DDIT (Exemptions), CHENNAI V. M/s. Chennai Port Trust, CHENNAI

ITA 1327/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51722 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: K MEENATCHISUNDARAMCA
• Keywords: Commercial expediency; Condonation of delay
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 1327/MDS/2010 ASSESSMENT YEAR : 2007-08 THE DY. DIRECTOR OF INCOME-TAX, (EXEMPTIONS)-II, CHENNAI. V. M/S. CHENNAI PORT TRUST, NO.1, RAJAJI SALAI, CHENNAI-600 001. PAN : AAALC0025B (APPELLANT) (RESPONDENT) A N D C.O. NO. 98/MDS/2010 (IN ITA NO. 1327/MDS/2010) ASSESSMENT YEAR : 2007-08 M/S. CHENNAI PORT TRUST, V. THE DY. DIRE CTOR OF INCOME- TAX NO.1, RAJAJI SALAI, (EXEMPTIONS)-II, CHENNAI-600 001. CHENNAI. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : DR. I. VIJAYAKUMAR, CIT-DR RESPONDENT BY : SRI K.MEENATCHISUNDARAM,CA DATE OF HEARING : 10-08 -2011 DATE OF PRONOUNCEMENT : 12/08/2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : ITA 1327/MDS/2011 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED I.T.A. NO. 1327/MDS/2010 & CO 98/MDS/2010 2 CIT(APPEALS)-IX, CHENNAI IN ITA NO. 108/09-10 DATE D 17-05-2010 FOR THE ASSESSMENT YEAR 2007-08. CO NO. 98/MDS/2010 IS THE CROSS OBJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL IN ITA NO. 1327/MDS/2010. 2. DR. I. VIJAYAKUMAR, LEARNED CIT-DR REPRESENTED O N BEHALF OF THE REVENUE AND SHRI K. MEENATCHI SUNDARAM, CA REPRESEN TED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE EXPENDITURE INCURRED BY THE ASSESSEE ON 125 TH YEAR OF CELEBRATION. 2.1 IT IS SUBMITTED THAT THE DECISION RELIED ON BY THE CIT(A) IN THE CASE OF GUJARAT HIGH COURT DECISION I N CIT VS. MEHSANA DISTRICT CO-OP MILK PRODUCERS UNION LTD. 20 7 ITR 140 IS DISTINGUISHABLE ON THE FACTS THAT THE CASE R ELATED TO TAXABLE INCOME. IT IS ALSO SUBMITTED THAT THE COUR T HAS OBSERVED THAT THE EXPENDITURE IS ALLOWABLE IF THERE IS COMMERCIAL EXPEDIENCY AND TO MEET CUSTOMER HOSPITAL ITY AND THAT THE EXPENDITURE SHOULD BE FOR KEEPING MEMB ERS ON GOOD HUMOUR AND WITH THE OBJECT OF PRESERVING AN D BETTERING ITS BUSINESS PROSPECTS. 2.2 THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT IN THE PRESENT CASE REQUIRED ASPECTS ARE ABSENT SINCE THE ASSESSEE IS A PORT AND THE ALLOWABILITY OF EXPENDIT URE OF AN I.T.A. NO. 1327/MDS/2010 & CO 98/MDS/2010 3 EXEMPT TRUST DEPENDS UPON ITS USE TOWARDS THE OBJEC TS OF THE TRUST. THE ASSESSEE HAS FAILED TO ESTABLISH HO W THIS EXPENDITURE IS FOR THE OBJECTS OF THE TRUST. 3. THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW ACCUMULATION OF INCOME U /S 11(2) THOUGH REQUIRED FORM 10 WHICH WAS REJECTED FOR MATE RIAL DEFECTS, WAS FILED BELATEDLY. 3.1 THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT AS TO THE CONDONATION OF DELAY IN FILING FORM 10, THE CBD T HAS LAID DOWN CERTAIN GUIDELINES FOR ENTERTAINING APPLI CATIONS FOR ACCUMULATION FILED BEYOND TIME LIMIT. SUCH POW ERS HAVE BEEN VESTED WITH THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) U/S.119(2)(B) AND F.NO.180/57/80-IT(AI) DATED 03-06-80 GOVERNS SITUATIONS WHERE THE DELAY C AN BE CONDONED. 