DCIT, Circle-10(1), Hyderabad, Hyderabad V. Hyderbaad Metropolitan Development Authority (HMDA), Hyderabad, Hyderabad

ITA 224/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2453 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 13-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B NARSIMHA SHARMA
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution; Retrospective amendment; Condonation of delay; Cancellation of registration
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. A.Y APPELLANT RESPONDENT 03/HYD/2017 NIL HMDA, HYDERABAD CIT(EXEMPTIONS), HYDERABAD 980/HYD/2010 2003-04 HMDA, HYDERABAD JCIT, RANGE-10, HYDERABAD 399/HYD/2011 2004-05 HMDA, HYDERABAD DCIT, CENTRAL CIRCLE-10 (1), HYDERABAD 970/HYD/2011 2005-06 HMDA, HYDERABAD ACIT, CENTRAL CIRCLE-10 (1), HYDERABAD 971/HYD/2011 2006-07 HMDA, HYDERABAD ACIT, CENTRAL CIRCLE-10 (1), HYDERABAD 1029/HYD/2011 2007-08 HMDA, HYDERABAD ACIT, RANGE-10, HYDERABAD 459/HYD/2012 2008-09 HMDA, HYDERABAD ACIT, RANGE-10, HYDERABAD 905/HYD/2015 2009-10 HMDA, HYDERABAD ACIT, RANGE-10, HYDERABAD 906/HYD/2015 2010-11 HMDA, HYDERABAD ACIT, RANGE-10, HYDERABAD 108/HYD/2017 2011-12 HMDA, HYDERABAD CIT(OSD), RANGE-10, HYDERABAD 109/HYD/2017 2012-13 HMDA, HYDERABAD DCIT, CENTRAL CIRCLE 10 (1), HYDERABAD 110/HYD/2017 2013-14 HMDA, HYDERABAD DCIT, CENTRAL CIRCLE 10 (1), HYDERABAD 1008/HYD/2010 2003-04 ACIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 360/HYD/2011 2004-05 ACIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 911/HYD/2011 2005-06 ACIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 912/HYD/2011 2006-07 ACIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 913/HYD/2011 2007-08 ACIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 223/HYD/2017 2011-12 DCIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 224/HYD/2017 2012-13 DCIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 225/HYD/2017 2013-14 DCIT, CIRCLE-10(1), HYDERABAD HMDA, HYDERABAD 2 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. C.O NO. 75/HYD/2010 (IN ITA NO. 1008/HYD/2010 ASSESSMENT YEAR: 2003-04) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI B. NARSIMHA SHARMA DATE OF HEARING : 11-10-2017 DATE OF PRONOUNCEMENT : 31-10-2017 ORDER PER BENCH: ITA NO. 03/HYD/2017:- THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(EXEMPTIONS), HYDERABAD, DATED 26-12-2016 NOT GRANTING REGISTRATION U/S 12AA OF THE IT ACT W.E.F A.YS 2002-03 TO 2006-07 AND ALSO FOR THE A.Y 2009-10 ONWARDS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AUTHORITY INITIALLY CONSTITUTED UNDER THE ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT OF 1975. AFTER CONSTITUTING THE ASSESSEE AUTHORITY THE GOVERNMENT OF ANDHRA PRADESH, VIDE G.O.M.S NO. 411/MA DATED 27-9-1975 ISSUED A NOTIFICATION ALLOWING THE JURISDICTION TO EACH OF THE DEVELOPMENT AUTHORITY. THE ASSESSEE WAS RECOGNIZED AS A LOCAL AUTHORITY. THE INCOME OF THE ASSESSEE WAS EXEMPT FROM TAXATION U/S 10(20A) OF THE IT ACT, TILL 31-03-2003 AS SEC. 10(20A) OF THE IT ACT WAS OMITTED W.E.F 01-04-2003. THE ASSESSEE WAS IN EXISTENCE TILL FORMATION OF HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY (HMDA) W.E.F 19-04- 2008 BY VIRTUE OF THE HMDA ACT OF 2008 AND THE GOVT., ISSUED CONSEQUENTIAL G.OS FOR APPOINTMENT OF THE MEMBERS AND FUNCTIONING OF THE HMDA. THEREAFTER, THE ASSESSEE FILED AN APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT BY 3 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. FILING FORM NO. 10A, DATED 02-03-2007. THE SAID APPLICATION WAS REJECTED BY THE CIT(E) AND THE MATTER TRAVELLED UP TO HONBLE SUPREME COURT ON REFUSAL OF CONDONATION OF DELAY BY THE TRIBUNAL. THE HONBLE SUPREME COURT CONDONED THE DELAY AND REMANDED THE MATTER TO THE FILE OF THE TRIBUNAL, WHICH REMANDED THE ISSUE TO THE FILE OF THE CIT(E) FOR RECONSIDERATION OF THE ISSUE ON MERITS. THE ASSESSEE, VIDE LETTER DATED 12-04- 2016, STATED THAT THE ASSESSEE WAS ENJOYING THE EXEMPTION U/S 10(20A) OF THE IT ACT UP TO THE A.Y 2002-03 AND AFTER THE SAID SECTION IS DELETED, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT AND THEREFORE PRAYED THAT THE REGISTRATION U/S 12AA MAY BE GRANTED W.E.F 01-04- 2003. THE ASSESSEE ALSO RELIED UPON CBDT CIRCULAR NO. 21 OF 2016 DATED 17-05-2016, WHEREIN THE CBDT INSTRUCTED THE COMMISSIONERS NOT TO CANCEL REGISTRATION U/S 12A OF THE IT ACT DUE TO APPLICATION OF THE PROVISO TO SEC. 2(15) OF THE IT ACT. THE ASSESSEE ALSO SUBMITTED THAT IT IS AN INSTITUTION CARRYING ON DEVELOPMENTAL ACTIVITIES ON BEHALF OF GOVERNMENT WITHOUT ANY PROFIT MOTIVE AND THAT THERE ARE NO SHAREHOLDERS AND THERE IS NO DIVISION OF PROFIT AND THEREFORE THE ASSESSEE IS A CHARITABLE INSTITUTION AND IS ENTITLED FOR REGISTRATION U/S 12AA OF THE IT ACT. 2.1 THE CIT(E), VIDE ORDERS DATED 26-12-2016 ACCEPTED THAT THE OBJECTIVES OF THE ASSESSEE ARE CHARITABLE IN NATURE AND THAT IT IS NOT CARRYING ON ANY ACTIVITY FOR PROFIT. HE THEREFORE, GRANTED THE REGISTRATION FOR THE A.YS 2007-08 AND 2008-09. THEREAFTER, HE PROCEEDED TO CONSIDER THE APPLICATION OF THE SECOND PROVISO TO SEC. 2(15) OF THE IT ACT INTRODUCED W.E.F 01-04-2009 BY THE FINANCE ACT OF 2010 4 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. ACCORDING TO WHICH, WHERE ACTIVITIES OF ANY TRUST OR INSTITUTION ARE IN THE NATURE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, IT SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNLESS THE AGGREGATE VALUE OF SUCH RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES DURING THE PREVIOUS YEAR DOES NOT EXCEED 25 LAKHS OR LESS IN THE PREVIOUS YEAR. THUS, ACCORDING TO HIM, THE PURPOSE OF SUCH CLASSIFIED INSTITUTION SHALL BE DEEMED AS CHARITABLE DESPITE IT DERIVING CONSIDERATION FROM SUCH ACTIVITIES, BUT IF THE AGGREGATES THE VALUE OF THESE RECEIPTS EXCEEDS THE SPECIFIED CUT-OFF, THE ACTIVITY WOULD BE NO LONGER BE CHARITABLE AND INCOME OF THE TRUST / INSTITUTION WOULD NOT BE ELIGIBLE FOR TAX EXEMPTION IN THAT YEAR. HE ALSO OBSERVED THAT THE INCOME OF THE ASSESSEE FROM ACTIVITIES, SUCH AS, RENTAL INCOME AND INCOME FROM ADVERTISING, HOARDING AND ADVERTISEMENTS, EXCEEDED THE THRESHOLD LIMIT OF 25 LAKHS IN THE PREVIOUS YEARS 2008-09, 2009-10, 2011-12, 2012-13 AND ALSO FOR SUBSEQUENT YEARS. HE THEREFORE DID NOT GRANT THE REGISTRATION FROM THE A.Y 2009-10 ONWARDS. IN EFFECT HE GRANTED REGISTRATION U/S 12AA OF THE ACT ONLY FOR THE A.YS 2007-08 AND 2008-09. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 5 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) ERRED IN NOT ALLOWING REGISTRATION WITH EFFECT FROM 1.4.2002. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) OUGHT TO HAVE SEEN THAT IN THE APPLICATION FILED THE APPELLANT MENTIONED THE DATE OF INCORPORATION OF THE ASSESSEE AND IN THE LETTER FILED BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) A REQUEST WAS MADE THAT THE REGISTRATION BE GRANTED WITH EFFECT FROM 1.4.2002. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) ERRED IN HOLDING THAT THE REGISTRATION GRANTED WOULD HAVE EFFECT ONLY FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 AND WOULD NOT HAVE EFFECT FOR THE LATER YEARS. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE AMENDMENT TO SEC.2(15) WITH EFFECT FROM 1.4.2009 WOULD NOT PREVENT THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS) FROM GRANTING REGISTRATION U/S 12AA FOR THE PERIOD AFTER 1.4.2009. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (EXEMPTIONS) ERRED IN HOLDING THAT THE ACTIVITIES OF THE APPELLANT ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THAT, THEREFORE, THE PROVISO TO SEC.2(15) WOULD APPLY TO THE APPELLANT. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 4. GROUND NO. 1 AND 7 BEING GENERAL IN NATURE, NEED NO ADJUDICATION. IN GROUND NO. 2 AND 3, THE ASSESSEE IS SEEKING REGISTRATION W.E.F 01-04-2002 AND BY VIRTUE OF GROUNDS 4 TO 6, THE ASSESSEE IS SEEKING EXEMPTION FROM THE A.YS 2009-10 ONWARDS. 5. LD. COUNSEL FOR THE ASSESSEE, SHRI S. RAMA RAO, WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE CIT(E), SUBMITTED THAT BEFORE THE CIT(E) ASSESSEE HAS MADE AN APPLICATION FOR REGISTRATION U/S 12A ON 2-03-2007 AS IS EVIDENT FROM PAGE 1 OF THE PAPER BOOK FILED BEFORE US. HE SUBMITTED THAT THE ASSESSEE HAS COME INTO EXISTENCE IN 1975 AND HAS BEEN CARRYING ON ACTIVITIES AS PER ITS OBJECTIVES AND THERE IS NO CHANGE IN THE ACTIVITIES CARRIED ON BY IT, EXCEPT FOR THE NOMENCLATURE BY VIRTUE OF THE 6 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. HMDA ACT OF 2008. HE SUBMITTED THAT THE ASSESSEE HAS BEEN CARRYING ON CHARITABLE ACTIVITIES ON BEHALF OF THE GOVT., AS PER THE DIRECTIONS OF THE GOVT., AND IS NOT WORKING FOR ANY PROFIT AND THEREFORE IS ELIGIBLE FOR EXEMPTION THROUGHOUT THE PERIOD OF ITS EXISTENCE. HE RELIED ON THE PROVISO TO SUB SEC. (2) OF SECTION 12A OF THE ACT, TO PLEAD THAT THE REGISTRATION GRANTED SHALL BE APPLICABLE FOR ALL THE PRECEDING ASSESSMENT YEARS, WHEN THE ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE A.O ON THE DATE OF SUCH REGISTRATION. HE SUBMITTED THAT THE ASSESSMENTS FOR THE ASSESSMENT YEARS 2003-04 ONWARDS WERE PENDING BEFORE THE A.O AT THE TIME WHEN THE REGISTRATION U/S. 12A WAS GRANTED AND THEREFORE THE REGISTRATION IS APPLICABLE FOR THE A.YS 2002-03 ONWARDS. 6. AS REGARDS THE DENIAL OF THE REGISTRATION FOR THE A.YS 2009-10 AND THEREAFTER IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(E) HAS CONSIDERED THE AMENDED DEFINITION OF CHARITABLE INSTITUTION BY VIRTUE OF THE PROVISO TO SEC. 2(15) OF THE IT ACT TO DENY THE REGISTRATION. HE HAS DRAWN OUR ATTENTION TO THE CBDT CIRCULAR NO. 21 OF 2016, WHEREIN THE CBDT HAS CLARIFIED THAT THE REGISTRATIONS GRANTED U/S 12A OF THE IT ACT SHALL NOT BE CANCELLED BY VIRTUE OF THE PROVISO TO SEC. 2(15) OF THE IT ACT. HE SUBMITTED THAT THE REGISTRATION U/S 12A IS GRANTED AFTER BEING SATISFIED THAT THE OBJECTIVES OF THE ASSESSEE COMPANY ARE CHARITABLE IN NATURE AND IT SHALL BE IN FORCE UNTIL IT IS CANCELLED OR WITHDRAWN UNDER SUB-SEC. (2) OF SEC. 12AA OF THE IT ACT. HE SUBMITTED THAT THE CIT(E) HAVING GRANTED REGISTRATION FOR THE A.Y 2007-08 AND 2008-09 HAS, IN THE SAME ORDER, CANCELLED THE REGISTRATION FROM THE A.Y 2009- 7 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. 10 ONWARDS WHICH IS NOT PERMISSIBLE IN LAW OR AS PER THE DIRECTIONS OF THE CBDT CIRCULAR NO. 21 OF 2016. THEREFORE, HE PRAYED THAT THE CIT(E) BE DIRECTED TO GRANT REGISTRATION U/S 12AA OF THE IT ACT FROM THE F.Y 2002-03 ONWARDS AND NOT LIMIT IT TO A.Y. 2007-08 AND 2008-09 ALONE. 7. HE ALSO ARGUED THAT THE ASSESSEE IS NOT CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THEREFORE THE PROVISO OF SEC. 2(15) OF THE ACT IS NOT APPLICABLE TO IT BUT NONE OF THE AUTHORITIES BELOW EVER CONSIDERED THE APPLICABILITY OR OTHERWISE OF THE PROVISO TO THE ASSESSEE EITHER IN THE PROCEEDINGS U/S 12A OF THE ACT OR DURING THE ASSESSMENTS FOR THE A.YS 2009-10 ONWARDS WHEN THE PROVISO HAS COME INTO THE STATUTE BOOK. HE SUBMITTED THAT THE ISSUE OF THE APPLICABILITY OF THE PROVISO TO SEC. 12A(2) OF THE IT ACT CAN BE CONSIDERED ONLY DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT WHILE THE CONSIDERING ALLOWABILITY OF THE EXEMPTIONS U/S 11 OF THE ACT. 8. THE LD. SENIOR STANDING COUNSEL FOR THE DEPARTMENT, MR. B. NARSIMHA SHARMA, ON THE OTHER HAND, SUPPORTED THE ORDER OF CIT(E) DATED 26-12-2016. HE SUBMITTED THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/S 10(20A) OF THE IT ACT TILL A.Y 2002-03 AND THE ASSESSEE HAS MADE THE APPLICATION FOR REGISTRATION U/S 12AA OF THE IT ACT ONLY ON 02-03-2007. HE SUBMITTED THAT THE ASSESSEE HAS NOT GIVEN ANY REASONS FOR NOT MAKING THE APPLICATION EARLIER AND IT IS NOT TO BE GRANTED WITH RETROSPECTIVE EFFECT ONLY AT THE INSTANCE OF THE ASSESSEE. HE SUBMITTED THAT IT IS FOR THE AUTHORITY GRANTING REGISTRATION TO CONSIDER THE REQUEST OF 8 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. THE ASSESSEE, AND IT IS FOR SUCH AUTHORITY TO BE EITHER SATISFIED OR NOT SATISFIED FOR CONDONING THE DELAY IN MAKING THE APPLICATION AND TO GRANT REGISTRATION FROM AN EARLIER DATE. THEREFORE ACCORDING TO HIM, THE ASSESSEE CANNOT BE GRANTED REGISTRATION U/S 12A OF THE IT ACT