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4. We have considered the facts and reasoning given in the Assessee's Application for condonation of delay. In view of the explanation given by the Assessee, which is found to be justified, the delay of 34 days in filing the Appeal is condoned, the Assessee having been prevented by a reasonable cause from filing the appeal in time.

5. The facts of the case are that during the assessment proceedings, the Assessing Officer asked the Assessee-trust to explain its activities during the year, which resulted in income, and to explain ITA No.273 /Chd/2020- Improvement Trust, Sangrur how these activities were charitable in nature. The Assessee submitted that the objects / activities of the trust were to bring about improvement in the town of Sangrur by providing streets, housing facilities, development of parks, development of roads and other infrastructures, providing drinking water, etc., and that all these activities are charitable in nature. Vide notice dated 22.11.2018, issued u/s 143(1) of the Income Tax Act, 1961 (hereinafter called also 'the I.T. Act' or 'the Act'), the Assessee was asked to show cause as to why exemption under sections 11 and 12 of the I.T. Act be not disallowed. In the notice, it was stated that it had been observed that the Assessee had earned income from sale of land, non-construction fee, transfer fee, penal rent, compounding fee, etc.; that the trust was mainly doing the work of sale of plots, SCOs, SCFs, booths, other commercial and residential places, etc., at market rates, and of development of land; that the Assessee buys land at nominal cost, develops it, cuts it into small plots and sells it at a much higher price in order to earn profits; that these activities of the trust are in the nature of trade, commerce or business and are similar to the activities of a builder operating on commercial lines and cannot be construed as charitable activities; and that in order to qualify for claiming deduction u/ss 11 and 12 of the I.T. Act, for carrying out the charitable work of 'general public utility', the trust must fulfill the conditions laid down in the proviso to section 2(15) of the I.T. Act.

21. The Hon'ble High Court was deciding the substantial question of law as to whether benefit of section 11 of the Income Tax Act should be granted to the Assessee Improvement Trust, Moga, for assessment year 2011-12, in view of the proviso to section 2(15) of the Act. Their Lordships made it clear (page 603, placitum 71 of the Report), that it was not necessary in the appeals before them to decide the effect of the amendment to section 2(15) introduced with effect from 1.4.2016. It is this which is of paramount importance here, as the year under consideration before us is assessment year 2016-17. The Revenue has maintained that the proviso to section 2(15) of the I.T. Act specifically bars any activity of rendering any service for a cess or fee or any other consideration; that this, irrespective of the application and use of the income generated therefrom, meaning thereby, that such receipts, if any are being utilised for a charitable purpose, they would not come within the purview of exempt income; that in this regard, it is also pertinent that section 13(8) of the I.T. Act states that if the provisions of section 2(15) become applicable, any income u/ss 11 & 12 will not be excluded from the total income; that the aggregate receipts of the Assessee trust from the activities of sale of plots, commercial booths, transfer fee, non-construction fee and penal interest, etc., exceed 20% ITA No.273 /Chd/2020- Improvement Trust, Sangrur of the total receipts; that therefore, the proviso to section 2(15), as brought in w.e.f. 1.4.2016, is applicable to the year under consideration; that even if for the sake of argument, it were to be considered that the activities of the trust fall under the residuary clause of 'general public utility', the commercial income from such activities is not be excluded from the total income in the light of the second proviso to section 2(15), but is subjected to the limit of the quantum of the proceeds, as prescribed, in keeping with the decision of the Chandigarh Bench of the Tribunal in the case of 'M/s Chandigarh Lawn Tennis Association' rendered in ITA No. 1382/Chd/2016, for assessment year 2013-14; that since the decision of the Hon'ble Punjab & Haryana High Court in the case of 'Moga Improvement Trust' 308 ITR 361 (PH) (supra) was delivered on 31.10.2008 much after the amendment to section 2(15) and in view of the amended provisions, the said decision is not applicable; that the Finance Act, 2008, w.e.f. 1.4.2009, has excluded any trade, commerce or business related activities by any trust engaged in the advancement of any object of general public utility from the purview of the definition of 'charitable purpose' u/s 2(15) of the I.T. Act; that thus, the carrying on any activity in the nature of trade, commerce or business in pursuit to object (vi) cannot be considered as charitable in nature, if the receipt from such activity exceeds rupees ten lakhs per annum; that in 'Chandigarh Lawn Tennis Association', the Tribunal ITA No.273 /Chd/2020- Improvement Trust, Sangrur has held that whether the activity is in in the nature of trade, commerce or business will also depend on the volume of such activity and the nature and volume of receipts therefrom; that as per the submission of the Assessee trust, the Departmental appeal was dismissed by the Hon'ble High Court on 23.12.2016 relying on its own order in the case of 'Moga Improvement Trust'; that in that case, the Hon'ble High Court followed the decision of the Hon'ble Supreme Court in the case of 'CIT Vs. Gujarat Maritime Board', 295 ITR 561 (SC), wherein, the expression 'any other object of general public utility' was explained to include all objects which promote welfare of the general public; that the Hon'ble High Court, vide order dated 31.10.2003, held that the Assessee was carrying out objects of general public utility; that the said decision is inapplicable since it was pronounced based on facts as existed and were presented before the Hon'ble High Court at that point of time, since there are findings that the Assessee was not doing any charitable activity, and since now there is an amendment to section 2(15), whereby all entities doing activity in the nature of business, trade or commerce, would be taxable; that further against judgement dated 23.12.2016, given by the Hon'ble High Court in ITA No. 147/2016, in the case of 'M/s Improvement Trust Moga' an SLP has been preferred by the Department, which is yet to be decided, meaning thereby, that the issue has not yet attained finality; and that the activities carried out ITA No.273 /Chd/2020- Improvement Trust, Sangrur by the Assessee trust, by way of construction of flats and commercial booths, sale of plots, construction of colonies, building of shops, etc., are not at all covered under 'charitable purpose' within the meaning of section 2(15) of the I.T. Act, and no such activity is related with public welfare.

47. It was noted that in 'Addl. CIT v. Surat Art Silk Cloth Manufacturers Association' 121 ITR 1 (SC), the Hon'ble Supreme Court has held: that the test to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit; that where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would ITA No.273 /Chd/2020- Improvement Trust, Sangrur cease to be a charitable purpose and not to earn profit, it would lose its character of a charitable purpose merely because some profit arises from the activity; that the test of dominant object of an entity would be relevant to determine whether the entity is carrying on business or not; and that although it is not essential that an activity be carried on for profit motive in order to be considered as business, but existence of profit motive would be a vital indicator in determining whether an organisation is carrying on business or not.

68. The matter was carried before the Hon'ble Supreme Court by way of appeal by the Department. We will note here, briefly, the rival contentions relevant to the case of the present Assessee as raised before the Hon'ble Supreme Court.

69. It was contended on behalf of the Department that statutory corporations, agencies, boards and authorities may trace their origins to specific Central or State laws; that however, if their activities are akin to or "in the nature of" business, or trade, or they provide services to businesses or trade, for consideration, fee or even cess (since they may be enabled to do so by law), they have to fulfill the mandate and restrictions under Section 2(15), especially proviso (ii); that as per the decision of the Hon'ble Supreme Court in 'New Delhi Municipal Council v. State of Punjab', ["NDMC", for short], (1997) 7 SCC 339, state entities are not exempt from Union taxation, if they engage in trade or business; that the effect of proviso (i) to Section 2 (15) is that there can be no question of any incidental activity, nor can the proceeds of trade claim to be exempt merely because they are ITA No.273 /Chd/2020- Improvement Trust, Sangrur ploughed back to feed the charitable object; that in keeping with 'Adityapur Industrial Area Development Authority v. Union of India', [2006] 283 ITR 97 (SC), there is no constitutional immunity from taxation for the State, because by Article 289(2) of the Constitution, even State or its instrumentalities/agencies are not immune from taxation if they carry on trade or business; that in the light of Article 289(2), there is no constitutional bar for the States (or the Union) to engage or carry on trade or business, and Article 289 allows the Parliament to impose taxes on such trade or business; that the ratio in 'NDMC' (supra) has to be read in the light of the provisions, and the judgment of the Hon'ble Supreme Court, rendered in 'Shri Ramtanu Cooperative Housing Society Ltd. Vs. State of Maharashtra', [1970] 3 SCC 323 should, in turn, be read in the light of 'NDMC'; that the decisive factor, therefore, is not the status of the entity, but the nature of activity carried on by it; that if the nature of the activity is trade or business with a profit motive, then the same can be taxed even if it is carried on by the State or its instrumentalities; and that Article 289 of the Constitution does not grant absolute immunity from taxation. It was contended that the validity of the amendment can be tested especially in the case of exclusions or exemptions on limited grounds, i.e., invalidity, arbitrariness, unreasonableness and discrimination; and in no case under any such ground stood made out by the Assessees; that referring to 'Trustees of the Tribune, In re v. CIT', ITA No.273 /Chd/2020- Improvement Trust, Sangrur [1939] 7 ITR 415 (PC) and 'All India Spinners' Association v. CIT', [1944] 12 ITR 482 (PC), "general public utility" is only a statutory creation so as to form part of charitable purposes and it can always be given a statutory import by subjecting it to conditions and limitations prescribed under section 2(15), at different points of time; that in other words, "general public utility" can always be regulated or modulated through statutory prescriptions, conditions, and limitations while granting an exemption from taxation; that exclusions are not based on mere objects of a trust, but on whether the purpose of the trust is "advancement of any other object of general public utility"; that therefore, it cannot be said that one has to look only at the objects to determine if it constitutes charitable purposes for section 2(15) of the I.T. Act. It was contended that the reference to the terms "business, trade or commerce" and "service in relation to" such activities are meant to imply that profit motive should be completely absent.