A bench of Justices Sanjiv Khanna and Pratibha M Singh allowed the plea of the GNIDA seeking to set aside a 2015 order of the Central Board of Direct Taxes (CBDT) rejecting its application for grant of exemption under Section 10 (46) of the Income Tax Act 1961.
Section 10(46) of the IT Act deals with the exemption of ‘specified income’ of certain bodies or authorities. It says that any specified income arising to a body or authority, constituted by or under a central or state Act with the object of regulating or administering an activity for the benefit of general public and which is not engaged in any commercial activity, shall be exempted.
The authority had contended before the high court that the CBDT had on June 8, 2015, arbitrarily rejected its plea to declare the income of GNIDA under ‘specified income’ on the ground that it was making huge profits out of its activities, which are commercial in nature.
The GNIDA had said that it was established for the development of certain areas in the state of Uttar Pradesh as an industrial and urban township, and thus discharged sovereign functions as an arm of the government.