DIT (E), New Delhi V. The Energy & Resources Institute, New Delhi

ITA 2292/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3590 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption; Revised return
• Section: 12A; 10B; 12; 11

Judgement Text

ITA NO. 2292/DEL/2010 A.Y. 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2292/DEL/2010 A.Y. : 2006-07 DY. DIRECTOR OF INCOME TAX (E), VS. THE ENERGY & RESOURCE INSTITUTE ROOM NO. 204, 2 ND FLOOR, DARBARI SETH BLOCK, AAYAKAR BHAVAN, LAXMI NAGAR DISTT. IHC COMPLEX, LO DHI ROAD, CENTRE, NEW DELHI 110 092 NEW DELHI 110 003 (PAN: AAATT2841E) [APPELLANT] (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SH. H.K. LAL, D.R. PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 25.2.201 0 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE GROUND RAISED READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C.I.T.(A) HAS ERRED IN REDUCING THE ASSESSED INCOME AT RS. 3,76,2 2,000/- TO RS. NIL BY HOLDING THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 OF THE ACT WHEN, IN THE FIRST PLACE, THE ASSESSEE NEVER EVEN CLAIME D THE SAME IN THE ORIGINAL RETURN OF INCOME OR BY WAY OF FILING A REVISED RETU RN OF INCOME. IN THE ABSENCE OF CLAIM THROUGH FILING OF REVISED RETURN T HE ASSESSEE IS NOT ENTITLED TO CLAIM OF EXEMPTION U/S 11 OF THE ACT. ITA NO. 2292/DEL/2010 A.Y. 2006-07 2 3. THE ASSESSEE IN THIS CASE FILED RETURN OF INCOME ON 19.1.2007 AFTER CLAIMING EXEMPTION U/S. 10(21) OF RS. 3,76,22,000/-. THE BRI EF FACTS OF THE CASE IS THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIE S REGISTRATION ACT, 1860 AND IS ENGAGED IN THE FIELD OF ORGANIZING, PROMOTING AND C ONDUCTING SCIENTIFIC RESEARCH FOR THE EXTENSION OF KNOWLEDGE IN THE FILED OF ENER GY ENGINEERING, POLICY ANALYSIS, ENERGY AUDIT AND BIOTECHNOLOGY. IT HAD FILED RETURN AT NIL INCOME BY CLAIMING EXEMPTION U/S. 10(21) OF THE ACT. IN THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS APPR OVED BY THE PRESCRIBED AUTHORITY IN THE CATEGORY OF INSTITUTION FOR THE PURPOSE OF SECTION 35(1)(II) OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, THIS CLAI M OF THE ASSESSEE WAS NOT IN ORDER AS EXEMPTION UNDER SECTION 10(21) WAS AVAILAB LE ONLY TO A SCIENTIFIC RESEARCH ASSOCIATION AND NOT TO INSTITUTION, SUB JECT TO ITS APPROVAL UNDER SECTION 35(1)(II) AND OTHER PRESCRIBED CONDITIONS. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE APPELLANT DID NOT ENCLOSE WITH TH E INCOME AND EXPENDITURE ACCOUNT, THE AUDITORS CERTIFICATE SPECIFYING THE AM OUNT RECEIVED AS DONATION IN RESPECT OF WHICH DONORS ARE ELIGIBLE FOR DEDUCTION UNDER CLAUSE (II) OF SECTION 35(1) AND CERTIFICATE THAT SUCH AMOUNT WAS INCURRED ON SCIENTIFIC RESEARCH. IT WAS ALSO HELD THAT THE APPELLANT IS PARTLY AND NOT WH OLLY ENGAGED IN RESEARCH WORK. THE ARGUMENT OF THE ASSESSEE WAS THAT THE CLAIM SHO ULD BE ACCEPTED SINCE IT HAD ALWAYS BEEN ACCEPTED IN THE PAST. HOWEVER, THE C LAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 10(21) OF THE ACT WAS REJECT ED ON THE GROUND THAT IT WAS CATEGORIZED AS AN INSTITUTION AND NOT AS AN ASSO CIATION. THE ASSESSEE ALSO MADE AN ALTERNATE CLAIM FOR EXEMPTION UNDER SECTION 11 AS ASSESSEE WAS REGISTERED UNDER SECTION 12A OF THE ACT. HOWEVER, THIS CLAIM OF THE ASSESSEE WAS ALSO NEGATIVED ON THE GROUND THAT NO REVISED RETURN WAS FILED, AND FURTHER FORM ITA NO. 2292/DEL/2010 A.Y. 2006-07 3 10B WAS NOT SIGNED BY THE AUDITORS. THUS, BY DENYIN G BOTH THE CLAIMS, THE TOTAL INCOME WAS ASSESSED AT RS. 3,76,22,000/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) HELD THAT ASSESSING OFFICER WAS CORRECT IN DENYING THE BENEFIT OF SECTION 10(21) TO THE ASSESSEE AS INCOME TAX ACT PROVIDED BENEFIT TO ASS OCIATION AND NOT TO INSTITUTION. HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE ALTERNATIVE GROUND OF THE ASSESSEE THAT IN ABSENCE OF EXEMPTION U/S 10(21) OF THE ACT IT SHOULD HAVE BEEN GIVEN THE BENEFIT OF SECTIO N 11, AS IT IS REGISTERED UNDER SECTION 12A OF THE IT ACT. LD. COMMISSIONER OF INC OME TAX (APPEALS) IN THIS REGARD REFERRED TO SEVERAL CASE LAWS AND HELD AS UNDER:- THUS, THE SUM AND SUBSTANCE OF THE ABOVE DISCUSSIO N IS THAT THE APPELLATE AUTHORITIES CAN ENTERTAIN RIGHTFUL CLAIMS OF THE AP PELLANT AND ADJUDICATE ON THE SAME AND FILING OF AUDIT REPORT IS NOT MANDAT ORY BUT ONLY DIRECTOR. IN THE INSTANT CASE, THE APPELLANT BEING REGISTERED U/ S. 12A AND HAVING FILED AUDIT REPORT AT THE TIME OF ASSESSMENT PROCEEDINGS, IS ELIGIBLE FOR THE BENEFIT OF EXEMPTION U/S. 11 AND 12 EVEN THOUGH THE SAME WAS NOT CLAIMED IN THE RETURN OF INCOME, PROVIDED ALL THE CONDITION S LAID DOWN IN THIS REGARD IN THE IT ACT ARE FULFILLED, AND ITS CLAIMS ARE WIT HIN THE PARAMETERS LAID DOWN IN THE CASE LAWS DISCUSSED ABOVE. THUS, THE CONTENTION OF THE APPELLANT IN RESPECT OF THE ABOVE ISSUE STANDS AL LOWED. IT IS ALSO NOTICED THAT THE ASSESSING OFFICER HAS OBSERVED THAT FORM 10B IS NOT SIGNED BY ANY AUDITORS, AS FORM 10B HAS THE SIG NATURE OF M/S KHANNA AND ANNADHANAM, WHO ARE NOT THE AUDITOR OF THE APPE LLANT SOCIETY AND MADE IT GROUND FOR REJECTION OF EXEMPTION U/S. 11 & 12 OF THE IT ACT. ITA NO. 2292/DEL/2010 A.Y. 2006-07 4 HOWEVER, ON PERUSAL OF THE FORM 10B IT WAS SEEN TH AT SAME HAS BEEN SIGNED BY A CHARTERED ACCOUNTANT. THE REQUIREMENT O F LAW IS THAT FORM 10B HAS TO BE SIGNED BY THE ACCOUNTANTS AS DEFINED U/S. 288 OF THE INCOME TAX ACT, 1961. IT IS NOT NECESSARY THAT ACCOUNTANT HAS TO BE AUDITOR (IN THIS CASE OF AF FERGUSON & CO.). PERHAPS THIS FACT HAS NOT BEEN PROPERLY APPRECIATED BY ASSESSING OFFICER , AND HE HAS ERRED IN REJECTING THE AUDIT REPORT ON THIS GROUND AND MAKING IT A BASIS OF DENI AL OF EXEMPTION U/S. 11 & 12. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE AS SESSEE HAS NOT CLAIMED THE EXEMPTION IN THE ORIGINAL RETURN OF INCOME OR BY W AY OF FILING A REVISED RETURN OF INCOME, HENCE, LD. COMMISSIONER OF INCOME TAX (APPE ALS) SHOULD NOT HAVE ALLOWED THE ASSESSEES CLAIM. 6.1 WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTA TIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE. UPON CAREFUL CONSIDERATI ON, WE ARE OF THE OPINION THAT THE ISSUE CAN BE ADJUDICATED BY CONSIDERING THE MAT ERIALS ON RECORD AND HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. ACCORDINGLY, WE PROCEED TO ADJUDICATE THE SAME. 6.2 WE FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IS NOT ENTITLED FOR CLAIMING EXEMPTION U/S 11 OF THE ACT. THE ONLY GRIEVANCE IS THAT THE SAME HAS NOT BEEN CLAIMED IN THE ORIGINAL RETURN O F INCOME OR BY WAY OF FILING ITA NO. 2292/DEL/2010 A.Y. 2006-07 5 THE REVISED RETURN OF INCOME. IN THIS REGARD, R EVENUE HAS RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE GOET Z (INDIA) LTD. VS. C.I.T. 284 ITR 323. UPON CAREFUL CONSIDERATION, WE FIND THAT THI S PLEA OF THE REVENUE IS NOT TENABLE, AS WHEN THE ASSESSEE IS ENTITLED TO EXEMP TION GENUINELY, THE SAME CANNOT BE DENIED. WE ALSO FIND THAT THE HONBLE AP EX COURT IN THE CASE OF GOETZ (INDIA) LTD. VS. C.I.T. (SUPRA) HAD CLARIFIED THAT THE DECISION REFERRED IN THAT CASE SHALL NOT RESTRICT THE POWERS OF THE TRIBUNAL TO A DMIT AND ADJUDICATE THE CLAIM OF THE ASSESSEE. IN OUR CONSIDERED OPINION THE CLAI M OF THE ASSESSEE WAS GENUINE. ARTICLE 265 OF THE CONSTITUTION OF INDIA STATES T HAT NO TAX CAN BE COLLECTED EXCEPT BY AUTHORITY OF LAW. CBDT CIRCULAR NO. 114 XL-35 OF 1955 DATED 11.4.1955 STATES THAT OFFICER OF THE DEPARTMENT MUST NOT TAKE ADVANT AGE OF THE IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. HONBLE APEX COURT IN THE CASE OF CIT VS. MR. P. FIRM IN 56 ITR 67 WHEREIN THE BENCH COMPRISED THREE OF THE IR LORDSHIPS HAD EXPOUNDED THAT IF A PARTICULAR INCOME IS NOT TAXABLE UNDER IT ACT, IT CANNOT BE TAXED ON THE BASIS OF ESTOPPEL OF ANY OTHER EQUITABLE DOCTRINE . IF A PARTICULAR INCOME IS NOT EXIGIBLE TO TAX, AO HAS NO POWER TO IMPOSE TAX ON THE SAID INCOME. 6.3 CONSIDERING THE ABOVE, WE FIND THAT THE GENUIN ENESS/CORRECTNESS OF THE ASSESSEES CLAIM HAS NOT BEEN DOUBTED BY THE REVENU E AND THE ONLY GRIEVANCE IS THAT THE SAME HAS NOT BEEN FILED BY WAY OF ORIGINAL RETURN OR REVISED RETURN. THE ITA NO. 2292/DEL/2010 A.Y. 2006-07 6 ASSESSING OFFICER HAS NOT ALLOWED THE CLAIM ONLY ON THIS GROUND AND THAT THE AUDITORS CERTIFICATE WAS NOT SIGNED BY THE SAME AUD ITOR. A GENUINE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED AND THE ANOTHER ARGUMEN T FOR DENIAL BY THE ASSESSING OFFICER THAT FROM 10-B HAS NOT BEEN SIGNED BY THE SAME AUDITOR, IS DEVOID OF MERITS. HENCE, ON THE BASIS OF THE AFORESAID DIS CUSSION AND PRECEDENTS, WE DO NOT FIND ANY MERIT IN THIS GRIEVANCE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) AND HENCE WE AFFIRM THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/07/2010 UP ON CONCLUSION OF THE HEARING. SD/- SD/- [A.D. JAIN] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 15/07/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ITA NO. 2292/DEL/2010 A.Y. 2006-07 7 DEPUTY REGISTRAR, ITAT, DELHI BENCHES