Ahmedabad Urban Development Authority, Ahmedabad v. The DIT(Exemp.),, Ahmedabad

ITA 754/AHD/2010 | misc
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 75420514 RSA 2010
Bench Ahmedabad
Appeal Number ITA 754/AHD/2010
Duration Of Justice 2 month(s) 11 day(s)
Appellant Ahmedabad Urban Development Authority, Ahmedabad
Respondent The DIT(Exemp.),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 21-05-2010
Date Of Final Hearing 12-05-2010
Next Hearing Date 12-05-2010
Assessment Year misc
Appeal Filed On 11-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVNESH SAINI JUDICIAL MEMBER) ITA.NO.754/AHD/2010 ASSTT.YEAR : 2009-2010 AHMEDABAD URBAN DEVELOPMENT AUTHORITY SARDAR VALLABHBHAI PATEL SANKUL USMANPURA ASHRAM ROAD AHMEDABAD. VS. DIT(EXEMPTION) AHMEDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.SOPARKAR REVENUE BY : SHRI RAJEEV AGARWAL O R D E R PER G.D. AGARWAL VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE DIRECTOR OF INCOME TAX (EX EMPTION) DATED 15-02-2010 UNDER SECTION 12AA(3) OF THE INCOME TAX ACT 1961. 2. THE FIRST GROUND RAISED BY THE ASSESSEE IS AS UN DER: 1. THE LD.DIT(EXEMPTION) ERRED IN LAW AND ON FACTS IN CANCELING THE REGISTRATION GRANTED TO THE APPELLANT AUTHORITY U/S.12A(3) OF THE ACT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. DIT(EXEMPTION) OUGHT NOT TO HAVE CANCELLED THE REGISTRATION OF THE APPELLANT AUTHORITY. THE OTHER GROUNDS ARE ONLY ARGUMENTS IN SUPPORT OF THE ABOVE GROUND NO.1. 3. AT THE TIME OF HEARING BEFORE US IT IS SUBMITTE D BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IS AN AUTONOMOUS BODY SET UP AND GOVERNED BY THE PROVISIONS OF THE GUJARAT TOWN PLANNING AND URBAN DEVELOPMENT ACT 1976 (HEREINAFTER REFERRED TO AS GTP ACT). THAT THE ASSESSEE WAS REGISTERED UNDER SECTION 12AA OF THE IT ACT W.E.F. 1-4-2002 VI DE ORDER DATED 23-10-2003 OF THE DIT(EXEMPTION) AHMEDABAD. THE DIT(EXEMPTIO N) VIDE HIS ORDER UNDER SECTION 12AA(3) DATED 15-2-2010 CANCELLED THE REGISTRATION UNDER SECTION 12AA W.E.F. 1-4-2002. HE SUBMITTED THAT AS PER SECTION 12AA(3) ITA.NO.754/AHD/2010 -2- REGISTRATION ONCE GRANTED CAN BE CANCELED ONLY IN T WO CIRCUMSTANCES (I) THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE A ND (2) THE ACTIVITIES OF THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION. HE HAS STATED THAT IN THE CASE OF THE ASSESSEE NONE OF THE ABOVE CONDITIONS IS SATISFIED. THE ASSESSEE IS REGULARLY FUNCTIONING IN ACCORDANCE WITH GTP ACT. HE HAS STATED THAT THE LEARNED DIT (EXEMPTION) HAS STATED THAT THE ACTIVITIES OF THE ASSESSEE ARE CARRIED OUT ON A FINANCIALLY NEUTRAL BASIS MEANING THEREBY ALL THE COSTS ARE RECOVERED. THERE FORE NO CHARITABLE ACTIVITY IS BEING DONE BY THE ASSESSEE. HE SUBMITTED THAT AS P ER SECTION 79 OF THE GTP ACT THE COST OF ANY SCHEME BEING EXECUTED BY THE ASSESSEE IS TO BE MET BY IMPOSING LEVY ON EACH PLOT INCLUDED IN SUCH SCHEME. THEREFORE MERELY BECAUSE THE ASSESSEE IS RECOVERING THE COST BY IMPO SING THE LEVY ON THE PLOT BEING SOLD BY IT IT CANNOT BE SAID THAT THE ASSESS EE IS NOT CARRYING OUT THE CHARITABLE ACTIVITY. THE DIT(EXEMPTION) HAS NOT PO INTED OUT ANY VIOLATION OF PROVISIONS OF THE GTP ACT BY THE ASSESSEE. THERE FORE THE CONCLUSION OF THE DIT(EXEMPTION) THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION IS W ITHOUT ANY BASIS. HE ALSO POINTED OUT THAT UNDER THE IDENTICAL FACTS THE HON BLE JURISDICTIONAL HIGH COURT IN TAX APPEAL NO.667 OF 2007 DATED 3-4-2007 UPHELD THE ORDER OF THE ITAT IN THE CASE OF CIT VS. SUDA WHEREIN REGISTRATION UNDE R SECTION 12AA WAS GRANTED TO SUDA. HE ALSO RELIED UPON THE DECISION O F THE HONBLE APEX COURT IN THE CASE OF CIT VS. GUJARAT MARITIME BOARD 295 ITR 561. IN VIEW OF THE ABOVE IT IS STATED BY THE LEARNED COUNSEL THAT THE ORDER OF THE DIT(EXEMPTION) SHOULD BE QUASHED. 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON T HE ORDER OF THE DIT(EXEMPTION) AND STATED THAT THE REGISTRATION UND ER SECTION 12AA(3) WAS GRANTED ERRONEOUSLY AND THEREFORE IT WAS WITHDRAWN FROM THE FIRST DATE OF THE REGISTRATION. HE SUBMITTED THAT IF THE REGISTRATIO N WAS GRANTED ERRONEOUSLY THE SAME CAN BE WITHDRAWN FROM THE DATE FROM WHICH THE REGISTRATION WAS GRANTED. HE ALSO STATED THAT EVEN IF THE CONDITIONS PRESCRIB ED UNDER SECTION 12AA(3) ARE ITA.NO.754/AHD/2010 -3- NOT SATISFIED THE REGISTRATION IF GRANTED ERRONEO USLY CAN BE WITHDRAWN. IN SUPPORT OF THIS CONTENTION HE RELIED UPON THE DECI SION OF KERALA HIGH COURT IN THE CASE OF M.P.SANTHIVERMA JAIN VS. STATE OF KERAL A 265 ITR 385. HE FURTHER STATED THAT THE ACTIVITIES OF THE ASSESSEE-INSTITUT ION ARE NOT CHARITABLE BECAUSE THE ASSESSEE IS ACTING IN A COMMERCIAL MANNER AND N OT AS A CHARITABLE INSTITUTION. WHEN THE ACTIVITY IS NOT CHARITABLE THE DIT(E) RIGHTLY INVOKED SECTION 12AA(3). HE ALSO POINTED OUT THAT SIMILAR BODIES WITH SIMILAR OBJECTIVES WERE NOT GRANTED REGISTRATION UNDER SECT ION 12AA BY THE DIT(EXEMPTION) AND THOSE ORDERS HAVE BEEN UPHELD BY THE CHANDIGARH/AMRISTAR BENCHES OF ITAT IN THE FOLLOWIN G CASES: I) PUNJAB URBAN DEVELOPMENT AUTHORITY 103 TTJ 988 (15 6 TAXMAN 37); II) JALANDHAR DEVELOPMENT AUTHORITY 124 TTJ 598 ITAT AMRISTAR HE THEREFORE SUBMITTED THAT THE ORDER OF THE DIT(EX EMPTION) PASSED UNDER SECTION 12AA(3) SHOULD BE SUSTAINED. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SECTION 12A A(3) READS AS UNDER: 12AA .. . (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE HE SHALL PASS AN O RDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION: FROM THE ABOVE IT IS EVIDENT THAT ONCE A TRUST OR INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA(3) SUBSEQUENTLY T HE IF COMMISSIONER FINDS THAT ONE OF THE CONDITIONS VIZ. (I) THE ACTIVITY OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE AND (II) THE ACTIVITY OF THE SUCH TRUST OR INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION IS SATISFIED THEN THE ITA.NO.754/AHD/2010 -4- COMMISSIONER HAS POWER TO CANCEL REGISTRATION GRANT ED U/S.12AA(1) BY PASSING AN ORDER IN WRITING. THEREFORE REGISTRATION GRANT ED U/S.12AA(1) CANNOT BE CANCELLED U/S.12AA(3) UNLESS ONE OF THE CONDITIONS PRESCRIBED U/S.12AA(3) IS SATISFIED. WE ARE UNABLE TO AGREE WITH THE CONTENTI ON OF THE LEARNED DR THAT IF THE REGISTRATION IS ERRONEOUSLY GRANTED IT CAN BE WITHDRAWN EVEN IF THE CONDITION PRESCRIBED UNDER SECTION 12AA(3) ARE NOT SATISFIED. WE MAY POINT OUT THAT IN SUPPORT OF THE CONTENTION THE LEARNED DR HAS RELIED UPON THE DECISION OF KERALA HIGH COURT IN THE CASE OF M.P.SA NTHIVEERMA JAIN (SUPRA). HOWEVER THE SAID DECISION WAS DELIVERED BY THE HON BLE KERALA HIGH COURT UNDER THE KERALA AGRICULTURE INCOME TAX AND NOT UND ER THE INCOME TAX ACT 1961. WHEN UNDER THE INCOME TAX ACT THERE IS A SPE CIFIC PROVISION FOR CANCELLATION OF REGISTRATION WITH SPECIFIC CONDITI ON IN OUR OPINION FULFILLMENT OF THOSE CONDITIONS ARE NECESSARY FOR INVOKING THE JURISDICTION UNDER SECTION 12AA(3). THE DIT(EXEMPTION) IN THE ORDER UNDER SE CTION 12AA(3) HAS RECORDED HIS SATISFACTION AS UNDER: 15. ACCORDINGLY I AM SATISFIED THAT THE ACTIVITIE S OF AUDA ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF INSTITUTION (AUDA) FOR WHICH THE REGISTRATION WAS GRANTED AND HENCE TH E REGISTRATION GRANTED ON 23-10-2003 WITH EFFECT FROM 1-4-2002 IS HEREBY CANCELLED UNDER SECTION 12AA(3) OF THE INCOME TAX ACT 1961 HOWEVER IN THE ENTIRE ORDER PASSED UNDER SECTION 1 2AA(3) HE HAS NOT POINTED OUT ANY SINGLE INSTANCE WHERE THE ACTIVITY OF AUDA (THE ASSESSEE) WAS NOT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION. IT SEEMS THAT THE DIT(EXEMPTION) FORMED THE OPINION THAT THE AUDA WAS NOT FUNCTIONING IN ACCORDANCE WITH THE OBJECT OF THE INSTITUTION BECAU SE THE AUDA WAS RECOVERING THE COST OF THE PROJECT BY IMPOSING LEVY ON THE ARE A DEVELOPED BY IT AND ALSO BY SELLING PLOTS. VIEW OF THE DIT(EXEMPTION) WOULD BE MORE EVIDENT FROM PARA- 12 OF HIS ORDER WHICH READS AS UNDER: 12. VIEWED FROM THIS POINT AUDA IS NOT SPENDING A NY MONEY EITHER FROM ITS CAPITAL OR FROM ITS RECEIPTS FOR PROVIDING CHARITY BUT WHATEVER IS INCURRED ON ITS PERMITTED ACTIVITY IS FULLY RECOVER ED ON A SELF RELIANT ITA.NO.754/AHD/2010 -5- BASIS AS ADMITTED BY THEM. AS DETAILED IN THE CHAR T GIVEN IN ANNEXURE-II THEY HAVE HUGE RESERVE OF SALEABLE PLOTS/SALE OF WH ICH WOULD MORE THAN RECOVER THE COST. FURTHER THE INCOME EXPENDITURE STATEMENT FURNISHED WITH RETURN DO NOT SATISFY THE REQUIREMENTS OF MATC HING PRINCIPLE OF ACCOUNTANCY AS REGARDS OMISSION OF CLOSING STOCK VA LUE OF SALEABLE PLOTS WITH AUDA YEAR ON YEAR. 6. IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT T HE SECTION 79 OF THE GTP ACT PROVIDES FOR RECOVERY OF THE COST OF PROJ ECT BY IMPOSING LEVY ON THE PLOTS BEING DEVELOPED BY THE ASSESSEE. THE SECTION 79 OF THE GTP ACT READS AS UNDER: 79.(1) THE COSTS OF THE SCHEME SHALL BE MET WHOLLY OR IN PART BY A CONTRIBUTION TO BE LEVIED BY THE APPROPRIATE AUTHOR ITY ON EACH PLOT INCLUDED IN THE FINAL SCHEME CALCULATED IN PRO PORTION TO THE INCREMENT WHICH IS ESTIMATED TO ACCRUE IN RESPECT O F SUCH PLOT BY THE TOWN PLANNING OFFICER: PROVIDED THAT (I) (A) WHERE THE COST OF THE SCHEME DOES NOT EXCEE D HALF THE INCREMENT THE COST SHALL BE MET WHOLLY BY A CONTRIBUTION AND (II) WHERE IT EXCEEDS HALF THE INCREMENT TO THE EXTENT OF HALF THE INCREMENT IT SHALL BE MET BY A CONTRIBUTION AND THE EXCESS SHALL BE BORNE BY THE APPROPRIATE AUTHORITY; (III) WHERE A PLOT IS SUBJECT TO A MORTGAGE WITH POSSESS ION OR TO A LEASE THE TOWN PLANNING OFFICER SHALL DETERMI NE IN WHAT PROPORTION THE MORTGAGEE OR LESSEE ON THE ONE HAND AND THE MORTGAGOR OR LESSOR ON THE OTHER HAND SHALL PAY SUCH CONTRIBUTION; (IV) NO SUCH CONTRIBUTION SHALL BE LEVIED ON A PLOT USE D ALLOTTED OR RESERVED FOR A PUBLIC PURPOSE OR FOR TH E PURPOSE OF THE APPROPRIATE AUTHORITY WHICH IS SOLEL Y BENEFICIAL TO THE OWNERS OF LAND OR RESIDENTS WITHI N THE AREA OF THE SCHEME; AND (II) THE CONTRIBUTION LEVIED ON A PLOT USED ALLOTTED OR RESERVED FOR A PUBLIC PURPOSE OR FOR THE PURPOSE OF THE APPR OPRIATE AUTHORITY WHICH IS BENEFICIAL PARTLY TO THE OWNERS OF LAND OR RESIDENTS WITHIN THE AREA OF THE SCHEME AND PART LY TO THE ITA.NO.754/AHD/2010 -6- GENERAL PUBLIC SHALL BE CALCULATED IN PROPORTION TO THE BENEFIT ESTIMATED TO ACCRUE TO THE GENERAL PUBLIC F ROM SUCH USE ALLOTMENT OR RESERVATION. (2) THE OWNER OF EACH PLOT INCLUDED IN THE FINAL S CHEME SHALL BE PRIMARILY LIABLE FOR THE PAYMENT OF THE CONTRIBUTIO N LEVIABLE IN RESPECT OF SUCH PLOT. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE IS RECOVERING THE COST AS PROVIDED UNDER THE GTP ACT UNDER WHICH THE ASSESSEE IS FU NCTIONING. MERELY BECAUSE THE ASSESSEE IS RECOVERING THE COST OF THE PROJECT PARTIALLY OR WHOLLY IT CANNOT BE SAID THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE INSTITUTION. 7. IN VIEW OF THE ABOVE WE ARE SATISFIED THAT NONE OF THE CONDITIONS AS PRESCRIBED UNDER SECTION 12AA(3) IS SATISFIED IN TH E CASE OF THE ASSESSEE SO AS TO CANCEL THE REGISTRATION GRANTED UNDER SECTION 12 AA. WE THEREFORE QUASH THE ORDER OF THE DIT(EXEMPTION) PASSED UNDER SECTION 12 AA(3) AND RESTORE THE ORDER OF THE REGISTRATION PASSED BY THE DIT(EXEMPTI ON) UNDER SECTION 12AA(1) DATED 23-10-2003. 8. BEFORE WE PART WITH THE MATTER WE MAY POINT OUT THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAD ARGUED AT LENGTH THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE AND THEREFORE THE ASSESSEE IS ENTITL ED FOR REGISTRATION UNDER SECTION 12AA. IN SUPPORT OF THIS CONTENTION HE HA S RELIED UPON THE DECISION OF HONBLE APEX COURT AS WELL AS THE HONBLE JURISDICT IONAL HIGH COURT. THE LEARNED DR HAS ALSO ARGUED AT LENGTH TO SUPPORT REV ENUES POINT THAT THE ASSESSEE IS NOT ENTITLED TO REGISTRATION UNDER SECT ION 12AA. IN SUPPORT OF HIS CONTENTION HE HAS ALSO RELIED UPON VARIOUS DECISIO NS. HOWEVER THE ISSUE BEFORE US IS NOT WHETHER THE ASSESSEE IS ENTITLED T O REGISTRATION OR NOT BECAUSE THE ASSESSEE-INSTITUTION IS ALREADY REGISTERED VIDE ORDER OF THE DIT(EXEMPTION) UNDER SECTION 12AA(1) DATED 23-10-2003. THE LIMITE D ISSUE IN THIS APPEAL BEFORE US WHETHER THE DIT(EXEMPTION) WAS JUSTIFIED IN CANCELING SUCH REGISTRATION BY INVOKING THE POWER UNDER SECTION 12 AA(3). ITA.NO.754/AHD/2010 -7- 9. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND FACTS OF THE CASE WE WERE SATISFIED THAT THE CONDITIONS PRESCRIBED UN DER SECTION 12AA(3) OF THE ACT WERE NOT SATISFIED AND THEREFORE WE CANCEL THE ORDER OF THE DIT(EXEMPTION) PASSED UNDER SECTION 12AA(3). 10. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 21-05-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT AHMEDABAD