M/S CENTRE FOR DEVELOPMENT COMMUNICATION, Jaipur V. CIT, Jaipur

ITA 163/JPR/2012

• Counselvise Citation: [2013] 129 COUNSELVISE.COM (IT) 9966 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Maximum Marginal Rate; Benefit of exemption; Cancellation of registration
• Section: 12A; 12AA

Judgement Text

1 ITA 163(2)-12 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : JAIPUR. BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT ITA NO. 163/JP/2012 ASSESSMENT YEAR : 2009-10 M/S. CENTRE FOR DEVELOPMENT VS. COMMISSIONER OF I NCOME-TAX-I COMMUNICATION TRUST, 1227, GHAT GATE JAIPUR. BAZAR, JAIPUR. ITA NO. 92/JP/2013 ASSESSMENT YEAR : 2009-10 M/S. CENTRE FOR DEVELOPMENT VS. THE INCOME-TAX OF FICER, COMMUNICATION TRUST, 1227, GHAT GATE WARD 2(1), JA IPUR. BAZAR, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSIONS RESPONDENT BY : SHRI A.K. KHANDELWAL DATE OF HEARING : 21.08.2013. DATE OF PRONOUNCEMENT : 22.08.2013. ORDER PER B.R. JAIN, A.M. THESE TWO APPEALS AGAINST THE ORDER DATED 29.12.20 11 OF LD. CIT-I, JAIPUR WITHDRAWING REGISTRATION UNDER SECTION 12AA OF THE IT ACT AND LD. CIT (A)-I, JAIPUR BY ITS ORDER DATED 19.12.2012 IN QUANTUM RAISED FOLLOW ING GROUNDS IN RESPECTIVE APPEALS :- ITA NO. 163/JP/2011: THE IMPUGNED ORDER DATED 29.12.2011 PASSED BY THE LEARNED CIT-I U/S 12AA(3) OF THE IT ACT, 1961 WITHDRAWING REGISTRATIO N GRANTED U/S 12AA OF THE IT ACT, 1961 FROM A.Y. 2009-10 AND ONWARDS I S BAD IN LAW AND ON 2 FACTS BEING WITHOUT JURISDICTION AND FOR VARIOUS OT HER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. ITA NO. 92/JP/2012 : I) THE LD. CIT (APPEALS-I) ERRED IN NOT ALLOWING EX EMPTION OF SURPLUS INCOME OF RS. 2268839/- U/S 11(1)(A) AND ERRED IN S USTAINING IT AS TAXABLE INCOME. II) THE LD. CIT (APPEALS-I) ERRED IN WITHHOLDING DI SALLOWANCE OF RS. 843143/- ON ACCOUNT OF PRIOR PERIOD EXPENSES AND IN ADDING IT TO TOTAL INCOME OF APPELLANT. III) THE LD. CIT (APPEALS-I) WAS NOT JUSTIFIED IN U PHOLDING CHARGE OF TAX BY MAXIMUM MARGINAL RATE IN PLACE OF RATES APPLICABLE UNDER THE STATUS OF INDIVIDUAL AND AOP AS GIVEN IN PARAGRAPH A OF PART I OF THE FIRST SCHEDULE OF INCOME TAX ACT, 1961. 2. IN APPEAL NO. 163/JP/2012, BRIEFLY THE FACTS ARE THAT THE ASSESSEE TRUST WAS ALLOWED REGISTRATION UNDER SECTION 12A OF THE IT ACT FROM T HE ASSESSMENT YEAR 2001-02. ON PERUSAL OF THE RECORD, THE LD. CIT FOUND THAT THE A SSESSEE TRUST IS ENGAGED IN SOLID WASTE MANAGEMENT OF VARIOUS NAGAR NIGAMS/NAGAR PARISHADS IN DIFFERENT STATES. THE ACTIVITIES CARRIED OUT BY THE TRUST ARE IN THE NATURE OF TRADE , COMMERCE OR BUSINESS WHICH IS NOT ALLOWABLE AS PER THE BENEFIT OF EXEMPTION UNDER SEC TION 11 OF THE IT ACT, 1961. THE LD. CIT (A), THEREFORE, AFFORDED AN OPPORTUNITY VIDE SH OW CAUSE NOTICE DATED 17.10.2011 AND ASSESSEES REPLY WAS SENT TO THE ADDITIONAL CIT RAN GE-2, JAIPUR WHOSE REPORT THEREOF WAS CONSIDERED. AFTER CONSIDERING THE REPLY AND FACTS AND CIRCUMSTANCES OF THE CASE, THE AMENDED PROVISO BELOW SECTION 2(15) OF THE ACT WAS TAKEN INTO CONSIDERATION. SINCE THE PROVISO CLAUSE WAS APPLICABLE, THE LD. CIT WITHDREW THE REGISTRATION GRANTED UNDER SECTION 12AA(3) OF THE ACT WITH EFFECT FROM ASSESSM ENT YEAR 2009-10 AND ONWARDS. 3 3. THE APPELLANT IN HIS WRITTEN SUBMISSIONS CONTEND S THAT THERE IS NO CHANGE IN THE OBJECTS ON THE BASIS OF WHICH THE APPELLANT WAS GRA NTED REGISTRATION. THE LD. CIT EXCEEDED HIS JURISDICTION AND ACTED BEYOND THE SCOP E OF PROVISO CONTAINED UNDER SECTION 12AA(3) OF THE ACT. 4. ON THE OTHER HAND, THE REVENUE RELIED ON THE FIN DINGS AND CONCLUSION REACHED BY THE LD. CIT. 5. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE PROVISIONS OF SECTION 12AA(3) OF THE IT ACT, WHICH ARE RELEVANT TO THE IS SUE ARE REPRODUCED AS UNDER :- (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUB SECTION (1) (OR HAS OBTAINED REGI STRATION AT ANY TIME UNDER SECTION 12A (AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) ACT, 1996 (33 OF 1996) AND SUBSEQUENTLY THE COMMISS IONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANC ELING THE REGISTRATION OF SUCH TRUST OR INSTITUTION : PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASS ED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD. THE PERUSAL OF THE AFORESAID LEGAL PROVISIONS REVEA LS ONLY TWO CIRCUMSTANCES UNDER WHICH THE LD. CIT IS EMPOWERED TO CANCEL THE REGISTRATIO N GRANTED UNDER SECTION 12AA(1) OF THE ACT. THESE CONDITIONS ARE (1) THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE; (2) THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE INSTITUTION. IN THE PRESENT CASE IN APPEAL, THE LD. CIT, HOWEVER , BY APPLICATION OF PROVISO BELOW SECTION 2(15) TOOK DECISION IN CANCELING THE REGIST RATION GRANTED TO THE ASSESSEE AND DID NOT RESTRICT THE SCOPE OF HIS JURISDICTION AS CONTA INED UNDER SECTION 12AA(3) OF THE ACT. THE PROVISO BELOW SECTION 2(15) OF THE ACT IS RELEV ANT FOR THE PURPOSE OF ASSESSMENT 4 WHEREBY THE ASSESSING OFFICER UPON FINDING THAT THE ASSESSEES ACTIVITIES ARE IN THE NATURE OF BUSINESS OR TRADE, COULD DENY APPLICATION OF SUC H INCOME UNDER SECTION 11(1)(A) /12 OF THE ACT, FROM YEAR TO YEAR BASIS. WE, THEREFORE, D O NOT FIND ANY JUSTIFICATION IN THE CANCELLATION OF REGISTRATION BY THE LD. CIT WHICH W E HEREBY SET ASIDE AND ALLOW THE GROUND RAISED IN APPEAL. 6. IN SO FAR AS ASSESSEES GROUNDS RAISED IN APPEAL NO. 92/JP/2013 ARE CONCERNED, IT IS APPARENT THAT THE DEDUCTION OF ALLOWANCE HAS NOT BE EN ALLOWED TO THE APPELLANT MERELY BECAUSE THE REGISTRATION STANDS WITHDRAWN BY APPLIC ATION OF PROVISIONS OF SECTION12AA(3) OF THE ACT. HAVING SET ASIDE THE ORDER DATED 29.12 .2011 MADE BY LD. CIT, JAIPUR-1, JAIPUR, THE ASSESSING OFFICER IS DIRECTED TO RECOMP UTED THE INCOME HAVING REGARD TO THE PROVISIONS OF SECTION 2(15) OF THE ACT BY PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, APPEAL IN ITA NO. 92/JP/2013 STAN DS ALLOWED FOR STATISTICAL PURPOSES WHEREAS APPEAL IN ITA NO. 163/JP/2012 STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22.08.2013. SD/- SD/- ( KUL BHARAT ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 22/08/2013. D/- COPY FORWARDED TO :- M/S. CENTRE FOR DEVELOPMENT COMMUNICATION TRUST, JA IPUR. THE CIT-1, JAIPUR. THE ITO WARD 2(1), JAIPUR. THE CIT (A) THE D/R GUARD FILE (ITA NO. 163(2)/JP/2012) BY ORDER, AR ITAT JAIPUR. 5