Case Law Details
Brief Facts of the Case
The assessee was granted registration u/s 12AA of the Income Tax Act, 1961 w.e.f 1/4/2003. The A.O examined the eligibility of the assessee for exemption as per section 11 of the income tax Act, 1961. The A.O observed that income of the assessee does not fall u/s 11(1) (a) (b) or (C). It has been further observed by the A.O that the provisions of the Section 11 (1) (d) and 12(1) are also not applicable to the income shown by the assessee. The A.O has also observed that during the year under consideration the activities of the assessee were not found to be in conformity with its object. The activities of the assessee during the year under consideration are to purchase/acquires land and sale them after making development thereon. It has also constructed house/flats/shops etc. on such plots and sold the same at marketable competitive price. Prima facie such activities appear to be commercial activities akin to those carried out by the property dealers, Builders and Developers. Reliance was also placed on the decision of the Hon’ble Supreme Court in the case of M/s Safdurjung Enclave Education Society Vs. Municipal Corporation Delhi (1992) 3 SCC 390, in which it has been held that the activities run on commercial lines do not fall within the ambit of charitable object. Assessment in this case was completed u/s 143(3) of Income Tax Act, 1961 vide Assessment Order dated 13/12/2011 on a total income of Rs.19,69,28,030.00 as against returned Nil Income.
Held by CIT (A)
The assessee filed appeal before the CIT(A) against the assessment order. The CIT(A) held that the status of the assessee in the earlier years was accepted as a charitable trust having income eligible for exemption u/s 11 of the Act and there was no change in the facts and circumstance of the cases during the year under consideration. The CIT(A) further observed that the A.O has never denied the fact that the assessee is registered u/s 12AA of the Income Tax Act. The CIT(A) partly allowed the appeal of the assessee vide instant order.
Contention of the Appellant/Assessee
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