The CBDT – Ministry of Finance, Government of India, issued a notification on 23.06.2020 exempting specific incomes of the Greater Noida Industrial Development Authority, under Section 10 (46) of the Income Tax Act, 1961.
The Authority had engaged SARC & Associates – a leading Delhi based C.A. firm, founded by Sh. Sunil Kumar Gupta, for advocating its case for exemption. It is apposite to mention here that SARC & Associates has also recently been appointed by the Government of India as the official auditor for the PM Cares Fund.
CBDT had rejected Application in 2015
The CBDT, in 2015, had rejected an Application filed by the Authority requesting for notification of its “specified income” under Section 10 (46) of the Income Tax Act, 1960 for exemption from tax. The rejection was based on the grounds that the Authority was engaged in activities of commercial nature, such as the lease of immoveable properties, construction, and sale of immovable properties, etc., through which it was making huge profits, thereby not complying with sub-clause (b) of S. 10 (46), as per which exemption will not applicable on entities engaged in any commercial activity.
Writ Petition in the Delhi High Court
In a Writ Petition [W.P. (C) No. 732/2017] filed by the Authority, the Hon’ble Delhi High Court, vide order dated 26.02.2018, held the Authority eligible for exemption under Section 10 (46) of the Income Tax Act, 1961 and directed the CBDT to issue the necessary notification within three months.
The Authority’s case was successfully pleaded by Sh. Balbir Singh learned Senior Advocate. It was submitted that the Authority satisfied all the criteria laid down in S. 10 (46), being an Authority constituted under the Uttar Pradesh Industrial Development Act, 1976, by virtue of which, the Authority was mandated to perform only those functions/activities, as prescribed under Section 6 of the said Act, which is of general public utility and aimed at regulation/development of the concerned area, without any view of earning profits. It was further pleaded that even though profits were generated in carrying out its activities, the same were applied towards performing the mandated functions/activities in terms of Section 20 of the said Act.
Challenge in the Supreme Court
The above order was challenged before the Hon’ble Supreme Court of India in Special Leave Petition [SLP (C) No. 27827/2018]. The Authority, under the guidance of Sh. Sunil Kumar Gupta, Founder – SARC & Associates, was able to successfully contest the challenge being led by Sh. Jasmeet Singh, an Advocate on Record at the Supreme Court, as the challenge was dismissed vide order dated 25.11.2019, thereby confirming the landmark judgment passed by the Delhi High Court.
Notification passed by the CBDT in 2020
The Authority was finally notified by the CBDT (bearing no. S.O. 2014(E)) on 23.06.2020, as per which the incomes of the Authority from state government grants, monies/lease rent/fees/charges received in 90 years lease of immovable properties, interest from funds deposited in banks, interest/penalties received for deferred payments by allottees of immovable properties as also municipal charges received from such allottees, have been exempted.
Mr. Sunil Kumar Gupta said, “The Greater Noida Authority is the first of its kind to have received exemption Section 10 (46). It is going to have lasting impacts in the years to come.” Mr. Jasmeet Singh, an advocate who had been assisting the Authority and Sh. Sunil Kumar Gupta since the inception of the litigation added that the exemption would also help the Authority in efficiently carrying out its public duties.
[Report by Saif Ali (Advocate)]