NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY vs UNION OF INDIA & ORS.

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 13 May 2024
Judgment pronounced on: 11 July 2024

+ W.P.(C) 4711/2021
NEW OKHLA INDUSTRIAL DEVELOPMENT
AUTHORITY ….. Petitioner

Through: Mr. Balbir Singh, Sr. Adv. with Mr. Jasmeet Singh, Mr. Mahinder Singh Hura, Mr. Saif Ali, Mr. Pushpendra S. Bhadoria, Mr. Karan Sachdev, Mr. Vijay Sharma, Ms. Mamta Chakraborty, Mr. Pranav Menon & Mr. Ransiv Khatana, Advs.

Versus

UNION OF INDIA & ORS. ….. Respondents

Through: Ms. Nidhi Raman, CGSC with Mr. Zubin Singh, Adv. for Resp./UOI.
Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, JSC.

CORAM:
HON’BLE MR. JUSTICE YASHWANT VARMA
HON’BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

J U D G M E N T

YASHWANT VARMA, J.

1. The New Okhla Industrial Development Authority1, an entity constituted under the Uttar Pradesh Industrial Area Development Act, 19762 impugns the order dated 24 December 2020 in terms of which the Central Board of Direct Taxes3 has refused to accede to its prayer for being accorded appropriate certification as contemplated in terms of Section 10(46) of the Income Tax Act, 19614. The aforenoted statutory provision enables the CBDT to certify the specified income of a body or authority constituted under a Central, State or Provincial enactment or one which is created by the Union or the State Governments with the object of regulating and administering any activity for the benefit of the general public and which is not engaged in any commercial activity to be exempt from taxation with the income so specified not being liable to be included in its total income of the previous year.
2. The impugned order has come to be passed based on an application made in November 2011 by NOIDA for being accorded the requisite certification under Section 10(46) of the Act. The record would reflect that since the said application had remained pending for a considerable period of time, the petitioner was constrained to approach this Court by way of W.P.(C) 5574/2020 which came to be disposed of on 24 August 2020 with the Court directing the CBDT to decide the petitioner’s application within 12 weeks.
3. As would be evident from a reading of the order impugned before us, the CBDT has principally drawn an adverse inference in light of NOIDA having extended loans to various entities. This becomes evident from a reading of the facts as encapsulated in Para 7.1 of the impugned order which is extracted hereinbelow:-
“7.1 Vide reply dated 10.12.2020, the Authority also furnished the Balance Sheet for FY 2017-18 to 2018-19. Perusal of the same indicates that loans as under have been advanced:

(Amount in Rs.)

FY
2016-17
2017-18
2018-19
Loan to UPSIDC
4,50,00,000
4,50,00,000
2,31,19,86,565
Loan to UP Textiles Corporation
9,39,19,851
9,39,19,851
9,39,19,851
Loan to UPIDA
1,00,00,000
1,00,00,000
1,00,00,000
Loan to UP Handloom Corp
5,00,00,000
5,00,00,000
5,00,00,000
Loan to Yamuna Expressway Authority
11,61,15,33,332
11,52,81,33,332
11,52,81,33,332
Loan to Greater Noida Authority
33,29,91,13,945
33,29,91,13,945
32,83,70,02,704
Loan to UPPCL
2,50,00,00,000
2,50,00,00,000
2,50,00,00,000
Loan to Agra Development Authority
59,12,52,176
59,12,52,176
32,39,04,333
Loan to Amarpali Silicon City-IRP
–
1,05,00,000
1,05,00,000
Loan to YEIDA-Jewar Airport
–
3,30,00,00,000
–

4. Holding that the reply furnished by NOIDA was inconsistent and that the extension of loans appear to be activities undertaken otherwise than for the benefit of the general public, the impugned order observes as follows:-
“7.2 The replies furnished by the applicant have been seen and found to be inconsistent. It is not clear as to how the loans and advances given to UP Textiles Corporation, UP Handloom Corporation, UPRRN and also to private parties like M/s Amarpali Silicon City are keeping with the objectives of the Authority. The perusal of the above reply indicates that you are engaged in the activities of advancing loans and advances on a routine basis, thereby undertaking an activity in the nature of trade, commerce or business or rendered in relation to trade, commerce or business. The fact that the applicant is constituted by the state government and is established with the object of regulating or administering the activity for the benefit of the general public is being used as a mask or device to hide the true purpose which is trade, commerce or business or in the nature of commercial activity, aiming at earning a profit. Any institution claiming its activity to be of general public activity shall eschew any activity which is in the nature of commercial activity, otherwise it defeats the purpose of the provisions of the Act.
7.3 The financial statements furnished by the Authority shows that there are huge Loans and approximately Rs. 5,000 crores that have been advanced in FY 2018-19 and more than Rs. 5000 Crores in FY 2017-18 to various entities including private parties, which have no direct, immediate and fundamental connection with the role, objective, function and duties of the applicant. The applicant has earned huge interest income to the tune of Rs. 793 crores in AY 2018-19 and approx Rs. 350 crores in AY 2017-18. It is pertinent to mention that the money and funds received by the applicant are to be used for only planned development of the Municipal Services which shall be in the nature of public good. In fact, it is observed that the applicant Authority has advanced loans to private parties like M/s Amarpali Silicon City out of its funds. The activities of advancing such loans is in contravention of section 20(2) of the UPID Act which provides that the fund shall be applied towards meeting the expenses incurred by the Authority in the administration of this Act and for no other purposes. Since, both the income and application of money as discussed in the above table has no bearing with the objectives of the Authority and is resorted to with the sole motive of making profit, there should not be any ambiguity w.r.t. taxability of such income. There is no argument against utilization of funds by the Authority in making investments or advancing loans, however, the income generated from such instruments cannot be claimed to be exempt from taxation. The Authority may utilize the funds as it deems fit, but at the same time must pay the taxes due to the exchequer.”

5. Apart from the above, the CBDT has also observed that NOIDA had made huge investments in bonds, shares of various entities and created interest yielding fixed deposits which again could not be said to have had any “direct, immediate and fundamental connection” with the role assigned to it under the UPID Act and thus being in contravention of Section 20(2) thereof. On an overall consideration of the above, the CBDT came to conclude that NOIDA was systematically indulging in activities which were commercial in character and undertaken with the view to earning profit. In view of the above, the CBDT concluded that the petitioner did not fulfill the conditions for grant of exemption as contemplated under Section 10(46). It is the aforesaid view as taken by CBDT which is assailed before us.
6. Before proceeding to chronicle the rival submissions which were addressed, it would be appropriate to advert to the salient facts which would be relevant for the purposes for rendering a decision on the present writ petition. The application for the registration and issuance of an appropriate notification in terms of Section 10(46) was initially made by the writ petitioner on 15 November 2011. On 10 December 2014, it supplemented the aforesaid application by specifying the heads of income which were sought to be notified. The aforesaid communication is extracted hereinbelow: –

“No. Noida /F.C./2014/ 699
Date: 10.12.2014
To,
Additional CIT (OSD) ITA-Division
Ministry of Finance
Department of Revenue (CBDT}
(ITA. 1 Division)

Reg: New Okhla Industrial Development Authority PAN: AAALN01201A
Sub: Application for exemption filed under section 10(46) of the Income Tax Act, 1961

Dear Sir,
This is with the reference to meeting with your good self on 28.11.2014. Please find the list of income sought to be notified for the purpose of section 10(46) of the Income Tax Act, 1961.
Following income are requested to be notified for the purpose of section 10(46):
a. Grants received from the State Government
b. Moneys received from the disposal/90 years lease of immovable properties
c. Moneys received by the way of lease rent & fees or any other charges from the disposal/ 90 years lease of immovable properties
d. The amount of interest earned on the funds deposited in the banks
e. The amount of interest /penalties received on the deferred payment received from the Allotees of various immovable properties.
f. Water, sewerage and other municipal charges from the Allotees of various immovable properties.

Thanking You.
Yours faithfully
For New Okhla lndustrial Development Authority

Authorised Signatory
G.P. Singh
Finance Controller NOIDA”

7. In a related development, the Allahabad High Court while ruling on ITA No. 107/2016 and other connected cases in CIT(E), Lucknow vs. M/s Yamuna Expressway Industrial Development Authority5, and which batch included an appeal involving the writ petitioner as one of the respondent authorities, came to hold that the respondents could not be said to be carrying on any activity aimed at generation of profits and directed the respondents therein to be accorded registration in terms of Section 12AA of the Act. The relevant extracts of that decision are reproduced hereinbelow: –
“55. Section 20(2) says that funds shall be applied by Industrial Development Authority towards meeting the expenses incurred in administration of UPIAD Act, 1976 and for no other purposes. Therefore, there is a complete bar that the funds of the authorities can be used only for the purpose of UPIAD Act, 1976 and not otherwise. As we have already said, they are for general public utility and not for an individual or any individual group or otherwise. The State Government after due approval by Legislature by law, grant advances, etc. to “Industrial Development Authority” for performance of functions under UPIAD Act, 1976. Similarly, an “Industrial Development Authority” may also borrow money by way of loan or debenture from such sources, other than the Government, on such terms and conditions as may be approved by the State Government. For re-payment of borrowed money, an “Industrial Development Authority” is required to maintain a sinking fund. Accounts of the “Industrial Development Authorities” are to be audited vide section 22, in the area declared as “industrial township”. There may not be constituted any “municipality” though it is obligatory under article 243Q of the Constitution, but proviso to article 243Q(1) authorises the Governor to specify an “Industrial Development Authority” as “industrial township” and municipal services thereof shall be provided by the “Industrial Development Authority” in that area. Therefore, within the area, the “Industrial Development Authorities” have been declared industrial township and municipal services are to be provided by them.
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58. With reference to section 6(2)(i), Industrial Development Authority acquire land, develop the same and sell at the cost of acquisition plus development. For the purpose of maintenance cost, it charges lease rent from the allottee of the land. If any surplus arises or remains with “Industrial Development Authorities”, it has to be consumed/utilised for meeting the expenses incurred by the “Industrial Development Authorities” in administration of UPIAD Act, 1976 and not for any other purpose.
59. Thus, whatever amount is received by “Industrial Development Authorities” under different heads, whether tax, rent, fee, sale consideration, etc., it has to be used in discharge of objectives and functions provided under UPIAD Act, 1976, for the benefit of general public.
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71. The entire discussion, if we summarise, can be placed in a small arena of judicial analysis, that is, a body or institution which is functioning for advancement of objects of general public utility and its activities are not in the nature of trade, business or commerce and also not a sheer profit making, such institution is entitled to claim itself to be constituted for “charitable purposes” and seek registration under section 12A(1) of the Act, 1961.”

8. Reverting to the application that was made by the writ petitioner, the CBDT in terms of its letter of 03 September 2013 sought an explanation with respect to the petitioner qualifying the requirements of Section 10(46). This was responded to by the petitioner providing various details as embodied in its replies dated 18 and 31 October 2013. Further representations in support of the application which were made were submitted before the CBDT on 20 June and 30 July 2018.
9. It becomes pertinent to note that the Greater Noida Industrial Development Authority6, yet another entity constituted under the UPID Act, approached this Court aggrieved by the refusal on the part of the CBDT to issue a notification referable to Section 10(46). The aforesaid writ petition came to be allowed in terms of the judgment rendered in GNIDA vs. Union of India7 and the order of the CBDT dated 08 June 2015 impugned therein was quashed and set aside. The Court on that occasion came to conclude that GNIDA’s activities could not be said to be commercial in nature and which may thus fall within the disqualification comprised in clause (b) of Section 10(46). Directions were consequently framed for the CBDT to issue the necessary notification in respect of GNIDA’s specified income. While allowing the aforesaid writ petition, the Court while expounding upon the meaning to be ascribed to the phrase “commercial activity” drew a parallel from the considerations which imbue Section 2(15) of the Act and the various decisions that had been rendered in the context of that provision. This would be evident from the following passages which form part of the judgment of the Court:-
“12. The expression “commercial activity” in clause (46) of section 10 of the Act, has not been specifically defined and, therefore, meaning would have to be given keeping in mind the legislative intent of the enactment. Normally when a word or expression is not defined for a provision, we apply the common parlance interpretation principle. Reference is made to the dictionary meaning to interpret the word or expression. However, words and dictionary definitions can have varied, broad and narrower meanings. Therefore, contextual interpretation is required and mandated. In Union of India v. Harjeet Singh Sandhu (2001) 5 SCC 593, the court went by the dictionary meaning of the term “impracticable” in proximity with the term “impossibility”, and relying upon the common parlance principle, it was held:
“31. The above passage shows that the learned judges went by the dictionary meaning of the term ‘impracticable’, placed the term by placing it in juxtaposition with ‘impossibility’ and assigned it a narrow meaning. With respect to the learned judges deciding Major Radha Krishan v. Union of India case (1996) 3 SCC 507 ; [1996] SCC (L and S) 761 we find ourselves not persuaded to assign such a narrow meaning to the term. ‘Impracticable’ is not defined either in the Act or in the Rules. In such a situation, to quote from Principles of Statutory Interpretation (Chief Justice G.P. Singh, 7th Edn., 1999, pages 258-59):
When a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which that word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule that ‘the meanings of words and expressions used in an Act must take their colour from the context in which they appear’. Therefore, ‘when the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers’.
As stated by Krishna Iyer, J. : ‘Dictionaries are not dictators of statutory construction where the benignant mood of a law, and more emphatically, the definition clause furnish a different denotation.’ In the words of Jeevan Reddy, J. : ‘A statute cannot always be construed with the dictionary in one hand and the statute in the other. Regard must also be had to the scheme, context and to the legislative history.’ Learned Judge Hand cautioned ‘not to make a fortress out of the dictionary’ but to pay more attention to ‘the sympathetic and imaginative discovery’ of the purpose or object of the statute as a guide to its meaning.”
13. In Black’s Law Dictionary 8th Edition the word “commerce” has been defined as exchange of goods or services especially on large scale involving transportation between cities, States and nations. In Advanced Law Lexicon, 3rd Edition 2005 Vol. I, at page 878 by P. Ramanatha Aiyar, the word “commerce” has been defined as under:
“‘Commerce’ is a term of the largest import. It comprehends intercourse for the purposes of trade in any and all its forms, including transportation, purchase, sale, and exchange of commodities between the citizens of one country and the citizens or subjects of other countries, and between the citizens of different provinces in the same State or country. Walton v. Missoury, 23 L Ed. 347 (1875).
Buying and selling together, exchange of merchandise especially on a large scale between different countries or Districts ; intercourse for the purpose of trade in any and all its forms [section 2(13), Income-tax Act) (43 of 1961)]”.
If we go by the aforesaid definition the word “commercial activity” will be of extremely wide import and would cover any transaction or activity connected with exchange of goods or property of any type, be it buying, selling or even compulsory acquisition under the Land Acquisition Act, which is a statutory function and obligation.
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16. Way back in 1970, a Constitution Bench of five judges in Shri Ramtanu Co-operative Housing Society Ltd. v. State of Maharashtra (1970) 3 SCC 323, had examined the validity of Maharashtra Industrial Development Act, 1961 (3 of 1962) and in that context had referred to the functions performed by the Maharashtra Development Corporation, which was to establish and manage industrial estate on selected basis and to develop industrial area selected by the State Government and for this purpose acquire and transfer land by way of sale, lease, etc,. The contention of the petitioner therein that the Corporation established would be a trading one or a commercial corporation was rejected in the following words:
“16. The petitioners contended that the Corporation was a trading one. The reasons given were that the Corporation could sell property, namely, transfer land ; that the Corporation had borrowing powers ; and that the Corporation was entitled to moneys by way of rents and profits. Reliance was placed on the report of the Corporation and in particular on the income and expenditure of the Corporation to show that it was making profits. These features of transfer of land, or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their directors for the regulation and management of the Corporation. Such a Corporation set up by the shareholders carries on business and is intended for making profits. When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading Corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity Board and the Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings. It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries.
19. There are two provisions of the Act which are not to be found in any trading Corporation. In the first place, the sums payable by any person to the Corporation are recoverable by it under this Act as an arrear of land revenue on the application of the Corporation. Secondly, on dissolution of the Corporation the assets vest in and the liabilities become enforceable against the State Government.
20. The underlying concept of a trading Corporation is buying and selling. There is no aspect of buying or selling by the Corporation in the present case. The Corporation carries out the purposes of the Act, namely, development of industries in the State. The construction of buildings, the establishment of industries by letting buildings on hire or sale, the acquisition and transfer of land in relation to establishment of industrial estate or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent in setting up industries in the State. The Act aims at building an industrial town and the Corporation carries out the objects of the Act. The hard core of a trading Corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one.”
17. There are a number of decisions of the Delhi High Court on interpretation of the expression “in the nature of trade, commerce or business” in the proviso to section 2(15) of the Act, for an institution carrying on the aforesaid activities is not a charitable institution under the residual category of advancement of any other object of general public utility. In Institute of Chartered Accountants of India v. DGIT (Exemptions) (2012) 347 ITR 99 (Delhi) referring to the meaning of the terms “commerce” and “business”, it was held as under (page 123):
“Section 2(15) defines the term ‘charitable purpose’. Therefore, while construing the term ‘business’ for the said section, the object and purpose of the section has to be kept in mind. We do not think that a very broad and extended definition of the term ‘business’ is intended for the purpose of interpreting and applying the first proviso to section 2(15) of the Act to include any transaction for a fee or money. An activity would be considered ‘business’ if it is undertaken with a profit motive, but in some cases this may not be determinative. Normally, the profit motive test should be satisfied but in a given case activity may be regarded as business even when profit motive cannot be established/proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles, and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. The test as prescribed in State of Gujarat v. Raipur Manufacturing Co. Ltd. (1967) 19 STC 1 (SC) and CST v. Sai Publication Fund (2002) 258 ITR 70 (SC) ; (2002) 126 STC 288 (SC) can be applied. The six indicia stipulated in Customs and Excise Commissioner v. Lord Fisher (1981) 2 All ER 147 ; [1981] STC 238 are also relevant. Each case, therefore, has to be examined on its own facts.
In view of the aforesaid enunciation, the real issue and question is that whether the petitioner-institute pursues the activity of business, trade or commerce. To our mind, the respondent while dealing with the said question has not applied their mind to the legal principles enunciated above and have taken a rather narrow and myopic view by holding that the petitioner-institute is holding coaching classes and that this amounts to business.”
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19. After extensively referring to the judgments of the Supreme Court in State of Punjab v. Bajaj Electricals Ltd. (1968) 70 ITR 730 (SC), Barendra Prasad Ray v. ITO (1981) 129 ITR 295 (SC), CIT v. Lahore Electric Supply Co. Ltd. (1966) 60 ITR 1 (SC) and State of Gujarat v. Raipur Manufacturing Co. Ltd. (1967) 19 STC 1 (SC), it was held that the term “profit motive” as per the enactment may not be the sole or relevant consideration to be kept in mind. It may be one of the aspects, as normal commercial or business activity is with the intent to earn profit. For several enactments, concept and principle of “economic activity” and not profit motive has gained acceptance as in cases relating to taxability under the sales tax, excise duty, value added tax, etc. as these are not taxes on income, but the taxable event occurs because of the economic activity involved. The charge or incidence of tax can be on the “economic activity”, whereas under the Act, i.e., the Income-tax Act, the charge is on income. The word “business”, it was observed, is an etymological chameleon and it suits its meaning to the context in which it is found. It is not a term of legal art. This, as observed above, is equally true when we judicially interpret and define the expression “commercial activity” in the context of an enactment.
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22. Now we would turn to the two decisions in the case of the petitioner itself. The first decision is by the Allahabad High Court in CIT (Exemption) v. Yamuna Expressway Industrial Development Authority/Greater Noida Industrial Development Authority reported in (2017) 395 ITR 18 (All). This was a case relating to registration under section 12AA read with section 2(15) of the Act. The nature of activities undertaken by the petitioner were extensively examined and considered and the contention raised by the Revenue was rejected. In other words, the petitioner was entitled to registration under section 12AA read with section 2(15) of the Act.
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25. Having considered varied and different dimensions and contours associated with the expression “commercial activity”, we would like to pen down why and for what reason, we perceive and believe that a wider definition or criteria of “economic activity” should not be applied when we interpret the said expression “commercial activity” for the purpose of section 10(46) of the Act.
26. Object and purpose behind section 10(46) is to by way of a notification exempt specified income earned by an authority/body established by or under a statutory enactment, or constituted by Central or State Government with the object of regulating or administering any activity for the benefit of general public. These stipulations are primary and constitute the core of the provision. Sub-clause (b) of section 10(46), which states that such authority/body must not be engaged in any commercial activity, should be interpreted in harmony and symmetrically with sub-clause (a) of section 10(46) to fulfil the primary objective. This exemption provision is predicated on the assumption that the authority/body satisfying and meeting requirements of sub-clause (a) of section 10(46) would earn and have taxable income under the heads stated in section 14 and therefore would apply and seek exemption. Perceptively, when no fee or consideration is charged and paid, the authority/body would not have any income (except interest or other income from investments) and, hence, would not require an exemption notification under section 10(46) of the Act. Sub-clause (b) of section 10(46) does not require and mandate that interest income or the like alone would be exempt.
27. Clause (46) of section 10 of the Act exempts specified income from the charge. Only specified income is granted exemption and excluded from the ambit of the charging section and not all incomes other than those specified. Therefore while granting exemption, the respondents can restrict and specify the income which would be exempt. All incomes earned from varied and different activities need not be granted exemption.
28. Bar and negative stipulation in sub-clause (b) should not be interpreted as forbidding charging of fee, service charge or consideration while regulating and administering the activities for which the authority/body is established in general public interest. This would be impracticable and extremely restrictive and archaic interpretation. A more realistic, pragmatic and reasonable interpretation of the expression “any commercial activity” would be more acceptable and in consonance with the legislation in question.
29. At the same time it is apparent that all and every authority/body established by or under the statutory enactments or by Central or State Governments with the object of regulating and administering any activity for the benefit of public are not entitled to claim exemption, for otherwise sub- clause (b) of section 10(46) would become superfluous and obtuse. We have to delineate and define the scope and ambit of disqualification envisaged by the words “any commercial activity” in sub-clause (b) of the said section. In the absence of any clear statutory definition elucidating these words, we have to outline a definitive and clear standard and test to be applied.
30. Any activity undertaken with profit motive and intent would be certainly commercial activity. Authorities/bodies set up or created by the Government with commercial purposes and objects are not entitled to exemption. This cannot be debated and challenged. Equally, reference to expansive and wider interpretative meaning attributed to the expression “charitable purpose” defined in section 2(15), vide earlier judgments including Addl. CIT v. Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC) would not be apposite and constitute affirmative precedent in view of the strict mandate and contrary language of sub-clause (b) of section 10(46) of the Act. Any commercial activity undertaken with profit motive even if with the intent to feed and to be utilised in activities for the benefit of general public would result in disqualification under sub-clause (b) of section 10(46) of the Act.
31. Thus, there is need to distinguish commercial activity which constitutes disqualification under sub-clause (b) of section 10(46) of the Act, and charging and payment of fee, service charges, reimbursement of costs or consideration for transfer of rights for performing and undertaking regulatory or administrative duties for general public interest, when these are not guided and undertaken with profit motive or intent. In other words, if an authority/body created and established under a statutory enactment or constituted by Central or State Government, charges and is paid for regulating and administrating any activity for which it was established and set up, sub-clause (b) is not contravened and breached. Where, however, an authority/body established is with a commercial intent and objective, i.e., on commercial lines, and intends to or earn profits as one of its goals, it would falter under sub-clause (b) and would be denied registration. Authority/body satisfying the requirements of sub-clause (a) can also be denied registration if it carries on any commercial activity, i.e., economic activity unconnected and unassociated with the regulatory and administrative purpose for which they were created and established, even when such receipts, income and profit generated is used for undertaking regulatory and administrative functions for the benefit of public.
32. Consequently we would hold that an authority/body satisfying the requirements of sub-clause (a) would not incur disentitlement under sub- clause (b) when it charges and receives money by way of fee, reimbursement or even consideration as rent or for transfer of rights in movable and immovable properties directly connected and having nexus with regulatory and administrative functions that they are obliged and mandated to perform and execute. Not to charge any fee or consideration for services rendered or for rights granted, specially from those who can afford, would be contrary to general public interest specified and stipulated in sub-clause (a) of section 10(46) of the Act.
33. Therefore, we do not agree with the respondents that interpretation of the expression “any commercial activity” would include within its ambit and scope any activity for which fee, service charges or consideration is charged and paid. Equally, we would also not accept the specious and wide definition predicated only on the end use of the funds/income, and not the commercial manner in which income/funds are generated. The determinative test to be applied is to examine and answer whether or not the activity for which fee, service charge or consideration was charged and paid, was intrinsically associated, connected and had immediate nexus with the object of regulating and administering the activity for the benefit of general public. Further, the activity should also not run on commercial lines, i.e., with the profit motive and intent to earn profit but given the regulatory and administrative role assigned to the body or authority, the activity must be and should be for meeting and complying with the responsibility and mandate of the role prescribed and assigned. If the answer is in favour of the authority, body etc. exemption would not be denied in view of sub-clause (b) of section 10(46) of the Act. Exemption would not be available and granted to a body or authority, which is carrying on a commercial activity with intent and motive to earn profit even when the profit and income earned is with the object to sub-serve the object of general public utility. In other words, profits which arise even when utilized for and to feed the charitable purpose, i.e., the general public interest, would result in disqualification/ineligibility.
34. One can urge that the interpretation given by us would mean and imply that section 10(46) and the provisions relating to charity under section 2(15) read with sections 11 to 13 of the Act would overlap. Overlapping to some extent is possible. However, section 10(46) of the Act is a specific provision dealing with body or authority etc. created or constituted by the Central or State Government or under the Central or State enactment. Further, exemption under the said provisions could be restricted to only specified types or categories of income and not all incomes. The petitioner- assessee cannot be denied benefit of section 10(46) of the Act for the reason that it may well qualify and would be entitled to benefit under section 2(15) read with sections 10 to 13 of the Act.
35. The Allahabad High Court in CIT (Exemption) v. Greater Noida Industrial Development Authority (2017) 395 ITR 18 (All) after extensively referring to the statutory mandate and object for which the petitioner authority has been established and also the provisions of the Act, i.e., the Income-taxAct, had observed that the petitioner was to provide amenities and facilities in industrial estate and in industrial area in the form of road, electricity, sewage etc. We have also referred to the functions and objectives for which the petitioner is established. The said activities necessarily require money and funds, which are received from the State Government. The petitioner, given the regulatory and administrative functions performed is required and charges fee, cost and consideration in the form of rent and transfer of rights in land, building and movable properties. Similarly payments have to be made for acquisition of land, creation and construction of infrastructure and even buildings. Carrying out and rendering the said activities is directly connected with the role and statutory mandate assigned to the petitioner. It has not been asserted and alleged that these activities were or are undertaken on commercial lines and intent. The petitioner does not earn profits or income from any other activity unconnected with their regulatory and administrative role. Income in the form of taxes, fee, service charges, rents and sale proceeds is intrinsically, immediately and fundamentally connected and forms part of the role, functions and duties of the petitioner.”

10. The judgment rendered in GNIDA was assailed by the respondents before the Supreme Court by way of SLP (Civil) No. 34332/2018 which ultimately came to be dismissed on 25 November 2019. Undisputedly, the specified income of GNIDA came to be consequently notified on 23 June 2020. The petitioners also rely upon the certification which was granted by the Board in favour of the M/s Yamuna Expressway Industrial Development Authority8, yet another body which owes its creation to the UPID Act on 24 April 2020. It is in the aforesaid backdrop that NOIDA assails the validity of the impugned order.
11. Appearing in support of the writ petition, Mr. Balbir Singh, learned Senior Counsel addressed the following submissions. Mr. Singh contended that NOIDA is an authority duly constituted under Section 3 of the UPID Act and which represents a State enactment and whose objectives are essentially for the benefit of the general public. Learned Senior Counsel in this regard, drew our attention to Section 6 of the UPID Act which reads as follows: –
“Section 6: Function of the Authority–
(1) The object of the Authority shall be to secure the planned development of the industrial development area.
(2) Without prejudice to the generality of the objects of the Authority, the Authority shall perform the following functions :–
(b) to prepare a plan for the development of the industrial development area;
(c) to demarcate and develop sites for industrial, commercial and residential purpose according to the plan;
(d) to provide infrastructure for industrial, commercial and residential purposes;
(e) to provide amenities;
(f) to allocate and transfer either by way of sale or lease or otherwise plots of land for industrial, commercial or residential purposes;
(g) to regulate the erection of buildings and setting up of industries: and
(h) to lay down the purpose for which a particular site or plot of land shall be used, namely for industrial or commercial or residential purpose or any other specified purpose in such area”

12. Mr. Singh pointed out that the Board has clearly erred in holding that the petitioner is engaged in commercial activity, bearing in mind the statutory mandate of Section 20 of the aforesaid enactment which makes the following provisions: –
“Section 20: Fund of the Authority–
(1) The authority shall have and maintain its own fund to which shall be credited–
(a) all moneys received by the Authority from the State Government by way to grants, loans advances or otherwise;
(b) all moneys borrowed by the Authority from sources other than the State Government by way of loans or debentures;
(c) all fees, tolls and charges received by the Authority under this Act;
(d) all moneys received by the Authority from the disposal of lands, buildings and other properties movable and immovable; and
(e) all moneys received by the Authority by way of rents and profits or in any other manner or from any other sources
(2) The fund shall be applied towards meeting the expenses incurred by the Authority in the administration of this Act for no other purposes.
(3) Subject to any directions of the State Government, the Authority may keep in current account of any Scheduled Bank such sum of money out of its funds as it may think necessary for meeting its expected current requirements and invest any surplus money in such manner as it thinks fit.
(4) The state Government may, after due appropriation made by Legislature by law in that behalf, make such grants, advances and loans to the Authority as that Government may deem necessary for the performance of the functions of the authority under this Act, and all grants, loans and advances, made shall be on such terms and conditions as the State Government may Determine.
(5) The Authority shall maintain a sinking fund for the repayment of moneys borrowed under sub-section (5), and shall pay every year into the sinking fund such sum as may be sufficient for repayment within the period fixed of all moneys so borrowed.
(7) The sinking fund or any part thereof shall be applied in, or towards, the discharge of the loan for which such fund was created, and until such loan is wholly discharged it shall not be applied for any other purpose.”

13. Mr. Singh submitted that the petitioner is in one sense a wing of the State Government itself constituted for the purposes of regulating and undertaking planned development of the industrial development area falling under its jurisdiction and thus subserves the interests of the general public. Learned Senior Counsel also laid stress upon NOIDA having been declared to be an industrial township in terms of the Proviso to Article 243Q (1) of the Constitution bearing in mind the undisputed fact that it performs municipal functions as contemplated under Schedule XII of the Constitution.
14. According to learned Senior Counsel, the CBDT has taken a wholly erroneous and untenable view while proceeding to hold against the petitioner solely on the basis of it having generated a surplus and the revenue generated by it. Mr. Singh submitted that a reading of the UPID Act as well as the functions discharged by NOIDA would unerringly lead one to arrive at the conclusion that profit making is clearly not its predominant objective. Mr. Singh in this respect sought to draw support from the following pertinent observations as they appear in Shri Ramtanu Coop. Housing Society Ltd. vs. State of Maharashtra9:-
“16. The petitioners contended that the Corporation was a trading one. The reasons given were that the Corporation could sell property, namely, transfer land; that the Corporation had borrowing powers; and that the Corporation was entitled to moneys by way of rents and profits. Reliance was placed on the report of the Corporation and in particular on the income and expenditure of the Corporation to show that it was making profits. These features of transfer of land, or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their Directors for the regulation and management of the Corporation Such a Corporation set up by the shareholders carries on business and is intended for making profits. When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading Corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity Board and the Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings. It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries.
17. The Corporation has to provide amenities and facilities in industrial estates and industrial areas. Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas are within the programme of work of the Corporation. The found of the Corporation consists of moneys received from the State Government, all fees, costs and charges received by the Corporation, all moneys received by the Corporation from the disposal of lands, buildings and other properties and all moneys received by the Corporation by way of rents and profits or in any other manner. The Corporation shall have the authority to spend such sums out of the general funds of the Corporation or from reserve and other funds. The Corporation is to make provision for reserve and other specially denominated funds as the State Government may direct. The Corporation accepts deposits from persons, authorities or institutions to whom allotment or sale of land, buildings, or sheds is made or is likely to be made in furtherance of the object of the Act. A budget is prepared showing the estimated receipts and expenditure. The accounts of the Corporation are audited by an auditor appointed by the State Government. These provisions in regard to the finance of the Corporation indicate the real role of the Corporation viz. the agency of the Government in carrying out the purpose and object of the Act which is the development of industries. If in the ultimate analysis there is excess of income over expenditure that will not establish the trading character of the Corporation. There are various departments of the Government which may have excess of income over expenditure.
xxxx xxxx xxxx
20. The underlying concept of a trading Corporation is buying and selling. There is no aspect of buying or selling by the Corporation in the present case. The Corporation carries out the purposes of the Act, namely, development of industries in this State. The construction of buildings, the establishment of industries by letting buildings on hire or sale, the acquisition and transfer of land in relation to establishment of industrial estate or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent in setting up industries in the State. The Act aims at building an industrial town and the Corporation carries out the objects of the Act. The hard core of a trading Corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one.”

15. Our attention was also drawn to a more recent decision rendered by the Supreme Court in CIT vs. Ahmedabad Urban Development Authority10 and where, in the context of statutory bodies, it was pertinently observed as under: –
“206.4. The determinative tests to consider when determining whether such statutory bodies, boards, authorities, corporations, autonomous or self-governing government sponsored bodies, are GPU category charities:
206.4.1. Does the State or Central law, or the memorandum of association, constitution, etc. advance any GPU object, such as development of housing, town planning, development of industrial areas, or regulation of any activity in the general public interest, supply of essential goods or services — such as water supply, sewage service, distributing medicines, of foodgrains (PDS entities), etc.
206.4.2. While carrying on of such activities to achieve such objects (which are to be discerned from the objects and policy of the enactment; or in terms of the controlling instrument, such as memorandum of association, etc.), the purpose for which such public GPU charity, is set up — whether for furthering the development or a charitable object or for carrying on trade, business or commerce or service in relation to such trade, etc.
206.4.3. Rendition of service or providing any article or goods, by such boards, authority, corporation, etc. on cost or nominal markup basis would ipso facto not be activities in the nature of business, trade or commerce or service in relation to such business, trade or commerce.
206.4.4. Where the controlling instrument, particularly a statute imposes certain responsibilities or duties upon the body concerned, such as fixation of rates on predetermined statutory basis, or based on formulae regulated by law, or rules having the force of law, setting apart amenities for the purposes of development, charging fixed rates towards supply of water, providing sewage services, providing foodgrains, medicines, and/or retaining monies in deposits or government securities and drawing interest therefrom or charging lease rent, ground rent, etc. per se, recovery of such charges, fee, interest, etc. cannot be characterised as “fee, cess or other consideration” for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto.
206.4.5. Does the statute or controlling instrument set out the policy or scheme, for how the goods and services are to be distributed; in what proportion the surpluses, or profits, can be permissively garnered; are there are limits within which plots, rates or costs are to be worked out; whether the function in which the body is engaged in, is normally something a Government or State is expected to engage in, having regard to provisions of the Constitution and the enacted laws, and the observations of this Court in NDMC [NDMC v. State of Punjab, (1997) 7 SCC 339] ; whether in case surplus or gains accrue, the corporation, body or authority is permitted to distribute it, and if so, only to the Government or State; the extent to which the State or its instrumentalities have control over the corporation or its bodies, and whether it is subject to directions by the Government, etc. concerned.
206.4.6. As long as the statutory body, corporation, authority, etc. concerned while actually furthering a GPU object, carries out activities that entail some trade, commerce or business, which generates profit (i.e. amounts that are significantly higher than the cost), and the quantum of such receipts are within the prescribed limit [20% as mandated by the second proviso to Section 2(15)] — the statutory or government organisations concerned can be characterised as GPU charities. It goes without saying that the other conditions imposed by the seventh proviso to Section 10(23-C) and by Section 11 have to necessarily be fulfilled.
206.5. As a consequence, it is necessary in each case, having regard to the first proviso and seventeenth proviso (the latter introduced in 2012, w.r.e.f. 1-4-2009) to Section 10(23-C), that the authority considering granting exemption, takes into account the objects of the enactment or instrument concerned, its underlying policy, and the nature of the functions, and activities, of the entity claiming to be a GPU charity. If in the course of its functioning it collects fees, or any consideration that merely cover its expenditure (including administrative and other costs plus a small proportion for provision) — such amounts are not consideration towards trade, commerce or business, or service in relation thereto. However, amounts which are significantly higher than recovery of costs, have to be treated as receipts from trade, commerce or business. It is for those amounts, that the quantitative limit in proviso (ii) to Section 2(15) applies, and for which separate books of account will have to be maintained under other provisions of the IT Act.
xxxx xxxx xxxx
B. Authorities, corporations, or bodies established by statute
274. The amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the State Governments or Central Government, for achieving what are essentially “public functions/services” (such as housing, industrial development, supply of water, sewage management, supply of foodgrain, development and town planning, etc.) may resemble trade, commercial, or business activities. However, since their objects are essential for advancement of public purposes/functions (and are accordingly restrained by way of statutory provisions), such receipts are prima facie to be excluded from the mischief of business or commercial receipts. This is in line with the larger Bench judgments of this Court in Shri Ramtanu Coop. Housing Society [Shri Ramtanu Coop. Housing Society Ltd. v. State of Maharashtra, (1970) 3 SCC 323] and NDMC [NDMC v. State of Punjab, (1997) 7 SCC 339] .
275. However, at the same time, in every case, the assessing authorities would have to apply their minds and scrutinise the records, to determine if, and to what extent, the consideration or amounts charged are significantly higher than the cost and a nominal markup. If such is the case, then the receipts would indicate that the activities are in fact in the nature of “trade, commerce or business” and as a result, would have to comply with the quantified limit (as amended from time to time) in the proviso to Section 2(15) of the IT Act.
276. In clause (b) of Section 10(46) of the IT Act, “commercial” has the same meaning as “trade, commerce, business” in Section 2(15) of the IT Act. Therefore, sums charged by such notified body, authority, board, trust or commission (by whatever name called) will require similar consideration — i.e. whether it is at cost with a nominal markup or significantly higher, to determine if it falls within the mischief of “commercial activity”. However, in the case of such notified bodies, there is no quantified limit in Section 10(46). Therefore, the Central Government would have to decide on a case-by-case basis whether and to what extent, exemption can be awarded to bodies that are notified under Section 10(46).”

16. The grounds which form the basis for rejection of the petitioner’s application were then assailed by Mr. Singh, who submitted that the various loans and advances extended by the petitioner to other governmental entities were made pursuant to directions and instructions issued by the Government of Uttar Pradesh and which NOIDA was statutorily obliged to comply with by virtue of Section 41 of the UPID Act. The details of the various directions and the corresponding documents which are sought to be relied upon to contend that the loans were in fact granted basis the directives of the State Government have been provided in a tabular statement which is extracted hereinbelow: –
“STATE GOVERNMENT INSTRUCTIONS FOR EXTENDING LOANS TO STATE BODIES AND AGREEMENTS WITH STATE INSTRUMENTALITIES FOR PUBLIC WORKS

S.
DOCUMENT WHICH WAS BASIS OF THE DISBURSEMENT (Loan or advance or expense contribution in insolvency proceedings)

1.
Letter dated 18.05.2001 of the Principal Secretary to NOIDA directing it to provide loan of ?10 Crores to UP State Handloom Corporation Ltd.

The above loan amount was modified vide letter dated 2.6.2001 to ?5 Crores.
2.
Minutes of 107th Meeting of Board of NOIDA dated 21.11.2001.

A. Approval of ?10 Crores loan to Taj Expressway Authority (now Yamuna
Expressway Authority); and
B. Approval of ?5 Crores loan to UP State Handloom Corporation Ltd.
C. Loan Agreement of NOIDA with UP State Handloom Corporation Ltd.
for advancing ?5 Crores loan by the former to the latter.

3.
Agreement dated 15.5.2005 between NOIDA and UP Rajkiya Nirman Nigam (“UPRNN”) appointing latter as consultant for development work in Residential Sectors 98, 99, 100 and 134.

4.
Agreement dated 17.8.2000 between NOIDA and UP Rajkiya Nirman Nigam (“UPRNN”) appointing latter as consultant for development work in Sectors and construction of proposed houses of various category Sectors within Noida.

5.
In relation to ?1,05,00,373.46 given to IRP Amrapali Silicon Valley for CIRP cost under Insolvency & Bankruptcy Code, 2016:
1. NOIDA’s noting dated 27.10.2017 mentioning IRP’s letter of demand dated 25.10.2017.
2. IRP Rajesh Samson’s letter acknowledging receipt of aforesaid amount from NOIDA.
3. IRP Rajesh Samson’s letter dated 7.5.2019 requesting for release of further amounts towards CIRP Cost.

6.
Minutes of Meeting (held on 17.08.2013), dated 23.08.2013, issued by the Chief Secretary, Government of Uttar Pradesh, directing NOIDA to provide a loan of Rs. 100 to Agra Development Authority for developing “Agra Inner ring road”

7.
Minutes of Meeting (held on 17.07.2014), dated 08.08.2014, issued by the Chief Secretary, Government of Uttar Pradesh, directing NOIDA to provide a loan amount of Rs.479 Crores to Uttar Pradesh State Industrial Development Corporation (“UPSIDC”) for the establishment of theme park in Agra and True Translation.

8.
Memorandum of Understanding dated 18.01.2019 between NOIDA and Uttar Pradesh State Bridge Corporation Limited (“UPSBC”) for DPR and Construction of Elevated corridor from Delhi to Noida along Shahadara Drain.

9.
Memorandum of Understanding dated 10.04.2008 between NOIDA and Uttar Pradesh Rajkiya Nirman Nigam (“UPRNN”) for ‘construction of boundary wall to secure Sector 95, Noida’.

10.
Memorandum of Understanding dated 16.10.2014 between NOIDA and Uttar Pradesh Rajkiya Nirman Nigam (“UPRNN”) for ‘appointment of UPRNN as consultant in NOIDA’s project of constructing a Hospital at Sector 39, Noida’.

11.
Memorandum of Understanding dated 27.02.2009 between NOIDA and Uttar Pradesh Rajkiya Nirman Nigam (“UPRNN”) for ‘laying pipeline and UGR of 80 qusec for the Ganga Jal Pariyojana’.

12.
Official Noting by NOIDA for release of ?1,73,79,115/- to Uttar Pradesh Power Corporation Limited (“UPPCL”) for development work in Sector 70, Noida.

17. Proceeding along these lines, Mr. Singh further disclosed that the loans given to the UP Rajkiya Nirman Nigam was for carrying out engineering and construction works on behalf of the petitioner. It was further submitted that the sale and purchase of land, buildings and other connected activities are intrinsic to the regulatory and administrative role which is assigned to the authority by virtue of the various provisions of the UPID Act. According to Mr. Singh, the profits or surplus generated from such activities as well as any interest earned from loans and advances are reapplied by the petitioner exclusively for the purposes of undertaking activities in furtherance of the functions specified in Section 6. Viewed in light of the above, Mr. Singh would contend that it would be wholly incorrect for the CBDT to have assumed that the petitioner was either proceeding solely for the purposes of earning profits or undertaking activities which could be termed as ‘commercial’. According to learned Senior Counsel, the profits as well as the interests that may be earned are judiciously applied by it in bonds, shares and fixed deposits so as to maximize the funds available at its disposal and for economically rational purposes.
18. Mr. Singh further contended that the amount which was made over to the Interim Resolution Professional11 of M/s Amarpali Silicon City has also been clearly misconstrued since the same only represented the burden liable to be borne by the petitioner towards Corporate Insolvency Resolution Process12 costs. The aforesaid expenditure, according to Mr. Singh, was undertaken only in order to secure the financial interest of the petitioner and pursuant to the statutory requirements of the Insolvency and Bankruptcy Code, 201613 and could not have possibly been treated as the undertaking of a commercial activity.
19. It was then submitted that the petitioner stands on a footing identical to GNIDA and YEIDA both of which are authorities which also owe their genesis to the UPID Act and have been accorded certification under Section 10(46). According to learned Senior Counsel, there thus existed no rationale or justification for the petitioner having been denied identical reliefs. It was in the aforesaid context that Mr. Singh contended that the judgment rendered by this Court in GNIDA squarely applies and the impugned order is consequently liable to be quashed and set aside.
20. It was lastly submitted that during the course of consideration of the application that was originally made, the respondents had sought various clarifications from time to time and all of which were duly attended to with the petitioner clarifying that it was not undertaking any activities of a commercial nature. Our attention was drawn to the various responses which were placed for the consideration of the respondents and details whereof have been set forth in tabular form as under: –
“QUERIES BY CBDT AND RESPONSES BY NOIDA QUA NATURE OF ACTIVITY

S.
PARTICULARS (of correspondence by the Department-Revenue)
RESPONSE (of NOIDA-Petitioner)
1.
Revenue’s letter dated 27.5.2013, enquiring about the nature of activity carried out by NOIDA and they are commercial in nature?
NOIDA’s CA’s letter dated 19.6.2013 stating specifically the functions carried out by it as per the mandate of UPIAD Act, 1976, are for the benefit of the general public and not commercial in nature.
2.
Revenue’sletter 3.9.2013 requesting from NOIDA details in prescribed format including nature of activity and if they are commercial in nature? The Balance Sheets for the last 3 year were also sought for in Sl.18 of the prescribed format
NOIDA’s CA’s letter dated 18.10.2013 providing details as sought in prescribed format, explaining that the nature of NOIDA’s activity was not commercial and sought time to furnish the Balance Sheet for last three years.

NOIDA’s CA’s letter dated 31.10.2013 wherein the copies of Balance Sheets for the last three years – 2008-09, 2009-10, 2010-11 were provided.

3.
Revenue’s letter dated 25.4.2014 requesting from NOIDA details in prescribed format (same as above).
The Balance Sheets for 2010-11, 2011-12 and 2012-13 were also sought for.
NOIDA’s CA’s response letter dated 7.5.2014 providing details as sought in prescribed format with detailed supporting explanations. The Balance Sheets for 2010-11, 2011-12 and 2012- 13 were enclosed as mentioned in Sl.19 of the prescribed format

4.
–
NOIDA’s response to Revenue’s letter which stated that NOIDA’s activity is commercial in nature because it is earning huge profits out of the activity of acquiring and selling land for residential, industrial and commercial purpose. NOIDA explained that the same is not commercial in nature.

5.
Revenue’s letter dated 13.11.2020 requesting NOIDA to explain, inter alia, the loans and advances given to various entities between FY 2006-07 and 2011-12. Revenue also sought for the financial statements of last three years
NOIDA’s response letter dated
10.12.2020 explaining, inter alia, the purpose of giving loans to various entities identified by the Revenue in its letter. The financial statements for 2016-17, 2017-18 and 2018-19 were also enclosed.

21. Controverting the aforenoted submissions, Mr. Bhatia, learned counsel appearing for the respondents submitted that on a plain reading of Section 10(46), it is apparent that apart from an entity seeking certification being found to have been established or constituted under a Central, State or Provincial Act, it has to be further established that the said entity has been created with the avowed objective of discharging functions for the benefit of the general public and is not engaged in any commercial activity.
22. Mr. Bhatia submitted that from the financial statements which were tendered by the petitioner it is apparent that it had advanced loans of more than INR 5,000 crores to various