9911796707
TMI Blog2022 (6) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances, Hon'ble Supreme Court had dismissed the appeals filed by the assessee. We observe that the Learned counsel for the assessee had not elaborated on this argument of the Revenue therefore, the cases were refixed and were finally heard on 17/05/2022. Learned counsel for the assessee filed supplementary written submissions, which has been made part of this order. In the supplementary written submissions, the Learned counsel for the assessee has argued that the judgment of Hon'ble Supreme Court in the case of Greater Cochin Development Authority is not applicable to the facts and circumstances of assessee. Elaborating on such judgment, Learned counsel for the assessee, through her written submissions, had submitted that in that case the Hon'ble ITAT had held that the activities of the assessee were hit by the proviso to section 2(15) of the Act and Hon'ble High Court [ 2014 (12) TMI 1314 - KERALA HIGH COURT] had dismissed the appeal of the assessee by holding that no substantial question of law arose in that appeal and in this respect our attention was invited to the judgment of Hon'ble Kerala High Court dated 19/12/2014. We find force in this ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EVELOPMENT AUTHORITY, M/S GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY, M/S NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY, NOIDA [ 2017 (4) TMI 1154 - ALLAHABAD HIGH COURT] after discussing various provisions of section 12A, 11A and 2(15) of the Act, along with the proviso to section 2(15), the Hon'ble High Court has answered all these three questions in favour of the assessee and against the Revenue. Therefore, their Lordships while considering question No. 2, exhaustively examined the activities of the assessee and held them to be non commercial in nature. As with the insertion of section 10(46) of the Act, introduced by the statute by the Finance Act 2011, the specified income arising to a body or trust or Board or Trust or Commission, which has been established or constituted by a Central or a State Act, for any activity for the benefit of general public and which is not engaged in any commercial activity has been held to be exempt. The Greater Noida Industrial Development Authority, which again is set up by UP State Government and which is engaged in industrial development activity in the Greater Noida, has been held to be engaged in non commercial activities vide order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and therefore, neither assessee filed any grounds of appeal before learned CIT(A) against the order of the Assessing Officer in this respect. However, we find that since the Assessing Officer had outrightly disallowed the exemption u/s 11 of the Act, he has not examined the provisions of section 11(2) of the Act which necessitates that exemption u/s 11 will be available to the assessee only if it fulfills the provisions contained in section 11(2) of the Act. The provisions of section 11(2), as already noted by us above, relates to spending of 85% of the income and accumulation of 15% of the income, which aspect can be examined by the Assessing Officer while allowing exemption u/s 11 of the Act. Therefore, the Assessing Officer is directed to examine this aspect while allowing exemption u/s 11 of the Act. In view of the above, ground No. 2 of the additional grounds of appeal is allowed for statistical purposes. Whether CIT(A) has not taken into account the provisions contained in section 13(1)(d)? - The provisions contained in section 13(1)(d) of the Act relate to investments of the accumulated fund in the specified modes as contained in sub section 5 of section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 11(2) - HELD THAT:- The provisions of section 11(2), as already noted by us above, relates to spending of 85% of the income and accumulation of 15% of the income, which aspect can be examined by the Assessing Officer while allowing exemption u/s 11 of the Act. Therefore, the Assessing Officer is directed to examine this aspect while allowing exemption u/s 11 of the Act. Additions Ground 3 - Investment of Accumulation of income in specified manner - HELD THAT:- This aspect can also be examined by the Assessing Officer while granting exemption u/s 11 of the Act. In view of the above, ground No. 3 of the additional grounds of appeal is allowed for statistical purposes. Additions Ground 4 - allotment of plots were made to the employees of the assessee - use of funds of the assessee by the author of the trust or the founder of the institution or any person who has made a substantial contribution to the trust or institution, or any relative - Scope of provision of Section 13(3) - HELD THAT:- in the present case, it is undisputed fact that the assessee was allowing discount to its employees - AO can again examine these facts while granting exemption u/s 11 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise transfer plots, building and other properties of the Board or of the State Government placed under the control and management of the Board. f) To organize and run workshops and stores for the manufacture and stock piling of building materials. g) On such terms and conditions as may be agreed upon between the Board and the State Government, to declare houses constructed by it in execution of any scheme to be houses subject to the U.P. industrial Housing Act, 1955 (U.P. Act No. XXIII of 1955). h) To regulate building operations. i) To improve and clear slums. j) To provide roads, electricity, sanitation, water supply and other civic amenities and essential services in areas developed by it. k) To acquire movable and immovable properties for any of the purposes before mentioned. l) To raise loans from market, to obtain grants and loans from the State Government the Central Government, Local Authorities and Public Corporations and to give grants and loans to Local Authorities. Urban bodies, corporations, hospitals etc. m) To make investigation, examination or survey of any property or contribute towards the cost of any such investigation, examination or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the same may be admitted and adjudicated along with the original grounds of appeal. Learned counsel for the assessee submitted that the additional grounds of appeal filed vide letter dated 05/02/2020 are though available with her but the additional grounds filed on 19/03/2021 are not with her as the Revenue had not provided a copy of the same to her. On a query from the Bench Clerk, it was informed that the additional grounds of appeal, claimed to have been filed on 19/03/2021, are also not on record of the Tribunal and therefore, the Learned Special Counsel for the Revenue was questioned as to how the additional grounds of appeal claimed to have been filed vide letter dated 19/03/2021, which are not on record either with us or with the Learned counsel for the assessee, can be admitted. Learned Special Counsel for the Revenue fairly agreed that the additional grounds of appeal filed on 19/03/2021 are almost similar to the additional grounds filed on 05/02/2020 therefore, they may be admitted and adjudicated. From the grounds of appeal taken as additional grounds of appeal by the Revenue vide letter dated 05/02/2020, we observe that these grounds are legal in nature and are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was first asked to proceed with additional grounds of appeal. In this respect he invited our attention to the written submissions filed by the Department on 29/12/2021 and submitted that the first ground relates to failure on the part of learned CIT(A) to consider the full and correct import of section 13(8) read with the proviso to section 2(15) of the Act vide Finance Act, 2010. Learned Special Counsel for the Revenue in this respect invited our attention to legislative background regarding the definition of charitable purpose as amended with effect from 01/04/2009 and submitted that the primary purpose of introducing the amendment with effect from 01/04/2009 was with respect to any activity of advancement of any other object of general public utility wherein a rider was inserted that such activity should not involve carrying on of any activity in the nature of business/trade or commerce. It was submitted that intent of the legislature was clear whereby it wanted to separate charity from the business. Learned Special Counsel for the Revenue argued extensively on the provisions of section 2(15) along with the proviso to section 2(15) of the Act and also invited our attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also dismissed by Hon'ble Supreme Court. It was submitted that in that case also the assessee was engaged in the similar activities and therefore, the findings of these case laws are applicable to the present assessee also. The Learned Special Counsel also placed reliance on some orders of the Tribunal where under similar facts and circumstances the various Benches of Tribunal has held that assessee was not eligible for exemption u/s 11 of the Act. Though at the same time the Learned Special Counsel admitted that some benches of the Tribunal have taken a contrary view and have granted exemption u/s 11 of the Act. It was submitted that in the present cases the judgment of Hon'ble Supreme Court in the case of Vegetable Products will not be applicable and assessee cannot be given the benefit of favourable judgment as there is no ambiguity in the language of provisions and the case law of Vegetable Products is applicable only where there are different opinions due to ambiguity in the language of such provisions. 7. As regards other additional grounds of appeal, Learned counsel for the assessee submitted that learned CIT(A), while allowing exemption u/s 11 of the Act, has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S SUBMISSIONS ON GROUND NO. 1 ADDITIONAL GROUND NO. 1 RAISED VIDE LETTER DATED 05.02.2020 1. This ground of appeal relates primarily to the failure of the CIT(A) to consider the full and correct import of Section 13(8) read with the proviso to Section2(15) of the Act. Vide Finance Act, 2010, a second proviso was added, with retrospective effect from 01.04.2009. Legislative Background 2. The definition of Charitable Purpose as introduced in the I.T. Act, 1961 read as under:- (15)- charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity for profit 3. This definition clearly stipulated that the objects of general public utility could not involve any activity which was for a profit. Thus, while charitable activities in relation to education, medical relief and relief of the poor had no qualifications but the residual clause of any other object of general public utility had a precondition of an activity not being an activity for profit. 4. However, this condition created some difficulties where the primary object was general publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be driven by one or more considerations like the need for higher revenues, or preference for direct subsidization or budgetary support over the indirect support like tax exemptions etc. which is outside the realm of the present proceedings. The Parliament also did not provide that these authorities would be regarded as charitable institutions to continue to claim the benefits of total exemption. 11. However, these authorities began to claim the benefit of a regime of charitable institution and had the approval of tribunals and courts. 12. Considering these developments, Parliament intervened again and introduced the proviso to Section 2(15) vide Finance Act, 2008 and re-asserted the legislative intent that if an authority or institution is engaged in any activity in the nature of trade or commerce, it would not be regarded as a charitable institution. However, some relaxations were given in this regard to save the smaller institutions by providing that the proviso shall not apply if the total receipts from such activities are less than rupees twentyfive lakhs. 13. There was yet another legislative intervention when the Parliament introduced sub-section (8) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity is not of the purpose or the motive, but the similarity is of the nature of the activity. Therefore, an institution may carry on the activity to earn the profit and appropriate it and the other institution may carry on same activity for other laudable motives but if the activities are of the same nature , both would lose the exemption under the proviso; and iv. The proviso would apply irrespective of the nature of use or application or retention of the income from such activity . This last limb of the proviso makes the true import of the proviso very clear. It stipulates that the use of the income from the activity is immaterial; the purpose for which the income is applied is immaterial; whether the income is applied or retained is also immaterial; what really matters for the application of proviso is that the activities have the nature of trade, commerce or business. Certain relevant facts of the case 16. Some of the significant facts which may have bearing on the primary issue, whether or not the Respondent is entitled to the benefit of exemption under Section 11 and whether such benefit can be denied to the Respondent by virtue of proviso to Section 2(15) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittle details were filed, came to the conclusion that these transactions are also guided by commercial considerations. ix. The Respondents have not received any amount during the year by way of voluntary contributions or donations. All their receipts are either by way of proceeds from the sale of properties or receipts incidental to such sale, or income of interest etc. Therefore, the acquisition of land, construction of houses and sale thereof is the primary and the dominant object of the Respondent authority and this activity is not different from that of any real estate developer. The activity is in the nature of trade, commerce or business as stipulated in the proviso to Section 2(15). As per the proviso, it is immaterial how the receipts from these activities were used or applied. Therefore, by virtue of Section 13(8), the Respondent would not be entitled to exemption, as their activities are in the nature of those activities which are contemplated in the proviso to Section 2(15) of the Act. 17. Powers and functions of the Respondent: - i. The Uttar Pradesh Avas Evam Vikas Parishad Adhiniyam, 1965 ( Regulation ), brought into existence the Respondent. Clause 15 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in the Memorandum and no part of such income or property could be distributed amongst the Members in any form or utilized for their benefit either during its operational existence or on its winding up or dissolution as such the object was a charitable one. 21. As pointed out, on winding up, the entire reserve and surplus which has been swelling up over the years, goes back to the state government, which was its founder/ creator / promoter. This fails the test laid down by the Hon ble Supreme Court in the above case and the Respondent cannot be held to be a charitable institution under Section 2(15) of the Act. Applicability of the proviso to Section 2(15) as introduced by Finance Act, 2008 22. From the facts stated hereinabove, it is apparent that the authority is engaged in the acquisition of land, construction of houses/housing projects in the same manner as any real estate developer would do. This is the principal activity of the Respondent. It is not engaged in the development of towns or cities. Its primary activity is the acquisition of land, construction of houses and its sale to the eligible entities. The provision for facilities like internal roads, drainage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent having been created by the state, does not have any profit motive and the income derived from these activities would be utilized only for the development of the area. It is also contended by the Respondent that the activities undertaken by it are for the welfare of the people and these therefore cannot be regarded as being in the nature of trade, commerce or business. It is submitted that this defence of the Respondent goes against the very grain of the amendment brought out by the Finance Act, 2008. The motive in carrying out an activity may be very laudable, but if during the previous year activities undertaken are of such nature as have the trappings of trade, commerce or business, the entity would be hit by the proviso. The argument that the monies earned would only be utilised for public good or that the Respondent is the creation of the state, is wholly irrelevant. There are several entities set up or created by the central or the state government having separate corporate status and doing public good are charged to tax and it would be highly discriminatory to suggest that a corporation set up by the central/state government for generating power is charged to tax b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will need to be satisfied before a complete exemption is granted. 7. In this regard, attention is kindly drawn to provisions contained in Section 11(2) of the Act, which provide that where 85 per cent. of the income is not applied for charitable purposes in India, during the previous year, it can be accumulated or set apart for application in future years provided that the assessee files a statement in Form 10 stating:- i. The purpose for which the income is being accumulated; ii. The period for which it is accumulated, which shall in no case exceed five years; iii. The money so accumulated is invested or deposited in a specified mode; and iv. A statement as prescribed is furnished before the due date of the filing of the return. 8. Sub section (3) of Section 11 provides that if such income which is accumulated is not utilized for the purpose for which it was so accumulated during the period given in the statement, then such income shall be deemed to be the income of such person of the previous year in which it is ceases to be so accumulated. A period of one year gets further allowed after the expiry of the given period. 9. A bare reading of the provisions cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to tax under Section 11(2) of the Act. The provisions of Section 11(3) also provide that the amount accumulated under Section 11(2) has to be invested and remain invested in specified mode till it is spent. There is nothing to suggest that the amount set apart earlier and due for application in this year were withdrawn out of the investments in prescribed modes. 13. It is submitted that the Hon ble High Court of Allahabad in Commissioner of Income Tax-I, Lucknow v. Lucknow Development Authority, Gomti Nagar,[2014] 265 CTR 433 (Allahabad) has observed as under:- The registration under Section12A is mandatory to claim exemption under Sections 11 13, but registration alone cannot be treated as conclusive. It is always open to Revenue Authorities, while processing return of income of these assessees, to examine the claim the assessees under Sections 11 and 14 and give such treated to these institutions as is warranted by the facts of the case. Revenue Authorities are always at liberty to cancel the registration under Section 12AA(3). Moreover, it may be mentioned that the benefit of Section 11 is not absolute or conclusive. It is subject to control of Sections 60 to 63. If i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut complete information in this regard is not being made available to the Revenue. 17. In this regard, reliance is placed on the decision of the Hon ble Andhra Pradesh High Court in the case of Talaprolu Bapanaiah Vidya Dharma Nidhi Trust v. CIT, (1987) 167 ITR 482 (AP), wherein it was held that:- But section 13 excludes the application of section 11, provided the conditions prescribed there under are satisfied, namely, section 11shall not operate so as to exclude from total income of the previous year of the person in receipt of, in the case of a trust for charitable or religious purposes or charitable or religious institutions, any income thereof or any part thereof, if such income or any property of such trust or institution is used or applied directly or indirectly for the benefit of any person referred to in sub-section (3), namely, the author of the trust or the founder of the institution if any funds of the trust or the institution are, or continue to remain, invested for any period during the previous year in which the founder or the author has sub stantialinterest. Sub-section (2) of section 13 makes the matter explicit. It speaks that without prejudice to the gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious types of benefits such as by way of interest free loans, loans without security, permission or licence to use land or other property without charging adequate recompense, excessive payment for service, sale of property for inadequate consideration and investment of the trust funds in concern belonging to the specified person or in which he has substantial interest as observed in the case of Talaprolu Bapanaiah Vidya Dharma Nidhi Trust v. CIT : (1987) 167 ITR 482 (AP). In the instant case, the beneficiary is not covered by the list of persons mentioned in Section 13(3) of the Act. Hence, we set aside the impugned order passed by the Tribunal and restored the order passed by the A.O. The answer to the question is in negative i.e. in favour of the revenue and against the Assessee. The appeal filed by the department is allowed. 6. The facts and circumstances are identical in nature, hence by following the order (supra), we set aside the impugned order dated 31st July, 2007 passed by the Tribunal-Respondent and restore the order of the A.O. 19. The Hon ble Delhi High Court in the case of DIT v. Maruti Center for Excellence, [2012] 208 Taxman 236 (Delhi) has also held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indirectly for the benefit of the persons mentioned in Section 13(3). The term 'benefit' is important and shows that reasonable and fair payments made for the actual services rendered and provided by persons under Section 13(3) will be and are allowed. Justified and reasonable payments and adequate compensation for services rendered, goods supplied etc. Cannot be regarded as providing a benefit to a person under Section 13(3). What is prohibited and barred is application of income or use of the property of the institution directly or indirectly for benefit of a person mentioned in Section 13(3) i.e. he is paid beyond what is reasonable, adequate, commensurate and justified for the services rendered or goods supplied. The said person should not profit at the expense of the trust/institution. Charity should not become the primary or important source of business profits and a fa ade to promote business interest or secure advantage, for persons mentioned in Section 13(3) in the name of charity. The word benefit need not be restricted to direct material benefit, but is of wide significance comprehending whatever would be beneficial in any respect, materially or otherwise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the training and whether this was a benefit to the persons mentioned in Section 13(3). For example, in case training was subsidized, then it can be said and argued that benefit was given to the member, even if same fee was charged from non-members. Further and importantly, Section 13(1)(c) (ii) will get attracted if the benefit was confined primarily and predominantly to the persons mentioned in Section 13(3)(b) and (e) and incidentally some benefit had percolated and flowed to the public/third persons. 20. It has been held by the Hon ble Allahabad High Court in the Respondent s own case in M/s UP Awas Evam Vikas Parishad, ITA No. 114 of 2010 dated 16.09.2013 that:- The registration under section 12A is mandatory to claim exemption under Section 11 and 13 but registration alone cannot be treated as conclusive. It is always open to revenue authorities to examine the claim under Section 11 and 13 and give such treatment to this institution as is warranted by the facts of the case. 21. Lastly, the Hon ble Patna High Court in the case of Budha Vikas Samity v. Commissioner of Income Tax-I, Patna, [2011] 199 Taxman 395 (Patna) has observed that:- 9. The learned author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.30(Asr)/2011 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.f. 01.04.2009, as mentioned hereinabove. Therefore, after insertion of the said proviso, any institution carrying on of any activity in the nature of trade, commerce or business etc. as mentioned herein above, shall not be a charitable purpose. As per objects of the assessee, it is observed that the main object of the assessee is to promote and secure the development of local area and there is no charitable purpose 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. Further profit making by the assessee is not mere incidental or by product of the assessee. There is no real object of the assessee and there is no spending of the income exclusively for the purpose of charitable activities and profits of the assessee are not used for charitable purpose under the terms of the object and there is no ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r brevity, the Act) is directed against order dated 14.06.2012 passed by the Income Tax Appellate Tribunal, Amritsar, upholding the order withdrawing the status of Charitable Institution given to the appellant-assessee under Section 12AA(1)(b)(i) of the Act. The Tribunal has reached a categorical conclusion that the assessee-Jammu Development Authority cannot be regarded as an institution or trust which may have been set up to achieve the objects enumerated under Section 2 of the Act particularly in view of the addition of first and second proviso made by the Finance Act, 2008 w.e.f. 01.04.2009 to Section 12 AA of the Act. There are findings of fact that the assessee-appellant has not been acting to advance any of the object concerning general public utility. Even otherwise the proviso which has been added by the Finance Act, 2008 w.e.f. 01.04.2009 stipulates that the advancement of any other object of the general public utility shall not be a charitable purpose, if it involves 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 or a cess or fee or any other consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain objects. It can be said that it is the duty of the Government to create/provide all these facilities to public at large, which is being done through this agency in a particular area. At the same time, the funds which are provided to the assessee by the Government is again a public money or generated from the public itself, so where is the charity? If the activities of the assessee and the arguments of the learned Counsel are put in a juxtaposition, it can be said that the objects of the assessee, though claimed to be charitable, but actually are of purely commercial nature where profit motive is involved. It is a known fact that the assessee is acquiring the land at very low prices and selling the same land on very higher rates and is earning a profit there from. A new trend has also emerged that the assessee has started auctioning the plots by way of bidding at the market rate and sometimes more than that and charging interest on belated payments. In such a situation, we are of the view that no charity is involved. Rather the assessee has converted itself into a big business house. Similar development/infrastructure/facilities are also provided by private developers these days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other real estate developer is engaged in. It was considering these admitted facts that the assessing officer and the appellate authorities have concurrently come to the conclusion that the activities carried on by the assessee are in the nature of trade, or commerce or business, and that the assessee is receiving consideration in return for its activities. 13. Considering the nature of the activities that are carried on by the assessee, the factual correctness of which is undisputed, we can only endorse the view taken by the statutory authorities that in view of the proviso to Section 2(15), the activities of the assessee do not qualify to be charitable purpose as defined therein. In such a scenario, the assessing officer was justified in disallowing the exemption claimed and assessing to tax the income of the assessee and the appellate authorities were justified in confirming the same. In such circumstances, we don t see any question of law arising in these appeals to be considered by this Court under Section 260(A) of the Income Tax Act. 7. The matter was thereafter carried to the Hon ble Supreme Court, which after hearing the petitioner, was pleased to dismiss the SL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court of Patna observed as under:- 11. In Surat Art Silk Cloth Mfrs. Association's case (supra), it has been held: ...The income and property of the assessee were liable to be applied solely and exclusively for the promotion of the object set out in the memorandum and no part of such income or property could be distributed amongst the members in any form or utilised for their benefit either during its operational existence or on its winding up or dissolution. The assessee's income was derived primarily from two sources: (i) an annual subscription collected from its members at the rate of Rs. 3 per power loom, in regard to which it was conceded by the department that it was exempt from tax and (ii) commission of a certain percentage of the value of licences for import of foreign yarn and quotas for purchase of indigenous yarn obtained by the assessee for its members. This commission was credited separately in a building account and out of this amount the assessee constructed a building. The Tribunal held that the primary purpose for which the assessee was established was to promote commerce and trade in art silk, silk yarn and cloth as set out in clause(a) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hit by the proviso to section 2(15). The contention of the department is that the assessee is carrying on activity in the nature of trade, commerce or business for a consideration, while the assessee contends that it is not hit by the proviso. The assessee is not carrying on any trade, commerce or business. 17. From the perusal of Section 2(15) after the insertion of the proviso, which is applicable only in the case where the assessee is engaged in the advancement of any other object of general public utility, the definition of charitable purpose got amended. The proviso as is apparent clearly states that the advancement of any other object of general public utility shall not be charitable purpose and subsequent to that it gives certain conditions if the institution fulfills those conditions as are stipulated in the proviso, the institution will not be regarded to have been engaged for the advancement of any other object of general public utility for the purpose of Section 2(15) of the Income Tax Act and will no longer remain to have been engaged in charitable purposes. In fact, this proviso puts an embargo on the institution that in case the institution falls within the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated for charitable purpose cannot have profit motive. Due to this reason, if we go to the background of Sec. 2(15), the Hon'ble Supreme Court interpreted Sec. 2(15) in the case of Addl. CIT Vs. Surat Art Silk Cloth Manufacturers Association 121 ITR 1 (relied on by Sr. Advocate), when the Section 2(15) contained the words not involving the carrying on of any activity for profit after advancement of any other object of general public utility . Profit motive in respect of an institution cannot be main object but it may be ancillary and incidental to the main objects due to which Sec. 11 (4A) was also incorporated under the Income Tax Act initially y Finance Act, 1983 w.e.f. 1.4.1984. The Learned AR even though relied before us on the decision of Hon'ble Supreme Court in case of ACIT v. Surat Art Silk Manufacturers Association 121 ITR 1 (SC), but this decision is not applicable in the case of the assessee at all as it relates to the interpretation of Sec. 2(15) prior to its amendment by the Finance Act, 1983 when the words 'not involving any activity for profit' were there under Section 2(15) after the words 'advancement of any other objects of general public u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have any leg to stand for deciding whether the proviso of Sec. 2(15) is applicable in the case of the assessee or not because the proviso clearly states that 'the nature of use or application or retention of the income from the activity carried on by the institution which are in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or businesses not relevant. 28. We find that the meaning of the expressions trade, commerce or business was analysed by the Hon'ble Delhi High Court in the case of Institute of Chartered Accountants of India Vs. DGT (347ITR 99) and the relevant discussions have been extracted by the Hon'ble Delhi High Court in the case of GSI India Vs. DGIT (Exemption) (2014) (360 ITR 138) (Delhi) as under: - Scope of Trade, Commerce or Business 15. The key words, namely; trade, commerce and business were enumerate and elucidate in Institute of Chartered Accountants of India v. Director General of Income Tax (Exemptions) Delhi (Supra) as under: - Trade, as per the Webster's New Twentieth Century Dictionary (2nd edition), means, amongst others, a means of earning one's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s Law of Income Tax (9th edition), a business activity has four essential characteristics. Firstly, a business must be a continuous and systematic exercise of activity. Business is defined as an active occupation continuously carried on. Business vocation connotes some real, substantive and systematic course of activity or conduct with a set purpose. The second essential characteristic is profit motive or capable of producing profit. To regard an activity as business, there must be a course of dealings continued, or contemplated to be continued, normally with an object of making profit and not for sport or pleasure (Bharat Development P. Ltd. v. CIT [1982] 133ITR 470 (Delhi)). The third essential characteristic is that a business transaction must be between two persons. Business is not a unilateral act. It is brought about by a transaction between two or more persons. And, lastly, the business activity usually involves a twin activity. There is usually an element of reciprocity involved in a business transaction. .. 35. We have gone through the order of the Lucknow Bench of Allahabad High Court in the case of Lucknow Bench of Allahabad High Court in the case of Lucknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted before the High Court relate to the assessment year prior to the assessment year 2009-10 when the provision of Section 2(15) were amended by inserting proviso in Section 2(15) of the Income Tax Act. This is settled law in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. Sun Engineering (P) Ltd., 198 ITR 197 that case has to be applied on the basis of facts and contents therein. Each A. Y. is independent and the law prevailing during the assessment year has been considered for deciding the case of that A.Y... 11. Furthermore, the Hon'ble Coordinate Bench of the ITAT, Indore in the case of Indore Development Authority, ITA 366/Ind/2008 has observed that: - 52. To sum up, if the totality of facts/case-laws as narrated above and the arguments advanced by the Id. respective counsel are kept injuxta-position and analysed, in our humble opinion, the assessee is not engaged in activities of relief to poor, education, medical relief and/or advancement of any other objects of general public utility as defined in sec. 2(15) of the Act. Rather the assessee is actually not carrying out any activity of advancement of objects of general public utility w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, lacs of people are applying and the cost of the application form which may be in thousand/thousands, is never returned to the applicants who do not get the plots. Even the security/advance money taken with the application forms is returned after a long time without interest to the persons not getting plots, resulting into huge profit to the assessee authority and loss the public at large. In such a situation, what chanty the assessee is doing is not known/beyond imagination. If registration is granted to the assessee, it will open a pandora box wherein every colonizer/builder will ask for registration under section 12AA of the Act, which would be very much indifference to the intention of the legislature. In fact, the assessee authority is working on commercial pattern like a big businessman. Even otherwise, if some plots are reserved for economically weaker sections of the society, firstly, there is no parameter that these are actually allotted to such poor persons and secondly, the hidden cost is already added to such plots. It is pertinent to mention here that the legislature in their wisdom amended sec. 2(15) through the Finance Act, 2008 in the case of Trade Associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Hon'ble High Courts of 3ammu and Kashmir, Andhra Pradesh. Kerala and Patna have affirmed the views of these co-ordinate benches of the Hon'ble ITAT that these entities would not be entitled to exemption under Section 11. The Hon'ble Supreme Court has also dismissed SLPs filed against the orders of Hon'ble High Court of Jammu and Kashmir and Kerala. 13. There are certain decisions of the co-ordinate benches of the Hon'ble ITAT which are contrary to the above view. References to these decisions have been made in the written submissions of the Respondent. It is urged that in view of the express language employed in the proviso to Section 2(15) and there being no ambiguity in the express provisions of the law, the decisions rendered by co-ordinate benches in favour of Revenue ought to be followed. The principle laid down in the case of The Commissioner of IncomeTax, West Bengal-I, Calcutta v. M/s. Vegetables Products Ltd., 1973 AIR 927 would apply which reads as under: - There is no doubt that the acceptance of one or the other interpretation sought to be placed on S. 271(1)(a)(i) by the parties would lead to some inconvenient result, but the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 26-28, there is a reference to proviso to Section 2(15) and the Hon'ble Court observes as under: 28. There is no material/evidence brought on record by the revenue which may suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit or has deviated from its objects as detailed in the trust deed of the assessee. In these facts and circumstances of the case, the proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 for the relevant assessment year. It is submitted with utmost respect that when the proviso was not on the statute in the years for which the appeal was being decided, and the question of law before the High Court also did not make any reference to the proviso, the observations of the High Court are mere stray observations and these do become ratio decidendi to constitute a binding precedent. Reference is invited to the decision of the Hon'ble Supreme Court in CIT v. Sun Engineering (P.) Ltd., 198 ITR 197, where the Hon'ble Supreme Court observed that a decision is a precedent for what it decides. A sentence or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose during the impugned assessment year read as under: charitable purpose includes relief of the poor education, medical relief and the advancement of any other object of general public utility 37. The said definition was considered by the High Court in that case and after considering the said definition the Hon'ble High Court took the view that the assessee was entitled to exemption u/s. 11 for the relevant assessment year. This issue we noted before the High Court relate to the assessment year prior to the assessment year 2009-10 when the provision of Section 2(15) were amended by inserting proviso in Section 2(15) of the Income Tax Act. This is settled law in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. Sun Engineering (P) Ltd., 198ITR 197 that case has to be applied on the basis of facts and contents therein. Each A. Y. is independent and the law prevailing during the assessment year has been considered for deciding the case of that A.Y... In view of the above, the decision of the Hon'ble Allahabad High Court does not help the case of the Respondent. 15. CIT(A)-I, Lucknow v. U.P. Housing Development Board, ITA No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase acquisition of land, its development into plots of land or houses and sale thereof. These are being done on commercial lines. The mode and manner are sale and disposal of these plots/houses is the same which any builder would do. Unlike Moradabad Development Authority (supra), the present Respondent is not involved in the development of city or town planning etc., nor are they entrusted with any regulatory functioning. b. The A.O. has pointed out the sources of receipt and the nature of activities in his order of assessment. He has also indicated how they are charging interest on commercial lines, which by itself may indicate that the activities are in the nature of trade, commerce or business. c. The provisions of Section 13(8) were not examined by the ITAT in the case of Moradabad Development Authority. The relevance of the proviso at the time of granting of registration is to see that the objects do not suggest any activity in the nature of trade, commerce or business. However, the provisions contained in Section 13(8) stipulate that despite the registration given, holding the genuineness of the trust and of the objects, the A.O. can still go into the question whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Development Authority (supra) in Para 31 observed as under: - 31. Reverting back to pivotal issue, we find that CIT(E), at the stage of registration, is not supposed to inquire into the conduct of charitable or other activities to be performed by a trust or institution which has submitted application for registration. That is an investigation to be gone subsequently at the time of assessment by Assessing Authority. In this regard, reliance is placed on Kerala High Court in Sree Anjaneya Medical Trust v. CIT, (2016) 382ITR 399 and Karnataka High Court in Commissioner of Income Tax and Others v. Sri Gururaja Seva Samithi decided on 03.07.2015 and some other authorities which we may discuss in detail at appropriate stage. j. It is thus obvious that the enquiry by CIT under Section 12AA and that by the 'A.O.' under Section 13(8) at the time of assessment are two different fields of inquiry and it cannot be said that a decision rendered on the point of registration can apply by any logic to the order of the assessment which examines the nature of activities during that previous year. Thus, the questions of law in the two appeals were not similar. The case Morada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, that the question of law raised was similar to the one answered in M/s Yamuna Expressway Industrial Development Authority (supra). o. Thus, the decision of the Hon'ble High Court in the case of Moradabad Development Authority (supra) does not apply to the facts of this case and is certainly not a binding precedent, while adjudicating the issue in the context of Section 13(8) of the Act for a given previous year . p. A tabular chart giving the factual distinction between the two cases is enclosed as enclosure to these submissions. 