Barnala Improvement Trust, Barnala v. CIT, Patiala

ITA 387/CHANDI/2012 | misc
Pronouncement Date: 16-04-2014 | Result: Dismissed

Appeal Details

RSA Number 38721514 RSA 2012
Assessee PAN AABTB1345E
Bench Chandigarh
Appeal Number ITA 387/CHANDI/2012
Duration Of Justice 2 year(s) 14 day(s)
Appellant Barnala Improvement Trust, Barnala
Respondent CIT, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 16-04-2014
Date Of Final Hearing 02-04-2014
Next Hearing Date 02-04-2014
Assessment Year misc
Appeal Filed On 02-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.387/CHD/2012 ASSESSMENT YEAR : 2009-10 THE BARNALA IMPROVEMENT TRUST VS THE COMMISSIONE R OF 22 ACRE SCHEME INCOME TAX NEAR LIC OFFICE PATIALA BARNALA (PUNJAB). . PAN : AABTB1345E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARDEEP GOYAL RESPONDENT BY : DR.AMARVEER SINGH DATE OF HEARING : 02.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 O R D E R PER SUSHMA CHOWLA JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX PATIALA DATED 19.01.201 2 AGAINST THE ORDER PASSED UNDER SECTION 12AA(3) OF THE INCOME-TA X ACT 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : I) THE LEARNED C.I.T PATIALA HAS ERRED IN CANCELLATIO N OF REGISTRATION DULY GRANTED TO APPELLANT U/S 12AA (1) OF INCOME TAX ACT 1961 VIDE HIS OFFICE ORDER NO. CIT/PTA/TECH/12 A/2006-07/406 DATED 26/04/2006 & HAS ERRED IN INTERPRETATION OF A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WHICH SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OWING TO AMENDMENT MADE IN THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE I NCOME TAX ACT 1961 BY FINANCE ACT 2008 II) THE APPELLANT HAS MADE NO CHANGE IN THE OBJECTS OF THE TRUST SINCE REGISTRATION U/S 12AA WHICH HAS NOT BEEN CONS IDERED BY THE LEARNED COMMISSIONER OF INCOME TAX PATIALA 2 III) THE APPELLANT IS A PUBLIC SECTOR ORGANIZ ATION PERFORMING STATE FUNCTION HAVING NO PROFIT MOTIVE & IS PROVIDING PUB LIC UTILITY SERVICES TO THE SOCIETY AT A LARGE. IV) THE LEARNED CIT HAS ERRED IN INTERPRETATIO N OF LAW BY ERRONEOUSLY TREATING THE APPELLANT AS A COMMERCIAL ORGANIZATION CARRYING ON THE OBJECTS IN THE NATURE OF TRADE COM MERCE OR BUSINESS. V) THAT APPELLANT LEAVES TO ADD AMEND OR WITH DRAW ANY GROUND OF APPEAL BEFORE APPEAL IS HEARD & DISPOSED OFF. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT BY THE COMM ISSIONER OF INCOME TAX PATIALA AND WITHDRAWING THE REGISTRATIO N GRANTED UNDER SECTION 12AA(1) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT BY THE O RDER OF THE COMMISSIONER OF INCOME TAX PATIALA DATED 26.04.200 6 SUBJECT TO THE CONDITION THAT MERE GRANT OF THE REGISTRATION U NDER SECTION 12A OF THE ACT DOES NOT CONFER ANY RIGHT OR ENTITLEMENT UPON THE ASSESSEE REGARDING OPERATION OF SECTION 11 TO 13 OR ANY OTHER PROVISION OF THE INCOME TAX ACT WHICH WERE TO BE D ECIDED BY THE ASSESSING OFFICER DEPENDING UPON THE MERITS OF THE CASE AFTER EACH YEAR. THE COMMISSIONER OF INCOME TAX PATIALA NOTE D THAT THE PROVISIONS OF SECTION 2(15) OF THE ACT HAD BEEN AME NDED BY THE FINANCE ACT 2008 W.E.F. 01.04.2009 BY THE INSERTIO N OF THE PROVISO UNDER WHICH ACTIVITIES OF CERTAIN INSTITUTIONS WERE NOT TO BE CONSIDERED AS CHARITABLE IN NATURE IF IT INVOLVED C ARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINE SS. THE COMMISSIONER OF INCOME TAX FROM THE PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2008 AND 31.3.2009 NOTED THAT THE ASSESSEE WAS ENGAGED IN THE NATURE OF TRADE COMMER CE AND BUSINESS BY WAY OF AUCTIONING OF THE PROPERTIES WHICH ESTABL ISHED THE PROFIT MAKING NATURE AND MOTIVE OF THE TRUST. THE ASSESSE E WAS THUS SHOW 3 CAUSED TO EXPLAIN AS TO WHY REGISTRATION GRANTED UN DER SECTION 12AA OF THE ACT SHOULD NOT BE WITHDRAWN UNDER SECTION 12 AA(3) OF THE ACT. 5. THE PLEA OF THE ASSESSEE WAS THAT THE TRUST WAS CONSTITUTED UNDER THE PUNJAB TOWN IMPROVEMENT TRUST ACT WITH TH E PRINCIPAL OBJECT OF IMPROVEMENT OF TOWNS AND THE TRUSTS WERE EXEMPT UPTO ASSESSMENT YEAR 2002-03 UNDER SECTION 10(20A) OF TH E ACT. AFTER WITHDRAWAL OF THE SAID EXEMPTION W.E.F. ASSESSMENT YEAR 2003-04 THE ASSESSEE TRUST QUALIFIED FOR THE RELIEF UNDER S ECTION 11 OF THE ACT AS ITS OBJECTS WERE OF GENERAL PUBLIC UTILITY AND T HE ASSESSEE WAS REGISTERED AS CHARITABLE TRUST UNDER SECTION 12AA O F THE ACT VIDE ORDER DATED 26.04.2006. THE NEXT PLEA OF THE ASSESS EE BEFORE COMMISSIONER OF INCOME TAX PATIALA WAS THAT THE IM PROVEMENT TRUSTS WERE WORKING FOR THE IMPROVEMENT OF THE TOWN S BY DEVELOPING NEW COLONIES/SCHEMES FOR WHICH PURPOSE LAND WAS ACQUIRED UNDER THE LAND ACQUISITION ACT AND AFTER M AKING DEVELOPMENT PLOTS WERE SOLD TO PUBLIC AT LARGE ON CONCESSIONAL RATES AS COMPARED TO MARKET RATES. THE BUS-STANDS BUILT IN BARNALA CITY PROVIDED INFRASTRUCTURE FOR BATH-ROOMS TOILET S WAITING HALLS ETC. AND WERE TO BE UTILIZED BY THE PUBLIC AT LARGE AND ONLY NOMINAL BUS-ADDA FEE AS PRESCRIBED BY THE GOVERNMENT WAS CO LLECTED FROM THE BUSES ENTERING THEREIN. FURTHER THE PROSPECT/A PPLICATION FORMS FOR PLOTS WERE SOLD AND THE AMOUNT COLLECTIVELY SHO WN UNDER THE HEAD SALE OF FORMS. FURTHER TOWER RENT WAS RECE IVED BY ALLOWING COMPANIES SUCH AS BSNL TO INSTALL TOWERS IN THE OPE N SPACE. THE INTEREST INCOME RECEIVED FROM THE BANKS AND SAVING ACCOUNTS WAS SAID TO BE THE INCOME OF THE ASSESSEE IN ADDITION T O THE INTEREST CHARGED FROM ALLOTTEES FOR LATE PAYMENT OF THE RESP ECTIVE 4 INSTALMENTS. THE CONTENTION OF THE ASSESSEE IN THIS REGARD WAS THAT NO SINGLE BUSINESS ACTIVITY WAS BEING CARRIED ON BY THE ASSESSEE AND AMOUNT CHARGED BY IT FROM THE PUBLIC WAS ONLY FOR M EETING ITS COST AND FURTHER IMPROVEMENT OF TOWNS. 6. THE COMMISSIONER OF INCOME TAX VIDE PARA 3 & 4 O BSERVED AS UNDER : 3. THE CONTENTIONS OF THE ASSESSEE HAVE BEEN CONSI DERED BUT DO NOT MERIT ACCEPTANCE. FOR ONE NO EVIDENCE HAS BEEN FI LED THAT ALL ACTIVITIES OF THE IMPROVEMENT TRUST ARE AIMED ONLY AT PROVIDING SHELTER TO THE POOR AT COST PRICE OR PROVIDING HOUS ES/PLOTS AT COST PRICE TO THE PUBLIC AT LARGE . IT IS TRUE THAT IMPROVEMEN T TRUSTS WERE SET UP ORIGINALLY FOR PROVIDING BETTER CLEAN DWELLING PLA CES TO INHABITANTS OF A SOCIETY OR A LOCAL AREA DEVELOPING 'REBUILDING SCH EMES' AFFORDING BETTER FACILITIES FOR CONSERVANCY ETC. IN THE CARRYING ON THESE OBJECTIVES THE TRUST CONCEDES THAT THEY UNDER TAKE A VARIETY .OF A CTIVITIES AND THEIR INCOME IS DERIVED FROM DIFFERENT SOURCES INCLUDING SALE OF PLOTS THROUGH AUCTION AS WELL AS BY DRAW OF LOTS ADDA F EES TOWER FEES INTEREST INCOME FROM FUNDS MAINTAINED IN BANKS INT EREST CHANGED FROM ALLOTTEES NON CONSTRUCTION FEE ENLISTMENT F EES COMPOSITION FEES TRANSFER FEES ETC. IN FACT A MAJOR SHARE OF INCOME OF THE IMPROVEMENT TRUST IS ON ACCOUNT OF ACQUISITION OF LAND ITS DEV ELOPMENT AND SALE THROUGH AUCTION OR BY DRAW OF LOTS. IT IS COMMON KN OWLEDGE THAT AUCTION OF PLOTS FETCHES ASTRONOMICAL PRICES FOR TH E TRUST AND IS A MAJOR CONTRIBUTER TO THE KITTY OF THE TRUST. THE FA CT THAT AUCTION OF LANDS FETCHES CONSIDERABLE INCOME CAN NOT BE AND IS NOT DENIED BY THE TRUST. THERE IS A CLEAR COMMERCIAL MOTIVE IN RAISING HUGE REVENUES BY UNDERTAKING CLEARLY BUSINESS