Auto Cluster Development & Research Institute, Pune V. Deputy Commissioner of Income-tax,

ITA 1025/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7372 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-09-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Business income; Depreciation; Benefit of exemption; Capital expenditure
• Section: 143(3); 12A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 1025 /P U N/20 1 5 / ASSESSMENT YEAR : 20 1 1 - 1 2 AUTO CLUSTER DEVELOPMENT AND RESEARCH INSTITUTE, H BLOCK, PLOT NO.C - 181, CHINCHWAD, PUNE 411019 . / APPELLANT PAN: AAFCA0558D VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, PUNE . / RESPONDENT / APPELLANT BY : SHRI KISHOR PHADKE / RESPONDENT BY : SHRI VIVEK AGGARWAL / DATE OF HEARING : 2 5 .0 9 . 201 7 / DATE O F PRONOUNCEMENT: 29 .0 9 . 201 7 / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - I, PUNE, DATED 10.11.2014 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 14 3 (3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) - 1 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN CARRYING A VIEW THAT THE APPELLANT IS NOT REGISTERED U/S 12A OF THE I T ACT, 1961 ON DEEMED REGISTRATION BASIS. 2 ITA NO. 1025 /P U N/201 5 AUTO CLUSTER DEVELOPMENT AND RESEARCH INSTITUTE 2. THE LEARNED CIT(A) - 1 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN APPLYING THE AMENDED FORM OF SECTION 2(15) OF THE ITA, 1961 TO THE APPELLANT (WHO WAS FORMED BEFORE THE YEAR 2005) EVEN WHEN THIS AMENDED SECTION APPLIES TO THOSE CHARITIES WHICH GET FORMED AND APPROVED AFTER 01/04/2008. 3. THE LEARNED CIT(A) - 1 AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE EXEMPTION U/S 11 OR 12 OF THE ITA, 1961 BY ALLEGING THAT THE ACTIVITIES OF THE APPELLANT ARE NON CH ARITABLE IN NATURE. THE LEARNED IT AUTHORITIES OUGHT TO HAVE APPRECIATED THAT THE APPELLANT IS NOT ENGAGED IN ANY ACTIVITY AKIN TO TRADE / BUSINESS / COMMERCE. 4. THE LEARNED CIT(A) - 1 ERRED IN LAW IN UPHOLDING THE DISALLOWANCE OF RS.5,27,225/ - MADE BY TH E LEARNED AO ON ACCOUNT OF THE LEASEHOLD PREMIUM PAID BY TREATING THE SAID PREMIUM AS CAPITAL EXPENDITURE. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE GROUND OF APPEAL NO.2 IS NOT PRESSED AND HENCE, THE SAM E IS DISMISSED AS NOT PRESSED. 4. THE ISSUE IN GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ORDERS OF AUTHORITIES BELOW IN HOLDING THAT THE ASSESSEE WAS NOT REGISTERED UNDER SECTION 12A OF THE ACT ON DEEMED REGISTRATION BASIS. THE LINKED I SSUE IN GROUND OF APPEAL NO.3 IS IN NOT ALLOWING EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT BY ALLEGING THAT THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE WERE NON CHARIT ABLE IN NATURE. ANOTHER ISSUE RAISED VIDE GROUND OF APPEAL NO.4 IS AGAINST THE DISALLOW ANCE MADE OF LEASEHOLD PREMIUM PAID BY THE ASSESSEE OF RS.5,27,225/ - TREATING THE SAME AS CAPITAL EXPENDITURE. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE OF DEEMED REGISTRATION AND THE CLAIM OF EXEMPTION UNDER S ECTION 11 AND 12 OF THE ACT AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS AND CERTAIN DIRECTIONS WERE GIVEN BY THE TRIBUNAL IN THIS REGARD. HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER GIVING EFFECT TO THE ORDER OF TRIBUNAL UNDER SECTION 143(3) R.W.S. 254 OF THE ACT VIDE ORDER DATED 29.03.2015 RELATING TO ASSESSMENT YEARS 3 ITA NO. 1025 /P U N/201 5 AUTO CLUSTER DEVELOPMENT AND RESEARCH INSTITUTE 2005 - 06, 2008 - 09 AND 2009 - 10, ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE AT NIL IN ALL THE YEARS. HE REFERRED TO THE COPIES OF ASSESSMENT ORDER FILED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AT THE BEHEST OF THE TRIBUNAL, WHEREIN VIDE PARA 3 IN ALL THE ORDERS, THE ASSESSING OFFICER REFERS TO THE DIRECTIONS OF THE TRIBUNAL VIDE ORDER DATED 30.12.2013, WHEREIN THE MATTER WAS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH DIRECTION TO DECIDE THE ISSUE AFRESH. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEN, POINTED OUT THAT THE ASSESSING OFFICER NOTES AFTER VERIFICATION OF RECORDS AND DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE RETURN OF INCOME OF ASSESSEE IS ACCEPTED, WHICH ADMITTEDLY, WAS FILED AT NIL AFTER CLAIMING EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. SIMILARLY, IN ASSESSMENT YEAR 2010 - 11, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT, WHEREIN THE ASSESSEE HAD RECEIPT OF RS.10.96 CRORES, AGAINST WHICH IT HAD CLAIMED EXPENDITURE OF RS.8.99 CRORES. THE ASSESSING OFFICER WAS OF THE VIEW THAT EXCESS INCOME OF RS.1.58 CRORES IS TO BE TAXED IN TH E HANDS OF ASSESSEE AS BUSINESS INCOME. THE ASSESSEE WAS ISSUED NOTICE UNDER SECTION 148 OF THE ACT. HOWEVER, THE INCOME DECLARED BY THE ASSESSEE AT NIL WAS ASSESSED IN THE HANDS OF ASSESSEE VIDE ASSESSMENT ORDER DATED 29.03.2015. COPIES OF ALL THESE OR DERS ARE AVAILABLE ON RECORD. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY ADMITTED THAT THE ASSESSING OFFICER AFTER THE ORDER OF TRIBUNAL HAS DETERMINED THE INCOME IN THE HANDS OF ASSESSEE AT NIL FOR THE RELEVANT ASSESSMENT YEARS. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS FORMED WITH THE INITIATIVE BY MINISTRY OF 4 ITA NO. 1025 /P U N/201 5 AUTO CLUSTER DEVELOPMENT AND RESEARCH INSTITUTE INDUSTRY, GOVT. OF INDIA, PRIMPRI CHINCHWAD MUNICIPAL CORPORATION AND MAHARATTA CHAMBER OF COMMERCE , INDUSTRIES AND AGRICULTURE, PUNE. THE ASSESSEE WAS ENGAGED IN PROVIDING VARIOUS SERVICES LIKE RESEARCH AND DEVELOPMENT FACILITIES, BUSINESS AUXILIARY, COMMERCIAL COACHING / TRAINING CONVENTION, CONSULTING ENGINEERING TEST, INSPECTION, CERTIFICATION MANA GEMENT, CONSULTANCY BUSINESS AND EXHIBITION SERVICES FOR SMALL, MEDIUM AND LARGE AUTO INDUSTRIES IN AND AROUND PUNE. THE ASSESSEE ALSO MANUFACTURES RAPID PROTO TYPE PARTS (RPT) AND OTHER PARTS AS PER THE REQUIREMENTS OF CUSTOMERS. FOR THE YEAR UNDER CONS IDERATION, THE ASSESSEE FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME AT NIL. THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. THE ASSESSEE CLAIMED THAT IT HAD SUBMITTED THE APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT AFTER FORMATION OF THE COMPANY IN THE YEAR 2005. HOWEVER, THE ASSESSEE HAD NOT RECEIVED ANY COMMUNICATION NOR ANY DENIAL OF REGISTRATION FROM THE COMMISSIONER. THE ASSESSEE BEFORE THE ASSESSING OFFICER EXPLAINED THAT IT WAS PROMOTED BY THE GOVT. OF INDIA, MCCIA AND PCMC WITH THE OBJECT OF PROVIDING WORLD CLASS MACHINING, TESTING AND RELATED FACILITIES AT MINIMUM OF THE PRICE IN THE VEHICLE MANUFACTURING ACTIVITY. THE ASSESSEE CLAIMED THAT IT WAS ELIGIBLE FOR THE SAID EXEMPTION UNDER SECTION 11 OF THE ACT. HOWEVER, THE ASSESSING OFFICER DENIED EXEMPTION CLAIMED UNDER SECTION 11 AND 12 OF THE ACT IN THE ABSENCE OF 12A REGISTRATION AND ASSESSED THE ASSESSEE AS DOMESTIC COMPANY AND AFTER ADJUSTMENT OF DEPRECIATION AS PER THE INCOME TAX ACT, THE TOTAL INCOME WAS DETERMINED UNDER THE NORMAL PROVISIONS OF THE ACT AT RS.2.72 CRORES. THE EXPENDITURE BOOKED ON ACCOUNT OF PREMIUM OF LEASEHOLD LAND AT RS.5,27,225/ - WAS DISALLOWED IN THE HANDS OF ASSESSEE. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. 5 ITA NO. 1025 /P U N/201 5 AUTO CLUSTER DEVELOPMENT AND RESEARCH INSTITUTE 8. WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2005 - 06, 2006 - 07, 2008 - 09 & 2009 - 10 IN ITA NOS.1987 TO 1990/PN/2012 IN THE APPEALS FILED BY THE ASSESSEE AND THE CROSS APPEALS FILED BY THE REVENUE IN ASSESSMENT YEAR S 2005 - 0 6 & 2006 - 07 IN ITA NOS.2262 TO 2265/PN/2012, VIDE ORDER DATED 30.12.2013 FIRST OBSERVED THAT THERE WAS NO PROFIT MOTIVE INVOLVED IN THE HANDS OF ASSESSEE AS THE ASSESSEE WAS AN INSTITUTION, WHICH WAS SPONSORED AND FOUND AT THE INITIATIVE OF THE CENTRAL GOV ERNMENT WITH THE PARTICIPATION OF LOCAL MUNICIPAL CORPORATION FOR THE DEVELOPMENT OF RESEARCH AND PROVIDING SERVICES IN AUTO SECTOR IN AND AROUND PUNE. THE TRIBUNAL REFERRED TO THE APPLICATION MADE BY THE ASSESSEE FOR REGISTRATION UNDER SECTION 12A OF THE ACT AND ITS NON - DISPOSAL BY THE COMMISSIONER. THE TRIBUNAL AFTER CONSIDERING THE PLEA OF ASSESSEE THAT NON - CONSIDERATION OF APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT WITHIN TIME FRAME FIXED UNDER SECTION 12AA(2) OF THE ACT WOULD HAVE AN A DVERSE CONSEQUENCE I N THE PRESENT CASE, AS THE ASSESSEE C OULD NOT BE CONSIDERED ELIGIBLE FOR EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT , RESTORED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER. THE SAID DIRECTIONS WERE GIVEN BY THE TRIBUNAL FOR ASSESS MENT YEARS 2005 - 06, 2006 - 07 AND ALSO FOR ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF TRIBUNAL FOR ALL THE YEARS I.E. ASSESSMENT YEARS 2005 - 06, 2008 - 09 AND 2009 - 10 , IN THE CONSEQUENT ORDER PASSED IN ALL T HE CASES DATED 29.03.2015 HAS GIVEN THE BENEFIT OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT BY ASSESSING THE INCOME IN THE HANDS OF ASSESSEE AT NIL. THE SAID RATIO IS TO BE APPLIED TO THE ISSUE RAISED BEFORE US IN THE INSTANT ASSESSMENT YEAR ALSO. AC CORDINGLY, WE HOLD THAT THE INCOME IN THE HANDS OF ASSESSEE IS TO BE ASSESSED AT NIL ON DEEMED REGISTRATION BASIS, WHEREIN THE ASSESSEE IS THUS, FURTHER ENTITLED TO CLAIM EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. FURTHER, THERE IS NO 6 ITA NO. 1025 /P U N/201 5 AUTO CLUSTER DEVELOPMENT AND RESEARCH INSTITUTE MERIT IN MAKING A NY DISALLOWANCE ON ACCOUNT OF LEASEHOLD PREMIUM PAID BY THE ASSESSEE AT RS. 5,27,225/ - . CONSEQUENTLY, THE GROUNDS OF APPEAL NO.1, 3 AND 4 RAISED BY THE ASSESSEE ARE ALLOWED. 9 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF SEPTEMBER , 201 7 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 29 TH SEPTEMBER , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE A PPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , PUNE; 4. THE CIT - I, PUNE . 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE