Indian Institute of Cemical Engineers, Kolkata V. ITO(E) 1-Kolkata, Kolkata

ITA 1777/KOL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1777 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MD USMAN CIT LD
• Assessee Lawyers: D K DASGUPTA FCA LD
• Keywords: Charitable institution
• Section: 143(3); 142(1); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BE NCH, KOLKATA BEFORE : SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1777/KOL/2014 A.Y 2009-10 INDIAN INSTITUTE OF VS. I.T.O. (E)-1, KOLKATA CHEMICAL ENGINEERS PAN:AAAAI 1126Q [APPELLANT-ASSESSEE ] [DEPARTMENT-RESPONDENT ] APPELLANT BY : SHRI D.K. DASGUPTA, FCA, LD.AR RESPONDENT BY : MD.USMAN, CIT, LD. SR.DR DATE OF HEARING : 31-10-2017 DATE OF PRONOUNCEMENT : 24-01-2018 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 23-06-2014 OF COMMISSIONER OF INCOME-TAX (A), JALPA IGURI FOR THE ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE IS TO BE DECIDED AS TO WHETHER TH E CIT-A IS JUSTIFIED IN CONFIRMING THE ASSESSMENT ORDER DETERM INING THE TOTAL INCOME OF ASSESSE AT RS.92,04,200/- AGAINST THE RET URNED INCOME AT RS. NIL IN THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. BRIEF FACTS OF THE CASE, ACCORDING TO AO ARE THA T THE ASSESSEE IS AN AOP AND FILED ITS RETURN OF INCOME DECLARING NIL FOR THE A.Y UNDER CONSIDERATION ON 19-02-2010. NOTICES U/S. 143(2) A ND 142(1) OF THE ACT WERE ISSUED AND DULY SERVED ON THE ASSESSEE. IN RESPONSE TO WHICH, THE A/R OF THE ASSESSEE APPEARED AND FILED W RITTEN SUBMISSIONS AND PRODUCED BOOKS OF ACCOUNTS. DURING THE COURSE OF SCRUTINY PROCEEDINGS THE AO FOUND THAT THE APPLICAT ION FOR RENEWAL OF APPROVAL U/S. 35(1)(II) OF THE ACT FOR THE PERIOD FROM 1-4-08 ONWARDS ITA NO. 1777/KOL/2014 INDIAN INSTITUTE OF.CHEMICAL ENGINEERS, KOLKATA 2 HAS BEEN REJECTED BY THE CENTRAL BOARD OF DIRECT TA XES HEREAFTER FOR SHORT AS CBDT VIDE ITS ORDER DT. 24-08-09. THEREBY THE AO T REATED THE ASSESSEE AS AOP AND DETERMINED THE TOTAL INCOME A T RS.92,04,200/- VIDE HIS ORDER DT. 25-11-2011 PASSED U/S 143(3) OF THE ACT. 4. BEFORE THE CIT-A, IN FIRST APPELLATE PROCEEDINGS , IT WAS CONTENDED THAT THE ASSESSEE IS AN INSTITUTE WHICH W AS ESTABLISHED IN THE YEAR 1947 AND WAS LATER ON REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1961. IT HAS BEEN APPROVED BY THE SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION, MINISTRY OF SCIEN CE. THE APPLICATION FOR RENEWAL OF RECOGNITION AS A SCIENTIFIC AND INDU STRIAL RESEARCH ORGANIZATION BY THE DEPARTMENT OF SCIENTIFIC AND IN DUSTRIAL RESEARCH' (DSIR) HAS BEEN APPROVED UPTO 31.03.2014. THE ASSES SEE HAS BEEN CONSISTENTLY INVOLVED IN THE FIELD OF CHEMICAL ENGI NEERING OVER THE YEARS. IT HAS ALSO BEEN INVOLVED IN VARIOUS R&D PRO JECTS. THE ASSESSEE ALSO CONDUCTS ASSOCIATE MEMBERSHIP EXAMINA TION WHICH IS RECOGNIZED BY VARIOUS UNIVERSITIES AND INSTITUTES. IT HAS BEEN ORGANIZING PROFESSIONAL MEETS & SEMINARS, PUBLISHIN G JOURNALS AND RESEARCH PAPERS IN THE FIELD, OF CHEMICAL ENGINEERI NG. THE ASSESSEE WAS ALSO AN APPROVED SCIENTIFIC RESEARCH ORGANIZATI ON AND HAD OBTAINED CERTIFICATE U/S 35(1)(IV) OF THE IT. ACT. SUBSEQUENTLY THE APPLICATION FOR RENEWAL OF THE SAID CERTIFICATE WAS REJECTED BY THE CBDT. THE ASSESSEE HAS BEEN TRYING TO REVIVE THE SA ID APPLICATION AND IS IN THE PROCESS OF PURSUING THE MATTER BEFORE THE HIGHER AUTHORITIES. THE AO OUT RIGHTLY ASSESSED THE SURPLU S OF THE ASSESSEE AS THE TAXABLE INCOME UNDER THE I.T. ACT WITHOUT AP PRECIATING THE FACTS AND THE AO SHOULD HAVE MADE A PROTECTIVE ASSE SSMENT. 5. CONSIDERING THE ABOVE SUBMISSIONS, THE CIT-A IN ABSENCE OF ANY APPROVAL U/S. 35(1)(II) OF THE ACT REJECTED THE CLAIM OF ASSESSEE AND CONFIRMED THE ORDER OF THE AO. THE RELEVANT POR TION OF WHICH IS REPRODUCED AS UNDER: ITA NO. 1777/KOL/2014 INDIAN INSTITUTE OF.CHEMICAL ENGINEERS, KOLKATA 3 1. THIS APPEAL IS FILED AGAINST ORDER U/S. 143(3) DATED 25/11/2011 ASSESSING THE INCOME AT RS.92,04,200 AGAINST THE RETURNED INCOME OF RS. NIL. 2. THE AO NOTED THAT THE RENEWAL OF APPROVAL U/S 3 5(1)(II) FOR THE PERIOD 01/04/2008 ONWARDS HAS BEEN REJECTED BY CENTRAL BOA RD OF DIRECT TAXES VIDE ORDER DATED 24/08/2009. AS THE ASSESSEE WAS NOT REGISTERE D AS A CHARITABLE TRUST U/S 12, THE AO DID NOT ALLOW EXEMPTION U/S 11. 3. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE MADE WRITTEN SUBMISSIONS AND ORAL ARGUMENTS. 4. CONCLUSION- I HAVE CONSIDERED THE WRITTEN SUBMI SSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER. THE FACT THAT THE ASSESSEES RENE WAL OF APPROVAL U/S 35(1)(II) BY THE CBDT IS NOT DISPUTED. ALSO, THE ASSESSEE WAS NOT R EGISTERED AS A CHARITABLE ORGANIZATION ENTITLED FOR EXEMPTION U/S 11 DURING THE RELEVANT P ERIOD. CBDT IS THE HIGHEST DECISION- MAKING AUTHORITY OF THE INCOME TAX DEPARTMENT AND T HE AO HAS RIGHTLY TAXED THE ASSESSEE AS AOP. THE ORDER OF THE AO IS UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 6. BEFORE US THE LD.AR SUBMITS THAT INITIALLY THE G OVT. OF INDIA GRANTED RECOGNITION FOR EXEMPTION U/S. 35(1)(II) OF THE ACT VIDE ORDER DT. 24-02-1977 FOR THE PERIOD FROM 1-4-1976 TO 31-0 3-1979, PLACED ON RECORD AND REFERRED TO PARA-1 OF THE WRITTEN SUB MISSION FILED BEFORE US VIDE DT. 06-062017. IT HAS BEEN RENEWED F ROM TIME TO TIME UPTO 31-03-2005. THE ASSESSEE MADE AN APPLICATION F OR RENEWAL FOR THE PERIOD FROM 1-4-05 TO 31-03-08 AND NO SUCH ORDE R WAS PASSED BY THE CBDT. THE ASSESSEE AGAIN MADE AN APPLICATION FO R THE PERIOD FROM 1-4-08 TO 31-03-2011, WHICH WAS REJECTED BY TH E CBDT VIDE ITS ORDER DT. 24-08-2009. THE LD.AR ARGUED THAT THE CBD T REJECTED THE APPLICATION OF THE ASSESSEE WITHOUT THERE BEING ANY AUTHORITY. THE GOVT. OF INDIA IS THE AUTHORITY TO GRANT APPROVAL U /S. 35(1)(II) OF THE ACT OR RENEWING THE SAME THEREAFTER. IN VIEW OF THE SUCH CIRCUMSTANCES, THE LD.AR ARGUED THAT THE ORDER OF R EJECTION OF RENEWAL PASSED BY THE CBDT IS NOT VALID AND PRAYED TO ALLOW THE GROUNDS OF APPEAL AS RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL. 7. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CBDT REJECTED THE APPLICATION OF A SSESSEE FOR RENEWAL OF THE RECOGNITION SEEKING EXEMPTION BY AN ORDER DATED 24- ITA NO. 1777/KOL/2014 INDIAN INSTITUTE OF.CHEMICAL ENGINEERS, KOLKATA 4 08-2009 STATING THAT NO ADEQUATE SCIENTIFIC RESEARC H ACTIVITY HAS BEEN CARRIED OUT BY THE ASSESSE. WE NOTE THAT IN OR DER TO CLAIM EXEMPTION U/S. 35(1)(II) OF THE I.T ACT 1961 APPROV AL IS ESSENTIAL AND NECESSARY. THE RELEVANT PORTION OF WHICH IS REPRODU CED AS UNDER:- 2. AFTER CAREFUL EXAMINATION OF THE APPLICATION AS WELL AS OTHER DETAILS FURNISHED BY YOU FROM TIME TO TIME, IT IS NOTICED THAT ADEQUATE SCIENTIFIC RESEARCH ACTIVITY, WHICH IS AN ESSENTIAL TO QUALIFY FOR APPROVAL U/S 35(1)(II) OF THE INCOME-TAX ACT 1961, HAS NOT BEEN CARRIED OUT BY YOU. ACCORDINGLY, THE PRESCRIBED AU THORITY HAS HELD THAT M/S. INDIAN INSTITUTE OF CHEMICAL ENGINEERS IS NOT A FIT CASE F OR GRANT OF APPROVAL UNDER THAT SECTION. IT IS, THEREFORE, REGRETTED THAT YOUR APPLICATION F OR APPROVAL UNDER SECTION 35(1)(II) OF THE INCOME-TAX ACT, 1961, HAS BEEN REJECTED. 9. THEREFORE, IT IS CLEAR FROM THE RECORD THERE WAS NO APPROVAL FOR THE ASSESSE TO CLAIM EXEMPTION U/S 35(1)(II) OF THE ACT AS ON THE DATE OF ASSESSMENT AND GROUNDS RAISED ARE LIABLE TO BE D ISMISSED. 10. THE ARGUMENTS OF THE LD.AR REGARDING THE ORDER OF CBDT HAVING NO AUTHORITY TO GRANT APPROVAL, IN THIS REGARD, WE NOTE THAT THE ASSESSEE CHALLENGED THE ACTION OF THE CBDT IN REJEC TING THE APPLICATION SEEKING APPROVAL BEFORE THE HONBLE HIG H COURT OF CALCUTTA AND THE HONBLE HIGH COURT WAS PLEASED OBS ERVE THAT IT IS TO LEFT OPEN TO THE ASSESSE TO AGITATE BEFORE THE AUTH ORITY WHICH MAY PROPOSE TO HEAR ON THE SUBJECT VIDE ITS ORDER DT:28 -11-2013 IN MAT 795/2013 + CAN 8121/2013+CAN 8346/2013 IS AT DOCUME NT NO-3 OF PAPER BOOK OF THE ASSESSEE. THEREAFTER, THE ASSESSE MOVED ANOTHER APPLICATION IN FMA 3161/2015 AND THE HONBLE HIGH C OURT WAS PLEASED TO OBSERVE THAT THE ASSESSE FAILED TO REALI ZE THAT THE MATTER SHALL THEREAFTER BE PLACED BEFORE THE MINISTRY OF F INANCE FOR PASSING AN ORDER EITHER ACCEPTING OR REJECTING THE PRAYER F OR APPROVAL IS AT DOCUMENT NO-4 OF PAPER BOOK OF ASSESSEE. THE RELEVA NT PORTION OF WHICH IS REPRODUCED HEREIN BELOW:- IN THIS CASE THE PETITIONER WAS OFFERED AN OPPORTU NITY OF HEARING BEFORE 'MEMBER (IT) CSDT AND CIT (IT)''. CIT (IT) IS ALSO THE AUTHORITY TO RECEIVE THE APPLICATION FOR APPROVAL, CIT(IT) AFTER RECEIVING S UCH APPLICATION IS REQUIRED TO SATISFY HIMSELF AS REGARDS ELIGIBILITY OF THE APPLICANT. IN CASE HE IS NOT SATISFIED BE MAY ALSO AFFORD AN OPPORTUNITY OF HEARING TO THE APPELLANT A ND SHALL THEREAFTER MAKE THE RECOMMENDATION. IN THIS CASE SUCH AN OPPORTUNITY WA S GRANTED BY THE LETTER DATED 26 TH FEBRUARY, 2013 BUT THE WRIT PETITIONER REFUSED TO A VAIL THE OPPORTUNITY ON THE GROUND THAT THE MEMBER (IT) CBDT WAS NOT AUTHORISED TO HEA R., THE WRIT PETITIONER FAILED TO REALIZE THAT THE MATTER SHALL THERE-AFTER BE PLACED BEFORE THE MINISTRY OF FINANCE FOR PASSING AN ORDER EITHER ACCEPTING OR REJECTING' THE PRAYER FOR APPROVAL, FOR THAT PURPOSE THE MINISTRY IS ENTITLED TO MAKE FURTHER ENQUIRY IN TO THE MATTER. PROVISION FOR SUCH FURTHER ENQUIRY IS THERE IN RULE 9 AND 10 QUOTED ABOVE. ITA NO. 1777/KOL/2014 INDIAN INSTITUTE OF.CHEMICAL ENGINEERS, KOLKATA 5 IN CASE THE MINISTRY ALLOWS THE PRAYER, THERE IS NO REASON WHY ANY FURTHER HEARING IS TO BE GIVEN. IN CASE IT IS INCLINED TO R EJECT THE PRAYER, IT HAS TO DISCLOSE REASONS BUT BEFORE IT DOES THAT IT IS REQUIRED TO G IVE AN OPPORTUNITY OF HEARING TO THE APPLICANT. THEREFORE, HEARING BEFORE THE MEMBER (IT ) CBDT AND THE CIT PROPOSED BY THE LETTER DATED 2611I FEBRUARY, 2013 WAS NOT THE END O F THE ROAD. THE WRIT PETITIONER BY REFUSING TO APPEAR AT PERSONAL HEARING AND BY REFUS ING TO SATISFY THE CIT AS REGARDS ITS ELIGIBILITY PREVENTED THE STATUTORY AUTHORITY FROM PERFORMING ITS JOB. IN THE CIRCUMSTANCES THERE WAS NO OCCASION FOR ANY FURTHER HEARING BEFOR E REJECTING THE PRAYER FOR APPROVAL. THE CONTENTION OF THE WRIT PETITIONER ON THE BASIS OF THE JUDGEMENT IN THE CASE OF G. NAGESWARA RAO (SUPRA) IS THEREFORE WITHOUT ANY BASI S. WE ARE AS SUCH OF THE OPINION THAT THE MEMBER (IT) CBDT AND CIT(IT) WERE IN LAW AUTHORISED TO HEAR THE APPLICANT BEFORE MAKING THE RECOMMENDATION ONE WAY O!' THE OTHER. IN THE RESULT, THE APPEAL FAILS AND IS DISMISSED. 11. IN VIEW OF THE DECISION ABOVE BY THE HONBLE H IGH COURT OF CALCUTTA, WE FIND NO FORCE IN THE SUBMISSIONS OF TH E LD.AR IN RESPECT OF THE CBDT HAS NO POWER TO DECIDE THE APPLICATION SEEKING APPROVAL U/S 35(1)(II) OF THE ACT. ADMITTEDLY, IT IS NOTICED THAT FOR THE A.Y UNDER CONSIDERATION, THERE WAS NO APPROVAL FOR GETT ING EXEMPTION U/S. 35(1)(II) OF THE ACT AS ON THE DATE OF ASSESSM ENT TO CLAIM EXEMPTION. THEREFORE, IN OUR OPINION, THE CIT-A RIG HTLY EXERCISED HIS JURISDICTION IN CONFIRMING THE ORDER OF AO IN REJEC TING THE CLAIM OF THE ASSESSEE. THEREFORE, GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ARE DISMISSED. 12. IN THE RESULT, THE APPEAL (ITA NO. 1777/KOL/201 4 FOR THE A.Y 2009-10) OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24-0 1-2018 SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24-01-2018 PP(SR.P.S.) ITA NO. 1777/KOL/2014 INDIAN INSTITUTE OF.CHEMICAL ENGINEERS, KOLKATA 6 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE :INDIAN INSTITUTE OF CHEMICAL EN GINEERS DR. H.L. ROY BLDG., JADAVPUR UNIVERSITY CAMPUS, RAJ A S.C MULLICK ROAD, KOLKATA-32. 2 RESPONDENT/DEPARTMENT: INCOME TAX OFFICER (E)-1, MI DDLETON ROW, KOLKATA-71. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.PS, H.O.O ITAT, KOLKATA