Income Tax Appellate Tribunal - Chandigarh
Haryana Urban Development Authority, ... vs Assessee on 10 September, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI H.L.KARWA, VICE PRESIDENT
AND MS. RANO JAIN, ACCOUNTANT MEMBER
ITA No.628/Chd/2004
(Assessment Year : 2003-04)
M/s Haryana Urban Development Vs. The C.I.T.,
Panchkula. Panchkula.
PAN: AAAAH0087M
(Appellant) (Respondent)
Appellant by : Shri A.K.Jindal
& Ms.Rattan Kaur
Respondent by : Shri Sunil Verma, DR
Date of hearing : 03.09.2015
Date of Pronouncement : 10.09.2015
O R D E R
PER RANO JAIN, A.M. :
This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax, Panchkula dated nil for assessment year 2003-04.
2. The assessee has raised following grounds of appeal:
1. That the order of Learned Commissioner of Income Tax, Panchkula is bad, illegal and against the facts & Law and deserves to be cancelled.
2. That the Commissioner of Income Tax, Panchkula has erred by not condoning the delay for filing of application u/s 12A
(a) of Income Tax Act in Form No. 10A of Income Tax Act.2
3. That the Learned Commissioner of Income Tax, Panchkula has erred by not granting registration u/s 12AA of Income Tax Act, 1961.
4. That the Learned Commissioner of Income Tax has erred by treating the appellant, at par with private colonizers.
5. That the Learned Commissioner of Income Tax, Panchkula has erred by ignoring the fact that the appellant authority was enacted under the act for the purposes of dealing and satisfying the need for housing accommodation or for the purposes of planning and development or improvement of cities, towns and village or both, therefore the object of HUDA is for advancement of general public, utility and not to earn profit.
6. That the Learned Commissioner of Income Tax, Panchkula has erred by not treating the object of HUDA as for Charitable purpose within the meaning of section 2(15) of Income Tax Act.
7. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off."
3. In substance, all the grounds raised as above are against the action of the learned Commissioner of Income Tax in rejecting the application of the assessee for grant of registration under section 12A(a) of the iia1, 1961 (in short 'the Act').
4. During the course of hearing, the learned counsel for the assessee fairly conceded that the issue is squarely covered against the assessee by the order of the Chandigarh Bench of the ITAT in the case of Punjab Urban Planning & Development Authority Vs. CIT, reported in (2006) 103 TTJ (Chd), 988, dated 1.6.2006. It was also submitted that the 3 aims and objects of the assessee being similar to that of PUDA, the registration under section 12A of the Act cannot be granted to the assessee.
5. The learned D.R. relied upon the order of the Punjab Urban Planning & Development Authority (supra) and prayed that the order of the learned Commissioner of Income Tax rejecting the application of the assessee for grant of registration under section 12A(a) of the Act may be confirmed.
6. We have heard both the parties and also perused the order in the case of PUDA (supra), as the aims and objects of PUDA are similar to the aims and objects of the assessee, the issue is squarely covered by the order of the Chandigarh Bench of the Tribunal. The relevant findings of the Tribunal are as under :
"In view of these facts and judicial pronouncements, we are supposed to see the predominant object of the assessee. If all the objects and activities actually carried out by the assessee are analysed and kept in juxtaposition with the aforesaid judicial pronouncements, we are of the view that activities of the assessee are more of commercial nature with profit-oriented intent, so rid leniency should be shown to the assessee. The Department may also get support from the decision of the Hon'ble Patna High Court as pronounced in the case of Bihar State Forest Development Corporation vs. CIT (1997) 224 ITR 757 (Pat) where the Government company was formed for promotion and development of forestry. The assessee- corporation was permitted under memorandum of association to engage in commercial activities and there was no restriction on application of money, the corporation was not held to be a charitable trust and consequently not entitled to exemption. Similar is the case in the present appeal of the assessee.4
During arguments, the learned counsel for the assessee invited our attention to the case of Maharashtra Housing & Area Development Authority wherein registration was granted. The learned CIT-Departmental Representative contended that in the case of Market Committee, the ownership remains with the committee but in the case of the assessee it goes to individual and the learned CIT was not satisfied with the explanation of the assessee. Likewise in the judicial pronouncements in New Life in Christ Evangelistic Association (NLC) vs. CIT (2001) 165 CTR (Mad) 446 : (2000) 246 ITR 532 (Mad) as relied by the assessee, it can be said that it is a religious trust, so not applicable to the present facts as the assessee is auctioning the plots on huge profits and even the Hon'ble Courts are intervening to enhance compensation on petitions filed by land owners. However, if the argument of the assessee is analysed on point of general public utility, still it can be said that commercial angle with profit motive is involved which has become predominant object of the assessee. Even if this issue is analysed as contended by the learned counsel for the assessee that application of income is not the criteria in the light of the decision of Hon'ble High Court of Allahabad in the case of Fifth Generation Education Society vs. CIT (1990) 87 CTR (All) 169 :
(1990) 185 ITR 634 (All), still we are of the view that if the objects and real situation is analysed, the objects are not of charitable nature. Almost in every activity there is a scent of commercialization/profit motive but in the charitable institution no profit motive is involved and the service is done mainly with the intent of social/religious upliftment of the masses in general. Admittedly, the assessee is doing some activities like housing/infrastructure Development and the public is also benefited but for the same the assessee has already charged in the form of hidden cost. Rather the assessee is generating income, so no charity is involved. We agree with the conclusion of the learned CIT, as contended by learned CIT-Departmental Representative, that a charitable institution provides services for charitable purposes free of cost and for no gain and are for the benefit of public at large. As we have discussed in the 5 preceding para, the assessee acquires land at nominal rates and after developing the same, the same land (is sold) on high profit which cannot be said to be a charitable activity. Even just for argument sake, under the present facts, if registration is granted, then every private colonizer will claim charity. The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the PUDA and if certain facilities like parks, community center, school are provided is not only basic requirement, rather a tool of attracting the investors wherein the hidden cost of these facilities is already included. In the absence of these facilities, normally the purchaser may not invest and the prices may be less.
In view of these facts and judicial pronouncements, we are of the view that the application of the assessee has been rightly rejected by learned CIT. The stand of the learned CIT is upheld. Appeal of the assessee is, therefore, dismissed."
7. Respectfully following the order of the Tribunal, we uphold the order of the learned Commissioner of Income Tax rejecting the application of the assessee for registration under section 12A of the Act.
8. In the result, the appeal of the assessee is dismissed Order pronounced in the open court on this 10th day of September, 2015.
Sd/- Sd/-
(H.L.KARWA) (RANO JAIN)
VICE PRESIDENT ACOUNTANT MEMBER
Dated : 10 t h September, 2015
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar, ITAT, Chandigarh 6