Chennai Port Trust, CHENNAI V. DDIT, CHENNAI

ITA 215/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64192 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: K MEENATCHI SUNDARAM
• Keywords: Business income; Charitable institution; Retrospective amendment; Revised return
• Section: 139(5); 12AA; 12; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 215/MDS/2012 ASSESSMENT YEAR : 2006-07 CHENNAI PORT TRUST, C/O SUNDARAM & NARAYANAN, CHARTERED ACCOUNTANTS, 18, BALAIAH AVENUE, LUZ CHURCH ROAD, MYLAPORE, CHENNAI - 600 004. PAN : AAALC0025B (APPELLANT) V. THE DEPUTY DIRECTOR OF INCOME TAX (E)-II, INCOME TAX DEPARTMENT, CHENNAI - 600 034 . (RESPONDENT) APPELLANT BY : SHRI K. MEENATCHI SUNDARAM, CA RESPONDENT BY : DR. S. MOHARANA, CIT-DR DATE OF HEARING : 23.08.2012 DATE OF PRONOUNCEMENT : 23.08.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVANC E IS THAT CLAIM FOR EXEMPTION UNDER SECTIONS 11 AND 12 OF INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT') WAS DENIED BY THE A.O. AND THIS WAS CONF IRMED BY THE CIT(APPEALS). 2 I.T.A. NO. 215/MDS/12 2. FACTS APROPOS ARE THAT ASSESSEE HAD FILED RETURN FOR THE IMPUGNED ASSESSMENT YEAR ON 31.10.2006, WHEREIN AN INCOME OF ` 74,63,59,100/- WAS ADMITTED. ASSESSEE IS A BODY GOVERNED BY THE PR OVISIONS OF MAJOR PORT TRUSTS ACT, 1963, WHICH IS A CENTRAL ACT. IN THE ORIGINAL RETURN FILED BY THE ASSESSEE FOR IMPUGNED ASSESSMENT YEAR, IT HA D NOT CLAIMED ANY EXEMPTION UNDER SECTION 11 OF THE ACT. THEREAFTER, ON 31.3.2008, ASSESSEE HAD FILED A REVISED RETURN, BUT IN SUCH RE TURN ALSO NO SUCH EXEMPTION WAS CLAIMED. THEREAFTER, ON 28.1.2009, A SSESSEE FILED ANOTHER REVISED RETURN, INTER ALIA, CLAIMING EXEMPT ION UNDER SECTION 11 OF THE ACT. ASSESSING OFFICER WAS OF THE OPINION THAT IN THE ORIGINAL RETURN, ASSESSEE HAVING ADMITTED TAXABLE BUSINESS INCOME, I T COULD NOT CLAIM PRIVILEGE UNDER SECTIONS 11 AND 12 IN REVISED RETUR N. AS PER THE A.O., THE RETURN FILED ON 28.1.2009 WAS WELL AFTER THE EX PIRY OF TIME ALLOWED UNDER SECTION 139(5) OF THE ACT. HE, THEREFORE, RE LYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LT D. V. CIT (284 ITR 323), HELD THAT ASSESSEE COULD NOT BE GRANTED EXEMP TION UNDER SECTIONS 11 AND 12 OF THE ACT. ACCORDINGLY, HE COMPLETED TH E ASSESSMENT TAKING INTO CONSIDERATION RETURNS FILED BY THE ASSESSEE ON 31.10.2006 AND 31.3.2008, AFTER MAKING SOME ADDITIONS FOR DEPRECIA TION, DISPUTED CLAIMS, SEPARATION AMOUNT PAYABLE TO CCTPL, EXPENDI TURE CHARGED FOR THE SUCCEEDING YEAR, ETC. 3 I.T.A. NO. 215/MDS/12 3. ASSESSEE MOVED IN APPEAL BEFORE CIT(APPEALS) AND SUBMITTED BEFORE HIM THAT IT HAD RECEIVED REGISTRATION UNDER SECTION 12AA OF THE ACT FROM DIT (EXEMPTION), CHENNAI, VIDE HIS ORDER D ATED 16.6.2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2002. AS PER THE ASS ESSEE, IT WAS, THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 11 OF THE ACT. ASSESSEE ALSO POINTED OUT THAT THIS TRIBUNAL IN ASSESSEES C ASE FOR ASSESSMENT YEAR 2003-04, 2004-05 AND 2005-06 HAD ALLOWED ITS P LEA FOR GRAND OF DEDUCTION UNDER SECTION 11 OF THE ACT. HOWEVER, CI T(APPEALS) WAS NOT IMPRESSED BY THIS ARGUMENT. ACCORDING TO HIM, THE FACTS AND CIRCUMSTANCES, WHICH WERE PREVAILING IN PREVIOUS YE ARS RELEVANT TO ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06, WERE ENTIRELY DIFFERENT AND WERE NOT APPLICABLE TO THE PREVIOUS Y EAR RELEVANT TO IMPUGNED ASSESSMENT YEAR. AS PER THE CIT(APPEALS), AN ASSESSEE COULD NOT CLAIM A DEDUCTION OTHER THAN THROUGH A VA LID REVISED RETURN. SUCH A VALID REVISED RETURN HAVING NOT BEEN FILED B Y THE ASSESSEE, ITS CLAIM FOR EXEMPTION UNDER SECTIONS 11 AND 12, RELYI NG ON THE ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06, COULD NOT BE ACCEPTED. HE, THEREFORE, CONFIRMED TH E ORDER OF THE A.O. REJECTING THE CLAIM OF EXEMPTION UNDER SECTION 11 O F THE ACT. 4. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW, SUBMITTED THAT CIT(APPEALS) FELL IN GROSS ERROR IN 4 I.T.A. NO. 215/MDS/12 COMING TO A CONCLUSION THAT FACTS WHICH EXISTED IN PRECEDING ASSESSMENT YEARS WERE DIFFERENT FROM THOSE IN THE IMPUGNED ASS ESSMENT YEAR. ACCORDING TO HIM, FOR ASSESSMENT YEAR 2005-06 ALSO, NO EXEMPTION WAS CLAIMED IN THE ORIGINAL RETURN, NOR IN THE FIRST RE VISED RETURN. EXEMPTION WAS CLAIMED ONLY AFTER REGISTRATION UNDER SECTION 1 2AA WAS RECEIVED WITH RETROSPECTIVE EFFECT, THROUGH A SECOND REVISED RETURN. FOR ASSESSMENT YEAR 2005-06 ALSO, A.O. HAD NOT ALLOWED THE CLAIM FOR EXEMPTION, BUT CIT(APPEALS) IN HIS ORDER DATED 23.3 .2011 HAD ALLOWED SUCH CLAIM. LEARNED A.R. POINTED OUT THAT REVENUE HAD MOVED IN APPEAL AGAINST SUCH ORDER OF THE CIT(APPEALS) AND T HIS TRIBUNAL, VIDE ITS ORDER DATED 7 TH SEPTEMBER, 2011, HAD UPHELD THE ORDER OF CIT(APPEA LS) GRANTING ASSESSEE EXEMPTION UNDER SECTION 11 OF THE ACT. THEREFORE, ACCORDING TO HIM, CIT(APPEALS) FELL IN ERROR IN NOT FOLLOWING THE ORDER OF THE TRIBUNAL IN I.T.A. NOS. 1152, 1153 & 1154/MDS/2 011 ON REVENUES APPEAL FOR ASSESSMENT YEARS 2003-04, 2004-05 AND 20 05-06. 5. PER CONTRA, LEARNED D.R. SUBMITTED THAT THE TRIB UNAL HAD NOT IN ITS EARLIER ORDER FOR ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 TAKEN NOTICE THAT ASSESSEE HAD NOT FILED ANY REVISED RETU RN FOR THE RELEVANT PREVIOUS YEARS FOR CLAIMING EXEMPTION UNDER SECTION S 11 AND 12 OF THE ACT. ACCORDING TO HIM, BY VIRTUE OF THE DECISION O F HONBLE APEX COURT IN 5 I.T.A. NO. 215/MDS/12 THE CASE OF GOETZE (INDIA) LTD. (SUPRA), LOWER AUTH ORITIES WERE JUSTIFIED IN DENYING SUCH CLAIM MADE THROUGH AN INVALID REVISED RETURN. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT ASSESSEE IS A BODY FOUND B Y CENTRAL GOVERNMENT UNDER MAJOR PORT TRUSTS ACT, 1963. ASSE SSEE HAD FILED RETURN FOR THE IMPUGNED ASSESSMENT YEAR ORIGINALLY ON 31.10.2006. AT THAT POINT OF TIME IT HAD FILED SUCH A RETURN, IT W AS NOT HAVING REGISTRATION UNDER SECTION 12AA OF THE ACT. SUCH A REGISTRATION WAS GRANTED TO IT ONLY ON 16.6.2008, BUT ADMITTEDLY, THE REGISTRATION WAS GIVEN WITH RETROSPECTIVE EFFECT FROM 1.4.2002. AT THE POINT O F TIME, WHEN THE ASSESSEE WAS FILING THE RETURN, IN NO WAY IT COULD HAVE CLAIMED EXEMPTION UNDER SECTIONS 11 AND 12 SINCE REGISTRATI ON UNDER SECTION 12AA OF THE ACT WAS A PRIMARY REQUIREMENT FOR MAKIN G SUCH A CLAIM. ASSESSEE RECEIVED REGISTRATION UNDER SECTION 12AA O N 16.6.2008 BY THE ORDER OF DIT(EXEMPTIONS) AND THEREAFTER FILED A REV ISED RETURN CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. NO DOUBT, S UCH REVISED RETURN WAS FILED AFTER THE TIME PROVIDED UNDER SECTION 139 (5) OF THE ACT. HOWEVER, WITHOUT DOUBT, THE A.O. AT THE TIME OF THE COMPLETION OF ASSESSMENT, WAS VERY WELL AWARE THAT ASSESSEE WAS H AVING REGISTRATION UNDER SECTION 12AA OF THE ACT AND SUCH REGISTRATION WAS EFFECTIVE FOR THE IMPUGNED ASSESSMENT YEAR ALSO. THERE IS NOTHING IN THE ORDER OF THE 6 I.T.A. NO. 215/MDS/12 ASSESSING OFFICER WHICH WOULD SHOW THAT ASSESSEE HA D VIOLATED ANY PROVISIONS OF SECTIONS 11 AND 12 BY WHICH IT COULD HAVE BEEN DENIED SUCH AN EXEMPTION. THE SOLE REASON WHY THE EXEMPTI ON WAS DENIED WAS THAT IT HAD FILED THE CLAIM FOR EXEMPTION AFTER THE PERIOD ALLOWED UNDER SECTION 139(5) OF THE ACT. IF WE LOOK AT THE DECISION OF HONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPR A), IT WILL BE CLEAR THAT THERE THE CLAIM WAS MADE BY AN ASSESSEE FOR A DEDUC TION. CLAIM FOR DEDUCTION AND CLAIM FOR EXEMPTION STAND ON DIFFEREN T FOOTING. EXEMPTION PROVISIONS EXEMPT AN INCOME FROM THE PURVIEW OF TAX ATION. SUCH INCOME IS NOT CONSIDERED TAXABLE AT ALL. DEDUCTION, ON TH E OTHER HAND, IS ON COMPUTED INCOME AND AS HELD BY HONBLE APEX COURT, SUCH DEDUCTION COULD NOT BE CLAIMED OTHER THAN THROUGH A VALID REV ISED RETURN. IN OUR OPINION, WHERE AN ASSESSEE HAS CLAIMED AN EXEMPTION EVEN IF SUCH CLAIM WAS NOT THERE IN THE ORIGINAL RETURN, IT WAS STILL ELIGIBLE FOR SUCH EXEMPTION IF IT COULD SHOW THAT IT WAS BY REASONABL E CAUSE PREVENTED FROM MAKING SUCH A CLAIM IN THE ORIGINAL RETURN. A SSESSEE RECEIVED A RIGHT TO CLAIM SUCH EXEMPTION BY VIRTUE OF THE ORDE R OF DIRECTOR OF INCOME TAX (EXEMPTION), WHO IS ALSO A PART OF THE REVENUE MACHINERY. THEREFORE, IT OUGHT NOT HAVE BEEN DENIED SUCH AN EX EMPTION FOR A TECHNICAL REASON ALONE. THAT APART, THE CASE FOR I MPUGNED ASSESSMENT YEAR IS VERY SIMILAR FOR THAT OF ASSESSMENT YEAR 20 05-06 WHERE ON ASSESSEES APPEAL, CIT(APPEALS) BY VIRTUE OF HIS OR DER DATED 23.3.2011 7 I.T.A. NO. 215/MDS/12 HAD HELD IT TO BE ELIGIBLE FOR THE CLAIM OF EXEMPTI ON UNDER SECTIONS 11 AND 12 OF THE ACT. ON REVENUES APPEAL, AGAINST SU CH ORDER, IT WAS HELD BY THIS TRIBUNAL ON 7 TH SEPTEMBER, 2011 AT PARAS 6 AND 7 OF I.T.A. NOS. 1152 TO 1154/MDS/2011 AS UNDER:- 6. WE HEARD BOTH SIDES IN DETAIL. THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SEC. 12AA. THE REGISTRATION CONF IRMS DECLARATION OF THE ASSESSEE THAT IT IS A CHARITABLE INSTITUTION . IT IS NOT NECESSARY THAT THE ASSESSEE MUST BE AN ASSOCIATION OF PERSON S SO AS TO CLAIM THE STATUS OF A CHARITABLE INSTITUTION. A PARTNERS HIP MAY NOT BE ENTITLED TO BE CLASSIFIED AS A CHARITABLE INSTITUTI ON FOR THE REASON THAT IT IS CONSTITUTED FOR THE PURPOSE OF SHARING THE PR OFIT AND LOSS OF A BUSINESS CARRIED ON BY THE FIRM. SO ALSO IN THE CA SE OF A COMPANY AS WELL, IT CANNOT BE A CASE OF A CHARITABLE INSTITUTI ON FOR THE REASON THAT THE OBJECT OF A COMPANY IS TO CARRY ON BUSINESS FOR PROFIT. THE COMPANIES ACT HAS SPECIFICALLY EXEMPTED UNDER SEC.25 O F THAT ACT THE CASE OF A CHARITABLE COMPANY. A CO-OPERATIVE SOCIE TY ALSO MAY NOT BE TREATED AS A CHARITABLE INSTITUTION, AGAIN FOR THE REASON THAT THE OBJECT OF A CO-OPERATIVE SOCIETY IS TO DECLARE DIVI DENDS OUT OF THE PROFITS EARNED BY IT. BUT THE ABOVE STATED INHERENT CLASSIFICATION DOES NOT APPLY NOT ONLY TO AN ASSOCIATION OF PERSONS B UT ALSO TO A LOCAL AUTHORITY. A LOCAL AUTHORITY IS NOT TREATED AS AN AUTHORITY CONSTITUTED FOR THE PURPOSE OF CARRYING ON BUSINESS AND DIVIDING THE PROFIT AMONG THE SHAREHOLDERS. A MUNICIPAL CORPORA TION IS A LOCAL AUTHORITY BY STATUS AND NOT SUPPOSED TO CARRY ON BU SINESS ONLY FOR PROFIT. THEY ARE PERFORMING THE DUTIES OF A LOCAL GOVERNMENT. LIKEWISE, THE PORT TRUST CONSTITUTED UNDER INDIAN M AJOR PORT TRUST ACT IS A STATUTORY AUTHORITY TREATED AS A LOCAL AUT HORITY UNDER THE PROVISIONS OF GENERAL CLAUSES ACT. IT IS AFTER CON SIDERING ALL THESE ORGANIZATIONAL FEATURES, THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SEC.12AA OF THE INCOME-TAX ACT, 1961 . 7. THEREFORE, THE ASSESSING OFFICER CANNOT DENY THE BENEFIT OF SEC.11 TO THE ASSESSEE ONLY ON THE BASIS OF STATUS CLAIMED BY THE ASSESSEE. THE EXEMPTION CAN BE DENIED FOR VIOLATION OF OTHER CONDITIONS LAID DOWN IN SEC.11, 12 AND 13. THE ASSES SING AUTHORITY HAS NO SUCH CASE. IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE FIND 8 I.T.A. NO. 215/MDS/12 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RI GHTLY DIRECTED THE ASSESSING OFFICER TO GRANT THE BENEFIT OF SEC.1 1 TO THE ASSESSEE. WE ARE, THEREFORE, OF THE OPINION THAT THE CLAIM OF ASSESSEE WAS UNJUSTLY DENIED. ASSESSING OFFICER IS DIRECTED TO ALLOW THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTIONS 11 AND 12 OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 23 RD OF AUGUST, 2012, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 23 RD AUGUST, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-XII, CHENNAI-34 (4) DIT (EXEMPTIONS), CHENNAI (5) D.R. (6) GUARD FILE