DCIT Vs Kanpur Development Authority (ITAT Delhi)
Development Authority Entitled to Section 11 Exemption – Infrastructure Fund & AwasBandhu Contribution Held Non-Taxable
The Delhi ITAT dismissed the Revenue’s appeal and upheld the CIT(A)’s order granting full relief to Kanpur Development Authority. The Tribunal held that the Authority continued to qualify as a charitable institution under Section 2(15) and was entitled to exemption under Sections 11 and 12, notwithstanding its activities of development and sale of properties. Relying on the Supreme Court decision in Ahmedabad Urban Development Authority and consistent earlier orders in the assessee’s own case, the Tribunal ruled that the proviso to Section 2(15) was not attracted and the surplus could not be taxed as business income.
The Tribunal further held that amounts earmarked for the Infrastructure Fund were not taxable as income since the Authority merely acted as a nodal agency and the funds stood diverted by overriding title for specified governmental purposes. Likewise, the contribution paid to AwasBandhu, a statutory body of the U.P. Government, was held allowable as application of income and not disallowable. In absence of any contrary precedent or distinguishing facts, the Revenue’s grounds were rejected in entirety and the appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