18. To sum up: - a. None of the decisions of the coordinate benches, relied upon by the Respondents take into consideration the fact that the proviso to Section 2(15) does not contemplate the actual carrying on of trade, commerce or business, but the stipulation is that the activities are in the nature of trade, commerce or business. This makes a world of difference. b. These decisions referred to by the Respondent also do not consider the fact that the proviso to Section 2(15) very clearly states that the trust or institution shall not be regarded ascarrying on any other object of general public utility irrespective of, the reten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Development Authority (supra) or Moradabad Development Authority (supra) is also of no consequence for the reason that these were the cases where registration under Section 12AA was denied by the CIT and the Hon'ble High Court intervened to hold that the assessees were entitled to registration as a charitable institution. i. In the case of Moradabad Development Authority (supra), the decision is again not a precedent for the reason that both the parties consented to a totally incorrect statement that the question of law in Moradabad Development Authority (supra) for that year was similar to the one answered in M/s Yamuna Expressway Industrial Development Authority (supra). It is submitted that such an order will only act as binding in nature qua the parties to that case and will not have a binding effect. j. The objects with which the Respondent may have been formed by the state government, may be a relevant factor for the grant of registration under Section 12AA, but despite having this registration, the Respondent will have to, meet the requirement of Section 13(8) before they can enjoy the benefits of exemption under Section 11(1) of the Act. Thus, the fact that the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not been maintained. o. The decisions referred to by the Respondent like the cases of Commissioner of Income Tax (Exemption) v. Gujarat Housing Board, Tax Appeal Nos. 184 of 2019 or Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemption), Tax Appeal Nos. 423-425 of 2016 would not help the case of the Respondent. Unlike the case of Institute of Chartered Accountants of India v. Director General of Income Tax (Exemptions), Delhi, (2013) 217 Taxman 152 (Del.), Director of Income Tax (Exemption) v. Sabarmati Trust (2014) 223 Taxman 43(Gujrat), GSI India v. DGIT (Exemption) (2013) 219 Taxman 205 (Delhi), Commissioner of Income Tax-1 v. Kandla Port Trust, (2014) 225 Taxman 145 (Guj.), Bureau of Indian Standards v. Director General of Income Tax (Exemptions), (2013) 212 Taxman 210, the major receipts and expenses of the Respondent relate to those activities which have the trappings of trade, commerce or business. These were not cases where incidental receipts were involved. p. In view of the foregoing, the case of the Respondent has to be examined with reference to the provisions contained in Section 13(8) read with Section 2(15) of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 12A which is already in existence. Therefore, the case law relied on by Special Counsel is not applicable to the facts and circumstances of the case. Without prejudice it was submitted that in the case of Jammu Development Authority, Hon'ble High Court had not framed any question of law what to talk of substantial question of law and therefore, any order passed by Hon'ble Supreme Court by way of dismissing the SLP does not lay down any precedent as the said case is binding only to the particular facts and circumstances of that case. 12. As regards the reliance placed by Learned counsel for the assessee on the case of Greater Cochin Development Authority, it was submitted that in this case also the Hon'ble Kerala High Court had not framed any question of law and the SLP dismissed by Hon'ble Supreme Court therefore, does not lay down any law. In support of her arguments that such SLP dismissed by Hon'ble Supreme Court do not lay down any law, reliance was placed on the judgment of Hon'ble Punjab Haryana High Court in the case of The Tribune Trust wherein the Hon'ble High Court has held that where the High Court had not framed any question of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue in favour of the assessee and therefore, assessee is eligible for exemption u/s 11 of the Act. 13.2 The learned AR further submitted that in the case of assessee itself for assessment year 2015-16, the case of the assessee was reopened u/s 148 and Assessing Officer has again examined the activities of the assessee and has granted exemption u/s 11 of the Act. The learned A.R. further placed reliance on the provisions of section 10(46) of the Act and submitted that CBDT itself has granted exemption u/s 10(46) on the similar activities being undertaken by different assessees. In this respect reliance was placed on the notifications issued by CBDT in the case of Yamuna Expressway Industrial Development Authority and Greater Noida Industrial Development Authority. The learned A.R. argued that CBDT has examined the activities of these organizations and has issued notifications exempting the income u/s 10(46) of the Act. It was submitted that activities being undertaken by assessee are similar to the activities being undertaken by the assessee. In view of all these facts and circumstances it was submitted that there is no infirmity in the order of learned CIT(A), which should be up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to submission made earlier vide paper book dated 05.02.2020 following submission is being made in lieu of the contention made by the Ld. DR in last hearing: (A) SECTION 2(15) A detailed submission along with reliance on judgements has been made on this issue in our paper book dated 05.02.2020. The words trade and commerce have not been defined in the Income-tax Act. Through page nos. 7 to 10 of our aforementioned submission we have tried to explain the meaning of the terms business, trade and commerce. The objects and activities of the appellant Parishad has been briefed in our above referred submission from page no. 3 to 7 and thereafter from page no. 17 to page no. 52 of above referred paper book we have discussed the non-applicability of the proviso to section 2(15) of Income-tax Act in case of the appellant Parishad. The above portion of the submission in addition to some other contentions in this regard are being submitted hereunder: I. MEANING AND CONCEPT OF BUSINESS , TRADE AND COMMERCE (i) Business In the Commentary on Income Tax Law by Chaturvedi Pithisaria, business has been defined / explained as under (Page 1321; Vol I; Fifth edi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The expression business has further been defined in the Commentary on Income Tax Law by Chaturvedi Pithisaria (Pages 1322 and 1323; Vol 1; Fifth edition) as under: The word 'business' is a word of large and indefinite import. It is something which occupies the attention and labour of a person for the purpose of profit. It has a more extensive meaning than the word 'trade'. An activity carried on continuously in an organized manner with a set purpose and with a view to earn profit is business [CIT v. M.P. Bazaz, (1993) 200 ITR 131, 135, 136 (Ori)]. Also see, Khoday Distilleries Ltd. vs. State of Karnataka, JT 1994 (6) SC 588, 625-26. (ii) Meaning and Concept of Trade and Commerce In the Commentary on Income Tax law by Chaturvedi Pithisaria, trade and commerce have been defined as under (Page 1323; Vol 1; Fifth Edition): Trade or Commerce- The definition of 'trade' does not find its place in the Act. The dictionary meaning of 'trade' as per dictionary of Webster's New Twentieth Century Dictionary, (Second edition), means amongst others, 'A means of earning one's living, occupation or work'. In Black's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax business Income-Carrying on of Business - Government Acquired Assessee Company's Undertaking In Regard To Supply Of Electricity-Mere fact That It Did Not Go Into Liquidation Would Not Establish That It Had Intention To Do Business-at The Relevant Time The Company Was Not Express And Intention To Resume Business- Thus, no Business was Carried On-facts That It had To Pay The Government Half Share of Profits For Some time and That It Had To Return Deposits To Consumers Would Not Indicate That It was Carrying On Business-Business as Contemplated By S.10 Of 1922 Act Is An Activity Capable Of Producing A Profit Which Can Be Taxed. 3) In the case of CIT Vs. K.S. Venkatksubbiah Reddiari (1996), 221 ITR 18, 21 (Mad.), Hon'ble Madras High Court has, while holding that profit - motive is essential to constitute a business, observed as under: It is, therefore, clear that the two essential requirements for any activity to be considered as business are (i) it must be a continuous course of activity; and (ii) it must be carried on with a profit motive. 4) Barendra Prasad Ray vs. ITO (1981) 129 ITR 295 (SC) 5) Lala Indra Sun In Re (1940) 8 ITR 187 (Alld.) 6) Narasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dictates of the State Government, through its own cadre of civil service. The functions of U.P. Awas Evam Vikas Parishad Adhiniyam, 1965 (U P. Adhiniyam Sankhya 1 of 1966) are prescribed u/s 15 of the Act and the same are reproduced as below:- Functions of the Board- (I) Subject to the provisions of this Act and the rules and regulations, the functions of the Board shall be- To frame and execute housing and improvement schemes and other projects. a) To plan and coordinate various housing activities in the State and to ensure expeditious and efficient implementation of housing and improvement scheme in the State. b) To provide technical advice for scrutiny of various projects under housing and improvement scheme sponsored or assisted by Central Govt. or State Govt. c) To assume management of such immovable properties belonging to the State Government as may be transferred or entrusted to its purpose. d) To maintain, use, allot, lease or otherwise transfer plots, building and other properties of the Board or of the State Government placed under the control and management of the Board. e) To organize and run workshops and stores for the manufacture and stock p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State Government. Thus the very purpose of enactment of U.P. Awas Evam Vikas Parishad Adhiniyam, 1965 (U.P. Adhiniyam Sankhya 1 of 1955) was for advancement of various schemes of the Parishad for the development and improvement of housing activities in the State and to ensure expeditious and efficient implementation of housing and improvement schemes in the State to regulate building operations, to improve and clear slums, to provide roads, electricity, sanitation, water supply and other civic amenities and essential services in the areas developed by it. In this connection, reference may be made to relevant provisions of U.P. Awas Evam Vikas Parishad Adhiniyam, 1965 (U.P. Adhiniyam Sankhya 1 of 1966). References to section 80 of the said Act were made, in which type of housing and improvement schemes had been laid down, which reads as under:- Types of housing and improvement schemes A housing or improvement scheme shall be of one of the following types, or a combination of two or more or more of such types or of special features there of namely- a) Grihsthan Yoina (house accommodation scheme) b) Malin Bastl Sudhar Aur Nipatan Yojna (Slum improvement and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulation also vests with the State Government as provided in chapter XI of the Act. III. PROFIT MOTIVE IS ESSENTIAL TO CONSTITUTE BUSINESS, TRADE OR COMMERCE In this regard it is submitted that the appellant Parishad main objective is to execute various housing and improvement schemes in lieu of the directions of the State/ Central Government. The objects and activities of the appellant Parishad has not changed since grant of registration u/s 12AA of the Act. There is no profit motive involved. The funds can be utilized in accordance with approved budget by State Government. The ultimate property/ funds of the appellant Parishad vest with State Government in case of dissolution by the State Government. The appellant Parishad cannot act beyond the Statute through which it was incorporated. Further, with respect to the fact that the objects/ activities of the appellant Parishad are not commercial in nature, your honour s kind attention is being drawn towards clause 46 of section 10 which was inserted by Finance Act 2011. The clause reads as under: any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called), or a clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the activities related to the planned development of the area, all municipal functions like roads, water supply, street lighting and power supply, sewerage, drainage, collection treatment and disposal of industrial waste and town refuse and other community facilities, services or conveniences. Activities performed by the Authority are for the benefit of general public at large and by no stretch of imagination commercial in nature. All the amounts received by the Authority are utilized for the development of the Notified Area under its authority. Authority is mandated only to carry on the functions/objectives as detailed by Uttar Pradesh Industrial Development Act, 1976. Authority is not mandated to carry on any commercial/business activity from the point of view of earning profits. Authority is performing the Sovereign functions of planned development in the notified area and provision of municipal services in that area. 7. The term as used in Section 10(46)(b) that the body or authority or commission or board is not engaged in any commercial activity has not been defined anywhere in the Act. 8. The applicant has sought to distinguish its case stating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other sources by way of loans and debentures. Funds can also consist of fees, tolls and charges received by the petitioner under the Act and money received from disposal of land, building and properties both movable and immovable and money by way of rents and profits. Sub-section (2) to Section 20 of the UPID Act stipulates that the funds shall be applied towards meeting the expenses incurred by the petitioner in administration of the UPID Act and for no other purposes. 11. To the aforesaid extent, there is no dispute or debate. The lis, which has to be decided by us, is whether acquisition and sale or leasing of land or built up structures by the petitioner in the context of the function it performs and its obligations under the UPID Act, would constitute and can be treated as commercial activity . A careful reading of paragraph 8 of the impugned order dated 8th June, 2015 would show that the respondents have held that an activity which is continuous and has the effect of generating money is commercial activity . It does not matter whether or not any profit intent or motive is involved. It does not also matter whether the primary function of the petitioner was planned develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o being engaged in or concerned with commerce and it also has a second more restrictive meaning; namely:- 19. 1. engaged in, or concerned with, commerce. 2. having profit as a primary aim rather than artistic etc. value; philistine‟. (The Concise Oxford Dictionary). 15. In Punjab University Vs. Unit Trust of India Ors. (2015) 2 SCC 669, reference was made to Stroud s Judicial Dictionary, in which the word commercial‟ has been defined and it was held: Commercial.--(1) Commercial action‟ includes any cause arising out of the ordinary transactions of merchants and traders and, without prejudice to the generality of the foregoing words, any cause relating to the construction of a mercantile document, the export or import of merchandise, affreightment, insurance, banking, mercantile agency and mercantile usage. (2) An incorporated canal company whose profits arose from tolls, was held a commercial company‟, or a company associated for commercial purposes‟, and, as such, liable to become bankrupt under the Joint Stock Companies Act, 1844. 23. Thus, the words commercial purpose would cover an undertaking the object of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation and in particular on the income and expenditure of the Corporation to show that it was making profits. These features of transfer of land, or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their Directors for the regulation and management of the Corporation Such a Corporation set up by the shareholders carries on business and is intended for making profits. When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading Corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity Board and the Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing of the State Government in establishing industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pretation given by us would mean and imply that Section 10 (46) and the provisions relating to charity under Section 2 (15) read with Sections 11 to 13 of the Act would overlap. Overlapping to some extent is possible. However, Section 10 (46) of the Act is a specific provision dealing with body or authority etc. created or constituted by the Central or State Government or under the Central or State enactment. Further, exemption under the said provisions could be restricted to only specified types or categories of income and not all incomes. The petitioner-assessee cannot be denied benefit of Section 10 (46) of the Act for the reason that it may well qualify and would be entitled to benefit under Section 2 (15) read with Sections 10 to 13 of the Act. 35. Allahabad High Court in Greater Noida Industrial Development Authority, (supra) after extensively referring to the statutory mandate and object for which the petitioner authority has been established and also the provisions of the Act i.e. the Income Tax Act, had observed that the petitioner was to provide amenities and facilities in industrial estate and in industrial area in the form of road, electricity, sewage etc. We have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Moneys received from the disposal/90 years lease of immovable properties; (c) Moneys received by the way of lease rent fees or any other charges from the disposal/90 years lease of immovable properties; (d) The amount of interest earned on the funds deposited in the banks; (e) The amount of interest/penalties received on the deferred payment received from the Allotees of various immovable properties; and (f) Water, sewerage and other municipal charges from the Allotees of various immovable properties. Meanwhile, aggrieved of the order of Hon ble Delhi High Court a Special Leave Petition was preferred before Hon ble Supreme Court vide SLP (C) No. 27827/2019 which was dismissed on 25th November 2019. Further, following the aforementioned judgement in case of Greater Noida Industrial Development Authority, similar order was passed by Hon ble Delhi High Court in case of Yamuna Expressway Industrial Development Authority vide W.P. (Civil) No. 5603 of 2020 dated 23rd August 2020. Similar Notification was issued by CBDT in case of Yamuna Expressway Industrial Development Authority vide Notification No. 91/ 2020 dated 24th December 2020. Further, similar order wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in formulation of housing schemes either on own motion or on request by any local authority or on the direction of the State Government. The schemes are developed keeping in view the public purpose that it has to serve. The schemes are formulated with an idea of developing a complete township in an area not developed at all, keeping in mind disbursal of population and avoidance of overcrowded conditions in any area. On seeking 12A registration post deletion of section 10(20A) of Income-tax Act w.e.f. 01.04.2003, the Ld. Commissioner of Income-tax while rejecting the application of appellant Parishad made allegation on Parishad for being involved in activities on commercial lines and that such activities were akin to private developers, who also conduct development of large chunk of areas. Aggrieved of the order of Commissioner, appeal was preferred before Hon ble ITAT, Lucknow vide ITA Nos. 686 (LUC)/2003. Hon ble ITAT, Lucknow vide order dated 25th July 2005 in case of appellant Parishad allowed 12A registration holding that the appellant Parishad was not involved in commercial activities. The relevant portion of the order is reproduced below: 16. It is argued by the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us, by way of getting themselves registered under section 12A of the Act, will ultimately claim exemption under section 11 of the Act. It will be out of place to mention that when section 10(20A) was omitted from the statute the then Chief Minister has requested the Finance Minister, Government of India to withdraw the deletion of the provisions of section 10(20A) of the Act from the statute. But the then Finance Minister, in his letter addressed to the then Chief Minister, Uttar Pradesh, has advised that such authorities could claim exemption under section 11 of the Act. Section 11 of the Act reads as under: 11. Income from property hold for charitable or religious purposes.