ACTIVITIES OF THIS KIN D. THE PLEA THAT THE TRUST ALSO SELLS LAND BY WAY OF DRAW OF LOTS CAN NO T GLOSS OVER THE OTHER BUSINESS ACTIVITIES OF THE TRUST INCLUDING SALE OF DEVELOPED PLOTS THROUGH AUCTION. A CURSORY GLANCE AT THE ACCO UNTS OF THE TRUST INDICATE THAT THE ASSESSEE HAS SHOWN A NET PROFIT O F RS.35 87 874/-ON A TOTAL GROSS INCOME OF RS.2 12 68 059/- IN ASSESSM ENT YEAR 2009-10. IN PERCENTAGE TERMS THIS PROFIT IS FAR BETTER THAN TH AT SHOWN BY BUILDERS AND DEVELOPERS THE CLEAR COMMERCIAL MOTIVE OF THE I MPROVEMENT TRUST CAN NOT BE DENIED CONSIDERING THE ACTIVITIES OF TH E TRUST. 4. THE CONTENTION OF THE ASSESSEE TRUST THAT TH E INCOME OF THE TRUST HAS BEEN EXEMPTED U/S 10(46) IS ALSO NOT CORRECT. T HE PROVISIONS OF SECTION 10(46) OF THE I.T.ACT 1961 HAVE BEEN REPROD UCED AS BELOW: 'ANY SPECIFIED INCOME ARISING TO A BODY OR AUTHORIT Y OR BOARD OR TRUST OR COMMISSION WHICH - (A) HAS BEEN ESTABLISHED OR CONSTITUTED BY OR UNDER A CENTRAL S TATE OR PROVINCIAL ACT OR CONSTITUTED BY THE CENTRAL GOVER NMENT OR A STATE GOVERNMENT WITH THE OBJECT OF REGULATING O R ADMINISTERING OR ANY ACTIVITY FOR THE BENEFIT OF TH E GENERAL PUBLIC; (B) IS NOT ENGAGED IN ANY COMMERCIAL ACTIVI TY; AND 5 (C) IS NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OF FICIAL GAZETTE FOR THE PURPOSES OF THIS CLAUSE. IN THIS CLAUSE OF THE ACT ALSO THE ELEMENT OF 'COMM ERCIAL ACTIVITIES' IS STRESSED TO BE CONSIDERED WHILE DECI DING ON EXEMPTION GRANTED UNDER THIS SECTION. 7. THE COMMISSIONER OF INCOME TAX PATIALA THUS HEL D THAT AS THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE TRUST WERE IN THE NATURE OF TRADE COMMERCE OR BUSINESS IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT AND WERE NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12AA OF THE ACT REGISTRATION GRANTED TO THE TRUST WAS WITHDRAWN W.E.F. 01.04.2009. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 8. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE POWERS OF THE COMMISSIONER OF INCOME TAX UNDER SECTION 12AA(3) OF THE ACT ARE LIMITED AND WHILE EXERCISING THE SAID POWERS AGAINS T ASSESSEE THE COMMISSIONER OF INCOME TAX CANNOT CANCEL THE REGIST RATION ALREADY GRANTED UNDER SECTION 12AA OF THE ACT. RELIANCE WAS PLACED UPON THE RATIO LAID DOWN IN THE DECISION OF THE CHANDIGA RH BENCH OF THE TRIBUNAL IN BABA GANDHA SINGH EDUCATION TRUST VS CI T (ITA NOS. 803/CHD/2009 AND ITA NO. 357/CHD/2010 ) ORDER DATED 29.09.2010. IT WAS POINTED OUT THAT FIRSTLY THE ASSESSEE WAS NO T CARRYING ON ANY BUSINESS ACTIVITY AND SAME ACTIVITY SINCE 1973 WAS BEING CARRIED OUT. SECONDLY THE AMENDMENT IN SECTION 2(15) OF T HE ACT COULD NOT AFFECT THE REGISTRATION ALREADY GRANTED AND HENCE T HE INCOME HAS TO BE RECOMPUTED BY THE ASSESSING OFFICER. 9. THE LD. DR FOR THE REVENUE POINTED OUT THAT WHER E THERE ARE MULTIPLE ACTIVITIES BEING CARRIED ON BY THE ASSESSE E THE COMMISSIONER OF INCOME TAX HAS POWER TO WITHDRAW TH E REGISTRATION WHERE ONE OF THE ACTIVITIES CARRIED ON BY THE ASSES SEE WAS COVERED 6 BY THE AMENDED PROVISIONS OF SECTION 2(15) OF THE A CT. RELIANCE WAS PLACED UPON THE ORDER OF THE COMMISSIONER OF INCOME TAX PATIALA PASSED UNDER SECTION 12AA(3) OF THE ACT BY THE LD. DR FOR THE REVENUE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT VIDE ORDER DATED 26.04.2006. IN VIEW OF THE AMENDE D PROVISIONS OF FINANCE ACT 2008 W.E.F. 1.4.2009 BY INSERTION OF P ROVISO TO SECTION 2(15) OF THE ACT UNDER WHICH WHERE ACTIVITIES OF C ERTAIN INSTITUTIONS INVOLVED CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS THEN THE SAME CANNOT