Director of Income Tax (Exemption) Vs Ahmedabad Urban Development Authority (Gujarat High Court)
The Revenue filed a tax appeal under Section 260A of the Income Tax Act, 1961 against the Income Tax Appellate Tribunal’s order dated 09.09.2011 for Assessment Year 2008-09. The appeal raised two substantial questions of law: whether the Tribunal was justified in restoring the matter to the Assessing Officer for recomputation under Sections 11, 12 and 13, and whether the Director of Income Tax (Exemption) had rightly cancelled the assessee’s registration under Section 12AA on the ground that its activities were not charitable.
The High Court noted that the issue had already been settled by the Supreme Court in the assessee’s own case in Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority, reported in [2022] 143 Taxmann.com 278 (SC). Referring to the Supreme Court’s interpretation of Section 2(15) read with Section 10(23C), the Court reproduced the principles that statutory bodies engaged in objects of general public utility (GPU) may continue to qualify as charitable institutions even if, while pursuing their objects, they undertake activities involving trade, commerce or business, subject to the statutory conditions and prescribed limits. The Supreme Court had also held that statutory bodies in sectors such as housing development and town planning are entitled to be considered as GPU category charities, and that recovery of statutory charges, fees, rent or similar amounts does not by itself amount to trade, commerce or business.