W.E.F 01-04- 2002. FURTHER, HE ALSO SUBMITTED THAT IT IS NOT DISPUTED THAT THE ASSESSEES OBJECTIVES ARE CHARITABLE IN NATURE TILL THE PROVISO TO SEC 2(15) OF THE IT ACT WAS INTRODUCED W.E.F. 01-04-2009. HE SUBMITTED THAT THE CIT(E) TAKING NOTE OF THE SAID PROVISO, HAS GRANTED REGISTRATION FOR A.YS 2007-08 AND 2008-09 ONLY. ACCORDING TO HIM, THE CIT(E), WHILE CONSIDERING THE APPLICATION FOR THE REGISTRATION U/S 12A OF THE ACT, IS REQUIRED TO EXAMINE WHETHER THE ACTIVITIES CARRIED ON BY THE ASSESSEE FALL UNDER THE CATEGORY OF CHARITABLE ACTIVITIES AND ONLY THEN CAN HE GRANT THE REGISTRATION. HE SUBMITTED THAT WHEN THE CIT(E) WAS CONSIDERING THE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT, THE PROVISO TO SEC. 2(15) OF THE ACT WAS VERY MUCH IN THE STATUTE BOOK AND THEREFORE THE STRICT INTERPRETATION OF THE LANGUAGE USED IN THE SAID PROVISO HAS TO BE CONSIDERED AND IMPLEMENTED. HE SUBMITTED THAT THE ASSESSEE WAS CARRYING ON ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THEREFORE THE CIT(E) HAS RIGHTLY NOT GRANTED REGISTRATION FOR A.Y 2009-10 ONWARDS. 9. AS REGARDS THE ASSESSEES RELIANCE UPON THE CBDT CIRCULAR NO. 21 OF 2016, HE SUBMITTED THAT THE SAID CIRCULAR RELATES TO CANCELLATION OF THE REGISTRATION ALREADY GRANTED U/S 12A OF THE ACT AND NOT TO FRESH APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. AS REGARDS ASSESSEES PRAYER FOR REGISTRATION FOR THE ASSESSMENT YEARS PRIOR TO THE 9 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. DATE OF APPLICATION AND THE ASSESSEES RELIANCE UPON THE PROVISO SUB SEC. 2 OF SEC. 12A OF THE ACT, HE SUBMITTED THAT THE SAID PROVISO WOULD BE APPLICABLE ONLY WHEN THE APPLICATION FOR REGISTRATION FILED AFTER 01-06-2007 IS PENDING ADJUDICATION BEFORE THE DEPARTMENT. HE SUBMITTED THAT IN THE CASE OF THE ASSESSEE, THE APPLICATION WAS FILED ON 02-03-2007 AND WAS REJECTED AND IT HAS NOW COME FOR RECONSIDERATION BY THE CIT(E), BY VIRTUE OF THE REMAND OF THE ISSUE TO HIS FILE BY THE HONBLE ITAT. THEREFORE, ACCORDING TO HIM, THE PROVISO TO SUB-SEC. (2) OF SEC. 12 A OF THE ACT, CANNOT BE APPLIED TO THE ASSESSEES CASE AND THE ASSESSEE CANNOT BE GRANTED REGISTRATION FROM THE A.YS 2003-04 ONWARDS. THE LD. STANDING COUNSEL ALSO DREW OUR ATTENTION TO SUB SEC. (8) OF SEC. 13 OF THE ACT INTRODUCED BY THE FINANCE ACT 2012 WITH RETROSPECTIVE EFFECT FROM 01-04- 2009 TO STATE THAT EVEN IF THE REGISTRATION U/S 12A IS GRANTED, THE ASSESSEE WILL NOT BE ENTITLED TO THE EXEMPTION U/S 11 AND 12 OF THE ACT BY VIRTUE OF THIS SECTION AND THEREFORE SINCE THE ASSESSEE WAS CARRYING ON THE ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, THE ASSESSEE IS NOT ENTITLED FOR REGISTRATION U/S 12A OF THE ACT AS HELD BY THE CIT(E). 10. IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SEC. 13(8) OF THE ACT AND THEIR APPLICABILITY WILL BE CONSIDERED BY THE A.O WHILE COMPLETING THE ASSESSMENT U/S 11 AND 12 OF THE ACT AND U/S. 12A OF THE ACT, APPLICATIONS CANNOT BE EXAMINED FOR FROM YEAR TO YEAR. HE SUBMITTED THAT THE OBJECTIVE OF THE ASSESSEE IS ONLY TO PROMOTE AND DEVELOP THE AREAS UNDER ITS JURISDICTION AND ALL THE OTHER ACTIVITIES CARRIED ON PURSUANT 10 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. TO SUCH OBJECTS ARE ONLY INCIDENTAL. HE ALSO SUBMITTED THAT ON THE DISSOLUTION OF THE ASSESSEE, THE ASSETS AND LIABILITIES ARE REVERTED BACK TO THE GOVERNMENT AS PER THE ACT AND HENCE THE ASSESSEES ACTIVITY CANNOT BE CONSIDERED TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. HE ALSO SUBMITTED THAT THE CBDT CIRCULAR NO. 21 OF 2016 IS APPLICABLE NOT ONLY TO CANCELLATION OF REGISTRATION BUT ALSO TO DENIAL OF REGISTRATION UNDER SECTION 12A OF THE ACT. BOTH THE PARTIES ALSO RELIED UPON VARIOUS CASE LAW AND THE COPIES OF THE SAME FILED BEFORE US. 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD AND THE CASE LAW RELIED UPON BY BOTH THE PARTIES, WE FIND THAT THE OBJECTIVES OF THE ASSESSEE BEING CHARITABLE IN NATURE IS NOT IN DISPUTE AND THE CIT(E), ACCEPTING THE SAME, HAS GRANTED REGISTRATION FOR THE A.Y 2007-08 AND 2008-09. THE REGISTRATION U/S 12A OF THE IT ACT IS NOT ANNUAL BUT IS FOR ALL THE SUBSEQUENT YEARS UNTIL IT IS WITHDRAWN U/S 12AA OF THE IT ACT. HAVING GRANTED REGISTRATION FOR THE A.Y 2007-08, HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR THE REGISTRATION FOR THE A.YS 2009-10 ONWARDS WILL AMOUNT TO REJECTION OR CANCELLATION OF THE REGISTRATION GRANTED EARLIER. IN THESE CIRCUMSTANCES, IN OUR VIEW, THE CBDT CIRCULAR NO. 21 OF 2016 WOULD APPLY AND THE CBDT CIRCULARS BEING BINDING ON THE REVENUE AUTHORITIES, THE CIT(E) OUGHT NOT TO HAVE REJECTED THE REGISTRATION U/S 12A OF THE ACT FOR THE SUBSEQUENT ASSESSMENT YEARS EVEN IF IT IS PRESUMED AND ACCEPTED THAT THE PROVISO TO SEC. 2(15) OF THE ACT IS APPLICABLE TO THE ASSESSEE. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT(E) VS. M/S WATER AND LAND MANAGEMENT 11 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. TRAINING AND RESEARCH INSTITUTE, HIMAYATH NAGAR, HYDERABAD IN ITTA NO. 56 OF 2017, VIDE JUDGMENT DATED 15.03.2017 HAS HELD THAT THE CLAUSE (II) OF THE PROVISO TO SEC. 2(15) OF THE ACT CLEARLY PROVIDES THAT THE PROVISO WOULD APPLY ONLY IF THE TURNOVER OF THE ASSESSEE TRUST CROSSES RS. 25 LAKHS AND THEREFORE ON THIS GROUND THE REGISTRATION U/S 12A CANNOT BE DENIED. THEREFORE WE HAVE NO HESITATION IN HOLDING THAT EVEN IF THE PROVISO TO SEC. 2(15) OF THE ACT IS APPLICABLE TO ASSESSEE FOR THE A.YS 2009-10 ONWARDS, IT CANNOT BE DENIED REGISTRATION U/S 12A OF THE ACT. THE STANDING COUNSELS OBJECTION THAT BY VIRTUE OF SEC. 13(8) OF THE ACT, THE ASSESSEE WOULD NOT BE ENTITLED TO EXEMPTION SEC. 11 AND 12 OF THE ACT, EVEN IF THE REGISTRATION U/S 12A OF THE ACT IS GRANTED AND THEREFORE, THERE IS NO USEFUL PURPOSE IN GRANTING REGISTRATION U/S 12A OF THE IT ACT AT THIS STAGE, IS NOT ACCEPTABLE TO US, BECAUSE IN OUR OPINION THE APPLICABILITY OF SEC. 13(8) OF THE ACT CAN BE CONSIDERED ONLY WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT AND EXAMINING THE ALLOWABILITY OF EXEMPTION U/S 11 AND 12 OF THE ACT. 12. FURTHER, AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE CIT(E) OR EVEN THE A.O HAS NOT EXAMINED THE APPLICABILITY OF THE PROVISO TO SEC. 2(15) OF THE IT ACT TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAD RELIED UPON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS THAT THE PROVISO TO SEC. 2(15) OF THE IT ACT ARE NOT APPLICABLE TO THE ASSESSEE: (I) [2014] 52 TAXMANN.COM 25 (JAIPUR TRIB.)-JAIPUR DEVELOPMENT AUTHORITY VS. CIT. 12 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. (II) [2017] 81 TAXMANN.COM 208 (ALLAHABAD)- CIT VS. YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY. (III) [2015] 155 ITD 0318 (DELHI)- HARIDWAR DEVELOPMENT AUTHORITY VS. CIT. 13. HOWEVER, SINCE THIS ISSUE IS TO BE CONSIDERED IN THE ASSESSMENTS U/S 143(3) OF THE IT ACT, WE REFRAIN FROM GIVING ANY FINDING ON THIS ISSUE AT THIS STAGE. AS REGARDS THE ASSESSEES PRAYER TO GRANT REGISTRATION W.E.F. 01-04- 2002 AS THE ASSESSMENTS FOR THE RELEVANT ASSESSMENT YEARS WERE PENDING AS ON THE DATE OF REGISTRATION IS CONCERNED, WE FIND THAT THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF THE SINGLE MEMBER CASE SMC AT AHMADABAD IN THE CASE OF SHRI BHANUSHALI MITRAMANDALI TRUST VS ITO REPORTED IN (2016) 68 TAXMAN.COM 205 AHMADABAD TRIBUNAL WHEREIN IT WAS HELD THAT WHERE THE REGISTRATION IS GRANTED IN THE SUBSEQUENT YEAR, THE BENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS ALSO UNDER THE FIRST PROVISO TO SEC. 12A(2) OF THE ACT, AND THAT SUCH PROVISO IS APPLICABLE EVEN TO APPEALS PENDING BEFORE THE CIT(E). 14. THE LD. COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE APPLICATION U/S 12A OF THE IT ACT WAS INITIALLY REJECTED BY THE CIT(E) AND THE ISSUE WAS RESTORED TO THE FILE OF THE CIT(A) BY THE ITAT, AND THEREFORE, THE EARLIER ORDER OF THE CIT(E) GOT NULLIFIED AND THE ASSESSEES APPLICATION FOR REGISTRATION GOT RESTORED AND HAS TO BE CONSIDERED AS PENDING FOR CONSIDERATION BY THE CIT(E). HE SUBMITTED THAT AT THE TIME WHEN THE CIT(E) WAS CONSIDERING THE ASSESSEES 13 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. APPLICATION AFRESH, THE ASSESSEE HAD FILED A LETTER SEEKING REGISTRATION W.E.F. 01-04-2002 AND THEREFORE THE ISSUE WAS VERY MUCH BEFORE THE CIT(E) WHILE GRANTING REGISTRATION W.E.F. A.Y 2007-08. HE SUBMITTED THAT AS PER THE FIRST PROVISO OF 12A(2) OF THE IT ACT, THE REGISTRATION GRANTED IN THE SUBSEQUENT YEAR SHALL BE APPLIED TO THE EARLIER ASSESSMENT YEARS ALSO, WHEREVER THE ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE A.O. HE SUBMITTED THAT THE ASSESSMENTS IN THE CASE OF THE ASSESSEE FOR ALL THE ASSESSMENT YEARS FROM 2003-04 ON WARDS WERE PENDING BEFORE THE A.O AND HENCE THE PROVISO WAS APPLICABLE AND ASSESSEE SHOULD BE GRANTED REGISTRATION W.E.F 01-04-2002. 15. THE LD. SR. STANDING COUNSEL FOR THE DEPARTMENT, ON THE OTHER HAND, SUBMITTED THAT ASSESSEES APPLICATION WAS ALREADY REJECTED BY THE CIT(E) AND IN THE EARLIER APPLICATION THE ASSESSEE HAD NEVER CLAIMED THE EXEMPTION W.E.F 01-04- 2002 NOR HAS IT FILED ANY APPLICATION FOR CONDONATION OF DELAY GIVING REASONS AS TO WHY THE APPLICATION COULD NOT BE FILED EARLIER. 16. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT BY VIRTUE OF REMAND TO THE CIT(E) FOR RE-CONSIDERATION OF THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT, THE ASSESSEES APPLICATION HAS BEEN REVIVED. AS ON THE DATE WHEN THE CIT(E) WAS CONSIDERING THE APPLICATION FOR REGISTRATION PURSUANT TO THE REMAND BY THE ITAT, THE PROVISO TO SEC. 12A(2) OF THE IT ACT HAS COME INTO THE STATUTE BOOK AND THEREFORE IT IS VERY MUCH APPLICABLE TO ALL THE PENDING ASSESSMENTS BEFORE THE A.O. THE SMC BENCH OF THIS 14 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. TRIBUNAL AT AHMADABAD, IN THE CASE OF SHRI BHANUSHALI MITRAMANDALI TRUST VS ITO (CITED SUPRA) HAS ALSO HELD SO. PARTICULARLY IN THE CASE OF HAND, WE FIND THAT THERE IS NO CHANGE IN THE OBJECTS OF THE ASSESSEE FROM THE EARLIER AND IN THE SUBSEQUENT ASSESSMENT YEARS AND THERE IS NO FINDING THAT THE ASSESSEE HAS CARRIED ON ANY ACTIVITY NOT IN ACCORDANCE WITH ITS OBJECTIVES. IN VIEW OF THE SAME, WE ARE OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE IT ACT W.E.F 01-04-2002 AND ACCORDINGLY, WE DIRECT THE CIT(E) TO MODIFY THE ORDER OF REGISTRATION U/S 12AA OF THE ACT W.E.F. 01-04-2002 I.E FROM A.Y 2003-04 ONWARDS. IN THE RESULT THE ASSESSEE APPEAL IN ITA NO. 03/HYD/2017 IS ALLOWED. ITA NOS. 980, 399, 970, 971, 1029, 459, 905, 906, 108, 109,110, 911, 912, 913, 360, 1008, 223, 224, 225 & CO 75/HYD/2010 IN ITA NO. 1008/HYD/2010: 17. ALL THESE ARE THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE AND ALSO THE CROSS OBJECTIONS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS I.E FOR THE A.YS 2003-04 ONWARDS AGAINST THE REGULAR ASSESSMENTS COMPLETED U/S 143(3) OF THE IT ACT FOR THE RELEVANT ASSESSMENT YEARS AND THE ADDITIONS ARISING THERE FROM. 18. SINCE WE HAVE ALREADY HELD THAT THE ASSESSEE IS ENTITLED FOR REGISTRATION U/S 12A OF THE ACT W.E.F 01-04- 2002, ONWARDS AND ALSO FROM THE A.Y 2009-10 ONWARDS, WE ARE OF THE OPINION THAT ALL THESE ASSESSMENTS HAVE TO BE REMANDED TO THE FILE OF THE A.O FOR RE-CONSIDERATION OF THE ISSUES IN THE LIGHT OF THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE IT ACT W.E.F 01-04-2002. 15 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY. HYD. 19. IN VIEW OF THE SAME, ALL THESE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 20. IN THE RESULT, ASSESSEES APPEAL IN ITA NO. 03/HYD/2017 IS ALLOWED AND OTHER APPEALS OF THE ASSESSEE, THE REVENUE AND C.OS FILED BY THE ASSESSEE FOR ALL THE RELEVANT ASSESSMENT YEARS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- SD/- (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 31 ST OCTOBER , 2017. KRK 1 HMDA C/O SHRI S RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO. 9, HIMAYATNAGAR, HYDERABAD-29. 2 CIT(E), HYDERABAD. 3 CIT(A)-55, MUMBAI. 4 5 6 7 ACIT, CIRCLE-10(1), HYDERABAD. JCIT, RANGE-10, HYDERABAD CIT(OSD), RANGE-10, HYDERABAD DCIT, CIRCLE-10, HYDERABAD 8 9 CIT-6, HYDERABAD. PCIT, RANGE-6, HYDERABAD THE DR, ITAT HYDERABAD GUARD FILE