ANDHRA PRADESH URBAN INFRASTRUCTURE FUND Vs. DIRECTOR OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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Saktijit Dey, Member (J) -
(1.) THE appeal of the assessee is directed against the order dated 28 -2 -2013 passed by the DIT (E), Hyderabad rejecting the assessee's application for grant of registration u/s. 12AA of the Act.
(2.) BRIEFLY , the facts are the assessee a trust created by the Government of Andhra Pradesh was formed vide trust deed executed on 23 -2 -2005, the settlor of the trust is Governor of Andhra Pradesh and members of trust board are as under: - -
a) Chief Secretary of Andhra Pradesh - Chairman
b) Principal Secretary to Government, Finance Deptt. - Trustee
c) Prl. Secy./Secretary to Govt. MA&UD Deptt. - Trustee
d) Prl. Secy to Govt., Planning Deptt. - Trustee
e) Prl. Secretary to Govt. Housing Deptt. - Trustee
f) Commissioner and Director of Municipal Administration - Trustee
g) Managing Director, APUFIDC - Secretary of Trust
The trust was created with the primary object of financing infrastructure projects in the State of Andhra Pradesh undertaken by urban local bodies, statutory bodies, public sector undertakings and private investors, as the settler has noted the need for providing cost effective finance for urban infrastructure through direct loans, EPT and also providing for raising resources on it pooled basis and also provide new credit enhancements for achieving the objective of low cost finance for the urban sector. The assessee made an application in the prescribed manner on 30 -5 -2007 before the DIT (E) seeking registration, u/s. 12AA of the Act. The application was initially rejected by the DIT (E) vide order dated 22 -11 -2007 for the reason that the assessee failed to furnish the information called for and did not make the required compliance to the queries made by him.
The assessee challenged the order passed by the DIT (E) refusing registration by filing an appeal before the ITAT. The Tribunal vide order dated 31 -3 -2008 in ITA No. 128/Hyd/2008 set aside the order assessed by the DIT (E) and remitted the matter back to him for considering the matter afresh after providing a reasonable opportunity of being herd to the assessee. In pursuance to the order passed by the ITAT, the DIT (E) took up the proceedings again by issuing a notice to the assessee on 2 -8 -2008. In course of proceedings, the DIT (E) sought for clarification from the assessee on different issues. He also called upon the assessee to submit a note describing the factual position. The DIT (E) after examining the books of accounts also sought clarification with regard to certain expenditure debited in the account for different financial years and also asked the trust to produce the bank statement for the preceding three financial years i.e., 2004 -05 to 2006 -07. After examining the books of accounts and verifying other information furnished by the assessee, the DIT (E) noted that the assessee trust was formed pursuant to G.O. No. 72 of Municipal Administration and Urban Development Department dated 18 -2 -2005 of Government of Andhra Pradesh. On going through the object of the trust as mentioned in the trust deed, the DIT (E) noted that the trust was created primarily for the purpose of providing finance for infrastructure project in the State of Andhra Pradesh. Referring to paras 2 and 3 at page -4 of the trust deed, the DIT (E) noted that the purpose for which the trust has been created i.e., finance for infrastructure projects in the state of Andhra Pradesh under taken by different bodies is not charitable having regard to the meaning of 'charitable purpose' as contained in the provisions of section 2(15) of the Act. Hence the registration cannot be granted u/s. 12A of the Act to the assessee. Further, referring to the main objects of the assessee as contained in section 2.3 under Article -II at page -9 of the said trust deed, the DIT (E) was of the view that as a whole the assessee trust is mainly providing financial assistance to different bodies for development of infrastructure projects which does not fit in to the term 'charitable purpose' as defined in section 2(15) of the Act, as the objects of the trust cannot be considered to be for general public utility. The DIT (E) on going through some clauses of the trust deed was of the view that not only the trust has been formed by the Government of Andhra Pradesh but the Govt., of A.P is also the sole beneficiary of the Trust. Further referring to clause -5 of the trust deed, it is noted that the trust is fully owned by Government of Andhra Pradesh. From this, the DIT (E) concluded that as the entire income from the trust is meant for the Govt., of A.P and as the trust is wholly owned by Government of Andhra Pradesh and the Government of AP is the sole beneficiary, it cannot be granted registration u/s. 12AA of the Act by treating it as public charitable institution. With the aforesaid observation, the DIT (E) rejected the assessee's application for registration.
(3.) THE learned AR referring to the preamble of the trust deed as well as other clauses submitted that the mission statement declares that trust would facilitate the sustained development of urban infrastructure in the state by enabling urban local bodies and other local entities to have access to low cost capital by supporting urban sector reforms to make them creditworthy and eventually access the capital market on their own and by facilitating public private community initiative for building urban infrastructure. The learned AR referring to the object of the trust as contained in section 2.3 of Article II of the trust deed submitted that the trust receives monies from Central and State government Urban Infrastructure oriented schemes. In the preceding years, he trust received funds grants from Central Government under Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Urban Infrastructure Development Scheme for small and medium Towns (UIDSSM) and Integrated Housing and Development Program and, from State Govt., under AP Municipal Development Project. It was submitted that these funds were utilized by the Trust to sanction grants and loans with nominal interest, to various Urban Local Bodies (Municipalities and Municipal Corporations) based on the approved urban infrastructure plan. It is submitted that the components to which these grants can be released to Urban Local Bodies is specified in the scheme framed by the Government and the trust has to adhere to the norms fixed by the Government and the eligible items under these schemes generally include sewerage, storm water drainage, solid waste management, improve infrastructure facilities in towns, create durable public assets, to promote planned integrated development of towns and cities. It was submitted that portion of the amount to be released is earmarked as loan to the ULB with an intention to create a revolving fund, which will received the loan repayments from these ULB and utilize the same to fund urban infrastructure projects in future.;
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