THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. GANDHINAGAR URBAN DEVELOPMENT AUTHORITY

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TAXAP/271/2020HC GujaratGJHC24039711202030 September 2020Bench: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH,HONOURABLE MR. JUSTICE J.B.PARDIWALA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that all the substantial questions of law proposed by the Revenue were no longer res integra. The Court found that these questions were squarely covered by its own previous judgment in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption), reported in 396 ITR 323 (Guj.). Consequently, the Court dismissed the appeal. The reasoning was that the established precedent from this High Court directly addressed the issues raised by the Revenue regarding the applicability of Sections 11 and 12 of the Act in light of Section 2(15) and the reliance on prior judicial pronouncements. The ratio decidendi is that if a specific issue has been authoritatively decided by the jurisdictional High Court, subsequent appeals raising the same points will be dismissed as covered by that precedent, irrespective of pending challenges to related decisions before the Supreme Court.

What were the facts?

The Revenue, Commissioner of Income Tax (Exemptions), filed this Tax Appeal against an order of the Income Tax Appellate Tribunal, "B" Bench, Ahmedabad, for Assessment Year 2012-13. The appeal challenges the Tribunal's decision to allow the assessee, Gandhinagar Urban Development Authority, the benefit of exemptions under Sections 11 and 12 of the Income Tax Act, 1961. The Revenue contends that the assessee is engaged in widespread commercial activities, falling under Section 2(15) of the Act, thereby disqualifying it from these exemptions. The dispute centers on the applicability of exemptions despite alleged business-like activities and the reliance by the Tribunal on certain High Court decisions that were under challenge before the Supreme Court.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was justified in allowing exemptions under Sections 11 & 12 of the Act, considering the assessee's alleged widespread commercial activities falling under Section 2(15) of the Act. 2. Whether the Tribunal was justified in allowing the benefit of Section 11 of the Act by relying on decisions in Ahmedabad Urban Development Authority Vs. ACIT (Exemption) and CIT Vs Gujarat Industrial Development Corporation, despite these decisions being challenged before the Supreme Court via pending SLPs. 3. Whether the Tribunal was justified in allowing the benefit of accumulation of Rs.18,65,00,000/- under Section 11(1)(2) and accumulation @15% of Rs.5,91,67,533/-, given that the proviso to Section 2(15) is applicable. 4. Whether the Tribunal was justified in allowing the benefit of Section 11 of the Act by relying on a co-ordinate bench decision in ITA No.3621/Ahd/2015, which was not accepted by the Revenue. Assessee's arguments are not recorded. The Revenue argued that the assessee's commercial activities disqualify it from exemptions under Sections 11 & 12 due to Section 2(15). It also argued that reliance on High Court decisions under challenge before the Supreme Court was inappropriate. The Revenue further contended that accumulation benefits under Section 11(1)(2) should not be allowed if Section 2(15) applies, and that a co-ordinate bench decision not accepted by the Revenue should not be followed.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 2(15),Section 11(1)(2)

AI-generated summary — verify with the full judgment below

C/TAXAP/271/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 271 of 2020 ========================================================== THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus GANDHINAGAR URBAN DEVELOPMENT AUTHORITY ========================================================== Appearance: MR MR BHATT, SR. ADVOCATE MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA

Date : 30/09/2020

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 This Tax Appeal is at the instance of the Revenue, being dissatisfied with the order passed by the Income Tax Appellate Tribunal, “B” Bench, Ahmedabad, in the ITA No.2438/Ahd/2017 for the A.Y.2012-13. 2 The Revenue has proposed the following substantial questions of law for the consideration of this Court: “[A] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in allowing the benefit of exemptions under sections 11 & 12 of the Act without considering the fact that the assessee is involved in widespread commercial activities in nature of business and the activity of the assessee is covered under the provisions of section 2(15) of the Act and us, exemption u/s. 11 & 12 of the Act is not allowable to the assessee? Page 1 of 3

C/TAXAP/271/2020 ORDER [B] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in allowing benefit of section 11 of the Act relying on the decisions of this Hon’ble Court in the case of Ahmedabad Urban Development Authority Vs. ACIT (Exemption) reported in 396 ITR 323 and CIT Vs Gujarat Industrial Development Corporation reported in (2017) 83 Taxmann.com 366 (Gujarat) despite the said decisions are challenged before Hon. Supreme Court by way of SLPs which are pending? [C] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in allowing benefit of accumulation of Rs.18,65,00,000/- u/s.11(1)(2) of the Act and accumulation @15% of Rs.5,91,67,533/- without appreciating the fact that once the proviso to section 1 & 2 to section 2(15) is applicable, the benefit u/s.11 and 12 of the Act cannot be allowed to the assessee? [D] Whether on the facts and circumstances of the case and in law, the Hon’ble Tribunal in allowing benefit of section 11 of the Act relying on the decision Co-ordinate Bench of Ahmedabad in ITA No.3621/Ahd/2015 which has not been accepted, though further SLP was not preferred on account of the quantum of tax involved?” 3 We have heard Mr. M.R.Bhatt, the learned Senior Counsel assisted by Mrs. Mauna Bhatt, the learned Senior Standing Counsel appearing for the Revenue and have perused the materials on record. The questions proposed Page 2 of 3

C/TAXAP/271/2020 ORDER by the Revenue are no longer res integra in view of the judgment of this very Court rendered in the Tax Appeal No.79 of 2020 dated 25.02.2020. All the questions proposed are squarely covered by the decision rendered in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption), 2017 396 ITR 323 (Guj.). 3 In the result, the Appeal fails and is hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) A. B. VAGHELA/P.SUBRAHMANYAM Page 3 of 3

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