ITO, SRIGANGANAGAR V. M/s. Urban Improvement Trust, SRIGANGANAGAR

ITA 26/JODH/2014

• Counselvise Citation: 2623314 RSA 2014
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-06-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Business income; Capital expenditure
• Section: 143(3); 12A; 148; 10

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 531 /JODH/ 2013 (A.Y. 200 8 - 09 ) A CIT, CIRCLE, VS. URBAN IMPROVEMENT TRUST, SRIGANGANAGAR . MODEL TOWN , SRIGANGANAGAR. PAN NO. AAATU 2481 P (APPELLANT) (RESPONDENT) ITA NO. 1 26 & 26 /JODH/ 2014 (A.Y S . 200 9 - 1 0 & 2010 - 11 ) ITO , WARD - 3 , VS. URBAN IMPROVEMENT TRUST, SRIGANGANAGAR. SRIGANGANAGAR. PAN NO. AAATU 2481 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH OJHA. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 12 / 0 6 /201 4 . DATE OF PRONOUNCEMENT : 23 /0 7 /201 4 . O R D E R 2 PER N.K. SAINI, A.M TH ESE APPEAL S BY THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER S DATED 30 /0 9 /2013 , 23/12/2013 & 30/10/2013 OF L D . CIT(A), BIKANER FOR THE A.YS. 2008 - 09 , 2009 - 10 AND 2010 - 11 RESPECTIVELY . COMMON ISSUES ARE INVOLVED IN THESE APPEAL S WHICH WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2 FIRST WE WILL DEAL WITH I.T.A.NO. 531/JODH/2013. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: - 1. DELETING ADDITION OF RS. 27,50,070/ - MADE ON ACCOUNT OF SHARE OF GOVT. IN LEASE MONEY. 2. DELETING ADDITION OF RS. 72,70,000/ - MADE ON ACCOUNT OF SHARE OF GOVT. IN LAND CONVERSION. 3. DELETING ADDITION OF RS. 49,46,630/ - MADE ON ACCOUNT OF SHARE OF MC IN THE SALE OF PLOTS. 4. DELETING ADDITION OF RS. 18,48,284/ - MADE ON ACCOUNT OF EXPENSES ON ACCOUNT OF LAND ACQUISITION. 5. D ELET I NG ADDITION OF RS. 7,54,211/ - MADE ON ACCOUNT OF NA ZARANA. 6. DELETING ADDITION OF RS. 4,57,235/ - MADE ON ACCOUNT OF INTEREST INCOME. 3. FACTS RELATING TO TH IS CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30/09/2008 DEC L ARING A NIL INCOME. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN TOTAL RECEIPTS TO THE TUNE 3 OF RS. 9,82,93,598/ - AND APPLICATION OF INCOME AT RS. 9,36,88,420/ - . HE ALSO OBSERVED THAT THE INCOME SET APART/ACCUMULATED TO THE LIMIT OF 15% IS S HOWN AT RS. 46,05,168/ - THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT A REGISTERED TRUST BY THE COMMISSIONER OF INCOME TAX, BIKANER, THEREFORE, ITS INCOME WAS TAXABLE AS BUSINESS INCOME. ACCORDINGLY, NOTICE U/S 148 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, IT WAS SUBMITTED THAT THE ORIGINAL RETURN FILED U/S 139(1) OF THE ACT ON 30/09/2008 MAY BE TREATED AS RETURN FILED IN RESPONSE TO TH E NOTICE U/S 148 OF THE ACT. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAD CLAIMED THE FOLLOWING EXPENDITURE IN THE INCOME & EXPEN SES ACCOUNT : - I. SHARE ON ACCOUNT OF SHARE OF GOVERNMENT IN LEASE MONEY RS. 27,50,070/ - II ON ACCOUNT OF SHARE OF GOVERNMENT IN LAND CONVERSION RS. 72,72,000/ - III. SHARE OF MC IN THE SALE OF PLOTS RS. 49,46,630/ - IV EXPENSES ON ACCOUNT OF LAND ACQUISITION RS. 18,48,284/ - V . NAZRANA RS. 7,54,211/ - THE SAID EXPEN SES W ERE TREATED BY THE ASSESSING OFFICER AS CAPITAL IN NATURE AND CORRESPONDING INCOME WAS ADDED IN THE HANDS OF THE ASSESSEE. 4 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) , WHO OBSERVED THAT AS ON DATE OF INITIATING THE PROCEEDINGS U/S 147/148 OF THE ACT , THE ASSESSEE WAS NOT HAVING REGISTRATION U/S 12A OF THE ACT. HE FURTHER OBSERVED THAT THE ASSESSEE APPLIED FOR REGISTRATION U/S 12A OF THE ACT WHICH WAS REJECTED BY THE CIT , BIKANER AND THE MATTER WAS TRAVELLED UPTO ITAT JODHPUR BENCH, JODHPUR WHEREIN REGISTRATION WAS ALLOWED VIDE ORDER DATED 01/04/2013 W.E.F. 01/04/200 3 . THE LD. CIT(A) WAS OF THE VIEW THAT SINCE THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A OF THE ACT, THEREFORE, I T BECAME ELIGIBLE FOR THE BENEFITS OF CHAPTER III I.E. SECTIONS 11 TO 13 OF THE ACT . THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AND ALSO OBSERVED THAT IF IT WAS PRESUMED THAT THE VIEW OF THE ASSESSING OFFICER WAS CORRECT AND THE EXPENDITURE WAS CLAIMED UNDER THE DEFINITION OF CAPITAL EXPENDITURE EVEN THEN THE EXPENSES CLAIMED WERE COVERED UNDER THE PURVIEW OF APPLICATION OF INCOME FOR THE AIMS AND OBJECTS OF THE ASSESSEE TRUST AND HENCE, WERE ALLOWABLE FOR THE PURPOSES OF CHAPTER - III AND THOSE EXPENSES WERE COVERED UN D ER THE PROVISIONS OF SECTION 11(1) OF THE ACT . ACCORDINGLY , THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 5 5. LEARNED D.R. ALTHOUGH SUPPORTED THE ORDER OF THE ASSESSING O FFICER, BUT COULD NOT CONTROVERT THE OBSERVATIONS MADE BY THE LD. CIT(A) . 6 . IN HIS RIVAL SUBMISSIONS , LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) AND FURTHER SUBMITTED THAT AT THE TIME OF PASSING THE ASSESSMENT ORDER , THE ISSUE RELATING TO GRANT OF REGISTRATION U/S 12A OF THE ACT WAS PENDING BEFORE THE ITAT AND LATER ON REGISTRATION WAS GRANTED U/S 12A OF THE ACT. IT WAS FURTHER SUBMITTED THAT SIMILAR ISSUE FOR THE A.YS. 2003 - 04 TO 2007 - 08 WAS SET ASIDE BY THE ITAT T O THE ASSESSING OFFICER , WHO INCOMPLIANCE TO THE SAID ORDER, ALLOWED THE EXPENSES WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT . OUR ATTENTION WAS DRAWN TOWARDS PAGES 68 TO 115 OF THE ASSESSEES PAPER BOOK WHICH ARE THE COPIES OF THE ASSESSMENT ORDER S PASSED BY THE ASSESSING OFFICER FOR THE A.YS. 2003 - 04 TO 2007 - 08 . 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE , IT IS AN ADMITTED FACT THAT WHEN THE IMPUGNED ADDITIONS WERE MADE BY THE ASSESSING OFFICER, THE ASSESSEE WAS NOT HAVING BENEFIT OF REGISTRATION U/S 12A OF THE ACT WHICH WAS LATER ON GRANTED BY THE ITAT, 6 SAME WAS THE POSITION FOR THE EARLIER YEAR S I.E. A. YS. 2003 - 04 TO 2007 - 08 WHEREIN SIMILAR DISALLOWANCE S WERE MADE BY THE ASSESSING OFFICER AND THE MATTER TRAVELLED UPTO ITAT WHEREIN THE ISSUE WAS SENT BACK TO THE ASSESSING OFFICER TO BE DECIDED BY CONSIDERING THIS FACT THAT THE ASSESSEE WAS HAVING THE REGI STRATION U/S 12A OF THE ACT. ON THE DIRECTION OF THE ITAT , THE ASSESSING OFFICER ALLOWED THE EXPENSES BY CONSIDER ING THE SAME AS APPLICATION OF INCOME . F OR THE YEAR UNDER CONSIDERATION ALSO, T HE ASSESSEE IS HAVING THE BENEFIT OF REGISTRATION U / S 12A OF THE ACT AND IT IS NOT IN DISPUTE THAT THE EXPENSES UNDER CONSIDERATION WERE OUT OF THE INCOME OF THE ASSESSEE . SO, IT WAS THE UTILIZATION OF FUNDS, THEREFORE, THE DEDUCTION UNDER CHAPTER - III WAS AVAILABLE TO THE ASSESSEE AND THESE EXPENSES EVEN I F TREATED AS CAPITAL IN NATURE WERE ALLOWABLE U/S ECS . 12 TO 13 OF THE ACT. WE THEREFORE, DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY , DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 8 . IN I.T.A.NO. 126/JODH/2014 & 26/JODH/2014 THE FACTS ARE IDENTICAL AS WERE INVOLVED IN THE A.Y. 2008 - 09 IN I.T.A.NO. 531/JODH/2013 (SUPRA) . T HEREFORE, IN VIEW OF OUR DETAILED FINDINGS GIVEN FOR THE SAID YEAR IN THE 7 FORMER PART OF THIS ORDER , W E DO NOT SEE ANY MERIT IN THE APPEALS FOR THE A.Y S . 2009 - 10 & 2010 - 11. 9 . IN THE RESULT, APPEAL S OF THE DEPARTMENT ARE DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 23 RD JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD JULY , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR .