The Dy. Commissioner of Income Tax (Exemptions), Circle-1, Ahmedabad V. Gujarat Industrial Development Corporation, Gandhinagar

CO 55/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7049 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APOORVA BHARADWAJ
• Assessee Lawyers: BIREN SHAH
• Keywords: Charitable institution
• Section: 143(3); 12; 28; 11

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER CROSS OBJECTION NO.55/AHD/2017 IN ! '# ./ ITA NO.2700/AHD/2017 $%&'() *+( / ASSTT. YEAR: 2012-13 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION 2 ND FLOOR, BLOCK NO.4, UDYOG BHAVAN, SECTOR 11 GANDHINAGAR 382 011 VS. DCIT, EXEMPTION, CIR.2 AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI BIREN SHAH, AR REVENUE BY : SHRI APOORVA BHARADWAJ, SR.DR ! / DATE OF HEARING : 08/01/2019 '#$ ! / DATE OF PRONOUNCEMENT: 09/01/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: AGAINST ORDER OF THE LD.CIT(A), GANDHINAGAR DATED 3 1.8.2016 IN THE ASSTT.YEAR 2012-13, THE ASSESSEE HAS FILED APPE AL BEARING ITA NO.2700/AHD/2016. ON RECEIPT OF NOTICE, REVENUE HA S FILED CO BEARING NO.55/AHD/2017. CO WAS PRESENTED ON 28.4.2017. IT IS PERTINENT TO NOTE THAT REVENUE HAS FILED AN APPEAL ALSO AGAINST THE IMPUGNED ORDER OF THE LD.CIT(A) I.E. ITA NO.2738/AHD/2016. CROSS APPEALS OF THE BOTH THE PARTIES WERE DECIDED BY THE TRIBUNAL ALONGWITH WITH THEIR APPEALS FOR THE ASSTT.YEAR 2013-14 ON 10.11.2017. IT APPEA RS THAT PARTIES HAVE CO NO.55/AHD/2017 2 NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL ABOUT THE CROSS OBJECTION OF THE REVENUE FILED IN THE ASSTT.YEAR 2012-13, HENCE CO REMAINED UN- ADJUDICATED. 2. IN THE CO REVENUE HAS TAKEN THE FOLLOWING GROUND S: I. THE APPELLANT PRAYS THAT THE HON'BLE TRIBUNA L BE PLEASED TO PERMIT TO ADMIT THE FOLLOWING GROUNDS I. THE RESPONDENT ASSESSES HAS VIOLATED THE PRO VISIONS OF SECTION 11(5) OF THE ACT AND THAT PROVISIONS OF SEC TION 13(1)(D) OF THE ACT WERE APPLICABLE. II. THE RESPONDENT ASSESSEE HAS FAILED TO INVEST ITS FUNDS AS PER THE MODES PRESCRIBED U/S 11(5) OF THE INCOME TAX AC T AND THEREFORE THE PROVISIONS OF SECTION 13(L)(D) OF THE ACT ARE ATTRACTED. III. THE EXEMPTIONS CLAIMED BY THE ASSESSEE U/S 11 OF THE ACT BE DISALLOWED IN VIEW OF SECTION 13(L)(D) OF THE AC T, SINCE THE RESPONDENT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 11(5). I. THE APPELLANT PRAYS THAT THE ABOVE GROUNDS BE AD MITTED IN VIEW OF THE RATIO LAID DOWN BY THE FULL BENCH OF HO N'BLE MUMBAI HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD VS CIT, 199 ITR 351. II. THE APPELLANT ALSO SEEKS RELIANCE UPON DECISION OF ITAT, MADRAS IN THE CASE OF ACIT VS AMARNATH REDDY 126 ITD 113 AND SET ASIDE THE ASSESSMENT TO THE FILES OF THE A. O FOR THE ISSUE TO BE RE-EXAMINED. III. THE APPELLANT ALSO PRAYS TO DRAW ATTENTION OF THE HON'BLE ITAT TO THE RATIO LAID DOWN BY THE HON'BLE APEX COU RT IN THE CASE OF HUKAMCHAND MILLS LTD VS CIT (1967) 63 ITR 232. 