The DCIT, GNR Circle, Gandhinagar V. Gujarat Council of Science & Technology, Gandhinagar

ITA 1686/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0581 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 05-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Assessee Lawyers: M K PATEL
• Keywords: Charitable institution; Difference of opinion; Change of opinion
• Section: 143(3); 12A; 12AA; 147; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1686/AHD/2012 / ASSESSMENT YEAR : 2006-07 DCIT, GANDHINAGAR CIRCLE, GANDHINAGAR VS GUJARAT COUNCIL OF SCIENCE & TECHNOLOGY, 7 TH FLOOR, M.S. BUILDING, SECTOR-11, GANDHINAGAR-11 PAN : AAATG 7061 P / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI S.L. CHANDEL, SR DR ASSESSEE BY : SHRI M.K. PATEL, AR / DATE OF HEARING : 06/09/2016 / DATE OF PRONOUNCEMENT: 07/09/2016 / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), GANDHINAGAR, AHMEDABAD DATED 16.05.2012 FOR AY 2006-07. 2. FOLLOWING GROUNDS ARE RAISED:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FAC TS BY HOLDING THE RE- ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AS INVALID . 2. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FAC TS IN TREATING REGISTRATION U/S 12A OF THE ACT AS VALID THEREBY ALSO ALLOWING THE ASSESSEE TO BE ELIGIBLE FOR DEDUCTION U/S 11 OF THE ACT. 3. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF DISALLOWING E XEMPTION U/S 11 OF THE ACT AMOUNTING TO RS.37,03,791/-. 3. LD. DR RELIED ON THE ORDER OF THE LD. ASSESSING OFFICER. 4. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDS THAT THE ASSESSEE IS A TRUST, INCORPORATED BY GOVERNMENT OF GUJARAT FOR ADVANCEMENT AND PROMOTION OF SCIENCE AND TECHNOLOGY AS WELL AS TO ENCOURAGE R & D SMC-ITA NO. 1686/AHD/2012 DCIT VS. GUJARAT COUNCIL OF SCIENCE & TECHNOLOGY AY : 2006-07 2 ACTIVITIES IN THE STATE OF GUJARAT. IT IS REGISTERE D U/S 12AA OF THE INCOME-TAX ACT. THE BENEFIT OF SECTION 12A WAS GIVEN BY LD. A O IN THE ORIGINAL ASSESSMENT FRAMED U/S 143(3) ON 15.12.2008; HOWEVER , BY WAY OF REOPENING THE ASSESSMENT, THE BENEFIT WAS DENIED. LD. CIT(A) QUASHED THE REASSESSMENT AND UPHELD THE ELIGIBILITY OF SECTION 11/12A, BY FOLLOWING OBSERVATIONS:- 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE FACTS OF THE CASE AND THE CONTENTIONS OF THE APPELLANT. THE FIRST TWO GROUND S ARE AGAINST REOPENING AND THE THIRD GROUND IS ON THE MERITS AS TO WHETHER THE INCOME IS EXEMPT U/S 11. AS THE FACTS AND CIRCUMSTANCES ARE INTER-RELATED , THESE ARE DISCUSSED TOGETHER. AFTER CONSIDERATION OF THE ASSESSMENT ORD ER, WRITTEN SUBMISSIONS AND EVIDENCES, THE FOLLOWING IMPORTANT FACTS AND MY CONSIDERED OPINION EMERGE:- A) THE ORIGINAL ASSESSMENT WAS PASSED U/S. 143(3) AN D EXEMPTION U/S. 11 WAS GRANTED TO THE ASSESSEE. B) DURING THE ORIGINAL (REGULAR) ASSESSMENT PROCEEDI NGS SPECIFIC QUERY WAS RAISED ASKING FOR COPY OF TRUST DEED. IN RESPON SE MEMORANDUM OF ASSOCIATION WAS ENCLOSED. FURTHER, CERTIFICATE U/S. 12A WAS CALLED FOR AND SUBMITTED. AS THESE WERE SPECIFIC QUERIES, THER EFORE, THE LOGICAL ASSUMPTION IS THAT THESE WERE CONSIDERED BY THE A.O. FOR THIS CONCLUSION, SUPPORT IS TAKEN FROM THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD (SUPRA ). C) THE CASE HAS BEEN REOPENED AND DECIDED AGAINST THE ASSESSEE BY THE AO SAYING THAT THE ASSESSEE IS AN INSTITUTION AND NO T RUST HAS BEEN CREATED (NO INSTRUMENT EVIDENCING CREATION IS AVAILABLE). F URTHER, THE AO HAS HELD THAT THE REGISTRATION U/S. 12A IS FOR THE INSTI TUTION AND THE ASSESSEE IS NOT A TRUST BUT A CHARITABLE INSTITUTION. D) FROM THE MEMORANDUM & RULES AND REGULATIONS FIL ED, IT IS CLEAR THAT THE PROPERTY IS VESTED IN THE GOVERNING BODY, THE G OVERNING BODY AND ITS POWERS AND FUNCTIONS ARE CLEARLY DEFINED ALONG WITH THE OBJECTIVES. IT CAN BE SAID THAT THE PROPERTY IS HELD UNDER TRUST A S REQUIRED UNDER THE PROVISIONS OF SEC. 11. IN THIS REGARD I HAVE RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GUJARAT MARITI ME BOARD, 295 ITR 561 WHEREIN THE BOARD'S PROPERTY WAS HELD TO BE HELD IN TRUST, FOR THE PURPOSE OF SEC. 11. IN VIEW OF THE ABOVE FACTS AND OBSERVATIONS, THE RE OPENING IS HELD TO BE INVALID AS BEING MERELY A CHANGE OF OPINION. FURTHE R, IT IS HELD THAT PROPERTY IS VESTED WITH THE TRUST, THE TRUSTEES BEING THE GO VERNING BODY, AND THE SMC-ITA NO. 1686/AHD/2012 DCIT VS. GUJARAT COUNCIL OF SCIENCE & TECHNOLOGY AY : 2006-07 3 GOVERNING BODY AND ITS POWERS AND FUNCTIONS ARE CLE ARLY DEFINED ALONG WITH THE OBJECTIVES. FURTHER, THE ASSESSEE HAS DULY BEEN GRANTED REGISTRATION U/S. 12A OF THE IT ACT. THEREFORE, ON MERITS ALSO THE ASSE SSEE IS HELD TO BE ELIGIBLE FOR DEDUCTION U/S. 11. 4.1. IN THE PRECEDING AND SUCCEEDING YEARS, BY ORDE R U/S 143(3), THE ASSESSEE HAS BEEN HELD TO BE ELIGIBLE AS A CHARITAB LE ORGANIZATION AND BENEFITS HAVE BEEN GIVEN. THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A). 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUT HORITIES. AS FAR AS THE RE-OPENING IS CONCERNED, I SEE NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN QUASHING THE REASSESSMENT BY HOLDING THAT THE SAME AS INVALID AS IT WAS PASSED BASED ON CHANGE OF OPINION, FOR WHICH HE REL IED UPON THE JUDGMENTS OF HONBLE SUPREME COURT JUDGMENT IN THE CASE OF K ELVINATOR OF INDIA LTD (SUPRA) AND GUJARAT MARITIME BOARD (SUPRA). ON MER IT ALSO, THE OBJECTS OF THE ASSESSEE ARE CLEARLY DEFINED WHICH ARE CHARITAB LE IN NATURE AND THE SAME IS FURTHER EVIDENT FROM THE FACT THAT DEPARTMENT IT SELF HAS HELD THAT THE ASSESSEES OBJECTS AND THE ORGANIZATION ARE CHARITA BLE IN NATURE AND THE ASSESSEE WAS GIVEN THE BENEFITS U/S 12A OF THE ACT IN THE PRECEDING AND SUCCEEDING YEARS. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 07/09/2016 *BIJU T. SMC-ITA NO. 1686/AHD/2012 DCIT VS. GUJARAT COUNCIL OF SCIENCE & TECHNOLOGY AY : 2006-07 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD