The DCITNavsari Circle, Navsari V. Dharampur Utthan Vahini, Navsari

ITA 2126/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6537 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Assessee Lawyers: K N BHATT
• Keywords: Charitable institution
• Section: 12A; 10B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI T K SHARMA,JM &SHRI A N PAHUJA,AM ITA NO.2126/AHD/2009 (ASSESSMENT YEAR:-2006-07) DEPUTY COMMISSIONER OF INCOME-TAX, NAVSARI CIRCLE, NAVSARI V/S DHARAMPUR UTTHAN VAHINI VRINDAVAN CAMPUS, AT & PO: LACHHAKADI, TAL: VANSDA, DISTT.: NAVSARI PAN: AAATD 4290 P [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI A K PATEL, DR ASSESSEE BY:- SHRI K N BHATT, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATE D 27-03-2009 OF THE LD. CIT(APPEALS), VALSAD FOR THE ASSESSMENT YEAR 2006-07, RAISES THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AGGREGATE ADDITION OF RS.10,81,240/- MADE BY THE AO ON ACCOUNT OF DIFFERE NCE OF INTEREST RECEIVED BY THE ASSESSEE-TRUST FROM THE BENEFICIARI ES AND PAID TO THE NABARD, AS THE TRUST IS NOT PROVIDING FREE SERV ICES OR COST TO COST SERVICE TO THE BENEFICIARIES. BESIDES, THE SUR PLUS ON SALE OF MATERIAL VIZ. FERTILIZERS, EQUIPMENT ETC. THOUGH TH E SAID BUSINESS ACTIVITIES WERE OUT OF PURVIEW OF THE OBJECT OF THE TRUST. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO AND DISMISSED THE PLEA OF THE ASSESSEE. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AND THAT OF AO BE RESTORED. [4] THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEN D ANY GROUNDS OF APPEAL. 2 ADVERTING FIRST TO GROUND NO. 1 IN THE APPEAL, FA CTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL I NCOME WHILE CLAIMING EXEMPTION U/S 11 OF THE INCOME-TAX ACT, 19 61 [HEREINAFTER REFERRED TO AS THE ACT] FILED ON 30-10-2006 BY TH E ASSESSEE-TRUST 2 ITA NO.2126/AHD/2009 2 (AOP), AFTER BEING PROCESSED U/S 143(1) OF THE ACT, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 09-07-2007. THE ASSESSING OFFICER[AO IN SHORT] NOTI CED THAT THE TRUST HAD SHOWN TOTAL RECEIPTS OF RS.5,20,97,741/-,INCLUD ING RECEIPTS FROM RURAL DEVELOPMENT & TRADING ACTIVITIES AND OTHER BU SINESS ACTIVITIES, BESIDES INTEREST, RENT AND DONATIONS WHILE CLAIMIN G EXPENSES OF RS.5,19,80,652/- FOR ITS OBJECTS IN TERMS OF REPORT OF AUDIT IN FORM NO. 10B AS REQUIRED U/S 12A(B) OF THE ACT .THE TRUS T REGISTERED U/S 12A OF THE ACT WAS STATED TO HAVE BEEN CONSTITUTED BY THE INSTRUMENT OF TRUST DEED AND MEMORANDUM OF ASSOCIATION, LATE I N THE SEVENTIES IN THE NAME AND STYLE 'DHARAMPUR UTTHAN VAHINI (DHR UVA)', HAVING REGISTERED OFFICE AT VILLAGE LACHHAKDI. TAI. VANSDA , DIST. NAVSARI WITH THE FOLLOWING OBJECTS. 'I. TO TAKE UP VARIOUS PROGRAMMES FOR SELF-EMPLOYME NT AND TO PROMOTE SELF-CONFIDENCE AMONG RURAL COMMUNITIES; II. TO PLAN AND IMPLEMENT VARIOUS PROGRAMMES FOR SO CIO-ECONOMIC DEVELOPMENT OF THE RURAL FAMILIES; III. TO UNDERTAKE VARIOUS ACTIVITIES FOR COMPREHENS IVE RURAL DEVELOPMENT; IV. TO TAKE UP DEVELOPMENT OF WATER RESOURCE TO PRO VIDE ADEQUATE QUANTITY OF WATER TO RURAL COMMUNITIES DURING ALL S EASONS; V. TO DEVELOP FACILITIES AND UNDERTAKE PROGRAMMES F OR RURAL HEALTH CARE;. VI. TO TAKE UP POVERTY ALLEVIATION PROGRAMMES FOR T HE RURAL FAMILIES AND ACTIVITIES TO ENSURE BETTER NUTRITION; VII. TO TAKE UP EDUCATIONAL AND RELATED PROGRAMME I N ORDER TO PROMOTE EDUCATION, IN RURAL AREA; VIII. TO PLAN AND IMPLEMENT OR HELP TO IMPLEMENT PR OGRAMMES FOR ECONOMIC DEVELOPMENT OF THE RURAL FAMILIES; IX. TO TAKE UP IMPLEMENTATION OF AGRICULTURAL AND L IVESTOCK DEVELOPMENT ACTIVITIES FOR RURAL FAMILIES; X. TO PROMOTE ACTIVITIES SUCH AS FISHERIES, POULTRY FARMING ETC.; AND 3 ITA NO.2126/AHD/2009 3 XI. TO TAKE UP PROGRAMME TO PROMOTE MODERN SCIENTIF IC TECHNICAL TEMPER AND APPROACH; ESTABLISH TRAINING CENTERS AND TO TAKE UP CREDIT, PROGRAMMES FOR RURAL DEVELOPMENT.' 2.1 ON VERIFICATION OF ACCOUNTS, THE AO NOTICED T HAT THE TRUST BORROWED FUNDS FROM THE NABARD AND ALLOTTED THE SAM E FOR ITS OBJECTS AS WELL AS TO THE MEMBERS / FARMERS / BENEF ICIARIES OF THE TRUST THROUGH GRAM SEVA MANDAL. THE TRUST RECEIVED FUNDS FROM THE NABARD ON INTEREST @ 6% AND ALLOTTED TO THE GRAM VI KAS MANDAL ON INTEREST @ 9.5% AND THE GRAM VIKAS MANDAL ALLOTE D THE SAID FUNDS RECEIVED FROM THE TRUST TO THE MEMBERS / FARM ERS / BENEFICIARIES ON INTEREST @ 9.5% TO 12.5%. THE GRAM VIKAS MANDALS WERE UNREGISTERED BODIES, PLAYING THE ROLE OF INTER MEDIARY BETWEEN THE TRUST AND THE BENEFICIARIES. RELYING UPON A STA TEMENT RECORDED ON OATH OF SHRI V.C. BADVE. CHIEF PROGRAMME COORDINATO R ON 06/10/2006, DURING THE COURSE OF ASSESSMENT PROCEED INGS FOR THE A.Y. 2004-05 AND REPORT OF THE INSPECTOR ,THE AO C ONCLUDED THAT THE TRUST WAS CARRYING ON THE COMMERCIAL ACTIVITIES BY CHARGING INTEREST FROM THE GRAM VIKAS MANDALS AND BENEFICIARIES AT HI GHER RATES THAN THE RATES AT WHICH LOANS WERE RECEIVED FROM THE NAB ARD. AS SUCH NO FREE SERVICES OR COST-TO-COST SERVICES WERE PROV IDED TO THE BENEFICIARIES WHILE TRUST WAS ALSO ENGAGED IN TRADING IN FERTILIZERS AND EQUIPMENT AND THEREBY EARNED PROFIT THEREFROM, THE AO OBSERVED. ACCORDINGLY, THE AO TREATED THE EXCESS I NTEREST OF RS.679198/- BEING DIFFERENCE OF INTEREST CHARGED FR OM THE BENEFICIARIES @ 12.5% PA AND INTEREST PAID TO THE NABARD @ 6%, [RS.130615 0 RS.626952] AS INCOME OF THE TRUST FROM THE BUSINESS ACTIVITIES BE SIDES AN AMOUNT OF RS.402042/- ON ACCOUNT OF 'SURPLUS ON MATERIAL SUPPLIED FOR TRI BAL DEVELOPMENT ON THE GROUND THAT THE ASSESSEE ENTERED INTO SALES OF FERTILIZERS, EQU IPMENT ETC. BEYOND ITS OBJECTS , RESULTING IN TOTAL ADDITION OF RS.10,81, 240/-. 3. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON IN THE FOLLOWING TERMS:- 4 ITA NO.2126/AHD/2009 4 5.3 THE AR OF THE APPELLANT CONTENDED THAT THE MAI N OBJECT OF THE APPELLANT TRUST IS OF RURAL DEVELOPMENT AND THE SAM E FALLS WITHIN THE PURVIEW OF DEFINITION OF CHARITABLE PURPOSES U/S. 2 (15) OF THE ACT. HE FURTHER CONTENDED THAT THE APPELLANT TRUST BEING A PUBLIC C HARITABLE TRUST REGISTERED U/S.12A OF THE ACT CARRIES OUT OF THE VARIOUS OBJEC TS INCLUSIVE OF OBJECT OF RURAL DEVELOPMENT. THE MEMORANDUM OF ASSOCIATION OF THE APPELLANT TRUST FURNISHED WITH THE AO AND THE OBJECTS OF THE TRUST DULY RE-PRODUCED BY THE AR OF THE APPELLANT REVEALS THE FACT THAT THE APPEL LANT TRUST CARRIED OUT THE ACTIVITIES, WHICH FALLS WITHIN THE PURVIEW OF SECTI ON 2(15) OF THE ACT, WHICH DEFINE, THE MEANING OF ADVANCEMENT ANY OTHER OBJECT OF GENERAL UTILITY AND CONTENDED THAT IT PARTAKES THE CHARACTER OF CHARITA BLE PURPOSE. HE PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS;- 1. ADDL. C1T V/S. SURAT ART MANUFACTURERS' ASSOCIAT ION (1980) 121 ITR O1 (SC) 2. CIT V/S. ANDRA PRADESH STATE ROAD TRANSPORT ASSO CIATION (1986) 159 ITR 01 (SC). 3. VICTORIA TECHNICAL INSTITUTE V/S. ADDL. CIT (199 1) 188 ITR 057 (SC). 4. GIRIJAN CO.OP. CORPORATION LTD. V/S. CIT (1989) 76 CTR 44 (AP) 5. MAHAKOSHAL SHAHEED SMARAK TRUST V/S. CIT (I983) 140 ITR 795(MP) 6. JAIPUR CHARITABLE TRUST V/S. CIT(I981) 127 620 ( DEL.) 7. ADD. CJT V/S. AUTOMOBILE ASSOCIATION OF SOUTHERN INDIA (1981) 127 ITR 730 THE AR OF THE, APPELLANT THEREAFTER CONTENDED THAT THE ALLEGED ACTIVITY OF THE APPELLANT TRUST DESERVES THE BENEFIT OF SECTION 11 OF THE ACT FURNISHED DETAILED SUMMARY OF THESE ACTIVITIES VIDE EXHIBIT-A , WHICH IS PLACED ON RECORD. IN REALITY, THE APPELLANT TRUST PROVIDES FE RTILIZER TO THE FARMERS / BENEFICIARIES / MEMBERS AT FREE OF COST AND FOR THE SAKE OF TRANSPARENCY AND TO REPORT TO THE SPONSORER ORGANIZATIONS, THE S AME IS DISCLOSED SEPARATELY IN THE FINANCIAL STATEMENTS. THE AR OF T HE APPELLANT ALSO CONTENDED THAT EVEN UNDER THE ACT, THERE IS NO BAN TO CARRY OUT BUSINESS ACTIVITY BY THE CHARITABLE TRUST, SO FAR AS THE SAM E IS FOR THE ATTAINMENT OF THE OBJECT OF THE TRUST. THE AR OF THE APPELLANT, T HEREAFTER REFERRED TO THE CIRCULAR NO. 621 AND 642 DATED 19.12.91 AND 11.12.9 2 RESPECTIVELY, WHEREIN, THE CBDT HAS CATEGORICALLY STATED THAT THE TRUST IS PERMITTED TO CARRY ON THE BUSINESS ACTIVITY FOR THE ATTAINMENT O F THE OBJECT OF THE TRUST. REFERRING TO