THE COMMISSIONER OF INCOME TAX vs. GUJARAT INDUSTRIES DEVELOPMENT CORP. LTD.

C/TAXAP/1060/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1060 of 2018 ========================================================== THE COMMISSIONER OF INCOME TAX Versus GUJARAT INDUSTRIES DEVELOPMENT CORP. LTD. ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 27/08/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   23.03.2018 raising following questions for our consideration: “[A] Whether   on   the   facts   and   in   the circumstances   of   the   case,   and   in   law,   the Appellate   Tribunal   is   in   interpreting   the provisions of section 2(15) of the Act that the assessee   trust's   activities   do   not   fall   under the last limb of section 2(15) i.e.“ advancement of general public utility?” [B] Whether,   on   the   facts   and   in   the circumstances   of   the   case,   and   in   law,   the Appellate   Tribunal   is   in   directing   to   allow depreciation on roads of Rs.11,18,20,000/­? [C] Whether   on   the   facts   and   in   the circumstances   of   the   case,   and   in   law,   the Appellate  Tribunal  is In  deleting  disallowance made u/s.40(a)(ia) of Rs.55,08,286/­ considering that income is required to be computed u/s.11(1) (a) of the Act?” Page 1 of 4

C/TAXAP/1060/2018 ORDER 2. The issue pertains to assessment year 2008­09. The   respondent   assessee   is   Gujarat   Industrial Development Corporation Limited ('GIDC' for short). GIDC is constituted under the State Act which is also registered under section 12AA of the  the Income Tax Act, 1961 ('the Act' for short) which is enacted and is carrying on the business of acquiring land within the   State   of   Gujarat   for   industrial   purposes   and developing industrial estates constructing sheds and housing quarters and transferring facilities to the various   industries   after   creating   infrastructural facilities such as roads, streetlights, water supply, effluent   disposal,   storm   water   drainage   etc. Principally two issues arise in the present appeal out   of   the   impugned   judgment   of   the   Income   Tax Appellate Tribunal ('the Tribunal' for short).  First is, whether the activities of the respondent assessee can   be   said   to   be   falling   within   the   expression “advancement   of   general   public   utility”.     Second issue is whether the subsidies provided by GIDC as corpus fund for the purpose of disbursement of funds to the other agencies implementing the schemes for specific   performances   who   also   form   part   of   the Page 2 of 4

C/TAXAP/1060/2018 ORDER corpus and hence, gathered under the provisions of section 11(1)(d) of the Act. 3. The first issue referred to above is covered by the judgment of the Division Bench of this Court in case   of  Commissioner   of   Income­tax   v.   Gujarat Industrial   Development   Corporation reported   in [2017] 83 taxmann.com 366 (Gujarat),  in which, the Court made following observations: “14. As per the statement and object of GIDC Act, 1962,  it has been enacted for securing the   orderly   establishment   and   organization of   industries   in   industrial   areas   and industrial   estates   in   the   State  of   Gujarat and   for   the   purpose   of   establishing commercial   centres   in   connection   with   the establishment   and   organization   of   such industries   and   for   that   purpose,   to establish

Industrial

Development Corporation, and for purposes connected with the aforesaid matters. 15.   It   cannot   be   said   that   the   activities carried out by the assessee can be said to be for “advancement of any other object of general   public   utility”.   Considering   the object   and   purpose   for   which   the   assessee has been established under the provisions of the   Act   and   the   activities   carried   out   by the   assessee,   it   cannot   be   said   that   the activities   carried   out   by   the   assessee   can be said to be either in the nature of trade, commerce   or   business,   or   rendering   any services in relation to any trade, commerce or business for a Cess or Fee or any other consideration   so   as   to   attract   proviso   to Section 2[15] of the IT Act.” Page 3 of 4

C/TAXAP/1060/2018 ORDER 4. The   second   issue   has   been   discussed   by   the Tribunal at some length.  The Tribunal observed that income from properties held under Trust would have to   be   arrived   at   in   normally   commercial   manner without   classification   under   various   heads   stated out   in   section   14   of   the   Act.     The   expression “income” has to be understood in popular or general sense.  The Tribunal relied on the judgment of this Court in case of Commissioner of Income­Tax v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust reported in 198 ITR 598.   The view taken by the High Court in the said judgment is approved by the Supreme Court in case of  Commissioner of Income­Tax v. Rajasthan and   Gujarati   Charitable   Foundation reported   in [2018] 402 ITR 441 (SC). 5. In the result, we do not find any question of law arises.  Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 4 of 4