Commissioner Of Income Tax (Exemptions), 3[Rd] Floor, Kailashheights, Lal Kothi, Tonk Road, Jaipur v. Urban Improvement Trust, Uit Building, Near Cad Circle, Kota(Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 322/2018 Commissioner Of Income Tax (Exemptions), 3[rd] Floor, KailashHeights, Lal Kothi, Tonk Road, Jaipur. ----Appellant Versus Urban Improvement Trust, UIT Building, Near CAD Circle, Kota(Raj). ----Respondent For Appellant(s) : Mr. Shantanu Sharma, Advocate with Ms. Bhavana Lodha, AdvocateMs. Bhavana Lodha, Advocate For Respondent(s) : Mr. Rajat Sharma, Advocate with Mr. Aryan Singh, Advocate for Mr. Prakul Khurana, Advocate HON'BLE MR. JUSTICE MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE PRAVEER BHATNAGAR Judgment / Order 02/08/2023 Heard. This appeal was admitted on following substantial questions of law:- “i.Whether on the facts and circumstances ofthe case and in law the ld. ITAT was right inallowing the benefit of section 10(20) of the Act,relying upon the decision of the Hon’ble HighCourt in the case of assessee in DB ITANo.73/2011and357/2011dated25.07.2017,inspite of the fact that the income ofUIT is not exempt after insertion of explanation ofsection10(20) by the Finance Act, 2002 w.e.f.01.04.2003? ii.Whether on the facts and circumstances ofthe case and in law the assessee would be still beheld eligible for exemption u/s 10(20) of the Act inspite of the fact that the Hon’ble Supreme Court vide its judgment/order dated 12.10.2018has heldUrban Improvement Trust not eligible for theexemption u/s 10(20)? iii.Whether on the facts and circumstances ofthe case and in law the Hon’ble ITAT is right inignoring the fact that assessee failed to maintainits Books of Accounts as well as getting audited ofthe same in accordance to the provision of section12(A)(1)(b) of the Act,1961?” Learned counsel for the parties would jointly submit thatthat the questions of law were framed by this Court keeping inview the judicial pronouncement of this Court in D.B. Income TaxAppeal Nos.73/2011 and 357/2011 dated 25.07.2017, admittingthe appeal on above substantial questions of law. Learned counsel for the parties would jointly submitted thatthe issue raised in the present case is no longer res integra in viewof the judicial pronouncement of the Hon’ble Supreme Court in thecase of The Income Tax Officer Vs. Urban Improvement Trust (CivilAppeal No. 10577/2018 and other connected matters) decided on12.10.2018. The decision of the ITAT in allowing benefit of Section 10(20)of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’),proceeded on the decision of this Court in the case of assessee inD.B. Income Tax Appeal Nos. 73/2011 and 357/2011. The Hon’ble Supreme Court in the case of The Income TaxOfficer Vs. Urban Improvement Trust (supra) has reversed thedecision of the High Court on which the ITAT relied upon andallowed the benefit of Section 10 (20) of the Act to the assessee. Accordingly, the question of law framed are answered in themanner that under the scheme of Rajasthan Urban ImprovementAct, 1959, Urban Improvement Trust is not a local authority withinthe meaning of Clause (iii) of Explanation to Section 10(20) of theAct. Consequently, the order passed by the ITAT is heldunsustainable in law and set aside. We, however, find that the order of ITAT as well as theCommissioner of Income Tax did not decide other issue arising forconsideration in appeal on account of decision on the issue withregard to applicability of the exemption clause. The case is,therefore, remanded to CIT appeal for consideration andadjudication on other grounds raised in appeal. (PRAVEER BHATNAGAR),J (MANINDRA MOHAN SHRIVASTAVA),J