Greater Cochin Development Authority means business, that's the 'realty'
While charitable activities are not for profit, GCDA has sold land at market rates and charged interests on delayed payments
Nov 08, 2014
Source : The Times of India
Greater Cochin Development Authority


KOCHI: If you thought the Greater Cochin Development Authority (GCDA) was a civic body formed in larger public interest for planning and developing the city, you could not have been further from the truth.

It turns out that GCDA has converted itself into a business house, and its "activities are more commercial in nature with profit oriented intent".

This observation was made in the Kochi Income Tax Appellate Tribunal's (ITAT's) order in response to GCDA's appeal against income tax department's two orders that denied it tax exemption on grounds that it was no more a charitable institution.

For the 2009-10 and 2010-11 assessment years, the department assessed GCDA's income at Rs 8 crore.

While charitable activities are not for profit, GCDA has sold land at market rates and charged interests on delayed payments, indicating its business nature, ITAT said, upholding the department's contention.

"GCDA is acquiring land at very low prices and selling it at very high rates and earning a profit," the tribunal said.

"It also auctions plots by bidding at the market rate and charges interest on delayed payments. Since similar development infrastructure facilities are also provided by private developers, they will also claim the status of a charitable institution," ITAT said.

GCDA has developed several commercial centres and rented them out. They are responsible for the maintenance, upkeep and the provision of common facilities of these commercial establishments. It has earned Rs 4.09 crore from renting out and charging for maintenance. These activities are in the nature of business. GCDA has also earned Rs 1.23 crore from supervision and other charges. The tribunal also said that while GCDA projects were of "general public utility" nature, it "acts like a real estate giant".

GCDA's counsel contended that it was set up with the sole intention to plan the development of the region allotted to it. Commercial interest and profit motive found no place in its operation, and they were not engaged in real estate business. GCDA has provided land to a total of about 125 persons from backward classes and is also maintaining several monuments, the counsel added. However, I-T said that GCDA had sold land to private builders and rented out commercial space on market rates and therefore was not indulging in charity.

ITAT said that it if this income was exempted from tax then it would open a Pandora's box and anybody would seek similar exemption. A charitable institution provides services for charitable purposes, free of cost and the benefit of public at large.

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