3.2 THE LEARNED CIT(A) HAS NOT GONE INTO THE MERIT S OF THE CASE WHILE ALLOWING THE FORM 10 WITH RESPECT TO THE GUIDELINES OF THE CBDT. 3.3 THE LEARNED CIT(A) HAS ALSO NOT CONSIDERED THA T THE FORM 10 SUFFERS MANY DEFECTS BY NOT BEARING A D ATE OR THE SUM TO BE ACCUMULATED AND HENCE NOT CONSIDERED AS VALID FORM AS PER PROVISIONS OF SECTION 11(2) BY TH E ASSESSING OFFICER. IT IS SUBMITTED THAT SUCH DEFEC TIVE FORM 10 CANNOT BE CONSIDERED EVEN FOR CONDONATION. 4. IT WAS SUBMITTED BY THE LEARNED DR THAT THERE AR E TWO ISSUES INVOLVED IN THIS APPEAL. IN REGARD TO THE FIRST ONE, BEING THE GROUNDS 2 TO 2.2 IT WAS I.T.A. NO. 1327/MDS/2010 & CO 98/MDS/2010 4 SUBMITTED THAT THE ASSESSEE IS AOP-TRUST REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. IT WAS THE SUBMISSION TH AT THE ASSESSEE TRUST HAD INCURRED AN EXPENDITURE OF ` 9,41,99,197/- TOWARDS ITS 125 TH YEAR CELEBRATION. IT WAS THE SUBMISSION THAT THE EXPEND ITURE WAS TOWARDS ADVERTISEMENT. IT WAS THE SUBMISSION THAT THE ASSE SSING OFFICER HAD DISALLOWED THE SAME BY HOLDING THAT THE SAID EXPEND ITURE COULD NOT BE TREATED AS APPLICATION TOWARDS THE OBJECTS OF THE T RUST. 5. IN REGARD TO THE OTHER GROUND BEING GROUND NOS. 3 TO 3.3 IT WAS SUBMITTED THAT THE ASSESSEE HAD FILED FORM NO. 10 F OR ACCUMULATION BEFORE THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT P ROCEEDINGS AND THE SAME WAS DEFECTIVE AS THE SAME WAS NOT FILED WITHIN THE TIME PROVIDED UNDER SECTION 139(1). IT WAS THE SUBMISSION THAT T HE ASSESSING OFFICER HAD REFUSED TO GRANT THE ASSESSEE THE BENEFIT OF ACCUMU LATION ON ACCOUNT OF THE SAME. IT WAS THE SUBMISSION THAT THE LEARNED C IT(A) HAD HELD THAT THE EXPENDITURE ON THE 125 TH WAS AN APPLICATION AND THE FORM NO.10 HAD BEEN FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS AND C ONSEQUENTLY THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF ACCUMULATIO N. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. IT W AS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE REV ERSED. 6. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE FORM NO.10 HAD BEEN FILED IN THE COURSE OF THE ASSE SSMENT PROCEEDINGS I.T.A. NO. 1327/MDS/2010 & CO 98/MDS/2010 5 AND THE SAME WAS LIABLE TO BE CONSIDERED IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. NAGPUR HOTEL OWNERS ASSOCIATION, REPORTED IN (2001) 114 TAXMAN 255 (SC) AS ALSO THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT V. SIMLA CHANDIGARH DIOCESE SOCIETY REPORTED IN 318 ITR 96. 