M/s Artificial Limbs Manufacturing Corporation of India, (ALIMCO), Kanpur V. Astt. Commissioner of Income Tax-6, Kanpur

ITA 140/LKW/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1065 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-02-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Benefit of exemption
• Section: 12A; 12AA; 12; 11; 15

Judgement Text

I.T.A. NO.140/LKW/2016 ASSESSMENT YEAR:2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.140/LKW/2016 ASSESSMENT YEAR:2011-12 M/S ARTIFICIAL LIMBS MANUFACTURING CORPORATION OF INDIA (ALIMCO) G. R. ROAD, NARAMAU, KANPUR. PAN:AABCA 8899 F VS. A.C.I.T.-6, KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A), KANPUR DATED 08/12/2015 RELATING TO ASSESSMENT YEAR 2011-12. THE APPEAL WAS EARLIER DISPOSED OFF BY THE HON'BLE TRIBUNAL VI DE ORDER DATED 27/06/2016. HOWEVER, THE SAID ORDER WAS RECALLED F OR REHEARING OF THE CASE VIDE TRIBUNAL ORDER DATED 07/06/2017. 2. AT THE OUTSET, LEARNED A. R. SUBMITTED THAT THE ASSESSEE IS A SECTION 25 COMPANY AND IS FULLY OWNED GOVERNMENT OF INDIA C OMPANY AND ITS ENTIRE CAPITAL IS HELD BY THE PRESIDENT OF INDIA THROUGH M INISTRY OF SOCIAL JUSTICE & EMPOWERMENT. IT WAS SUBMITTED THAT THE ASSESSEE HA D APPLIED FOR APPELLANT BY SHRI P. K. KAPOOR, C. A. RESPONDENT BY SHRI J. S. MINHAS, CIT, D.R. DATE OF HEARING 28 / 02 /201 8 DATE OF PRONOUNCEMENT 07 / 03 /201 8 I.T.A. NO.140/LKW/2016 ASSESSMENT YEAR:2011-12 2 REGISTRATION U/S 12AA OF THE ACT WHICH WAS DENIED. HOWEVER, THE TRIBUNAL, VIDE ORDER DATED 15/09/2008, DIRECTED THE CIT (EXEM PTIONS) TO ALLOW REGISTRATION U/S 12A WITH EFFECT FROM 30/11/1972. IT WAS STATED THAT IN VIEW OF THE ORDER OF THE TRIBUNAL DIRECTING THE CIT (EXE MPTIONS) TO GRANT REGISTRATION, THE CIT (EXEMPTIONS) HAD GRANTED REGI STRATION U/S 12A VIDE CERTIFICATE OF REGISTRATION DATED 05/12/2008 AND TH EREFORE, THE ASSESSEE HAD FILED RETURN DECLARING NIL INCOME AFTER CLAIMING EX EMPTION U/S 11 OF THE ACT. LEARNED A. R. SUBMITTED THAT AGAINST THE GRANTING O F REGISTRATION U/S 12AA BY THE TRIBUNAL, THE REVENUE HAD PREFERRED APPEAL B EFORE HON'BLE ALLAHABAD HIGH COURT WHICH HAS DISMISSED THE APPEAL OF THE RE VENUE VIDE ORDER DATED 06/11/2017 AND IN THIS RESPECT OUR ATTENTION WAS IN VITED TO PAGE NO. 16 OF THE PAPER BOOK WHERE COPY OF SAID ORDER WAS PLACED. 2.1 IT WAS SUBMITTED THAT DESPITE AVAILABILITY OF R EGISTRATION U/S 12AA, THE ASSESSING OFFICER MADE DISALLOWANCES AND DID NOT AL LOW THE BENEFIT OF EXEMPTION AVAILABLE U/S 11 OF THE ACT. IT WAS SUBM ITTED THAT THE ASSESSING OFFICER HELD THAT ASSESSEE WAS ENGAGED IN MANUFACTU RING, PURCHASE AND SALE OF GOODS AND THEREFORE, IN VIEW OF INSERTION OF PRO VISO TO SECTION 2(15) WITH EFFECT FROM 01/04/2009, THE ASSESSEE WAS NOT CARRYI NG OUT CHARITABLE ACTIVITIES. IN VIEW OF THESE FACTS AND CIRCUMSTANCE S, IT WAS SUBMITTED THAT SINCE THE ASSESSEE WAS ENJOYING REGISTRATION U/S 12 AA OF THE ACT, THE DENIAL OF EXEMPTION U/S 11 BY THE AUTHORITIES BELOW WAS NO T JUSTIFIED. 3. LEARNED D. R., ON THE OTHER HAND, HEAVILY PLACED HIS RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UNDISPUTE D FACT THAT THE ASSESSEE WAS GRANTED REGISTRATION VIDE CERTIFICATE DATED 05/ 12/2008. THE SAID I.T.A. NO.140/LKW/2016 ASSESSMENT YEAR:2011-12 3 REGISTRATION WAS GRANTED IN VIEW OF THE DIRECTIONS BY THE TRIBUNAL ORDER DATED 15/09/2008. THE SAID ORDER OF REGISTRATION W AS CHALLENGED BEFORE HON'BLE ALLAHABAD HIGH COURT WHICH VIDE ORDER DATED 06/11/2017 HAD DISMISSED THE APPEAL OF THE REVENUE. THE ASSESSING OFFICER HAS DENIED THE EXEMPTION U/S 11 OF THE ACT BY HOLDING THAT THE REG ISTRATION U/S 12AA WAS GRANTED TO THE ASSESSEE ON THE DIRECTIONS ISSUED BY THE TRIBUNAL AND FOR WHICH THE REVENUE HAD FILED APPEAL BEFORE HON'BLE H IGH COURT. THE ASSESSING OFFICER THEREFORE, DID NOT CONSIDER THE R EGISTRATION U/S 12AA AND ASSESSED THE ASSESSEE AS A COMPANY. THE RELEVANT F INDINGS OF THE ASSESSING OFFICER ARE REPRODUCED BELOW: THEREFORE, KEEPING IN VIEW OF FACTS AS DISCUSSED A BOVE, THE STATUS OF THE ASSESSEE IS TAKEN AS COMPANY AND TOTAL INCOME IS COMPUTED IN ACCORDANCE WITH NORMAL PROVIS IONS OF THE I.T. ACT, 1961 APPLICABLE IN THE CASES OF DOMESTIC COMPANIES. FURTHER LD. THE COMMISSIONER OF INCOME TAX-II, KANP UR VIDE HIS ORDER DATED 08.12.2008 GRANTED CERTIFICATE U/S. 12A A OF THE ACT IN ACCORDANCE WITH THE DIRECTIONS ISSUED BY HON'BLE ITAT GRANTED REGISTRATION TO THE INSTITUTION W.E.F. 30.1 1.1972, SUBJECT TO PROVISIONS CONTAINED U/S 12AA (3) OF THE INCOME TAX ACT, 1961. THE ISSUE OF GRANT OF REGISTRATION U/S. 12AA IS SUB-JUDICE BEFORE HON'BLE ALLAHABAD HIGH COURT, THEREFORE THE STATUS OF THE ASSESSEE AS DISCUSSED IN ABOVE PARAS IS TAKEN AS 'COMPANY. 4.1 THE LEARNED CIT(A) ALSO UPHELD THE ORDER OF THE ASSESSING OFFICER. THE RELEVANT FINDINGS OF LEARNED CIT(A) ARE REPRODU CED BELOW: A PERUSAL OF THE ORDER OF THE HON'BLE ITAT VIDE OR DER IN ITA N0.514/LKW/2014 FOR A.Y. 2010-11, DIRECTED THE AO T O CONSIDER THE PROVISIONS OF SUB SECTION (8) OF SECTION 13 WHI LE DECIDING THE ISSUE OF COMPUTING INCOME IN TERMS OF SECTION 1 1 TO 13 OF THE ACT. SECTION 13(8) SAYS THAT EXEMPTION U/S. 11 & 12 WILL NOT BE GRANTED TO THE PERSONS IF THE PROVISIONS OF 1 ST PROVISO TO CLAUSE 15 TO SECTION 2 BECOME APPLICABLE IN THE CAS E OF SUCH PERSONS IN ANY PREVIOUS YEAR. THESE OBSERVATIONS MA DE BY I.T.A. NO.140/LKW/2016 ASSESSMENT YEAR:2011-12 4 HON'BLE ITAT REFLECTS THAT THIS WAS THE ASPECT WHIC H NEEDED AO'S ATTENTION FOR THE SUBSEQUENT YEARS. IT WAS PRO PERLY LOOKED INTO AND THE DECISION WAS TAKEN. APPLICABILITY OF S ECTION 2(15) IN THE ASSESSEE'S CASE HAS NOT BEEN DECIDED BY ANY HIG HER JUDICIAL AUTHORITY IN PREVIOUS YEARS AND KEEPING IN VIEW OF THE ABOVE MENTIONED DISCUSSION, I UPHOLD THE ORDER OF THE AO IN THIS REGARD AND CONFIRMED THE APPLICABILITY OF SECTION 2 (15) OF THE I.T. ACT AND HOLD THAT THE OBJECT ACTIVITY OF THE A PPELLANT ARE NOT IN THE NATURE OF RELIEF TO POOR OR MEDICAL RELIEF A ND HENCE THE PROVISIONS OF SECTION 2(15) IS CLEARLY APPLICABLE O N THE APPELLANT'S CASE. 4.2 FROM THE ABOVE FINDINGS OF THE AUTHORITIES BELO W, IT IS SEEN THAT THEY HAVE HELD THAT SINCE THE ASSESSEE WAS ENGAGED IN TH E BUSINESS OF MANUFACTURING, BUYING AND SELLING OF ARTIFICIAL LIM BS AND ACCESSORIES THEREFORE, THEY WERE HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT WHICH WAS INSERTED WITH EFFECT FROM 01/04/2009. THE ASSESSIN G OFFICER ALSO DENIED THE EXEMPTION IN VIEW OF THE FACT THAT REVENUE HAD CHAL LENGED THE ORDER OF HON'BLE TRIBUNAL BY WHICH IT HAD DIRECTED LEARNED C IT(A) TO GRANT EXEMPTION. HOWEVER, THE REVENUE WAS NOT ABLE TO DE MONSTRATE THAT THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12AA OF TH E ACT HAS BEEN WITHDRAWN. THEREFORE, UNLESS THE SAID REGISTRATION IS WITHDRAWN, THE ASSESSEE WILL BE ELIGIBLE FOR EXEMPTION U/S 11 OF T HE ACT UNLESS IT IS HIT BY THE PROVISIONS CONTAINED IN SECTION 13 OF THE ACT. WE FURTHER FIND THAT GROUND NO. 1 TO 3 TAKEN BY THE ASSESSEE RELATE TO T HE GRIEVANCE OF THE ASSESSEE OF NOT BEING HEARD BY LEARNED CIT(A). THE ASSESSEE HAS STATED THAT THE DIRECTIONS GIVEN BY LEARNED CIT(A) DATED 2 7/10/2015 DURING THE COURSE OF APPELLATE PROCEEDINGS WERE COMPLIED ON 17 /11/2015 WHICH WERE NOT CONSIDERED BY THE CIT(A). THE ASSESSEE HAS FUR THER TAKEN AS A GROUND OF APPEAL THAT THE ASSESSEE HAD SUBMITTED ON DUE DA TE I.E. 17/11/2015 COMPREHENSIVE WRITTEN SUBMISSIONS IN THE FORM OF CO MPILATION RUNNING FROM 1 TO 142 PAGES WHICH HAD NOT BEEN CONSIDERED. THER EFORE, IN VIEW OF THE I.T.A. NO.140/LKW/2016 ASSESSMENT YEAR:2011-12 5 ENTIRE FACTS AND CIRCUMSTANCES, WE DEEM IT APPROPRI ATE TO REMIT THIS ISSUE BACK TO THE OFFICE OF LEARNED CIT(A) WHO SHOULD DEC IDE THE ISSUE AFRESH KEEPING IN VIEW THE REGISTRATION AVAILABLE TO THE A SSESSEE U/S 12AA OF THE ACT AND FURTHER HE SHOULD DECIDE THE ISSUE OF EXEMP TION U/S 11 AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE IN ITS WRITTEN SUBMISSIONS. NEEDLESS TO SAY THAT THE ASSESSEE WIL L BE PROVIDED SUFFICIENT OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 07/03/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:07/03/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW