| The Tax Publishers2020 TaxPub(DT) 3558 (Guj-HC) INCOME TAX ACT, 1961
Section 11 read with Section 2(15)
Where assessee-urban development authority, was selling plots by way of auction to avoid further allegation of favouritism and to fetch maximum proceeds, which could be applied towards its object of urban development, could not be said to be carrying out any activity in the nature of trade, commerce or business and proviso to section 2(15) was not applicable to case of assessee, so as to deny benefit of exemption under section 11.
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Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Surplus from activities incidental to attainment of main object
Assessee was an urban development authority constituted to carry out development works in the urban development area as may be assigned to it by State Government from time to time. It claimed exemption under section 11. Revenue denied the exemption on allegation that assessee was collecting cess and fees and was also selling plots by way of public auction at maximum price. According to revenue, activities of assessee were in nature of business and proviso to section 2(15) was attracted. Held: Assessee-urban development authority, selling plots by way of auction sale to avoid further allegation of favouritism and to fetch maximum proceeds which could be applied towards its object of urban development, could not be said to be carrying out any activity in the nature of trade, commerce or business and proviso to section 2(15) did not, therefore, get attracted. 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. Thus, activities of assessee were for charitable purposes as per section 2(15) and consequently, it was eligible for benefits under sections 11 and 12.
Followed: Ahmedabad Urban Development Authority v. Asstt. CIT (Exemption) 2017 TaxPub(DT) 1863 (Guj-HC) CIT v. Gujarat Industrial Development Corporation [Tax Appeal No. 381 of 2017 to Tax Appeal No. 382 of 2017, decided on 28-6-2017] : 2017 TaxPub(DT) 1934 (Guj-HC)
REFERRED : Commr. of Sales Tax v. Sai Publication Fund (2002) 258 ITR 70(SC) : 2002 TaxPub(DT) 1304 (SC) Khoday Distilleries Ltd. v. State of Karnataka (1995) 1 SCC 574 (SC) Addl. CIT, Gujarat v. Surat Art Silk Cloth Manufacturers Association (And Other References) (1980) 121 ITR 1 (SC) : 1980 TaxPub(DT) 0848 (SC) State of Andhra Pradesh v. Abdul Bakhi & Bros. (1964) 15 STC 644 (SC) CIT v. Gujarat Industrial Development Corporation [Tax Appeal No. 381 of 2017 to Tax Appeal No. 382 of 2017, decided on 28-6-2017] : 2017 TaxPub(DT) 1934 (Guj-HC) CIT-I, Jodhpur v. Jodhpur Development Authority, Jodhpur and CIT, Bikaner v. Urban Improvement Trust, Sri Ganganagar and CIT (Exemption), Jaipur v. Urban Improvement Trust, Sri Ganganagar [Tax Appeal No. 63 of 2012 decided on 5-7-2016] : 2016 TaxPub(DT) 3870 (Raj-HC) India Trade Promotion Organization v. Director General of Income Tax (Exemptions) & Ors. [WP(C) No. 1872 of 2013 decided on 22-1-2015] : 2015 TaxPub(DT) 0623 (Del-HC) Director of Income Tax (Exemption) v. Sabarmati Ashram Gaushala Trust 2014 TaxPub(DT) 1964 (Guj-HC) M/s. GS1 India v. Director General of Income Tax (Exemption) & Anr. (2013) 219 Taxman 205 (Del) : 2013 TaxPub(DT) 2791 (Del-HC) CIT-I & Ors. v. M/s. Lucknow Development Authority & Ors. 2014 TaxPub(DT) 0157 (All-HC) Bureau of Indian Standards v. Director General of Income Tax (Exemptions) (2013) 212 Taxman 210 (Delhi) : 2013 TaxPub(DT) 0323 (Del-HC)
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