THE SAID CIRCULARS, THE AR OF THE APPE LLANT CONTENDED THAT THE APPELLANT TRUST HAS FAIRLY COMPLIED WITH THE CONDIT IONS STIPULATED U/S. 11(4A) OF THE ACT AND SUCH AN ACTIVITY CARRIED OUT FOR THE ATTAINMENT OF THE OBJECT OF THE TRUST IS ELIGIBLE FOR DEDUCTION U/S. 11 OF T HE ACT. HE RELIED UPON THE UNDERSTATED PRONOUNCEMENTS;- (1) CIT V/S. DHARMODAYAM (2001) 165 CTR 12 (SC) (2) ADDL.CIT V/S. THANTHI TRUST (2001) 247 ITR 785 (SC) (3) ADDL. CIT V/S. SURAT ART CLOTH MANUFACTURERS AS SOCIATION (1980) 121 ITR 01 (SC) 5 ITA NO.2126/AHD/2009 5 I HAVE CONSIDERED THE RIVAL CONTENTIONS. I FOUND FO RCE IN THE ARGUMENTS ADVANCED BY THE AR OF THE APPELLANT AND SATISFIED I N TERM'S OF OBJECTS OF THE TRUST, THE RURAL DEVELOPMENT BEING AN OBJECT FA LLS WITHIN THE DEFINITION OF CHARITABLE PURPOSES U/S. 2(15) OF THE ACT. SINCE, T HE APPELLANT TRUST COMPLIES WITH THE PROVISIONS OF SECTION 11(4A) OF T HE ACT DESERVES EXEMPTION U/S. 1 1 OF THE ACT, I FOUND AO BEING NOT JUSTIFIED IN DRAWING A CONCLUSION THAT THE APPELLANT TRUST IS CARRYING OUT PURELY A BUSINESS ACTIVITY AND THEREBY DENYING THE EXEMPTION U/S. 11 OF THE AC T. SINCE, IDENTICAL ISSUE RAISED BY THE APPELLANT IN THE A.Y. 2005-06 W AS DECIDED BY THIS OFFICE IN FAVOUR OF THE APPELLANT VIDE APPELLATE OR DER NO.CIT/VLS/353/07-08 DATED 17.04.2008, THE APPELLANT SUCCEEDS IN THESE GROUNDS OF APPEAL FOR THE YEAR UNDER CONSIDERATION. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED AR ON BEH ALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LEARNED CIT( A) WHILE RELYING ON THE DECISION DATED 04-06-2010 OF THE ITAT AHMEDA BAD BENCH-B IN THE ASSESSEES OWN CASE FOR THE AY 2004-05 IN I TA NO.600/AHD/2008 AS ALSO DECISION DATED 23.12.2010 I N ITA NO.2811/AHD./2008 FOR THE AY 2005-06. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS OF THE ITA T. WE FIND THAT THE A CO-ORDINATE BENCH WHILE ADJUDICATING A SIMILA R ISSUE IN THE ASSESSEES OWN CASE FOR THE AY 2004-05 ,CONCLUDED I N THEIR DECISION DATED 4.6.2010 IN THE FOLLOWING TERMS: 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE THE O RDER OF THE LEARNED CIT(A). IT IS UNDISPUTED FACT THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UN DER THE PROVISIONS OF SECTION 12A OF THE IT ACT CARRYIN G OUT VARIOUS OBJECTS INCLUSIVE OF OBJECT OF RURAL DEVELOPMENT. THE ASSESSEE CLAIMED THAT SINCE THE OBJECTS OF THE ASSESSEE TRUST BEING RURAL DEVELOPME NT, THE SAME FALLS WITHIN THE PURVIEW OF SECTION 2(15) OF THE IT ACT WHICH, DEFINES MEANING OF ADVANCEMENT OF ANY 6 ITA NO.2126/AHD/2009 6 OTHER OBJECTS OF GENERAL PUBLIC UTILITY WHICH PARTA KES THE CHARACTER OF CHARITABLE TRUST. THE ASSESSEE FIL ED TABLE OF INCOME AND APPLICATION OF INCOME BEFORE TH E LEARNED CIT(A) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH PROVED THAT THE ASSESSEE MET WI TH THE CONDITIONS STIPULATED IN SECTION 11 OF THE IT A CT. BENEFICIARIES OF THE ASSESSEE TRUST ARE FANNERS OF TRIBAL AREA AND THE ACTIVITIES OF THE ASSESSEE TRUST ARE C ARRIED OUT FOR ATTAINMENT OF THE OBJECTIVES OF THE TRUST. NOTHING IS POINTED OUT IF THERE WAS DIVERSION OF AN Y INCOME TO ANY PERSON PROHIBITED UNDER THE LAW. THE ASSESSEE FILED FINANCIAL STATEMENT BEFORE THE LEARN ED CIT(A) TO SHOW THAT THE TRUST HAS PROVIDED FERTILIZ ERS TO THE POOR FARMERS EVEN AT FREE OF COST. THE LEARNED CIT(A) ON CONSIDERATION OF THE MATERIALS BEFORE AND THE DECISIONS CITED BEFORE HIM SATISFIED WITH THE OBJEC TS OF THE ASSESSEE TRUST AND ITS ACTIVITIES FALLING WITHI N THE PURVIEW OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS DEFINED U/S 2(I5) OF THE IT ACT. WE MAY ALSO NOTE HERE THAT DEFINITION OF ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WAS EXPANDED BY ADDING THE PROVISO TO SECTION 5(15) OF THE IT ACT WITH EFFECT FROM 01-04-2009 WHICH IS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL. THE LEARNED CIT(A) ON CONSIDERATION OF THE MATERIAL ON RECORD SPECIFICALLY HELD THAT THE ASSESSEE HAS COMP LIED WIFE THE PROVISIONS OF SECTION 11 OF IT ACT, THEREF ORE, THE ASSESSEE CANNOT BE DENIED THE BENEFIT U/S 11 OF THE IT ACT. HONBLE DELHI HIGH COURT IN THE CASE OF BHARAT PRATISTHAN VS. DIRECTOR OF INCOME-TAX (EXEMPTION) 2 99 ITR 406 HELD HELD, ALLOWING THE APPEAL, THAT THE T RUST DEED REQUIRED THE TRUST TO UTILIZE ITS FUNDS FOR CH ARITABLE PURPOSES WHICH WERE MEDICAL RELIEF, EDUCATION AND RELIEF TO THE POOR. IN THE APPLICATION FOR ACCUMULA TION THE ASSESSEE HAD SPECIFIED THESE THREE OBJECTS. IT WAS NOT REQUIRED FOR THE ASSESSEE TO BE MORE SPECIFIC W ITH REGARD TO THE UTILIZATION FOR THE OBJECTS OF THE TR UST. INCIDENTAL INCOME OR ACCUMULATION OF INCOME FOR THE OBJECTS OF TRUST CANNOT DENY BENEFIT OF SECTION 11 OF THE 7 ITA NO.2126/AHD/2009 7 IT ACT TO ASSESSEE. THE LEARNED DR HAS NOT PRODUCED ANY EVIDENCE OR MATERIAL BEFORE US TO CONTRADICT TH E FINDINGS OF THE LEARNED CIT(A). IN THE ABSENCE OF A NY CONTRARY MATERIAL ON RECORD, WE DO NOT FIND IT TO B E A FIT CASE FOR INTERFERENCE. WE ACCORDINGLY, CONFIRM THE FINDINGS OF THE LEARNED CIT(A) AND DISMISS THE APPE AL OF THE REVENUE. 5.1 FOLLOWING THE AFORESAID DECISION FOR THE AY 2 004-05, THE ITAT VIDE THEIR ORDER DATED 23.12.2010 IN ITA NO.2811/AH D./2008 FOR THE AY 2005-06 DISMISSED THE APPEAL OF THE REVENUE. 5.2 INDISPUTABLY, FACTS AND CIRCUMSTANCES FOR THE Y EAR UNDER CONSIDERATION ARE SIMILAR TO THE FACTS OBTAINING IN THE PRECEDING ASSESSMENT YEARS I.E.AY 2004-05 & 2005-06.THOUGH TH E PRINCIPLE OF RES JUDICATA HAS NO APPLICATION TO PROCEEDINGS UNDE R THE ACT AND THE FINDINGS REACHED FOR ONE PARTICULAR ASSESSMENT YEAR CANNOT BE HELD TO BE BINDING IN THE ASSESSMENT PROCEEDINGS FOR A S UBSEQUENT YEAR, BUT THIS GENERAL RULE IS SUBJECT TO THE QUALIFICATI ON THAT A FINDING REACHED IN THE ASSESSMENT PROCEEDINGS FOR AN EARLIE R YEAR WOULD NOT BE REOPENED IN A SUBSEQUENT YEAR IF IT IS NOT ARBIT RARY OR PERVERSE, HAS BEEN ARRIVED AT AFTER DUE ENQUIRY AND IF NO FRE SH FACTS ARE PLACED IN THE SUBSEQUENT ASSESSMENT YEAR. THIS IS ON THE P RINCIPLE THAT THERE SHOULD BE FINALITY AND CERTAINTY IN ALL LITIG ATIONS INCLUDING LITIGATIONS ARISING OUT OF THE ACT [SEE BURMAH-SHEL L REFINERIES LTD. V. G. B. CHAND [1976] 61 ITR 493 (BOM) AND CIT V. DALM IA DADRI CEMENT LTD. [1970] 77 ITR 410 (P & H)]. IN THE INST ANT CASE, NO FRESH MATERIAL WAS BROUGHT IN THE ASSESSMENT PROCE EDINGS FOR THE YEAR UNDER CONSIDERATION AND THE LD. CIT(A) MERELY FOLLOWED THE ORDER HIS PREDECESSOR FOR THE AY 2005-06 WHILE AL LOWING THE CLAIM. IN THE CASE OF TARABEN RAMANBHAI PATEL [1995] 215 I TR 323 (GUJ),HONBLE HIGH COURT OBSERVED THAT IT IS NO DOU BT TRUE THAT THE STRICT RULE OF THE DOCTRINE OF RESJUDICATA DOES NOT APPLY TO PROCEEDINGS UNDER THE ACT, AT THE SAME TIME, IT IS EQUALLY TRUE THAT 8 ITA NO.2126/AHD/2009 8 UNLESS THERE IS A CHANGE OF CIRCUMSTANCES, THE AUTH ORITIES WILL NOT DEPART FROM PREVIOUS DECISIONS AT THEIR SWEET WILL IN THE ABSENCE OF MATERIAL CIRCUMSTANCES OR REASONS FOR SUCH DEPARTUR ES. THE HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG V. CIT [1992] 193 ITR 321 HAS APPROVED THE PRINCIPLE OF CONSISTEN CY, WHEN THEY OBSERVED THAT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND THE PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL A PPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. SI MILAR VIEW HAS BEEN EXPRESSED IN A CATENA OF CASES INCLUDING CIT V . LEADER VALVES LTD. [2007] 295 ITR 273 (PUNJ. & HAR.), DIT (EXEMPT ION) V. GURU NANAK VIDYA BHANDAR TRUST [2004] 272 ITR 379 (DELHI ), DIRECTOR OF INCOME-TAX (EXEMPTION) V. APPAREL EXPORT PROMOTION COUNCIL (NO. 1) [2000], 244 ITR 734(DEL.), CIT V. NEO POLY PACK P. LTD. [2000] ,245 ITR 492 (DELHI), AND CIT V. A.R.J. SECURITY PRINTER S [2003] 264 ITR 276(DEL.). THOUGH THE PRINCIPLE OF RES- JUDICATA IS NOT APPLICABLE IN THE INCOME-TAX MATTER, BUT FINDINGS OF EARLIER YEAR S ON THE SAME MATTER ARE RELEVANT AS PER THE RATIO LAID DOWN IN S ARDAR KEHAR SINGH V. CIT [1992] 195 ITR 769 (RAJ), TARABEN RAMANBHAI PATEL V. ITO [1995] 215 ITR 323 (GUJ) AND CIT V. HINDUSTHAN MOTO RS LTD. [1991] 192 ITR 619 (CAL). EARLIER HONBLE APEX COURT IN PA RASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 (SC) OBSERVED : 'AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PAR TICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SP HERES OF HUMAN ACTIVITY.' 5.3 HONBLE DELHI HIGH COURT IN A.R.J. SECURITY PRINTERS' CASE [2003] 264 ITR 276 AND CIT V. NEO POLY PACK P. LTD. [2000] 245 ITR 492 (DELHI), HELD THAT EVEN WHEN THE DOCTRINE OF RE S JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, WHERE AN ISSUE HAS BEEN DECIDED CONSISTENTLY IN A PARTICULAR MANNER FOR EAR LIER ASSESSMENT 9 ITA NO.2126/AHD/2009 9 YEARS, THE SAME VIEW SHOULD PREVAIL EVEN DURING THE SUBSEQUENT YEARS UNLESS THERE IS A MATERIAL CHANGE IN THE FACT S. THE LAW IS, THEREFORE, FAIRLY WELL SETTLED. FOR REJECTING THE V IEW TAKEN FOR THE EARLIER ASSESSMENT YEARS, THERE MUST BE A MATERIAL CHANGE IN THE FACT SITUATION. THERE IS NO GAINSAYING THAT THE PRE VIOUS VIEW WILL HAVE NO APPLICATION EVEN IN CASES WHERE THE LAW ITS ELF HAS UNDERGONE A CHANGE BUT BEFORE AN EARLIER VIEW CAN B E UPSET OR DIGRESSED FROM, ONE OF THE TWO MUST BE DEMONSTRATED , NAMELY, A CHANGE IN THE FACT SITUATION OR A MATERIAL CHANGE I N LAW WHETHER ENACTED OR DECLARED BY THE SUPREME COURT. IN THE I NSTANT CASE, THE LD. CIT(A) HAVE FOLLOWED THE DECISION OF HIS PREDE CESSOR FOR THE AY 2005-06 IN ALLOWING THE CLAIM, WHICH HAS BEEN UPHEL D BY THE ITAT IN THEIR DECISION DATED 23.12.2010. IN THE ABSENCE OF MATERIAL CHANGE IN FACTS OR ANY ADDITIONAL INPUT, THERE IS NO COMPE LLING REASON FOR TAKING A DIFFERENT VIEW. 5.4 IN VIEW OF THE FOREGOING, ESPECIALLY WHEN FA CTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION ARE I NDISPUTABLY, PARALLEL TO THE FACTS AND CIRCUMSTANCES OBTAINING I N THE AYS 2004-05 & 2005-06 WHILE THE LD. DR HAVE NOT PLACED BEFORE U S ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER NOR BROUGHT TO OUR NOTICE ANY CONTRARY DECISION, WE ARE NOT INC LINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE ,GRO UND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6. GROUND NOS.2 AND 3 BEING MERE PRAYER NOR ANY SUB MISSIONS HAVING BEEN MADE ON THESE GROUNDS, DO NOT REQUIRE A NY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.4 IN THE APPEAL, AC CORDINGLY, THESE GROUNDS ARE DISMISSED. 7. IN THE RESULT, APPEAL IS DISMISSED. 10 ITA NO.2126/AHD/2009 10 ORDER PRONOUNCED IN THE COURT TODAY ON 3 -06-2011 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 3 -06-2011 COPY OF THE ORDER FORWARDED TO: 1. DHARAMPUR UTTHAN VAHINI VRINDAVAN CAMPUS, AT & P O: LACHHAKADI, TAL: VANSDA, TAL: NAVSARI 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, NAVSARI C IRCLE, NAVSARI 3. CIT CONCERNED 4. CIT(A), VALSAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD