Urban Improvement Trust , Jaipur vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 1019/JP/2011 fu/kZkj.k o"kZ@Assessment Year : ---- Section 12AA of the Act

M/s. Urban Improvement cuke The CIT Trust, Ajmer Vs. Ajmer LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargieya , Advocate jktLo dh vksj ls@ Revenue by : Mrs. Rolee Agarwal (CIT).

lquokbZ dh rkjh[k@ Date of Hearing : 12/11/2014 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 16 /01/2015

vkns'k@ ORDER PER R.P. TOLANI, JM

This is an appeal filed by the assessee against the order of the ld.

CIT, Ajmer dated 23-09-2011 challenging the denial of registration u/s

12AA of the I.T. Act, 1961, on the ground that the activities of the

assessee are commercial in nature and it has no element of charity.

2.1 The ld. Counsel for the assessee contends that ld. CIT dismissed

the application u/s 12AA by following observation 2 .

''From the above, it appears that the Trust's objects are not charitable in nature. Almost in every activity, there is a scent of commercialization / profit motive. Admittedly, the assessee is doing some activities like housing/ infrastructure development and the public is also benefited for the same, the appellant has already charged in the form of hidden cost. Rather the assessee is generating income, so no charity is involved. A charitable institution provides services for charitable purposes free of cost and for no gain and are benefit of public at large. The assessee acquires land at nominal rates and after developing the same, the same land is sold on high profit which cannot be said to be a charitable activity. Under the present facts if registration is granted, then every private colonizer will claim charity. The facilities which are provided to the plot holders are incidental to the commercial activity carried out by the UIT and if certain facilities like parks, community centre, road, drainage, construction of tennis Court indoor stadium and schools are provided is not only basic requirement, rather a tool of attracting investors where in the hidden cost of these facilities is already included. The above findings are squarely covered with the case of Punjab Urban Planning & Development Authority vs. CIT reported at 103 TTJ (Chd.) 988 (2006) of ITAT, Chandigarh 'B' Bench.

The other activities carried out by UIT are not according to their major activities. The UIT also not produced books of account audite4d by the Chartered Accountant for the F.Y. 2009-10 & 2010-11. A certificate of audit conducted by Local Fund Audit has been enclosed with the reply dated 21-09-2011.''

2.2 It is pleaded that order of the ld. CIT is not sustainable inasmuch

as:

(i) The registration has been denied on a vague allegation that ''almost in every activity there is a scent of commercialization/ profit motive".

(ii) Assessee is an statutory organization under the aegis of State Urban Ministry for the development of Ajmer city and

3 .

caries out the works assigned by legislature by way of relevant laws and rules.

(iii) There are various activities which are conducted by the assessee in public interest which are clearly charitable in nature, and it are not appreciated by the ld. CIT in proper manner. Merely because the activities yield surplus cannot tantamount to commercial activity as the surplus again is utilized for charitable purposes.

(iv) The analysis of various activities being charitable or otherwise is in the domain of the AO while framing the relevant assessment. A plain reading of sec. 12AA(1) reads that the ld. CIT at the time of registration may inquire about the objects and genuineness of the activities of the institution. The objects are statutory and activities are genuine. There is no adverse observation except that assessee's audit is conducted in accordance with State Govt. rules and not by chartered accountant; such vague observations cannot be held against the assessee to disentitle from registration u/s 12AA.

2.3 The ld. DR supported the order of the ld. CIT.

2.4 We have heard the rival contentions and perused the material

available on record. In our considered view, the registration cannot be

refused on the basis of vague findings like the "scent of commercial

activity" and accounts audit being as per state govt. rules and not a CA.

From the verification of the relevant Urban Development Rules, it

emerges that assessee carries on various activities which appear to be

charitable in nature. In our considered view, the ld. CIT has not

appreciated the application for registration in proper perspective, the 4 .

activities of the assessee can be judged from the documents submitted by

it. Thus looking at the entirety of the facts and circumstances of the case,

we are inclined to set aside the issue back to the file of the ld. CIT to

decide the same afresh in accordance with law by providing reasonable

opportunity of being heard to the assessee expeditiously. Thus the appeal

of the assessee is allowed for statistical purposes.

3.0 In the result, the appeal of the assessee is allowed for statistical

purposes .

Order pronounced in the open court on 16 /01/2015.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P.Tolani) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 16th January, 2015 *Mishra

vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- M/s. Urban Improvement Trust, Ajmer

2. izR;FkhZ@ The Respondent- The CIT, Ajmer .

3. vk;dj vk;qDr@ CIT, Jaipur

4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

5. xkMZ QkbZy@ Guard File (ITA No.1019/JP/2011)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@ Assistant. Registrar