Ghaziabad Development Authority Vs JCIT (ITAT Delhi)
ITAT Delhi held that income derived from the property held under the trust is wholly for a charitable purpose and hence exemption under section 11 of the Income Tax Act is allowable.
Facts- The assessee is engaged in development work constituted under Uttar Pradesh Urban Planning & Development Act, 1973. The assessee has been claiming the benefits of provisions of Section 10(20A). Section 10(20A) was omitted by Finance Act, 2002. The assessee filed a return of income on 31.12.2010 declaring a total income of Rs.4,24,09,340/-.
The assessment u/s 143(3) was completed on 31.12.2010 determining a total income of Rs.4,24,09,340/. Further, the notice u/s 148 has been issued to the assessee on 14.07.2014 and the assessment has been completed on 21.03.2016.
Mainly, the assessee challenged reassessment proceedings stating that the reassessment proceedings have been initiated merely based on audit objection without application of mind and without recording his own reasons. The assessee has further challenged the assessment on account of administrative jurisdiction contending that proceedings initiated by DIT-Exemption have been completed by JCIT-Exemption without jurisdiction.
The assessee also challenged the denial of the benefit of section 11 contending that the AO has applied the amended provisions of section 2(15) which are applicable from A.Y. 2009-10 onwards. It was argued that the assessee has not been given the benefit of provisions of section 11(2) inspite of appellant having filed Form 10 regarding the accumulation of income in the stipulated time. The revenue held that the mere filing of the certificate as Form 10 does not entitle the appellant to get the benefit of section 11(2). For getting benefit u/s 11 the appellant has to have valid registration u/s 12A and should have applied the income derived under property held under trust wholly for the charitable purpose. The appellant has claimed that AO should allowed the benefit of section 11.
Conclusion- As per section 7 of the Act, the object of authority is to promote and secure the development of the area according to the plan and for that purpose authority shall have the power to acquire, hold, manage and dispose of land and other property to carry out building, engineering, mining and other operations to execute works in connection with the supply of water and electricity to dispose of sewage and to provide and maintain other services and amenities and generally to do anything necessary and expedient for such development and for purposes me dental thereto. Provided that save as provided in this act nothing contained in this act shall be construed as authorizing the disregard by the authority of any law for the time being in force. Thus the above said act authorizes the appellant to undertake any activity to fulfill the main abject of development of land in the specified area.
Since, the assessee is found to be eligible for exemption u/s 11 for all the years pre and post A.Y. 2008-09, by the orders of the Tribunal, we hold that action of the Assessing Officer denying the exemption u/s 11 cannot be supported.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeal has been filed by the assessee against the order of ld. CIT(A), Ghaziabad dated 31.01.2017.
2. Following grounds have been raised by the assessee:
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 143(3)/147 and that too without assuming jurisdiction as per law and without complying with the mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing the impugned reassessment order u/s 143(3)/147, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in denying the benefit of exemption u/s 11 & 12 of the Act and further erred in holding that assessee authority falls within the ambit of the proviso to section 2(15) read with section 13(8) of the Act, and further erred in holding that the activities of assessee authority are commercial in nature and that too in violation of principles of natural justice.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in taxing the surplus of Rs.4,48,12,14,793/- and that too by invoking section 11(4A) and further erred in denying the exemption u/s 11 & 12 as claimed by the assessee and that too by recording incorrect facts and findings and in violation of principles of natural justice, more so in the face of decision of CIT vs Jet Airways (I) Ltd. 331 ITR 236 (BHC).
5. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in taxing the surplus of Rs.4,48,12,14,793/- and denying the exemption u/s 11 & 12, is bad in law and against the facts and circumstances of the case.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making the disallowance of Rs.3,49,09,341/- on account of payment of compensation through court orders and further erred in making double disallowance in this regard and that too without providing the adequate opportunity and in violation of principles of natural justice.
7. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making the disallowance of Rs.3,49,09,341/- on account of payment of compensation through court orders, is bad in law and against the facts and circumstances of the case.
8. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making the disallowance of Rs.75,00,000/- on account of excess audit fees paid to government and further erred in making double disallowance in this regard and that too without providing the adequate opportunity and in violation of principles of natural justice.
9. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making the disallowance of Rs.75,00,000/- on account of excess audit fees paid to government, is bad in law and against the facts and circumstances of the case.
10. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in not granting the benefit of exemption u/s 11 & 12 and not quashing the impugned assessment order and additions made therein is illegal, bad in law, contrary to law and facts and beyond jurisdiction that too by recording incorrect facts and findings and the same are not sustainable on various legal and factual grounds.
11. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging the interest u/s 234A, 234B, 234C and 234D of Income Tax Act, 1961.”
3. The assessee is engaged in development work constituted under Uttar Pradesh Urban Planning & Development Act, 1973. The assessee has been claiming the benefits of provisions of Section 10(20A). Section 10(20A) was omitted by Finance Act, 2002. Thus, the A.Y. 2003-04 was the first year wherein return of income had been filed by the assessee as prior to this year. The assessee filed return of income on 31.12.2010 declaring total income of Rs.4,24,09,340/-.
4. From the record, we find that the assessment u/s 143(3) was completed on 31.12.2010 determining total income of Rs.4,24,09,340/-. Further, the notice u/s 148 has been issued on the assessee on 14.07.2014 and assessment has been completed 21.03.2016.
5. The pertinent facts are as under:
