ITO (Exemptions), New Delhi V. M/s. Association of Unified Telecom Providers of India, New Delhi

ITA 1822/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97180 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN COMMISSIONER
• Keywords: Charitable institution; Rule of consistency; Tax effect
• Section: 12A; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER ITA NO. 1822/DEL/2015 ASSTT. YRS: 2011-12 ITO (EXEMPTION), VS. ASSOCIATION OF UNIFIED TELEC OM TRUST WARD-1(1), NEW DELHI. B-601, GAURI SADAN, 5, HAILEY ROAD, NEW DELHI. PAN: AAAAA 1951 B ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI S.K. JAIN ADDL. COMMISSIONER RESPONDENT BY : SHRI K.V.S.R. KRISHNA CA DATE OF HEARING : 23/07/2015. DATE OF ORDER : 09/09/2015. O R D E R PER S.V. MEHROTRA, A.M.. : THIS APPEAL, PREFERRED BY THE REVENUE, IS DIRECTE D AGAINST THE ORDER OF LD. CIT(A)-40, NEW DELHI DATED 30-01-2015 PASSED IN APP EAL NO. 491/2013-14, RELATING TO A.Y. 2011-12.. FOLLOWING GROUNDS ARE R AISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE AS SESSE AS CHARITABLE INSTITUTION EXEMPT U/S. L1 OF THE INCOME TAX ACT, 1961, ESPECIALLY WHEN THE ASSESEE ITSELF HAS ACCEPT ED THAT IT IS MUTUAL ORGANIZATION. 2 ITA NO. 1822/DEL/2015 ITO VS. ASSOCIATION OF UNIFIED TELECOM 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD, CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE AO DENIED THE CLAIM OF EXEMPTION TO THE ASSESSE E U/S. 11& 12 OF THE INCOME TAX ACT. 1961, AS THE ASSESSEE ASSOCIATION IS CATERING TO THE BENEFITS OF ITS MEMB ERS ONLY. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD, CIT (A) HAS FAILED TO APPRECIATE TH E FACT THAT A MUTUAL ORGANIZATION CANNOT BE TERMED AS CHARITABL E WITHIN THE MEANING OF SECTION 2(15) OF THE 1.T. ACT, 1961. 4. 'THE APPELLANT CRAVES LEAVE TO ACID, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HE ARING.' 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, FOR THE RELEVANT ASSESSMENT YEAR, HAD FILED ITS RETURN DECLARING NIL INCOME AND THE ASSESSMENT WAS ALSO FRAMED AT NIL INCOME. THE ASSESSEE WAS REGISTERED U/S 12A OF THE I.T. ACT SINCE 22-9-1998. THE AO HAS, INTER ALIA, OBSERVED AS UNDER: THE ASSESSEE SOCIETY WAS FORMED WITH THE FOLLOWING OBJECTIVE AS PER ITS MOA: (I) TO COLLECT AND DIFFUSE USEFUL KNOWLEDGE AND INFORMATION FOR THE PROMOTION OF BASIC TELEPHONE SERVICES AND SUCH BASIC TELEPHONE SYSTEM(S) (II) TO PROMOTE, ENCOURAGE AND ENGAGE IN SUCH SCI ENTIFIC AND EDUCATIONAL ACTIVITIES WHICH LEAD TO HEALTHY GROWTH OF BASIC TELEPHONE SERVICES / INDUSTRIES IN THE COUNTRY. (III) TO ACT AS A BRIDGE BETWEEN SUBSCRIBERS/ CUST OMERS AND BASIC TELEPHONE NETWORK OPERATIONS AND BASIC TELEPHONE NETWORK OPERATORS ON ONE HAND AND FOR 3 ITA NO. 1822/DEL/2015 ITO VS. ASSOCIATION OF UNIFIED TELECOM THE COLLECTION AND DIFFUSION OF USEFUL KNOWLEDGE AN D WITH A VIEW TO IDENTITY AND FROM COMMON OBJECTIVES, OPINIONS AND GOALS. THE FOLLOWING ARE CORE MEMBERS OF THE SOCIETY AS UN DER: (1) TATA TELE SERVICES LIMITED; (2) RELIANCE TELECOM LIMITED; (3) HFCL INFOTEL LIMITED; (4) RELIANCE INFOCOM LIMITED AND (5)TATA TELESERVICES (MAHARASHTRA) LIMITED. 2.1. THE AO HELD THAT ASSESSEES ACTIVITIES WERE NO T CHARITABLE AFTER OBSERVING AS UNDER: THE ASSESSEE HAS CLAIMED TO BE DOING CHARITABLE AC TIVITIES. HOWEVER, ON GOING THROUGH THE ASSESSEE'S SUBMISSION S AND THE DETAILS FILED, THE ACTIVITIES CANNOT BE CONSIDE RED AS CHARITABLE. THE ASSESSEE IS NOT RENDERING ANY GOODS OR SERVICES IN ANY OF THE CATEGORIES OF ACTIVITIES WHI CH ARE INCLUDED IN THE DEFINITION OF SEC. 2(15) OF THE I.T ACT, AS AMENDED W.E.F 01.04.2009. THE ASSESSEE IS ONLY SEEN FIGHTING FOR THE CAUSE OF ITS MEMBERS WHO ARE TELEC OM SERVICE PROVIDERS. THE ASSESSEE IS ONLY REPRESENTIN G THE CAUSE OF SUCH MEMBERS BEFORE, TRAI AND OTHER GOVT. AGENCIES AND THE CASES IT FOUGHT BEFORE, THE JUDICI AL AUTHORITIES WERE ALSO TO FURTHER THE CAUSE OF THE M EMBERS. IT HAS CLAIMED THAT IT IS BECAUSE OF ITS ACTIVITIES TH AT PEOPLE IN REMOTE VILLAGES ALSO WITH VERY LITTLE MEANS CAN AFF ORD TO HAVE MOBILE PHONES AND LAND LINE PHONES. THEY ARE T AKING UN DUE CREDIT FOR THE LOW PRICES WHICH IS A RESULT OF MARKET COMPETITION IN THE FIELD. IF, SUCH ARGUMENT IS ACCE PTED THEN TOMORROW ANY AUTOMOBILE MANUFACTURES CAN ALSO CLAIM TO BE DOING CHARITY AS THEIR PRODUCTS HAVE PENETRATED A LARGE MASS OF PEOPLE/ SOCIETY. THE ASSESSEE'S ACTIVITY IS , 4 ITA NO. 1822/DEL/2015 ITO VS. ASSOCIATION OF UNIFIED TELECOM THEREFORE, NOT FOUND TO BE CHARITABLE AND ITS CLAIM IN THIS REGARD IS REJECTED. 2.2. HOWEVER, HE ALLOWED ASSESSEES ALTERNATIVE CLA IM ON THE BASIS OF PRINCIPLE OF MUTUALITY, BECAUSE ONLY CONTRIBUTORS W ERE THE MEMBERS OF THE SOCIETY AND THE BENEFICIARIES OF ITS ACTIVITIES WERE ALSO THE MEMBERS ONLY. 3. LD. CIT(A) ALLOWED THE ASSESSEES APPEAL BY FOLL OWING THE DECISION OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR EARLIER YEARS AS ALSO THE DECISIONS OF THE ITAT, OBSERVING IN PARA 4 .3 OF HIS ORDER AS UNDER: 4.3. I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABL E MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE CASE OF THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY TH E ASSESSEE'S OWN CASE FOR THE A.Y. 2002-03, 2003-04, 2005- 06, 2008-09, 2009-10 & 2010-11 BY THE ORDERS OF THE LD. CIT (A) AND THE HON'BLE TRIBUNAL AS DISCUSSED ABOVE . THERE IS ALSO MERIT IN THE SUBMISSIONS OF THE ASSES SEE THAT THE PRINCIPLE OF CONSISTENCY SHOULD BE FOLLOWED WHE N THERE ARE SAME SET OF FACTS. AFTER CONSIDERING ALL THE FA CTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT TH E ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11(1) AND T HE SAME IS ALLOWED ON THE PRINCIPLE OF CONSISTENCY FOLLOWING T HE EARLIER ORDERS AND ACCORDINGLY THE APPEAL OF THE A SSESSEE IS ALLOWED. 4. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBM ITTED THAT THIS APPEAL BE DISMISSED FOR NO TAX EFFECT. HOWEVER, THI S PLEA OF ASSESSEE CANNOT BE ACCEPTED BECAUSE THE DEPARTMENT HAS ASSAI LED THE FINDING OF 5 ITA NO. 1822/DEL/2015 ITO VS. ASSOCIATION OF UNIFIED TELECOM LD. CIT(A) IN HOLDING THAT ASSESSEE WAS CHARITABLE INSTITUTION EXEMPT U/S 11. 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES I FIND THAT SINCE THIS ISSUE IS COVERED BY THE EARLIER ORDERS O F THE TRIBUNAL IN ASSESSEES OWN CASE (COPIES FOR AY 2002-03, 2003-04 & 2005-06 FILED BEFORE US), THE DEPARTMENTS APPEAL HAS NO FORCE AN D IS LIABLE TO BE DISMISSED ACCORDINGLY. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 09/09/2015.. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 09/09/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 6 ITA NO. 1822/DEL/2015 ITO VS. ASSOCIATION OF UNIFIED TELECOM - + DATE INITIAL 1. DRAFT DICTATED ON - 09.2015 PS 2. DRAFT PLACED BEFORE AUTHOR .09.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.