Delhi Development Authority Vs ACIT (Exemption) (ITAT Delhi)
ITAT Delhi Remands DDA’s 2(15) Exemption Dispute for Fresh Examination in Light of Supreme Court’s Ahmedabad Urban Development Authority Ruling
In this appeal, the Delhi Development Authority (DDA), represented by Shri Baldev Raj, CA & Shri Maneesh Upneja, CA, challenged the NFAC order dated 30.06.2023 which had upheld the denial of exemption u/s 11 & 12, held DDA to be hit by the proviso to s.2(15), invoked s.13(8), & disallowed expenditure u/s 40A(9). The Department was represented by Shri Shrikant Namdeo, CIT-DR.
DDA, a statutory urban development authority established by the Delhi Development Act, 1957 & registered u/s 12A since 2002, had filed NIL return for AY 2016-17. The AO made a massive assessment at ₹5,12,80,66,351, holding that DDA’s activities were “commercial” in nature & fell within the last limb of s.2(15). CIT(A) affirmed the action.
Before Tribunal, the Assessee submitted that, after the landmark guidelines of the Hon’ble Supreme Court in Ahmedabad Urban Development Authority (449 ITR 1), the fundamental question—whether activities of the Authority breach the 20% limit or constitute trade/commerce—must be re-evaluated afresh. Reliance was also placed on the co-ordinate bench decision in Jhansi Development Authority, where similar issues were remanded following the Supreme Court’s interpretation.
The Department fairly conceded that the matter may be restored for fresh adjudication.
Tribunal noted from the orders & from the co-ordinate bench decision that the correct legal test now stands governed by the Supreme Court’s detailed framework on charitable authorities performing urban development functions. Tribunal held that the issue of DDA’s taxability vis-à-vis s.2(15) must be reconsidered entirely in light of the Apex Court’s ratio. Consequently, the matter was remitted to the AO to re-examine all aspects afresh, including applicability of s.11, s.12, s.2(15), s.13(8), & the allowability of expenditure, strictly following the Supreme Court guidelines & after granting reasonable opportunity to the Assessee.
The appeal was thus allowed for statistical purposes, with all issues restored to AO.
FULL TEXT OF THE ORDER OF ITAT DELHI
