Dy. Commissioner of Income Tax(Exemptions)-2(1), Mumbai, Mumbai V. Society For Applied Microwave Electronic Engineering Research Bombay, Mumbai

ITA 1427/MUM/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0723 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-06-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 26-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K I O R D H U L E
• Assessee Lawyers: RITU PANJABI
• Section: 147; 148; 11; 143(3); 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI RAHUL CHAUDHARY, JM ITA No. 1427/Mum/2024 (Assess ment Yea r: 2010-11) Dy. Co mmissioner of Inco me Tax ( Exe mptions)-2(1), Roo m No.608, 6 th Floor, MTNL Peddar Road, Cu mbala Hill, Mu mbai-400 026 Vs. Society for applied Microwave Electronic Engineering Research Bo mba y IIT Ca mpus, Hill Slde, Powai , Mu mbai-400 076 (Appellant) (Respondent) PAN No. AALAS5825K Assessee by : M s . R i t u P a n j a b i , A R Revenue by : S h r i D r . K i s h o r D h u l e , C IT D R D a t e o f h e a r i n g : 2 4 . 0 6 . 2 0 2 4 Date of pronouncement : 2 6 . 0 7. 2 0 24 O R D E R PER PRASHANT MAHARISHI, AM: 01. ITA No. 1427/Mum/2024, for A.Y. 2010-11, is filed by the Dy. Commissioner of income Tax, Exemption 2(1), Mumbai against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)], dated 5 th February, 2024, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Income-tax Act, 1961 (the Act) dated 29 th March, 2016, passed by the Income Tax Officer, Exemption 2(3), Mumbai, was allowed. Page | 2 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 02. The learned Assessing Officer is aggrieved with the above appellate order and has preferred this appeal raising following grounds as under:- “1. "Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in not acknowledging the fact that the objectives of the society are commercial in nature and the income received by the society from its activities in the form of trade and commerce is more than Rs. 10 Lakhs and hence the exemption u/s 11 shall not be granted to it as per the provisions of the proviso to section 2(15). 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CTT(A) erred in ignoring the fact that even if the activities of assessee are considered charitable, such activities will fall in the category of advancement of any other object of general public utility only hence applicability of proviso to section 2(15) should have been examined as the same result into denial of exemption u/s 11 of the I.T. Act. 3. Whether on the facts and circumstances of the case and in law and in light of the law laid down by Hon'ble Supreme Court in Civil Appeal No. 21762 of 2017 in various batch of appeal and SLP's (lead case ACIT (Exemptions) Vs. Ahmedabad Urban Development Authority [2022] 143 taxmnn.com 278(SC)), the Ld.CIT(A) erred in not appreciating that even if the activities of the assessee are held to be covered under Page | 3 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 residuary part section 2(15) as "advancement of any other object of general public utility" even then it is not entitled to exemption u/s 11 because it is hit by the proviso to section 2(15) as the income of the assessee consists of activities which are in the nature of trade, commerce or business.” 03. The brief facts of the case shows that assessee is an association of persons, who filed its return of income on 12 th October, 2010, total income of ₹ nil. Assessee is registered under Section 12A of the Act vide registration dated 24 th June, 1992. The assessment was completed under Section 143(3) of the Income-tax Act, 1961 (the Act) on 23 rd January, 2012, at total income of ₹7,73,12,319/-. 04. The case of the assessee was reopened by issue of notice under Section 148 of the Act on 31 st March, 2015, in response to that assessee submitted a letter dated 11 th January, 2016, reiterating the original income. Assessee raised objections against reopening which were disposed off on 12 th February, 2016. 05. It was found that assessee is engaged in a research work in the area of Micro Wage (electronics) and has claimed benefit of exemption under Section 11 of the Act. As the activities of the assessee are pure research work, the assessee is required to be taxed and assessed under Section 10(21) of the Act subject to fulfillment of conditions. It was noticed that assessee claiming it to be an autonomous research and development institute under the control of department of Information Technology, Ministry of Communication and Information Technology. It carries research in the field of linear oscillator radar based instrumentation, etc. Therefore, the learned Page | 4 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 Assessing Officer noted that the assessee is engaged in research and development in scientific field. Thus, the claim of the assessee of exemption under Section 11 of the Act is not available. The learned Assessing Officer was of the view that merely registration under Section 12A of the Act does not entitle the assessee the benefits of section 11 of the Act unless the assessee fulfills those conditions. He also rejected the claim of the assessee that in earlier years, the assessee has been granted benefit of Section 11 and 12 of the Act does not hold any water as each assessment year is different. Further, the assessee has submitted a certificate of registration issued from Ministry of Science and Technology for availing Custom Duty Exemption and on the same line assessee should have applied for exemption under Section 10(21) of the Act. Further, to avail the benefit of Section 10(21) of the Act the assessee should have been approved under that Section. It was found that no such approval is available and therefore, the exemption under Section 11 of the Act is not available to the assessee. Further, for claiming the benefit of Section 12A of the Act, the activities of the assessee must follow specified activities under Section 2(15) of the Act as the