M/s. AP Plastic Manufactures Association, Hyderabad V. ADIT (Exemptions)-I, Hyderabad

ITA 1422/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53650 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 04-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A SRINIVAS
• Keywords: Business income
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.1422/HYD/2011 ASSESSMENT YEAR 2008-09 AP PLASTIC MANUFACTURES ASSOCIATION, HYDERABAD. (PAN: AAAAA 1048 H) VS ASSTT. DIRECTOR OF INCOME - TAX (E) - I,AAYAKAR BHAVAN, HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A. SRINIVAS RESPONDENT BY DATE OF HEARING:14-9-2011 DATE OF PRONOUNCEMENT :14-10-2011 : SMT. ANJALA SAHU O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT (A)-IV, HYDERABAD, DATED 30-6-201 1 AND IT PERTAINS TO THE ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPE AL ARE AS UNDER:- 1. THE ORDER OF THE AO IS CONTRARY TO LAW, FACTS A ND CIRCUMSTANCES OF THE CASE. 2. THE AO OUGHT NOT TO HAVE TAXED THE SURPLUS OF TH E ASSESSEE AS BUSINESS INCOME. ITA 1422/HYD/2011- AP PLASTIC MANUFACTURES ASSOCIAT ION, HYDERABAD. L.L 2 3. THE CIT (A)-IV, HYDERABAD OUGHT NOT TO HAVE CONF IRMED THE ADDITION ON THE GROUND THAT THE SURPLUS WAS NEITHER APPLIED NOR ACCUMULATED IN TERMS OF THE SECTION 11 OF THE I T ACT. 4. ANY OTHER GROUND WHICH THE ASSESSEE MIGHT URGE E ITHER AT OR BEFORE THE TIME OF HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A TRUST FILED ITS RETURN OF INCOME ON 24-9-2008 DECLARING NIL INC OME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BY CLAIMING EXE MPTION UNDER SECTION 11 OF THE IT ACT. THE RETURN HAS BEEN PRO CESSED UNDER SECTION 143(1) OF THE ACT. LATER, THE CASE WAS CONVERTED I NTO SCRUTINY. ACCORDINGLY, NOTICES UNDER SECTION 143(2)/142(1) HA VE BEEN ISSUED. IN RESPONSE TO THE SAID NOTICES, THE AUTHORIZED REPRES ENTATIVE OF THE ASSESSEE TRUST APPEARED FROM TIME TO TIME AND FILED THE INFORMATION CALLED FOR AND PRODUCED THE BOOKS OF ACCOUNTS ETC., BEFORE THE ASSESSMENT OFFICER. AFTER EXAMINING ALL THE SUBMIS SIONS MADE BEFORE HIM, THE ASSESSING OFFICER DETERMINED THE TOTAL INC OME OF THE ASSESSEE AT RS.36,76,166/- AS AGAINST NIL INCOME SHOWN AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT PASSED UNDER SECTION 1 43(3) OF THE ACT ON 24-12-2010. AGGRIEVED AGAINST THE ORDER OF THE ASS ESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (A). ON APP EAL, THE CIT (A) AFTER CONSIDERING THE GROUNDS RAISED BY THE ASSESSE E, DISAGREED WITH THE ASSESSING OFFICER THAT MERELY BECAUSE CERTAIN PROFI T WAS EARNED BY THE ASSOCIATION FROM EXHIBITION, THE VERY ACTIVITY OF T HE ORGANIZING THE EXHIBITION CANNOT BE CONSIDERED AS CHARITABLE. HO WEVER, HE HELD THAT THE ASSESSEE HAD FAILED TO COMPLY WITH THE CONDITIO NS FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND HENCE THE ASSESSEE SOCIETY IS NOT ITA 1422/HYD/2011- AP PLASTIC MANUFACTURES ASSOCIAT ION, HYDERABAD. L.L 3 ENTITLED FOR SUCH EXEMPTION DURING THE YEAR UNDER C ONSIDERATION. FURTHER AGGRIEVED AGAINST THE FINDINGS OF THE CIT ( A), THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE IN QUESTION HAS BEEN DECIDED BY THE CIT (A) I N HIS ORDER AT PARAGRAPH 6.1 WHICH READS AS UNDER:- 6.1. HOWEVER, IT IS SEEN THAT THE VERY CONDITION FO R EXEMPTION OF ANY INCOME EARNED OUT OF ANY INCIDENTAL BUSINESS ACTIVI TY ALSO IS THAT THE INCOME GENERATED THERE FROM SHOULD BE APPLIED FOR THE PURPOSE OF ACHIEVING THE OBJECTS OF THE TRUST. IN THE APPELLA NTS CASE HOWEVER, NO SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED WITH REG ARD TO THE EXHIBITION ITSELF. FURTHER, ADMITTEDLY, THE INCOME SO GENERATED HAS NOT BEEN UTILIZED FOR THE BENEFIT OF THE PLASTIC INDUST RY OR ANY OTHER OBJECTS OF THE APPELLANT SOCIETY. THOUGH IT IS CONTENDED TH AT THIS WAS THE FIRST YEAR IN WHICH THE APPELLANT EARNED THE SURPLUS FROM THE EXHIBITION, THE SURPLUS SO GENERATED WAS NEITHER APPLIED NOR ACCUMU LATED IN TERMS OF THE PROVISIONS OF THE ACT. BESIDES, IT IS ALSO CLE AR THAT THE APPELLANT IS NOT CORRECT IN CONTENDING THAT THE NET SURPLUS, AFT ER REDUCING 15% OF GROSS INCOME OF RS.2,37,80,816/- AS PER SECTION 11( 1A) FROM THE SURPLUS OF RS.36,73,166/-, WAS RS.1,06,119/- ONLY. ACCORDINGLY, I AM OF THE VIEW THAT SINCE THE APPELLANT HAS FAILED TO COMPLY WITH THE CONDITIONS FOR EXEMPTION UNDER SECTION 11 OF THE AC T, IT IS NOT ENTITLED FOR SUCH EXEMPTION DURING THE YEAR. UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN BRINGING TO TAX THE ENTIRE SUR PLUS OF RS.36,73,166/- THEREFORE, THE GROUND NOS. 2 AND 4 ARE DECIDED AGAI NST THE APPELLANT. ITA 1422/HYD/2011- AP PLASTIC MANUFACTURES ASSOCIAT ION, HYDERABAD. L.L 4 AFTER CONSIDERING THE TOTALITY OF FACTS AND THE CIR CUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE ASSOCIATION HAD NOT MAINT AINED SEPARATE BOOKS OF ACCOUNTS WITH REGARD TO THE EXHIBITION INC OME AND OTHER ACTIVITIES OF THE ASSOCIATION. WE ALSO FIND THAT T HE SURPLUS SO GENERATED FROM THE EXHIBITION NEITHER APPLIED NOR ACCUMULATED IN TERMS OF THE PROVISIONS OF THE ACT AND HENCE WE ARE IN FULL AGRE EMENT WITH THE FINDINGS OF THE CIT (A). THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHORITY IN HOLDING T HAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE CONDITIONS FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND NOT ENTITLED FOR EXEMPTION DURING THE Y EAR UNDER CONSIDERATION. IN VIEW OF THIS, WE UPHOLD THE FINDI NGS OF THE CIT (A) AND ACCORDINGLY REJECT THE GROUNDS RAISED BY THE AS SESSEE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 14 -10- 2011. SD/- SD/- (G.C. GUPTA) (AKBER BASHA) VICE PRESIDENT. ACCOUNTANT MEMBER. DT/-14-10-2011. COPY FORWARDED TO: 1. ACIT, CIRCLE - 2(1), HYDERABAD. 2. M/S. A.P. PLASTICS MANUFACTURES ASSOCIATION, ROO M NO.304, RAGHAVA RATNA TOWERS, CHIRAG ALI LANE, HYDERABAD. 3. CIT(A) - I V , HYDERABAD. 4. CIT, AP, HYDERABAD. 5. THE D.R., ITAT, HYDERABAD. JMR* ITA 1422/HYD/2011- AP PLASTIC MANUFACTURES ASSOCIAT ION, HYDERABAD. L.L 5