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TMI Blog2021 (12) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore falls within the ambit of definition of charitable purpose contemplated under s.2(15) of the Act. In view ofthe foregoing, we find that the relief sought by the assessee to the extent that the activities carried on by the assessee should be recognized to be of charitable nature requires to be endorsed. - Decided in favour of assessee. Addition on account of deemed rent - deemed rent from various fact/unoccupied plots/shade added to the total income of the assessee - HELD THAT:- Considering the entire aspect of the matter we find that when the appellant has an exempt entity Chapter-3 of the matter would be applicable in its case and not the provision of Chapter-4 of the Act. Therefore, the addition of deemed rent would fall under the head income from house property under Chapter-4 of the Act and therefore, the addition is not sustainable. Considering this aspect the order passed by the Ld. CIT(A) in deleting addition in our considered view is just and proper and so as to warrant interference. Depreciation as per normal commercial principles and rule of accountancy - AO is required to re-examine the issue afresh in accordance with law considering the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os. 2, 3 5 are covered in assessee s own case in ITA No. 2700/Ahd/2016 427/Ahd/2017 for A.Y. 2012-13 2013-14 . In fact, the activities carried out by the assessee company are in the nature of advancement of other general public utility in the nature of trade/commerce/business and therefore, the activities carried out by the assessee cannot be reckoned as attributable to charitable purpose within the meaning to Section 2(15) of the Act as alleged. Accordingly, benefit of exemption has been denied to the assessee claimed under Section 11 of the Act. However, the Coordinate Bench in assessee s own case for A.Y. 2009-10 to 2011-12 held that the assessee company cannot be said to be conducting affairs solely on commercial lines with a motive to earn profit and consequently proviso to Section 2(15) of the Act does not trigger in the case of the assessee. Such view of the Coordinate Bench has been ultimately affirmed by the Hon ble Jurisdictional High Court in the case of CIT vs. Gujarat Industrial Development Corporation (2017) 80 taxmann.com 366 (Guj.). In that view of the matter the Ld. Counsel prayed for setting aside the issue to the file of the Ld. AO in the light of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. In view ofthe foregoing, we find that the relief sought by the assessee to the extent that the activities carried on by the assessee should be recognized to be of charitable nature requires to be endorsed. However, all other issues raised in the respective appeals of the assessee and revenue would require re-examination in the light of conclusion drawn in favour of assessee towards applicability of section 2(15) of the Act as noted above. Thus, all other issues are kept open for re-examination at the end of the AO. 9. In the result, cross-appeals of the assessee as well as revenue in ITA No.2738/Ahd/2016 2700/Ahd/2016 relevant to AY 2012-13 are allowed for statistical purposes in terms of directions noted hereinabove. ITA No.427/Ahd/2017 AY 2013-14 - Assessee s appeal and ITA No.544/Ahd/2017 AY 2013-14 - Revenue s appeal 10. The directions and findings in ITA Nos.2700/Ahd/2016 and ITA No.2738/Ahd/2016 for AY 2012-13 would apply mutatis mutandis to both the cross-appeals in ITA Nos.427/Ahd/2017 544/Ahd/2017 relevant to AY 2013-14. Consequently, the assessment framed by the AO for AY 2013-14 is also set aside and restored back to his fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant company was conducting its affairs solely on commercial lines with a motive to earn profit. There is also no material brought on record which could suggest that the appellant company deviated from its objects for which it has been constituted. In our humble opinion and understanding of law, the proviso to Sec. 2(15) of the Act is not applicable on the facts of the case. 30. Accordingly, we hold that the order of the First Appellate Authority is erroneous and bad in law. The appellant succeeds. 31. We direct the A.O. to decide the claim of deductions made by the assessee in the light of our finding that the proviso to Section 2(15) of the Act does not apply in the case of the assessee. We direct accordingly. 32. Before parting, the ld. D.R. heavily relied upon another amendment in the Act by way of introduction of section 13(8) which came through Finance Act of 2012 with retrospective effect from 01.04.2009 which provided that the benefit of Section 11 or Section 12 would not be available if the receipts from the activity in the nature of trade or business exceeded the threshold provided for in the proviso to Section 2(15) of the Act. Section 13 (8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of trade, commerce or business, for a Cess or Free or any other consideration so as to attract proviso to section 2(15) and same could be said to be for charitable purpose and, consequently, assessee was entitled to exemption under section 11 Held, yes [Paras 15 and 17] [In favour of assessee]. 11. Hence, we do not find any reason to interfere in the order passed by the Ld. CIT(A) in allowing exemption under Section 11 12 of the Act and hence the same is hereby confirmed. Revenue s this ground of appeal fails. 12. Ground No. 3:- Since this ground of appeal has already been directed to be decided by the Ld. AO in ITA No. 2700/Ahd/2016 for A.Y. 2012-13 and 427/Ahd/2017 for A.Y. 2013-14 by the Coordinate Bench by its order dated 10.11.2017. Respectfully relying upon the same we direct the Ld. AO to decide the issue on the same line. 13. Ground No. 4:- The addition of ₹ 12,00,667/- on account of deemed rent is the subject matter before us. 14. The assessee was issued with a show-cause notice dated 09.12.2016 as to why deemed rent from various fact/unoccupied plots/shade should not be added to the total income of the assessee. The assessee made ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r we find that when the appellant has an exempt entity Chapter-3 of the matter would be applicable in its case and not the provision of Chapter-4 of the Act. Therefore, the addition of deemed rent would fall under the head income from house property under Chapter-4 of the Act and therefore, the addition is not sustainable. Considering this aspect the order passed by the Ld. CIT(A) in deleting addition in our considered view is just and proper and so as to warrant interference. 15. Ground No. 5 is general in nature. There is no need of separate adjudication. ITA No. 329/Ahd/2019(A.Y. 2015-16)(Assessee s Appeal):- 16. The grounds of appeal raised by assessee reads as under:- 1. Erred in rejecting assessee s plea that for all practical purpose being an agent of State Govt. of Gujarat and by virtue of provisions contained in Article 289 of the constitution of India, it cannot be subjected to assessment and levy of tax under the Income Tax Act 2. Erred in holding receipts from premium on land given on lease are recurring and operational receipts, by considering 40% of lease income as revenue receipt 3. Erred in confirming that assessee has violate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has already been decided by us in ITA No. 808/Ahd/2018 for A.Y. 2014-15 in Ground No. 3 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 25. Ground No. 4:- This ground has already been decided by us in ITA No. 808/Ahd/2018 for A.Y. 2014-15 in Ground No. 4 therein. In the absence of any changed circumstances the same shall apply mutatis mutandis. 26. Ground No. 5 6:- This ground relates to the direction upon the Ld. AO to allow depreciation as per normal commercial principles and rule of accountancy when as per newly inserted amendment in section 11(6), depreciation is not allowable to the assessee from A.Y. 2015-16. 27. While disposing of the ground the Ld. CIT(A) discussed as follows: 9.1 On the issue of depreciation, the appellant during the appellate proceedings submitted as under: 3.17 Without prejudice to foregoing, Appellant states that the premium received of ₹ 703,30,00,837 if for plot of land and shed given on long term lease of 99 years. In view of the same, such whole premium cannot be taxed in the first year and should be amortized over a period of 99 years. 9.2 Keeping in mind th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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