-(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income 35. We have, therefore, first examined as to whether the assessees before us could take the benefit of sections 11 to 13 of the Act, read with section 12AA of the Act even after the deletion of section 10(20A) of the Act from the statute. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or even all persons living in a particular country or province. It was sufficient if the intention was to benefit a section of the public as distinguished from specified individuals. . . . That if the primary purpose be advancement of objects of general public utility, it would remain charitable even if an incidental entry into the political domain for achieving that purpose, e.g., promotion of or opposition to legislation concerning that purpose, was contemplated. It was only for the purpose of securing its primary aims that it was mentioned in the memorandum of association that the Chamber might take steps to urge or oppose legislative or other measures affecting trade, commerce or manufactures. Such an object ought to be regarded as purely ancillary or subsidiary and not the primary object. 37. The Hon ble Supreme Court in the case of Surat Art Silk Cloth Mfrs. Association (supra) also observed as under: The test which has, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit-making is the predominant object of the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA of the Act. Later aforementioned order of Hon ble ITAT, Lucknow was affirmed by Hon ble Allahabad High Court vide ITA No. 16 of 2006 dated 27.09.2013. The relevant portion of the order is as under: Learned counsel for the assessee submits that the issue has already been discussed at Page No. 11 to 16 in the judgment and order dated 16.09.2013, passed in the assessees' case (Income Tax Appeal No. 149 of 2009 along with connected cases), where it was observed that the assessees are entitled for the benefit of Section 12AA of the Income Tax Act, 1961. This is only the disputed point in the present appeals. After hearing all the parties and on perusal of the record, it appears that issue pertaining to the benefit under Section 12AA of the Act, is squarely covered by the judgment and order dated 16.09.2013 passed by this Court in the leading Income Tax Appeal No. 149 of 2009 and other bunch cases. When it is so, then all the appeals filed by the Department are dismissed in terms of the judgment and order dated 16.09.2013 passed in ITA No.149 of 2009 and other bunch cases. Therefore, in lieu of above order of Hon ble ITAT, Lucknow, the Ld. Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her object of general public utility is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of general public utility will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is charitable purpose within the meaning of Section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business. Circular No. 10 of 2009: 5.2 With a view to limiting the scope of the phrase advancement of any other object of general public utility , subsection (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activities on non-commercial lines with no motive to earn profits, for fulfilment of its aims and objectives, which are charitable in nature and in the process earn some profits, the same would not be hit by proviso to section 2(15). The aims and objects of the assessee-trust are admittedly charitable in nature. Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under Section 11. The intention of the trustees and the manner in which the activities of the charitable trust institution are undertaken are highly relevant to decide the issue of applicability of proviso to Section 2(15). There is no material/evidence brought on record by the revenue which may suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit or has deviated from its objects as detailed in the trust deed of the assessee. In these facts and circumstances of the case, the proviso to Section 2(15) is not applicable to the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst and second proviso to section 2(15) of the I. T. Act w.e.f. 01.04.2009. The Hon ble Allahabad High while deciding the aforementioned question of law dismissed the revenue appeal. The relevant portion of the judgement is reproduced below: 4. Learned counsel for the parties at the outset could not dispute that issue raised in this appeal is squarely covered by this court s judgement in Income Tax Appeal No. 107 of 2016 Commissioner of Income Tax (Exemption), Lucknow vs. M/s Yamuna Expressway Industries Development Authority and other two connected appeals decided on 21.04.2017. 5. For the reasons stated in aforesaid judgement, the question raised in this appeal is answered against Revenue. 6. Appeal is accordingly dismissed. From above it is clear that time and again it has been questioned before the Courts whether the activities of the appellant Parishad are at par with private colonizers / developers and whether in such a situation proviso to section 2(15) should be applicable. All the revenue s appeals till date on this issue has been dismissed. Following the jurisdictional high court decision, this issue as of now comes to rest that the proviso to section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as Rules, 1962 ) on 27.12.2005. 9. Commissioner of Income Tax, Ghaziabad (hereinafter referred to as CIT ) vide order dated 21.06.2006 rejected application observing that HPDA is not an Institution working for charitable purposes since it was not registered under Indian Trusts Act, 1882 (hereinafter referred to as Act, 1882 ) or Societies Registration Act, 1860 (hereinafter referred to as Act, 1860 ). Further its activities are also not charitable, per se as it sells land on commercial rates and to fudge profit it does not follow commercial accounting principles. HPDA preferred appeal i.e. ITA No. 2735 (Del) of 2006 which has been allowed by Tribunal vide orders impugned in these appeals. 10. Tribunal has followed its earlier decision dated 31.07.2007 passed in ITA No. 2903 (Del) of 2006 in respect to Ghaziabad Development Authority which is also a body constituted under U.P. Act, 1973 and held that it was also entitled for registration under Section 12A. Tribunal has also referred to an earlier judgment dated 25.07.2005 in ITA No. 690 (Luc) of 2003 wherein registration for similar body was directed to be allowed. This appeal is also before us. 11. It is not in disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. There is no requirement for the purpose of Section 12 that Institution must be registered under Act, 1882 or Act, 1860. CIT added this condition on his own though we do not find any such condition provided under Section 12A or 12AA of Act, 1961. In order to consider whether creation of HPDA is for advancement of general public utility. Tribunal has looked into objects and purposes of U.P. Act, 1973 and also the purpose of acquisition of land by HPDA, which is only for public purpose and not personal one. 17. Learned Counsel for appellant has submitted that Tribunal has ignored the fact that authority was engaged in activities other than those mentioned in its main object. It is further submitted that Tribunal has erred in coming to conclusion that authority carries on charitable work. It is submitted that Tribunal erred in considering definition of charitable purpose as defined under Section 2 (15) and definition of 'income' as given under Section 2 (24) read with Rule 17-A (a) and 1962CBDT instruction No.1024 dated 9.11.1976. Learned Counsel has relied on judgment of this Court in ITA No.231/2006, U.P. State Industrial Development Corporation Ltd. Vs. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether on the basis of the facts of the case and the law applicable, the Tribunal was justified in allowing the appeal and issuing a direction to the authority concerned to register the Parishad as being entitled to exemption under the provisions of Section 12-AA of the Income Tax Act, 1961 and read with Section 2 (15) thereof ? (ii) Whether the findings recorded by the Tribunal to the effect that the Parishad-assessee was not carrying out any activity of profit and it's predominant object of welfare of public at large are correct or not ? 5. Before answering aforesaid questions, we may, in brief, examine characteristics of the three bodies, issue of registration whereof is involved in these appeals. 32. Though arguments have been advanced in a much wider compass, but we find that real dispute is whether Parishads-authorities would satisfy term ''charitable purpose' as defined under Section 2(15) of Act, 1961 so as to entitle them for registration under Section 12A(1) of Act, 1961. Another argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous provisions of UPUPD Act, 1973 were placed. This Court held that expression ''general' under Section 2(15) means pertaining to whole class. Advancement of any object or purpose to benefit public or a section of public is distinguished from benefit to an individual or group of individuals. Expression charitable purpose would prima facie include all objects which promote welfare of general public. 51. We would now examine in the light of above definition as explained by CBDT vide Circular dated 19th December, 2008 and exposition of law, discussed above, whether an IDA constituted under a provincial enactment, on the subject of Industrial Development, would satisfy requirement of Section 2(15) of Act, 1961 and would not be disqualified by attracting proviso thereto. 67. The consideration on the part of CIT (E), it appears, is more influenced by concept of first three heads of charitable trusts. Apparently, it has lost objectivity in looking into thrust, ambit and spirit of 4th head i.e. advancemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if we summarize, can be placed in a small arena of judicial analysis, that is, a body or institution which is functioning for advancement of objects of general public utility and its activities are not in the nature of trade, business or commerce and also not a sheer profit making, such institution is entitled to claim itself to be constituted for charitable purposes and seek registration under Section 12A(1) of Act, 1961. 79. One objection, which has been advanced seriously, is that Tribunal should not have directed to grant registration since competent authority is Commissioner, therefore, Tribunal should have directed Commissioner to consider registration. In our view, this submission also sans merit. Tribunal exercises coextensive appellate power against the order of Commissioner. It is the last Court of fact. There is no restriction on the power of Tribunal. Section 254 of Act, 1961 empowers Tribunal to pass such orders as it deems fit. Therefore, in all the matters, where appeal is provided to Tribunal, its power is coextensive with the authorities whose orders are appealed before Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant primarily is not carrying out any activity for advancement of any objective of general public utility, as such. The Applicant was purely involved in commercial activities for the purpose of making profit and charity, if any, was just incidental to its business. The Authority was acquiring land from farmers and others at a low price, which was developed and sold at a premium to the perspective buyers. Apparently, on dissolution of the authority, all assets shall be transferred to the Government and there was no restriction on the use of these assets by the Government. Therefore the objects pursued by the applicant cannot be termed as charitable in view of the fact that the applicant, was a commercial organization (with no restriction as to the application of assets on dissolution or winding up) Therefore the applicant cannot be termed as charitable organization by any stretch of imagination. (d.) Whether on the facts and circumstances of the case the Hon'ble ITAT was justified in upholding the order of Ld. CIT(A) and giving the benefit of section 12A to the assessee as the activities of advancement of the object of general public utility by the appellant authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Vs. Municipal Corporation, Delhi (1992) 3 SCC 390 but the same is not applicable in the case as the charitable purpose and object was never changed at any time in case of assessee herein. Thus, exemption u/s 11 rejected by the Assessing Officer is not just and proper. In assessee s own case for the preceding year and the subsequent year, the Co-ordinate Bench of the ITAT has allowed the appeal of the assessee. The Delhi High Court in its decision in the case of India Trade Promotion Organization (Supra) has clearly given the interpretation of Constitutional validity of the proviso to Section 2 (15) of the Act. The Hon ble Delhi High Court held that the said proviso applies in a situation where the main object is essentially to carry on business for the purpose of profit. But in assessee s case, the situation is different. The main object of town planner has been held to be charitable and at the time of registration u/s 12A was in very much existence. Thus, the Revenue has not made out the case that the condition on which the registration was allowed has changed from earlier year or in subsequent year as well as in the present year. The reliance of the decision of the Jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of the assessee authority are covered by first and second proviso to section 2(15) of the Act and thus not entitled to exemption u/s 11 and 12 as per provisions of section 13(8) of the Act? 4. It also appears that with respect to Gujarat Housing Board itself on the very same proposed question of law, a coordinate Bench of this Court dismissed the appeal relying on the decision of this Court in the matter of AUDA. It is brought to our notice that the issue is now pending before the Supreme Court. We may quote the order passed in Tax Appeal No.752 of 2018 in the case of Commissioner of Income Tax (Exemption) vs. Gujarat Housing Board, decided on 02.07.2018: [2.0] Heard Mrs. Mauna Bhatt, learned Advocate appearing on behalf of the revenue. At the outset, it is required to be noted that as such by the impugned order and after having noted the decisions of this Court in the case of Ahmedabad Urban Development Authority Vs. ACIT (Exemption) in ITA No.423 to 425 of 2016 dated 02/05/2017 and CIT Vs. Gujarat Industrial Development Corporation reported in (2017) 83 Taxmann.com 366 (Gujarat), learned Tribunal has restored the issue to the file of the Assessing Officer to conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the ITAT ) with respect to different assessment years, all these appeals are decided and disposed of together by this common judgment and order. 2. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned ITAT passed in ITA No.712/AHD/2013 for AY 2009-10, by which, learned ITAT has held that the activities of appellant- assessee cannot be said to be for charitable purpose within the definition of Section 2(15) of the Income Tax Act and therefore, not entitled to deduction claimed under Section 11 of the Income Tax Act, the assessee has preferred the present Tax Appeal No. 423 of 2016 to consider the following questions of law. (1) Whether the Income-tax Appellate Tribunal has erred in law and on facts in holding that the activity of the appellant was in the nature of trade, commerce or business and hence it cannot be regarded as activity for charitable purpose in view of the proviso to section 2(15) of the Income-tax Act, 1961? (2) Whether the Income-tax Appellate Tribunal has erred in law and on facts in disallowing the claim of exemption of the appellant under section 11 of the Income-tax Act, 1961, and assessing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further submitted by Shri Bhatt, learned Senior Advocate for the Revenue that the business model of the assessee has been aptly been discussed by the Tribunal. It is submitted that main excerpts are as under: A. Whenever a town planning scheme is conceived, the land belonging to various persons/entities are put into a common pool, and thereafter, the scheme in a planned way is drawn. B. 40% of the land is to be taken from the land owners and the same is to be used as (i) fifteen per cent for roads, (ii) five per cent for parks, play grounds, gardens and open space, (iii) five per cent for social infrastructure such as school, dispensary, fire brigade, public utility place as earmarked in the Draft Town Planning Scheme, and (iv) fifteen per cent for sale by appropriate authority for residential, commercial or industrial use depending upon the nature of development. 15% land would vest in the Assessee, i.e. AUDA. C. However, such land of 15% of share retained out of 40% appropriated from the original land owners is not free of cost. The cost is incurrence of expenditure on the development of remaining 85% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity of advancement of any other objects of general public utility. But auction of land to the highest bidder is an activity, which is specifically, keeping in view, the profit in mind and the levy of cess/charges/fees are designed in lines of an professional and business oriented infrastructure development real estate entity. G. It may be noted that there are surplus and reserves which are continuously swelling. These are generated by the Assessee by way of this activity sale/lease of land and charging fees. The Assessee has not been charging nominal fees or selling the land at a nominal rate. It has been making money by putting the land on auction after taking a reserve price. This activity cannot be said to be a charitable activity. It is submitted that having noted the above facts and activities of the assessee which is in the nature of trade or business, the learned Tribunal has rightly applied proviso to Section 2(15) of the Act and has rightly held that the activities of the assessee cannot be said to be charitable purpose . 12. From the aforesaid provisions of the Town Planning Act, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding housing accommodation to the members of socially and economically backward classes of people. As per Section 40(i)(jj) for the aforesaid purposes certain percentage of total area covered under the scheme are allotted earmarked. Fifteen percent of total area is allotted for the purpose of roads, five percent for parks, play grounds, gardens and open space, five percent for social infrastructure such as school, dispensary, fire brigade, public utility place as earmarked in the Draft Town Planning Scheme and Fifteen percent for sale by appropriate authority for residential, commercial or industrial use depending upon the nature of development. Last Fifteen percent is earmarked under the Town Planning Scheme for sale, by appropriate authority for residential, commercial or industrial use. The appropriate authority/Urban Development Authority is permitted to sale the said plots/lands to the extent of 15% of the total area to meet with the expenditure towards drainage, roads, gardens, schools, markets, water supply etc. So that maximum price can be fetched and the same can be utilized for the development of the Urban Development Area and so as to avoid any allegation of favoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5% of the total area covered under the Town Planning Scheme) is required to be used only for the purpose to carry out the object and purpose of Town Planning Act and to meet with expenditure while providing general utility service to the public such as electricity, road, drainage, water etc. and even the entire control is with State Government and even accounts are also subjected to audit and there is no element of profiteering at all, the activities of the assessee cannot be said to be in the nature of trade, commerce and business and therefore, proviso to Section 2(15)of the Act shall not be applicable so far as assessee is concerned and therefore, the assessee is entitled to exemption under Section 11 of the Income Tax Act. Therefore, the question no.1 is to be held in favour of the assessee and against the revenue. 15. Now, so far as another question which is posed for the consideration of this Court i.e. whether while collecting the cess or fees, activities of the assessee can be said to be rendering any services in relation to any trade, commerce or business is concerned, for the reasons stated above, merely because the assessee is collecting cess or fees which is regulato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any activities of rendering service in relation to any trade, commerce or business, for a cess or fee or any other consideration. Such statutory amendment was explained by the Finance Ministers speech in the Parliament. Relevant portion of which reads as under: I once again assure the House that genuine charitable organizations will not in any way be affected. The CBDT will, following the usual practice, issue an explanatory circular containing guidelines for determining whether any entity is carrying on 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. Whether the purpose is a charitable purpose will depend on the totality of the facts of the case. Ordinarily, Chambers of Commerce and similar organizations rendering services to their members would not be affected by the amendment and their activities would continue to be regarded as advancement of any other object of general public utility. 7. In consonance with such assurance given by the Finance Minister on the floor of the House, CBDT issued a Circular No. 11 of 2008 dated 19th December 2008 explaining the amendment as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is charitable purpose within the meaning of section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business. 8. What thus emerges from the statutory provisions, as explained in the speech of Finance Minister and the CBDT Circular, is that the activity of a trust would be excluded from the term charitable purpose if it is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business for a cess, fee and/or any other consideration. It is not aimed at excluding the genuine charitable trusts of general public utility but is aimed at excluding activities in the nature of trade, commerce or business which are masked as charitable purpose. 12. All these were the objects of the general public utility and would squarely fall under section 2 (15) of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Following the decision of the Hon'ble Allahabad High Court in the case of Lucknow Development Authority (supra) on identical facts, therefore, we accept the grievance of the assessee authority as justified. The decision cited by ld. DR is distinguishable on facts because the activities of that authority were carried out with profit motive but not with the predominant object of welfare of the people at large within the meaning of newly introduced proviso to section 2(15) of the Act., hence not applicable to the present case i.e. the assessee authority. 17. In view of above, we hold that the assessee authority has been created with the object of general public utility which is a charitable object within the meaning of Section 2(15) and the proviso to Section 2(15) is not applicable because assessee authority is not carrying out activities with any profit motive but the pre-dominant object is welfare of the people at large. Therefore, the CIT is directed to grant registration u/s. 12AA of the Act to the assessee authority. 18. In the result, appeal of the assessee is allowed. 5) Hon ble ITAT, Delhi in the case of Haridwar Development Authority in ITA No. 4616/Del/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(15) of the Act and same cannot be termed as commercial or of business nature for the purpose of proviso to section 2(15) of the Act. Accordingly, we find no reason to interfere with the order of Ld. CIT (A) allowing benefit of application and exemption u/s 11 of the Act. As a result, the grounds raised by the revenue are dismissed. 3.9 As we have already decided this issue in favour of assessee in AY 2013- 14 and 2014-15 and in absence of any change of facts or circumstances, we uphold the order of the Ld. CIT (A) allowing the claim of exemption u/s 11 of the Act. 6) Hon ble ITAT, Agra in the case of Agra Development Authority in ITA No. 216/Agr/2016 for AY 2011-12, 177/Agr/2014 for AY 2009-10 and 239/Agr/2015 for AY 2010-11 dated 17.05.2021 7) Hon ble ITAT, Agra in case of Jhansi Development Authority in ITA No. 256/Agra/2014 and 149 to 151/Agra/2017 for A.Ys. 2010-11 to 2013-14 dated 13.01.2021. The relevant portion is reproduced below: 56. It is the settled proposition of law that when two views are possible, the view favorable to assessee should be followed. Hence respectfully Following the decision of the Gujarat High Court in the matter of. SUDA (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment Authority. There are two reasons for not accepting the Departmental stand. Firstly, the issue before the Hon'ble Jammu and Kashmir High Court was cancellation of registration by the CIT u/s 12AA(3) of the Act and not the denial of exemption, as is prevailing in the extant case. Admittedly, the assessee's registration has not been cancelled by the Commissioner. Further, it is a settled legal position that a summary dismissal of SLP cannot be construed as a declaration of law by the Hon'ble Supreme Court under Article 141 of the Constitution. A mere dismissal of SLP without giving any reasons, cannot be equated with exposition of law by the Hon'ble Supreme Court so as to indicate the imprimatur on the reasoning and/or the ratio decidendi of the High Court in the judgment. In such circumstances, there is no merger of the judgment of the Hon'ble High Court. The Hon'ble Apex Court in Hemalatha Gargya vs. CIT (2003) 259 ITR 1 (SC), has held that dismissal of SLP in limine: could not operate as a confirmation of the reasoning in the decision sought to be appealed against........ . Similar view has been taken by the Hon'ble Summit court ITA Nos.4631 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi (2013) 217 Taxman 152 (Del.) The head note of this judgment is reproduced below- Section 2(15), read with sections 10(23C)(vi), 11 and 13, of the Income Tax Act, 1961 - Charitable/religious purposeCharitable/religious institution [Registration] - Assessment Year 200-07 to 2011 - 12 - Whether, Purport of first proviso to section 2(15) is not to exclude entities which are essentially for charitable purpose but are conduction some activities for a consideration or fees, but to exclude organizations which are carrying on regular business from scope of charitable purpose - Held, yes - Whether, therefore, where dominant objective of assessee - institute was to regulate profession of Chartered Accountancy in India, and conducting extensive educational program, conducting coaching classes and campus placements, for fees, could not be held as business, but only as in aid of its objects - Held, yes - Whether, where functions performed by assessee institute were in genre of public welfare and not for any private gain or profit, it could not be said that assessee was involved in carrying on any business, trade or commerce and therefore, registration under section 10(23C)(vi) could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see trust was registered with object of breeding cattle and to improve quality of cows and oxen - It generated considerable income from activity of milk production and the Assessing Officer denied benefit of exemption under section 11 on ground that it was earning profit over years and activities were commercial in nature and Commissioner (Appeals) confirmed same- Tribunal reversed decision of revenue authorities holding that assessee was entitled to exemption under section 11 and since aims and objects of assessee-trust were charitable and profit earned from said activities were incidental in nature, it was not hit by section 2 (15)- Whether objects of Trust clearly established that same were for general public utility and profit making was neither aim nor object of trust - Held, yes- whether mere because while carrying out activities for purpose of achieving objects of trust certain incidental surpluses were generated, would not render activity in nature of trade, commerce or business- Held ,yes - Whether thus order of Tribunal were to' be upheld - Held, yes {Paras 12 14} { In favour of assessee} 12) GSl lndia vs. DGIT (Exemption) (2013) 219 Taxman 205 (Delhi) The he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trol and management of various port activities which was an activity of general public utility - Further, that there was no profit making was equally clear from provisions of Act of 1963- Whether in view of aforesaid, Tribunal was justified in granting registration to assessee trust - Held, yes (Para 22) 14) Bureau of Indian Standards vs. Director General of Incometax (Exemptions) (2013) 212 Taxman 210/(2012) 27 taxmann.com 127 (Delhi) The head note of this judgement is reproduced below: Section 2(15), read with section 10(23C), of the Income-tax Act, 1961 - Charitable purpose - Object of general public utility - Whether public utility activity of evolving, prescribing and enforcing standards involves carrying on of trade or commerce activity - Held, no Whether, therefore, activities of Bureau of Indian Standards (BIS) in prescribing of standards of goods/articles and enforcing those standards through accreditation and continuing supervision through inspection, etc., cannot be considered as trade, business or commercial activity merely because testing procedures involves charging of fees - Held, yes [Para 16] [In favour of assessee] The concluding part of the judgeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961) In view of above facts, circumstances of the case and judgements, the proviso to section 2(15) of Income-tax Act are not applicable upon the appellant Parishad and for this reason the exemption u/s 11, 12 and 13 deserves to be allowed. VI. NON APPPLICABILITY TO SECTION 13(8) OF INCOME-TAX ACT AND JUDGEMENTS THEREON It is submitted that unlike other charitable trusts or institutions in whose cases the provisions of section 2(15) are applicable, the Authority is an organization constituted by State Government to provide affordable houses to all sections of society without profit motive. Hence, its being engaged in carrying on any activity in the nature of trade, commerce or business or any activity in the nature of rendering any service in relation to any trade, commerce or business does not arise. Further, the jurisdiction High Court has already decided that the proviso to section 2(15) of Income-tax Act are not applicable upon the appellant Authority vide ITA No. 31 of 2010 (Supra). Sub-section (8) to Section 2013 was inserted by Finance Act, 2012 with retrospective effect from 01.04.2009. The said subsection is reproduced below: (8) Nothing contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of trust or institution. Therefore, there is need to ensure that if the purpose of a trust or institution does not remain charitable due to application of first proviso on account of commercial receipt threshold provided in second proviso in a previous year. Then, such trust or institution would not be entitled to get benefit of exemption in respect of its income for that previous year for which such proviso is applicable. Such denial of exemption shall be mandatory by operation of law and would not be dependent on any withdrawal of approval or cancellation of registration or a notification being rescinded. It is, therefore, proposed to amend section 10(23C), section 13 and section 143 of the Act to ensure that such organization does not get benefit of tax exemption in the year in which it s receipts from commercial activities exceed the threshold whether or not the registration or approval granted or notification issued is cancelled, withdrawn or rescinded. This amendment will take effect retrospectively from 1st April, 2009 and will, accordingly, apply in relation to the assessment year 2009-10 and subsequent assessment years. Thus, where the receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. We may quote the order passed in Tax Appeal No.752 of 2018 in the case of Commissioner of Income Tax (Exemption) vs. Gujarat Housing Board, decided on 02.07.2018: [2.0] Heard Mrs. Mauna Bhatt, learned Advocate appearing on behalf of the revenue. At the outset, it is required to be noted that as such by the impugned order and after having noted the decisions of this Court in the case of Ahmedabad Urban Development Authority Vs. ACIT (Exemption) in ITA No.423 to 425 of 2016 dated 02/05/2017 and CIT Vs. Gujarat Industrial Development Corporation reported in (2017) 83 Taxmann.com 366 (Gujarat), learned Tribunal has restored the issue to the file of the Assessing Officer to conclude the issue de novo. No question of law arises. We do not propose to interfere with the impugned order of remand. On the basis of the material on record, which may be before the learned Assessing Officer, the Assessing Officer may consider the applicability of the aforesaid two decisions vis-a-vis the activities being carried out by the assessee. Under the circumstances, present Tax Appeal deserves to be dismissed and is accordingly dismissed. 5. In view of the aforesaid, the question proposed cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities and was squarely covered by provisos first and second to section 2(15) read with section13(8) - Whether functions of assessee were for charitable purposes and for general public utility and therefore, assessee was entitled to exemption under section 11 - Held, yes [Paras 5 to 7] VII. NON-APPLICABILITY OF SECTION 13(3) OF INCOME-TAX ACT The Parishad vide GO no. 1490/PS/HC dated 24.12.1988 is liable to grant discount of 5% on the value to the property once in the lifetime to its employee/ officers. Further, Parishad is also liable to grant reservation of 2% in allotment not only to its own employees but also employees of Development Authority/ Jal Nigam, Municipality and employees of other Local Bodies by virtue of Rule 36 of U.P. Awas Evam Vikas Parishad (Disposal of Residential Non-Residential Properties), 1988. Further, it is submitted that the specified persons as per the section 13(3)(cc) are only manager of institution by whatever name they may be called in the institution. The clause (cc) of section 13(3) was inserted by Finance Bill 1972. The relevant portion of the Memorandum explaining the provisions in the Finance Bill, 1972 is reproduced below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being enlarged by including therein trustees of trusts, managers of institutions, their relatives and concerns in which such trustees, managers and relatives have a substantial interest. The effect of this amendment will be that where any income of the trust or institution created or established after 31.3.1962 (i.e., after the coming into force of the Incometax Act, 1961) ensures for the benefit of trustees, managers, etc., the trust or institution will forfeit exemption from tax. Likewise, where any income or property oi the trust or institution is used or applied during the relevant account year for the direct or indirect benefit of trustees, managers. etc. exemption from income-tax will be forfeited irrespective of whether the trust or institution was created or established before or after the commencement of the Income-tax Act. From the plain reading of the Memorandum explaining the provisions in the Finance Bill, 1972 it is clear that the legislatures did not intent to include employees of the institution/ trust under the purview of section 13(3)(cc) of the Income-tax Act. The scope of section 13(3) was widened for plugging loopholes in the law so that the tax exempt fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. (h) The Housing Commissioner, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member. (i) The Chief Engineer, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member. (j) The Finance Controller, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member. (k) The Chief Architect Planner, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member.] Further, the Board may appoint such officers and servants as it considers necessary for efficient performance of its functions by virtue of section 8 of the Adhiniyam. The Housing Commissioner who is appointed by the State Government under the provision of section 7 of the U.P. Avas Evam Vikas Parishad Adhiniyam, 1965 (UPAEVPA) has control over the all officers and servants of the Board by virtue of section 11 of said Adhiniyam. Thus, the officers and servants do not hold the ultimate controlling power and hence cannot be equated as Managers under the provision of section 13(3)(cc) of Income-tax Act. Here it is pertinent to mention that even the Board does not have the ultimate control. The functions of the Board are defined under section 15 of the Adhiniyam which was constituted after the approval of U. P. Legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence, no violation has been made. The said submission was pleaded to be accepted in A.Y. 2017-18 during the hearing before the Ld. Commissioner of Income-tax (Appeals). With respect to our contention that the legislatures never intended to include the employees, we further place our reliance on judgement of Hon ble Patna High Court in case of Tata Steel Charitable Trust wherein it was observed and held as under: 11. Now, coming to the second condition, as said above, it seems that even if a trust has been created wholly for charitable purposes, when subsequently it is found that its income either enures or is used or applied directly or indirectly for the benefit of any person specified under Sub-section(3) of Section 13 of the Act then such trust becomes disentitled to claim any exemption under Section 11 of the Act. But the list of such persons as contained under Section 13(3) does not include the employees of the author of the trust. The employees of the author of the trust do not fall within the specified categories of persons referred to in Section 13(3). Even Section 13(3)(d), which includes any relative of the author, can have no application in the case of the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake the order of the Hon ble Allahabad High Court bad-in-law and license to the revenue to proceed on the basis that the order is stayed and/or in abeyance. In this regard reliance is also placed on judgement of Hon ble Bombay High Court in the case of Pr. Commissioner of Income-tax vs. Associated Cables Pvt. Ltd. in ITA No. 293 of 2016 dated 03.08.2018 where their lordships observed and held as under: 8. Mr. Pinto, next submits that the decision of this Court in Hindustan Unilever (supra) is not correct. However, no submissions in support thereof are made. Therefore, no reason has been shown to us at the final hearing, why the decision is Hindustan Unilever Ltd. (supra) is not to be followed. Merely filing of an SLP from the order of Hindustan Unilever Ltd. (supra) would not make the order of this Court bad in law or give a license to the Revenue to proceed on the basis that the order is stayed and/or in abeyance. The Revenue is entitled to challenge the view taken by us following our decision in Hindustan Unilever (supra) by challenging this decision in the Apex Court. However, in the present facts, at this stage, there can be no question of our not following the order in Hin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the past, either by the AO himself or by virtue of the orders of the Tribunal as affirmed by the Hon'ble High Court. This settled position ought not to have been ordinarily disturbed. The authorities below have chosen to deviate from the earlier consistent ITA Nos. 4631 4632/Del/2017 view by harping on the dismissal of SLP against the judgment of the Hon'ble J K High Court in Jammu Development Authority. There are two reasons for not accepting the Departmental stand. Firstly, the issue before the Hon'ble Jammu and Kashmir High Court was cancellation of registration by the CIT u/s 12AA(3) of the Act and not the denial of exemption, as is prevailing in the extant case. Admittedly, the assessee's registration has not been cancelled by the Commissioner. Further, it is a settled legal position that a summary dismissal of SLP cannot be construed as a declaration of law by the Hon'ble Supreme Court under Article 141 of the Constitution. A mere dismissal of SLP without giving any reasons, cannot be equated with exposition of law by the Hon'ble Supreme Court so as to indicate the imprimatur on the reasoning and/or the ratio decidendi of the High Court in the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciple of judicial discipline. Further, in the judgement of Hon ble Gujarat High Court in the case of Arvind Board Paper Products Ltd. vs. CIT (1982) 137 ITR 635 it was held as under: In Income tax matters which are governed by an All India Statute, when there is a decision of a High Court interpreting a statutory provision, it would be a wise judicial policy and practice not to take a different view. Further, sometimes, an argument is made and also put on record that the Department has not accepted the decision of the Court and an Appeal has been preferred by them. However, courts have repeatedly held that phraseology of not accepting the decision is obnoxious and un-parliamentary in respect of the order of the higher authority. Unless, in Appeal the order of the higher authority is stayed, it operates as a valid binding decision for the lower authority not only in the case of the same assessee but also in other cases where the same law point is involved. In this regard reliance is placed on following judgements: 1. Judgement of Hon ble Madhya Pradesh High Court in the case of Agrawal Warehousing And Leasing vs Commissioner Of Income-tax in 2002 257 ITR 235 MP R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiating proceedings or deciding on the rights involved in such proceeding; c) If in spite of the earlier exposition of law by the High Court having been pointed out and attention being pointedly drawn to that legal position, in utter disregard of that position, proceedings are initiated, it must be held to be a willful disregard of the law laid down by the High Court and would amount to Civil Contempt as defined in S. 2(b) of the Contempt of Courts Act, 1971. 