M/s.MYSORE ESDM CLUSTER, Mysore V. Commissioner of Income-Tax, Bangalore

ITA 1528/BANG/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4157 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 22-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI G.R
• Keywords: Opportunity of being heard; Principle of natural justice; Condonation of delay
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 1528/BANG/2016 & 2789/BANG/2017 M/S. MYSORE ESDM CLUSTER, NO. 360, KIADB INDUSTRIAL AREA, HEBBAL, HOOTAGALLI, MYSORE 570 018. PAN: AAJCM8354K VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVI .G.R, CA RESPONDENT BY : SHRI PRADEEP KUMAR, CIT (DR) DATE OF HEARING : 1 4 .0 2 .2019 DATE OF PRONOUNCEMENT : 15 .0 2 .2019 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND THE SE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(E), BANGALORE BOTH DATED 29.06.2016 PASSED U/S. 12AA AND U/S. 80G(5) OF IT ACT. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 15 28/BANG/2016 ARE AS UNDER: BASED ON THE PRINCIPLE OF NATURAL JUSTICE: 1. THE ORDER BY THE LEARNED COMMISSIONER IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE AN D NATURAL JUSTICE. THE REPLY FILED BY THE APPELLANT ON 30' JUNE, 2016 HAS BEEN TOTALLY IGNORED BY THE DEPARTMENT. HENCE THE APPELLANT WAS NOT GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD WHICH IS AGAI NST THE PROVISION OF SECTION 12AA(1)(B)(II) WHICH STATES THAT: 'PROVI DED THAT NO ORDER UNDER SUB-CLAUSE (II) TO CLAUSE (B) OF SUB-SECTION (1) OF SECTION 12AA SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.' BASED ON MERITS: 2. THE SCHEME IN TERMS OF WHICH THE COMPANY IS SETU P ENVISAGES 'INCREASE IN THE MANUFACTURING BASE OF ELECTRONIC P RODUCTS IN THE COUNTRY, ATTRACTING MORE INVESTMENTS, INCREASE IN E MPLOYMENT, DRIVE ITA NOS. 1528/BANG/2016 & 2789/BANG/2017 PAGE 2 OF 5 INNOVATION AND CATALYZING ECONOMIC GROWTH OF THE RE GION.' 3. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN TREATING THE ACTIVITY OF THE COMPANY AS CARRYING ON 'TRADE, COMM ERCE OR BUSINESS'. HE HAS FAILED TO APPRECIATE THAT IN TERM S OF SECTION 2(15) OF THE INCOME TAX ACT, 1961, 'CHARITABLE PURPOSE' INCL UDES CARRYING ON ACTIVITIES RELATING THE ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC UTILITY. THE ACTIVITIES OF THE COMPANY IS TO PROVIDE A COMMON PLATFORM TO ELECTRONIC COMPONENT MANUFACTURES BY DE VELOPING, OPERATING AND MAINTAINING INFRASTRUCTURE, AMENITIES AND COMMON FACILITIES FOR ELECTRONIC SYSTEM DESIGN AND MANUFAC TURING (ESDM) UNITS WHICH SQUARELY FALL WITHIN THE 'ACTIVITIES RE LATING TO ADVANCEMENT OF GENERAL PUBLIC UTILITY' LIMB OF SECTION 2(15). 4. THE 2ND PROVISO TO SECTION 2(15) STATES AS BELOW : [(II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES DURING THE PREVIOUS YEAR, DONOT EXCEED TWENTY PER CENT OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKINGSUCH ACTIVITY OR AC TIVITIES, OF THAT PREVIOUS YEAR;] 5. THE COMPANY EXPECTS SUBSTANTIAL RECEIPTS OF GRAN TS FROM THE GOVERNMENT AND OTHER DONORS, THE AGGREGATE OF WHICH WOULD BE IN EXCESS OF 80% OF THE RECEIPTS OF THE COMPANY. THIS IS ALSO PROVED BY THE FACT THAT GOVERNMENT OF INDIA HAS SANCTIONED GR ANT OF RS. 21.31 CRORES ( RUPEES TWENTY ONE CRORE AND THIRTY ONE LAK HS ONLY). IN VIEW OF THE SAME, THE COMPANY WOULD NOT ATTRACT THE DISQUALIFICATION LISTED IN THE AFORESAID PROVISO AND HENCE WOULD BE ENTITLED FOR REGISTRATION U/S 12A AND RECOGNITION U/S 80G OF THE INCOME TAX ACT, 1961. 6. THE APPELLANT CRAVES TO ADD, ALTER, DELETE OR SU BSTITUTE ANY OF THE GROUNDS URGED ABOVE. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 27 89/BANG/2017 ARE AS UNDER: BASED ON THE PRINCIPLE OF NATURAL JUSTICE: 1. THE ORDER BY THE LEARNED COMMISSIONER IN SO FAR AS IT IS AGAINST THE APPELLANT, IS OPPOSED TO LAW, WEIGHT OF EVIDENCE AN D NATURAL JUSTICE. THE REPLY FILED BY THE APPELLANT ON 30TH JUNE 2016 HAS BEEN TOTALLY IGNORED BY THE LEARNED COMMISSIONER OF INCOME TAX A ND REASONABLE OPPORTUNITY OF BEING HEARD WAS NOT GRANTED TO THE A PPELLANT IN THE INSTANT CASE. BASED ON MERITS: ITA NOS. 1528/BANG/2016 & 2789/BANG/2017 PAGE 3 OF 5 2. THE SCHEME IN TERMS OF WHICH THE COMPANY IS SETU P ENVISAGES 'INCREASE IN THE MANUFACTURING BASE OF ELECTRONIC P RODUCTS IN THE COUNTRY, ATTRACTING MORE INVESTMENTS, INCREASE IN E MPLOYMENT, DRIVE INNOVATION AND CATALYZING ECONOMIC GROWTH OF THE RE GION.' 3. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN TREATING THE ACTIVITY OF THE COMPANY AS CARRYING ON 'TRADE, COMM ERCE OR BUSINESS' . HE HAS FAILED TO APPRECIATE THAT IN TER MS OF SECTION 2(15) OF THE INCOME TAX ACT, 1961, 'CHARITABLE PURPOSE' I NCLUDES CARRYING ON ACTIVITIES RELATING THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE ACTIVITIES OF THE COMPANY IS TO PROVIDE A COMMON PLATFORM TO ELECTRONIC COMPONENT MANUFACTURES BY DE VELOPING, OPERATING AND MAINTAINING INFRASTRUCTURE, AMENITIES AND COMMON FACILITIES FOR ELECTRONIC SYSTEM DESIGN AND MANUFAC TURING (ESDM) UNITS WHICH SQUARELY FALL WITHIN THE 'ACTIVITIES RE LATING TO ADVANCEMENT OF GENERAL PUBLIC UTILITY' LIMB OF SECTION 2(15). 4. THE 2ND PROVISO TO SECTION 2(15) STATES AS BELOW : [(II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING SUCH ACTIVITY OR ACTIVITIES, OF THAT PREVIOUS YEAR;] 5. THE COMPANY EXPECTS SUBSTANTIAL RECEIPTS OF GRAN TS FROM THE GOVERNMENT AND OTHER DONORS, THE AGGREGATE OF WHICH WOULD BE IN EXCESS OF 80% OF THE RECEIPTS OF THE COMPANY. THIS IS ALSO PROVED BY THE FACT THAT GOVERNMENT OF INDIA HAS SANCTIONED GR ANT OF RS. 21.31 CRORES (RUPEES TWENTY ONE CRORE AND THIRTY ONE LAKH S ONLY). IN VIEW OF THE SAME, THE COMPANY WOULD NOT ATTRACT THE DISQUALIFICATION LISTED IN THE AFORESAID PROVISO AND HENCE WOULD BE ENTITLED FOR RECOGNITION U/S 80G OF THE INCOME TAX ACT, 1961. 6. THE APPELLANT CRAVES TO ADD, ALTER, DELETE OR SU BSTITUTE ANY OF THE GROUNDS URGED ABOVE. 7. IN VIEW OF THE ABOVE AND OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED IN THE INTEREST OF JUSTICE AND EQUITY. 4. THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 2789 /BANG/2017 IN RESPECT OF PROCEEDINGS U/S. 80G(5) OF IT ACT IS FILED AFTER A DELAY OF 476 DAYS. THE REGISTRY HAS ISSUED A DEFECT MEMO TO ASSESSEE POINT ING OUT THAT THE APPEAL IS TIME BARRED BY 476 DAYS. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH AN AFFIDAVIT OF SHR I BHAGYA M.G STATED TO BE AN AUTHORIZED SIGNATORY OF THE ASSESSEE. IN THIS AP PLICATION FOR CONDONATION OF DELAY, IT HAS BEEN STATED THAT AGAINST TWO ORDER PASSED BY LD. CIT(E) U/S. ITA NOS. 1528/BANG/2016 & 2789/BANG/2017 PAGE 4 OF 5 12AA AND 80G(5), THE ASSESSEE HAS EARLIER FILED ONL Y ONE APPEAL REFERRING TO BOTH THE ORDERS BUT IN COURSE OF HEARING OF THE SAI D APPEAL ON 26.10.2017, IT WAS POINTED OUT BY THE BENCH THAT THE ASSESSEE IS R EQUIRED TO FILE SEPARATE APPEALS IN RESPECT OF THESE TWO PROCEEDINGS U/S 12A A AND 80G(5). HE SUBMITTED THAT UNDER THESE CIRCUMSTANCES, THE DELAY WAS CAUSED AND THIS DELAY IS BECAUSE OF BONAFIDE REASONS AND WRONG UNDE RSTANDING OF THE ASSESSEE THAT FILING OF ONLY ONE APPEAL IS ENOUGH. THE LD. DR OF REVENUE STRONGLY OPPOSED CONDONATION OF DELAY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN VI EW OF THE FACTS DISCUSSED ABOVE AND BY RESPECTFULLY FOLLOWING THE JUDGEMENT O F HONBLE APEX COURT RENDERED IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI& OTHERS AS REPORTED IN (1987) 167 ITR 471(SC), WE CONDONE THE DELAY AND ADMIT THE APPEAL. THE CONCLUSION OF HONBLE APEX COURT IN THIS CASE W AS THIS THAT 'SUFFICIENT CAUSE' FOR THE PURPOSE OF CONDONATION OF DELAY SHOULD BE I NTERPRETED WITH A VIEW TO DO EVEN-HANDED JUSTICE ON MERITS IN PREFERENCE TO APPR OACH WHICH SCUTTLES A DECISION ON MERITS. HENCE, WE CONDONE THE DELAY IN THE INTEREST OF JUSTICE. 6. REGARDING THE MERIT OF THE APPEALS, IT IS SUBMIT TED BY LD. AR OF ASSESSEE THAT AS PER GROUND NO. 1 IN BOTH APPEALS, THIS IS T HE SUBMISSION OF THE ASSESSEE THAT REPLY WAS FILED BY THE ASSESSEE ON 30.06.2016. IT WAS SUBMITTED THAT ALTHOUGH THE APPLICATION FOR REGISTRATION WAS FILED BY THE ASSESSEE ON 14.12.2015, THE FIRST NOTICE WAS ISSUED BY LD. CIT (E) ON 16.06 .2016 FIXING THE DATE OF HEARING ON 24.06.2016. HE SUBMITTED THAT BECAUSE OF SHORT TIME OF ABOUT A WEEK FROM THE DATE OF NOTICE TILL THE DATE OF HEARING, THE AS SESSEE COULD NOT COMPLETE THE REQUIREMENTS BY THAT DATE AND THE ASSESSEE WOULD CO MPLETE THE REQUIREMENTS BY 27.06.2016 AND THE SAME WAS FILED IN THE OFFICE OF THE LD. CIT (E) ON 30.06.2016. HE SUBMITTED THAT COPY OF THESE SUBMISSIONS IS AVAI LABLE ON PAGE NOS. 23 AND 24 OF THE APPEAL MEMO. HE SUBMITTED THAT IN THE INTER EST OF JUSTICE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT (E) FOR FRESH D ECISION AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND AFTER GRANTING ADEQU ATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. THE LD. DR OF REVENUE SUBMITTED THAT SINCE THE DATE OF HEARING WAS FIXED ON 24.06.2016 AND NO COMPLIANCE W AS MADE ON THAT DATE BEFORE THE LD. CIT (E), NO FURTHER OPPORTUNITY SHOU LD BE PROVIDED TO ASSESSEE. ITA NOS. 1528/BANG/2016 & 2789/BANG/2017 PAGE 5 OF 5 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS IS NOTED BY CIT (E) IN HIS ORDER PASSED BY HIM ON 29.06.2016 U/ S. 12AA OF IT ACT THAT THE ASSESSEE TRUST FILED AN APPLICATION FOR REGISTRATIO N U/S. 12AA ON 14.12.2015 AND A LETTER DATED 16.06.2016 WAS SENT CALLING FOR CERTAI N DETAILS / INFORMATION AND THE ASSESSEE WAS ASKED TO EXPLAIN HOW THE OBJECTS ARE C HARITABLE IN NATURE BY POSTING THE CASE ON 24.06.2016 AT 12.30 PM. HENCE, IT IS SEEN THAT AFTER RECEIVING AN APPLICATION OF THE ASSESSEE ON 14.12.2 015, THE FIRST AND ONLY NOTICE WAS ISSUED BY LD. CIT (E) ON 16.06.2016 I.E. AFTER SIX MONTHS AND TIME ALLOWED TO ASSESSEE WAS ONLY ABOUT A WEEK. THIS IS TRUE THAT ON 24.06.2016, NO COMPLIANCE WAS MADE BY THE ASSESSEE AND ASSESSEE EVEN DID NOT APPEAR BEFORE LD. CIT (E) TO SEEK ADJOURNMENT BUT STILL IN THE INTEREST OF JU STICE, WE FEEL IT PROPER TO RESTORE BOTH THE MATTERS BACK TO THE FILE OF CIT (E) FOR FR ESH DECISION AFTER CONSIDERING THE WRITTEN SUBMISSIONS ALREADY FILED BY THE ASSESSEE B EFORE HIM ON 30.06.2016 AND AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. WE ORDER ACCORDINGLY. IN VIEW OF THIS DECISION, NO ADJUDICAT ION ON MERIT IS CALLED FOR AT THE PRESENT STAGE. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE ME NTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODI A) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGAL ORE.