'ACCORDING TO SUPREME COURT IN HUKAMCHAND MILLS LTD . VS. CIT (1967) 63 ITR 232 (SC), THE WORDS OF SECTION 25 4(1) PASS SUCH ORDERS THEREON AS IT THINKS FIT INCLUDE A LL THE POWERS-EXCEPT POSSIBLY THE POWER ENHANCEMENT WHICH ARE CONFERRED UPON THE DEPUTY COMMISSIONER (APPEALS) BY SECTION 251. THE INCOME TAX TRIBUNAL RULES, 1963 AR E NOT EXHAUSTIVE OF THE POWERS OF THE TRIBUNAL. THE RULES ARE MERELY PROCEDURAL IN CHARACTER AND DO NOT IN ANY WA Y, CIRCUMSCRIBE OR CONTROL THE POWER OF THE TRIBUNAL.' CO NO.55/AHD/2017 3 IV. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R VARY AND / OR WITHDRAW ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 26.9.201 2 DECLARING A LOSS AT RS.18,17,39,45,398/-. AN ASSESSMENT ORDER WAS PASS ED UNDER SECTION 143(3) ON 25.3.2015. THE LD.AO DID NOT GRANT BENEF IT OF SECTIONS 11 AND 12 OF THE ACT AND COMPUTED INCOME AS PER NORMAL PROVISION OF THE INCOME TAX ACT. HE MADE VARIOUS ADDITIONS AND ULTI MATELY DETERMINED TAXABLE INCOME AT RS.16,76,42,10,676/-. ON APPEAL, THE LD.CIT(A) FURTHER UPHELD THAT INCOME OF THE ASSESSEE IS TO BE DETERMINED AS PER SECTION 28 TO 44 OF THE ACT. ACCORDING TO THE REVE NUE, ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTIONS 11 AND 12 OF THE ACT. IN THIS BACKGROUND, REVENUE HAS RAISED GROUNDS EXTRACTED (S UPRA) IN THE CO. WE FIND THAT THE TRIBUNAL HAS ALLOWED APPEAL OF THE ASSESSEE AND HELD THAT IT IS TO BE TREATED AS CHARITABLE INSTITUTION, WHICH IS ENTITLED FOR EXEMPTION UNDER SECTIONS 11 AND 12. ITS INCOME HAS TO BE DETERMINED ACCORDINGLY. FINDING RECORDED BY THE TRIBUNAL WHIL E ADJUDICATING THE APPEAL OF BOTH THE PARTIES READ AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE C ORE ISSUE IN CONTROVERSY IS CORRECTNESS OF APPLICABILITY OF PROV ISO TO S.2(1T) IN DUE FACTS OF THE CASE. WE FIND THAT THE IDENTICAL I SSUE AROSE IN ASSESSEE'S OWN ITA NOS.2700/AHD/16 & 427/AHD/17 (BY ASSESSEE) ITA NOS.2738/AHD/16 & 544/AHD/17 (BY REVE NUE) GIDC VS. DCIT/ACIT ASST.YEARS - 2012-13 & 2013-14 C ASE IN THE PRECEDING THREE ASSESSMENT YEARS. WE FIND THAT THE COORDINATE BENCH HAS DETERMINED THE ISSUE IN FAVOUR OF ASSESSE E AND HELD THAT PROVISO TO SECTION 2(15) DOES NOT APPLY IN THE FACTS OF THE CASE. IT CONSEQUENTLY UPHELD THE CLAIM OF THE ASSES SEE THAT OBJECT OF THE ASSESSEE ARE FOR CARRYING OUT THE ACTIVITY F OR CHARITABLE PURPOSE. THE REVENUE CARRIED THE AFORESAID DECISION OF THE COORDINATE BENCH IN APPEAL BEFORE THE HON'BLE JURIS DICTIONAL HIGH COURT WITHOUT ANY SUCCESS. THE CATCH- NOTES OF THE JUDGEMENT OF THE HON'BLE GUJARAT HIGH COURT ARE EXTRACTED HEREUN DER:- CO NO.55/AHD/2017 4 SECTION 2(15), READ WITH SECTION 11, OF THE INCOME- TAX ACT, 1961 - CHARITABLE PURPOSE (OBJECTS OF GENERAL PUBLI C UTILITY) - ASSESSMENT YEAR 2009-10 - WHETHER WHERE ASSESSEE- CORPORATION WAS CONSTITUTED