DCIT, C-2, (Exemptions), Chandigarh V. M/s HP State Reproductive & Child Health Care Society , Shimla

ITA 1335/CHANDI/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4961 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDERKANTA ADD
• Keywords: Wrong claim
• Section: 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS.1335 TO 1337/CHD/2017 (ASSESSMENT YEARS : 2006-07 TO 2008-09) THE D.C.I.T. VS. M/S H.P. STATE REPRODUCTIVE & CIRCLE-2 (EXEMPTION), CHILD HEALTH CARE SOCIETY, CHANDIGARH. DIRECTORATE OF SERVICES SDA COMPLEX, KASUMPATI, SHIMLA. HIMACHAL PRADESH. PAN: AAATH3148J (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. CHANDERKANTA, ADD.CIT RESPONDENT BY : NONE DATE OF HEARING : 25.04.2018 DATE OF PRONOUNCEMENT : 10.05.2018 ORDER PER ANNAPURNA GUPTA, A.M . : ALL THE THREE APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE CONSOLIDATED ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS), SHIMLA DATED 31.3.2017 RELATIN G TO ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09, DELE TING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. SINCE COMMON ISSUE IS INVOLVED IN ALL THE APPEAL S BEING PENALTY LEVIED ON ACCOUNT OF ADDITION MADE BY TREATING GRANTS-IN-AID RECEIVED BY THE ASSESSEE AS ITS INCOME, THEY WERE HEARD TOGETHER AND ARE BEING DISP OSED OFF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, WE SHALL BE DEALING WI TH THE FACTS IN ITA NO.1335/CHD/2017 FOR ASSESSMENT YE AR 2 2006-07 AND THE DECISION RENDERED THEREIN WILL APPL Y MUTATIS MUTANDIS TO OTHER APPEALS ALSO. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE SOCI ETY IS AN AUTONOMOUS AND INDEPENDENT BODY ENGAGED IN IMPLEMENTATION OF REPRODUCTIVE AND CHILD HEALTH PRO GRAM AND OTHER FAMILY PLANNING/WELFARE PROGRAMS IN THE S TATE OF HIMACHAL PRADESH AND IS REGISTERED U/S 12A OF THE I NCOME TAX ACT. FOR THE IMPUGNED ASSESSMENT YEAR THE ASSE SSEE HAD CLAIMED ITS INCOME AS EXEMPT UNDER THE PROVISIO NS OF SECTION 11 OF THE ACT. DURING ASSESSMENT PROCEEDING S THE AO FOUND THAT THE ASSESSEE HAD RECEIVED GRANTS IN A ID . HOLDING THE SAME TO BE IN THE NATURE OF VOLUNTARY CONTRIBUTION AND HENCE THE INCOME OF THE ASSESSEE A S PER THE PROVISIONS OF SEC. 2(24) R/W SECTION 12 (1) OF THE ACT, AND FINDING THE SAME TO NOT HAVING BEEN UTILIZED TO THE EXTENT OF 85%, AS STIPULATED UNDER SECTION 11 OF TH E ACT FOR THE PURPOSE OF CLAIMING THE ENTIRE INCOME AS EXEMPT ,THE ASSESSING OFFICER SUBJECTED TO TAX THE UNSPENT GRAN TS IN AID RECEIVED BY THE ASSESSEE, TO THE TUNE OF RS.3,54,46 ,191/- . THE APPEAL FILED BY THE ASSESSEE AGAINST THE AFORES AID ORDER WAS DISMISSED BY THE CIT(APPEALS).FURTHER APPEAL WA S FILED BY THE ASSESSEE BEFORE THE I.T.A.T., WHO ACCEPTED T HE ASSESSEES CONTENTION THAT GRANTS IN AID RECEIVED FO R SPECIFIC PURPOSES IF UNSPENT AND WHICH WERE TO BE REFUNDED T O THE PARENT SOCIETY, WERE NOT IN THE NATURE OF INCOME OF THE RECIPIENT. BUT HAVING ACCEPTED SO, THE ITAT RESTORE D THE MATTER BACK TO THE AO TO VERIFY THE ACTUAL REFUND O F THE 3 UNSPENT GRANT TO THE GOVERNMENT OF INDIA ON THE CLO SE OF ITS PROJECTS, DIRECTING THE AO TO MAKE NO ADDITION IF T HE SAME IS PROVED. 4. THE ASSESSING OFFICER PASSED THE CONSEQUENTIAL ASSESSMENT ORDER, GIVING HIS FINDINGS THAT THE ASSE SSEE COULD NOT ESTABLISH THAT THE UNUTILIZED GRANT-IN-AI D WAS REFUNDED TO THE GOVT. OF INDIA. THEREFORE, THE ASSE SSING OFFICER ADDED BACK THE AMOUNT OF RS.3,54,46,191/- A GAIN TO THE TAXABLE INCOME OF THE ASSESSEE. THE CIT(APPEALS ) UPHELD THE ORDER OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SUBSEQUENTLY PROCEEDED TO LEVY PENALTY U/S 271(1)(C ) AMOUNTING TO RS.1,19,31,188/-VIDE ORDER DATED 28.03 .2014. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO DELETED THE PENALTY LEVIED, HOL DING THAT THE ASSESSEE HAD FURNISHED ALL PARTICULARS OF HIS I NCOME VIS- -VIS GRANT-IN-AID AND THE INCOME HAD BEEN BROUGHT TO TAX MERELY BECAUSE THE ASSESSEES CONTENTION OF CLAIMIN G EXEMPTION OF THE SAME U/S 11 WAS NOT ACCEPTED BY TH E ASSESSING OFFICER. 6. AGGRIEVED BY THE SAME, THE REVENUE HAS COME UP I N APPEAL BEFORE US, RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY EVE N AFTER UPHOLDING THE ACTION OF THE AO OF TREATING TH E GRANTS-IN-AID RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT AS VOLUNTARY CONTRIBUTION AND HENCE TAXABLE AS INCOME U/S 2(24) OF THE ACT WHICH THE ASSESSEE FAILED TO SHOW AS ITS INCOME AND ALSO FAILED TO UTILIZE IT FULLY AS PER THE REQUIRED PROVISIONS. 4 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW WHILE RELYING UPON THE APEX COURT'S JUDGMENT IN RELIANCE PRODUCTS WITHOUT ELABORATING AS TO HOW THE JUDGMENT IS APPLICABLE TO THE FACTS OF THE CASE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN NOT FOLLOWING THE JUDGMEN T OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF M/S ZOOM COMMUNICATION (P) LTD (327 ITR 510) WHEREIN THE HON'BLE HIGH COURT HAS UPHELD THE PENALTY LEVIED ON WRONG CLAIM OF DEDUCTION OF INCOME TAX PAYMENT & EXPENSES CLAIMED UNDER THE HEAD 'EQUIPMENT EXPENSES WRITTEN OFF. 7. DURING THE COURSE OF HEARING BEFORE US, IT WAS BROUGHT TO THE NOTICE OF THE BENCH THAT THE I.T.A.T., IN TH E SECOND ROUND OF QUANTUM PROCEEDINGS, HAD ADJUDICATED THE A PPEALS FILED BY THE ASSESSEE VIDE ITS CONSOLIDATED ORDER DATED 9.10.2017 IN ITA NO.337, 338 & 339/CHD/2013 FOR THE IMPUGNED YEARS. COPY OF THE ORDER WAS PLACED BEFORE US. IT WAS POINTED OUT THEREFROM THAT THE ITAT HAD AGAIN R ESTORED THE ISSUE BACK TO THE ASSESSING OFFICER TO VERIFY WHETHER THE GRANTS WERE TIED UP GRANTS RECEIVED FOR SPECIFI C PURPOSES AND THEREAFTER DECIDE THE ISSUE IN ACCORDA NCE WITH LAW. LD.COUNSEL FOR THE ASSESSEE CONTENDED THEREFOR E THAT SINCE NO ADDITION STOOD AS ON DATE ON THE IMPUGNED ISSUE, NO PENALTY U/S 271(1) WAS LEVIABLE. 8. LD.DR ADMITTED THAT THE ISSUE ON WHICH PENALTY H AD BEEN LEVIED, BEING GRANTS IN AID TREATED AS INCOME OF THE ASSESSEE, HAD BEEN RESTORED BACK TO THE ASSESSING O FFICER BY THE ITAT VIDE ITS AFORESAID ORDER. 9. IN VIEW OF THE ABOVE, SINCE THE ADDITION MADE ON ACCOUNT OF GRANTS-IN-AID, U/S 271(1)(C) OF THE ACT ON WHICH PENALTY HAS BEEN LEVIED IN THE PRESENT CASE HAS BEE N 5 RESTORED BACK TO THE ASSESSING OFFICER BY THE I.T.A .T. IN QUANTUM PROCEEDINGS, THE PENALTY PROCEEDINGS BECOME INFRUCTUOUS. 10. THE APPEAL OF THE REVENUE IN ITA NO.1335/CHD/20 17 IS, THEREFORE, DISMISSED. 11. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH MAY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH