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TMI Blog2024 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... e also been framed under the said judgment passed by the Apex Court to verify and examine the objects and activities of the organizations to find out whether they are in the nature of trade, commerce or business and if it is found so than it must be examined whether the quantified limit as amended time to time in proviso to Section 2(15) of the Act has been breached or not. In that view of the matter since the verification/examination has not been carried out by the authorities below in terms of the observations and guidelines framed in the case of Ahmedabad Urban Development Authority (supra), issue set aside to the file of the Learned AO for examining the same and to pass the order accordingly. Thus remit the issue to the file of Learned AO to consider the same afresh upon examining the nature of assessee s activities and to pass a reasoned order. All the appeals of Revenue are allowed for statistical purposes. - Shri G. S. Pannu, Vice President And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri G. C. Srivastava, Adv. And Shri Kalrav Mehrotra, Adv. For the Respondent : Ms. Rishpal Bedi, CIT-D.R. ORDER PER MS. MADHUMITA ROY JUDICIAL MEMBER : Bunch of appeals filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the same was pronounced much after the assessment order, the Learned CIT(A) deleted such additions made by Assessing Officer and finalized the appeal in favour of the assessee. While doing so, Learned CIT(A) further relied upon the judgment passed by the Hon ble Gujarat High Court in the case of Surat Urban Development Authority (SUDA) and the judgment passed by the Karnataka High Court in the case of Karnataka Industrial Development Board reported in 121 taxmann.com 88 (Karnataka). Hence, the instant appeal before us preferred by the Revenue. 4. At the time of hearing of the appeal the Learned Departmental Representative submitted before us that the impugned order is not sustainable in view of the order passed by Hon ble Apex Court on 19.10.2022 in the case of ACIT (E) vs. Ahmedabad Urban Development Authority (AUDA) in Civil Appeal No.21762/2017 whereby and whereunder, it has been held that the profit earned by the assessee authority is significantly higher than the nominal markup, its activities cannot be treated as charitable activity. It was further submitted that the principle of nominal markup in testing the charitable activities of the assessee authority under general uti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed provisions of the IT Act. A. General test under Section 2(15) A.1. It is clarified that an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration ( cess, or fee, or any other consideration ); A.2. However, in the course of achieving the object of general public utility, the concerned trust, society, or other such organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that (i) the activities of trade, commerce or business are connected ( actual carrying out inserted w.e.f. 01.04.2016) to the achievement of its objects of GPU; and (ii) the receipt from such business or commercial activity or service in relation thereto, does not exceed the quantified limit, as amended over the years (Rs. 10 lakhs w.e.f. 01.04.2009; then Rs. 25 lakhs w.e.f. 01.04.2012; and now 20% of total receipts of the previous year, w.e.f. 01.04.2016); A.3. Generally, the charging of any amount towards consideration for such an activity (advancing general public utility), which is on cost-basis or nominally above cost, cannot be considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignificantly higher than the cost and a nominal mark-up. If such is the case, then the receipts would indicate that the activities are in fact in the nature of trade, commerce or business and as a result, would have to comply with the quantified limit (as amended from time to time) in the proviso to Section 2(15) of the IT Act. B.3. In clause (b) of Section 10(46) of the IT Act, commercial has the same meaning as trade, commerce, business in Section 2(15) of the IT Act. Therefore, sums charged by such notified body, authority, Board, Trust or Commission (by whatever name called) will require similar consideration i.e., whether it is at cost with a nominal mark-up or significantly higher, to determine if it falls within the mischief of commercial activity . However, in the case of such notified bodies, there is no quantified limit in Section 10(46). Therefore, the Central Government would have to decide on a case-by-case basis whether and to what extent, exemption can be awarded to bodies that are notified under Section 10(46). B.4. For the period 01.04.2003 to 01.04.2011, a statutory corporation could claim the benefit of Section 2(15) having regard to the judgment of this Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in proviso to Section 2(15), has been breached, thus disentitling them to exemption. 254. In accordance with the foregoing discussion, and summary of conclusions, the numerous appeals are disposed of as follows: (i) The revenue s appeals against the Improvement Trust, Moga, the Hoshiarpur Improvement Trust, Bathinda Improvement Trust, Fazilka Improvement Trust, Sangrur Improvement Trust ; Patiala Improvement Trust, Jalandhar Improvement Trust, Kapurthala Improvement Trust, Pathankot Improvement Trust, Improvement Trust, Hansi, and the Special Leave Petitions filed against the Gujarat Maritime Board and Karnataka Water Supply and Drainage Board are rejected. (ii). The revenue s appeals against Ahmedabad Urban Development Authority, the Gujarat Housing Board, the Gandhinagar Urban Development Authority, Rajkot Urban Development Authority, Surat Urban Development Authority, Jamnagar Area Development Authority, and the Gujarat Industrial Development Corporation are rejected. Likewise, the revenue s appeals against Agra Development Trust; UP Awas Evam Vikas Parishad; Raebareli Development Authority, Rajasthan Housing Board; Mangalore Urban Development Authority; Mathura Vrindavan Develo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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