activity of the assessee are purely on research work and does not fall under Section 2 (15) of the Act. The learned Assessing Officer considered the surplus generated of the assessee of ₹20,35,79,750/- as not eligible for benefit under Section 11 of the Act and therefore, same was added to the total income of the assessee. The learned Assessing Officer further noted that assessee is engaged in various commercial activities which were in the nature of business and therefore, the activity are also hit by proviso to Section 2(15) of the Act. On question, assessee submitted reply dated 17 th March, 2016, wherein it explains its object, reiterated its registration under Section 12AA Page | 5 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 of the Act and claim of exemption under Section 11 and 12 allowed to the assessee in earlier years. It was further stated that even otherwise the surplus generated by the assessee are not commercial activity. The assessee explained the various projects undertaken by it. Thus, relying on the decision of the Hon'ble Delhi High Court in case of India Trade Promotion organization vs. DGIT Investigation dated 22 nd January, 2015, submitted that the assessee is eligible for the benefit. The learned Assessing Officer rejected the contention of the assessee and stated that the benefit granted in earlier year does not mean that for this year the claim of the assessee cannot be examined. It was held that the objections of the assessee are nothing but advancement of any other object of general public utility and fall in the category of commercial activity only. Thus exemption under Section 11 of the Act was denied to the assessee. Accordingly, the total income of the assessee was assessed at ₹ 20,39,79,570/- by reassessment order dated 29 th March, 2016. 06. Aggrieved by the re-assessment order, assessee preferred the appeal before the learned CIT (A), who on considering the various clauses of memorandum of association held that assessee is not in the business activity and does not lose its exemption under Section 11 and 12 of the Act. The learned CIT (A) also noted that the assessee is set up by the Government of India to make the country reliant in Micro Wave Technology through incentive research and development. Thereafter considering several judicial precedents, the learned CIT (A) held that dominant purpose of assessee is charitable and activities also does not mean to carry on business accordingly, appeal of the assessee was allowed. Page | 6 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 07. The learned Departmental Representative reiterated the grounds of appeal and stated that in view of the decision of the Hon'ble Supreme Court in case of Ahmedabad Urban Development Authority 2022, 143 taxmann.com 278, the order of the learned CIT (A) is not sustainable. 08. The learned Authorized Representative submitted that identical issue arose and in case of assessee for A.Y. 2009-10, 2011-12, 2012-13, wherein in ITA No.4311, 5551 and 7414, as per order dated 25 th November, 2022, restore the orders of the learned CIT (A) to the file of the learned Assessing Officer for examination in accordance with the decision of Hon'ble Supreme Court in case of Ahmedabad Urban development authority. The learned Assessing Officer passed the order for both the years on 2 nd February, 2024, under Section 143(3) read with section 254 of the Act read with section 144B of the Act on 25 th March, 2024 26 th March, 2024, and 27 th March, 2024, wherein the case of the assessee is accepted and the return of income filed by the assessee was accepted. It was further stated that assessment year passed for A.Y. 2016-17 on 27 th march, 2024, for A.Y. 2017-18 on 26th March, 2024 and for A.Y. 2022-23, under Section 143(3) read with section 144B of the Act and accepted the claim of the assessee. Thus, the claim of the assessee is accepted therefore, appeal of the learned Assessing Officer deserves to be dismissed. 09. We have carefully considered the rival contentions and perused the orders of the lower authorities. On careful consideration of the fact, we find that the assessee is established by Department of Electronics, Government of India and form the permission of Microwave Electronics Ltd. to make the country as reliant in the Page | 7 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 field of Micro Wave Electronics. The assessee is an autonomous body for this purpose. In the earlier years, the co-ordinate Bench has restored the appeals of the assessee to the file of the learned Assessing Officer to decide in accordance with the decision of Hon'ble Supreme Court in case of Ahmed Urban Development Authority. In the stated proceedings, the learned Authorized Representative has accepted the claim of the assessee and for all these years assessed it at the return of income. Subsequently for A.Y. 2016-17, 2017-18 and 2022-23, also the earlier years were passed after scrutinizing the case of the assessee and benefit of section 11 and 12 of the Act, was allowed. Therefore, for this year, the appeal of the Revenue does not stand on strong footing for the reason that the learned Assessing Officer in series of the assessment orders passed and restored proceedings or in independent assessment proceedings has accepted the claim of the assessee. It is not the claim of the Revenue that the fact for this year or the law in this year is different than those assessment years. In view of this, we dismiss ground no.1 to 3 of the appeal of the learned Assessing Officer. 010. In the result, the appeal of the learned Assessing Officer is dismissed. Order pronounced in the open court on 26.07. 2024. Sd/- Sd/- (RAHUL CHAUDHARY) (PRAS HANT M AHAR ISHI) (JUDIC IAL M EM BER) (ACC OUNTANT MEMB ER) Mumbai, Dated: 26.07.2024 Sudip Sarkar, Sr.PS Page | 8 ITA No.1427/Mum/2024 Society for applied Microwave Electronic Engineering Research Bombay; A.Y. 2010-11 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai