Gujarat Industrial Development Corpn.Ltd., Gandhinagar V. The ACIT., GNR Circle, Gandhinagar

ITA 1171/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5737 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: TALATI
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3); 115JB; 12AA; 143(1); 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1171/AHD/2007 A. Y.: 2003-04 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION LTD., BLOCK NO.4, 2 ND FLOOR,UDYOG BHAVAN, SECTOR-11, GANDHINAGAR VS THE A. C. I. T., GANDHINAGAR CIRCLE, GANDHINAGAR PA NO. AABCG 8033D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. H. TALATI, AR RESPONDENT BY SHRI K. M. MAHESH, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), GANDHINAGAR DATED 22-12-2006 FOR ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ASSESSMENT OF INCOME U/S 115JB OF THE I. T. ACT ON THE GROUND THAT, THE SAME IS NOT ARISING OUT OF THE ORD ER APPEALED AGAINST. IT IS SUBMITTED THAT, THE APPELLA NT CORPORATION HAS GOT THE REGISTRATION U/S 12AA OF TH E INCOME-TAX ACT I.E. STATUS AS TRUST AND THEREFORE, PROVISIONS OF SECTION 115JB OF THE ACT IS NOT APPLI CABLE TO THE TRUST AND THIS ISSUE WAS RAISED FOR THE FIRS T TIME IN THE ORDER PASSED U/S. 143(3) OF THE ACT. THE GRO UND OUGHT TO HAVE BEEN ALLOWED. IT BE SO HELD THAT THE APPELLANT IS NOT LIABLE TO BE TAXED U/S 115JB. 2. THE ORDER PASSED BY THE LEARNED C. I. T. (APPEAL S) CONFIRMING THE ORDER OF ASSESSING OFFICER TO THE EX TENT HE UPHELD APPLICABILITY OF SEC. 115JB IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 3. THE LEARNED C. I. T. (APPEALS) OUGHT TO HAVE GIV EN SAME RELIEF WITH REGARD TO GROUND OF NON-APPLICABIL ITY ITA NO.1171/AHD/2007 GIDC VS ACIT, GANDHINAGAR 2 OF SEC. 115 JB AS HE GAVE TO THE ASSESSMENT OF OTHE R NOTIONAL INCOME/LOSS. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD POINTED OUT BY THE PARTIES. 3. THE LEARNED CIT(A) NOTED THAT THE ASSESSEE IS RE GISTERED U/S 12AA OF THE IT ACT AS PER ORDER PASSED BY CIT, GANDHINAG AR ON 27-03-2006. THE REGISTRATION WAS GRANTED WITH EFFECT FROM 01-04 -2002. PRIOR TO GRANT OF THE REGISTRATION, THE ASSESSEE HAD FILED RETURN OF INCOME ADMITTING LOSS OF RS.71,45,69,860/- AND DECLARING BOOK PROFIT U/S 115 JB OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD REQUESTED THAT ITS INCOME SHOULD BE TREATED AS EXEMPT UNDER ARTICLE 28 9 (1) OF THE CONSTITUTION OF INDIA AND ALSO U/S 11 OF THE IT ACT . THE AO REJECTED THE CLAIM PRIMARILY AS IT WAS NOT REGISTERED U/S 12 AA OF THE IT ACT AT THE RELEVANT POINT OF TIME. ACCORDINGLY HE COMPLETED TH E ASSESSMENT WHEREIN ADDITION AMOUNTING TO RS.31,52,483/- WAS MADE ON AC COUNT OF DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.14,10, 483/- AND OTHER REVENUE EXPENDITURE DISALLOWED RS.17,42,000/-. THE ASSESSEE OBJECTED THE ASSESSMENT BEFORE THE LEARNED CIT(A). 4. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AO WAS INCORRECT IN NOT CONSIDERING THE STATUS OF THE ASSE SSEE CORPORATION AS TRUST. REGISTRATION WAS GRANTED BY THE CIT, GANDHIN AGAR WITH EFFECT FROM 01-04-2002 AND ACCORDINGLY THE STATUS OF THE ASSESS EE IS THAT OF A TRUST. THE LEARNED CIT(A) ON CONSIDERATION OF THE ABOVE SU BMISSION OF THE ASSESSEE NOTED THAT THE ASSESSEE WAS GRANTED REGIST RATION SUBSEQUENT TO PASSING OF THE ASSESSMENT ORDER. THE LEARNED CIT, G ANDHINAGAR HAS GRANTED REGISTRATION TO THE ASSESSEE WITH EFFECT FR OM 01-04-2002 AND ACCORDINGLY STATUS ADOPTED OF COMPANY IS FOUND TO B E INCORRECT IN THIS REGARD. THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 1 1 AND 12 OF THE IT ACT. ITA NO.1171/AHD/2007 GIDC VS ACIT, GANDHINAGAR 3 THE ADDITIONS MADE BY THE AO ARE FOUND TO BE NOT IN ORDER. THE AO WAS ACCORDINGLY DIRECTED TO COMPUTE INCOME OF THE ASS ESSEE ALLOWING EXEMPTION U/S 11 AND 12 OF THE IT ACT. ON OTHER GRO UNDS OF APPEAL REGARDING DISALLOWANCE OF DEPRECIATION AND REVENUE EXPENSES, THE LEARNED CIT(A) NOTED THAT BECAUSE THE INCOME OF THE ASSESSEE WAS FOUND TO BE EXEMPTED U/S 11 AND 12 OF THE IT ACT, THE ABO VE DISALLOWANCES DO NOT SURVIVE AND ACCORDINGLY THESE GROUNDS OF APPEAL OF THE ASSESSEE WERE ALLOWED. 4.1 HOWEVER, ON THE OTHER GROUNDS ON WHICH THE ASSE SSEE OBJECTED TO THE ASSESSMENT OF INCOME U/S 115 JB OF THE IT ACT, THE LEARNED CIT(A) OBSERVED THAT ASSESSMENT OF INCOME U/S 115 JB OF TH E IT ACT WAS AS PER SECTION 143(1) OF THE IT ACT AND AS SUCH THIS GROUN D IS NOT ARISING FROM THE ORDER AND ACCORDINGLY DISMISSED THE APPEAL OF T HE ASSESSEE. THE ASSESSEE IS AGGRIEVED AGAINST THE ABOVE FINDINGS OF THE LEARNED CIT(A) IN NOT CONSIDERING THE ISSUE OF ASSESSMENT OF INCOME U NDER THE PROVISIONS OF SECTION 115JB OF THE IT ACT ON THE ABOVE GROUNDS OF APPEAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT R EGISTRATION WAS GRANTED TO THE ASSESSEE U/S 12AA OF THE IT ACT WITH EFFECT FROM 01-04-2002, THEREFORE, INCOME OF THE ASSESSEE IS EX EMPT U/S 11 AND 12 OF THE IT ACT. THE ORDER OF THE LEARNED CIT, GANDHI NAGAR GRANTING REGISTRATION WAS PASSED ON 27-03-2006 WHEREAS ASSES SMENT WAS FRAMED IN A HURRY MANNER ON 23-03-2006. HE HAS SUBMITTED T HAT SINCE LITIGATIONS WERE GOING ON THE ISSUE OF REGISTRATION BEFORE THE TRIBUNAL, THEREFORE, THE ASSESSEE UNDER PROTEST FILED THE RET URN OF INCOME DECLARING THE LOSS UNDER PROTEST AND DECLARED BOOK PROFIT U/S 115 JB OF THE IT ACT. HE HAS SUBMITTED THAT SAME IS CLEAR FROM THE COMPUT ATION OF INCOME FILED WITH THE RETURN OF INCOME SHOWING BOOK PROFIT U/S 115 JB OF THE IT ACT. HE HAS ALSO SUBMITTED THAT IT WAS MENTIONED IN NOTE NO.3 FORMING ITA NO.1171/AHD/2007 GIDC VS ACIT, GANDHINAGAR 4 PART OF THE STATEMENT OF INCOME THAT COMPUTATION OF INCOME IS MADE IN NORMAL COURSE BUT UNDER PROTEST THOUGH THE INCOME O F THE ASSESSEE IS EXEMPT UNDER ARTICLE 289(1) OF THE CONSTITUTION OF INDIA AND SECTION 11 OF THE IT ACT. HE HAS SUBMITTED THAT ONCE THE INCOME O F THE ASSESSEE IS EXEMPT U/S 11 AND 12 OF THE IT ACT AND THE PRAYER O F THE ASSESSEE HAS BEEN ACCEPTED BY THE LEARNED CIT(A), THEREFORE, INC OME OF THE ASSESSEE IN THE STATUS OF THE COMPANY UNDER THE PROVISIONS OF S ECTION 115 JB OF THE IT ACT CANNOT BE SHOWN. HE HAS RELIED UPON THE DECI SION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS SHELLY PRODUCTS AND ANOTHER 261 ITR 367 IN WHICH IT WAS HELD THAT EXCESS TAX PAID BY THE ASSESSEE OUT OF ABUNDANT CAUTION OR OWING TO ERROR OR NON-TA XABILITY HAS TO BE REFUNDED. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE O RDER OF THE LEARNED CIT(A) AND SUBMITTED THAT SINCE THE ASSESSEE FILED RETURN OF INCOME SHOWING BOOK PROFIT U/S 115 JB OF THE IT ACT, THEREFORE, THE LEARNED CIT(A) WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE WHICH WAS NOT ARISING OUT OF THE IMPUGNED ORDER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE F ILED RETURN OF INCOME ON 30-11-2003 DECLARING TOTAL LOSS OF RS.71,45,69,860/ -, THE COMPUTATION WAS MADE AS PER NORMAL BUSINESS COURSE AND THE ISSU E OF REGISTRATION WAS PENDING BEFORE THE AUTHORITIES BELOW. THE A SSESSEE HOWEVER, IN THE NOTE APPENDED TO THE RETURN OF INCOME STATED TH AT INCOME OF THE ASSESSEE WOULD BE EXEMPTED UNDER ARTICLE 289 (1) OF THE CONSTITUTION OF INDIA AND SECTION 11 OF THE IT ACT. SIMILAR NOTE WA S APPENDED TO SHOW THAT COMPUTATION OF INCOME WAS MADE IN THE NORMAL C OURSE UNDER PROTEST. INCOME WAS COMPUTED AS PER BOOK PROFIT U/S 115 JB OF THE IT ACT. THE AO PASSED THE ASSESSMENT ORDER ON 23-03-20 06 AND TOOK THE STATUS OF THE ASSESSEE AS A COMPANY. IT IS ALSO ADM ITTED FACT THAT REGISTRATION U/S 12AA OF THE IT ACT WAS GRANTED TO THE ASSESSEE WITH EFFECT FROM 01-04-2002 MEANING THEREBY THE INCOME O F THE ASSESSEE FOR ITA NO.1171/AHD/2007 GIDC VS ACIT, GANDHINAGAR 5 THE ASSESSMENT YEAR UNDER APPEAL SHALL HAVE TO BE C OMPUTED ACCORDING TO THE PROVISIONS OF SECTION 11 AND 12 OF THE IT AC T. THE LEARNED CIT(A) DIRECTED THE AO TO COMPUTE THE INCOME OF THE ASSESS EE ALLOWING EXEMPTION U/S 11 AND 12 OF THE IT ACT. THE ADDITION MADE BY THE AO OF RS.31,52,483/- WAS ALSO DELETED BY THE LEARNED CIT( A) BECAUSE THE INCOME WAS FOUND TO BE EXEMPT U/S 11 AND 12 OF THE IT ACT. THE LEARNED CIT(A) HOWEVER, NOTED THAT THE ASSESSMENT OF INCOME U/S 115 JB OF THE IT ACT IS NOT ARISING OUT OF THE ORDER OF THE ASSES SMENT. THIS FINDING OF THE LEARNED CIT(A) IS NOT SUSTAINABLE IN LAW. NOTHI NG IS PRODUCED BEFORE US TO SHOW IF THE DEPARTMENT HAS PREFERRED ANY APPE AL AGAINST THE IMPUGNED ORDER OF THE LEARNED CIT(A). THEREFORE, TH E ORDER OF THE LEARNED CIT(A) IS CONFIRMED TO THE EXTENT THAT THE INCOME O F THE ASSESSEE IS EXEMPT U/S 11 AND 12 OF THE IT ACT AND ALL ADDITION S STAND DELETED. ON THE FACE OF THE ABOVE FINDING OF THE LEARNED CIT(A) EXEMPTING THE INCOME OF THE ASSESSEE U/S 11 AND 12 OF THE IT ACT AND TAK ING THE STATUS OF THE ASSESSEE AS A TRUST, THE COMPUTATION OF INCOME OF T HE ASSESSEE BY THE AO IN THE STATUS OF COMPANY, READ WITH PROVISO TO SECT ION 115 JB OF THE IT ACT WOULD NOT BE JUSTIFIED. THEREFORE, THERE IS NO QUESTION OF COMPUTING THE INCOME OF THE ASSESSEE WITH THE AID OF SECTION 115 JB OF THE IT ACT. WE ACCORDINGLY, DIRECT THE LEARNED CIT(A) TO FURTHE R CLARIFY IN THE ORDER THAT SECTION 115JB OF THE IT ACT WOULD NOT APPLY IN THIS CASE. 7. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 16-07-2010. SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 16-07-2010 LAKSHMIKANT/- ITA NO.1171/AHD/2007 GIDC VS ACIT, GANDHINAGAR 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD