The Delhi High Court has ruled in favor of the New Okhla Industrial Development Authority (NOIDA), directing the income tax department to grant it income tax exemption under Section 10(46) of the Income Tax Act, 1961.
A division bench comprising justices Yashwant Varma and Purushaindra Kumar Kaurav rejected the Central Board of Direct Taxes’ decision to deny tax exemptions to NOIDA, stating that the revenue department had erred in its judgment. The court emphasized that NOIDA, as a government-established trust, is intended to benefit the general public and not for commercial purposes, thereby qualifying for income tax exemption.
The High Court dismissed the tax department’s argument that NOIDA was engaged in commercial activities for profit, emphasizing that the loans provided were for activities supportive and supplemental to the development work mandated for the authority. The judgment highlighted NOIDA’s role as an agent of the government, obligated to plan and execute development activities in the areas under its jurisdiction, as outlined in the Uttar Pradesh Industrial Area Development Act, 1976.