Exemption u/s 11 allowable on Income derived from Property held under Trust wholly for Charitable Purpose: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that Exemption u/s 11  of the Income Tax Act,1961 is allowable on income derived from property held under trust wholly for a charitable purpose.

M/s Ghaziabad Development Authority, the assessee is engaged in development work constituted under Uttar Pradesh Urban Planning & Development Act, 1973. The assesseeclaimed the benefits of provisions of Section 10(20A) of the act which was omitted by the Finance Act, 2002. The assessee filed a return of income on 31.12.2010 declaring a total income of Rs.4,24,09,340/-.

The assessment u/s 143(3) was completed on 31.12.2010 determining a total income of Rs.4,24,09,340/-. Further, the notice u/s 148 has been issued to the assessee on 14.07.2014 and the assessment has been completed on 21.03.2016.

The assessee challenged reassessment proceedings stating that the reassessment proceedings have been initiated merely based on audit objection without application of mind and without recording his reasons. The assessee has further challenged the assessment on account of administrative jurisdiction contending that proceedings initiated by DITExemption have been completed by JCIT-Exemption without jurisdiction.

The assessee challenged the denial of the benefit of section 11 contending that the AO has applied the amended provisions of section 2(15) which are applicable from A.Y. 2009-10 onwards. It was argued that the assessee has not been given the benefit of provisions of section 11(2) despitethe appellant having filed Form 10 regarding the accumulation of income in the stipulated time.

It was evident that the assessee filed a return of income on 27.06.2009. The return of income was due on 30.09.2008. The audit in this case has been completed on 27.06.2009 i.e. beyond the due date of filing the return.

The revenue held that the mere filing of the certificate as Form 10 does not entitle the appellant to get the benefit of section 11(2). For getting benefit u/s 11 the appellant has to have valid registration u/s 12A and should have applied the income derived under property held under trust wholly for the charitable purpose.

The appellant initially got registration u/s 12A w.e.f. 31.03.2003 which has been revoked later.  Again, the CIT, Ghaziabad vide order u/s 12AA(3) dated 31.03.2014 cancelled the registration of the appellant w.e.f. 01.04.2009 on account of a change of definition of charitable purpose u/s 2(15) which was annulled by the order of the ITAT vide order dated 29.04.2019 becausethe assessee is engaged in the development of land End in accordance to the Uttar Pradesh Urban Development Act 1973.

The object of authority is to promote and secure the development of the area according to the plan and for that purpose authority shall have the power to acquire, hold, manage and dispose of 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 and expedient for such development and purposes.

A Coram consisting of Sh. N. K. Choudhary, Judicial Member Dr B. R. R. Kumar, Accountant Member held thatthe assessee is found to be eligible for exemption u/s 11 for all the years pre and post-A.Y.2008-09, by the orders of the Tribunal and upheld the action of the Assessing Officer denying the exemption u/s 11 cannot be supported.

To Read the full text of the Order CLICK HERE

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