The Income Tax Appellate Tribunal (ITAT), Varanasi bench consisting of Vijay Pal Rao, Judicial Member, and Ramit Kochar, Accountant Member held that charitable entity under Section 2(15) of Income Tax Act eligible for exemption under Section of the Income Tax.
The assessee, M/s. Varanasi Development Authority, filed a return of income on 30.09.2011, declaring a total income of Rs. Nil. The case of the assessee was selected by Revenue for framing scrutiny assessment u/s. 143(3) read with Section 143(2) of the 1961 Act. Statutory notices under Sections 143(2)/142(1) of the 1961 Act were issued by AO from time to time. During the course of assessment proceedings, the assessee appeared before AO and filed replies and details, and produced books of accounts, bills, and vouchers, which were test checked by AO. The solitary question which has arisen in these appeals is with regard to the claim of the assessee for grant of exemption under Sections 11, 12, and 13 of the 1961 Act, which stood disallowed by the authorities below.
The assessee is registered under Section 12A of the 1961 Act. The assessee is a State Government body constituted by a separate Act of State Government. The object of the assessee is of general public utilities for management, regulation, and control of infrastructure falling within Varanasi. The assessee had claimed exemption under Sections 11, 12, and 13 of the 1961 Act. The assessee has filed Form-10B for seeking necessary exemptions u/s 11,12 and 13 of the 1961 Act. The audit report under Section 44AB was also filed by the assessee in prescribed forms No. 3CB and 3CD. They observed that the object of the assessee authority is defined under Section 7 of the Uttar Pradesh Urban Planning and Development Act, 1973.
The AO observed that the assessee is neither in the field of education nor in the field of medical relief of the poor and at the most, the assessee’s objects and activities could be said to be falling within the scope of ‘general public utilities’ u/s 2(15) of the 1961 Act. The assessee being aggrieved by the assessment framed by AO filed the first appeal before CIT(A), who was pleased to allow the appeal of the assessee in the first round of litigation. The Revenue being aggrieved filed the second appeal with the tribunal in the first round of litigation, wherein Tribunal, restored the matter to the file of CIT(A) for fresh adjudication and later decided against the assessee. Aggrieved by the order of CIT, the assessee, is in appeal before the Tribunal.
The Tribunal observed, “the assessee is a charitable entity u/s 2(15) of the 1961 Act, being engaged in the advancement of object of general public utility, with the predominant object of tackling problems of town planning and urban development in a planned manner, and shall be eligible for exemption u/s 11 of the 1961 Act.”
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