BE CONSI DERED AS CHARITABLE IN NATURE. THE COMMISSIONER OF INCOME T AX PATIALA FROM THE PERUSAL OF THE BALANCE-SHEET FOR THE ASSES SMENT YEAR 2008- 09 AND 2009-10 NOTED THE ASSESSEE TO BE ENGAGED IN THE NATURE OF TRADE COMMERCE OR ACTIVITY AS ONE OF THE ACTIVITIE S UNDERTAKEN BY THE ASSESSEE WAS THE SALE OF PLOTS OF LAND BOTH FOR RESIDENTIAL AND COMMERCIAL PURPOSE BY THE ASSESSEE TRUST. IT WAS PURCHASING BIG CHUNKS OF LAND WHICH WERE ACQUIRED UNDER THE LAND A CQUISITION ACT AND AFTER DEVELOPING THE SAME AND IN LINE WITH THE MARKET VALUE OF THE SAID ASSET WAS SELLING THE PLOTS OF LAND CARVE D OUT BY THE ASSESSEE TO DIFFERENT PURCHASERS EITHER THROUGH AUC TION OR THROUGH DRAW OF LOTS. SUCH ACTIVITY CARRIED ON BY THE ASSE SSEE WAS HELD TO BE IN THE NATURE OF TRADE COMMERCE OR BUSINESS BY THE COMMISSIONER OF INCOME TAX PATIALA AND THE REGISTR ATION ALREADY GRANTED UNDER SECTION 12AA OF THE ACT WAS WITHDRAWN UNDER SECTION 12AA(3) OF THE ACT. 11. WE FIND THAT SIMILAR ISSUE OF WITHDRAWAL OF REG ISTRATION GRANTED UNDER SECTION 12AA OF THE ACT BY THE COMMIS SIONER OF 7 INCOME TAX IN VIEW OF THE PROVISIONS OF SECTION 12A A(3) OF THE ACT AROSE BEFORE THE TRIBUNAL IN THE IMPROVEMENT TRUST MALERKOTLA VS CIT-II LUDHIANA IN ITA NO. 380/CHD/2013 WHEREIN VI DE ORDER DATED 27.03.2014 IT WAS HELD AS UNDER : 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE TRUST HAD ORIGINALLY FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 2 5.5.2006 AND AS THE ASSESSEE WAS FOUND NOT TO HAVE FULFILLED THE CONDITIONS UNDER SECTION 2(15) OF THE ACT THE COMM ISSIONER OF INCOME TAX REJECTED THE GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE APPEAL OF THE ASSESSEE BEFORE THE TRIBUNAL WAS ALSO DISMISSED IN ITA NO. 640/CHD/2006 VIDE ORDER DATED 28.09.2007. THE HON'BLE PUNJAB & HARYA NA HIGH COURT IN VIEW OF THE ORDER PASSED IN THE CASE OF T HE IMPROVEMENT TRUST MOGA IN IT APPEAL NO. 620 OF 200 8 VIDE ORDER DATED 16.01.2009 GRANTED REGISTRATION TO THE ASSESSEE UNDER SECTION 12A OF THE ACT. PURSUANT TO THE DIRE CTIONS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT THE COMMIS SIONER OF INCOME TAX ISSUED ORDER GRANTING REGISTRATION TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT. THEREAFTER NOTICE WAS ISSUED BY THE COMMISSIONER OF INCOME TAX-II LUDHIAN A DATED 08.09.2011 COPY OF WHICH IS PLACED AT PAGES 11-12 OF THE PAPER BOOK AS TO WHY THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT SHOULD NOT BE WITHDRAWN IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT. TH E ASSESSEE CLAIMS THAT IT WAS CONSTITUTED UNDER THE PROVISIONS OF PUNJAB TOWN IMPROVEMENT TRUST ACT 1922 IN ORDER TO BRING ABOUT PLANNED DEVELOPMENTS IN THE TOWN OF MALERKOTLA BY W AY OF PROVIDING STREETS HOUSING FACILITIES OR MAKING PRO VISIONS FOR OTHER PUBLIC UTILITY SERVICES. THE ACTIVITIES ENLIS TED TO THE ASSESSEE WERE IN CONSONANCE WITH THE STATUTORY SCHE ME FORMULATED UNDER THE PUNJAB TOWN IMPROVEMENT TRUST ACT AND THE ASSESSEE CLAIMED THAT ITS OBJECTS WERE TO PROVI DE BENEFITS TO THE PUBLIC WITHIN ITS LOCAL LIMITS RATHER THAN A NY BENEFITS TO THE TRUST ITSELF. THE ASSESSEE FURTHER CLAIMED THA T IT WAS NOT CARRYING ON ANY TRADE COMMERCE OR BUSINESS AS IT W AS ACQUIRING THE LAND FROM TIME TO TIME UNDER THE ACQU ISITION ACT AND THEREAFTER THE LAND WAS UTILIZED FOR MAKING ROA DS PARKS COMMUNITY HALLS ETC. AND OUT OF THE REMAINING AREA PROVISIONS FOR SHOPS AND PLOTS WAS MADE. THE ASSESSEE ADMITS T HAT IT WAS AUCTIONING ITS PLOTS OF LAND AND COMMERCIAL AREA AT RESERVE PRICE AND THE RECEIPTS COMPRISED OF THE PROFITS BEC AUSE OF INCREASE IN THE MARKET PRICE AND ALSO ON ACCOUNT OF OTHER CHARGES RECEIVED UNDER VARIOUS SCHEMES. 9. THE ASSESSEE WAS SHOW CAUSED BY THE COMMISSIONER OF INCOME TAX-II LUDHIANA TO EXPLAIN AS TO WHY THE REG ISTRATION GRANTED UNDER SECTION 12AA OF THE ACT SHOULD NOT BE WITHDRAWN IN VIEW OF THE AMENDED PROVISIONS OF SECT ION 2(15) OF THE ACT. THE FINANCE ACT 2008 HAS INTRODUCED TH E PROVISO TO SECTION 2(15) OF THE ACT WHICH READS AS UNDER : 8 2(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR EDUCATION MEDICAL RELIEF [PRESERVATION OF ENVIRONMENT (INCLU DING WATERSHEDS FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST ] AND THE ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINE SS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COM MERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECT IVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SU CH ACTIVITY:] [ PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGR EGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS [TWENTY-FIVE LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] 10. THE ISSUE ARISING BEFORE US IS IN RELATION TO T HE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT UNDER WHICH THE PROVISO I & II ARE INTRODUCED W.E.F. 01.04.2009 AND IN CASE THE TRUST IS FOUND TO BE ENGAGED IN THE ADVANCEMENT OF ANY OT HER OBJECT OF GENERAL PUBLIC UTILITY THEN SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE FOR C HARITABLE PURPOSE WHEREIN IT INVOLVES THE CARRYING ON OF SUCH ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY AC TIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COM MERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION. THE SECOND PROVISO PROVIDES THAT THE FIRST PROVISO WOUL D NOT APPLY IF AGGREGATE VALUE OF RECEIPTS IS RS. 25 LACS OR LE SS. ADMITTEDLY IN THE CASE OF ASSESSEE THE RECEIPTS WE RE MORE THAN RS. 25 LACS. 11. WE FIND THAT SIMILAR ISSUE OF WITHDRAWAL OF REG ISTRATION UNDER SECTION 12AA(3) OF THE ACT IN THE CASE OF IMP ROVEMENT TRUST BATHINDA VS CIT BATHINDA (SUPRA) AND THE TR IBUNAL VIDE ORDER DATED 18.12.2012 HELD THE SAID IMPROVEME NT TRUST BATHINDA TO BE NOT ENGAGED IN CHARITABLE ACTIVITIES IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT AND THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT WAS WITHDRAWN BY ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT WAS UPHELD BY THE TRIBUNAL. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER : 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE WITH US AS WELL AS DECISIONS CIT ED BY LD COUNSEL FOR THE ASSESSEE ALONGWITH OTHER DOCUMENTAR Y EVIDENCES FILED BY HIM. AS PER IMPUGNED ORDER AND SUBMISSIONS OF THE ASSESSEE. THE MAIN ACTIVITIES OF THE ASSESSEE TRUST AT THAT TO PURCHASE LAND TO ENHANCE AND DEVELOP THE LAND BY CUTTING IT INTO PLOTS ETC. TO ADVERTISE FOR SALE OF PLOTS IN THE DEVELOPED LAND AND TO SELL OFF THE LAND THROUGH AUCTION MEANING THEREBY THAT THE ASSE SSEE TRUST WAS BUYING UNDEVELOPED LAND AT A LOW PRICE AN D DEVELOPED IT AND PROVIDES THE SOME BASIC FACILITIES I.E. LEVELLING AND CLEARING THE LAND CUTTING IT INTO PL OTS PROVIDING ACCESS ROADS ELECTRICITY PROVIDING WATE R AND 9 SEWERAGE FACILITIES ETC. THE ASSESSEE-TRUST ENHANCE D COST OF LAND FROM COST OF PURCHASE BY IT. THE ASSESSEE-TRUS T IS ALSO CHARGING FEES AND FINES FROM SELLING OF FORMS LAND ENHANCEMENT FEES BUILDING PLAN FEES ROAD CUTTING FEES TRANSFER FEE3S. FINE AND PENALTIES AND NON-CONSTRUC TION CHARGES AND THUS EARNING HUGE PROFITS WHICH IS CONT RARY TO THE PROVISIONS OF SECTION 2(15) OF THE ACT AMENDED W.E.F. 01.04.2009. FOR THE SAKE OF CONVENIENCE PROVISION O F SECTION 2(15) F THE ACT IS PRODUCED AS UNDER: '2(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR EDUCATION MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHAR/TABLE PURPOSE IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION O R RETENTION OF THE INCOME FROM SUCH ACTIVITY.' 