Section 10(20A) — the law in short
What the courts have decided on section 10(20A), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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ACIT v Ahmedabad Urban Development Authority
Supreme CourtCuts both ways
We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
Only if the fees are pitched above cost. Charging on a cost or nominal mark-up basis is not trade, commerce or business; charges noticeably higher than cost are. Even permissible commercial activity must be carried on in the actual course of achieving the general public utility object, and receipts from it must stay within 20 per cent of total receipts.
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Adityapur Industrial Area Development Authority v Union of India
Supreme CourtHelps department
Section 10(20A) has been omitted and we are outside the new s.10(20) Explanation. Can we still say our income is the State's income and immune under Article 289?
No. The Supreme Court held that where a development authority is constituted under a State Act with its own funds, its own assets and its own liabilities, the income is the authority's own income and not the income of the State, so Article 289(1) does not help. The withdrawal of s.10(20A) by the Finance Act 2002 and the narrowing of s.10(20) by the Explanation from 1 April 2003 were deliberate, and a benefit expressly taken away cannot be recovered through the Constitution.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
