TMI Blog2025 (1) TMI 1392X X X X Extracts X X X X X X X X Extracts X X X X ..... nt towards consideration for such an activity (advancing general public utility), which is on cost-basis or nominally above cost, cannot be considered to be "trade, commerce, or business" or any services in relation thereto. It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that they would fall within the mischief of "cess, or fee, or any other consideration" towards "trade, commerce or business". Section 11(4A) must be interpreted harmoniously with Section 2(15), with which there is no conflict. Carrying out activity in the nature of trade, commerce or business, or service in relation to such activities, should be conducted in the course of achievin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst round of appeal, the Revenue challenged the same before Hon'ble Supreme Court of India as against the judgment dated 02-07-2018 passed Hon'ble Gujarat High Court in Tax Appeal No. 752 of 2018. The Revenue raised the following Questions of Law before Hon'ble Supreme Court. "1. Whether, on the facts and in the circumstances of the case, and in law, the Hon'ble High Court is justified in upholding the order of the Appellate Tribunal in remanding the matter to the assessing officer to examine the issue of deduction/exemption under Sections 11 & 12 of the Income Tax. Act, 1961 (for short 'the Act') on the basis of material on record and in view of the judgments of Hon'ble High court of Gujarat in the case of Ahmedabad Urba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose" (w.e.f. 01.04.2009), as well as the later amendments, and other related 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..." inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irement in Section 11(4A) of maintaining separate books of account is also in line with the necessity of demonstrating that the quantitative limit prescribed in the proviso to Section 2(15), has not been breached. Similarly, the insertion of Section 13(8), seventeenth proviso to Section 10(23C) and third proviso to Section 143(3) (all w.r.e.f. 01.04.2009), reaffirm this interpretation and bring uniformity across the statutory provisions. B. Authorities, corporations, or bodies established by statute B.1. The amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the state government or central governments, for achieving what are essentially 'public functions/services' (such as housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 the Gujarat Maritime Board case (supra). Likewise, the denial of benefit under Section 10(46) after 01.04.2011 does not preclude a statutory corporation, board, or whatever such body may be called, from claiming that it is set up for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 163, Jalandhar Improvement Trust 164, Kapurthala Improvement Trust 165, Pathankot Improvement Trust 166, Improvement Trust, Hansi 167, 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 170, the Gujarat Housing Board, the Gandhinagar Urban Development Authority 172, Rajkot Urban Development Authority 173, Surat Urban Development Authority 174, Jamnagar Area Development Authority 175, and the Gujarat Industrial Development Corporation1% are rejected. Likewise, the revenue's appeals against Agra Development Trust177; UP Awas Evam Vikas Parishad178; Raebareli Development Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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