The ITO, Ward-3, Anand V. Animal Breeding Research Organization, Anand

ITA 2016/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5695 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Question of law
• Section: 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 2016/AHD/2014 & C.O. NO. 260/AHD/14 (ASSESSMENT YEAR: 2010-11) THE I.T.O., WARD-3, ANAND ANIMAL BREEDING RESEARCH ORGANIZATION (INDIA) C/O. NDDB, POST BOX-40 OPP. JAGNATH MAHADEV, ANAND- 388001 V/S V/S ANIMAL BREEDING RESEARCH ORGANIZATION (INDIA) C/O. NDDB, POST BOX-40 OPP. JAGNATH MAHADEV, ANAND- 388001 THE I.T.O., WARD-3, ANAND (APPELLANT) (RESPONDENT) PAN: AAATA3919Q APPELLANT BY : SHRI K. MADHUSUDAN, A.R. RESPONDENT BY : SHRI SANJAY R. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 26 -07-201 7 DATE OF PRONOUNCEMENT : 31 -07-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 2016 & C.O. NO. 260/AHD/2014 . A.Y. 2010-11 2 1. ITA NO. 2016 & C.O. NO. 260/AHD/2014 ARE APPEAL BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE PREFERRED AGAINST THE VER Y SAME ORDER OF THE LD. CIT(A)-IV, BARODA DATED 21.04.2014 PERTAINING TO A. Y. 2010-11. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE ADDITION OF RS. 46,54,685/- MADE BY THE A.O. BY DIS ALLOWING THE CLAIM FOR EXEMPTION U/S. 11 R.W.S. 12A AND SECTION 2(15) OF T HE ACT. 3. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST ENGAGED I N THE DEVELOPMENT OF CATTLE AND BUFFALO AND IS ALSO RECOGNIZED U/S. 80G OF THE ACT. 4. THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS SEL ECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE I SSUED AND SERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM OF EXEMPTION IN THE L IGHT OF THE PROVISO TO SECTION 2(15) OF THE ACT. 6. ASSESSEE FILED A DETAILED REPLY IN SUPPORT OF ITS C LAIM OF EXEMPTION WHICH DID NOT FIND ANY FAVOUR WITH THE A.O. THE A.O. WAS OF T HE OPINION THAT THE ASSESSEE WAS INVOLVED IN THE SALE OF SEMEN FROM WHI CH IT HAS RECEIPT OF RS. 4,35 CRORES WHICH CLEARLY ATTRACTS THE PROVISO TO SECTIO N 2(15) OF THE ACT MAKING THE ASSESSEE ENGAGED IN ACTIVITIES FOR PROFIT MAKING PU RPOSES. THE A.O. ACCORDINGLY DENIED THE CLAIM OF EXEMPTION AND MADE THE ADDITION OF RS. 46,54,685/-. ITA NO. 2016 & C.O. NO. 260/AHD/2014 . A.Y. 2010-11 3 7. ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE L D. CIT(A) AND STRONG RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SABARMATI ASHRAM GAUSHALA TRUST WHICH IS CONFIRMED THE HONBL E HIGH COURT. 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS IN THE LIGHT OF THE JUDICIAL DECISIONS RELIED UPON BY THE ASSESSEE, THE LD. CIT( A) OBSERVED THAT THE ACTIVITIES OF SABARMATI ASHRAM GAUSHALA TRUST ARE SIMILAR TO T HE ACTIVITIES OF THE APPELLANT AND THE OBJECTS ARE ALSO SIMILAR TO THE O BJECTS OF SABARMATI ASHRAM GAUSHALA TRUST. THEREFORE, RESPECTFULLY FOLLOWING T HE BINDING DECISIONS, THE LD. CIT(A) ALLOWED THE CLAIM OF EXEMPTION. 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 10. THE LD. D.R. COULD NOT BRING ANY DISTINGUISHING DEC ISION IN FAVOUR OF THE REVENUE. PER CONTRA, THE LD. COUNSEL FOR THE ASSESS EE ONCE AGAIN RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF SABARMATI A SHRAM GAUSHALA TRUST. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE FACTS OF THE ASSESSEE TRUST ARE SIMILAR TO THE FACTS OF SABARMATI ASHRAM GAUSHALA TRUST. THE O BJECTS ARE ALSO SIMILAR. 