DELHI STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD.,NEW DELHI vs. DCIT, CIRCLE-7(1), NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWALAssessment Year: 2013-14
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2013-14, arises against the Commissioner of Income Tax (Appeals)-34 [in short, the “CIT(A)”], New Delhi’s order dated 31.08.2018 passed in case no 208/16-17, involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
2. Heard both the parties. Case file perused.
Assessee by Sh. Shobit Kansal, CA
Department by Sh. Rajesh Kumar Dhanesta, Sr. DR
Date of hearing
23.04.2025
Date of pronouncement
23.04.2025
2 | P a g e
Coming to the assessee’s sole substantive ground claiming section 10(46) exemption of Rs.61,96,00,000/- disallowed in the course of assessment framed by the Assessing Officer on 29th March, 2016; it emerges that the learned CIT(A) has upheld the same in the following preliminary terms: “6. Grounds of appeal no. 1(i) to 1(iii) are against the disallowance of exemption claimed u/s 10(46) of the Income Tax Act, 1961 amounting to Rs. 61,96,00,000/-, made by the AO.
1. The appellant is a State Government Corporation engaged in the activities of industrial development of National capital Region of Delhi.
2. Briefly stated the facts involved in the issue under consideration are that AO has disallowed claim of exemption u/s 10(46) of the Income Tax Act, 1961 amounting to Rs.61,96,00,000/-.
3. Against the disallowances made by AO, the appellant's AR has submitted that it has duly applied for notification before Central Government and same is awaited. The assessee is eligible for claiming exemption u/s 10(46) and accordingly exemption should have been allowed on provisional basis. It has been submitted
4. I have carefully gone through the findings of AO as well as the written submissions.
4.1. The, provisions of sec. 10(46) are extracted hereunder:-
Sec. 10(46) any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called) which-
(a) has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State
Government, with the object of regulating or administering any activity for the benefit of the general public,
(b) is not engaged in any commercial activity; and (c) is notified by the Central Government in the Official Gazette for the purposes of this clause.
Explanation. For the purposes of this clause, "specified income" means the income, of the nature and to the extent arising to a body or authority
3 | P a g e or Board or Trust or Commission (by whatever name called) referred to in this clause, which the Central Government may, by notification in the Official Gazette, specify in this behalf:
4.2. In the written submissions, appellant's AR has submitted that the appellant has claimed the exemption u/s. 10(46) in respect of various activities carried out for the benefit of general public and also applied for issue of notification by Central Government. In view of above position, the claim of exemption is in accordance with provisions of sec. 10(46) of I.T Act, 1961. It has been subimmted that:.
The appellant is a State Government Corporation.
It has been established with the object of regulating and administering various activities for the benefit of general public under direction, control and supervision of State Government.
The appellant has duly applied to Central Government for issue of notification as required u/s. 10(46) of I.T. Act, 1961. 6.4.3. It has also been submitted/clarified in the submissions that the appellant has not claimed benefit u/s. 10(46) in respect of sale of liquor. AR has submitted that even otherwise, the sale of liquor is on behalf of State Government and appellant is only a regulating agency, that the appellant has no profit motive and only working for development of infrastructure of State for benefit of general public and as such appellant is fully covered by provisions of sec. 10(46) of I.T. Act, 1961. 6.4.4. In the written submissions, appellant's AR has also submitted that that in para 4.2 and 4.3 of the assessment order, AO has given reference tp the replies submitted by the appellant before AO.
2 Vide reply dtd. 18.03.2016 the assesse has furnished its submission, the relevant extract of which is as follows:-
"This is with reference to your letter dated 16.03.2016 u/s. 143(3) to process scrutiny assessment and asked to furnish the information u/s.
142(1) regarding claim of deduction u/s. 801A(4) in the F.Y. 2012-13 (Α.Υ.
2013-14. In this connection, it is stated that during the A.Y. 2013-14
neither our corporation claimed deduction u/s. 801A(4) nor filed 10CCB report of Chartered Accountant in support of claim. During the year our corporation claimed exempt u/s. 10(46) due to our authority status. As act passed by Delhi State Assembly namely, "The Delhi Industrial
Development Operation and Maintenance Act, 2010 notified on 28.03.2011. Section 10(46) was notified in the F.Y. 2012-13 accordingly, our corporation had applied in CBDT (Ministry of Finance) for gront of exemption. In view of the above clarification no disallowance u/s. 801A(4)
4 | P a g e arise. However, our claim for exemption u/s. 10(46) may be allowed as our application for grant of an exemption is still pending before CBDT. A copy of Act is enclosed for your record and reference."
3 Vide reply dated 30.12.2015, the assesse has furnished its submission, the relevant extract of which is as follows:-
"the copies regarding request for notification u/s. 10(46) is alongwith submission of nature of activities being undertaking by DSIIDC in response to the CBDT letter dated 06.02.2013 attached herewith at annexure-1. The basis of exempted income amounting to Rs. 61.96 crores is being worked out as per Note:- 26 of the printed balance sheet at page 68. Our corporation is entitled to claimed exemption u/s. 10(46) as the query relating to all activities including commercial activities of the corporation asked by CBDT vide their letter dated February 06, 2013 had been submitted vide our letter dated 18/02/2013 (copy of CBDT, letter and reply thereof is already enclosed) as annexure T. Previously while seeking request for notification u/s. 10(46) CBDT had asked for information as per check list enclosed with their letter dated 6th September, 2012 and our corporation submitted the duly filled check list vide our letter dated
16/10/2012 (copy of CBDT letter and our reply thereof is ) enclosed as annexure 'II" In support of our claim we are enclosing herewith (copies of Delhi Industrial Operation & Maintenance Act, 2010 and copy of rules,
2011 & detailed note on DIDOMA Fund) in annexure III, IV & V respectively.
Hence our claim u/s. 10(46) is still pending before CBDT and likely to be decided in corporation's favour due to sovereign function assigned to DSIIDC by Govt., of NCT Delhi after taking over from MCD by passing an act & rules in assembly."
4.5. However the AO has not accepted claim of exemption u/s. 10(46), making the following observation as per para 4 of the assessment order.
6. The assesse company has falled to fulfill the eligibility condition as per 10(46)(c) as there is no notification by the Central Government in the Official Gazette for the purpose of this clause. The assesse company has also falled to fulfill the eligibility condition as per 10(46)(b) as the assesse company engaged in commercial activity i.e. sale of liquor and is therefore ineligible for the purposes of this clause. In view of the obove, exempted amount of Rs. 61.96 Cr. Under head Industrial Development Operational Fund (Reserve Fund, Note 26 of Balance sheet) is hereby disallowed and added back to the income of the assessee.
5. I have carefully gone through the findings of AO as well as the written submissions. I have observed that in the assessment order, AO has disallowed the claim of the appellant for deduction u/s 10(46) both on merits as well as in view of the fact that the appellant application before CBDT is pending for claiming exemption u/s 10(46). On merits, I am convinced with the arguments of AO that the assesse company is engaged in commercial activity i.e. sale of liquor and is 5 | P a g e therefore ineligible for the purposes of claiming exemption u/s 10(46). In addition to it, considering the fact that there is no notification issued by the Central Government in the Official Gazette for the purpose of this clause, the claim of the appellant is otherwise also not allowable. Accordingly, this Ground of appeal is dismissed.”
Learned counsel vehemently submits during the course of hearing that the assessee is pursuing his extraordinary writ remedy before hon’ble juri ictional high court which is stated to be pending for the purpose of claiming section 10(46) relief. We are of the considered view that as on date, the assessee could not be held as eligible for the impugned relief till the time it is not duly notified under section 10(46)(c) of the Act which forms a pre- condition, duly admitted by both the parties. That being the case, we accordingly see no reason either to postpone the hearing in the assessee’s appeal or to reverse the learned lower authorities action making impugned disallowance on merits, as the case may be. Rejected accordingly. 5. This assessee’s appeal is dismissed. Order pronounced in the open court on 23rd April, 2025 (MANISH AGARWAL) JUDICIAL MEMBER
Dated: 23.04.2025. RK/-