Case Law Details
CIT Vs Khurja Development Authority (Supreme Court of India)
The Supreme Court of India heard two connected appeals stemming from separate orders of the High Court of Judicature at Allahabad, dated January 12, 2015, and January 7, 2019. These appeals were filed by the Revenue under Section 260A of the Income Tax Act, 1961, challenging High Court orders that dismissed the Revenue’s appeals. The issue concerned the registration of the assessee (Khurja Development Authority) regarding its charitable purpose to avail benefits under the Act.
The High Court had dismissed the Revenue’s appeals by holding that the issue was squarely covered by earlier High Court and Tribunal decisions, specifically citing Commissioner of Income Tax vs. Lucknow Development Authority.
The counsel for the Revenue argued before the Supreme Court that the High Court had failed to examine the specific facts of the case to determine if the precedent law applied. Furthermore, they submitted that the law regarding the determinative tests to be adopted for ascertaining a charitable purpose has since been settled by a three-Judge Bench of the Supreme Court in Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority (AUDA), decided on October 19, 2022, and clarified on November 3, 2022.
Counsel for both sides agreed that the law on the issue has been settled by the AUDA decision but differed on its impact, with each side claiming the decision supports their cause.
The Supreme Court observed that the AUDA decision deals with several issues, including when an authority can be said to serve a charitable purpose. The Court found that the High Court’s impugned orders were “cryptic without elaborating the admitted factual situation,” making it impossible to apply the new law “in the abstract.”
Consequently, the Supreme Court allowed both appeals, set aside the impugned High Court orders, and restored the Revenue’s Income Tax Appeals (Defective No. 154 of 2014 and No. 550 of 2008) to the file of the High Court. The High Court was directed to reconsider the appeals in accordance with the law, including the law laid down in the AUDA decision.
The Supreme Court explicitly stated that it had not expressed any opinion on the merits of the claim of either side.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Delay condoned in Diary No.37337 of 2019 and leave granted therein.
2. Heard learned counsel for the parties.
3. These two connected appeal arise from separate order(s) of High Court of Judicature at Allahabad1dated 12th January, 2015 and 07.01.2019 passed in Income Tax Appeal Defective No.154 of 2014 and Income Tax Appeal No.550 of 2008 whereby appeal(s) of the Revenue under Section 260A of the Income Tax Act, 19612 against order(s) qua registration of the assessee regarding its charitable purpose to enable benefit(s) available under the Act were dismissed by holding that the issues raised in the appeal(s) were squarely covered by earlier decision(s) of the High Court in Commissioner of Income Tax vs. Lucknow Development Authority, (2014) 98 DTR (ALL) 193 and of the Tribunal.
4. The learned counsel for the appellant submits that High court while passing the impugned order(s) has not considered and examined the facts of the case to ascertain whether the law propounded applied to those facts. It is also submitted that now the law in respect of determinative tests to be adopted to determine the issue concerned has been settled by a three-Judge Bench decision of this Court in Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority (2023) 4 SCC 561 decided on 19.10.2022, which has been clarified vide order dated 3.11.2022 reported in (2023) 7 SCC 249.
5. Both sides counsel agree that the law has now been settled by the aforesaid decision however they differ on its impact on the present appeals because both sides claim that the decision supports their cause.
6. As we find that the decision of this Court in Ahmedabad Urban Development Authority (supra) deals with several issues including as to when an authority can be said to serve a charitable purpose whereas the impugned orders(s) in these appeals are cryptic without elaborating the admitted factual situation, in our view, the law cannot be applied in the abstract. Therefore, in our view, the High Court would have to reconsider the appeal of the Revenue by taking into consideration the decision of this Court in Ahmedabad Urban Development Authority (supra). Consequently, we allow these appeals, set aside the impugned order(s) and restore the Income Tax Appeal Defective No.154 of 2014 and Income Tax Appeal No.550 of 2008 of the Revenue on the file of the High Court for a fresh consideration in accordance with law including the law laid down by this Court in Ahmedabad Urban Development Authority (supra).
7. It is made clear that we have not expressed any opinion on the merits of the claim of either side.
8. Pending application(s), if any, shall stand disposed of.
1. Delay condoned in Diary No.37337 of 2019 and leave granted therein.
2. The appeals are allowed in terms of the signed order which is placed on the file.
3. Pending application(s), if any, shall stand disposed of.
Notes:
1 High Court
2 Act
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