The Assessing Officer says my statutory authority's port charges and lease rentals are trade or business, so the proviso to s.2(15) denies exemption. How is that tested after Ahmedabad Urban Development Authority?
The size of the receipts and of the surplus is not the test. Applying the Supreme Court's framework in Ahmedabad Urban Development Authority, the Tribunal held that what matters is the statutory setting in which the receipts arise, the nature of the functions discharged, the manner in which the charges are fixed and regulated, and the destination of the surplus — and on that footing the Board continued to fall within 'advancement of any other object of general public utility' and remained entitled to exemption under ss.11 and 12.
Decided by the ITAT (Dr. B.R.R. Kumar, Vice President and Siddhartha Nautiyal, Judicial Member — ITAT Ahmedabad "C" Bench) on 2026-05-13, reported as ITA Nos. 440/Ahd/2022, 117/Ahd/2023, 118/Ahd/2023, 561/Ahd/2022, 211/Ahd/2023 and 212/Ahd/2023, AYs 2017-18 to 2019-20. It bears on section 2(15), section 11, section 11(6), section 12, section 13(8) of the Income Tax Act 1961, in Charitable Trusts & Exemption, Capital Gains Exemptions and How Tax Law Is Read matters.
This is how the twenty per cent proviso is being worked in practice for statutory bodies, and it is more nuanced than either side usually admits. The Tribunal records the AUDA framework as requiring two controlling factors — whether the receipt-generating activity is intrinsically connected with and in the course of actually carrying out the object of general public utility, and whether the receipts from that activity exceed the quantitative threshold in the proviso. What it then does is decide the first limb and never reach the second: it holds that the Departmental Representative had not segregated any stream of income arising from an activity not in the course of actually carrying out the public utility objects, and that in the absence of that factual demonstration the proviso cannot be mechanically invoked on the basis of scale of operations or size of surplus. So the practical burden this order places on the Revenue is a stream-by-stream analysis, not an aggregate one. Read the disposal carefully before relying on it: the assessee's appeals were allowed for statistical purposes and the Department's partly allowed for statistical purposes, so much of the matter went back, and separate issues on depreciation and s.11(6) were restored.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The Gujarat Maritime Board is a statutory authority constituted under the Gujarat Maritime Board Act 1981 with the mandate of development, maintenance, control and management of minor ports in Gujarat, provision of navigational facilities, dredging, safety measures, port infrastructure and coastal development. Its functions as found by the Tribunal include formulation of port development policy, preparation and approval of master plans, regulation of port operations, control of vessel traffic, maritime safety and security, dredging policy, coastal zone protection, disaster management in coastal areas and coordination with Central Government and defence agencies. It earns port dues, wharfage, berth hire, pilotage, vessel traffic service charges, lease rentals of port lands, harbour craft charges, other user fees and interest on deposits. For AYs 2017-18 to 2019-20 exemption under ss.11 and 12 was denied on the footing that these activities attracted the proviso to s.2(15). The Departmental Representative relied on the scale of receipts, the consistent generation of surplus, the accumulation of reserves, competition with private port operators, market-linked tariffs and concession agreements with private entities. Separate issues arose on depreciation and on s.11(6) inserted by the Finance (No. 2) Act 2014, and on dividend income.
On the s.2(15) issue, the Board continues to fall within 'advancement of any other object of general public utility' and is entitled to exemption under ss.11 and 12 for the year under consideration; Ground 1 of the Department's appeal was dismissed (paras 26 and 27, repeated at paras 35, 40-41 and 48-49 for the other years). In the combined result the appeals of the assessee were allowed for statistical purposes and the appeals of the Department partly allowed for statistical purposes (para 51). The s.11(6) issue was restored to the file for fresh consideration (paras 33 and 34).