7.1. KEEPING IN VIEW THE AFORESAID PROVISIONS THE CHARITABLE PURPOSE INCLUDE RELIEF TO THE POOR EDUC ATION MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IN THE PRESENT CASE WE FOU ND THAT THE ASSESSEE-TRUST IS CARRYING ON VARIOUS ACTIVITIE S IN THE NATURE OF TRADE COMMERCE OR BUSINESS AND RENDERING ITS SERVICES FOR THE PURPOSE OF TRADE COMMERCE AND BUS INESS BECAUSE AS STATED ABOVE THE ASSESSEE-TRUST IS CHAR GING HUGE FEES ON ACCOUNT OF VARIOUS FACTS AS MENTIONED ABOVE. NO DOUBT THE ASSESSEE HAS GIVEN SOME EXPLANATION F OR CHARGING FEES FOR THE AFORE-MENTIONED ACTIVITIES BY STATING THAT THE ASSESSEE-TRUST IS CHARGING FEES AS PER RUL ES FRAMED BY THE PUNJAB LOCAL BODIES GOVT. WHICH IS CLEARLY T HE ADMISSION BY THE ASSESSEE-TRUST THAT THE ASSESSEE-T RUST IS DOING ACTIVITIES NOT FOR CHARITABLE PURPOSE BUT FOR BUSINESS PURPOSE ONLY. NO DOUBT THESE PENALTIES CHARGED BY THE ASSESSEE-TRUST ARE IN THE NATURE OF COMPENSATORY BU T THAT IS NOT PERMISSIBLE FOR THE CHARITABLE INSTITUTION. SOM E OF THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE TRUST THE ID . CIT(A) HAS REPRODUCED AT PAGES 7 TO 9 OF HIS ORDER WHICH ARE REPRODUCED AS UNDER: (A) TO DEVELOP SEWERAGE IN THE CITY COSTING ABUT RS.5H. 36 CRORES VIDE RESOLUTION NO.49 DATED 05.09.2008 (WITH OUT CHARGES OR RECOVERY). (B) THE TRUST HAS RESERVED 18.27 ACRES LAND FOR BUS STA ND FOR GENERAL PUBLIC VIDE RESOLUTION NO.18 DATED 03.10.2 007 FREE OF COST). (C) LAND MEASURING J .30 ACRES FOR CIA STAFF (POLICED DEPARTMENT) VIDE RESOLUTION NO.7L DATED 12.12.2008 (FREE OF COST). (D) COMMUNITY HALL MEASURING 2000 SQ.YDS TO BE ERECTED & BUILT IN RAJIV GANDHI NAGAR GURUKUL ROAD . 10 BATHINDA. VIDE RESOLUTION NO.75 DATED 30.09.2005 (FREE OF COST). (E) THE TRUST IS TO PROVIDE SERVICE LANE 16 WIDE WITH P ARKING AND FOOTPATH. THE AMOUNT TO BE SPENT IS RS. ONE CRORE VIDE RESOLUTION NO.48 DATED 26.08.2008 (FREE OF COST). (F) THE TRUST HAS GIVEN AS CHARITY OF TOWN CLEANING MAC HINE (VACCUM MACHINE) TO THE MUNICIPAL CORPORATION BATH INDA FOR RS 64.86 LAKHS VIDE RESOLUTION NO.56 (APP. RS.T EN LACS) VIDE LETTER NO. 1.1.46 DATED 24.09.2007 (FREE OF CO ST). (G) TO PROVIDE LAND AS WELL AS CONSTRUCTION OF BUILDING FOR 14 PLOTS MEASURING 1512 S. YDS VALUING RS.45.2 LACS AN D CONSTRUCTION COST RS.64.86 LAKHS VIDE RESOLUTION NO .56 DATED 31.08.2006 AND WERE HANDED OVER TO THE POOR ( FREE OF COST). (H) TO CONSTRUCT 'ROAD DIVIDER' AND DEVELOPMENT & RENOV ATION OF GONIANA BATHINDA- MANSA - G.T.ROAD COSTING RS. 10.64 CRORE VIDE RESOLUTION NO.41 DATED 31.12.2007 (FREE OF COST). (I) DONATION OF RS. 5 LACS TO : DEAF & DUMB SCHOOL' FOR THE WELFARE OF SUCH HANDICAP STUDENTS VIDE RESOLUTION NO.81 DA TED 31.10.2005. (J) LAND FOR 'VRIDH ASHRAM (REST HOUSE FOR SENIOR CITIZENS) MEASURING 2038 SQ. YDS IN TRANSPORT NAGAR (FREE OF COST). (K) LAND MEASURING 2055 SQ.YDS LOR CHILDREN & LA DIES WELFARE ASSOCIATION IN TRANSPORT NAGAR VIDE RESOLUTION NO. 107 DATED 30.12.2005 (TREE OF COST). (L) LAND FOR 'PUBLIC HEALTH CARE CENTRE' MEASURING 1825 SQ. YDS IN KARNLA NEHRU VIDE RESOLUTION NO.23 DATED 03.06.2009. (M) CONSTRUCTION OF RS.25 LAKH FOR CONSTRUCTION O F DIVIDER & ROAD FROM 'BRIDGE TO N.F.L. CHOWK.' PAYMENT