M/s Adityapur Industrial Area Dev. Authority, V. DCIT,

ITA 170/RAN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0330 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAON
• Assessee Lawyers: D SANNIGRAH
• Keywords: Business income; Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: CIRCUIT BENCH : RANCHI [BEFORE HONBLE S/SHRI N. S. SAINI, AM AND GEORGE M ATHAN, JM] ITA NO. 169 & 170/RAN/2014 ASSESSMENT YEAR: 2004-05 AND 2005-06 M/S. ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY, VIKASH BHAWAN, ADITYAPUR, JAMSHEDPUR PAN:AAABA0398M VS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE1, JAMSHEDPUR (APPELLANT) (RESPONDENT) APPELLANT BY SHRI D. SANNIGRAH, CA RESPONDENT BY SHRI CHOUDHARY ORAON, DR DATE OF HEARING: 27-10-2015 DATE OF PRONOUNCEMENT: 27-10-2015 O R D E R PER GEORGE MATHAN, JM: THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE LEARNED CIT(A), JAMSHEDPUR IN APPEAL NOS.25/JSR /2010-11 DATED 28-02-2014 AND 26/JSR/2010-11 DATED 28-02-2014 FOR ASSESSMENT YEARS 2004-05 AND 2005-06 RESPECTIVELY. 2. SHRI D. SANNIGRAH, CA REPRESENTED ON BEHALF OF T HE ASSESSEE AND SHRI CHOUDHARY ORAON, LEARNED DR REPRESENTED ON BEH ALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AR THAT THE ASSE SSEE WAS AN AOP AND STATUTORY BODY GOVERNED BY THE STATE LEGISL ATURE CREATED UNDER THE BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORI TY ACT, 1974 TO CARRY ON THE WORK OF DEVELOPMENT OF THE INDUSTRIAL AREA, FOR PROMOTION ITA NO.169 & 170/RAN/2014 (AY: 2004-05 & 2005-06) 2 OF INDUSTRIES AND MATTERS APPURTENANT THERETO. IT W AS A SUBMISSION THAT THE INCOME OF THE ASSESSEE WAS EXEMPT FROM TAX UNDER THE PROVISIONS OF SECTION 10(20A) OF THE ACT. IT WAS A SUBMISSION THAT BY THE FINANCE ACT, 2002 THE PROVISIONS OF SECTION 10( 20A) WAS OMITTED AND AN EXPLANATION WAS ADDED TO SECTION 10(20) OF T HE ACT. CONSEQUENTLY, THE ASSESSEES INCOME WAS LIABLE TO I NCOME TAX. IT WAS A SUBMISSION THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME DECLARING NIL INCOME. THE RETURN FILED BY THE ASSESSEE CAME T O BE PROCESSED AND THE TOTAL INCOME OF THE ASSESSEE AS PER ITS PROFIT & LOSS ACCOUNT WAS TREATED AS LIABLE TO TAX. WHEN COMPLETING THE ASSES SMENT, THE AO HAD DISALLOWED THE ASSESSEES CLAIM OF DEPRECIATION ON THE GROUND THAT THE ASSESSEE IS NOT HAVING ANY BUSINESS ACTIVITY. IT WA S ALSO THE SUBMISSION OF THE LEARNED AR THAT THE ASSESSMENT WA S COMPLETED IN DECEMBER,2006 FOR THE ASSESSMENT YEAR 2004-05 AND I N MARCH, 2007 FOR THE ASSESSMENT YEAR 2005-06. IT WAS A SUBMISSIO N THAT THE HONBLE SUPREME COURT BY ORDER IN CIVIL APPEAL NO.6382 OF 2 003 DATED 03 RD MAY, 2006 IN ASSESSEES OWN CASE HAS CATEGORICALLY HELD AS UNDER:- HAVING CONSIDERED THE VARIOUS PROVISIONS OF THE AC T INCLUDING THOSE RELATING TO THE FUNCTIONS AND POWERS OF THE CORPORA TION, THIS COURT CONCLUDED THAT IN PITH AND SUBSTANCE THE ACT WAS ME ANT FOR THE ESTABLISHMENT, GROWTH AND ORGANIZATION OF INDUSTRIE S, ACQUISITION OF LAND IN THAT BEHALF AND CARRYING OUT THE PURPOSES O F THE ACT BY SETTING UP THE CORPORATION AS ONE OF THE LIMBS OR AGENCIES OF THE GOVERNMENT. IT HELD THAT EVEN THOUGH THE CORPORATION RECEIVED M ONEYS FROM DISPOSAL OF LANDS, BUILDINGS AND OTHER PROPERTIES A ND ALSO RECEIVED RENTS AND PROFITS, SUCH RECEIPTS AROSE NOT OUT OF A NY BUSINESS OR TRADE BUT OUT OF SOLE PURPOSE OF ESTABLISHMENT, GROWTH AN D DEVELOPMENT OF INDUSTRIES. THE CORPORATION WAS NOT A TRADING CORPO RATION, AS IT WAS NOT INVOLVED IN BUYING OR SELLING ACTIVITY. THE TRU E CHARACTER OF THE CORPORATION WAS TO ACT AS AN ARCHITECTURAL AGENT OF THE DEVELOPMENT ITA NO.169 & 170/RAN/2014 (AY: 2004-05 & 2005-06) 3 AND GROWTH OF INDUSTRIAL TOWNS BY ESTABLISHING AND DEVELOPING INDUSTRIAL ESTATES AND INDUSTRIAL AREAS. IT, THEREF ORE, NEGATIVE THE ARGUMENT THAT THE CORPORATION BEING A TRADING ONE, THE IMPUGNED LEGISLATION FELL WITHIN ENTRY 43 OF LIST I OF THE S EVENTH SCHEDULE. IT WAS A SUBMISSION THAT THE HONBLE SUPREME COURT HAS CATEGORICALLY ACCEPTED THAT THE ASSESSEE WAS ACTING AS THE ARCHIT ECTURAL AGENT FOR THE DEVELOPMENT AND GROWTH OF INDUSTRIAL TOWN BY ES TABLISHING AND DEVELOPING INDUSTRIAL ESTATES AND INDUSTRIAL AREAS. IT WAS A SUBMISSION THAT THE ASSESSEE WAS DOING A SYSTEMATIC ACTIVITY A ND THE ACTIVITY OF THE ASSESSEE WAS LIABLE TO BE TREATED AS BUSINESS A ND THE ASSESSEE WAS ENTITLED TO DEPRECIATION AS CLAIMED. IT WAS A S UBMISSION THAT ON APPEAL, THE LEARNED CIT(A) DID NOT ACCEPT THE CONTE NTION OF THE ASSESSEE. IT WAS A SUBMISSION THAT THE ASSESSEE MAY BE GRANTED THE BENEFIT OF DEPRECIATION AS CLAIMED. 4. IN REPLY, THE LEARNED DR VEHEMENTLY SUPPORTED TH E ORDERS OF THE AO AND THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ASSESSEE IS DOING A SYSTEMATIC AND CONTINUOUS A CTIVITY AND THE TRUE CHARACTER OF THE ASSESSEE CORPORATION AS HAS BEEN H ELD BY THE HONBLE SUPREME COURT AS ARCHITECTURAL AGENT FOR THE DEVELO PMENT AND GROWTH OF THE INDUSTRIAL TOWNS BY ESTABLISHING AND DEVELOP ING INDUSTRIAL ESTATES AND INDUSTRIAL AREAS, WE ARE OF THE VIEW TH AT IT SHOULD BE HELD THAT THE ASSESSEE IS DOING BUSINESS ACTIVITY AND CO NSEQUENTLY ENTITLED TO DEPRECIATION AS CLAIMED. IN VIEW OF THE ACTIVITY OF THE ASSESSEE AS HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN ASSESSEES OWN CASE IN CIVIL APPEAL NO.6382 OF 2003 DATED 03 RD MAY, 2006, WE ARE OF THE VIEW THAT THE ASSESSEES ACTIVITY IS IN THE NAT URE OF BUSINESS AND ITS INCOME IS LIABLE TO BE ASSESSED ONLY UNDER THE HEAD BUSINESS INCOME. ITA NO.169 & 170/RAN/2014 (AY: 2004-05 & 2005-06) 4 CONSEQUENTLY, THE AO IS DIRECTED TO GRANT THE ASSES SEE THE BENEFIT OF DEPRECIATION AS CLAIMED. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CLOSE OF HEARING ON 27-10-2015. SD/- SD/- ( N .S. SAINI ) ACCOUNTANT MEMBER (GEORGE MATHAN ) JUDICIAL MEMBER DATE : 27.10.15 LK DEKA/SR.PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER ITA NO.169 & 170/RAN/2014 (AY: 2004-05 & 2005-06) 5 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 27.10.15 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27.10.15 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 27.10.15 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 27.10. 15 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27.10.15 S R.PS 6. DATE OF PRONOUNCEMENT 27.10.15 SR.PS 7. FILE SENT TO THE BENCH CLERK 27.10.15 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER