INCOME TAX ACT, 1961

Section 2(15) proviso

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Collection of fees and cess being regulatory fees by assessee,a regulatory body created under Gujarat Town Planning and Urban Development Act, 1976

Assessee, a regulatory body, was created under Gujarat Town Planning and Urban Development Act, 1976 for proper development of specified area in State in a phased and planned manner, preparation and implementation of development measures, surveying for development of areas and land acquisition, managing urban development schemes, working for water systems, sewage and other facilities and services. It claimed exemotion under section 11. AO held that activities of collection of fees and cess were non-charitable in nature and ,therefore, no exemption could be allowed in view of proviso to section 2(15). Held: Assessee-SUDA was an autonomous body which established under section 22 of Gujarat Town Planning and Urban Development Act, 1976 (XXVII of 1976) and Rules made for carrying Planned Development of areas as defined and designed by the Government of Gujarat and also infrastructural activities relating thereto such as to undertake the preparations of development plans, monitoring and control of development of town planning as construction of roads, bridges and carry out work in connection with supply of water and disposal of sewerage and provisions for other services and activities such as drainage system, water connection, etc. for the benefit of public at large. SUDA was constituted to carry out the object and purpose of Town Planning Act and collected regulatory fees for the object of the Acts; no services were rendered to any particular trade, commerce or business. Whatever the income was earned/received by assessee was required to be used only for carrying out the object of Town Planning Act and to meet the expenditure while providing general utility service to public such as electricity, road, drainage, water etc. Also,entire control was with State Government and even accounts were also subjected to audit. As there was no element of profiteering at all, activities of assessee could not be said to be in the nature of trade, commerce and business and, collection of fees and cess being regulatory fees were incidental to the object and purpose of the Act. Thus, proviso to section 2(15) was not applicable so far as assessee was concerned and, assessee was duly entitled to exemption under section 11.

REFERRED :

FAVOUR : in assessee's favour

A.Y. : 2012-13 to 2014-15

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