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TMI Blog2024 (5) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... t. If fee or cess or such consideration is collected for the purpose of an activity, by a state department or entity, which is set-up by statute, its mandate to collect such amounts cannot be treated as consideration towards trade or business. Therefore, regulatory activity, necessitating fee or cess collection in terms of enacted law, or collection of amounts in furtherance of activities such as education, regulation of profession, etc., are per se not business or commercial in nature - statutory boards and authorities, who are under mandate to develop housing, industrial and other estates, including development of residential housing at reasonable or subsidized costs, which might entail charging higher amounts from some section of the beneficiaries, to cross-subsidize the main activity, cannot be characterized as engaging in business. The character of being 'state', and such corporations or bodies set-up under specific laws (whether by states or the centre) would, therefore, not mean that the amounts are 'fee' or 'cess' to provide some commercial or business service. In each case, at the same time, the mere nomenclature of the consideration being a fee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in not adjudicating the same on merits. 5. The learned Assessing Officer has erred in law as well as on facts in determining total income of the appellant at Rs. 1,64,24,034/-and the Hon'ble CIT(A) has erred in not adjudicating the same on merits 6. The learned Assessing Officer has erred in law as well as on facts in not allowing exemption of Rs. 9,30,960/- claimed u/s. 11(1 A) on capital account and the Hon'ble CIT(A) has erred in not adjudicating the same on merits. 7. The learned Assessing Officer has erred in law as well as on facts in denying exemption of Rs 1,54,93,074/- claimed u/s 11(1)(a) in respect of deemed application of income and the Hon'ble CIT(A) has erred in not adjudicating the same on merits. 3. The brief facts of the case are that the assessee is a local authority constituted under the provisions of Gujarat Town Planning and Urban Development Act, 1976. The assessee undertakes activities like preparation of development plans for the development of area, preparation of town planning schemes, levy and collection of fees as prescribed by regulations for scrutiny of documents for permission for development, execute works in connection with supply of wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t work relating to construction of roads, sewerage, parks, play grounds, provide plots for educational, health and cultural institution for over all development of the community. The revenue generated through these activities is also finally utilized for the benefit of the public. The core activities carried out by the authority include: Preparation of development plans under the provisions of the Act for the development of area Preparation and execution of town planning schemes under the provisions of the Act if so directed by the State Government Carrying out surveys in the development area for the preparation of development plans or Town Planning Schemes To levy and collect such fees for scrutiny of documents submitted to the appropriate authority for permission for development as may be prescribed by the Regulations. To execute works in connection with supply of water, disposal of sewage and provision of other services and amenities To levy and collect such fees for execution of works and for provision of other services and amenities as may be prescribed by regulation To perform such other functions as are supplemental, incidental or consequential to the activities as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a fee, cess or any other consideration is the controlling phrase for both (a) and (b) (which are collectively referred to as prohibited activities for brevity) (d) Irrespective of the application of the income derived from such 'prohibited activities'. [Para 142] The impermissibility of any trade, or commercial activity or service, and income, from them, was intended to be conveyed through the prohibition, in the first part of the definition of GPU charities. The necessary implication which arises is that income (received as fee, cess, or any other consideration) derived from such 'prohibited activities' is necessarily motivated by profit. The ordinary meaning of fee or consideration would be synonymous with something of value, usually in monetary terms. However, the use of the expression cess facially lends a different colour to all the three expressions. [Para 143] Fee, cess and any other consideration has to receive a purposive interpretation, in the present context. If fee or cess or such consideration is collected for the purpose of an activity, by a state department or entity, which is set-up by statute, its mandate to collect such amounts cannot be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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