INCOME TAX OFFICER (EXEMPTIONS), WARD-3, BANGALORE vs. M/S. KANAKAPURA PLANNING AUTHORITY, BANGALORE

Common issue is raised in these appeals, hence, they were heard together and are being disposed of by this consolidated order. Identical grounds are raised, they read as follows:- “1. Order of the learned CIT(A) is opposed to the law and facts of the case.

2. Whether on the facts and in the circumstances of the case and in law, the CIT(A), NAFC, is right in holding that the Proviso to Sec.2(15) of the Act is not applicable in the case of the assessee without appreciating the fact that the assessing officer has made a finding that the features that are required for any business / trade activity are found prevalent in the transaction undertaken by the assessee.

Any other grounds which may arise at the time of hearing.

The brief facts of the case are as follows: The assessee is an AOP, registered u/s 12AA of the I.T.Act. It is engaged in the activities of development of infrastructural facilities. For the assessment years 2012-2013 to 2015-2016 and 2017-2018, assessments were completed by denying the benefit of exemption u/s 11 of the I.T.Act. The Assessing Officer held that the assessee is hit by proviso to section 2(15) r.w.s. 13(8) of the I.T.Act and irrespective of the fact that the assessee registration u/s 12AA of the I.T.Act is in force, it is not eligible for exemption u/s 11 of the I.T.Act (in respect of income derived to the assessee which falls under the last limb of definition of charitable purpose u/s 2(15) of the I.T.Act). The A.O. in taking the above view had also held

Aggrieved by the orders of the assessment, wherein the claim of exemption u/s 11 of the I.T.Act was denied by virtue of proviso to section 2(15) r.w.s. 13(8) of the I.T.Act, the assessee preferred appeals before the first appellate authority for assessment years 2012-2013 to 2015-2016 and 2017- 2018. The CIT(A) relying on the judgment of the Hon’ble jurisdictional High Court in the case of M/s Karnataka Industrial Area Development Board v. Addl.Director of Income Tax (Exemption) reported in (2021) 277 Taxman 36 (Kar.) and the order of the Tribunal in the case of Bangalore Development Authority (supra), decided the issue in favour of the assessee. The CIT(A) held that the assessee’s activities cannot come within the ambit of proviso to section 2(15) of the I.T.Act.

None was present on behalf of the assessee.

We have heard the learned DR and perused the material on record. On perusal of the case laws relied on by the CIT(A) for taking a decision in favour of the assessee, we find the activities of the assessee’s in the said cases and that of the assessee in the instant case are identical. The Hon’ble jurisdictional High Court in the case of M/s Karnataka Industrial Area Development Board (supra) and the order of the Bangalore Bench of the Tribunal in the case of Bangalore Development Authority (supra), had held that the assessee is not hit by the proviso to section 2(15) of the I.T.Act, and hence, cannot be denied the benefit of exemption u/s 11 of the I.T.Act. The learned DR was unable to point out any distinguishing features as regards the activities of the assessee and that of the activities of the assessee’s in the case laws relied on by the CIT(A). Therefore, we see no reason to interfere with the orders of the CIT(A) and we affirm the same as correct and in accordance with law. It is ordered accordingly.

In the result, the appeals filed by the Department are dismissed.