The Tribunal set out the AUDA framework at paragraph 20.1: after the 2015 amendment the traditional predominant object test is no longer decisive by itself, and two controlling factors must be examined — whether the receipt-generating activity is intrinsically connected with and in the course of actually carrying out the object of general public utility, and whether the receipts from that activity exceed the quantitative threshold in the proviso; statutory bodies in housing, town planning, industrial development and similar essential public services cannot automatically be branded commercial merely because they recover charges, and what is required is a year-wise scrutiny of the nature of receipts, the statutory framework, the manner of fixation of rates, the destination of surplus and the extent of governmental control. It noted the Supreme Court's reaffirmation in Khurja Development Authority that AUDA governs the field, and the application of AUDA by three High Courts to development authorities and industrial corporations (paras 20.2 to 20.5). Applying that to the facts it held that the Board's activities emanate directly from the parent legislation, that the charges are authorised and regulated by statute, and that there was nothing to suggest an independent commercial venture divorced from the statutory mandate (para 21). Against the Departmental Representative's reliance on scale it held that large receipts or surplus cannot by themselves determine the character of the activities (para 23); that the heads of income were not shown to be alien to the statutory mandate (para 24); that the Revenue had not demonstrated that tariffs are freely fixed in an unfettered commercial manner, the Board being subject to statutory rules, government policy and pervasive State control (para 24.1); that there was no evidence of surplus being distributed to any private stakeholder or diverted to non-statutory purposes, the accounts showing it earmarked for port development, dredging, safety infrastructure, expansion, coastal protection and capital assets (para 24.2); that concession agreements and leasing of port land within port limits are recognised modes of fulfilling a developmental mandate in a capital-intensive sector and cannot be equated with an independent trade (para 25); and, decisively, that the Departmental Representative had not segregated any specific stream of income arising from an activity not in the course of actually carrying out the public utility objects, so that the proviso could not be mechanically invoked on the basis of scale of operations or size of surplus (para 25.1). Paragraphs 25.2 to 25.4 add that the Board's policy, regulatory and sovereign functions are incapable of being performed by private entities.
We find that the mere presence of large receipts or surplus, by itself, cannot be determinative of the character of the assessee's activities.
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Handle my notice → Ask a CA on WhatsAppThe size of the receipts and of the surplus is not the test. Applying the Supreme Court's framework in Ahmedabad Urban Development Authority, the Tribunal held that what matters is the statutory setting in which the receipts arise, the nature of the functions discharged, the manner in which the charges are fixed and regulated, and the destination of the surplus — and on that footing the Board continued to fall within 'advancement of any other object of general public utility' and remained entitled to exemption under ss.11 and 12. This was decided by the ITAT (Dr. B.R.R. Kumar, Vice President and Siddhartha Nautiyal, Judicial Member — ITAT Ahmedabad "C" Bench) and bears on section 2(15), section 11, section 11(6), section 12, section 13(8) of the Income Tax Act 1961. It is reported as ITA Nos. 440/Ahd/2022, 117/Ahd/2023, 118/Ahd/2023, 561/Ahd/2022, 211/Ahd/2023 and 212/Ahd/2023, AYs 2017-18 to 2019-20. This is how the twenty per cent proviso is being worked in practice for statutory bodies, and it is more nuanced than either side usually admits. The Tribunal records the AUDA framework as requiring two controlling factors — whether the receipt-generating activity is intrinsically connected with and in the course of actually carrying out the object of general public utility, and whether the receipts from that activity exceed the quantitative threshold in the proviso. What it then does is decide the first limb and never reach the second: it holds that the Departmental Representative had not segregated any stream of income arising from an activity not in the course of actually carrying out the public utility objects, and that in the absence of that factual demonstration the proviso cannot be mechanically invoked on the basis of scale of operations or size of surplus. So the practical burden this order places on the Revenue is a stream-by-stream analysis, not an aggregate one. Read the disposal carefully before relying on it: the assessee's appeals were allowed for statistical purposes and the Department's partly allowed for statistical purposes, so much of the matter went back, and separate issues on depreciation and s.11(6) were restored. If it applies to you, the first step is this: Make the Revenue identify, receipt head by receipt head, which stream is said to arise from an activity not in the course of actually carrying out the object of general public utility; the Tribunal's ground for rejecting the proviso was the absence of that segregation.
The Gujarat Maritime Board is a statutory authority constituted under the Gujarat Maritime Board Act 1981 with the mandate of development, maintenance, control and management of minor ports in Gujarat, provision of navigational facilities, dredging, safety measures, port infrastructure and coastal development. Its functions as found by the Tribunal include formulation of port development policy, preparation and approval of master plans, regulation of port operations, control of vessel traffic, maritime safety and security, dredging policy, coastal zone protection, disaster management in coastal areas and coordination with Central Government and defence agencies. It earns port dues, wharfage, berth hire, pilotage, vessel traffic service charges, lease rentals of port lands, harbour craft charges, other user fees and interest on deposits. For AYs 2017-18 to 2019-20 exemption under ss.11 and 12 was denied on the footing that these activities attracted the proviso to s.2(15). The Departmental Representative relied on the scale of receipts, the consistent generation of surplus, the accumulation of reserves, competition with private port operators, market-linked tariffs and concession agreements with private entities. Separate issues arose on depreciation and on s.11(6) inserted by the Finance (No. 2) Act 2014, and on dividend income. The matter was decided on 2026-05-13 by the ITAT (Dr. B.R.R. Kumar, Vice President and Siddhartha Nautiyal, Judicial Member — ITAT Ahmedabad "C" Bench). On those facts the ITAT held as follows. On the s.2(15) issue, the Board continues to fall within 'advancement of any other object of general public utility' and is entitled to exemption under ss.11 and 12 for the year under consideration; Ground 1 of the Department's appeal was dismissed (paras 26 and 27, repeated at paras 35, 40-41 and 48-49 for the other years). In the combined result the appeals of the assessee were allowed for statistical purposes and the appeals of the Department partly allowed for statistical purposes (para 51). The s.11(6) issue was restored to the file for fresh consideration (paras 33 and 34).
The Tribunal set out the AUDA framework at paragraph 20.1: after the 2015 amendment the traditional predominant object test is no longer decisive by itself, and two controlling factors must be examined — whether the receipt-generating activity is intrinsically connected with and in the course of actually carrying out the object of general public utility, and whether the receipts from that activity exceed the quantitative threshold in the proviso; statutory bodies in housing, town planning, industrial development and similar essential public services cannot automatically be branded commercial merely because they recover charges, and what is required is a year-wise scrutiny of the nature of receipts, the statutory framework, the manner of fixation of rates, the destination of surplus and the extent of governmental control. It noted the Supreme Court's reaffirmation in Khurja Development Authority that AUDA governs the field, and the application of AUDA by three High Courts to development authorities and industrial corporations (paras 20.2 to 20.5). Applying that to the facts it held that the Board's activities emanate directly from the parent legislation, that the charges are authorised and regulated by statute, and that there was nothing to suggest an independent commercial venture divorced from the statutory mandate (para 21). Against the Departmental Representative's reliance on scale it held that large receipts or surplus cannot by themselves determine the character of the activities (para 23); that the heads of income were not shown to be alien to the statutory mandate (para 24); that the Revenue had not demonstrated that tariffs are freely fixed in an unfettered commercial manner, the Board being subject to statutory rules, government policy and pervasive State control (para 24.1); that there was no evidence of surplus being distributed to any private stakeholder or diverted to non-statutory purposes, the accounts showing it earmarked for port development, dredging, safety infrastructure, expansion, coastal protection and capital assets (para 24.2); that concession agreements and leasing of port land within port limits are recognised modes of fulfilling a developmental mandate in a capital-intensive sector and cannot be equated with an independent trade (para 25); and, decisively, that the Departmental Representative had not segregated any specific stream of income arising from an activity not in the course of actually carrying out the public utility objects, so that the proviso could not be mechanically invoked on the basis of scale of operations or size of surplus (para 25.1). Paragraphs 25.2 to 25.4 add that the Board's policy, regulatory and sovereign functions are incapable of being performed by private entities. In the words reproduced by the source cited on this page: "We find that the mere presence of large receipts or surplus, by itself, cannot be determinative of the character of the assessee's activities." The decision followed or applied ACIT (Exemptions) v. Ahmedabad Urban Development Authority [2022] 449 ITR 1 (SC), as clarified — applied as the binding framework; CIT (Exemption) v. Khurja Development Authority [2025] 307 Taxman 382 (SC) — relied on as reaffirming AUDA; CIT v. Haryana Rural Development Fund Administration Board [2024] 165 taxmann.com 379 (P&H) — relied on; CIT (Exemptions) v. Jaipur Development Authority [2024] 166 taxmann.com 5 (Raj.) — relied on; CIT (Exemptions), Ahmedabad v. Gujarat Industrial Development Corporation [2025] 181 taxmann.com 940 (Guj.) — relied on.
