act and it was held that the assessee was statutory body established under the BIS Act and was brought into existence for the harmonious development of the activities of standardization and marketing and quality certification of goods. The licence fee charged by the assessee for such activities was held not to be for the purpose of profit and it was held that it was not involved in carrying on of any activity in the nature of trade, commerce or business. However, in the facts of the present case, the assessee was purchasing large chunk of land and after developing the same, part of the land was utilized for selling as plots for residential or commercial purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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