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

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TAXAP/79/2020HC GujaratGJHC24009654202025 February 2020Bench: HONOURABLE MR. JUSTICE J.B.PARDIWALA,HONOURABLE MR. JUSTICE BHARGAV D. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that all three questions of law proposed by the Revenue were squarely covered by a previous decision of the same Court in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption), reported in (2017) 396 ITR 323 (Guj.). Consequently, the Court found that none of the questions of law raised by the Revenue were res integra (undecided). The reasoning was that the issue of whether an urban development authority's activities qualify for exemption under Sections 11 and 12, and the reliance on precedents, had already been authoritatively decided by the High Court. Therefore, the Tribunal's order allowing the exemption was upheld. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax (Exemptions), filed an appeal before the High Court of Gujarat against an order dated July 23, 2019, passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'C'. The appeal pertains to Assessment Year 2011-12 and challenges the ITAT's decision to allow the benefit of exemptions under Sections 11 and 12 of the Income Tax Act to the assessee, Gandhinagar Urban Development Authority. The dispute centers on whether the assessee's activities, described as widespread commercial activities in nature of business, fall within the ambit of Section 2(15) of the Act, thereby disqualifying it from claiming exemptions under Sections 11 and 12.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in allowing the benefit of exemptions under Sections 11 & 12 of the Act without considering that the assessee is involved in widespread commercial activities in nature of business and its activity is covered under Section 2(15) of the Act, thus making the exemption not allowable? Assessee's Contention: Not recorded. Revenue's Contention: The assessee is involved in widespread commercial activities which fall under Section 2(15) of the Act, disentitling it from claiming exemptions under Sections 11 & 12. The Tribunal erred in allowing the exemption. 2. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal is justified in allowing the benefit of Section 11 of the Act relying on the decisions of the Hon'ble High Court in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption) and CIT vs. Gujarat Industrial Development Corporation, subject matter of further appeal before the Hon'ble Supreme Court which are pending? Assessee's Contention: Not recorded. Revenue's Contention: The Tribunal's reliance on the Gujarat High Court decisions in Ahmedabad Urban Development Authority and Gujarat Industrial Development Corporation, which are pending appeal before the Supreme Court, is unjustified. 3. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal, in allowing the benefit of Section 11 of the Act, was justified in relying on the decision of a Coordinate Bench of Ahmedabad in ITA No.2751/Ahd/2014, which has not been accepted, though further appeal was not preferred on account of the quantum of tax involved? Assessee's Contention: Not recorded. Revenue's Contention: The Tribunal's reliance on a coordinate bench decision which was not accepted by the revenue, even though no further appeal was filed due to low tax effect, is unjustified.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 2(15)

AI-generated summary — verify with the full judgment below

C/TAXAP/79/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 79 of 2020 ================================================================ THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) Versus GANDHINAGAR URBAN DEVELOPMENT AUTHORITY ================================================================ Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 25/02/2020

ORAL ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. The Revenue is in appeal against the order passed by the Income Tax Appellate Tribunal, Ahmedabad, Bench 'C', Ahmedabad dated 23rd July, 2019 passed in the ITA No.3621/Ahd/2015 for the A.Y.2011-12. 2. The Revenue has proposed the following questions of law for the consideration of this Court; “(A) Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal was justified in allowing the benefit of exemptions u/s.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 thus exemption u/s.11 & 12 of the Act is not allowable to the assessee? (B) Whether on the facts and in the circumstances of Page 1 of 2

C/TAXAP/79/2020 ORDER the case and in law, the Hon'ble Tribunal is justified in allowing benefit of section 11 of the Act relying on the decisions of Hon. High Court in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption) in TA No.423 of 2016 and CIT vs. Gujarat Industrial Development Corporation reported in (2017) 83 Taxmann.com 366 (Gujarat) subject matter of further appeal before the Hon. Supreme Court which are pending? (C ) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal in allowing benefit of section 11 of the Act relying on the decision of Coordinate Bench of Ahmedabad in ITA No.2751/Ahd/2014 which has not been accepted, though further appeal was not preferred on account of the quantum of tax involved?” 3. All the three aforesaid questions of law, as proposed by the Revenue, are squarely covered by a decision of this Court in the case of Ahmedabad Urban Development Authority vs. ACIT (Exemption), 2017 396 ITR 323 (Guj.). 4. In view of the aforesaid, none of the questions of law, as proposed by the Revenue, are res integra. 5. In the result, the appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) Vahid Page 2 of 2

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