WAS MADE IN 21.11 .2001 BY CHEQUE TO PWD (B&R) FOR PUBLIC USE. (O) GRANT OF RS.1.25 LAKHS TO 'DEAF AND DUMB SCH OOL' BATHINDA VIDE RESOLUTION NO. 11 DATED 14.04.2007 FOR THE WELFARE OF SUCH HANDICAP STUDENTS. (P) LAND RESERVED FOR 'YATRI NIWAS' IN BATHIN DA NEAR TO NEW BUS STAND IN 49.5 ACRE (FREE OF COST). (Q) LAND PROVIDED FOR 'APPROACH ROAD' NEARLY 60 W IDE 382.4 SQ. MTR. CONSTRUCTION COST IS NEARLY RS.23.67 LACS APPROVED VIDE RESOLUTION NO.2L DATED 11.10.2007 (FREE OF COST). AFTER PERUSING THE AFORESAID ACTIVITIES WE ARE OF THE VIEW THAT-THE ID. APPELLATE AUTHORITY HAS RIGHTLY HELD THAT THE LAND OF THE ASS ESSEE TRUST IS THE SAME CATEGORY OF OTHER REAL ESTATE PRODUCTS AVAILABLE IN THE MARK ET OFFERED BY THE PRIVATE COLONIZERS AND REAL ESTATE AGENTS. BECAUSE THE ASS ESSEE ADVERTISED THIS VALUE ADDED PRODUCT WIDELY IN PRINT AS WELL AS ELEC TRONIC MEDIA SO AS TO ATTRACT A LARGE NUMBER OF CUSTOMERS/CLIENTS FROM AL L THE GENERAL PUBLIC INCLUDING THE FINANCIALLY SOUND PERSONS FROM THE PU BLIC. 12. THE ASSESSEE TRUST BEFORE US IS THE IMPROVEMENT TRUST MALERKOTLA AND THE FACTS OF THE PRESENT CASE ARE ID ENTICAL TO THE FACTS OF IMPROVEMENT TRUST BATHINDA WHICH IS A LSO FORMULATED UNDER THE PUNJAB TOWN IMPROVEMENT TRUST ACT. IT 11 WAS FAIRLY ADMITTED BY THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF HEARING THAT THE APPEALS IN THE CASE OF V ARIOUS IMPROVEMENT TRUSTS UNDER THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT W.E.F. 01.04.2009 WERE PENDING BEF ORE THE HON'BLE PUNJAB & HARYANA HIGH COURT. AS THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE AMRITSAR BENCH OF THE TRIBUNAL IN IMPROVEMENT TRUST BATHIND A VS CIT BATHINDA (SUPRA) AND FOLLOWING THE SAME PARITY OF R EASONING WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX I N WITHDRAWING THE REGISTRATION GRANTED TO THE ASSESSE E UNDER SECTION 12AA OF THE ACT. 13. THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN BUREAU OF INDIAN STANDARDS VS DIRECTOR GENERAL OF INCOME-TAX (EXEMPTIONS) (SUPRA). IN THE FACTS OF THE CASE BEF ORE THE HON'BLE DELHI HIGH COURT THE ASSESSEE WAS PERFORMI NG FUNCTIONS IN THE CAPACITY OF AN INSTRUMENTALITY OF THE STATE AND THE ISSUE WAS WHETHER IT WAS RENDERING SERVICES IN RELATION TO TRADE COMMERCE OR BUSINESS BY GRANTING CERTIFICATI ON/QUALITY MARKS IN RETURN OF LICENCING FEE. THE ASSESSEE THE REIN HAD CLAIMED EXEMPTION UNDER SECTION 10(23C)(4) OF THE I NCOME TAX ACT AND IT WAS HELD THAT THE ASSESSEE WAS STATUTORY BODY ESTABLISHED UNDER THE BIS ACT AND WAS BROUGHT INTO EXISTENCE FOR THE HARMONIOUS DEVELOPMENT OF THE ACTIVITIES OF STANDARDIZATION AND MARKETING AND QUALITY CERTIFICA TION OF GOODS. THE LICENCE FEE CHARGED BY THE ASSESSEE FOR SUCH ACTIVITIES WAS HELD NOT TO BE FOR THE PURPOSE OF PR OFIT AND IT WAS HELD THAT IT WAS NOT INVOLVED IN CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINE SS. HOWEVER IN THE FACTS OF THE PRESENT CASE THE ASSE SSEE WAS PURCHASING LARGE CHUNK OF LAND AND AFTER DEVELOPING THE SAME PART OF THE LAND WAS UTILIZED FOR SELLING AS PLOTS FOR RESIDENTIAL OR COMMERCIAL PURPOSES AND PROFITS WERE GENERATED OUT OF SUCH ACTIVITIES AS PER THE MARKET TRENDS AND THE SAME WAS HELD TO BE IN THE NATURE OF TRADE COMMERCE OR BUSINESS BY THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF A NOTHER IMPROVEMENT TRUST AT BATHINDA (SUPRA). AS THE FACTS OF THE ASSESSEE BEFORE US ARE IDENTICAL TO THE FACTS OF TH E CASE BEFORE THE AMRITSAR BENCH OF THE TRIBUNAL IN IMPROVEMENT T RUST BATHINDA VS CIT BATHINDA (SUPRA) THE SAME PARITY OF REASONING IS SQUARELY APPLICABLE AND THE RELIANCE P LACED UPON BY THE ASSESSEE ON THE RATIO LAID DOWN BY THE HON'B LE DELHI HIGH COURT IS MISPLACED. 14. WE FURTHER FIND THAT THE COMMISSIONER OF INCOME TAX IN THE ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT H AD RELIED UPON THE RATIO LAID DOWN BY THE AMRITSAR BENCH OF T RIBUNAL IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY (SUPRA) WH ICH HAS BEEN CONFIRMED BY THE HON'BLE JAMMU & KASHMIR HIGH COURT (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER : 1. THE INSTANT APPEAL UNDER SECTION 260- A OF THE INCOME TAX ACT 1961 (FOR BREVITY THE ACT) I S DIRECTED AGAINST ORDER DATED 14.06.2012 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL 'AMRITSAR UPHOLDING THE ORDER WITHDRAWING THE STATUS OF CHARITABLE INSTITUTION 12 GIVEN TO THE APPELLANT-ASSESSEE UNDER SECTION 12AA(L)(B)(I) OF THE ACT THE TRIBUNAL HAS REACHED A CATEGORICAL CONCLUSION THAT THE ASSESSEE-JAMMU DEVELOPMENT AUTHORITY CANNOT BE REGARDED AS AN INSTITUTION OR TRUST WHICH MAY HAVE BEEN SET UP TO ACHIEVE THE OBJECTS ENUMERATED UNDER SECTION 2 OF THE ACT PARTICULARLY IN VIEW OF THE ADDITION OF FIRST AND SECOND PROVISO MADE BY THE FINANCE ACT 2008 W.E.F 01.04.2009 TO SECTION 12 AA OF THE ACT. THERE ARE FINDINGS OF FACT THAT THE ASSESSEE-APPELLANT HAS RIOT BEEN ACTING TO ADVANCE ANY OF THE OBJECT CONCERNING GENERA] PUBLIC UTILITY. EVEN OTHE RWISE THE PROVISO WHICH HAS BEEN ADDED BY THE FINANCE ACT 20 08 W.E.F 01.04.2009 STIPULATES THAT THE ADVANCEMENT OF ANY O THER OBJECT OF THE GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OF BUSINESS OR ANY ACTIVI TY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COM MERCE OR BUSINESS OR A CESS OR FEE OR ANY OTHER CONSIDERATIO N. 2. WE FIND THAT NO QUESTION OF LAW MUCH LESS A SUBSTANTIAL QUESTION OF LAW WOULD EMERGE FROM THE IMPUGNED ORDER OF THE INCOME TAX. APPELLATE TRIBUN AL WARRANTING ADMISSION OF THE APPEAL. THE APPEAL IS WHOLLY WITHOUT MERIT AND IS THUS LIABLE TO BE DISMISSED. 3. FOR THE REASONS AFOREMENTIONED THIS APPEAL F AILS AND SAME IS DISMISSED ALONG WITH .CONNECTED APPLICATION(S). 15. IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE J AMMU & KASHMIR HIGH COURT IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY VS UNION OF INDIA & ANOTHER (SUPRA) AND A MRITSAR BENCH OF TRIBUNAL IN IMPROVEMENT TRUST BATHINDA VS CIT BATHINDA (SUPRA) WE ARE IN CONFORMITY WITH THE ORD ER OF THE COMMISSIONER OF INCOME TAX IN WITHDRAWING THE REGIS TRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE A CT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS DISMISSED . 12. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDEN TICAL TO THE ISSUE BEFORE THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE IMPROVEMENT TRUST MALERKOTLA VS CIT-II LUDHIANA (SUPRA) WHICH IN-TURN HAD FOLLOWED THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN IMPROVEMENT TRUST BATHINDA VS CIT BATHINDA (SUPRA ) AND DECISION OF THE HON'BLE HIGH COURT OF JAMMU & KASHMIR IN JA MMU DEVELOPMENT AUTHORITY VS UNION OF INDIA & ANOTHER I N ITA NO. 164/2012 CMA NO. 2/2012 VIDE JUDGEMENT DATED 07.11 .2013. FOLLOWING THE SAME PARITY OF REASONING WE UPHOLD T HE ORDER OF 13 COMMISSIONER OF INCOME TAX IN WITHDRAWING THE REGIS TRATION GRANTED UNDER SECTION 12AA OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS DISMISSED. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH APRIL 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH APRIL 2014 POONAM COPY TO: THE APPELLANT THE RESPONDENT THE CIT(A) THE CIT DR. ASSISTANT REGISTRAR ITA T CHD.