Centre for Development of Advanced Computing, Pune V. ITO, Pune

ITA 1111/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5902 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.1111/PN/2012 (ASSESSMENT YEAR : 2007-08) CENTRE FOR DEVELOPMENT OF ADVANCED COMPUTING, PUNE UNIVERSITY CAMPUS, GANESHKHIND, PUNE 411 007. PAN : AAATC0934H . APPELLANT VS. COMMISSIONER OF INCOME TAX 1, PUNE. . RESPONDENT APPELLANT BY : MR. P. S. SHINGTE RESPONDENT BY : MR. A. K. MODI DATE OF HEARING : 26-11-2013 DATE OF PRONOUNCEMENT : 10-01-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX - I, PUNE (IN SHORT THE COMMISSIONER) PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.03.2012 WHEREBY AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT DATED 24.11.2009 FOR THE ASSESSMENT YEAR 20 07-08 HAS BEEN HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. THE PRIMARY PLE A OF THE ASSESSEE IS THAT THE COMMISSIONER HAS ERRED IN TREATING THE ASSESSME NT ORDER DATED 29.11.2009 AS ERRONEOUS AND PREJUDICIAL TO THE INTE RESTS OF THE REVENUE BY DISREGARDING VARIOUS SUBMISSIONS MADE BY THE ASSESS EE. 2. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE I S A SCIENTIFIC RESEARCH ASSOCIATION IN THE FIELD OF INFORMATION AND COMMUNI CATION TECHNOLOGY AND RELATED FIELDS AND IS FUNCTIONING UNDER THE ADMINIS TRATIVE CONTROL OF THE ITA NO.1111/PN/2012 A.Y. 2007-08 DEPARTMENT OF INFORMATION TECHNOLOGY, MINISTRY OF C OMMUNICATION AND INFORMATION TECHNOLOGY, GOVERNMENT OF INDIA. ASSES SEE IS A SOCIETY CONSTITUTED IN 1988 AND REGISTERED UNDER THE BOMBAY TRUST ACT, 1950 AND IS ALSO REGISTERED WITH THE COMMISSIONER OF INCOME TAX U/S 12A(A) OF THE ACT. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESS EE FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSEE HAD DECLARED A SURPLUS OF RS.31,49,53,294/- WHICH WAS C LAIMED AS EXEMPT U/S 10(21) R.W.S. 35(1)(II) OF THE ACT. THE ASSESSING OFFICER SUBJECTED THE RETURN OF INCOME TO SCRUTINY ASSESSMENT AND VIDE ORDER DATED 24.11.2009 U/S 143(3) OF THE ACT, THE RETURNED INCOME WAS ACCEPTED AS SUCH. THUS, THE TOTAL INCOME WAS ASSESSED AT RS. NIL. 3. THE COMMISSIONER HAS INVOKED HIS SUPERVISORY JUR ISDICTION U/S 263 OF THE ACT AND SHOW-CAUSED THE ASSESSEE AS TO WHY THE ASSESSMENT ORDER DATED 24.11.2009 BE NOT CONSIDERED AS ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF TH E ACT. AS PER THE COMMISSIONER, THE ACTION OF THE ASSESSING OFFICER I N ALLOWING EXEMPTION U/S 10(21) OF THE ACT WAS ERRONEOUS FOR THE REASON THAT THE ASSESSEE INSTITUTION WAS NOT APPROVED AND NOTIFIED U/S 35(1)(II) OF THE ACT IN THE CATEGORY OF SCIENTIFIC RESEARCH ASSOCIATION AND THEREFORE, TH E GRANT OF EXEMPTION U/S 10(21) OF THE ACT HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS IN LAW. SECONDLY, AS PER THE COMMISSIONER, DEPRECIATION AMO UNTING TO RS.427.79 CRORES WHICH WAS CLAIMED AND ALLOWED IN THE ASSESSM ENT ORDER WAS ERRONEOUS SINCE IT IS NOT AN ALLOWABLE EXPENDITURE IN THE CAS E OF SCIENTIFIC RESEARCH ASSOCIATION FOR THE PURPOSE OF SECTION 35(1)(II) O F THE ACT. THIRDLY, AS PER THE COMMISSIONER, THE INFORMATION REGARDING THE AMOUNT ACCUMULATED/SET APART WITHIN THE MEANING OF SECTION 11(2) OF THE ACT WAS FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME FOR AND FROM THE ASSESSMENT YEAR 2003-04 ONWARDS, WHEREAS SUCH INFORMATION WAS REQUIRED TO BE FURNISH ED FOR THE LAST 11 YEARS PRIOR TO THE CURRENT ASSESSMENT YEAR. IN THE ABSEN CE OF SUCH INFORMATION, AS PER THE COMMISSIONER, THE AMOUNT OF INCOME ACCUMULA TED OR SET APART FOR ITA NO.1111/PN/2012 A.Y. 2007-08 SPECIFIC PURPOSES U/S 11(2) OF THE ACT AND ITS APPL ICATION OR OTHERWISE WITHIN THE SPECIFIED PERIOD HAS REMAINED TO BE VERIFIED. FOR THE ABOVE THREE REASONS, ASSESSEE WAS SHOW-CAUSED AS TO WHY THE ASSESSMENT O RDER DATED 24.11.2009 BE NOT CONSIDERED AS ERRONEOUS AND PREJU DICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF TH E ACT. 4. IN RESPONSE, ASSESSEE RESISTED THE ACTION OF THE COMMISSIONER BY FURNISHING A WRITTEN REPLY DATED 02.03.2011, A COPY OF WHICH IS ON RECORD. ON THE ISSUE OF THE ALLOWANCE OF EXEMPTION U/S 10(21) OF THE ACT, ASSESSEE POINTED OUT THAT IT WAS APPROVED AND NOTIFIED U/S 3 5(1)(II) OF THE ACT TILL 03.03.2004 AND SUBSEQUENTLY IT APPLIED FOR RENEWAL W.E.F. 01.04.2004 TO 31.03.2007 AND FOR 01.04.2007 ONWARDS. THE AFORESA ID APPLICATIONS WERE DULY RECOMMENDED BY THE CHIEF COMMISSIONER OF INCOM E TAX, PUNE, CENTRAL BOARD OF DIRECT TAXES FOR DOING THE NEEDFUL W.E.F. 01.04.2004. HOWEVER, THE EXEMPTION WAS GRANTED VIDE NOTIFICATION DATED 31.08 .2009 FROM THE ASSESSMENT YEAR 2009-10 ONWARDS. IN THE MEANTIME, ASSESSEE WAS PURSUING THE MATTER WITH THE CBDT TO REQUIRE AMENDMENT TO TH E EXEMPTION CERTIFICATE TO MENTION SPECIFIC DATES FROM 01.04.2004 ONWARDS. IT WAS POINTED OUT THAT THE ASSESSEE HAS CONTINUOUSLY GOT EXEMPTION U/S 10(21) R.W.S. 35(1)(II) OF THE ACT UPTO 01.04.2004 AND THEREAFTER FROM THE ASSESSMENT YEAR 2009-10 ONWARDS; AND, THERE IS NO CHANGE IN ITS ACTIVITY OR ITS CONS TITUTION DURING THE PERIOD UNDER CONSIDERATION. ASSESSEE SUBMITTED THAT NON-RECEIPT OF THE APPROVAL U/S 35(1)(II) OF THE ACT FOR THE PERIOD UNDER CONSIDERA TION WAS ONLY A TECHNICAL MATTER BUT OTHERWISE THE ASSESSEE IS FULLY ELIGIBLE FOR EXEMPTION U/S 10(21) R.W.S. 35(1)(II) OF THE ACT EVEN FOR THE YEAR UNDER CONSIDERATION. SECONDLY, WITH REGARD TO THE ALLOWANCE OF THE CLAIM OF DEPRECIATIO N, ASSESSEE POINTED OUT THAT IN VIEW OF THE JUDGMENT OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS. SOCIETY OF THE SISTERS OF ST. ANNE, 146 ITR 28 AND THAT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION, 264 ITR 110 (BOM), THE DEPRECIATION WAS CORRECTLY ALLOWED BY THE ASSESSING OFFICER. THIRDLY, WITH REGARD TO THE ACC UMULATION OF INCOME AND AS ITA NO.1111/PN/2012 A.Y. 2007-08 PER SECTION 11(2) OF THE ACT, ASSESSEE REFUTED THE CHARGE OF THE COMMISSIONER THAT THE REQUISITE INFORMATION IN FORM NO. 10 WAS N OT FURNISHED. IN THIS CONTEXT, ASSESSEE POINTED OUT THAT THE REQUISITE DE TAILS IN FORM NO. 10 WERE FURNISHED ALONGWITH THE RETURN OF INCOME. FURTHER, THE DETAILS OF EXCESS OF INCOME OVER EXPENDITURE SET APART TO BE UTILIZED FO R THE OBJECTS OF THE ASSESSEES SOCIETY WAS ALSO FURNISHED FOR THE FIVE YEARS AS PER THE REQUIREMENTS OF SECTION 11(2) W.E.F. 01.04.2004. I N ANY CASE, BEFORE THE COMMISSIONER, ASSESSEE FURNISHED THE DETAILS OF EXC ESS OF INCOME OVER EXPENDITURE FROM 1996-97 TO 2006-07 AND ITS APPLICA TIONS TOWARDS THE OBJECT OF THE ASSESSEE SOCIETY. ON THIS BASIS, IT WAS SOU GHT TO BE POINTED OUT THAT THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OF FICER DATED 24.11.2009 (SUPRA). 5. THE COMMISSIONER HAS CONSIDERED THE AFORESAID SU BMISSIONS OF THE ASSESSEE AND THEREAFTER CONCLUDED AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE BUT I AM UNABLE TO ACQUIESCE IN THE CONTENTION OF THE ASSESSEE. IN THI S CASE, APPROVAL U/S.35(1)(II) WAS GRANTED TO THE ASSESSEE TILL A.Y. 2005-06, AND SUBSEQUENTLY THE APPROVAL WAS RENEWED FROM A.Y.2009-10. FOR THE YEAR UNDER CONSIDERATION, I.E. A.Y.2007-08, SINCE THE CBDT HAS STILL NOT CONSIDERED THE APPLICATION OF THE ASSESSEE FOR APPROVAL U/S.35(1)( II) OF THE ACT, IT IS EVIDENT THAT THE ASSESSEE HAS NOT BEEN GRANTED THE REQUISIT E APPROVAL U/S.35(1)(II) TO THE ASSESSEE AND AS SUCH, IT BECOMES EVIDENT THAT T HE EXEMPTION U/S. 10(21) OF THE ACT HAS BEEN WRONGLY ALLOWED TO THE ASSESSEE AND THE SAME REQUIRES TO BE WITHDRAWN. IN VIEW OF THE ABOVE DISCUSSION, IT B ECOMES ABUNDANTLY CLEAR THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOU S, AND CONSEQUENTLY, PREJUDICIAL TO THE INTERESTS OF REVENUE. THE SAID O RDER IS THEREFORE, CANCELLED U/S.263 OF THE INCOME TAX ACT, 1961. THE CLAIM OF D EPRECIATION ALSO NEEDS TO BE VERIFIED IN THE LIGHT OF THE DECISIONS OF HONBL E SUPREME COURT AND REWORKED OUT AS PER PROVISIONS OF THE LAW. THE AMOU NT OF INCOME ACCUMULATED OR SET APART FOR SPECIFIC PURPOSES U/S. 11(2) AND I TS APPLICATION OR OTHERWISE WITHIN THE SPECIFIED PERIOD SHOULD BE VERIFIED BY T HE ASSESSING OFFICER DENOVO. THE ASSESSING OFFICER SHOULD PASS A FRESH ORDER CAR RYING OUT THE ABOVE DIRECTIONS. 6. IN NUTSHELL, AS PER THE COMMISSIONER, IN THE ABS ENCE OF THE REQUISITE APPROVAL AND NOTIFICATION U/S 35(1)(II) OF THE ACT FOR THE YEAR UNDER CONSIDERATION, ASSESSEE COULD NOT BE ALLOWED EXEMPT ION U/S 10(21) R.W.S. 35(1)(II) OF THE ACT, AND THUS THE ASSESSMENT ORDER DATED 24.11.2009 GRANTING ITA NO.1111/PN/2012 A.Y. 2007-08 EXEMPTION TO THE ASSESSEE U/S 10(21) R.W.S. 35(1)(I I) OF THE ACT WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVE NUE. ON THE ASPECT OF THE ALLOWANCE OF DEPRECIATION AND THE AMOUNT OF INCOME ACCUMULATED OR SET APART FROM THE SPECIFIC PURPOSES U/S 11(2) OF THE ACT, HE HAS DIRECTED THE ASSESSING OFFICER TO VERIFY AND THEREAFTER DECIDE DE-NOVO . 7. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMMISSIONER HAD FAILED TO APPRECIATE THE CIRCU MSTANCES IN WHICH THE REQUISITE APPROVAL U/S 35(1)(II) OF THE ACT WAS NOT AVAILABLE FOR THE YEAR UNDER CONSIDERATION. IN ANY CASE, IT IS POINTED OUT THAT ASSESSEE WAS A SOCIETY WHICH WAS DULY REGISTERED U/S 12A(A) OF THE ACT AND THERE FORE EVEN IN THE ABSENCE OF EXEMPTION U/S 10(21) R.W.S. 35(1)(II) OF THE ACT, I TS INCOME WAS ELIGIBLE FOR EXEMPTION UNDER SECTIONS 11&12 OF THE ACT. IT WAS, THEREFORE, CONTENDED THAT THE COMMISSIONER OUGHT TO HAVE APPRECIATED THE AFOR ESAID POSITION AND ONLY THEN EXAMINED AS TO WHETHER OR NOT THE ASSESSMENT O RDER DETERMINING THE TOTAL INCOME AT RS.NIL WAS ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE AC T. ON THE OTHER ASPECTS, THE SUBMISSIONS MADE BEFORE THE COMMISSIONER, WHICH WE HAVE NOTED ABOVE, WERE REITERATED. 8. ON THE OTHER HAND, THE LEARNED CIT(DR) APPEARING FOR THE REVENUE HAS DEFENDED THE ORDER OF THE COMMISSIONER FOR THE REAS ONS CONTAINED THEREIN. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. AT THE OUTSET, WE MAY SAY THAT IN THE RETURN OF INCOME FILED, ASSESSE E CLAIMED EXEMPTION U/S 10(21) R.W.S. 35(1)(II) OF THE ACT, AS IS EVIDENT F ROM A COPY OF THE STATEMENT OF TOTAL INCOME PLACED IN THE PAPER BOOK AT PAGE 47. A PERUSAL OF THE ASSESSMENT ORDER DATED 24.11.2009 ALSO ABUNDANTLY R EFLECTS THAT THE TOTAL INCOME OF THE ASSESSEE AS RETURNED WAS ACCEPTED, ME ANING THEREBY THAT THE ASSESSEES CLAIM FOR EXEMPTION U/S 10(21) R.W.S. 35 (1)(II) OF THE ACT WAS ACCEPTED. FACTUALLY, IT IS EVIDENT THAT THE CLAIM OF SUCH EXEMPTION WAS ITA NO.1111/PN/2012 A.Y. 2007-08 DEPENDENT ON ASSESSEE BEING APPROVED AND NOTIFIED U /S 35(1)(II) OF THE ACT, WHICH WAS CONSPICUOUS BY ITS ABSENCE FOR THE YEAR U NDER CONSIDERATION. THEREFORE, IN THIS BACKGROUND, THE ASSESSMENT ORDER DATED 24.11.2009 ALLOWING EXEMPTION U/S 10(21) R.W.S. 35(1)(II) OF T HE ACT IS RENDERED ERRONEOUS AND CONSEQUENTIALLY PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. THEREFORE, ON T HIS ASPECT, WE FIND NO REASONS TO INTERFERE WITH THE STAND OF THE COMMISSI ONER. SO, HOWEVER, ONE OF THE PLEA RAISED BY THE ASSESSEE IS THAT AFTER FAILI NG TO OBTAIN EXEMPTION U/S 10(21) R.W.S. 35(1)(II) OF THE ACT, ASSESSEES CLAI M OUGHT TO HAVE BEEN EXAMINED UNDER SECTIONS 11&12 OF THE ACT, AS ASSESS EE HAS BEEN GRANTED REGISTRATION U/S 12A(A) OF THE ACT BY THE COMMISSIO NER VIDE ITS ORDER DATED 27.04.1989. THE AFORESAID PLEA OF THE ASSESSEE, IN OUR VIEW, IS ON A SOUND FOOTING. EVIDENTLY, THE FACTUM OF THE ASSESSEE BEI NG REGISTERED U/S 12A(A) OF THE ACT IS NOT IN DISPUTE. THEREFORE, WE DEEM IT F IT AND PROPER TO MODIFY THE DIRECTIONS OF THE COMMISSIONER TO THE ASSESSING OFF ICER TO THE EXTENT THAT WHILE PASSING THE ORDER AFRESH THE ASSESSEE SHALL B E PERMITTED TO SUBSTANTIATE ITS CLAIM FOR EXEMPTION UNDER SECTIONS 11&12 OF THE ACT. THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPOR TUNITY OF BEING HEARD AND ONLY THEREAFTER PASS AN APPROPRIATE ORDER IN ACCORD ANCE WITH LAW ON THIS ASPECT. 10. SO FAR AS THE OTHER TWO ISSUES RAISED BY THE CO MMISSIONER ARE CONCERNED, THE ASSESSING OFFICER HAS BEEN DIRECTED TO VERIFY AND ALLOW THE CLAIMS AS PER LAW. THE AFORESAID DIRECTIONS OF THE COMMISSIONER ARE AFFIRMED WITH THE MODIFICATION THAT THE ASSESSEE BE ALLOWED AN OPPORTUNITY TO PUT-FORTH ITS CLAIM AND THEREAFTER THE ASSESSING OFFICER SHAL L PASS AN ORDER IN ACCORDANCE WITH LAW. 11. WITH THE AFORESAID REMARKS, WE UPHOLD THE ORDER OF THE COMMISSIONER IN-PRINCIPLE. ITA NO.1111/PN/2012 A.Y. 2007-08 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 10 TH JANUARY, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-I, PUNE; 4) THE DR, B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE