The ACIT,GNR Circle, Gandhinagar V. Gujarat Pollution Contorl Board, Gandhinagar

ITA 2337/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63264 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S KALYAN
• Keywords: Charitable institution; Audit objection

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI T.R.MEENA, HONBLE ACCOUNTANT MEMBER ITA NO.2337/AHD/2012 ASSESSMENT YEAR:2006-07 ASSTT. COMMISSIONER OF INCOME TAX, GANDHINAGAR CIRCLE, BLOCK NO. 14, 4 TH FLOOOR, UDHYOG BHAVAN, SECTOR-11, GANDHINAGAR V/S. GUJARAT POLLUTION CONTROL BOARD GUJARAT POWER CORPORATION LTD., BLOCK NO.-8, 6 TH FLOOR, UDHYOG BHAVAN, SECTOR NO-11, GANDHINAGAR [ PAN NO.AAAJG 0543J ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI D.S. KALYAN, CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 20-12-2012 /DATE OF PRONOUNCEMENT 28-12-2012 /O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-GANDHINAGAR-AH MEDABAD (CIT(A) FOR SHORT DATED 17-07-2012 FOR THE ASSESSMENT YEAR (AY) 2006-07. THE REVENUE HAS RAISED THE SOLITARY GROUND, WHICH READS AS UNDE R:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE CLAIMED U/S. 10(23C)(IV) OF THE ACT OF RS. 3,13,96,531/-. ITA NO.2337/AHD/2012 A.Y.2006-07 ACIT GNG V. GPCB PAGE 2 2. HOWEVER, NONE APPEARED ON BEHALF OF ASSESSEE DES PITE NOTICE OF HEARING BEING SERVED UPON THE ASSESSEE AND THE APPE AL IS TAKEN UP FOR HEARING IN THE ABSENCE OF ASSESSEE. 3. THE REVENUE IN THIS APPEAL IS AGGRIEVED BY THE A CTION OF LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE CLAIMED U/S. 10(23C)(IV) OF THE INCOME -TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) OF RS.3,13,96,531/-. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN ASSOCIATION OF PERSON ESTABLISHED BY THE GOVERNMENT OF GUJARAT (GOG FOR SHORT) AND IS ENGAGED IN THE ACTIV ITY OF CONTROL OF POLLUTION WITHIN THE TERRITORY OF STATE OF GUJARAT. THE ORIGI NAL RETURN OF INCOME WAS FILED ON 16-03-2007 AND IN THIS RETURN EXEMPTION WAS CLAI MED BY THE ASSESSEE IN RESPECT OF THE SURPLUS OF RS.3,13,96,531/- UNDER TH E PROVISIONS OF SECTION 10(23C) (IV) OF THE ACT. THE CASE WAS PICKED UP FOR SCRUTINY AND IN THE REGULAR ASSESSMENT ASSESSING OFFICER ALLOWED THE EXEMPTION U/S. 10(23C)(IV) OF THE ACT. SUBSEQUENTLY, RE-ASSESSMENT PROCEEDINGS WERE I NITIATED BY THE SUCCESSOR AO BY ISSUE OF NOTICE U/S. 148 OF THE ACT . THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO SUPPLY A COPY OF REASONS R ECORDED AND THE REASONS WERE SUPPLIED BY THE AO. THE ASSESSEE RAISED OBJECT ION AGAINST THE RE- OPENING OF ASSESSMENT WHICH WAS REJECTED VIDE A SEP ARATE ORDER. THEREAFTER, THE AO DENIED THE EXEMPTION CLAIMED U/S. 10(23C)(IV ) OF THE ACT HOLDING THAT THE EXEMPTION HAS NOT BEEN GRANTED AS PER THE LAW A ND THE CONDITION FOR EXEMPTIONS HAVE NOT BEEN FULFILLED. 4. IN APPEAL, LD. CIT(A) DIRECTED THE AO TO GRANT T HIS EXEMPTION U/S. 10(23C)(IV) OF THE ACT TO THE ASSESSEE BY OBSERVING AS UNDER:- 6. I FIND THAT THE FIRST GROUND RAISED IS AGAINST THE ADDITION OF RS.3,13,96,531/- AND HAS CHALLENGED THE ADDITION BO TH ON LAW AND FACTS. ALTHOUGH, THE APPELLANT IN THE WRITTEN SUBMISSIONS HAS CHALLENGED THE REOPENING ITSELF, THERE IS NO SUCH GROUND AS IS CLE AR FROM THE GROUNDS OF APPEAL REPRODUCED EARLIER. ITA NO.2337/AHD/2012 A.Y.2006-07 ACIT GNG V. GPCB PAGE 3 AS FAR AS THE MERITS OF ADDITION MADE TO THE TOTAL INCOME, AFTER REJECTING THE APPELLANTS CLAIM FOR EXEMPTION OF ITS INCOME U /S. 10(23C)(IV) OF THE IT ACT IS CONCERNED; I HAVE GONE THROUGH THE ASSESS MENT ORDER, THE SUBMISSIONS AND THE FACTS OF THE CASE. THE ASSESSME NT ORDER IS NOT VERY SPEAKING ON THE ISSUE THAT WHY THE EXEMPTION G RANTED VIDE LETTER F.NO.CC-IV/ADV/10 (23C)(IV)/GPCB/2007/08/5 DATED 28 /03/2008 W.E.F.. THE ASSTT. YEAR 2005-06; IS PRESUMED AND HE LD HAS NOT BEEN GRANTED BY THE AO AND WHAT ARE THE REQUISITE CONDITIONS WH ICH ACCORDING TO HIM HAVE NOT BEEN FULFILLED. HOWEVER, ON THE READING OF REASONS RECORDED FOR REO PENING, IT APPEARS THAT THE CASE WAS REOPENED ON THE BASIS OF AUDIT OB JECTION WHICH OPINED THAT EXEMPTION UNDER SECTION 10(23C)(IV) OF THE I.T ACT 1961 CAN BE GRANTED TO AN FUNDS/INSTITUTIONS- A) ONLY IF THE FUND/INSTITUTION IS ESTABLISHED FOR CHARITABLE PURPOSE WHICH MAY BE NOTIFIED BY THE CENTRAL A GOVT. IN THE OFFICIAL GAZETTE HAVING REGARD TO THE OBJECTS OF THE FUND OR INSTITUTION. B) THE REVENUE OFFICER FURTHER OBSERVED THAT THE GR ANTING OF EXEMPTION UNDER SECTION 10(23C)(IV) OF THE I.T ACT 1961 VIDE CITS (SIC)(ACTUALLY CHIEF CIT) APPROVAL INSTEAD OF UNDER NOTIFICATION BY THE CENTRAL GOVT. IN THE GAZETTE IS CONTRARY TO THE PROVISIONS OF THE ACT. THIS HAD RESULTED IN EXCESS EXEMPTION OF RS.3,13,96,531. IT IS CLEAR THAT THE EXEMPTION HAS BEEN DENIED, DES PITE OF THE SPECIFIC APPROVAL BY THE CHIEF CIT-IV, AHMEDABAD JUST BECAUS E THERE WAS NO NOTIFICATION BY THE CENTRAL GOVT. IN THE GAZETTE. D URING ALL THE EARLIER ASSESSMENT YEARS SUCH EXEMPTION WAS GRANTED BY THE I.T. DEPARTMENT ON THE BASIS OF APPROVAL GRANTED BY THE CENTRAL GOV ERNMENT. AS PER THE SCHEME OF APPROVAL PREVAILING DURING THESE YEARS, S UCH APPROVAL WAS TO BE GRANTED BY THE CENTRAL GOVERNMENT FOR A PERIOD O F THREE CONSECUTIVE ASSESSMENT YEARS. THE LAST SUCH APPROVAL WAS GRANTE D VIDE NOTIFICATION NO. 193/2006 DATED 25 TH JULY, 2006 IN RESPECT OF THE ASSESSMENT YEARS 2002-03 TO 2004-05. SUBSEQUENTLY THE RELEVANT PROVI SIONS OF LAW AND THE RULE 2C OF THE I.T. RULES WERE MODIFIED, FOLLOW ING WHICH THE CENTRAL BOARD OF DIRECT TAXES ISSUED A NOTIFICATION NO. 195 /2007 DATED 30 TH MAY, 207. UNDER THIS NOTIFICATION THE CENTRAL GOVER NMENT THROUGH CBDT AUTHORIZED SEVERAL CHIEF COMMISSIONERS OF INCOME-TA X OR DIRECTORS GENERAL OF INCOME-TAX TO ACT AS PRESCRIBED AUTHORIT Y FOR THE PURPOSES OF SECTION 10(23C)(IV), WITH EFFECT FROM 1 ST JUNE, 2007. AS PER THIS NOTIFICATION IN RESPECT OF THE CASES FALLING IN THE JURISDICTIONS OF DIRECTOR OF INCOME-TAX (EXEMPTION), AHMEDABAD, THE CHIEF COM MISSIONER OF INCOME-TAX-AHMEDABAD-I, AHMEDABAD WAS DESIGNATED AS THE PRESCRIBED AUTHORITY. THUS, WITH EFFECT FROM 1 ST JUNE, 2007, APPROVAL U/S. ITA NO.2337/AHD/2012 A.Y.2006-07 ACIT GNG V. GPCB PAGE 4 10(23C)(IV) WAS TO BE GRANTED IN THE PRESENT CASE B Y THE CHIEF COMMISSIONER OF INCOME-TAX AHMEDABAD-IV, AHMEDABAD, IRRESPECTIVE OF THE ASSESSMENT YEAR TO WHICH SUCH APPROVAL MAY P ERTAIN. IT IS SIGNIFICANT TO NOTE THAT SIMULTANEOUSLY THE LAST PR OVISION U/S. 10(23C)(IV) WAS INSERTED BY THE FINANCE ACT, 2007 WITH EFFECT F ROM 1.6.2007 AND THIS PROVISO READS AS UNDER:- PROVIDED ALSO THAT ALL ENDING APPLICATION, ON WHIC H NO NOTIFICATION HAS BEEN ISSUED UNDER SUB-CLAUSE (IV) OR SUB-CLAUSE (V) BEFORE THE 11STD DAY OF JUNE, 2007, SHALL SAND TRANSFERRED ON THAT DAY TO THE PRESCRIBED AUTHORITY AND THE PRESCRIBED AUTHORI TY MAY PROCEED WITH SUCH APPLICATIONS UNDER THOSE SUB-CLAUSES FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. THE AFORESAID PROVISO WAS INSERTED WHICH DIRECTED T HAT ALL SUCH UN- DISPOSED APPLICATIONS WOULD STAND AUTOMATICALLY TRA NSFERRED WITH EFFECT FROM 1 ST JUNE, 2007 TO THE PRESCRIBED AUTHORITY. AS MENTION ED ABOVE, THE ASSESSEE WAS ALREADY GRANTED APPROVAL UPTO THE A.Y. 2004-05 BY VIRTUE OF THE NOTIFICATION ISSUED BY THE CENTRAL GO VERNMENT AND IT HAD ALREADY FILED APPLICATIONS FOR APPROVAL FOR THE SUB SEQUENT ASSESSMENT YEARS AND THE SAME WERE PENDING AS ON 31 ST MAY, 2007. ACCORDINGLY, AS PER THE MANDATE OF THE LAST PROVISO U/S. 10(23C) OF THE I.T. ACT, THESE APPLICATIONS STOOD TRANSFERRED TO THE PRESCRIBED AU THORITY I.E. THE CHIEF COMMISSIONER OF INCOME-TAX AHMEDABAD-IV, AHMEDABAD. ACCORDINGLY, THE PRESCRIBED AUTHORITY PASSED AN ORDER DATED 28.3 .2008 GRANTING APPROVAL WITH EFFECT FROM THE AY 2005-06 ONWARDS TH E PURPOSE OF EXEMPTION U/S. 10(23C)(IV) OF THE I.T. ACT. THE AO' S ACTION OF WITHDRAWING THE EXEMPTION, WITHOUT APPLICATION OF I NDEPENDENT MIND AND BASED ON THE AUDIT OBJECTION IS NOT AT ALL JUSTIFIE D. THE AO IS DIRECTED TO ALLOW THE EXEMPTION U/S 10(23C)(IV) OF THE ACT. 5. AGGRIEVED BY THIS ORDER OF LD. CIT(A), NOW REVEN UE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE RE CORD WE FIND THAT SINCE THERE IS NO DISPUTE ABOUT THE FACT THAT AS PER THE AMENDED PROVISIONS OF LAW WITH EFFECT FROM 01-06-2007 THE PRESCRIBED AUTHORIT Y I.E. THE CHIEF COMMISSIONER OF INCOME-TAX HAS GRANTED APPROVAL TO THE ASSESSEE FOR THE PURPOSE OF EXEMPTION U/S. 10(23C)(IV) OF THE ACT, T HE LD. CIT(A) HAS RIGHTLY ITA NO.2337/AHD/2012 A.Y.2006-07 ACIT GNG V. GPCB PAGE 5 DIRECTED THE ASSESSING OFFICER TO ALLOW THE EXEMPTI ON U/S 10(23C)(IV) OF THE ACT TO THE ASSESSEE AND THEREFORE THE ORDER PASSED BY HIM IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (T.R.MEENA) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP ! '- $%& ' (() (() (() (() *) *) *) *) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. !&!(/ 0 / CONCERNED CIT 4. 0- / CIT (A) 5. )34 (((/, (/ , $%& / DR, ITAT, AHMEDABAD 6. 478 9: / GUARD FILE. BY ORDER/ , /TRUE COPY/ ;/$ != (/ , $%& ' STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 24/12 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 24/12 4) DATE OF CORRECTION 24/12 5) DATE OF FURTHER CORRECTION - - 6) DATE OF INITIAL SIGN BY MEMBERS 27/12 7) ORDER UPLOADED ON 28/12 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 8) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 28/12