ITO, New Delhi V. M/s. Agricultural Produce Marketing Committee, New Delhi

ITA 1240/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6841 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: PARAS CHAUDHARY
• Keywords: Business income; Charitable institution
• Section: 143(3); 12A; 11

Judgement Text

ITA NO. 1240/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1240/DEL/2014 A.Y. : 2007-08 INCOME TAX OFFICER, WARD 25(3), ROOM NO. 1709, 17 TH FLOOR, E- 2 BLOCK, CIVIC CENTRE MINTO ROAD, JLN MARG, NEW DELHI 110 002 VS. M/S AGRICULTURAL PRODUCE MARKETING COMMITTEE, NAJAFGARH, BAHADURGARH ROAD, NEW DELHI (PAN:AAATA7773Q) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. K.K. JAISWAL, DR ASSESSEE BY : MS. AVNISH AHLAWAT, ADV. & SH. PARAS CHAUDHARY, ADV. DATE OF HEARING : 18-01-2016 DATE OF ORDER : 10-02-2016 ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE APPEAL AGAINST THE IMPUG NED ORDER PASSED BY THE LD. CIT(A)-XVII DATED 26.12.2013 RELE VANT FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED IN THE REVENUES APPEAL READ AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF RS. 1,31,40,831/- MAD E ON ACCOUNT OF TREATING WHOLE OF THE SURPLUS AS INCOME AFTER DI SALLOWING THE STATUS OF CHARITABLE INSTITUTION. ITA NO. 1240/DEL/2014 2 2. THE APPELLANT CRAVES RIGHT THE RIGHT TO ADD, ALT ER OR AMEND ANY GROUND OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FURNISHED A RETURN CLAIMING THE STATUS OF LOCAL AUTHORITY AND DECLARED INCOME OF RS. 1,57,15,900/- AFTER DEPOSITING RS. 24,59,500/- AS S ELF ASSESSMENT TAX. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) DATED 23.9.2008 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE FILE WAS TRANSFERRED TO THE ACIT, CIRCLE 25(1) AND ACCORDING LY, A FRESH NOTICE U/S. 143(2) DATED 23.7.2009 WAS ISSUED AND SERVED. THE A SSESSEE CLAIMED INCOME EXEMPTED. THE STATUS OF LOCAL AUTHORITY WAS DENIED. THE HIGH COURT CONFIRMED THE ITOS ORDER AND HELD THAT THEY ARE NOT ENTITLED TO EXEMPTION. THE ASSESSEE HAS PREFERRED AN SLP WHICH HAS BEEN DISMISSED AND ACCORDINGLY, THE STATUS IS NOT ALLOWED AS A LOC AL AUTHORITY, THE STATUS WAS TAKEN AS BODY OF INDIVIDUAL. THE ENTIRE SURPL US IS TAXABLE AND ACCORDINGLY THE INCOME IS TREATED AS TAXABLE INCOME . THE ASSESSEE HAS APPLIED FOR GRANT OF EXEMPTION U/S. 11 AND FILED AP PLICATION U/S. 12A FOR REGISTRATION AS A CHARITABLE INSTITUTION ON 31.5.2 006. THE DIRECTOR OF INCOME TAX (EXEMPTION) GRANTED THE REGISTRATION AS A CHARITABLE INSTITUTION WITH CERTAIN CONDITION. THE EXPENDITU RE DEBITED IN THE P&L ACCOUNT ARE NEITHER CHARITABLE NOR ALLOWING BENEFI T OF THE COMMON MAN. ACCORDINGLY, THE ENTIRE RECEIPTS OF MARKETING FEES IS TAXED AS INCOME FROM BUSINESS AND NOT ENTITLED TO ANY EXEMPTION. THE INC OME OF THE ASSESSEE WAS ASSESSED AT RS. 1,31,40,831/- VIDE ORDER DATED 31.12.2009 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 4. AGGRIEVED WITH THE AFORESAID ORDER OF THE AO, TH E ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORD ER 26.12.2013 HAS DELETED THE ADDITION OF RS. 1,31,40,831/-. 5. AGAINST THE ORDER OF THE LEARNED CIT(A) THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 1240/DEL/2014 3 6. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND STA TED THAT THE ADDITION OF RS. 1,31,40,831/- MADE ON ACCOUNT OF TREATING WHOLE OF THE SURPLUS AS INCOME AFTER DISALLOWING THE STATUS OF CHARITABLE I NSTITUTION WAS WRONGLY DELETED BY THE LD. CIT(A). 7. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE ACTION OF THE AO WAS NOT JUSTIFIED. HE RELIED UPO N THE ORDER OF THE LD. CIT(A) AND REQUESTED THE BENCH TO UPHOLD THE ORDE R OF THE LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THA T LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE. FOR TH E SAKE OF CONVENIENCE, WE ARE REPRODUCING THE FINDING OF THE LD. CIT(A) FR OM PARA 5 TO 6 AT PAGES 5 & 6 OF THE IMPUGNED ORDER. I HAVE CONSIDERED ALL THE DOCUMENTS ON RECORD. I S HALL NOW TAKE UP THE VARIOUS GROUNDS OF APPEAL. 5. GROUND NO.1, 2, 5 & 6 ARE IN RESPECT OF THE FACT THAT THE AO DID NOT ALLOW THE STATUS OF A CHARITABLE INSTITUTIO N TO THE APPELLANT WHEN THE APPELLANT WAS ACCORDED REGISTRAT ION U/S 12A OF THE I. T. ACT, 1961. THE AO TAXED THE ENTIRE RECEIPTS OF MARKETING FEES AS INCOME FROM BUSINESS AND STATED T HAT THE APPELLANT WAS NOT ENTITLED TO ANY EXEMPTION. 5.1. THE AO HAS CLEARLY STATED IN THE ORDER THAT TH E DIRECTOR OF INCOME TAX EXEMPTION GRANTED REGISTRATION AS A CHAR ITABLE INSTITUTION TO THE APPELLANT. HOWEVER, THE AO HAS S TATED THAT THE EXEMPTION WAS GRANTED WITH CERTAIN CONDITIONS B UT THE CONDITIONS WERE NOT BROUGHT TO HIS NOTICE. I AM IND EED SURPRISED BY THIS OBSERVATION OF THE AO. THE FIRST THING THE AO SHOULD HAVE DONE WAS TO HAVE CALLED FOR A COPY OF T HE ITA NO. 1240/DEL/2014 4 REGISTRATION GRANTED AND SEEN THE CONDITIONS. I HAV E PERUSED THE ORDER AND THE CONDITIONS ARE CLEARLY SPECIFIED IN THE ORDER. 5.2. THE AO HAS FURTHER IN THE ORDER STATED THAT TH E EXPENDITURES DEBITED TO THE P & L A/C ARE NEITHER C HARITABLE NOR ALLOWING BENEFIT TO THE COMMON MAN. THE AO HAS NOT SPELT OUT WHAT ITEMS OF EXPENDITURE WAS NOT CHARITA BLE OR NOT BENEFICIAL TO THE COMMON MAN. IN FACTS THE AO HAS N OT STATED WHAT ITEMS OF EXPENDITURE WERE DEBITED TO THE P & L A/C AND OUT OF THESE WHAT WERE THE EXPENDITURE NOT BENEFICI AL TO THE COMMON MAN. 5.3. THE APPELLANT ON THE OTHER HAND HAS STATED THA T THE COMMITTEE IS ENGAGED IN FACILITIES & SERVICES OF PU BLIC UTILITY. I HAVE PERUSED THE DECISIONS QUOTED BY THE APPELLANT AND SEEN THE DOCUMENTS SUBMITTED. THE APPELLANT HAS BEEN GRA NTED REGISTRATION U/S 12A. IT IS ENGAGED IN PROVIDING SE RVICES OF PUBLIC UTILITY THE AO HAS NOT GIVEN ANY REASONS OR JUSTIFICATION FOR TREATING THE ENTIRE RECEIPTS OF MARKETING FEES AS BUSINESS INCOME. THE ADDITION OF RS.1,31,40,831/- IS THEREFO RE DELETED. THE GROUND OF APPEAL IS RULED IN FAVOUR OF THE APPE LLANT. 6. GROUND NO.4 IS IN RESPECT OF THE AO TREATING THE APPELLANT AS BODY OF INDIVIDUALS. IN THE ORDER I HAVE NOT BEE N ABLE TO DECIPHER WHY THE AO HAS DONE THIS. THE STATUS OF TH E APPELLANT IS THEREFORE TAKEN AS LOCAL AUTHORITY AS RETURNED BY THE APPELLANT. THE GROUND OF APPEAL IS RULED IN FAV OUR OF THE APPELLANT. 9. IN THE BACKGROUND OF THE AFORESAID FINDINGS, WE ARE OF THE VIEW THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH D OES NOT NEED ANY ITA NO. 1240/DEL/2014 5 INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME . ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/02/2016. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 10/02/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES