INCOME TAX ACT, 1961

Section 11 Section 2(15)

Charitable trust - Exemption under section 11 - Charitable purpose - Trade, commerce or business

Assessee was engaged in the development of urban area of Rajkot AO denied exemption under section 11 and held that activities of assessee-authority was in the nature of advancement of general public utility considering the fact that the assessee was involved in widespread commerical activities in nature of business and the activity of the assessee was covered under first and second proviso to section 2(15). Assessee trust was entitled to exemption under sections 11 and 12 on surplus arising from carrying out planned development of areas as defined and designed by the Government Gujarat and for carrying out infrastructural activities relating thereto such as construction of roads, bridgwes, drainage systems, water connection, etc., for the benefit of public at large. It was the case of the assessee before the CIT(A) that the trust was regisered under section 12AA and the objects of the trust were advancement of general public utility but without any profit motive and therefore, the case falls outside the scope of exception carved out in Proviso to section 2(15). CIT(A) however, allowed assessee's claim being held as entitled to benefit under sections 11 and 12. Held: The issue was no longer res integra. The Gujarat High Court in the case of AUDA itself has adjudicated the issue in favour of the assessee. The CIT(A) had taken cognizance of the binding decision of the Gujarat High Court in great length and had rightly reversed the action of the AO and held that the assessee was entitled to the relief claimed. There was no error in the order of the CIT(A) in view of the decision rendered in AUDA by the Gujarat High Court. Tribunal, therefore, decline to interfere with the order of CIT(A).

Followed:AUDA v. Asstt. CIT ITA No. 423, 424, 425 of 2016, dt. 2-5-2017] : 2017 TaxPub(DT) 1863 (Guj-HC).

REFERRED : Jalandhar Development Authority, ITA. No. 562/2008 : 2009 TaxPub(DT) 1794 (Asr-Trib), Punjab Urban Planning and Development Authority v. CIT (2006) 156 Taxman 37 (Chd) : 2006 TaxPub(DT) 1673 (Chd-Trib), Greater Cochin Development Authority v. Joint Director of IT(E), I.T.A. Nos. 792 & 793/Coch/2013, CIT v. Surat Art Silk Cloth Manufactures Association, (1980) 121 ITR 1 (SC) : 1980 TaxPub(DT) 848 (SC), New Okhla industrial Development Authority ITA. No. 114/2016 and in the case of Yamuna Expressway Industrial Development Authority ITA. No. 107/2016 : 2017 TaxPub(DT) 1243 (All-HC).

FAVOUR : In assessee's favour.

A.Y. : 2009-10 to 2014-15

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