Commissioner Of Income Tax (Exemptions) @APPELLANT@Hash Urban Improvement Trust & Ors.

By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has allowed the appeal of the assessee for

statistical purposes and remanded the matter back.

Counsel for the appellant has framed following substantial question of law:-

Whether on the facts and in thecircumstances of the case and in law, the ld. ITAT is right in setting aside the matter back to the AO t make the

assessment denovo relying on Hon'ble High Court's order in the case of UIT, Kota in DBIT No.357/2011 for A.Y. 2004-05, inspite of the facts that

the income of UIT is not exempt after insertion of explanation to section 10(20) w.e.f. 01.04.2003 by the Finance Act, 2002?

Whether on the facts and in thecircumstances of the case and in law, the Ld. ITAT is right in setting aside the matter back to the AO to make the

assessment denovo relying on Hon'ble High Court's order in the case of UIT, Kota in DBIT No.357/2011 for A.Y. 2004-05, which has not reached

the finality?

Whether on the facts and in circumstances ofthe case and in law, the Hon'ble ITAT is right in setting aside the following issues for denovo

proceedings:-

(i) Additions of grant of Rs.5,76,27,000/received by the assessee under Urban Infrastructure Development Scheme ignoring the fact that the

expenditure incurred on the scheme was claimed by the assessee as its business expenditure in the Income and Expenditure Account;

(ii) Addition of grant of Rs.20 crore received bythe assessee under Urban National River Conservation Plan Scheme, ignoring the fact that the

expenditure incurred on the scheme was claimed by the assessee as its business expenditure in the Income and Expenditure Account;

(iii) Addition of grant of Rs.5 Crore received bythe assessee under integrated National Housing and Slim Development Program Scheme ignoring the

fact that the expenditure incurred on the scheme was claimed by the assessee as its business expenditure in the Income and Expenditure Account;

(iv) Addition of receipt of BSUP shelter fund ofRs.13,54,241/- ignoring the fact that the expenditure incurred on the scheme was claimed by the

assessee as its business expenditure in the Income and Expenditure Account;

(v) Addition of Rs. 20,22,66,568/- on account ofreceipt from sale lf land at Rajiv Gandhi Nagar ignoring the fact that the assessee follows single entry

cash system of accounting and nothing had been paid by the assessee during the year to the government;

(vi) Addition of Rs.4,07,87,711/- being additionon acount of Niyemam Avam Urban Tax ignoring the fact that the assessee follows single entry cash

system of accounting and nothing had been paid by the assessee during the year to the government;

(vii) Addition of Rs.410 lakh being addition onaccount of payment to RUIDP;

(viii) Addition of House Rent of Rs.80,435/without appreciating the fact mentioned by the AO in the assessment order;

(ix) Addition of Rs.1,61,554/- as income by wayof Sazawati Shulk without appreciating the fact mentioned by the AO in the assessment order;

(x) Addition of Rs.8,65,80,109/- made onaccount of withheld money from payment out of contractors;

(xi) Addition of capital expenditure ofRs.10091.53 Lakh claimed as revenue expenditure without appreciating the fact mentioned by the AO in the

assessment order;

(xii) Addition of receipt of Rs.101.30 lakh fromallottees of Prem Nagar Society;

(xiii) Addition of Rs.1,26,132/- made on accountof amount deducted from advertisement expenses and retained with it under Patrakar Kosh;

(xiv) Disallowance of Rs.29,500/- made undersection 40a(ia) on account of non-deduction of TDS from the payments made to M/s Mahavir Samarity

towards swimming Pool and Gym expenses;

(xv) Disallowance of Rs.26,894/- made u/s40a(ia) on account of non-deduction of TDS from the payments to CAD centers;

(xvi) Disallowance of Rs.13,000 made u/s40a(ia) on account of non-deduction of TDS from the payments made to Shri S.N. Kumawat towards

swimming pool and Gym expenses;

(xvii) Addition of Rs.5,89,43,321/- on account ofcheques issued but time barred due to not being presented for payment;

(xviii) Addition of Rs.8,03,94,000/- made u/s69A without appreciating the facts mentioned by the AO in his assessment order;

(xix) Addition of Rs.16,652/- on account ofunaccounted bank deposits.

The facts of the case are that the assessee’s case was selected under compulsory scrutiny and therefore notice u/s 143(2) was issued by the

then Assessing Officer, ITO, Ward-1(2), Kota on 18.09.2013, which was duly served on the assessee on 19.09.2013. Durig the course of assessment

proceedings, the assessee produced bills, vouchers, cash book, etc. Before the then Assessing Officer, ITO, Ward-1(2), Kota as and when called for

by him. The then Assessing Officer, ITO, Ward-1(2), Kota found various discrepancies on the books of account and documents produced before him,

after issuing summons u/s 131 of the I.T. Act, 1961, the same were impounded by him u/s 131(3). Subsequently, the then Assessing Officer, ITO,

Ward-1(2), Kota having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts,

multiplicity of transactions in the accounts or specialised nature of business activity of the assessee, and the interests of the revenue, was of the

opinion that it is necessary to get the accounts of the assessee audited by an accountant u/s 142(2A) of the I.T. Act, 1961. Accordingly, the then

Assessing Officer, ITO, Ward-1(2), Kota after affording an opportunity of being heard to the assessee and with the previous approval of the Pr.

Commissioner of Income Tax, Kota directed the assessee to get its books of account and documents examined by an accountant u/s 142(2A) of the

I.T. Act.

Now the issue is squarely covered by the decision of this court in ITA No.643/2008 (The Commissioner of Income Tax vs. Urban Improvement

Trust) and other connected matters decided on 25.7.2017 wherein it has been held as under:-

“15. It is true that the functions which are carried out by the assessee are statutory functions and carry on for the benefit of the State Government

for urban development therefore, in our considered opinion, the functions carried out by the authority is a supreme function and fall within the activity

of the State Government.

In that view of the matter, the judgments which are strongly relied upon by counsel for the department are of no help in the facts of the case as

the case relied upon by the department was in respect of industrial corporation which was under the statute for the purpose of making profit. The fees

and other charges which are covered are statutorily for the development of the urban area. In that view of the matter, the judgment which sought to

be relied upon by the counsel for the respondents, in our considered opinion, would be of importance and the functions which are carried out by the

assessee is statutory function. In our considered opinion, under clause-10 (20) & Sub-cluase (3) Municipal Committee and District Board are legal

entity entrusted by the function of the Government within the control or management of the municipal or local authority and will try to help the

assessee.

In that view of the matter, the reliance placed by counsel for the department regarding 10(20) and explanation A will not make any difference.

Taking into consideration income of authority is under constitution of India vide order enacted either for the purpose of dealing with or setting up the

housing scheme for the purpose of planning and development of the improvement of the cities, town and villages or both for which the authority are

created to carry out the function of State which are sovereign whereas the urban development and calculation of development charges will fall under

the development charges.

In that view of the matter, deletion of 20A will not make difference in case of assessee. In our considered opinion, Clause-3 will come in the help

of the assessee. In that view of the matter, we are considered opinion, that the authority assessee is a local authority for the purpose of carrying out of

the improvement anddevelopment function of the State.

In that view of the matter, the issue is required to be answered in favour of the assessee against the department. In view of the answer, other

issues are become academic, therefore, we are not deciding those issue.â€​

In that view of the matter, no substantial question of law arises.

The appeal stands dismissed.