4. Judgement of Hon ble Supreme Court in the case of Palitana Sugar Mills (P) Ltd. vs. State of Gujarat AIR 2007 SC 1701 Relevant Portion It is well settled that the judgments of this Court are binding on all the authorities under Article 141 of the Constitution and it is not open to any authority to ignore a binding judgment of this Court on the ground that the full facts had not been placed before this Court and/or the judgment of this Court in the earlier proceedings had only collaterally or incidentally decided the issues raised in the show cause notices. Such an attempt to belittle the judgments and the orders of this Court to say the least is plainly perverse and amounts to gross contempt of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Faceless Appeal Centre for AY 2004-05 and also the fact that since beginning there was no change in the charitable activities and main objects of Parishad, the Parishad deserves to be treated as charitable institution engaged in charitable activities in pursuit of charitable purposes and its income deserves to be treated as exempt u/s 11 read with section 2(15), 12 and 13 of the Income-tax Act, 1961 and delete the addition of Surplus (reflecting in the audited Income Expenditure account) made by the Ld. Assessing Officer. Prayer It is most respectfully prayed that the Hon'ble Income Tax Appellate Tribunal may kindly be pleased to treat the Parishad as institution existing solely for charitable purposes and grant the exemption u/s 11 read with section 2(15), 12 and 13 of Incometax Act. Supplementary written submissions on additional grounds: In addition to submission made earlier vide paper book dated 05.02.2020 and 15.09.2021 following submission is being made regarding additional grounds taken by the revenue: I. REGARDING NON APPPLICABILITY TO SECTION 13(8) OF INCOME-TAX ACTAND JUDGEMENTS THEREON It is submitted that unlike other charitable trusts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as charitable, and accordingly, the benefits of exemption shall be available to it. Thus, a charitable trust or institution pursuing advancement of object of general public utility may be a charitable trust in one year and not a charitable trust in another year depending on the aggregate value of receipts from commercial activities. There is, therefore, need to expressly provide in law that no exemption would be available for a previous year, to a trust or institution to which first proviso of sub-section 2(15) become applicable for that particular previous year. However, this temporary excess in one year may not be treated as altering the very nature of the trust or institution so as to lead to cancellation of registration or withdrawal of approval or rescinding of notification issued in respect of trust or institution. Therefore, there is need to ensure that if the purpose of a trust or institution does not remain charitable due to application of first proviso on account of commercial receipt threshold provided in second proviso in a previous year. Then, such trust or institution would not be entitled to get benefit of exemption in respect of its income for that pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant Portion 2. The Revenue has proposed the following as the substantial question of law arising in this Tax Appeal: Whether the Appellate Tribunal has erred in law and on facts in setting aside the issue of deduction / exemptions u/s. 11 12 of the Act, without appreciating that the activities of the assessee authority are covered by first and second proviso to section 2(15) of the Act and thus not entitled to exemption u/s 11 and 12 as per provisions of section 13(8) of the Act? 4. It also appears that with respect to Gujarat Housing Board itself on the very same proposed question of law, a coordinate Bench of this Court dismissed the appeal relying on the decision of this Court in the matter of AUDA. It is brought to our notice that the issue is now pending before the Supreme Court. We may quote the order passed in Tax Appeal No.752 of 2018 in the case of Commissioner of Income Tax (Exemption) vs. Gujarat Housing Board, decided on 02.07.2018: [2.0] Heard Mrs. Mauna Bhatt, learned Advocate appearing on behalf of the revenue. At the outset, it is required to be noted that as such by the impugned order and after having noted the decisions of this Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with sections11 and 12AA, of the Income-tax Act, 1961 - Charitable purpose (Objects of general public utility) - Assessment year 2011-12 - Assessee was an Urban Development Authority constituted under section 22 of Gujarat Town Planning and Urban Development Act, 1976 - Powers and function of Urban Development Authority included, inter alia, to undertake preparation of development plans, carry out surveys in urban development area for preparation of development plans or town planning schemes and execute works in connection with supply of water, disposal of sewerage and provision of other services and amenities; and to levy and collect such fees for execution of works - Assessing Officer denied exemption under section 11 to assessee on ground that assessee was not carrying out any charitable activities and was squarely covered by provisos first and second to section 2(15) read with section13(8) - Whether functions of assessee were for charitable purposes and for general public utility and therefore, assessee was entitled to exemption under section 11 - Held, yes [Paras 5 to 7] II. REGARDING NON-APPLICABILITY OF SECTION 13(3) OF INCOME-TAX ACT The Parishad vide GO no. 149 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umulate income from voluntary contributions for future application to charitable or religious purposes for a maximum period up to ten years without forfeiting exemption from tax, if they comply with certain procedural requirements laid down in section 11 in this behalf. These requirements are that (1) the trust or institution should give notice to the Income-tax Officer, specifying the purpose for which the income to be accumulated and the period for which the accumulation is proposed to be made and (2)the income so accumulated should be invested in Government or other approved securities or deposited in post office savings bank, scheduled banks, co-operative banks or approved financial institutions. (iii) The list of persons referred to in sub-section (3) of section 13 of the Income-tax Act is being enlarged by including therein trustees of trusts, managers of institutions, their relatives and concerns in which such trustees, managers and relatives have a substantial interest. The effect of this amendment will be that where any income of the trust or institution created or established after 31.3.1962 (i.e., after the coming into force of the Income-tax Act, 1961) ensures for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficio,: (a-1) The Principal Secretary/Secretary to the Government of Uttar Pradesh in Housing and Urban Planning Department-Karyakari Adhyaksh/Sadasya-ex officio,] (b) Three Upadhyaksh who shall be the non-official members appointed by the State Government. (c)the Principal Secretary/Secretary to the Government of Uttar Pradesh in the Finance Department, ex-officio member; (d) the Principal Secretary/Secretary to the Government of Uttar Pradesh in the Urban development, ex-officio member; (e) the Principal Secretary/Secretary to the Government of Uttar Pradesh in the Bureau of public Enterprises Department ex-officio member; (f) the Chief Town and Country Planner, Uttar Pradesh, ex-officio member; (g) The Director, Central Building Research Institute Roorkee ex officio member. (h) The Housing Commissioner, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member. (i) The Chief Engineer, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member. (j) The Finance Controller, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member. (k) The Chief Architect Planner, Uttar Pradesh Avas Evam Vikas Parishad-ex officio member.] Further, the Board may ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first held that the Parishad has violated the provisions of section 13(3) in A.Y. 2017-18 and even the Ld. Commissioner of Income-tax (Appeals) has never adopted such view before A.Y. 2015-16. Here it would be pertinent to note that the Ld. Commissioner of Income-tax (Appeals) who held that the violation of section 13(3) has been committed by Parishad in A.Y. 2015-16 to A.Y. 2017-18, did not hold similar view while allowing the exemption claimed u/s 11 of Income-tax Act in A.Y. 2007-08 and A.Y. 2008-09 vide appellate order dated 15.11.2018 and neither the Ld Assessing Officer raised such issue in his remand report. Further, when the Ld. Commissioner of Income-tax (Appeals) raised this issue first in A.Y. 2015-16, we had made a submission that the employees of Parishad are not covered u/s 13(3) and hence, no violation has been made. The said submission was pleaded to be accepted in A.Y. 2017-18 during the hearing before the Ld. Commissioner of Income-tax (Appeals). With respect to our contention that the legislatures never intended to include the employees, we further place our reliance on judgement of Hon ble Patna High Court in case of Tata Steel Charitable Trust wherein it was ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong and illogical. III. REGARDING SECTION 11(2) 13(1)(d) OF INCOME-TAX ACT In this regard it is submitted that the appellant Parishad has complied with the provisions of section 11(2) and section 11(5) read with section 13(1)(d) of Income-tax Act. The same is evident from the audited Financial Statements, the computation of income filed with return of income and audit report in Form 10B and Form 10 wherever applicable submitted during assessment proceedings. In view of the aforesaid facts, circumstances, CBDT Circular No. 11/2008, judgements mentioned in earlier submissions and in this submission and judgement of Hon ble Supreme Court in the case of Andhra Pradesh Road Transport Corporation and judgement of Hon ble Allahabad High Court in case of appellant Authority in ITA Nos. 12 of 2006 for 12AA registration dated 27.09.2013, 31 of 2010 for AY 2004-05 dated 16.09.2013, Moradabad Development Authority in ITA No. 3 of 2017 for A.Y. 2009-10 dated 03.05.2017 and judgement of Hon ble Gujrat High Court in the case of Ahmedabad Urban Development Authority dated 02.05.2017 and Surat Urban Development Authority dated 21.09.2020,Hon ble ITAT, Delhi in the case of Moradabad De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Apex Court in the case of Distributors (Baroda) (P) Ltd. v. Union of India and Ors. (155 ITR 120) wherein the Hon'ble Apex Court held that it is almost as important that the law should be settled permanently as that it should be settled correctly but there may be circumstances where public interest demands that the previous decision be reviewed and reconsidered. The doctrine of stare decises should not deter the Court from overruling an earlier decision, if it is satisfied that such decision is manifestly wrong or precedes upon a mistaken assumption in regard to the existence or continuation of a statutory provision or is contrary to another decision of the Court. However, two views reasonably may be possible. Perpetuation of error is not a heroism. However, we make it clear that this observation of ours should not be treated to bear any effect in the case of other assessees. At the same time, order passed by a lower authority is not binding on the Tribunal. However, it may be a good arguable point by the parties. This issue requires deliberation from a different angle whether the assessee was constituted to provide any charity to the public at large or to satisfy the need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll open a pandora box and anybody will claim the exemption from tax. 52. The coordinate Bench of the Tribunal at Amritsar, following the decision in the case of Punjab Urban Planning and Area Development Authority vs. CIT, 156 Taxman 37 (Chd.) held, in the case of Jalandhar Development Authority V/s.CIT (2009)124 TTJ (Asr) 598, to which one of us, viz. author member, is a party, that denial of registration under S.12AA(a) of the Act to that assessee, which was also constituted under Punjab Regional And Town Planning and Development Act, 1995, was justified. The objects of the Authority in that case as noted by the Tribunal in para 3 of its order reads as follows: 53. At this juncture, it may be observed that the above objects noted by the Amritsar Bench of the Tribunal in the context of Jalandhar Development Authority, is almost identical to the assessee s case. Considering the contention of the assessee with regard to the charitable nature involved in its activities, and also taking into account th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, or commerce or business, and that the assessee is receiving consideration in return for its activities. 13. Considering the nature of the activities that are carried on by the assessee, the factual correctness of which is undisputed, we can only endorse the view taken by the statutory authorities that in view of the proviso to Section 2(15), the activities of the assessee do not qualify to be charitable purpose as defined therein. In such a scenario, the assessing officer was justified in disallowing the exemption claimed and assessing to tax the income of the assessee and the appellate authorities were justified in confirming the same. In such circumstances, we don't see any question of law arising in these appeals to be considered by this Court under Section 260(A) of the Income Tax Act. 14. For these reasons, ITA No. 208/2014 is dismissed. Since the issue raised in ITA No. 210/2014 is identical in all respects and in view of our conclusion as above, this appeal is also dismissed. iii. EXTRACTS FROM ORDER OF HON BLE SUPREME COURT Aggrieved of the said orders SLP were preferred by GCDA before Hon ble Supreme Court. The Hon ble Supreme Court dismissed the SLP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly for this reason that the Division Bench held that no question of law much less a substantial question of law emerged from the order of the Tribunal. It is difficult to understand how this order can possibly be relied upon as laying down any law when Court itself records that the order impugned therein is based on the facts of that case. The dismissal of the Special Leave Petition filed against that order is, therefore, of no assistance to the Revenue either. Further, it is submitted that from below made submissions it is clear that in case of appellant, the order of jurisdictional High Court would prevail as it has answered in affirmation to the question of nonapplicability of proviso to section 2(15) of Income-tax Act in case of appellant itself, however, we would like to differentiate the constitution of Greater Cochin Development Authority from the appellant by drawing your honour kind attention to sub-section (1) of section 30 of Madras Town Planning Act of 1920 (i.e. the Act under whose provisions the Greater Cochin Development Authority was constituted) which allows utilization of funds for purposes beyond the Act post sanction from State Government. In this regard it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case and the law applicable, the Tribunal was justified in allowing the appeal and issuing a direction to the authority concerned to register the respondent as being entitled to exemption under the provisions of Section 12-AA of the Income Tax Act, 1961 and read with Section 2 (15) thereof? (ii) Whether the findings recorded by the Tribunal to the effect that the respondent-assessee was not carrying out any activity of profit and it's predominant object of welfare of public at large are correct or not? Moradabad Development Authority (whose activities are quite similar to that of GCDA as well as appellant) for AY 2009-10 in ITA No. 03 of 20017 dated 03.05.2017 Questions of Law (a.) Whether on the facts and circumstances of the case the Hon'ble ITAT was justified by upholding the order of Ld. CIT(A) by not considering the amended provision of Section 2(15) of the Income Tax Act, 1961. In which there is a provision for charging tax if total receipt of entities engaged in advancement of general public utility exceeds Rs.10 Lakh. Whereas the assessee has shown excess of income over expenditure of Rs.16,69,28,027/- by sales of Plots, shops and flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities, and the same has already been confirmed by the Hon'ble High Court of Jammu Kashmir vide order dated 07.11.2013 in ITA No.164/2012 as well as by the Hon'ble Supreme Court of India vide order dated 21.07.2014 in Special Leave to AppealNo.4990/2014. Hence the appellant authority is not entitled to registration under section 12A of the Income Tax Act,1961. U.P. Awas Evam Vikas Parishad in ITA No. 15 of 2014 dated 18.07.2017 wherein issue involved was cancellation of 12AA registration. Question of Law Whether under the facts and circumstances of the case, the learned ITAT was right in holding that the registration granted u/s 12 A of the I.T. Act cannot be cancelled by the CIT under the provisions of Section 12AA (3) of the I.T. Act when the activities of the assessee were hit by the first and second proviso to section 2(15) of the I.T. Act w.e.f. 01.04.2009. The Hon ble Allahabad High Court while deciding the question of law in case of Yamuna Expressway Industrial Development Authority (Supra), has elaborately discussed as to when an object of advancement of general public utility would amount to charitable in nature and took cognizance of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis. In this regard it is firstly submitted that the Hon ble Allahabad High Court in the case of Lucknow Development Authority and Yamuna Expressway Industrial Development Authority has already considered similar contentions made by revenue and held that profit motive should be involved, just generation of surplus does not take away charitable nature of the institution. Further, through following words, However, we make it clear that this observation of ours should not be treated to bear any effect in the case of other assessees. the Hon ble Cochin Bench in case of GCDA gave its indication to revenue that this order may not be treated blanketly on all assesses as it pertains to only the party involved. Further, while adjudication of following cases, reference of Greater Cochin Development Authority has been made and order has been passed in favour of the assessee whose objects and nature of activities are similar to that of the appellant: i. Hon ble ITAT, Delhi in case of Dy Commissioner of Incometax v. Haridwar Development Authority in ITA No. 6796 5320/Del/2017 dated 30.06.2021 for AYs. 2013-14 2014-15 ii. Hon ble ITAT, Mumbai in case of Maharashtra State Road Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 11/2008, judgements mentioned in earlier submissions and in this submission and judgement of Hon ble Supreme Court in the case of Andhra Pradesh Road Transport Corporation and judgement of Hon ble Allahabad High Court in case of appellant Authority in ITA Nos. 12 of 2006 for 12AA registration dated 27.09.2013, 31 of 2010 for AY 200405 dated 16.09.2013, Moradabad Development Authority in ITA No. 3 of 2017 for A.Y. 2009-10 dated 03.05.2017 and judgement of Hon ble Gujrat High Court in the case of Ahmedabad Urban Development Authority dated 02.05.2017 and Surat Urban Development Authority dated 21.09.2020,Hon ble ITAT, Delhi in the case of Moradabad Development Authority in ITA Nos. 4631 and 4632/Del/2017 for A.Ys. 2012-13 and 2013-14 dated 04.01.2018 and judgement of Hon ble ITAT, Agra in the case of Firozabad Shikohabad Development Authority vs. CIT-II, Agra in ITA No. 55/ Agra/ 2015 dated 07.02.2018 and judgement of Hon ble ITAT, Agra in case of Agra Development Authority in ITA No. 215/Agr/2016 for AY 2011-12 dated 17.05.2021 and Jhansi Development Authority in ITA No. 256/Agra/2014 for AY 2010-11 dated 13.01.2021 and order of Hon ble ITAT, Delhi in case of Haridwar Developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee by holding that no substantial question of law arose in that appeal and in this respect our attention was invited to the judgment of Hon'ble Kerala High Court dated 19/12/2014. We find force in this argument of the ld. Counsel as Hon'ble High Court did not frame any question of law therefore, the Special Leave Petition dismissed by Hon'ble Supreme Court does not lay down any law in this respect and therefore, the judgment of Hon'ble Supreme Court is not a binding precedent. We further find that the judgment of Hon'ble High Court of Jammu Kashmir in the case of Jammu Development Authority is also not applicable to the assessee as that case related to the denial of registration u/s 12A of the Act and in the present cases there is no dispute regarding registration u/s 12A of the Act as the assessee is duly registered u/s 12A of the Act. Moreover, in this case also the Hon'ble High Court had not framed any question of law. 17. We find that Hon'ble Punjab Haryana High Court in the case of the Tribune Trust Chandigarh vs. CIT has observed that where the High Court had not framed any question of law, the SLP dismissed by Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal was admitted on following substantial question of law: Whether under the facts and circumstances of the case, the learned ITAT was right in holding that the registration granted u/s 12A of the I.T. Act cannot be cancelled by the CIT under the provisions of Section 12AA (3) of the I.T. Act when the activities of the assessee were hit by the first and second proviso to section 2(15) of the I.T. Act w.e.f. 01.04.2009. 4. Learned counsel for the parties at the outset could not dispute that issue raised in this appeal is squarely covered by this Court's judgment in Income Tax Appeal No. 107 of 2016: Commissioner of Income Tax, (Exemption), Lucknow Vs. M/s Yamuna Expressway Industrial Development Authority and other two connected appeals decided on 21.04.2017. 5. For the reasons stated in aforesaid judgment, the question raised in this appeal is answered against Revenue. 6. Appeal is accordingly dismissed. 18.1 The Hon'ble High Court, it is seen, has relied on its decision in the case of Yamuna Expressway Industrial Development Authority. It would be appropriate to reproduce the relevant portion of the decision of High Court order dated 21/04/2017 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 3 limbs, namely, relief of the poor, education or medical relief. It will apply only to entities whose purpose is advancement of any other object of general public utility i.e. 4th limb of definition of ''charitable purpose . 36. Entities which carry on commercial activities will not be eligible for exemption under Section 11 or 10 (23C) of Act, 1961. Whether an entity is carrying on activities in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of activities. It is said that an Assessee, if engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose . In such a case, object of general public utility will be only a mask or a device to hide the true purpose, which is trade, commerce or business, or rendering of any service in relation to trade, commerce or business. In our view, each case would depend on its own facts and no generalization is possible. 37. Recapitulating history of definition of expression charitable purpose , we fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding road transport facilities to general public, and a statutory enactment obliged the Corporation to handover to the Government all income left over after meeting expenses which was to be invested by Government for road development, its activities do not involve carrying on of an activity for profit and its income would be exempted as that of an institution meant for advancement of an object of general public utility. 41. Broadly, it is said that a valid trust for a charitable or religious purposes involves: 1) the specification or identification of the property, the subject matter of the trust; 2) the dedication of the property; 3) the constitution of the public as the beneficiary; and 4) the specification of the objects on which or for which income from the property is to be spent or applied. 42. In the context of Krishi Utpadan Mandi Samiti, a similar question came up for consideration before this Court in CIT Versus Krishi Utpadan Mandi Samitee 2010 (1) ALJ 817. It was held that charging of cess/fee is for the purpose of carrying out object of Act i.e. Krishi Utpadan Mandi Samiti Adhiniyam, 1964 (hereinafter referred to as U.P. Act,1964 ). Where dominan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from property held by such public trust as well as voluntary contributions received by said trust are subject matter of exemption from taxation under Act, 1961. Section 12A and 12AA contain detailed procedural requirements for making application for registration. Registration under Section 12A and 12AA is a condition precedent for availing benefit under Section 11 and 12. Unless institution is registered under Sections 12A and 12AA, it cannot claim benefit of Sections 11 and 12. After referring to various authorities, Court then said that legal effect of true facts and documents is a question of law. Determination of nature of trust as wholly religious or wholly charitable or both charitable and religious under Act, 1961 is not a question of fact. It is a question which requires examination of legal effects on proven facts and documents, i.e., the legal implication or object of respondenttrust as contained in trust deed. Words other objects of general public utility were considered in a catena of decisions. The said expression is of the widest connotation. Words ''general' in the said expression is pertaining to a whole class. Court relied on its earlier decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, Court said that activity of a trust would be excluded from the term ''charitable purpose', if it is engaged in any activity in the nature of trade, commerce or business or any service in relation to trade commerce or business for a cess, fee and/or any other consideration. Intention is not to exclude genuine charitable trust of general public utility, but is aimed at excluding activities in the nature of trade commerce or business, which are masked as charitable purpose . Gujarat High Court said that the main object of trust was for general public utility and for charitable purposes. The main objectives of trust are to breed the cattle and endavour to improve quality of cows and oxen in view of need of good oxen as India is prominently an agricultural country, to produce and sale cow milk, to hold and cultivate agricultural land etc. Various activities relating to cow milk and other research maintenance etc., Court held, that objects are of general public utility. Profit making was neither the aim nor object of trust. It was not principal activity. Merely because, while carrying out activities for the purpose of achieving the objects of the trust, certain inciden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inor ports in State of Gujarat. Court distinguished Section 10(20) and Section 11 of Act, 1961 and held that both provisions operate in totally different spheres. If Board ceased to be local authority , it is not precluded from claiming exemption under Section 11(1) in the light of definition of charitable purposes under Section 2(15) of Act, 1961. Advancement of any object of benefit to public or a section of public as distinguished from benefit to an individual or a group of individuals could be a charitable purpose . It was held that Gujarat Maritime Board was established for predominant purpose of development of minor ports within State of Gujarat and its management was given in the hands of Government. Income earned by Board is deployed for development of minor ports in the State. In the circumstances, it was held within the ambit of definition of ''charitable trust' under Act, 1961. 50. In the case of Jaipur Development Authority, Revenue held that major source of income is sale of plots and built up properties. Remaining income is received from various charges, fees and penalties levelled and collected by Jaipur Development Authority. Jaipur Bench of Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of the public. The intention of the institution is not to earn profit but recover the cost of the establishment as well as other expenditure to implement the object of the JDA. The State Government also give the grant to it. (emphasis added) 51. We would now examine in the light of above definition as explained by CBDT vide Circular dated 19th December, 2008 and exposition of law, discussed above, whether an IDA constituted under a provincial enactment, on the subject of Industrial Development, would satisfy requirement of Section 2(15) of Act, 1961 and would not be disqualified by attracting proviso thereto. 52. In this regard, we may examine functions of aforesaid ''IDAs' vis-a-vis nature of funds they collect in different forms. All three ''IDAs' are statutory bodies. They cannot function beyond authority conferred by UPIAD Act, 1976. Section 6 provides object of IDA which includes acquisition of land; preparation of a plan for development of industrial development area; demarcation and development of sites for industrial, commerce and residential purposes according to plan; providing infrastructure for industrial, commercial and residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than Government, on such terms and conditions as may be approved by State Government. For re-payment of borrowed money, an IDA' is required to maintain a sinking fund. Accounts of ''IDAs' are to be audited vide Section 22, in the area declared as ''industrial township'. There may not be constituted any ''municipality' though it is obligatory under Article 243 (Q) of Constitution, but proviso to Article 243 (Q) (1) authorizes Governor to specify an ''IDA' as industrial township and municipal services thereof shall be provided by ''IDA' in that area. Therefore, within the area, the ''IDAs' have been declared industrial township and municipal services are to be provided by them. 56. We may also examine some other aspects commented by Revenue to exclude ''IDAs' from the ambit of Section 2(15) of Act, 1961. 57. One of the queries made by CIT (E) was evidence regarding ownership of land, building in the name of ''IDAs', audit report of preceding three years with income and expenditure receipt and payment account and also whether any fund has been set apart/accumulated during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment. An argument was raised that Corporation was a trading one as it can sell property, transfer land, borrow money and entitled to charge rents and profits etc. Rejecting contention that Corporation is a trading body, Court said:- these profits will be themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their Directors for the regulations and management of the Corporation. Such a corporation set up by the shareholders carries on business and is intended for making profits. When profits are carned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading Corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity Board and the Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized by ''IDAs' render their activities in the nature of trade, business or commercial so as to exclude them from definition of charitable purposes by application of proviso to Section 2 (15) of Act, 1961. It was also observed that there are two features, which are normally not found in trading corporation (1) that the sums payable to corporation are recoverable as arrears of rent under the Act and (2) on dissolution, assets vest in and liabilities become enforceable against the State Government. Court also said that underlying concept of trading Corporation is buying and selling, but in the case of Corporation under the aforesaid Act, there was no aspect of buying or selling. Corporation carries out the purpose of Act, i.e. development of industries in the State. Constructions of buildings, establishment of industries by letting building on hire or sale, acquisition and transfer of land, in relation to establishment of industrial estates, or development of industrial areas and setting up of industries, it cannot be said to be relating to land or buildings for the reason that State is carrying out the object of Act with the Corporation as an agent in setting up indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies failed to prove the same. CIT (E) also observed that respondents-authorities have got property development income which comprises of sale and development of land and sale of constructed property. It has also got income under the head urban services , which comprises of lease rent, loan interest, fee, penalties, duties and taxes. Similarly, under head of administration ''IDAs' have got income form interest, forfeiture of property and miscellaneous income. Besides, interest bearing funds have been given interest free loan and grants. All these activities will show that respondentsauthorities are primarily engaged in business of development and sale of properties for earning profit and if there is any charitable activity, it is coincidence or incidental to its business. Respondents-authorities are running business purely on commercial line without any intention of any sort of charitable purposes. Attempt of ''IDAs' is to seek parity with LDA or Haridwar Development Authority (hereinafter referred to HDA ) in view of judgments rendered in respect of those bodies, directing grant of registration to CIT(E), was failed by distinguishing and observing that tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, ambit and spirit of 4th head i.e. advancement of any other object of general public utility . This is a sheer ignoring scope and ambit of statutory provisions of UPID Act, 1976 beyond which respondents-authorities cannot function, being statutory bodies constituted under said Act. They have to function within the provisions of said Act. 68. CIT (E) has attempted to equate these ''IDAs' with private builders and developers. Para-11 of said order is reproduced as under:- The law requires a conjunctive test whereby objects have to be charitable and genuineness of charitable activities should be established for registration of application u/s 12A. Mere recital of objects or activities without cogent or corroborative evidence are not sufficient by themselves to enable a registering authority to arrive at the satisfaction mandated by law. The applicant, in this case is primarily carrying out its business activities for making profit, just like any other private builder/developer. The applicant is neither a local authority, nor carrying out any charitable activity, as such. Like any other private builder or developer is acquiring land at a very low price and then d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n said that at the stage of considering application for registration, Commissioner is not to examine application of income. All that he may examine is whether application is made in accordance with the requirements of Section 12A read with rule 17A and whether Form No. 10A has been properly filled up. He may also see whether objects of the trust are charitable or not, but it is not proper to examine application of income. The Commissioner is also not supposed to see whether any activity carried out by society is charitable in nature or not. That is not the requirement of Section 12A. 74. Gujrat High Court in N.N. Desai Charitable Trust Versus Commissioner of Income Tax 2000 (246) ITR 452 (Guj.) held that authority, examining the question whether a fund of institution is eligible to be certified for the purposes of Section 80G, is not to act as an Assessing Officer and pronounce upon the pending assessments. Commissioner, in examining this aspect, in respect of pending assessments, in our opinion, exceeded his jurisdiction while considering the application for approval. He, as a matter of fact, stepped into the jurisdiction of Assessing Officer. 75. In Sanjeevamma Hanumanthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. No examination of the modus of the application of the funds of the trust or an examination of the ethical background of its settlers is called for while considering an application for registration. The stage for consideration of the relevance of the object of the trust and the application of its funds arises at the time of the assessment. Where benefits are claimed by the assessees in terms of section 11 and 12 of the Act, the question as to the nature of such contribution and income can be looked into. At the time of registration of the trust, going by the binding judgments of the apex court, what is to be looked into is whether the trust is a genuine one and whether it is a sham institution floated only to avail the benefits of exemption under the Act......... xxxx xxxx. 13. Going by the provisions of sections 12A and 12AA of the Income-tax Act, we hold that the grounds raised by the registering authority and upheld by the appellate authority for rejection of registration to the appellant trust cannot be sustained. The authorities could have examined only the genuineness of the trust and its activities. They did not have material to hold that the trust was either not genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction is not to be determined, as per aforesaid notification, with reference to the place where order under appeal was passed, but it has to be determined with reference to the location of office of Assessing Officer. Para-4 of Standing Order under Income Tax Appellate Tribunal, Rules 1963 (hereinafter referred to as Rules, 1963 ) issued with reference to Rule 4 (1) of Rules, 1963 reads as under: 4. The ordinary jurisdiction of the Bench will be determined not by the place of business or residence of the assessee but by the location of the office of the Assessing Officer. 83. We may also mention, at this stage, that in the aforesaid Standing Order, jurisdiction of various Benches constituted at different places, have been given in detail and jurisdiction of Delhi Bench has been given at Serial No. 11 and it covers District Gautam Budh Nagar also. Item 11 of the aforesaid Standing Order giving details of territorial jurisdiction of Delhi Bench of Income Tax Tribunal reads as under: 11. Delhi Benches (7) - National Capital of Territory of Delhi. - Districts of Bhiwani, Faridabad, Gurgaon, Hissar, Jhajjar, Karnal, Mohindergarh, Ranipat, Rewari, Rohtak and Sonepat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 of the I.T. Act, 1961 by invoking provisions of section 2(15) of the I.T. Act, 1961 and activities of the trust/organization was held as non-charitable. Therefore, all the expenses whether revenue or capital made during the year were for Non-charitable purposes. In view of this, the accumulation made during FY 2008-09 amounting to Rs.5,53,18,733/- should have been treated as the income of the FY 2014-15, being spent on non-charitable purpose, invoking section 11(3)(a) of the I.T. Act, 1961, in addition to the surplus income held of the current year. .. .. 5. Contention of assessee is examined in the light of the facts and circumstances on record. The Income Expenditure Account, balance sheet, computation of income etc. for financial year 2010-11 are verified during assessment proceedings. 6. In view of the facts and documents on record, total income of the assessee Parishad is assessed as under: Returned Income NIL Assessed income NIL 7. Assessed u/s 147 of the I.T. Act, 1961. Issue Demand Notice accordingly. Charge interest u/s 234A, 234B and 234C, if applicable. Give credit to prepaid issues. 20. We further find that with the inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received on the deferred payment received from the Allotees of various immovable properties; and (f) Water, sewerage and other municipal charges from the Allotees of various immovable properties. 2. This notification shall be effective subject to the conditions that Greater Noida Industrial Development Authority,- (a) shall not engage in any commercial activity; (b) activities and the nature of the specified income shall remain unchanged throughout the financial years; and (c) shall file return of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Income-tax Act, 1961. (d) shall file the Audit report along with the Return, duly verified by the accountant as provided in explanation to section 288(2) of the Income-tax Act, 1961 along with a certificate from the chartered accountant that the above conditions are satisfied. 3. This notification shall be deemed to have been applied for the period from 01-06-2011 to 31-03-2012 in the assessment year of 2012-2013 and also from the assessment years 2013-2014, 20142015, 2015-2016 and 2016-2017. [Notification No. 33/2020 F.No.300196/39/2018-ITA-I] PRAJNA PARAMITA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the welfare of the public. 9. As regards the Revenue s stand to compare the assessee with a private colonizer, we observe that the major source of income of the assessee authority is from the sale of plots, houses, shops, rent, sundry receipts and interest, still the assessee authority cannot be compared with a private Real Estate Developers for several reasons. Few such reasons are discussed below: a. The appellant Authority is constituted by Uttar Pradesh Urban Development Act, 1973 for the development of Lucknow without profit motive. On the other hand, the private colonizers/ Real Estate Developers are embodied by private firms and companies for the development of a housing project undertaken by them with profit motive. b. The appellant Authority consist of nominees of the State Government and are answerable to the State Government for any course of action taken by them beyond the powers delegated to them by the Act/ State Government, however, private colonizers/ Real Estate Developers consist of private players who are only answerable to each other for their actions. c. The Authority is neither running for profit motive nor it is actually earning profit. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e size as of appellant Authority build by private players is exorbitantly high and also differ if, the property sold by private player are vastu compliant/ east facing/ park facing, etc. iv. The receipt of money is arising out of sole purpose of growth and development of the areas and if there are surplus funds, they cannot be distributed but are used in forth coming years for development of Lucknow city. No such restriction is upon the Real Estate Developers. Therefore, from the development undertaken by the appellant Authority, public is benefited at large. It is clear that the benefits of development undertaken by the appellant Authority is not restricted to an individual or particular group of individuals for which its objects should be considered charitable under forth limb of section 2(15) of Income-tax Act. Words other objects of general public utility have been decided in catena of decisions. The said expression is widest of connotation. Words general in the said expression is pertaining to a whole class. If the primary purpose and the predominant object are to promote the welfare of the general public, the purpose would be charitable purpose. In this regard relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the L.D.A. is registered u/s 12AA of the Incometax Act, as per the order of the Hon ble ITAT dated 25.07.2005 in ITA No. 690/LUC/2003 and in pursuance of such order, registration has been granted by the Ld. Commissioner of Income Tax-I u/s 12AA of the Income Tax Act 1961, with effect from 01.04.2003 vide order dated 17.01.2006. Further, the registration u/s 12AA has never been revoked till date. 9.4 The argument of the Revenue is that after insertion comes out of the definition of charitable activities w.e.f. 01/04/2009, any activities in the nature of business or trade comes out by an organization will preclude the same for being an entity engaged in charitable activities. To examine the impact of insertion of proviso to Section 2(15), it is important to look at the intention with which the amendment was brought into force which is discussed below. 9.5 The main intent or purpose of the Legislature in bringing such an amendment is to exclude certain non-genuine NGOs which are carrying on activities in the nature of trade, commerce or business in the garb of advancement of public utilities and enjoying the exemption of income which is accrued because of such activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... =11TC 363]. Thus the word 'business' is a wider term than, and not synonymous with, trade; and means practically anything which is an occupation as distinguished from a pleasure [ Halsbury's Laws of England, Third Edition, Vo1.38, page 10, quoted in CIT v. Upasana hospital, (19970 225 ITR 845,851 (Ker). Also see, CIT v. Delhi Transport Corporation, (1996) 134 Taxation 386, 392-93 (Del)]. 'Business' is a word which has more extensive I meaning that trade. All trade is business but all business is not trade [Vijaya Bank v. A.N. Tewari, (1995) 83 Taxman 340,342 (Del)]. The aforesaid Commentary further explains business as under on Page 1336: Is profit-motive essential to constitute a 'business'? - Business, without profit is not business, any more than a pickle is candy [Abbot]. To regard an activity as 'business', there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure [Shah. J., in State of Andhra Pradesh v. H. Abdul Bakshi Bros. , (1964) 15 STC644, 647(SC); State of Guajrat v. Raipur Mfg. Co. Ltd. , (1967)19 STC 1 (SC) ; Director of Supplies and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led 'commerce, [Gannon Dunkerley Co. v. State of Madras, (1954) 5 STC 216,244 (Mad)],and it is the continuous repetition of such transactions which will constitute a business . 9.8 In the case of State of Punjab and Another v. Bajaj Electricals Ltd (1968) 70 ITR 730(SC), it has been held that essential condition for carrying on business, trade, commerce is making profit. The relevant portion of this judgment is reproduced below: Liability to pay tax under Act 7 of 1956 arises if a person carries on trade by himself or through his agent, or follows a profession or is in employment within the State, and to otherwise. The expression trade is not defined in the Act. Trade in its primary meaning is the exchanging of goods for goods for money; in its secondary meaning it is repeated activity in the nature of business carried on with a profit motive, the activity being manual or mercantile, as distinguished from the liberal arts or learned professions or agriculture. 9.9 Similarly, Hon ble Supreme Court in the case of Commissioner of Income-tax, Punjab v. Lahore Electric Supply Co. Ltd (1966)60 ITR 1 (S.C) has held as under: Income Tax business Income-Carrying O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... StateGovernment in case of dissolution by the State Government. The appellant Authority cannot act beyond the Statute through which it was incorporated. 10. As regards the objection of Revenue regarding surplus of income, we observe that the receipt of money by way of sale consideration, sundry receipts, interest, rent etc. is arising out of sole purpose of growth and development of the areas. Surplus of funds if any, cannot be distributed but are used in subsequent years for development of Lucknow city only. Therefore, surplus of funds should not be equated to profit motive. 10.1 In the judgment of Hon ble Allahabad High Court in case of Commissioner of Income-tax vs. Krishi Utpadan Mandi Samite (2010) 1 ALJ 817, their lordship held that charging cess /fee is for the purpose of carrying out object of Act i.e. Krishi Utpadan Mandi Samiti Adhiniyam, 1964. Where dominant purpose of trust is charitable, incidentally if some profit is made and such profit is used for charitable purposes, the said trust/institution does not cease to be established for ''charitable purposes . The dominant object of Mandi Samiti is to regulate, procure and supply of agricultural and some ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n charitable. The registration under Section 12A is mandatory to claim exemption under Sections 11 13, but registration alone cannot be treated as conclusive. It is always open to Revenue Authorities, while processing return of income of these assessees, to examine the claim of the assessees under Sections 11 13 and give such treated to these institutions as is warranted by the facts of the case. Revenue Authorities are always at liberty to cancel the registration under Section 12AA(3). Moreover, it may be mentioned that the benefit of Section 11 is not absolute or conclusive. It is subject to control of Sections 60 to 63. If it is found by keeping in view the provisions of Sections 60 to 63 that it is not so includible then such income does not qualify for any relief. The contention that the assessee are earning profit has no merit as per the ratio laid down in the case Sarafa Association vs. CIT, [2007] 294 ITR 262 (MP), where it was observed that the promotion of commercial trade is a charitable purpose under Section 2(15) of the Act . In the case of Director, ITO vs. Govinda, 315 ITR 237 (Mad), it was observed that the construction of commercial complex by charitable tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions for applicability of Sections 11 12 as provided in Section 12A. Therefore, once the procedure is complete as provided in sub-section (1) of Section 12AA and a certificate is issued granting registration to the trust or institution the certificate is a document evidencing satisfaction about (i) the genuineness of the activities of the trust or institution, and (ii) about the objects of the trust or institution. Section 12A stipulates that the provisions of Sections 11 12 shall not apply in relation to income of a trust or an institution unless the conditions stipulated therein are fulfilled. Thus, granting of registration under Section 12AA denotes that the conditions laid down in Section 12A stand fulfilled. The effect of such a certificate of registration under Section 12AAA, therefore, cannot be ignored or wished away by the Assessing Officer by adopting a stand that the trust or institution is not fulfilling the conditions for applicability of Sections 11 12. In the case of Gestetner Duplicators P. Ltd. vs. CIT [1979] 117 ITR 1 (SC), the Apex Court was called upon to determine as to whether the contribution made by the employer should be treated as a business exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to Section 2(15). There is no material/evidence brought on record by the revenue which may suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit or has deviated from its objects as detailed in the trust deed of the assessee. In these facts and circumstances of the case, the proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 for the relevant assessment year. From the record, it also appears that the Authority had been maintaining infrastructure, development and reserve fund IDRF as per the notification dated 15.01.1998, the money transferred to this funds is to be utilized for the purpose of project as specified by the committed having constituted by the State Government under the said notification and the same could not be treated to be belonging to the Authority or the receipt is taxable nature in its hands. For this reason also, it appears that the funds are utilized for general utility. Moreover, in the instant case, the Assessing Officer has not given any defective in computation of income as per Section 11 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was developed and sold at a premium to the perspective buyers. Apparently, on dissolution of the authority, all assets shall be transferred to the Government and there was no restriction on the use of these assets by the Government. Therefore the objects pursued by the applicant cannot be termed as charitable in view of the fact that the applicant, was a commercial organization (with no restriction as to the application of assets on dissolution or winding up) Therefore the applicant cannot be termed as charitable organization by any stretch of imagination. (d.) Whether on the facts and circumstances of the case the Hon'ble ITAT was justified in upholding the order of Ld. CIT(A) and giving the benefit of section 12A to the assessee as the activities of advancement of the object of general public utility by the appellant authority are undertaken/carried on in a totally commercial manner and activities of the assessee are similar to the Jammu 3 Development Authority wherein registration u/s 12A was not allowed by the Hon'ble ITAT, Amritsar Bench vide order dated 14.06.2012 in ITA No.30(Asr)/2011 in lieu of commercial nature of activities, and the same has already been conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The analysis of the above questions of law, as framed by Hon'ble Court, reflects that first question was regarding entitlement of the assessee for registration u/s 12AA of the Act whereas the second question framed by Hon'ble Court is to the effect as to whether assessee was not carrying out any activity of profit. The Hon'ble Court, after having elaborate discussions on various aspects of various sections of registration, denial of registration u/s 11, 12 and 13, has decided the above three questions in favour of the assessee and against the Revenue. The argument of the Revenue that this judgment of YEIDA do not deal with the denial of exemption u/s 11 does not seem to be correct in view of the specific question framed by the Hon'ble Court as question No. 2. This judgment, which has been followed in the Moradabad Development Authority, therefore, is quite relevant and the case of the assessee is duly covered by the judgment of Moradabad Development Authority. The case laws relied on by Revenue are not applicable to the facts of the case of the assessee. The case law of Jammu Development Authority relates to refusal to the assessee for registration u/s 12A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own case that assessee had allowed benefits to employees. 11.4 The Hon'ble Patna High Court in the case of CIT vs. Tata Steel Charitable Trust 78 Taxman 98 (Pat) vide order dated 07/01/1993 has held that employees of the author of the trust do not fall in the specified category of persons referred to in section 13(3) of the Act. The relevant findings of the Hon'ble court are reproduced below: As regards, the second condition, it seems that even if a trust has been created wholly for charitable purposes, when subsequently it is found that its income either enures or is used or applied directly or indirectly for the benefit of any person specified under sub-section (3) of section 13, then such trust becomes disentitled to claim any exemption under section 11. But the list of such persons as contained under section 13(3 ) does not include the employees of the author of the trust. The employees of the author of the trust do not fall within the specified categories of persons referred to in section 13(3). Even section 13(3)(d ), which includes any relative of the author, can have no application in the case of the employees of the author because 'relative' means a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at account in the balance sheet and was not routing through the profit loss account. The Assessing Officer has also added back these amounts while denying exemption u/s 11 of the Act. We find that this issue has already been dealt by the Hon'ble Allahabad High Court in the case of assessee itself whereby vide order dated 16/09/2013, Hon'ble Allahabad High Court has held that the money transferred to this fund is to be utilized for the purpose of project as specified by the committee having constituted by the Government and the same could not be treated to be belonging to the authority or the receipt is taxable in its hand. Therefore, ground No. 8 in I.T.A. No.185 and ground No. 9 in rest of the appeals are allowed. 11.8 As regards the other disallowance, as agitated by the assessee vide various grounds, we find that these disallowances do not need any specific adjudication as even if these disallowances are upheld, the resultant increase in net income of the assessee will again be eligible for exemption u/s 11 of the Act. Therefore, these additions have become academic in view of our findings in relation to exemption u/s 11 of the Act. Therefore, ground No. 9 to 12 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquiring land from farmers and others at a low price, which was developed and sold at a premium to the perspective buyers. Apparently, on dissolution of the authority, all assets shall be transferred to the Government and there was no restriction on the use of these assets by the Government. Therefore the objects pursued by the applicant cannot be termed as charitable in view of the fact that the applicant, was a commercial organization (with no restriction as to the application of assets on dissolution or winding up) Therefore the applicant cannot be termed as charitable organization by any stretch of imagination. (d.) Whether on the facts and circumstances of the case the Hon'ble ITAT was justified in upholding the order of Ld. CIT(A) and giving the benefit of section 12A to the assessee as the activities of advancement of the object of general public utility by the appellant authority are undertaken/carried on in a totally commercial manner and activities of the assessee are similar to the Jammu 3 Development Authority wherein registration u/s 12A was not allowed by the Hon'ble ITAT, Amritsar Bench vide order dated 14.06.2012 in ITA No.30(Asr)/2011 in lieu of commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue that this judgment of YEIDA does not deal with the denial of exemption u/s 11 of the Act, is of no consequence. Though in that case, the prime issue was that of grant of registration u/s 12 of the Act, what was examined was the activities of that assessee. It is this aspect of the matter which is in question in the present cases before us also, although the question here is of grant of exemption u/s 11 of the Act. This judgment, which has been followed in the Moradabad Development Authority, therefore, is quite relevant and the case of the assessee is duly covered by the judgment of Moradabad Development Authority. 27. In view of the above facts and circumstances, we do not find any infirmity in the order of learned CIT(A). 28. Now we take up the additional grounds of appeal taken by the Revenue vide its application dated 05/02/2022. Vide ground No. 1 of the additional grounds, it has been argued by the Revenue that learned CIT(A), while allowing relief to the assessee, has failed to consider the provisions contained in section 13(8) of the Act, introduced by the Finance Act, 2012 with retrospective effect from 01/04/2009. To adjudicate the above ground, it is important ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities of that previous year. 30. Admittedly, under the definition of charitable purposes, the objects of the assessee fall into advancement of any other object of general public utility. Therefore, the proviso inserted by the Finance Act, 2012 with effect from 01/04/2009 will be quite relevant in the case of the assessee. Such examination and effect of insertion of proviso to section 2(15) has already been made by Hon'ble Allahabad High Court, which is a jurisdictional High Court in the case of the assessee itself where the Hon'ble High Court, vide order dated 18/07/2017 has held that the activities carried on by the assessee are not hit by the proviso to section 2(15) of the Act. For the sake of completeness, the findings of Hon'ble Allahabad High Court are reproduced below: 3. This appeal was admitted on following substantial question of law: Whether under the facts and circumstances of the case, the learned ITAT was right in holding that the registration granted u/s 12A of the I.T. Act cannot be cancelled by the CIT under the provisions of Section 12AA ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed form and in the prescribed70 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: 33. We find that this provision requires an assessee to spend 85% of the income earned to be eligible for exemption u/s 11 of the Act. From the order of the Assessing Officer, it is observed that the Assessing Officer has not raised any observation regarding non spending of income earned by the assessee and therefore, neither assessee filed any grounds of appeal before learned CIT(A) against the order of the Assessing Officer in this respect. However, we find that since the Assessing Officer had outrightly disallowed the exemption u/s 11 of the Act, he has not examined the provisions of section 11(2) of the Act whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee by the author of the trust or the founder of the institution or any person who has made a substantial contribution to the trust or institution, or any relative of any such author, founder, person, member, trustee or manager or any concern in which any of the persons referred to in clauses (a), (b), (c) and (d) has a substantial interest. This aspect has been examined by the Tribunal while granting stay to the assessee in Stay Application No. 48 in I.T.A. No.701 where vide order dated 19/02/2020, the Tribunal prima facie had held that there is no violation of provisions of section 13(3) of the Act. Such findings were based on the fact that the allotment of plots were made to the employees of the assessee who are not part of the author as defined in section 13(3) of the Act and while holding so had relied on the judgment of CIT vs. Tata Steel Ltd. 203 ITR 704. The relevant findings of the Tribunal are reproduced below: This Stay Petition has been filed by the assessee with a request to stay the recovery of demand of Rs.3,01,83,05,459/- till disposal of the appeal. 2. The demand has risen due to addition made by the Assessing Officer by rejecting the exemption under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13(3) of the Act: 1. CIT vs. Awadh Educational Society, dated 13/9/2011 (Alld) 2. DIT vs. Maruti Center for Excellence, 208 Taxman 236 (Delhi) 3. Noida Entrepreneurs Association vs. NOIDA Ors. (SC), WP (Civil) No.150 of 1997, dated 9th May, 2011 7. We find from the details certified by the Assessing Officer, vide letter dated 14/2/2020 (copy placed on record), that none of the core persons of the assessee Parishad got any preferential or concessional allotment of plots and the two persons who did get discount, are not either Trustees or Managers of the Parishad. Further, it is the Department s own case that the allotments purportedly in violation of section 13(3) of the Act have been made to the employees of the assessee Parishad. There is no rebuttal, however, to the assertion on behalf of the assessee that these employees are not acting in any Managerial capacity, so far as regards the discharge of their duties under the Parishad; and that the specific requirement of the section is concerning Managers and not employees. Therefore, the assessee has a prima facie case in its favour and as such the balance of convenience is also in its favour. However, keeping in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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