12. WE FIND THAT THE ORDER OF THE TRIBUNAL WAS CHALLENG ED BEFORE THE HONBLE JURISDICTIONAL HIGH COURT WHICH ADMITTED THE FOLLOW ING SUBSTANTIAL QUESTION OF LAW:- (A) WHETHER THE APPELLATE TRIBUNAL HAS SUBSTANTIALLY E RRED IN DIRECTING THE ASSESSING OFFICER TO PROVIDE EXEMPTION U/S. 11 OF T HE I.T. ACT TO THE ASSESSEE? ITA NO. 2016 & C.O. NO. 260/AHD/2014 . A.Y. 2010-11 4 (B) WHETHER THE APPELLATE TRIBUNAL HAS SUBSTANTIALLY E RRED IN HOLDING THAT THE PROVISO TO SECTION 2(15) TO THE I.T. ACT WAS NOT AP PLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE? 13. AND THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT READ AS UNDER:- WE ARE WHOLLY IN AGREEMENT WITH THE VIEW OF THE TR IBUNAL. THE OBJECTS OF THE TRUST CLEARLY ESTABLISH THAT THE SAME WAS FOR GENER AL PUBLIC UTILITY AND WHERE FOR CHARITABLE PURPOSES. THE MAIN OBJECTIVES OF THE TRU ST ARE-TO BREED THE CATTLE AND ENDEAVOUR TO IMPROVE THE QUALITY OF THE COWS AND OX EN IN VIEW OF THE NEED OF GOOD OXEN AS INDIA IS PROMINENT AGRICULTURAL COUNTR Y, TO PRODUCE AND SALE THE COW MILK; TO HOLD AND CULTIVATE AGRICULTURAL LANDS; TO KEEP GRAZING LANDS FOR CATTLE KEEPING AND BREEDING, TO REHABILITATE AND ASSIST RA BARIS AND BHARWADS; TO MAKE NECESSARY ARRANGEMENTS FOR GETTING INFORMATICS AND SCIENTIFIC KNOWLEDGE AND TO DO SCIENTIFIC RESEARCH WITH REGARD TO KEEPING AND B REEDING OF THE CATTLE, AGRICULTURE, USE OF MILK AND ITS VARIOUS PREPARATIO NS, ETC.; TO ESTABLISH OTHER ALLIED INSTITUTIONS LIKE LEATHER WORK AND TO RECOGNIZE AND HELP THEM IN ORDER TO MAKE THE COW KEEPING ECONOMICALLY VIABLE; TO PUBLISH STU DY MATERIALS, BOOKS, PERIODICALS, MONTHLIES ETC., IN ORDER TO PUBLICIZE THE OBJECTS OF THE TRUST AS ALSO TO OPEN SCHOOLS AND HOSTELS FOR IMPARTING EDUCATION IN COW KEEPING AND AGRICULTURE HAVING REGARD TO THE TRUST OBJECTS. ALL THESE WERE THE OBJECTS OF THE GENERAL PUBLIC UT ILITY AND WOULD SQUARELY FALL UNDER SECTION 2 (I5) OF THE ACT. PROFIT MAKING WAS NEITHE R THE AIM NOR OBJECT OF THE TRUST. IT WAS NOT THE PRINCIPAL ACTIVITY. MERE LY BECAUSE WHILE CARRYING OUT THE ACTIVITIES FOR THE PURPOSE OF ACHIEVING THE OBJECTS OF THE TRUST, CERTAIN INCIDENTAL SURPLUSES WERE GENERATED, WOULD NOT RENDER THE ACTI VITY TO THE NATURE OF TRADE, COMMERCE OR BUSINESS. AS CLARIFIED BY THE CBDT IN I TS CIRCULAR NO. 11/2008 DATED 19 TH DECEMBER 2008 THE PROVISO AIMS TO ATTRACT THOSE AC TIVITIES WHICH ARE TRULY IN THE REGARDED AS BUSINESS EVEN WHEN PROFIT MOTIVE CA NNOT BE ESTABLISHED/PROVED. IN SUCH CASES, THERE SHOULD BE EVIDENCE AND MATERIA L TO SHOW THAT THE ACTIVITY HAS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPL ES, AND PURSUED WITH REASONABLE CONTINUITY. THERE SHOULD BE FACTS AND OT HER CIRCUMSTANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS. THE TEST AS PRESCRIBED IN RAIPUR MANUFACTURING COMP ANY [1967] 19 STC 1 (SC) AND SAI PUBLICATION FUND [2002] 258 ITR 70 (SC); [2 002] 126 STC 288 (SC) CAN BE ITA NO. 2016 & C.O. NO. 260/AHD/2014 . A.Y. 2010-11 5 APPLIED. THE SIX INDICIA STIPULATED IN LORD FISHER [1981] STC 238 ARE ALSO RELEVANT. EACH CASE, THEREFORE, HAS TO BE EXAMINED ON ITS OWN FACTS. IN VIEW OF THE AFORESAID ENUNCIATION, THE REAL ISSU E AND QUESTION IS THT WHETHER THE PETITIONER-INSTITUTE PURSUES THE ACTIVITY OF BU SINESS, TRADE OR COMMERCE. TO OUR MIND, THE RESPONDENT WHILE DEALING WITH THE SAI D QUESTION HAS NOT APPLIED THEIR MIND TO THE LEGAL PRINCIPLES ENUNCIATED ABOVE AND HAVE TAKEN A RATHER NARROW AND MYOPIC VIEW BY HOLDING THAT THE PETITION ER-INSTITUTE IS HOLDING COACHING CLASSES AND THAT THIS AMOUNTS TO BUSINESS. IN THE RESULT, WE DO NOT FIND THAT THE TRIBUNAL HAS COMMITTED ANY ERROR AND THE TAX APPEAL IS THEREFORE DISMISSED. 14. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT TO O UR NOTICE BY THE LD. D.R, WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS FOLL OWED THE BINDING DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA). THER EFORE, NO INTERFERENCE IS CALLED FOR. 15. APPEAL FILED BY THE REVENUE IS DISMISSED. 16. COMING TO THE CROSS OBJECTION OF THE ASSESSEE, WE F IND THAT THE DEFICIT SHOWN IN THE EARLIER YEARS IS ELIGIBLE TO BE GIVEN SET OFF F OR SURPLUS, IF ANY FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THE A.O. IS DIRECTE D TO ALLOW THE SET OFF OF BROUGHT FORWARD DEFICIT WHILE GIVING APPEAL EFFECT TO OUR ORDER. ORDER PRONOUNCED IN OPEN COURT ON 31- 07- 20 17 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 31/07/2017