M/S. GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY,UTTAR PRADESH vs. CIT (E), LUCKNOW

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH “D” NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI L.P. SAHU ITA No. 113/Del/2016 Assessment Year: -- Greater Noida Industrial Development Vs. CIT(E), Authority, H-169, Chitvan Estate, Lucknow. Sector-Gamma, Gr. Noida City, District – Gautam Budh Nagar. Uttar Pradesh. (PAN: AAALG0129L) (Appellant) (Respondent) ITA No. 112/Del/2016 Assessment Year: - - Yamuna Expressway Industrial Development Vs. CIT(E), Authority, First Floor, Commercial Complex, Lucknow. P-2, Sector-Omega 1, Greater Noida Gautam Budh Nagar, Uttar Pradesh. (PAN: AAALT0341D) Assessee by: S/Shri Balbir Singh & Abhinav Mehrotra, Adv., SK Gupta & Ms. Raj Rani, CAs. Department by: Shri Sandeep Kumar, CIT( DR) Date of hearing : 02 .03.2016 Date of pronouncement: 18 :05.2016 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER ITA No. 113/Del/2016: The assessee has questioned rejection of its application seeking grant of registration under sec. 12AA of the Income-tax Act, 1961 by the Learned CIT(Exemption) on the following grounds:

2 1. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee seeking grant of Registration u/s. 12AA of the Income-tax Act, 1961, without lawfully appreciating the true and correct facts of the case and hence the order is liable to be quashed. 2. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee, without lawfully appreciating that the assessee is a statutory authority constituted under sec. 3 of the Uttar Pradesh Industrial Development Act, 1976 (UPIDA) and is duly notified by the Hon’ble Governor of Uttar Pradesh as an Industrial Township under Article 243Q of the Constitution of India; and is statutorily mandated by section 6 of UPIDA for rendering public utility services, satisfying the requirements of sec. 2(15) of the Income-tax Act and hence entitled to be granted registration under sec. 12AA of the Act. 3. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in treating the assessee as a commercial business entity, whereas the assessee, being a statutory authority Notified under Article 243Q of the Constitution of India, is obliged to perform its functions as declared under Schedule XII prescribed under Article 243Q of the Constitution of India and hence cannot be treated a Commercial/Business entity and hence the activities of the authority being in accordance with Section 2(15) of the Income-tax

3 Act, is liable to be granted registration under Section 12AA of the Income-tax Act. 4. Because the Learned CIT(Appeals), grossly erred in law and on facts in treating that mere earning of surplus receipts from the activities of the assessee for the purpose of SELF- SUSTAINANCE, cannot be regarded as PROFIT-MOTIVE; hence such observations of the Learned CIT(Exemption) being in direct conflict of the verdict of the Hon’ble Apex Court in the cases of SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY 1971 SCR(1) 719, GUJARAT MARITIME BOARD [2008] 166 TAXMAN 58 (SC) and ANDHRA PRADESH ROAD TRANSPORT CORPORATION 25 TAXMAN 63A (SC) is liable to be repelled being inferior observations in view of the final verdict of the Supreme Court and the assessee be granted registration u/s. 12AA. 5. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in failing to apply and follow the binding judgment of the Hon'ble Jurisdictional High Court in the case of Lucknow Development Authority and that of the Hon’ble jurisdictional ITAT Delhi in the case of Haridwar Development Authority by citing relevant/extraneous reasons and which judgments are squarely applicable to the facts and circumstances of the instant case and on such count the impugned order, being unsustainable in law, deserves to be quashed. 6. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in

4 treating the assessee as a commercial business entity, without appreciating that the objects/activities of the assessee are in furtherance of public policy and activities of the assessee have not been acknowledged/taken note-off by the Learned CIT(Exemption), while adjudicating the claim of the assessee and hence the order is liable to be quashed. 7. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts while passing the impugned order in placing reliance upon case law authorities that are clearly distinguishable and inapplicable to the facts and circumstances of the instant case as in none of the cases cited by the Learned CIT(Exemption), the provisions of Chapter IXA of the Constitution of India, get attracted or have been incorrectly interpreted by the Learned CIT(Exemption) and hence on such premise the order being based upon irrelevant considerations, deserves to be quashed. 8. Because on the facts and in the circumstances of the case, the impugned order of the Learned CIT(Exemption), is liable to be quashed as the same is made by incorrectly observing that proper details were not supplied by the assessee, whereas in contrast, all requisite details were supplied by the assessee before the Learned CIT(Exemption) and the Learned CIT(Exemption) has rather passed the impugned order in a premeditated and biased manner, violating the principles of Natural Justice, as the order is passed on the same date on which the hearing was fixed and hence the order is liable to be quashed on this count.

5 9. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee seeking grant of Registration U/s. 12AA of the Income-tax Act, 1961, without appreciating that the books of account of the assessee are duly audited by the State Government Auditor [Local Fund Auditor] and that no expense can be incurred by the assessee without the authority of law or for a purpose otherwise than those enumerated under section 6 of the UPIDA; hence the observations of the CIT[Exemption] to the contrary are liable to be rejected. 10. That the order passed by the Learned CIT(Exemption) is further liable to be quashed as the same is made in violation to the principles of Natural Justice as the Learned CIT(Exemption) did not provide due and proper opportunity of hearing to the assessee and hence the order is liable to be quashed on this count as well. 11.Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), failed to perform its bounden legal obligation to follow and apply the decisions of the Hon'ble Jurisdictional High Court and the Hon’ble Jurisdictional Tribunal , in identical facts and circumstances, rather than, to frivolously compel the assessee to pursue litigation and for which reason, COSTS are liable to be awarded to the assessee. 12.The humble applicant craves for leave to raise any other or further ground of appeal with the permission of the Hon’ble Income-tax Appellate Tribunal.

6 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon.

7 The Learned CIT(E) has rejected the application seeking registration under sec. 12AA of the Act on the following basis: i) The applicant-society is a profit making body and not carrying out any charitable activity; ii) In absence of books of account and vouchers, the genuineness of activities could not be verified, exemption under sec. 10(20) of the Act is not admissible to the applicant; iii) The applicant got property development income which comprises sale of developed land and sale of constructed property. iv) The applicant has also got income under the head “urban services income comprising lease rent and fee, penalties, duties and taxes; v ) Under the head ‘administrative income’, the applicant like other builders/colonizers had got income from interest, forfeiture of property and miscellaneous income; vi) Interest bearing fund have been given as interest free loans and grants to other agencies; vii) If any charitable activity is being done by the applicant, it is just coincidental or incidental to its business. viii) The applicant authority is an authority established with the motive of profit.

8 therefore, it is not entitled for registration under sec. 12AA(1)(ii) of the Income-tax Act. The Learned CIT(E) noted that in view of omission of section 10(20A) of the Act an Explanation has been added to section 10(20). Now, the income of the local authority is chargeable to tax under the head “house property, capital gain, income from other sources or from business or trade carried on by the authority in respect of a previous year.” After the amendment, the Explanation defines ‘Local Authority’ to include only the authorities mentioned in the Explanation which only include Panchayat, District Board, Municipal Committee and Cantonment Board with effect from 01.04.2003. The learned CIT(E) also observed that in case registration is granted to the applicant then big builders/colonizers/developers will also claim exemption from income-tax by seeking registration under sec. 12AA of the Act. The Learned CIT(E) did not agree with the decisions cited before him by the applicant to justify the prayed registration. 5. In support of the grounds, the Learned AR submitted that the Learned CIT(E) is not correct in saying that proper details were not supplied by the applicant to him. On the contrary, all the requisite details were supplied to him and the Learned CIT(E) has passed the impugned order in a premeditated manner, violating the principles of natural justice. The order impugned has been passed on the same day on which hearing was fixed. He

9 failed to appreciate that books of account of the assessee are duly audited by the State Government Auditor and no expense can be incurred by the assessee without the authority of law or for a purpose otherwise than those enumerated under sec. 6 of the U.P. Industrial Dev. Act, 1976 (UPIDA).

6.1 Mere earning of surplus receipts from the activities of the assessee for the purpose of self-sustenance cannot be regarded as profit motive. The objects/activities of the assessee are in furtherance of public policy. The Learned AR referred page Nos. 1 to 34 of the paper book filed on behalf of the assessee i.e. copies of notification for constitution of the appellant authority under sec. 3 of the Uttar Pradesh Area Dev. Act, 1976 (UP Act No.

10 6 of 1976); UP Industrial Area Dev. Act, 1976; Notification for Declaration of Gr. Noida Ind. Dev. Authority (GAIDA) as industrial town-ship as per proviso to Article 243Q; and Schedule XII to Article 243W of Constitution of India. The Learned AR also referred page Nos. 1 to 220 of the paper book filed on 02.03.2016 which are copies of order sheet of Learned CIT(E); notice dated 29.9.2015 issued by learned CIT(E) requisitioning certain details/information; and submissions made by the assessee to the Learned CIT(E). The Learned AR placed reliance on the following decisions: a) CIT vs. Gujarat Maritime Board (2008) – 166 Taxmann 58 (S.C); b) CIT vs. Andhra Pradesh State Road Tpt. Corpn. (1986) – 25 Taxmann 63A (SC); c) Shri Ramtanu Co-op. vs. St. of Maharashtra (1970 S.C.C(3) 323; d) CIT vs. Lucknow Development Authority & Ors. – ITA No. 149 of 2009 & Ors. (All.); e) Haridwar Dev. Authority vs. CIT – ITA Nos. 3056/Del/2012 & Ors. – order dated 25.7.2014; f) Jammu Dev. Authority vs. Union of India – ITA No. 164 of 2012 – judgment dated 7.11.2013 (J&K); g) Bureau of Indian Standard vs. DG of Income-tax (E)(2013) – 358 ITR 78 (Del.); h) Indian Trade Promotion Organization vs. DG of Income-tax (E) & Ors. (2015)-371 ITR 333 (Del.);

11 j) Managing Director, Haryana State Ind. Dev. Corporation & Ors. Vs. Hari Om Enterprises (2009) – 16 SCC 208; k) Jodhpur Development Authority vs. CIT – ITA No. 508/Jodhpur/2010 – order dated 9.1.2012; L) Jaipur Development Authority vs. CIT – ITA No. 182/Jp/2012 – order dated 30.9.2014.

12 being done by the appellant. It is just coincidental or incidental to its business. He contended that the appellant is primarily running its business purely on commercial lines without any intention of any sort of charitable purpose as such. He submitted that despite opportunities, the assessee- appellant did not bother to file its books of account before the Learned CIT(E) to enable him to verify genuineness of its activities claimed to be charitable. He submitted that during the year the return of income has been filed by the appellant only in response to the notice issued under sec. 142(1) of the Act. The Learned CIT(DR) placed reliance on the decision of Amritsar Bench of the ITAT in the case of Jammu Development Authority vs. CIT (2012) – 23 Taxmann.com 343(ASR), which has been upheld by the Hon'ble High Court of Jammu & Kashmir – ITA No. 164 of 2012 – judgment dated 7.11.2013. The Learned CIT(DR) pointed out that the assessee had preferred SLP before the Hon'ble Supreme Court against the judgment of Hon'ble High Court but could not succeed. In support, he referred the order dated 24.7.2014 of the Hon'ble Supreme Court in petition for Special Leave to Appeal (C) No. 4990/2014.

13 having distinguishable facts. In those cases, the issue was not of granting of registration under sec. 12AA of the Act but the validity of the order of the Learned CIT(E) in withdrawing the registration already granted.

14 and there was no profit motive, as indicated by the provisions of sections 73, 74 and 75 of the Gujarat Maritime Board Act, 1981. The income earned by it was deployed for the development of minor ports in India. Under the scheme of section 11, the source of income must be held under trust or under other legal obligation. Applying the said test, the Hon'ble Supreme Court held that the assessee was under legal obligation to apply the income which would arise directly and substantially from the business held under trust for the development of minor port in the State of Gujarat, therefore, it was entitled to be registered as “charitable trust” under sec. 12A of the Act.

9.1 Again in the case of CIT vs. Andhra Pradesh State Road Transport Corporation (supra), the assessee, a road transport corporation, was established for development of road transport instead and the road transport Corporation Act under which it was established it was required to carry on its undertaking on business principles. Its income was to be utilized for road development and its own expansion. It was held by the Hon'ble Supreme Court that assessee did not carry on its activities with object of making profit and its objects being one of general public utility, it was entitled to exemption under sec. 4(3)(i) of 1922 Act and section 11 of 1961 Act

15 notwithstanding provisions in Road Transport Corporation Act that in carrying on its undertaking, assessee would act on business principles.

9.2 In the case of CIT vs. Lucknow Development Authority (supra), which is more akin to the case of the present appellant before us, the Hon'ble jurisdictional Allahabad High Court has been pleased to decide the issue in favour of the assessee upholding the order of the ITAT that income of the assessee is exempted under sec. 11 of the Income-tax Act, 1961, though there was no condition that no profit should be earned by its activities and the profit earned will not be distributed amongst the stakeholders. In that case also before the Hon'ble High Court, it was argued by the Revenue that assessee is not on different footing from private colonizer and was making huge profits by giving compensation for land which is less than the market value of the actual land owners. As regards the claim of providing public amenities, private colonizers were also providing similar facilities. It was contended that (i) assessee is a huge profit making agency for which it is taking money from general public; (ii) assessee did not engage in any charitable and if assessee developed any institution of public importance, the cost was recouped from the public at large; (iii) the objects/activities of the assessee were commercial in nature and they did not involve any charity,

16 (iv) assessee also auctions plot at market rate and this does not involve any charity, and (v) in every activity of the assessee, there was a scent of commercialization/profit motive and infra-structure/facility provided by the assessee are also provided by private builders. It was contended by the Revenue that the ITAT has grossly erred in holding that the assessee authority was not established for commercial purposes, but for charitable purposes. The submission of the assessee on the other hand remained that as per section 4 of the Uttar Pradesh Planning & Development Act, 1973, the assessee’s object is “an act to provide for the development of certain areas of Uttar Pradesh according to plan and for matter ancillary thereto”. The objects of the development authority were referred as per section 7 of the said 1973 Act. The objects shall be to promote and secure the development of the area according to plan and for that purpose the authority shall have the power to acquire, hold, manage and disposed off land and other property to carry out building, engineering, mining and other operations to execute works in connection with the supply of water and electricity, to dispose of sewage and to provide and maintain other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto. It was pointed out by the assessee that as per section 58 of the said 1973 Act, in case of dissolution of

17 the authority, the entire assets will be vested with the state government. So, no profit of interest is involved. Up to the assessment year 2002-03, the assessee was also enjoying the exemption from income-tax under sec. 10(20A) of the Act. Following the deletion of section 10(20A) and insertion of explanation in section 10(20) in the Finance Act, 2002, applicable w.e.f. 01.04.2003, the assessee was advised to seek registration under sec. 12A of the Act. The assessee submitted that assessee’s income is for “charitable purposes” as defined in sec. 2(15) of the Act, which covers the objects for “advancement of any other objects for general public utility”. It was submitted by the assessee that the term “objects of general public utility” had been extensively dealt with and defined, to meant that where the objects of an institution cover the public at large or a section of public, the objects are to be held to the “objects of general public utility” as meant in section 2(15) of the Act. Thus, discussing the cases of the parties in detail and the decisions cited by them going through, the Hon'ble jurisdictional Allahabad High Court has given following findings:

“We have heard learned counsel for the parties and gone through the material available on record.

It is undisputed fact that the assessee is a "Statutory Authority" which was

18 established under the provisions of the Uttar Pradesh Planning and Development Act, 1973. In the instant case, prior to 1st April, 2003, the assessee were enjoying exemption under Section 10(20A) and Section 10(29). When these provisions were amended w.e.f. 1st April, 2003, then the necessity arose to register these institutions under Section 12A. In view of the objects, there is no good reason for holding that statutory bodies could not be treated as "charitable" within the meaning of Section 2(15). The object of the "Authority" is to provide shelter to the homeless people, therefore, there is no objectionable material to treat these institutions as non-charitable. The registration under Section 12A is mandatory to claim exemption under Sections 11 & 13, but registration alone cannot be treated as conclusive. It is always open to Revenue Authorities, while processing return of income of these assessees, to examine the claim of the assessees under Sections 11 & 13 and give such treated to these institutions as is warranted by the facts of the case. Revenue Authorities are always at liberty to cancel the registration under Section 12AA(3). Moreover, it may be mentioned that the benefit of Section 11 is not absolute or conclusive. It is subject to control of Sections 60 to 63. If it is found by keeping in view the provisions of Sections 60 to 63 that it is not so includible then such income does not qualify for any relief.

The contention that the assessee are earning profit has no merit as per the ratio laid down in the case Sarafa Association vs. CIT, [2007] 294 ITR

19 262 (MP), where it was observed that "the promotion of commercial trade is a charitable purpose under Section 2(15) of the Act". In the case of Director, ITO vs. Govinda, 315 ITR 237 (Mad), it was observed that the construction of commercial complex by charitable trust is eligible. If the objects of the "Authority" is charitable as public utility then the benefit being a charitable trust is eligible as per the ratio laid down in the case of CIT vs. Gujarat Maritime Board, [2007] 295 ITR 561 (SC), where it was observed that:

"... in Section 2(15), namely, "any other object of general public utility". From the said decisions it emerges that the said expression is of the widest connotation. The word "general" in the said expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose [CIT vs. Ahmedabad Rana Caste Association, [1983] 140 ITR 1 (SC)]. The said expression would prima facie include all objects which promote the welfare of the general public. It cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served. If the primary purpose and the predominant object are to promote the welfare of the general public the purpose would be charitable purpose. When an object is to promote or protect the interest of a particular trade or industry that object becomes an object of public utility, but not so, if it seeks to promote the interest of those who conduct the said trade or industry [CIT vs. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC)]. If the primary or predominant object of an institution is charitable, any other object which might not be charitable but which is ancillary or incidental to the dominant purpose, would not prevent the institution from being a valid charity [Addl. CIT vs. Surat Art Silk Cloth Manufacturer Association [1980] 121 ITR 1 (SC)]."

20 Applying the ratio laid down in the case of CIT vs. Andhra Pradesh State Road Transport Corporation [1986] 159 ITR 1 (SC), where of in the present case, the "Autonomous Authority" was established for the purpose of predominant of development the area and provide to shelter to the homeless people within the State of U.P. The management and control of the Authority is essentially with the State Government and there is no profit motive as the income earned by the Authority is deployed for the development of the State. Further, it may be mentioned that Section 12AA of the Act lays down the procedure for registration in relation to the conditions for applicability of Sections 11 & 12 as provided in Section 12A. Therefore, once the procedure is complete as provided in sub-section (1) of Section 12AA and a certificate is issued granting registration to the trust or institution the certificate is a document evidencing satisfaction about (i) the genuineness of the activities of the trust or institution, and (ii) about the objects of the trust or institution. Section 12A stipulates that the provisions of Sections 11 & 12 shall not apply in relation to income of a trust or an institution unless the conditions stipulated therein are fulfilled. Thus, granting of registration under Section 12AA denotes that the conditions laid down in Section 12A stand fulfilled. The effect of such a certificate of registration under Section 12AAA, therefore, cannot be ignored or wished away by the Assessing Officer by adopting a stand that the trust or institution is not fulfilling the conditions for applicability of Sections 11 & 12. In the case of Gestetner Duplicators P. Ltd. vs. CIT [1979] 117 ITR 1 (SC), the Apex Court was called upon to determine as to whether the contribution made by the employer should be treated as a business expenditure, the requirement being contribution should be made to a recognized provident fund. Needless to mention that this Hon'ble Court in the case of CIT vs. M/s. U.P. Forest Corporation Ltd., in Income Tax Appeal No. 70 of 2009 observed that the Forest Corporation being an statutory entity is entitled

21 for the registration under Section 12A of the Act. The said observations was upheld by the Hon'ble Apex Court vide its order dated 12.05.2011 in Special Leave Petition No. (Civil) No. 2590/2011. We may also like to refer a C.B.D.T. Circular No. 11/2008 dated 19.12.2008, wherein the applicability of the commercial activities in respect of charitable purpose has been clarified. The said circular is reproduced as below:

"2.2. 'Relief of the poor' encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under Section 11(4A) or the seventh proviso to Section 10(23C), which are that - (i) the business should be incidental to the attainment of the objectives of the entity, and (ii) separate books of accounts should be maintained in respect of such business."

For the applicability of proviso to Section 2(15), the activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activities on non-commercial lines with no motive to earn profits, for fulfillment of its aims and objectives, which are charitable in nature and in the process earn some profits, the same would not be hit by proviso to section 2(15). The aims and objects of the assessee-trust are admittedly charitable in nature. Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under

22 Section 11. The intention of the trustees and the manner in which the activities of the charitable trust institution are undertaken are highly relevant to decide the issue of applicability of proviso to Section 2(15).

There is no material/evidence brought on record by the revenue which may suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit or has deviated from its objects as detailed in the trust deed of the assessee. In these facts and circumstances of the case, the proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 for the relevant assessment year.

From the record, it also appears that the "Authority" had been maintaining infrastructure, development and reserve fund IDRF as per the notification dated 15.01.1998, the money transferred to this funds is to be utilized for the purpose of project as specified by the committed having constituted by the State Government under the said notification and the same could not be treated to be belonging to the "Authority" or the receipt is taxable nature in its hands. For this reason also, it appears that the funds are utilized for general utility.

Moreover, in the instant case, the Assessing Officer has not given any defective in computation of income as per Section 11 as submitted in Form-XB, but observed that the activities of the assessee are not charitable. The activities of the assessees are genuine. So, then it is so, then we find no reason to interfere with impugned orders passed by the Tribunal. The same are hereby sustained along with reasons mentioned therein. The answer to the substantial questions of law are in favour of the assessee and against the department.

23 In view of above, all the appeals filed by the department are dismissed, as stated above. OrderDate:16/09/2013.”

9.3 In view of the ratio laid down in the above cited decisions, when we examine the facts of the present case, we note the following important aspects: i) By Notification No. 6710/77-4-2001-56Bha/99, Lucknow dated 24.12.2001, the Hon’ble Governor in pursuance of the provisions of clause (3) of Article 348 of the Constitution of India and by exercising power under the proviso to clause (1) of Article 243Q of the Constitution of India has been pleased to specify the Greater New Okhla Industrial Development Area to be an “Industrial Township” w.e.f. the date of publication of the Notification in the Official Gazettee. ii) In the above notification, a reference has been made regarding declaration of Greater New Okhla Industrial Development Area at an Industrial Development Area by government notification No. 7436/DHA-U/XVIII-11-107Bha/85 dated 28.1.1991 and that the municipal services are being provided by the Greater New Okhla Ind. Dev. Authority in that area. iii) The Uttar Pradesh Ind. Area Dev. Act, 1976 (UP Act No. 6 of 1976) has been passed by the Uttar Pradesh Legislature to provide for the constitution of an Authority for the development of certain areas in the state into industrial and urban township and for matters connected therewith.

24 iv) In exercise of the powers under sec. 3 of the Uttar Pradesh Area Development Act, 1976, the Hon’ble Governor vide Notification No. 7436BHA-U-XVIII-II-107Bha/85 dated 28.1.1991 has been pleased to constitute an Authority to be called the Greater Noida Industrial Dev. Authority for the industrial development area mentioned in the Schedule given. In the said notification for the constitution of the Authority, the details of districts, tehsil, villages coming there under have been given in the schedule coming under GNIDA.

9.4 Copy of the above notification, UP Industrial Area Development Act, 1976 and Schedule Twelfth to Article 243W of Constitution of India have been made available at page Nos. 1 to 34 of the paper book filed on behalf of the assessee.

9.5 The appellant authority is governed under the UP Industrial Area Development Act, 1976 and UP Government Notifications. As per this the authority shall have to maintain its own funds to which shall be credited (a) all moneys received by the authority from the State Government by way of grants, loans, advances or otherwise; (b) all moneys borrowed by the authority from sources other than the State Government by way of loans or debentures; (c) all fees, tools and charges received by the authority under the

25 Act; (d) all moneys received by the authority from the disposal of lands, buildings and other properties moveable and immoveable; & (e) all moneys received by the authorities by way of rent and profits or in any other manner or from any other sources. It is mentioned under section 20(1) of the UP Industrial Area Development Act, 1976. In sub-section (2) to section 20 of the said Act has been mentioned that the funds shall be applied toward meeting the expenses incurred by the authority in the administration of the said acts and for no other purposes.

9.6 In section 58 of the said 1976 Act has been provided that where the State Government is satisfied that the purposes for which the authority was established under the Act have been substantially achieved so as to render the continued existence of the authority in the opinion of the state government unnecessary that government may by notification in the Gazettee declare that the authority shall be dissolved w.e.f. such date as may be specified in the notification and the authorities shall be deemed to be dissolved accordingly. In sub-section (2) to that section 58 of the Act, it has been provided that from the date of such dissolution, all properties, funds and dues which are vested in, or realized by the authority shall waste in or be realized by the state government. All nazul lands placed at the disposal of

26 the authority shall revert to the state government. It has been further provided that all liabilities which are enforceable against the authority shall be enforceable against the state government and for the purpose of carrying out any development which has not been duly carried out by the authority and for the purpose of realizing properties, funds and dues referred in clause (a), the functions of the authority shall be discharged by the state government. Under Article 243P of the Constitution of India “Municipality” has been defined in clause (e) of the said Article as “means an institution of self-government constituted under Article 243Q”. Under Article 243W, the legislature of a State, may by laws, Endo the Municipalities with such powers and authorities as may be necessary to enable them to function as institution of self-government and such law may contends provisions for the devolution of the powers and responsibilities upon municipalities, subject to such conditions as may be prescribed therein with respect to the preparation of plans for economic development and social justice; the performance of function and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the 12th Schedule; and the committee with such powers and authorities as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the 12th schedule. Vide notification No.

27 6710/77-4-2001-56BHA/99 dated 24.12.2001, the State Government in exercise of powers under the proviso to clause (i) of Article 243Q of the Constitution of India has specified the Greater New Okhla Industrial Development Area to be an Industrial Town-ship w.e.f. the date of the publication of the said notification in the official gazette. In this notification, it has been mentioned that having regard to the size of Greater New Okhla Industrial Development Area which has been declared as an industrial development area by government notification dated 28.1.1991 and the municipal services are being provided by the Greater New Okhla Industrial Development Authority in that area. Thus, it is clear that the appellant has been constituted by the State Act and it is assigned not only with the object of development of industrial area but would be an industrial town-ship and would provide services of a municipal corporation. Thus, the objects of the appellant are in the nature of public utility. When it is not the case of Revenue that profit from the activities of acquiring land and selling it after development is being utilized not in the objects of the appellant, it cannot be compared with the activities carried out by a builder developing a colony. The appellant might be selling certain property at market rate through auction after developing that property but it is not the main object of the appellant. Such activity is incidental to the objects of the appellant. We thus

28 come to the conclusion that the appellant is very much entitled for the claimed registration under section 12A(1)(a) of the Act. We thus while setting aside the order impugned direct the Learned CIT(E) to grant registration under sec. 12AA of the Act to the appellant. The grounds are accordingly allowed. 10. In result, the appeal is allowed. ITA No. 112/Del/2016 11. The assessee has questioned rejection of application for registration under section 12A(1)(a) of the Income-tax Act, 1961 on the following grounds: 1. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee seeking grant of Registration u/s. 12AA of the Income-tax Act, 1961, without lawfully appreciating the true and correct facts of the case and hence the order is liable to be quashed. 2. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in rejecting the application filed by the assessee, without lawfully appreciating that the assessee is a statutory authority constituted under sec. 3 of the Uttar Pradesh Industrial Development Act, 1976 (UPIDA) and is duly notified by the Hon’ble Governor of Uttar Pradesh as an Industrial Township under Article 243Q of the

29 Constitution of India; and is statutorily mandated by section 6 of UPIDA for rendering public utility services, satisfying the requirements of sec. 2(15) of the Income-tax Act and hence entitled to be granted registration under sec. 12AA of the Act. 3. Because on the facts and in the circumstances of the case, the Learned CIT(Exemption), grossly erred in law and on facts in treating the assessee as a commercial business entity, whereas the assessee, being a statutory authority Notified under Article 243Q of the Constitution of India, is obliged to perform its functions as declared under Schedule XII prescribed under Article 243Q of the Constitution of India and hence cannot be treated a Commercial/Business entity and hence the activities of the authority being in accordance with Section 2(15) of the Income-tax Act, is liable to be granted registration under Section 12AA of the Income-tax Act. 4. It is further informed that Income Tax Assessments for the assessment years 2008-09, A.Y. 2010-11 to 2013-14, are been undertaken by the respective Assessing Officer and there is likelihood that the same would be completed in foreseeable future, due to limitation. A copy of the Notice of hearing in the matter is also enclosed. 5. In this view of the matter, it is most respectfully submitted that in consideration of the statutory stipulation contained under Proviso to Sub-Section 2 of Section 12A, which reads as “Providied that where registration has been granted to the trust or institution under sec. 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived form property held under trusdt of

30 any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year” the income tax appeals of the assessee, bearing ITA No. 113/Del/16 be directed to be fixed for hearing at early date. 6. It is further submitted that the assessee is confident of succeeding in the appeals filed and has a very strong case, as the order of the CIT(Exemption), suffers from inherent errors of law and is unsustainable. 7. In case the prayers made in the instant petition are not granted, the assessee is likely to suffer from irreparable loss and injury and on the other hand no prejudice shall be caused to the Revenue, if the request is acceded. IT is further informed that the assessee has to discharge Sovereign functions like Making of Grants to other entities for public welfare, Setting up of Hospitals, Developing Roads, Developing EWS Societies for weaker section of the society on a daily basis. The Income-tax Department is likely to frame an adverse assessment, as has been done in the past. This constraints the functioning of the authority to a very large degree and hence in order to avoid such prejudicial orders being passed by the Assessing Officer, the appeals of the assessee be heard, at an early date.

31 12. Both the parties agreed that an identical issue regarding the eligibility of assessee for registration under section 12A of the Act under the similar facts as in the case of Greater Noida Industrial Development Authority has been raised. Both the parties, therefore, adopted similar arguments as advanced by them in the above appeal in the case of Greater Noida Industrial Development Authority.