It was decided by the ITAT on 2026-05-13 and is reported as ITA Nos. 440/Ahd/2022, 117/Ahd/2023, 118/Ahd/2023, 561/Ahd/2022, 211/Ahd/2023 and 212/Ahd/2023, AYs 2017-18 to 2019-20. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 2(15), section 11, section 11(6), section 12, section 13(8), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. On the s.2(15) issue, the Board continues to fall within 'advancement of any other object of general public utility' and is entitled to exemption under ss.11 and 12 for the year under consideration; Ground 1 of the Department's appeal was dismissed (paras 26 and 27, repeated at paras 35, 40-41 and 48-49 for the other years). In the combined result the appeals of the assessee were allowed for statistical purposes and the appeals of the Department partly allowed for statistical purposes (para 51). The s.11(6) issue was restored to the file for fresh consideration (paras 33 and 34). It arises in Charitable Trusts & Exemption, Capital Gains Exemptions and How Tax Law Is Read matters, on section 2(15), section 11, section 11(6), section 12, section 13(8) of the Income Tax Act 1961, and was decided by Dr. B.R.R. Kumar, Vice President and Siddhartha Nautiyal, Judicial Member — ITAT Ahmedabad "C" Bench. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Assemble the statutory material: the parent Act, the provisions under which tariffs and user charges are fixed, the government resolutions and the regulatory oversight, and the constraints on utilisation of funds and capital expenditure. Show where the surplus goes. Evidence that surpluses are earmarked for statutory purposes and are not distributed to any private stakeholder or diverted to non-statutory ends did substantial work here. If concession agreements or public-private partnership arrangements are relied on against you, show that the regulatory and sovereign powers — declaring ports, regulating entry, levying statutory charges, safety and environmental enforcement, land allocation, long-term planning — remain exclusively with the authority. Compute the proviso ratio for each year anyway. This order does not do the arithmetic, and a case that turns on the twenty per cent limb will need it.
Validity check could not be completed. Validity check could not be completed — the order was pronounced on 13 May 2026 and I did not search for any appeal under s.260A or later treatment. The order applies AUDA rather than adding to it, and it does not apply the twenty per cent quantitative limb of the proviso to any year's figures. Indiankanoon carries a second document at /doc/178223268/ with the same parties, bench and date, which appears to be the cross-appeal listing of the same order; I did not open it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to fifty-one numbered paragraphs, with sub-paragraphs 20.1 to 20.5, 24.1, 24.2 and 25.1 to 25.4; I established this by making the fetch transcribe the opening words of every numbered paragraph in sequence rather than by asking for a count. It attributes specific paragraph numbers to the Supreme Court's judgment in Ahmedabad Urban Development Authority — 142, 150 and 179 on regulatory and policy functions, 153, 176 and 190(iv)(a) on recovery of fees, and 179, 187 and 190(iv)(f) on regulated private participation. I did not open AUDA on this pass, and those locators are reproduced as the Tribunal's own attributions, unverified. Nor did I read Khurja Development Authority (SC), Haryana Rural Development Fund Administration Board (P&H), Jaipur Development Authority (Raj.) or Gujarat Industrial Development Corporation (Guj.), on all of which the Tribunal relies. The twenty per cent quantitative threshold is referred to in general terms at paragraph 20.1 and is not applied numerically to any year in this order. The combined disposal at paragraph 51 reads "appeal of the assessee are allowed for statistical purposes and appeals of the Department are partly allowed for statistical purposes", the grammatical slip being as printed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
On the s.2(15) issue, the Board continues to fall within 'advancement of any other object of general public utility' and is entitled to exemption under ss.11 and 12 for the year under consideration; Ground 1 of the Department's appeal was dismissed (paras 26 and 27, repeated at paras 35, 40-41 and 48-49 for the other years). In the combined result the appeals of the assessee were allowed for statistical purposes and the appeals of the Department partly allowed for statistical purposes (para 51). The s.11(6) issue was restored to the file for fresh consideration (paras 33 and 34).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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Our society runs a college but also earns from hostels and events. Can we get 10(23C)(vi) approval?