7. IN REGARD TO THE ISSUE OF THE 125 TH YEAR CELEBRATION IT WAS THE SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE EXPENDITURE HAD BEEN INCURRED WITH THE FULL APPROVAL OF THE CEN TRAL GOVERNMENT UNDER SECTION 88(1) OF THE MAJOR PORT TRUSTS ACT, 1963. THE EXPENDITURE WAS INCLUDED IN THE BUDGET SUBMITTED TO THE MINISTRY OF SHIPPING, GOVT. OF INDIA AND DUE APPROVAL WAS OBTAINED. IT WAS THE FURTHER SUBMISSION THAT THE AUDITED ACCOUNTS FOR THE FINANCIAL YEAR 2006-07 WER E PRESENTED BEFORE THE PARLIAMENT AND DULY APPROVED. IT WAS THE SUBMISSIO N THAT THE EXPENDITURE WAS TOWARDS ADVERTISEMENT AND TO PROMOTE THE AWAREN ESS AMONG PUBLIC ABOUT THE PORT ACTIVITIES AND VERY MUCH INCIDENTAL TO THE OBJECT OF THE TRUST. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LE ARNED CIT(A). IT WAS THE SUBMISSION THAT THE CROSS OBJECTION FILED BY TH E ASSESSEE WAS IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN RE GARD TO THE ISSUE OF EXPENDITURE TOWARDS THE 125 TH YEAR CELEBRATION SHOWS THAT THE EXPENDITURE WAS IN THE NATURE OF ADVERTISEMENT FOR THE PURPOSE OF PROMOTING THE I.T.A. NO. 1327/MDS/2010 & CO 98/MDS/2010 6 AWARENESS AMONG PUBLIC ABOUT THE PORT ACTIVITIES AN D THIS IS VERY MUCH INCIDENTAL TO THE OBJECTS OF THE TRUST. CONSEQUENT LY, THE SAME IS AN APPLICATION IN VIEW OF THE OBJECTS OF THE ASSESSEE TRUST WHEN READ WITH THE PROVISIONS OF SECTION 88(1) OF THE MAJOR PORT TRUST S ACT, 1963. 9. IN REGARD TO THE ISSUE OF THE FILING OF THE FORM NO.10 FOR THE PURPOSE OF ACCUMULATION BEFORE THE ASSESSING OFFICER AND NO T WITHIN THE TIME ALLOWED U/S.139(1), IT IS NOTICED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NAGPUR HOT EL OWNERS ASSOCIATION, REFERRED TO SUPRA, WHEREIN IT HAS BEEN HELD THAT THE COMPLIANCE OF THE REQUIREMENT OF THE ACT WILL HAVE TO BE DONE AT ANY TIME BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS . HERE, AS THE COMPLIANCE HAS BEEN DONE BEFORE THE COMPLETION OF T HE ASSESSMENT PROCEEDINGS, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERE NCE. 10. IN REGARD TO THE ISSUE REGARDING FORM NO.10 BEI NG DEFECTIVE AS THE SAME HAD BEEN FILED BEFORE THE ASSESSING OFFICER, A NY DEFECT FOUND THEREIN WAS LIABLE TO BE INTIMATED TO THE ASSESSEE FOR NECE SSARY CORRECTIONS. THE FORM NO.10 CANNOT BE REJECTED AS DEFECTIVE WITHOUT GRANTING THE ASSESSEE AN OPPORTUNITY TO RECTIFY THE SAME. AS SUCH OPPORT UNITY WAS NOT GRANTED TO THE ASSESSEE AND AS THE ASSESSEE HAS FILED THE FORM NO.10 AND HAS SHOWN ITS INTENTION WHICH IS TO BE DISCLOSED IN THE FORM NO.10, WE ARE OF THE VIEW I.T.A. NO. 1327/MDS/2010 & CO 98/MDS/2010 7 THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSU E IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMS TANCES, THE APPEAL OF THE REVENUE IS DISMISSED. 11. AS THE CROSS OBJECTION IS IN SUPPORT OF THE ORD ER OF THE LEARNED CIT(A) AND AS WE HAVE ALREADY UPHELD THE FINDING OF THE LE ARNED CIT(A) ON BOTH THE ISSUES, THE CROSS OBJECTION FILED BY THE ASSESS EE STANDS DISMISSED. 12. IN THE RESULT, BOTH THE APPEAL FILED BY THE REV ENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. 13. THE ORDER WAS PRONOUNCED IN THE COURT ON 12/08/ 2011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 12 TH AUGUST, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE