The Tax Publishers2020 TaxPub(DT) 2959 (Karn-HC) : (2020) 423 ITR 0373 : (2020) 316 CTR 0646

INCOME TAX ACT, 1961

Section 12A

Assessee being a statutory authority was under the control of State Government. Funds standing in the name of assessee were under the absolute control of Government as assessee functioned in a fiduciary capacity and therefore, even assessee might be involved in developing residential or commercial areas or even alienating sites through auction, said activity could not be held to be profit motive so as to come within the mischief of expression 'trade, commerce or business'. Therefore, assessee was entitled for exception under section 11 and was entitled for registration under section 12A.

Charitable trust - Registration under section 12A - Assessee being statutory authority constituted under KUDA Act to establish and develop urban areas in an orderly fashion - Activities treatd as trade, commerce or business on the ground of development of residential or commercial areas

Assessee was a statutory body constituted under section 3 of KUDA Act, with object of planning and promoting and securing development of Belagavi Urban area and for that purpose to acquire, hold, manage and dispose of movable and immovable properties and to carry out building and engineering operations and to take all steps for the purpose of development of the Belagavi urban area. It applied for registration under section 12A(1)(aa). CIT rejected said application Tribunal upheld rejection on the ground that activity carried on by assessee would amount to an activity in the nature of trade, commerce or business as assessee might be involved in developing various residential or commercial areas and thereby preparing house sites or commercial sites and even alienating such sites through auction or through allotting to eligible persons. Held: Assessee being a statutory authority was under the control of State Government, which had power to issue directions to the authority as per section 65. The said directions were those, which were necessary or expedient for carrying out purposes of the Act and it would be the duty of assessee to comply with such directions. Even utilization of funds by assessee was fully controlled by periodical instructions issued by Government. Funds standing in the name of assessee were under the absolute control of Government as assessee functioned in a fiduciary capacity and therefore, even assessee might be involved in developing residential or commercial areas or even alienating sites through auction, said activity could not be held to be profit motive so as to come within the mischief of expression 'trade, commerce or business'. Therefore, assessee was entitled for exception under section 11 and was entitled for registration under section 12A.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 12A

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