UNDER GUJARAT INDUSTRIA L DEVELOPMENT ACT, 1962, FOR PURPOSE OF SECURING AND ASSISTING RAPID AND ORDERLY ESTABLISHMENT AND ORGAN IZATION OF INDUSTRIAL AREAS AND INDUSTRIAL ESTATES IN STATE OF GUJARAT, AND FOR PURPOSE OF ESTABLISHING COMMERCIAL CENTERS IN CONNECTION WITH ESTABLISHMENT AND ORGANIZATION OF S UCH INDUSTRIES IT COULD NOT BE SAID THAT ACTIVITIES CAR RIED OUT BY ASSESSEE WERE EITHER IN NATURE OF TRADE, COMMERCE O R BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION SO AS TO ATTRACT PROVISO TO SECTION 2(15) AND SAME COULD BE SAID TO BE FOR CHARITABLE PURPOSE AND, CONSEQUENTLY, ASS ESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 11 - HELD, YES [PARAS 15 AND 17] [IN FAVOUR OF ASSESSEE].' 8. THE HON'BLE JURISDICTIONAL HIGH COURT IN ESSENCE UPHELD THAT ASSESSEE WAS NOT INVOLVED IN THE ACTIVITIES IN THE SPIRIT OF COMMERCIAL ACCOMMODATION AND THEREFORE FALLS WITHIN THE AMBIT OF DEFINITION OF 'CHARITABLE PURPOSE' CONTEMPLATED UND ER S.2(15) OF THE ACT. IN VIEW OF ITA NOS.2700/AHD/16 & 427/AHD/1 7 (BY ASSESSEE) ITA NOS.2738/AHD/16 & 544/AHD/17 (BY REVE NUE) GIDC VS. DCIT/ACIT ASST.YEARS - 2012-13 & 2013-14 T HE FOREGOING, WE FIND THAT THE RELIEF SOUGHT BY THE AS SESSEE TO THE EXTENT THAT THE ACTIVITIES CARRIED ON BY THE ASSESS EE SHOULD BE RECOGNIZED TO BE OF CHARITABLE NATURE REQUIRES TO B E ENDORSED. HOWEVER, ALL OTHER ISSUES RAISED IN THE RESPECTIVE APPEALS OF THE ASSESSEE AND REVENUE WOULD REQUIRE RE-EXAMINATION I N THE LIGHT OF CONCLUSION DRAWN IN FAVOUR OF ASSESSEE TOWARDS APPL ICABILITY OF SECTION 2(15) OF THE ACT AS NOTED ABOVE. THUS, A LL OTHER ISSUES ARE KEPT OPEN FOR RE-EXAMINATION AT THE END OF THE AO. 9. IN THE RESULT, CROSS-APPEALS OF THE ASSESSEE AS WELL AS REVENUE IN ITA NO.2738/AHD/2016 & 2700/AHD/2016 RELEVANT TO AY 2012- 13 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF DIRECTIONS NOTED HEREINABOVE. 4. SINCE VERY BASIC FOR DETERMINATION OF ASSESSEES TAXABLE INCOME HAS BEEN CHANGED, THEREFORE, ALL CONSEQUENTIAL ISSU ES WERE TO BE EXAMINED BY THE AO WHILE GIVING EFFECT TO ORDER OF THE TRIBUNAL. THE ISSUES AGITATED IN THE CO ARE NO MORE RELEVANT AND NO SPECIFIC FINDING IS REQUIRED TO BE RECORDED IN THE PRESENT PROCEEDINGS. ALL THESE THINGS CO NO.55/AHD/2017 5 SHOULD BE TAKEN CARE OF BY THE AO WHILE PASSING FRE SH ASSESSMENT ORDER IN PURSUANCE OF THE TRIBUNALS ORDER IN THE APPEAL OF THE ASSESSEE. STATUS OF THE ASSESSEE HAS BEEN CHANGED. IT IS TO BE TREATED AS A CHARITABLE INSTITUTION AND ITS INCOME IS ACCORDINGL Y TO BE DETERMINED. THUS, NO FRESH DIRECTIONS ARE REQUIRED TO BE ISSUED TO THE AO, MORE SO, THE ISSUES AGITATED IN THE CO ARE BEING NOT ARISEN FROM THE ASSESSMENT ORDER. HENCE, THERE IS NO FORCE IN THE GROUNDS TAK EN IN THE CO. CROSS OBJECTION OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, CROSS OBJECTION OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER