Halol (GIDC) Industries Associateion, Panchmahal V. The ACIT, Panchmahal Circle, Godhra

ITA 1255/AHD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0907 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADITYA SHUKLA SR D R
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Benefit of exemption
• Section: 12AA; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , ITA. NO.1255/AHD/2014 (ASSESSMENT YEAR:2010-11) HALOL (GIDC) INDUSTRIES ASSOCIATION, C/O KIRTI PACKAGING IND. LTD., GIDC, HALOL, PANCHMAHALA APPELLANT VS. ASSTT. COMMISSIONER OF INCOME-TAX, PANCHMAHAL CIRCLE, GODHRA RES PONDENT PAN: AAATH2339H /BY APPELLANT : SHRI SUNIL H TALATI, A.R. /BY RESPONDENT :SHRI ADITYA SHUKLA, SR. D.R. ! '# /DATE OF HEARING : 13.07.2016 ! '# /DATE OF PRONOUNCEMENT : 29.07.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, BARODA, DATED 04.02.2014 FOR A.Y. 2010-11 ON FOLLOWING GROUNDS. (1) THE LEARNED C.I.T.(APPEALS) HAS ERRED IN CONFI RMING THE APPLICABILITY OF PROVISIONS OF SECTION 13(8) OF THE INCOME TAX ACT IN CASE OF THE APPELLANT AND THAT TH E APPELLANT IS ALSO COVERED BY THE PROVISION CONTAIN IN ITA NO.1255/AHD/14 A.Y. 10-11[HALOL (GIDC) IND. ASS . VS. ASST.CIT] PAGE 2 SECTION 2(15) INCLUDING PROVISO THEREOF. IT IS SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES OF TH E CASE SUCH FINDING OF APPLICABILITY OF SEC 13(8) IS TOTALLY INCORRECT AND INVALID AND SAME BE QUASHED AND CANCELLED. (2) THE LEARNED C.I.T.(APPEALS) HAS ERRED IN CONFIR MING THE DENIAL OF EXEMPTION U/S 11 AND 12 OF THE INCOME TAX ACT TO THE APPELLANT'S INCOME. IT IS SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND BASED ON THE CORRECT PROVISIONS OF THE ACT AND PRONOUNCEMENTS OF VARIOUS DECISIONS, THE APPELLANT IS ENTITLED TO CLAIM AND GET THE BENEFIT OF EXEMPTI ON OF ITS INCOME U/S 11 AND 12 OF THE INCOME TAX ACT. IT IS SUBMITTED THAT THE SAME BE GRANTED NOW. (3) THE LEARNED C.I.T.(APPEALS) HAS ERRED IN CONFIR MING THE ASSESSING OF THE TOTAL INCOME AT RS.2,96,551/-, WHEREAS THE APPELLANT IS NOT HAVING ANY TAXABLE INCOME, THE SAME WOULD BE TAXED AT NIL AS PER RETUR N OF INCOME. IT IS SUBMITTED THAT THE SAME BE HELD ACCORDINGLY. 2. ASSESSEE IS AN ASSOCIATION OF PERSON, REGISTERED WITH THE REGISTRAR OF CO-OP. SOCIETY ON 08.10.1990 AND ARE R EGISTERED U/S.12(A)(A) OF THE ACT W.E.F. 01.04.2000. THE RET URN OF INCOME WAS FILED ON 15.03.2011 DECLARING TOTAL INCO ME OF RS.NIL. ASSESSMENT U/S.143(3) OF THE ACT WAS FINAL IZED ON 07.02.2013 DETERMINING TOTAL INCOME OF RS.2,96,550/ - AFTER MAKING ADDITION OF RS.2,96,551/- U/S.13(8) OF THE A CT. 2.1 IN APPEAL, CIT(A) CONFIRMED THE APPLICABILITY O F PROVISIONS OF SECTION 13(8) OF THE ACT AND ALSO CON FIRMED THE ORDER OF ASSESSING OFFICER WHEREBY IT WAS STATED TH AT ASSESSEE IS ALSO COVERED BY PROVISIONS CONTAINED U/ S.2(15) OF THE ACT INCLUDING PROVISO THERETO. ITA NO.1255/AHD/14 A.Y. 10-11[HALOL (GIDC) IND. ASS . VS. ASST.CIT] PAGE 3 2.2 LD. AUTHORIZED REPRESENTATIVE POINTED OUT THAT SIMILAR ISSUE AROSE IN CASE OF DDIT VS. NARODA ENVIRO PROJE CTS LTD. IN ITA NO.546/AHD/2013 FOR A.Y. 2009-10 WHEREIN ITAT, AHMEDABAD A BENCH DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 4. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT MAIN OBJECT OF ASSESSEE COM PANY WAS CONVERTED AS PER SECTION 25 OF COMPANIES ACT CLARIFIES THAT ASSESSEE COMPANY IS IN AREA OF ENVIRONMENTAL PROTECTION, ABETMENT OF POLLUTION OF WATER, AIR, SOLID, ETC. GENERATED BY INDUSTRIAL UNITS IN A ND AROUND VATVA AND ODHAV AREA OF AHMEDABAD. ACCORDINGLY, ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT AS SESSEE IS DOING BASIC ACTIVITY OF TREATMENT OF VARIOUS POL LUTANTS GENERATED BY INDUSTRIAL UNITS. IT IS ALSO NOT DISP UTED BY ASSESSING OFFICER THAT SURPLUS GENERATED IS NOT DIS TRIBUTED TO ITS MEMBERS/SHAREHOLDERS, ETC. THE ASSESSEE CAN NOT LOOSE EXEMPTION MERELY ON THE GROUND THAT IT HAS MA DE SURPLUS AS LONG AS ASSESSEE IS NOT GENERATING SURPL US FOR PRIVATE PROFIT OF THE SETTLER OR ANY OTHER PERSON. IN THIS SITUATION, ASSESSING OFFICER WAS NOT JUSTIFIED IN H OLDING THAT ASSESSEE WAS GENERATING SURPLUS OR PROFIT MAKI NG WAS THE PREDOMINANT OBJECT OF ASSESSEE. ASSESSEE COMPANY WAS INCORPORATED WITH A SOLE OBJECT TO COMP LY WITH DIRECTIONS OF HON'BLE HIGH COURT OF GUJARAT IN A PIL FOR INDUSTRIES OF NARODA GIDC FOR ESTABLISHMENT IN RUNNING OF COMMON EFFLUENT TREATMENT PLANT AND IT S STORAGE AND DISPOSAL FACILITY AT ODHAV, AHMEDABAD. THE PROJECT WAS SETUP UNDER THE DIRECTIONS AND GUIDELIN ES OF HON'BLE HIGH COURT OF GUJARAT AND VARIOUS LOCAL AND STATE LEVEL AGENCIES VIZ. COLLECTOR, GIDC, AMC, GPCB, ETC . AS PER DIRECTIONS OF HON'BLE HIGH COURT OF GUJARAT, IT WAS SINE-QUA-NON FOR INDUSTRIAL UNITS TO BECOME MEMBER OF ASSESSEE COMPANY FOR MEETING THE POLLUTION CONTROL PARAMETERS LAID DOWN BY GPCB. THE AMOUNT COLLECTED FROM THE MEMBERS VARIED DEPENDING UPON THE QUANTUM OF EFFLUENT, NATURE OF EFFLUENT TO BE TREATED AS WELL AS OTHER FACTORS PERTAINING TO POLLUTANT OF DIFFERENT KIND C OMING FROM THE INDUSTRIAL UNITS. THUS, ASSESSEE IS ENGA GED IN THE ACTIVITY OF PRESERVATION OF ENVIRONMENT BY ABET MENT ITA NO.1255/AHD/14 A.Y. 10-11[HALOL (GIDC) IND. ASS . VS. ASST.CIT] PAGE 4 AND CONTROLLING POLLUTION OF ENVIRONMENT I.E. LAND, WATER AND AIR. FOR THIS OBJECTIVE, ASSESSEE IS PROVIDING POLLUTION CONTROL TREATMENT FOR DISPOSAL OF LIQUID AND SOLID INDUSTRIAL WASTE. IT IS UNDISPUTED THAT ASSESSEE W AS INCORPORATED U/S. 25 OF THE COMPANIES ACT. ASSESSE E WAS DULY REGISTERED U/S. 12AA AND ALSO U/S. 80G(5) OF T HE INCOME-TAX ACT. THE SAID CERTIFICATES WERE ISSUED AFTER DUE VERIFICATION BY CONCERN AUTHORITIES. ASSESSING OFFICER HAS IGNORED MODIFIED OBJECTS OF ASSESSEES MOU AFTE R ITS CONVERSION AS COMPANY U/S. 25 OF THE COMPANIES ACT. THE PLAIN READING OF OBJECTS OF COMPANY REVEALS THA T MAIN OBJECT IS PROTECTION OF ENVIRONMENT BY ABETMENT OF POLLUTION OF VARIOUS KINDS LIKE WATER, AIR, SOIL, E TC. IN THIS BACKGROUND, ACTIVITIES OF ASSESSEE COMPANY SQUARELY FALLS U/S. 2(15) OF THE INCOME-TAX ACT. THE PROVISO TO S ECTION 2(15) IS APPLICABLE TO OBJECTS OF GENERAL PUBLIC UT ILITY. THE SAME WAS ALSO CLARIFIED VIDE CBDT CIRCULAR NO. 11 D ATED 19.12.2008. SINCE ASSESSEE COMPANY IS DIRECTLY ENG AGED IN PRESERVATION OF ENVIRONMENT AS PER SECTION 2(15) , THE PROVISO AS POINTED BY ASSESSING OFFICER IS NOT APPL ICABLE IN THE INSTANT CASE. ACCORDINGLY, ASSESSING OFFICE R WAS NOT JUSTIFIED TO CONCLUDE THAT ASSESSEE IS NOT DOIN G ANY CHARITABLE ACTIVITY. WITH REGARDS TO ASSESSING OFF ICERS CONTENTION THAT ASSESSEE IS CARRYING OUT BUSINESS A CTIVITY AND IS IN THE NATURE OF PROFIT MAKING, WE FIND THAT BENEFIT OF EXEMPTION CANNOT BE DENIED ON THE GROUND THAT IT HAD MADE SURPLUS/PROFITS AS LONG AS IT IS NOT MEANT FOR PRIVATE PROFIT OF SELLER. PROFIT MAKING IS NOT PREDOMINANT OBJECT OF ACTIVITY. UNDER THE FACTS AND CIRCUMSTANCES, CIT( A) WAS JUSTIFIED IN HOLDING THAT ASSESSEE IS DOING CHARITA BLE ACTIVITY AS PER SECTION2(15) OF THE INCOME-TAX ACT, BENEFIT OF SECTION 11 & 12 OF THE INCOME-TAX ACT IS AVAILAB LE TO IT. ACCORDINGLY, CIT(A) WAS JUSTIFIED IN DIRECTING ASSESSING OFFICER TO TREAT THE ACTIVITY OF ASSESSEE COMPANY A S CHARITABLE AND FURTHER RIGHTLY DIRECTED TO DELETE T HE ADDITION OF RS.2,53,21,438/-. THIS REASONED FINDIN G OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPH OLD THE SAME. 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMIS SED. 2.3 NOTHING CONTRARY WAS BROUGHT TO MY KNOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWI NG SAME ITA NO.1255/AHD/14 A.Y. 10-11[HALOL (GIDC) IND. ASS . VS. ASST.CIT] PAGE 5 REASONING, ASSESSING OFFICER IS DIRECTED TO ALLOW T HE CLAIM OF ASSESSEE AS CLAIMED BECAUSE ASSESSEE ALSO ENGAGED I N ADVANCEMENT OF OBJECT OF BENEFIT IN PUBLIC AT LARGE . 3. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF JULY, 2016. SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER AHMEDABAD: DATED 29/07/2016 TRUE COPY S.K.SINHA ! / COPY OF ORDER FORWARDED TO:- () * / REVENUE 2) / ASSESSEE -)./.01! 2! / CONCERNED CIT 4) 2!- / CIT (A) 5)67 8!019 '019: / / DR, ITAT, AHMEDABAD ;)8 <=> ? / GUARD FILE. BY ORDER / 9 /: .* '019: /