S. 11 : Property held for charitable purposes-Object of improvement in the town of Sangrur-Activities cannot be held to be commercial in nature – Entitle to exemption. [S. 2(15), 12, 13(8)]
The objects/activities of the trust is improvement in the town of Sangrur. The Assessing Officer held that the activities of the trust with regard to the acquisition of land and development of the land and sale thereof cannot be treated as charitable activities under ‘general public utility. The Assessing Officer held that the Assessee was covered by the proviso to section 2(15) of the Act and could not be held to be engaged in charitable activities therefore, the Assessee was not liable for exemption u/s. 11 and 12 of the I.T. Act, read with the provisions of section 13(8) of the Act .During the year, the Assessee had incurred a loss, i.e., excess expenditure over income. The Assessing Officer assessed the income at nil. The CIT(A) up held the order of the Assessing Officer. On appeal the Tribunal held that where the plots and premises are sold at market price, the activity is not a commercial or business venture. It is sufficient if the trust does precisely what the last category in section 2(15) states, that is, being involved in activities for the advancement of an object of general public utility; that these activities, which are undertaken by the assessee by virtue of the Punjab Town Improvement Act, 1922, include a proper systematic development of certain areas. Therefore, regulatory activity, necessitating fee or cess collection in terms of enacted law, or collection of amounts in furtherance of activities such as education, regulation of the profession, etc., are per se not business or commercial in nature. Statutory boards and authorities, who are under mandate to develop housing, industrial and other estates, including the development of residential housing at reasonable or subsidised costs, which might entail charging higher amounts from some section of the beneficiaries, to cross-subsidize the main activity, cannot be characterised as engaging in business. Accordingly allowed the exemption under section 11 of the Act. (ITA No. 273/Chd/2020 dt. 25-5-2023 (AY. 2016-17).
Improvement Trust v. ACIT(E) (Chd.)(Trib.) www.itatonline.org
[Coram : Before Shri A.D. Jain, Vice President & Shri Vikram Singh Yadav, Accountant Member]