M/s Chamber of Commerce and Industries, Visakhapatnam V. The ITO, Ward-1, Visakhapatnam

ITA 202/VIZ/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7387 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 19-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Section: 80G

Judgement Text

ITA NO 202 OF 2011 CHAMBER OF COMMERCE AND INDUSTR IES TADEPALLIGUDEM PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.202/VIZAG/2011 ASSESSMENT YEAR: CHAMBER OF COMMERCE AND INDUSTRIES TADEPALLIGUDEM VS. ITO WARD-1, TADEPALLIGUDEM (APPELLANT) PAN NO: AAATT 9399 R (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI TH. LUCAS PETER, CIT (DR) ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.03.2011 PASSED BY LEARNED CIT RAJAHMUNDRY REJECT ING THE APPLICATION FILED BY THE ASSESSEE SEEKING RENEWAL OF RECOGNITIO N UNDER SECTION 80G(5) OF THE ACT. 2. THOUGH THE ASSESSEE HAS RAISED MANY GROUNDS, THE LEARNED AUTHORISED REPRESENTATIVE RESTRICTED HIS ARGUMENT W ITH REFERENCE TO GROUND NO.4 WHICH READS AS UNDER: THE COMMISSIONER OF INCOME TAX IS NOT EMPOWERED W. E.F. 31.3.2010 TO REFUSE RENEWAL OF EXEMPTION AS THE PRO VISO TO S. 80G(5)(VI) IS OMITTED FROM THE SAID DATE 3. THE FACTS RELATING TO THE SAID ISSUE ARE STA TED IN BRIEF. THE ASSESSEE SOCIETY WAS GRANTED RECOGNITION UNDER SECTION 80G O F THE ACT INITIALLY ON 04- 02-1988 AND THE SAME WAS RENEWED ON 07-07-2008 FOR THE PERIOD FROM 01- 04-2008 TO 31.3.2010. THERE AFTER THE ASSESSEE FIL ED AN APPLICATION BEFORE LEARNED CIT FOR RENEWAL OF RECOGNITION, BUT THE SAM E WAS TURNED DOWN BY ITA NO 202 OF 2011 CHAMBER OF COMMERCE AND INDUSTR IES TADEPALLIGUDEM PAGE 2 OF 6 LEARNED CIT, VIDE HIS ORDER DATED 14-05-2010, FOR T HE REASON THAT THE ASSESSEE DOES NOT POSSESS REGISTRATION UNDER SECTIO N 43(1) OF THE AP CHARITABLE AD HINDU RELIGIOUS INSTITUTIONS AND ENDO WMENTS ACT, 1987. THE ASSESSEE CHALLENGED THE SAID ORDER BEFORE THE ITAT AND THE TRIBUNAL, VIDE ITS ORDER DATED 26-08-2010 IN ITA NO.388/VIZAG/2010 DIRECTED THE LEARNED CIT TO EXAMINE THE APPLICATION OF THE ASSESSEE AFRE SH. ACCORDINGLY, THE LEARNED CIT EXAMINED THE APPLICATION OF THE ASSESSE E AND AGAIN REJECTED THE SAME. BEFORE LEARNED CIT, THE ASSESSEE CONTEND ED THAT THE EALIER RECOGNITION HAS BEEN GRANTED TO IT UP TO 31-3-2010 AND HENCE, BY VIRTUE OF OMISSION OF THE PROVISO TO SEC. 80G(5)(VI) WITH EFF ECT FROM 01-10-2009, THE SAID RECOGNITION SHALL BE CONTINUED IN PERPETUITY U NLESS SPECIFICALLY WITHDRAWN. HOWEVER, THE LEARNED CIT DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE BY PLACING RELIANCE ON THE CIRCULAR NO .7 OF 2010 ISSUED BY CBDT. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED AUTHORISED REPRESENTATIVE SUBMIT TED THAT THE EARLIER RECOGNITION GRANTED TO THE ASSESSEE GOT EXPIRED ONL Y ON 31-3-2010, I.E. AFTER THE OMISSION OF THE PROVISO TO SEC. 80G(VI) W ITH EFFECT FRO 01-10-2009. HE FURTHER SUBMITTED THAT THE ITAT, LUCKNOW BENCH IN THE CASE OF ASSOCIATION FOR ADVOCACY AND LEGAL INITIATIVES VS. COMMISSIONER OF INCOME TAX REPORTED IN (2011) (55 DTR (LUC.)(TRIB.) 273, O N IDENTICAL ISSUE, HAS HELD THAT THE EXISTING APPROVALS EXPIRING AFTER 01- 10-2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALL Y WITHDRAWN. ACCORDINGLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT, IN THE INSTANT CASE ALSO, THE RECOGNITION EARLIER GRANTED TO THE ASSESSEE WAS DUE TO EXPIRE ONLY AFTER 01-10-2009 AND HENCE IT WOULD BE CONTINUED IN PERPETUITY. HE FURTHER SUBMITTED THAT SINCE THE LEARNED CIT HAS NOT WITHDRAWN THE EARLIER RECOGNITION, THE IMPUGNED ORDER OF LEARNED CIT PASSED AGAINST THE APPLICATION FILED BY THE ASSESSEE NEEDS TO BE STRUC K DOWN. ITA NO 202 OF 2011 CHAMBER OF COMMERCE AND INDUSTR IES TADEPALLIGUDEM PAGE 3 OF 6 5. HOWEVER, THE LEARNED DEPARTMENTAL REPRESENTA TIVE, BY PLACING RELIANCE ON THE CIRCULAR NO.7/2010 ISSUED BY CBDT, SUBMITTED THAT THE ASSESSEES ARE REQUIRED TO SEEK RENEWAL OF RECOGNITI ON UNDER SECTION 80G EVEN IF THE EARLIER APPROVAL EXPIRES AFTER 01-10-20 09. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE HAVE ALSO GONE THROUGH THE DECISION RENDERED IN THE CASE OF ASSOCIATION FOR ADVOCACY AND LEGAL INITIATIVES REFERRED (SUPRA). I N THE ABOVE SAID CASE, THE APPROVAL GRANTED TO THE ASSESSEE THEREIN ALSO GOT E XPIRED ON 31-03-2010. THE SAID ASSESSEE ALSO FILED APPLICATION SEEKING RE NEWAL AND ITS APPLICATION WAS REJECTED. BEFORE THE TRIBUNAL, THE ASSESSEE CO NTENDED THAT THERE WAS NO NECESSITY FOR IT TO SEEK RENEWAL AS THE APPROVAL GRANTED TO IT WOULD GET EXTENDED IN PERPETUITY IN VIEW OF THE OMISSION OF T HE PROVISO TO SEC. 80G(5)(VI). ON THAT ISSUE, THE TRIBUNAL AGREED WIT H THE CONTENTIONS OF THE ASSESSEE. THE RELEVANT OBSERVATIONS MADE BY THE TR IBUNAL IN THE ABOVE CITED CASE ARE EXTRACTED BELOW: WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N RECORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE A SSESSEE- TRUST IS REGISTERED WITH THE SUB REGISTRAR, LUCKNOW , HAVING REGISTRATION UNDER S.12AA OF THE ACT ALSO WHICH HAS BEEN GRANTED BY THE LEARNED CIT LUCKNOW VIDE ORDER DT.10 TH FEB.2010. THE ASSESSEE WAS ALSO GRANTED APPROVAL UN DER S.80G(5)(VI) OF THE ACT W.E.F. 10 TH MARCH, 2000 WHICH WAS VALID TILL 31 ST MARCH, 2003 AND LATER ON RENEWAL OF THE APPROVAL UNDER THE SAID SECTION WAS GRANTED VIDE OR DER DT. 9 TH SEPT.2003 FROM 1 ST APRIL, 2003 TO 31 ST MARCH, 2006 AGAIN VIDE ORDER DT. 9 TH SEPT.2003 FROM 1 ST APRIL, 2006 TO 31 ST MARCH 2008 AND FINALLY VIDE ORDER DT. 16 TH SEPT.2008 FROM 1 ST APRIL, 2008 TO 31 ST MARCH, 2010 BY THE LEARNED CIT I LUCKNOW. THE COPIES OF THE SAID ORDERS ARE PLACED A T PP.41, 40 AND 39 RESPECTIVELY OF THE ASSESSEES PAPER BOOK . EARLIER AS PER PROVISIONS CONTAINED IN CL.(VI) TO SUB-S(5) O S.80G THE APPROVAL WAS TO BE GRANTED BY THE LEARNED CIT IN ACCORDANCE WITH RULES PRESCRIBED IN R.11AA OF THE I T RULES,1962 AND AS PER THE PROVISO TO S.80G(5)(VI) O F THE ACT, THE APPROVAL WAS TO BE RENEWED FROM TIME TO TIME. HOWEVER, CONSIDERING THE HARDSHIP, THE LEGISLATURE IN ALL ITS ITA NO 202 OF 2011 CHAMBER OF COMMERCE AND INDUSTR IES TADEPALLIGUDEM PAGE 4 OF 6 WISDOM HAS SOUGHT TO OMIT THIS PROVISO ON 1 ST OCTOBER 2009 VIDE ITS FINANCE (NO.2) ACT, 2009. THEREFORE, NOW A PPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUI TY. IN THE INSTANT CASE, THE APPROVAL WAS GRANTED TO THE ASSES SEE UP TO 31 ST MARCH, 2010, THEREFORE, IN VIEW OF THE AFORESAID OMISSION OF THE PROVISO TO S.80G(5)(VI) OF THE ACT VIDE FINANCE (NO.2)ACT, 2009, THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. THE MEMO EXPLAI NING THE PROVISIONS IN FINANCE (NO.2) BILL, 2009 AS REPORTED IN (2009) 224 CTR (ST) 145, 155: (2009) 25 DTR (ST) 25 2009) 314 ITR (ST) 193 AT P.194 READS AS UNDER: THIS AMENDMENT WILL TAKE EFFECT FROM 1 ST DAY OF APRIL, 2009 AND SHALL ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 2009-10 ONLY. FURTHER AS PER CL.(VI) OF SUB-S(5) OF S.80G OF THE IT ACT, 1961, THE INSTITUTIONS OR FUNDS TO WHICH THE DONATIONS ARE MADE HAVE TO BE APPROVED BY THE CIT IN ACCORDANCE WITH THE RULES PRESCRIBED IN R.11AA O F THE IT RULES 1962. THE PROVISO TO THIS CLAUSE PROVI DES THAT ANY APPROVAL GRANTED UNDER THIS CLAUSE SHALL H AVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS MAY BE SPECIFIE D IN THE APPROVAL. DUE TO THIS LIMITATION IMPOSED ON THE VALIDITY OF S UCH APPROVALS, THE APPROVED INSTITUTIONS OR FUNDS HAVE TO BEAR THE HARDSHIP OF GETTING THEIR APPROVALS RENEWE D FROM TIME TO TIME. THIS IS UNDULY BURDENSOME FOR TH E BONAFIDE INSTITUTIONS OR FUNDS AND ALSO LEADS TO WASTAGE OF TIME AND RESOURCES OF THE TAX ADMINISTRATION IN RENEWING SUCH APPROVALS IN A ROUT INE MANNER. THEREFORE, IT IS PROPOSED TO OMIT THE PROVISO TO CL .(VI) OF SUB-S(5) OF S.80G TO PROVIDE THAT THE APPROVAL O NCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. FURTHER, THE CIT WILL ALSO HAVE THE POWER OF WITHDRAWING THE APPROVAL IF THE CIT IS SATISFIED TH AT THE ACTIVITIES OF SUCH INSTITUTION OR FUND ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION OR FUND. THIS AMENDMENT WILL TAKE EFFECT FROM 1 ST DAY OF OCTOBER, 2009. ACCORDINGLY, EXISTING APPROVALS ITA NO 202 OF 2011 CHAMBER OF COMMERCE AND INDUSTR IES TADEPALLIGUDEM PAGE 5 OF 6 EXPIRING ON OR AFTER 1 ST OCT.2009 SHALL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALL Y WITHDRAWN. HOWEVER, IN CASE OF APPROVALS EXPIRING BEFORE 1 ST OCT. 2009, THESE WILL HAVE TO BE RENEWED AND ONCE RENEWED THESE SHALL CONTINUE TO BE VALID I N PERPETUITY, UNLESS SPECIFICALLY WITHDRAWN. 11. FROM THE ABOVE IT IS CRYSTAL CLEAR THAT THE APP ROVAL ONCE GRANTED UNDER S.80G(5)(VI) OF THE ACT SHALL CONTINU E IN PERPETUITY. IT IS ALSO NOTICED THAT THE CBDT ISSUED ITS CIRCULAR NO.5 (2010)40 DTR (ST) 9: (2010) 232 CTR (ST 289) B EING EXPLANATORY CIRCULAR FOR FINANCE (NO.2) ACT, 2009 AND PARA 29.7 OF THE SAID CIRCULAR READS AS UNDER: 29.7 APPLICABILITY-THIS AMENDMENT HAS BEEN MADE APPLICABLE W.E.F. 1 ST OCT. 2009. ACCORDINGLY, EXISTING APPROVALS EXPIRING ON OR AFTER 1 ST OCT.2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. HOWEVER, IN CASE OF APPROVA LS EXPIRING BEFORE 1 ST OCT. 2009, THESE WILL HAVE TO BE RENEWED AND ONCE RENEWED THESE SHALL CONTINUE TO BE VALID IN PERPETUITY, UNLESS SPECIFICALLY WITHDRAWN . 12. THE AFORESAID CIRCULAR IS IN FAVOUR OF THE ASSE SSEE AND EVEN IF THE ASSESSEE BY IGNORANCE OR INADVERTENTLY FILED AN APPLICATION FOR RENEWAL, THE CIT WAS REQUIRED TO DE CIDE THE SAME IN ACCORDANCE WITH THE AMENDED PROVISIONS. 7. IN THE INSTANT CASE ALSO, THE LEARNED CIT HAS PASSED THE ORDER AGAINST THE APPLICATION FILED BY THE ASSESSEE. THE LEARNED CIT HAS NOT ACTED UNDER SEC. 293C OF THE ACT. WITH REGARD TO THE CIRCULAR NO.7/2010 ISSUED BY THE CBDT, WE NOTICE THAT THE CBDT HAS ONLY FURTHER CLAR IFIED THE ISSUES, WHICH WERE EXPLAINED IN THE CIRCULAR NO.5 OF 2010. IT MA Y BE NOTED THAT THE CIRCULAR NO.5 OF 2010 ISSUED BY THE CBDT IS IN CONS ONANCE WITH THE MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE (NO .2) BILL, 2009 AND IT IS NOT CORRECT TO INTERPRET THAT THE CIRCULAR NO.7 OF 2010 HAS OVER RIDING EFFECT OVER CIRCULAR NO.5 OF 2010. THERE IS NO DISPUTE WI TH REGARD TO THE FACT THAT THE RECOGNITION GRATED TO THE ASSESSEE WAS DUE TO E XPIRE ONLY ON 31-03- 2010. ACCORDINGLY, CONSISTENT WITH THE VIEW EXPRES SED IN THE ABOVE CITED CASE, WE ALSO HOLD THAT THE EXISTING APPROVALS EXPI RING ON OR AFTER 1 ST ITA NO 202 OF 2011 CHAMBER OF COMMERCE AND INDUSTR IES TADEPALLIGUDEM PAGE 6 OF 6 OCTOBER, 2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. IN VIEW OF THE FOREGOING DIS CUSSIONS, WE SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 08-08-2011 COPY TO 1 CHAMBER OF COMMERCE AND INDUSTRIES, D/NO. 11-176( 1) MAIN ROAD, TADEPALLIGUDEM 2 ITO WARD-1, TADEPALLIGUDEM 3 THE CIT RAJAHMUNDRY 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM