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TMI Blog2022 (1) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... eal preferred by the Revenue is found to be devoid of any merit and, therefore, dismissed. - I.T.A. No. 05/Ahd/2020 - - - Dated:- 6-12-2021 - Waseem Ahmed , Member ( A ) And Madhumita Roy , Member ( J ) For the Appellant : Mohd. Usman , CIT-DR For Respondents : Prateek Toshniwal , Advocate ORDER Per Ms Madhumita Roy , JM The instant appeal filed by the Revenue is directed against the order dated 10.10.2019 passed by the Commissioner of Income Tax (Appeals)-9, Ahmedabad arising out of the order dated 26.12.2017 passed by the DCIT(Exemptions), Circle-2, Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for A.Y. 2015-16. 2. The issue relating to the entitlement of exemption under Section 11 12 of the Act is before us. 3. The assessee, is an autonomous body established under Section 22 of the Gujarat Town Planning and Urban Development Act, 1976 (XXVII of 1976) and Rules made therein carrying Planned Development of areas as defined and designed by the Government of Gujarat and also infrastructural activities relating thereto to undertake the preparation of development plans, monitoring and control of deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2013-14 2014-15 while dealing with the issue the Hon'ble Bench has been pleased to observe as follows: 5. When the matter was called for hearing, the learned AR for the assessee submitted that the assessee is a regulatory body created by State Government u/s. 22 of Gujarat Town Planning and Urban Development Act (GTPUDA), 1976 for proper development of specified area in the state which is supposed to be ensured by the State Government. It was submitted that the assessee is just like a government body functioning for and on behalf of State Government. As further stated, the very purpose of the above Act is to ensure the development of various areas of the state in a phased and planned manner. The Government of Gujarat as per the provisions of GTPUDA, 1976 had constituted SUDA as an Urban Development Authority by its notification No. GHB/23 UDA/1177/646(5) QZ, dated 13.(sic)1.1978. The reason for enactment of GTPUDA, 1976 is the development of areas for public purpose and to create better environmental condition. Following are the main tasks of the SUDA: Working for the preparation and implementation of development measures. Surveying for the development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of use or application, or retention, of the income from such activity. It was thus contended that the first proviso to section 2(15) shall apply in respect of only last limb of section 2(15). Thus, if an institution is involved in providing relief of the poor, education, medical relief, preservation of environment or monuments or places or objects of artistic or historic interest, then it shall continue to constitute 'Charitable purpose' even if it incidentally involves the carrying on of commercial activities. 5.3 The learned AR submitted that the Surat Urban Development Authority (SUDA) is the umbrella organization of Gujarat Government. The Authority takes over the new infrastructure developments, residential projects for people falling in low and middle income group. Since the assessee trust is engaged in providing easily affordable residence to low and middle income group, hence the assessee comes under the purview of Relief to Poor within the definition of Charitable Purpose. 5.4 It was next submitted that since Surat is a city of industries and enterprises, authority is also with several other governmental and private agencies concerned to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ominated by the State Government; (iii) three officials of the State Government, to he nominated by that Government, ex-officio; (iv) the Presidents of the district panchayats functioning in the urban development area, or, as the case may be, part thereof, ex-officio; (v) the Chief Town planner or his representative, ex-officio; (vi) the Chief Engineer or Engineers (Public Health) of the local authority or authorities functioning in the urban development area or his or their nominee or nominees, ex-officio: [(vi-a) the Municipal Commissioner of the Municipal Corporation, if any, functioning in the urban development area, ex-officio;] (vii) a member secretary to be appointed by the State Government who shall also be designated as the Chief Executive Authority of the Urban Development Authority. Thus, the constitution of the Urban Development Authority is subject to the control of the State Government. The powers and functions of the Urban Development Authority are contained in section 23. Considering section 40 of the Town Planning Act, the Town Planning Scheme prepared by the Urban Development Authority which has been prepared subject to sanction by the State Government for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prof her ing and therefore, the activities of the assessee can be said to be in the nature of business. However, while holding so. Tribunal has not properly appreciated the object and purpose of permitting the Urban Development Authority to sell the plots, maximum to the extent of 15 per cent of the total area i. e. to meet with the expenditure for providing them infrastructural facilities like gardens, roads, lighting, water supply, drainage system etc. The Tribunal has also not properly appreciated the reasons for selling the plot by holding public auction i. e.: (I) to avoid any further allegation of favoritism and nepotism and (2) so that maximum market price can be fetched, which can be used for the development of the Urban Development Area. [Para 12] Applying the ratio of various earlier decisions on similar issues to the facts of the case on hand and with respect to the activities of the AUDA-Ahmedabad Urban Development Authority under the provisions of the Gujarat Town Planning Act by no stretch of imagination, it can be said that the activities of the assessee (A UDA) can be said to be in the nature of trade, commerce or business and/or its object and purpose is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce or business. [Para 15] Having regard to the facts of the case and purpose for which the assessee is established/constituted under the provisions of the Gujarat Town Planning Act, collection of fees and cess is incidental to the object and purpose of the Act. and, thus, the case would not fall under second part of proviso to section 2(15). [Para 15.1] Thus, the Tribunal has committed a grave error in holding the activities of the assessee in the nature of trade, commerce or business and, consequently, holding that the proviso to section 2(15) would be applicable and, therefore, the assessee is not entitled to exemption under section 11. For the reasons stated above, it is held that the proviso to section 2(15) would not be applicable so far as assessee-A UDA is concerned and as the activities of the assessee can be said to be providing general public utility services, the assessee is entitled to exemption under section II. [Para 15.2] In view of the above, the impugned order passed by the Tribunal is set aside. Accordingly, the assessee's appeal is allowed. [Para 16] 5.8 On the similar footing, it was contended that SUDA is an autonomous body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:- (a) such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5); (c) the statement referred to in clause (a) is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year: Provided that in computing the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded. Explanation.-Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant and AUDA are constituted as Authorities under the Gujarat Town Planning and Urban Development Act, 1976. The powers and functions of both the authorities have been laid down under the said Act and are identical in nature. Nowhere in the order of assessment the AO pointed out that the appellant [SUDA] has undertaken functions beyond the mandate of Gujarat Town Planning and Urban Development Act. The appellant [SUDA] is registered u/s. 12A of the Act. It was thus contended that, as held by Hon'ble Gujarat High Court in decision quoted above, the assessee cannot be considered to be covered by the proviso to section 2(15) of the Act and hence AO cannot withdraw the claim of exemption by invoking proviso to section 2(15) r.w.s. 13(8) of the Act. As a corollary, the assessee cannot be assessed u/s. 28 to 44 of the Act. 6. The learned DR, on the other hand, relied upon the orders of the lower authorities but could not bring any distinction qua the decision taken in the case of Ahmedabad Urban Development Authority (supra). 7. We have carefully considered the rival submissions. In the instant case, Tribunal has been called upon to adjudicate whether assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered to any particular trade, commerce or business; and whatever income was earned by the assessee even while selling the plots (to the extent of 15% of the total area covered under the Town Planning Scheme) was required to be used only for the purpose to carry out the object and purpose of the Town Planning Act and to meet the expenditure of providing general utility service to the public such as electricity, road, drainage, water etc. and the entire control was with the State government and accounts were also subjected to audit and there was no element of profiteering at all. The activities of the assessee could not be said to be in the nature of trade, commerce and business and therefore, the proviso to Section 2(15) of the Act was not applicable so far as the assessee was concerned. Therefore, the assessee was entitled to exemption under section 11. Apart from that CIT-vs.-Gujarat Industrial Development Corporation, wherein it was held as follows: Section 2(15), read with section 11, of the Income-tax Act, 1961 - Charitable purpose (Objects of general public utility) - Assessment year 2009-10 -Whether where assessee - corporation was constituted under Gujarat I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961') is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal 'D' Bench, Ahmedabad dated 20.02.2012 in the ITA No. 2433/Ahd/2017 for the A.Y. 2014-15. 3. We have heard Ms. Mauna Bhatt, the learned Senior Standing Counsel appearing for the Revenue. 4. All the questions of law referred to above and proposed by the Revenue stand squarely covered by the decision of this Court in the case of Ahmedabad Urban Development Authority vs. ACIT reported in 396 ITR 323 (Guj). 10. Thus, from the above we find that the assessee's case is squarely covered by the order passed by the Coordinate Bench in holding the activities of the assessee for charitable purposes under Section 2(15) of the Act and the consequential benefits under Section 11 12 of the Act. We find no reason to deviate from the stand taken by the Co-ordinate Bench on this aspect. Further that the decision of the Coordinate Bench has further been confirmed by the Hon'ble Jurisdictional High Court. Hence, respectfully relying upon the same we hold, that the assessee is entitled to the benefit of the claim under Section 11 12 of the Act for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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