THE COMMISSONER OF INCOME TAX(EXEMPTIONS) vs. AHMEDABAD URBAN DEVELOPMENT AUTHORITY,

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TAXAP/301/2018HC GujaratGJHC24020422201807 August 2018Bench: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE A.Y. KOGJE4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issues involved in the present Tax Appeals are squarely covered against the Revenue by a previous decision of a Division Bench of the same Court in the case of Ahmedabad Urban Development Authority vs. Assistant Commissioner of Income Tax (Exemptions) reported in [2017] 396 ITR 323 (Guj). The Court noted that this earlier decision was carried in appeal to the Supreme Court, with a hearing fixed around July 2018. Considering the earlier Division Bench's observation that if the Supreme Court judgment was not available soon, the Court might consider the questions based on its own judgment, and given that the issues were not res integra and the Division Bench's decision was against the Department, the High Court dismissed both Tax Appeals. The Court did not decide the merits of the individual additions or the classification of receipts, as the appeals were dismissed based on the binding precedent.

What were the facts?

The Revenue has filed two Tax Appeals (R/TAX APPEAL NO. 300 of 2018 and R/TAX APPEAL NO. 301 of 2018) before the Gujarat High Court, challenging common judgments and orders passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Years 2012-13 and 2013-2014. The appeals pertain to the Ahmedabad Urban Development Authority (AUDA) as the assessee. The ITAT had allowed the appeals of the assessee, restoring issues to the Assessing Officer (AO) for re-adjudication, directing adherence to the High Court's judgment in earlier years. The Revenue's appeals raise several questions concerning the assessee's eligibility for exemption under Sections 11 and 12 of the Income Tax Act, 1961, and the classification of certain receipts.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether the Tribunal was justified in allowing the assessee's appeal and restoring issues to the AO for re-adjudication, directing adherence to the High Court's judgment for earlier years, especially when a Special Leave Petition (SLP) was pending before the Supreme Court concerning those earlier years? 2. Whether the Tribunal was justified in not appreciating that the assessee's activities are covered by the first and second provisos to Section 2(15) of the Act, thus disentitling it to exemption under Sections 11 and 12 as per Section 13(8)? 3. Whether the Tribunal was correct in not upholding the CIT(A)'s order confirming additions made by the AO, specifically: (i) Rs. 58,00,00,000/- for denying accumulation under Section 11(2); (ii) Rs. 43,26,20,000/- for denying deduction of receivables under Section 11(1) explanation clause (2); (iii) Rs. 49,17,54,150/- for denying accumulation at 15% under Section 11(1)(a)? 4. Whether the Tribunal was correct in not upholding the CIT(A)'s order directing the AO to consider certain receipts (general, drainage, EWS, water supply, township, Vambay, Gujarat Municipal Finance Board, Ministry of Urban Development funds, and premium on lease sale of plots/shops/flats) as revenue receipts? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the Tribunal erred in restoring issues to the AO, not appreciating the applicability of provisos to Section 2(15) and Section 13(8), and not upholding the CIT(A)'s additions and classification of receipts. The Revenue relied on the pendency of an SLP before the Supreme Court in earlier years.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 11(1),Section 11(1)(a),Section 11(2),Section 11,Section 12,Section 13(8)

AI-generated summary — verify with the full judgment below

C/TAXAP/300/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 300 of 2018 With R/TAX APPEAL NO. 301 of 2018 ================================================================ THE COMMISSONER OF INCOME TAX (EXEMPTIONS) Versus Ahmedabad Urban Development Authority ================================================================ Appearance: MR MM BHATT for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE A.Y. KOGJE

Date : 07/08/2018

COMMON ORAL ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, “C” passed in ITA No.1422/Ahd./2017 for the Assessment Year : 2012-13 and ITA No.1605/Ahd./2017 for the Assessment Year : 2013-2014, the Revenue has preferred the present two Tax Appeals with the following proposed questions of law :- Page 1 of 4

C/TAXAP/300/2018 ORDER “[A] Whether on facts and in circumstances of the case and in law, the Appellate Tribunal is justified in allowing the appeal of the assessee and in restoring the issues to the file of the AO for re-adjudication with direction to follow the judgment of the Hon’ble High Court in the earlier years particularly when SLP has been filed in the earlier years which are pending before the Supreme Court? [B] Whether on the facts and in the circumstances of the case in law, the Appellate Tribunal justified in not appreciating that the activities of the assessee authority are covered by first and second proviso to section 2(15) of the Act and thus not entitled to exemption u/s. 11 and 12 as per provisions of section 13(8) of the Act? [C] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal is correct in not upholding the order of the CIT(A) in confirming the following additions made by the AO :- (i) of Rs.58,00,00,000/- denying accumulation u/s.11(2) of the Act; (ii) of Rs.43,26,20,000/- denying deduction of receivables u/s.11(1) explanation clause (2); (iii) of Rs.49,17,54,150/- denying accumulation @ 15% u/s. 11(1)(a) of the Act? [D] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal is correct in not upholding the order of the CIT(A) in directing the Assessing Officer to consider the receipts shown under capital receipts (general), capital receipts (drainage), capital receipts (EWS), capital receipt (water supply), capital receipt (township), Capital receipt (Vambay), funds received from Gujarat Municipal Finance Board, funds from Ministry of Urban Development and premium on lease sale of plots/shops/flats as revenue receipts?” 2. Heard learned Senior Counsel appearing on behalf of the appellant – Revenue Mr. M.M. Bhatt. Page 2 of 4

C/TAXAP/300/2018 ORDER 3. At the outset, it is required to be noted and it is not in dispute that the issues involved in the present Tax Appeals are squarely covered against the Revenue, in view of the decision of the Division Bench of this Court in the case of Ahmedabad Urban Development Authority vs. Assistant Commissioner of Income Tax (Exemptions) reported in [2017] 396 ITR 323 (Guj). 4. Therefore, so far as this Court is concerned, these issues are concluded against the Revenue. However, it was reported that the aforesaid decision was carried in an Appeal before the Hon’ble Supreme Court and it was reported that the hearing was fixed some time in July 2018. Therefore, the earlier Division Bench of this Court adjourned the present Appeal/s to 1st AUGUST, 2018 with the observation that if by then, there is no possibility of the judgment of the Supreme Court being available in the near future, the Court might consider the question/s followed in the judgment, in the case of the very assessee / aforesaid decision. Page 3 of 4

C/TAXAP/300/2018 ORDER 5. In view of the above, and considering the observations made by the earlier Division Bench of this Court, in the order dated 12.04.2018 and as the issues involved in the present Tax Appeal/s are now not res integra and since the decision of the Division Bench of this Court is against the Department, in view of the aforesaid decision, in the case of the very assessee but with respect to different assessment years, both the Tax Appeals deserve to be dismissed and are accordingly, dismissed. Sd/- (M.R. SHAH, J) Sd/- (A.Y. KOGJE, J) CAROLINE Page 4 of 4

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