MAHRASHTRA LABOUR WELFARE BOARD, MUMBAI V. ITO 18(2)(4), MUMBAI

ITA 1380/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6044 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 1380 /M/ 20 1 6 ( ASSESSMENT YEAR : 2010 - 1 1 ) MAHARASHTRA LABOUR WELFARE BOARD, MUMBAI GIRNI KAMGAR KREEDA BHAVAN, SENAPATI BAPAT MARG, ELPHINSTONE, MUMBAI - 400013 . VS. ITO 18(2)(4) OLD WARD: ITO 18(2)(4) ITO 21(2)(2), (NEW RENUMBERED ITO WARD) PIRAMAL CHAMBERS, ROOM NO.111 1 ST FLOOR, LALBAUG, PAREL, MUMBAI - 400012. ./ ./ PAN/GIR NO. : AAAAM 3255 A ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 03 . 0 4 .2018 DATE OF PRONOUNCEMENT : 02 . 0 7 .201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10 . 1 2 .201 5 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 33 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 10 - 11 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - I THE HONORABLE COMMISSIONER OF INCOME TAX APPEALS - 33 HAS ERRED IN REJECTING THE CONTENTIONS OF THE APPELLANT AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW: ASSESSEE BY: SHRI ASHOK J. PATIL (AR ) DEPARTMENT BY: SHRI RAJAT MITTAL (DR) ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 2 1 HAS ERRED IN UPHOLDING THE ADDITIONS MADE BY THE LEARNED INCOME TAX OFFICER, BEING INTEREST ON DEPOSITS AND BANK DEPOSITS AMOUNTING TO RS.5,12,88,824/ - AS INCOME CHARGEABLE TO TAX, SUMMARILY REJECTING THE CONTENTIONS OF THE APPELLANT THAT IT IS A FUND ESTABLISHED UNDER STATE GOVERNMENT ACT FOR THE REGULATION, ADMINISTRATION AND PROMOTIO N OF WELFARE IN THE STATE OF MAHARASHTRA AND ITS INCOME IS EXEMPT UNDER IT ACT 1%1 AND THE RECEIPT IS ACTUALLY BY WAY OF REDUCTION OF EXPENSES WHICH ARE THEN AUGMENTED TOWARDS PUBLIC WELFARE OBJECTS OF THE FUND. THE REJECTION OF CLAIM AND UPHOLDING OF ADDI TIONS IS WITHOUT GOING INTO THE MERITS BUT ON THE TECHNICAL GROUND THAT APPELLANT HAS NOT SUBMITTED EVIDENCE REGARDING REGISTRATIONS / NOTIFICATION/APPROVAL BY THE COMMISSIONER OF INCOME TAX IN ACCORDANCE WITH RULES U/S 10 (23AAA) / 10 (23) (C) (IV), 11/12 A OF IT ACT 1961, 2. HAS FURTHER ERRED IN REJECTING [HE RELIEF CLAIMED BY THE APPELLANT TO: I. TREAT THE RECEIPTS FROM INTEREST AND MISCELLANEOUS INCOME FROM RENT ETC AS ARISING FROM AND IN THE COURSE OF WELFARE ACTIVITIES AND UTILIZED FOR THE S AME AS SUCH CONTRIBUTING TO REDUCTION OF EXPENSES INCURRED ON WELFARE ACTIVITIES AND ON NET BASIS RESULTING IN NET EXPENDITURE ON WELFARE/MUTUAL WELFARE / BENEFIT ACTIVITIES AND HENCE EXEMPT ON THE CONCEPT OF MUTUALITY, OR II. HOLD THAT IN THE AB SENCE OF PROCESSING / REJECTION OR GRANT OF APPLICATION/ APPROVAL I.E IN ABSENCE OF ACTION ON PART OF DEPARTMENT, THE EXEMPTIONS CLAIMED U/S 10 (23 AAA)/IO (23C) (IV)(V) AND /OR SECTIONS 11/12/12A/13 BE DEEMED TO BE GRANTED AND KINDLY DIRECT THE ASSESSING OFFICER TO GRANT THE SAME AND TREAT THE INCOME AS EXEMPT BY GRANTING APPROPRIATE RELIEF. THE LEARNED INCOME TAX OFFICER 18 (2) (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE EASE AND IN LAW: 1. HAS ERRED IN CONSIDERING INTEREST ON DEPOSIT AND INTEREST ON BANK DEPOSIT AMOUNTING TO RS. 5,12,88,824/ - AS INCOME CHARGEABLE TO TAX WITHOUT CONSIDERING THE FACT THAT THE APPELLANT IS A FUND ESTABLISHED UNDER STATE GOVERNMENT ACT / REGULATION FOR THE WELFARE OF LABOUR IN THE STATE OF MAHARASHTRA AND ITS INCOME IS EXEMPT UNDER J. T, ACT 1961 AND THAT THE ABOVE INCOME IS ACTUALLY A RECEIPT BY WAY OF REDUCTION OF EXPENSES WHICH ARE THEN AUGMENTED AND USED INCURRED TOWARDS OBJECTIVE OF FUND AND THAT ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 3 THE INVESTMENTS ARE MANDATED BY STATUTE. IN VIEW OF THIS THE ENTIRE A DDITION MADE TO THE RETURNED INCOME MAY BE DELETED. 2. HAS ERRED IN CONSIDERING OTHER MISC. INCOME WHICH INCLUDES INCOME FROM RENT AND TAXES OF RS.9 ,66,803.' - AS INCOME CHARGEABLE TO TAX WITHOUT CONSIDERING THE FACT THAT THE APPELLANT IS A FUND ESTABLIS HED UNDER STATE GOVERNMENT ACT/ REGULATION FOR THE WELFARE OF LABOUR IN THE SLATE OF MAHARASHTRA AND ITS INCOME IS EXEMPT UNDER I. T ACT 1961 AND THAT THE ABOVE INCOME IS ACTUALLY A RECEIPT BY WAY OF REDUCTION OF EXPENSES WHICH ARE THEN AUGMENTED AND USED TOWARDS OBJECTIVE OF FUND, IN VIEW OF THIS THE ENTIRE ADDITION MADE TO THE RETURNED INCOME MAY BE DELETED. 3. HAS ERRED IN [AXING THE RECEIPTS OF THE APPELLANT ON ACCOUNT OF INTEREST AND MISCELLANEOUS RECEIPTS BY WAY OF RENT AS INCOME IGNORING THE CLAIM OF THE APPELLANT THAT THE APPELLANT IS ELIGIBLE FOR EXEMPTION UNDER THE INCOME TAX ACT 1961, AND MORE PARTICULARLY U / S 10 (23C) (IV) / (V) AND / OR U/S 10 (23AAA), OR U/S 11, 12, 12 A, 13 OF THE INCOME TAX ACT 3961, IN VIEW OF THIS THE ENTIRE ADDITIONS MAY BE DELETED, 4. THE LEARNED INCOME TAX OFFICER TAX AUTHORITIES MAY HE DIRECTED TO CONSIDER THE APPELLANTS PENDING APPLICATIONS FOR APPROVAL, GRANT EXEMPTIONS AND DELETE THE ADDITIONS TO THE INCOME. 5. HOLD THAT IN THE ABSENCE OF PROCESSING/ REJECTING OR GRANT OF APPLICATION/ APPROVAL I,E, IN ABSENCE OF ACTION ON PART OF DEPARTMENT, THE EXEMPTIONS CLAIMED U/S 10(23AAA)/1G (23C) (IV)(V) AND/ OR SECTIONS 11/12/12A - '13 BE DEEMED TO GRANTED AND KINDLY DIRECT THE ASSESSING OFFICER TO GRANT THE SAME AND TREAT THE INCOME AS EXEMPT BY GRANTING APPROPRIATE RELIEF. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY, INSERT OR INTERPOLATE CLUB OR RECTIFY TO ALL OR ANY OF THE SAID GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF THE ASSESSE E WAS COMPLETED ON 28.03.2013 BY THE ITO 18(2)(4), MUMBAI FOR THE A.Y. 2010 - 11 U/S 143(3) OF THE I.T. AC , 1961 ASSESSING THE INCOME TO THE TUNE OF RS.5,22,55,630/ - . THE ASSESSEE WAS AOP ENGAGED IN THE LABOUR W ELFARE ACTIVITIES IN THE STATE OF MAHARASHTRA ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 4 AND FUNDED BY TRIPARTITE CONTRIBUTIONS FROM STATE GOVERNMENT, EMPLOYERS AND EMPLOYEES. APART FROM THIS , THE BOARD WAS EARNING THE INCOME BY WAY OF INTEREST ON BANK AND OTHER DEPOSITS/BONDS AND MISCELLANEOUS INC OME BY WAY OF RENT/CHARGES/FEES ETC. INCIDENTAL TO ITS WELFARE ACTIVITIES. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WAS NOT UNDER OBLIGATION TO PAY THE TAX AS TO ASSESSEE WAS STATE/AGENT OF THE STATE/INSTRUMENTAL OF THE STATE. THE CLAIM OF THE ASSESSEE WAS DECLINED AND IN APPEAL BEFORE THE CIT(A) ORDER OF THE ASSESSING OFFICER WAS CONFIRMED . AGGRIEVED BY THE SAID ORDER, THE APPELLANT/ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE BASIC ISSUE ON ACCOUNT OF NON - PAYMENT OF INCOME TAX PAYABLE BY APPELLANT BEING THE STATE HAS BEEN RESTORED BEFORE THE AO BY HONBLE ITAT IN T HE ASSESSEES OWN CASE IN ITA. NO.4305/M/2012 FOR THE A.Y. 2008 - 09 DATED 10.11.2017, THEREFORE, IN THE SAID CIRCUMSTANCES, THE PRESENT ISSUE IS ALSO LIABLE TO BE RESTORED BEFORE THE AO ACCORDINGLY IN ACCORDANCE WITH LAW. COPY OF ORDER IN ITA. NO.4305/M/201 2 FOR THE A.Y. 2008 - 09 DATED 10.11.2017 IS ON THE FILE IN WHICH THE FOLLOWING ISSUES HAS BEEN CONSIDERED BY THE HONBLE ITAT. 1. ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND IN LAW, NO INCOME TAX IS PAYABLE BY THE APPELLANT AS IT IS A STATE AND/ OR AGENT OF THE STATE AND/ OR INSTRUMENTAL OF THE STATE. ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 5 5. BEFORE GOING FURTHER WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE HONBLE ITAT ON THIS ISSUE GIVEN BELOW .: - 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. NOTABLY, THE ADDITIONAL GROUND THAT IS SOUGHT TO BE RAISED BY THE ASSESSEE IS BASED ON ARTICLE 289 OF THE CONSTITUTION OF INDIA. ARTICLE 289(1) OF THE CONSTITUTION OF INDIA PROVIDES THAT THE PROPERTY A ND INCOME OF THE STATE SHALL BE EXEMPT FROM UNION TAXATION. CLAUSE (2) & (3) OF ARTICLE 289 OF THE CONSTITUTION OF INDIA PRESCRIBES SOME OF THE EXCEPTIONS FROM THE PROVISIONS OF ARTICLE 289(1) OF THE CONSTITUTION. IN ANY CASE, THE POINT 5 SOUGHT TO BE MADE OUT BY THE ASSESSEE IS THAT IT MUST BE CONSIDERED AS STATE OR GOVERNMENT OR AN AGENT OF THE STATE SO AS TO FALL WITHIN THE PRESCRIPTION OF ARTICLE 289(1) OF THE CONSTITUTION. IT IS AXIOMATIC THAT IN ORDER TO ADJUDICATE THE SAID CONTROVERSY ONE HAS TO EXAM INE THE STATUTE UNDER WHICH ASSESSEE IS CONSTITUTED AND THE PURPORT AND MANNER OF ITS ACTIVITIES. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE REFERRED TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD. VS. ACIT, THE LD. DR WAS THAT THE NEW PLEA INVOLVES FRESH INVESTIGATION OF FACTS AND, THEREFORE, IT IS IMPERMISSIBLE TO BE RAISED AT THIS STAGE. THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS CO MMISSIONER OF INCOME TAX, 229 ITR 383 (SC) HELD THAT IT IS OPEN FOR THE APPELLATE AUTHORITIES TO ADMIT A FRESH PLEA, WHICH HAS NOT HITHERTO RAISED BEFORE THE LOWER AUTHORITIES PROVIDED, OF COURSE, THE NECESSARY FACTS TO DECIDE THE PLEA ARE ON RECORD. PERTI NENTLY, THE PLEA OF THE ASSESSEE IS PRIMARILY TO BE EXAMINED IN THE CONTEXT OF THE CHARTER, IN TERMS OF WHICH IT HAS BEEN SET - UP BY THE STATE LEGISLATURE. WE ARE NOT CONVINCED THAT THE PLEA OF THE LD. DR THAT THE ADJUDICATION OF THE FRESH PLEA WOULD REQUIR E AFRESH INVESTIGATION OF FACTS. RATHER, IN OUR VIEW, ALL THAT IS REQUIRED IS A FRESH APPRAISAL OF FACTS IN THE CONTEXT OF THE LEGAL POINT, AND NOT A FRESH INVESTIGATION TO OBTAIN THE FACTS. THEREFORE, IN OUR VIEW, THE RATIO OF THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) SUPPORTS THE PLEA OF THE ASSESSEE FOR ADMISSION OF THE SAID ADDITIONAL GROUND OF APPEAL SINCE IT INVOLVES A POINT OF LAW AND NO NEW FACTS ARE REQUIRED TO BE INVESTIGATED, BUT ARE ONLY REQ UIRED TO BE APPRAISED. PERTINENTLY, AT THIS STAGE, WE MAY ALSO NOTICE THAT THE BONA FIDE OF THE ADDITIONAL ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 6 GROUND OF APPEAL RAISED BY THE ASSESSEE HAVE NOT BEEN CHALLENGED AND, THEREFORE, IN OUR VIEW, CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITIONAL GROUND OF APPEAL DESERVES TO BE ADMITTED FOR ADJUDICATION. SINCE THE SAID PLEA WAS NOT BEFORE THE LOWER AUTHORITIES, AND AS IT WOULD CERTAINLY REQUIRE THE DETAILING OF FACTS IN A SLIGHT DETAIL, IN ALL FAIRNESS, WE DEEM IT FIT AND P ROPER TO RESTORE IT BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL CONSIDER AND ADJUDICATE IT AS PER LAW. 8. THE RELIANCE PLACED BY THE LD. DR ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ULTRATECH CEMENT LTD. (SUPRA), IN OUR VIEW , IS QUITE MISPLACED IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. IN THE CASE BEFORE THE HON'BLE HIGH COURT, A NEW CLAIM WAS RAISED BY THE ASSESSEE WITHOUT THERE BEING ANY EVIDENCE ON RECORD IN THE RELEVANT YEAR FOR ITS SUPPORT. IN FACT, IT WAS FOUN D THAT THE CLAIM REQUIRED LEADING OF EVIDENCE FOR THE RELEVANT YEAR BEFORE THE ASSESSING OFFICER, WHICH WAS IMPERMISSIBLE. FOR THE SAID REASONS, THE HON'BLE HIGH COURT UPHELD THE STAND OF THE TRIBUNAL NOT TO ADMIT THE FRESH PLEA. THE FACT - SITUATION IN THE PRESENT CASE STANDS ON A DIFFERENT FOOTING INASMUCH AS WE ARE DEALING WITH AN ENTITY WHICH HAS BEEN SET - UP BY AN ACT OF LEGISLATURE AND SECONDLY, THE STATUTE UNDER WHICH IT FUNCTIONS IS ALREADY IN THE KNOW OF THE REVENUE INASMUCH AS FROM ASSESSMENT YEAR 20 11 - 12 ONWARDS IT HAS BEEN ACCORDED EXEMPTION BY THE CHIEF COMMISSIONER OF INCOME TAX - 10, MUMBAI UNDER SECTION 10(23C)(IV) OF THE ACT BY ORDER DATED 28.12.2012. THEREFORE, FOR ALL THE AFORESAID REASONS, WE DEEM IT FIT AND PROPER TO ADMIT THE FRESH PLEA OF T HE ASSESSEE, WHICH SEEKS TO DETERMINE THE ROOT OF THE JURISDICTION OF THE ASSESSING OFFICER TO BRING THE ASSESSEE INTO THE TAX FOLD IN THE LIGHT OF ARTICLE 289 OF THE CONSTITUTION OF INDIA. 9. IN VIEW OF THE AFORESAID DISCUSSION, WE HEREBY SET - ASIDE THE O RDER OF CIT(A) AND RESTORE THE ENTIRE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL PASS AN ORDER DE NOVO, AS PER LAW. NEEDLESS TO MENTION, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND ONLY THEREAF TER HE SHALL PASS AN ORDER AFRESH IN ACCORDANCE WITH LAW. 10. BEFORE PARTING, WE MAY CLARIFY THAT OUR DECISION TO ADMIT AND RESTORE THE ADDITIONAL GROUND OF APPEAL FOR ADJUDICATION BY THE ASSESSING OFFICER IS NO REFLECTION ON THE MERITS OF THE ISSUE, WHIC H ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 7 SHALL BE GONE INTO AND DECIDED BY THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS PUT FORTH BY THE ASSESSEE ON MERITS AS PER LAW. 6 . IN VIEW OF THE ABOVE MENTIONED FINDING, THE MAIN ISSUE HAS ALREADY BEEN RESTORED BEFORE THE AO BY ITAT IN THE AS SESSEES OWN CA SE FOR THE A.Y. 2008 - 09 (SUPRA), T HEREFORE, IN THE SAID CIRCUMSTANCES, WE ALSO RESTORED THIS ISSUE BEFORE THE AO TO DECIDE THE MATTER AFRESH ON SIMILAR LINES. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESTORED THE ISSUE BEFORE THE AO TO DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW. 7 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE . ORDER P RONOUNCED IN THE OPEN COURT ON 02. 07 . 2018 . SD/ - SD/ - ( RAJENDRA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / J UDICIAL MEMBER MUMBAI; DATED : 02 . 0 7 . 2018 . V.P. SINGH ITA. NO. 1380 /M/201 6 A.Y. 20 10 - 11 8 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI