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

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TAXAP/272/2020HC GujaratGJHC24039708202030 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 decision in Tax Appeal No.79 of 2020 dated 25.02.2020. Furthermore, the Court referred to its judgment in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption), reported in (2017) 396 ITR 323 (Guj.). The reasoning implies that the precedents cited by the Revenue as grounds for appeal were already addressed and decided by the High Court in favor of the assessee in similar matters. The principle established is that if the issue has been decided by a higher court or a larger bench of the same court, subsequent appeals on the same point are likely to be dismissed. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue is in appeal against an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, for Assessment Year 2013-14. The ITAT had allowed the assessee, Gandhinagar Urban Development Authority, the benefit of exemptions under Sections 11 and 12 of the Income Tax Act, 1961. The Revenue's grievance stems from the ITAT's decision to grant these exemptions, particularly concerning the assessee's alleged widespread commercial activities and the accumulation of funds. The ITAT's order was based on previous decisions of the Gujarat High Court.

What were the issues?

1. Whether, on the facts and in law, the ITAT was justified in allowing exemptions under Sections 11 & 12, considering the assessee's alleged widespread commercial activities falling under Section 2(15) of the Act, thereby disentitling it to such exemptions? 2. Whether the ITAT was justified in allowing the benefit of Section 11 by relying on decisions of the Gujarat High Court in Ahmedabad Urban Development Authority vs. ACIT and CIT vs. Gujarat Industrial Development Corporation, which were subject to further appeals before the Supreme Court? 3. Whether the ITAT was justified in allowing the benefit of accumulation of Rs. 21,14,70,257/- under Section 11(1)(2) and accumulation at 15% of Rs. 10,01,66,877/-, given that the proviso to Section 2(15) was applicable? 4. Whether the ITAT was justified in allowing the benefit of Section 11 by relying on a decision of a Co-ordinate Bench in ITA No.3621/Ahd/2015, which was not accepted by the Revenue, although no further SLP was preferred due to the quantum involved? Assessee's arguments: Not recorded in the judgment. Revenue's arguments: The assessee is involved in widespread commercial activities covered under Section 2(15), making Sections 11 & 12 exemptions impermissible. Reliance was placed on the proviso to Section 2(15). The Revenue also questioned the reliance on High Court decisions that were pending before the Supreme Court and a Co-ordinate Bench decision not accepted by the Revenue.

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/272/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 272 of 2020 ========================================================== THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus GANDHINAGAR URBAN DEVELOPMENT AUTHORITY ========================================================== Appearance: MR MR BHATT, SR. ADVOCATE WITH 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.2439/Ahd/2017 for the A.Y.2013-14. 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/272/2020 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) in TA No.423 to 425 of 2016 and CIT Vs. Gujarat Industrial Development Corporation reported in (2017) 83 Taxmann.com 366 (Gujarat) which are subject matter of further appeal before the Hon'ble Supreme Court and 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.21,14,70,257/- u/s.11(1)(2) of the Act and accumulation @15% of Rs.10,01,66,877/- 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/272/2020 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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