Exemption u/s 12 A and 80 G of Income Tax Act: Allahabad HC directs to SDA for fresh Decision [Read Order]

The Allahabad High Court directed the Saharanpur Development Authority ( SDA )  to make a fresh decision regarding the exemption under Sections 12A and 80G of the Income Tax Act, 1961.

The petitioner claims to be a Charitable Society registered by the Registrar of Societies, Uttar Pradesh under the Societies Registration Act, 1860 vide Registration Certificate No.719/1990- 1991 dated 07.08.1990, which is renewed from time to time. For conducting the affairs of the Society it had also framed Bye-laws of the Society, wherein it is provided that the Society would run and maintain the funeral site (Shamshan Ghat), temple, Dharamshala, Charitable Hospital, Orphanage and library.

The exemption was claimed by the petitioner under Section 53 of Urban Planning and Development Act, 1973, which provides that "notwithstanding anything contained in this Act, the State Government may by notification in the Gazette exempt, subject to such conditions and restrictions, if any, as may be specified in such notification any land or building or class of lands or buildings from all or any of the provisions of this Act or rules or regulations made thereunder.

Under the said provision, the State of Uttar Pradesh had framed the Niyamavali known as "Nagar Yojana aur Kivas (Vikas Shulk Ka Nirdharan, Upgrahan Evam Sangrahan) Niyamavali, 2014" ,which was gazetted and notified on 17.11.2014. In view of the Niyamavali, 2014, a circular/notification was issued on 18.07.2016, which provides that in view of Niyamavali, 2014, the buildings, which are used for the purpose of charitable, spiritual/religious institution, charitable institutions for the benefit of general public, which have been specified in the Circular, would be exempted from development charge, which is normally charged by the Development Authorities under the Act, 1973.

The petitioner Society applied for construction of the temple and cremation site before the Saharanpur Development Authority and the same was approved by the SDA on 17.11.2014. The petitioner had also applied for exemption under Section 80-G of the Income Tax Act, 1961 and the same was accorded/registered under Section 12-A-A (1) (b) (i) of the Income Tax Act, 1961 with effect from 01.04.2014 vide order dated 29.03.2016 passed by the Commissioner of Income Tax (Exemption), Luck now.

Thereafter, a separate order was passed by the Commissioner of Income Tax (Exemption) Luck now on 02.06.2017 and both the orders have been brought on record collectively as Annexure No.6 to the writ petition. It is also claimed that at the time of moving an application for sanction of plan, the applications for registration under Section 12-A and 80-G of the Income Tax Act, 1961 were pending for approval. Finally, the registration was also accorded under the Act, 1961 w.e.f. 01.04.2014.

Mr Chetan Chatterjee representing the petitioner vehemently submitted that even though the Society was registered as charitable Society since 07.08.1990 and as per bye-laws of the Society, it is running and maintaining the funeral sites, temple and Dharamshala. Admittedly, the State Government had framed the Niyamavali, 2014 for providing exemption from realisation of process fee, development charges and in view of the Niyamavali, 2014, the Society is eligible for an exemption of process fee, development charges etc. More so, the said relief has also been pressed on the ground that the Society has already got benefits under Section 12A and 80G of the Act, 1961.

Per contra, Mr. A.P. Paul, representing the SDA has vehemently opposed the writ petition and reiterated the counter affidavit. He submits that at the time of sanction of plan, admittedly no exemption was accorded by the Income Tax Department and therefore, no exemption is to be accorded to the petitioner. Moreover, the Society had accepted the demand raised by the SDA at the time of sanction of plan on 17.11.2014 and therefore, no benefit is to be extended in favour of the Society. At the relevant point of time, no such exemption was available to the Society. Even from time to time notices were sent to the Society but till date no satisfactory response has been filed and rightly the impugned notices have been issued, which are fully sustainable in the eyes of law and are liable to be upheld by this Court.

The bench  found that the petitioner, which was a charitable society, applied for sanction of map for construction of temple and cremation site, which was so accorded by the SDA vide order dated 17.11.2014. Thereafter, the petitioner Society had constructed the building in question for charitable purposes and claimed concession for payment of process fee, development fee etc. as provided under Section 53 of the Act, 1973. It had also applied for exemption under Section 80-G of the Act, 1961 and the same was accorded with effect from 01.04.2014 vide order dated 29.03.2016 passed by the Commissioner of Income Tax (Exemption) Luck now under Section 12AA (1) (b) (i) of the Income Tax Act, 1961.

Consequently, the Coram of Justice Mahesh Chandra Tripathi and Justice Anish Kumar Gupta concluded that the writ petition was allowed and the matter was relegated to the Vice Chairman, SDA to take a fresh decision within a period of six weeks from the date of production of certified copy of this order but certainly considering the Niyamavali, 2014 and the exemption under Section 12A and 80G of the Income Tax Act, 1961.

To Read the full text of the Order CLICK HERE

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