ACIT (Exemption) v Ahmedabad Urban Development Authority (2022) 143
The Supreme Court ruled that a trust or institution with the object of advancement of any other object of general public utility (GPU category) cannot engage in trade, commerce, or business or provide services in relation thereto for any consideration. The predominant object test is not relevant, and charging an amount towards consideration for such activity on a cost-basis or nominally above cost cannot be considered as "trade, commerce, or business." However, if the amount charged is significantly above cost or marginal mark-up, then it will fall under trade, commerce, or business. The requirement of maintenance of separate books of accounts is applicable to section 2(15) as well.

Gist of the content

The content is a judgment related to section 2(15) of the Income Tax Act. It discusses a case where an assessee trust was created for the development and redevelopment of roads and allotment of land. The trust generated revenue through the disposal of plots via public auction, keeping the entire revenue in a separate fund for further development and expansion activities. The Assessing Officer (AO) applied section 2(15) of the Act, considering the trust's activities as trade, commerce, or business. However, the Supreme Court held that a trust or institution falling under the category of general public utility (GPU) cannot engage in trade, commerce, business, or provide services in relation to them for any consideration. The predominant object test is not relevant, and charging any amount towards consideration on a cost basis or nominally above cost cannot be considered as trade, commerce, or business. However, if the amount charged is significantly above cost or marginal mark-up, then it will fall under trade, commerce, or business. Additionally, the requirement of maintaining separate books of accounts is applicable to section 2(15) as well.