THE DY DIT(E)-I-(1), MUMBAI V. M/.S. THE MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORITY (MHADA), MUMBAI

ITA 2255/MUM/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79438 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-07-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 03-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREETAM SINGH
• Assessee Lawyers: M SUBRAMANIAM
• Keywords: Charitable institution; Competent authority
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , ! BEFORE SHRI SANJAY ARORA, AM AND DR. S. T. M. PAVA LAN, JM ' # I.T.A. NOS.4178 & 2255/MUM/2008 ( / ASSESSMENT YEARS: 2005-06 & 2003-04) DY. DIT(E)-1(1) ROOM NO. 505, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI 400 012 # VS. MAHARASHTRA HOUSING & AREA DEVELOPMENT AUTHORITY (MHADA) GRIHA NIRMAN BHAVAN, 4 TH FLOOR, BANDRA (EAST), MUMBAI 400 051 $ #'%' ./PAN/GIR NO. AAAJM 0344 H ( $& /APPELLANT ) : ( '($& / RESPONDENT ) $&)* / APPELLANT BY : SHRI PREETAM SINGH '($&)* / RESPONDENT BY : SHRI M. SUBRAMANIAM + ,)- / DATE OF HEARING : 17.07.2014 DATE OF ORDER : 31.07.2014 '.# O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO APPEALS BY THE REVENUE DIRECTE D AGAINST THE SEPARATE ORDERS BY THE COMMISSIONER OF INCOME TAX (APPEALS)-32, MUM BAI (CIT(A) FOR SHORT), ALLOWING THE ASSESSEES APPEALS (ON THE RELEVANT GR OUNDS), CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT H EREINAFTER) FOR THE ASSESSMENT YEARS (A.YS.) 2003-04 & 2005-06. 2.1 AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE INSTANT APPEALS BY THE REVENUE ARE COVERED AGAINST IT BY THE ORDER BY THE TRIBUNAL IN THE ASSESSEES CASE FOR TH E SUBSEQUENT YEARS, BEING A.Y. 2006-07 2 ITA NOS. 4178 & 2255/M/2008 (A.YS. 2005-06 & 03-04) DY. DIT(E) VS. MHADA (IN ITA NO.5582/MUM(F)/2009 DATED 16.01.2013) AND A .Y. 2007-08 (IN ITA NO.5758/MUM(B)/2010 DATED 16.11.2011), ADDUCING A C OPY OF THE SAID ORDER, COMMON FOR BOTH THE YEARS. HE WOULD FURTHER SUBMIT THAT TH E REVENUE HAD RAISED SIMILAR GROUNDS, I.E., AS FOR THE CURRENT YEAR, TAKING US THROUGH TH E GROUNDS ASSUMED BY THE REVENUE FOR THE CURRENT YEAR AS WELL AS THE GROUNDS REPRODUCED IN T HE TRIBUNALS ORDER FOR A.Y. 2006-07. THE SOLE ISSUE, HE WOULD CONTINUE, ARISING IN THE I NSTANT CASE IS WHETHER THE ASSESSEE COULD BE REGARDED AS A CHARITABLE INSTITUTION, SO A S TO BE EXIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT. THE ASSESSEE HAVING BEEN GRANTED REGISTERE D U/S.12A, WHICH IS CURRENT FOR THE RELEVANT YEARS, IT WAS IN THE VIEW OF THE TRIBUNAL NOT OPEN FOR THE ASSESSING OFFICER (A.O.) TO QUESTION THE SAME, AND IT IS ON THIS BASIS THAT IT REJECTED THE REVENUES CLAIM FOR THE SAID YEARS, FOLLOWING ITS DECISION IN THE CASE OF SLUM REHABILITATION AUTHORITY WHEREIN THIS ISSUE HAD FIRST ARISEN (IN ITA NO.5150/MUM(H)/ 2010 DATED 30.09.2011/COPY ON RECORD). THE COPY OF THE ASSESSEES REGISTRATION CE RTIFICATE, CALLED FOR BY THE BENCH ON AN EARLIER OCCASION, WAS ALSO FURNISHED BY HIM (COPY O N RECORD). 2.2 THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON BE ING CONFRONTED THEREWITH, WOULD SUBMIT THAT REFERENCE TO THE ASSESSEES REGISTRATIO N CERTIFICATE ITSELF CLARIFIES THAT REGISTRATION U/S.12A WOULD NOT OFFER ANY RIGHT OR E NTITLEMENT WITH REGARD TO EXEMPTION U/SS.11, 12 & 13, WHICH IS TO BE DECIDED BY THE A.O . ON MERITS. ACCORDINGLY, THE A.O. WAS WELL WITHIN HIS RIGHTS TO HAVE DECIDED ON THE N ATURE OF THE ASSESSEES ACTIVITIES, AND DENYING EXEMPTION U/S. 11, I.E., UPON FINDING THE S AME TO BE NOT CHARITABLE IN NATURE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE WITHDRAWAL OF THE REGISTRATION BY THE REVENUE I N THE ASSESSEES CASE, TO WHICH REFERENCE WAS ALSO MADE DURING HEARING, HAS BEEN W. E.F. A.Y. 2009-10 (COPY ON RECORD), SO THAT IT OBTAINS FOR THE CURRENT YEARS, AND ITS S UBSEQUENT WITHDRAWAL WOULD HAVE NO BEARING ON THE ASSESSMENTS UNDER REFERENCE. THE BAS IS OF THE REVENUES DENIAL OF EXEMPTION U/S.11 OF THE ACT IS ON THE GROUND THAT T HE ASSESSEE, A LOCAL AUTHORITY, IS NOT A CHARITABLE TRUST/INSTITUTION IN-AS-MUCH AS IT IS A PUBLIC ENTERPRISE/PUBLIC SECTOR UNDERTAKING, WHICH STOOD PROVIDED SPECIFIC EXEMPTIO N U/S. 10(20A), SINCE WITHDRAWN, 3 ITA NOS. 4178 & 2255/M/2008 (A.YS. 2005-06 & 03-04) DY. DIT(E) VS. MHADA I.E., BY FINANCE ACT, 2002, W.E.F. 01.04.2003. THE SCHEME OF THE ACT, I.E., PER SECTIONS 11 TO 13, WOULD NOT THEREFORE APPLY THERETO. IT IS WELL SETTLED THAT THE A.O. IN THE ASSESSMENT PROCEEDINGS CANNOT DETERMINE THE CHARACTER OR NATURE OF THE ACTIVITIES OF THE ASSESS EE, FOR WHICH A SEPARATE PROCEDURE BY WAY OF WITHDRAWAL OF REGISTRATION, ON A FINDING OF BREACH OF ANY OF THE CONDITIONS OF ITS REGISTRATION, IS TO BE ADOPTED. HIS PURVIEW IN THE ASSESSMENT PROCEEDINGS IS TO EXAMINE THE APPLICATION OF THE ASSESSEES INCOME TOWARD ITS AVOWED OBJECTS, CONSIDERED AS CONSTITUTING A CHARITABLE PURPOSE, AND ALLOW EXEMPT ION IN TERMS OF THE RELEVANT SECTIONS, ALSO CONFIRMING THE OBSERVANCE OF THE LIMITATIONS A ND CONDITIONS PRESCRIBED U/S.13 OF THE ACT. IT IS ALSO NOT THE REVENUES CASE THAT THE ACT IVITIES BEING PURSUED BY THE ASSESSEE WERE NOT CONSISTENT WITH OR IN ACCORD WITH ITS OBJ ECTS. THE ONLY MANNER, THEREFORE, WHEREBY THE REVENUE COU LD ESTOPP THE ASSESSEE A CHARITABLE INSTITUTION, REGISTERED AS SUCH UNDER TH E ACT, FROM CLAIMING EXEMPTION U/S.11, IS BY WAY OF INITIATING PROCEEDINGS TOWARD WITHDRAW AL OF THE SAID REGISTRATION FOR THE RELEVANT YEARS. THE GRANT OF REGISTRATION CARRIES W ITH IT AN INHERENT RIGHT TO THE COMPETENT AUTHORITY GRANTING THE SAME TO WITHDRAW THE SAME, I .E., WHERE THE CONDITION/S OF ITS GRANT STAND BREACHED OR VIOLATED, OR WHERE THE ACTIVITIES COULD NO LONGER BE REGARDED AS CHARITABLE, AS CLARIFIED BY THE HONBLE COURT IN ALLAHABAD AGRICULTURAL INSTITUTE V. UNION OF INDIA [2007] 291 ITR 116 (ALL) AND, IN FACT, FURTHER CON FIRMED PER THE AMENDMENT TO THE ACT BY WAY OF INSERTION OF SECTION 293C ON THE STATUTE BOOK. REFERENCE IN THIS CONTEXT MAY ALSO BE PROFITABLY MADE TO THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY VS. CIT [2012] 343 ITR 23 (BOM), EXPLAINING THE SCOPE OF S. 12AA(3), A PARA MATERIA PROVISION, TOWARD WITHDRAWAL OF REGISTRATION U/S. 12A. THAT HAVING ADMITTEDLY NOT B EEN DONE, NOR ANY PROCEEDINGS INITIATED TOWARD THE SAME, I.E., FOR THE RELEVANT Y EARS, IN OUR VIEW, THE REVENUE WAS NOT CORRECT IN LAW IN DENYING THE ASSESSEE EXEMPTION U/ S.11. THE TRIBUNAL HAS ALLOWED THE ASSESSEES CLAIM FOR OTHER YEARS ON THAT BASIS. THE DECISION BY IT IN THE CASE OF SLUM REHABILITATION AUTHORITY STANDS ALSO UPHELD BY THE HONBLE HIGH COURT (IN I TA (LOD) NO.2044 & 2045 OF 2012 DATED 08.03.2013/COPY ON REC ORD), HOLDING IT AS EXISTING NOT FOR 4 ITA NOS. 4178 & 2255/M/2008 (A.YS. 2005-06 & 03-04) DY. DIT(E) VS. MHADA PROFIT, BUT WITH A PRIMARY PURPOSE TO PROMOTE WELFA RE OF GENERAL PUBLIC, WHICH WOULD BE A CHARITABLE PURPOSE FOR THE PURPOSES OF THE ACT. IN VIEW OF THE FOREGOING, WE HAVE NO HESITATION IN, DECLINING TO INTERFERE WITH THE IMPUGNED ORDERS. IN FACT, EACH OF THE ISSUES RAISED BY THE REVENUE PER ITS GROUNDS, VIZ. THAT THE ASSESSEE IS A LOCAL AUTHORITY; IS NOT A TR UST, MUCH LESS REVOCABLE; AND THAT ITS OBJECTS ARE COMMERCIAL AND NOT CHARITABLE IN NATURE , STANDS SPECIFICALLY DEALT WITH BY THE LD. CIT(A), TO NO REBUTTAL BY THE REVENUE. WE DECID E ACCORDINGLY. 4. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED. /0 -1 ) 2 /) -34! ORDER PRONOUNCED IN THE OPEN COURT ON JULY 17, 2014 AT THE CONCLUSION OF THE HEARING. SD/- SD/- (DR. S. T. M. PAVALAN) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + 5, MUMBAI; 6 DATED : 31.07.2014 # ROSHANI , SR. PS ! ' #$%& ' &$ # COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. '' + 7- 8 9 / THE CIT(A) 4. '' + 7- / CIT CONCERNED 5. :; <'-=> ' =>0 + 5, / DR, ITAT, MUMBAI 6. < ?@ , # GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , + 5, / ITAT, MUMBAI