The assessee is an entity constituted under the Uttar Pradesh Industrial Area Development Act, 1976. The Central Board of Direct Taxes rejected its application to grant exemption under section\u00a010(46)\u00a0on the ground that the assessee extended loans to various entities and such activities undertaken were otherwise than for the benefit of the general public. On a writ petition the Court held that \u00a0that the assessee, had been constituted under the 1976 Act with the objective of undertaking developmental activities in an industrial development area. It acted as an arm and an adjunct of the State charged with undertaking planned development in the industrial development area. In that connection, the assessee undertook planning and development of the area, acquired land and property, engaged in construction of housing units or industrial units. In order to fulfil these objectives, it was provided funds by the State Government and additionally created a corpus from the revenue and receipts generated and received in the course of its operations. The assessee primarily was an agent of the Government obligated to undertake planned development of areas placed under its control. It could not be viewed as being a corporation intended to have been incorporated for a profit or commercial motive. The provisions of the 1976 Act and the material on record clearly dispelled any notion of the assessee being a \u201chardcore trading corporation\u201d. Statutory bodies like the assessee, were intended to act as an \u201carchitectural agent\u201d of development and growth. The Revenue had erred in holding that the loans and advances extended by the assessee would fall within the ambit of commercial activity. The grant of those loans had also not been established to have been motivated with a view to profit. Some of those loans were extended to finance activities supportive and supplemental to the development activity that was liable to be undertaken by the assessee. The finding in the order that the assessee had advanced loans to private entities was factually incorrect. \u00a0\u00a0The assessee did not claim exemption of interest income earned from bonds and shares for the purposes of section\u00a010(46)\u00a0and the interest income had been ploughed back for the purposes of carrying out the statutory functions and duties cast upon the assessee. Although the assessee was called upon to provide all financial details, the Revenue did not specifically place on notice to answer or tender any explanation with respect to the amount of interest income that was earned from bonds, shares and fixed deposits. \u00a0The order rejecting exemption under section\u00a010(46)\u00a0was quashed. The Revenue was directed to process the application for exemption made by the assessee.\u00a0 Relied on Greater Noida Industrial Development Authority v. UOI (2018) 406 ITR 418 (Delhi)(HC).<\/p>\n","protected":false},"excerpt":{"rendered":"
S.10(46):Body or Authority-Specified income-Commercial Activity-Granting loan-Agent of State Government to support to support development activities-Entitled to exemption-The order rejecting exemption under section 10(46) was quashed-The Revenue was directed to process the application for exemption made by the assessee. [S.2(15), 10(20A), 119, Art. 226] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-49540","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-cT2","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49540","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=49540"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49540\/revisions"}],"predecessor-version":[{"id":49541,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49540\/revisions\/49541"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=49540"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=49540"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=49540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}