Council of Handicrafts Development Corporation, New Delhi V. ITO, Exemptions, Ward- 1(3), New Delhi

ITA 2723/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1552 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 29-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption; TDS
• Section: 12; 11; 12A; 20

Judgement Text

1 ITA NO. 2723/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2) + SM C-1 NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 2723/DEL/2019 ( A.Y 2015-16) COUNCIL OF HANDICRAFTS DEVELOPMENT CORPORATION WEST BLOCK NO. 7, R. K. PURAM NEW DELHI PIN: 110066 PAN: AAATC5655R (APPELLANT) VS ITO EXEMPTIONS, WARD-1(3) NEW DELHI (RESPONDENT) APPELLANT BY SH. S. K. CHATURVEDI, CA RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 22.02.2019 PASSED BY CIT(A)-40, DELHI, FOR ASSESSMENT YEAR 20 17-18. 2. THE GROUND OF APPEAL IS AS UNDER:- 1. THAT LD.CIT(A)-40, NEW DELHI HAS ERRED BY CONFIRMI NG THE ACTION OF ASSESSING OFFICER REGARDING DENIAL OF CREDIT OF TD S OF RS. 13,94,101/- ON RENTAL INCOME COLLECTED BY THE APPELLANT UNDER AN A GREEMENT ON BEHALF OF DEVELOPMENT COMMISSIONER (HANDICRAFTS) MINISTRY OF TEXTILES IN RESPECT OF RAJEEV GANDHI HANDICRAFTS BHAWAN, NEW DELHI. DATE OF HEARING 05.03.2020 DATE OF PRONOUNCEMENT 15 .05.2020 2 ITA NO. 2723/DEL/2019 3. THE ASSESSEE SOCIETY WAS REGISTERED U/S 12A OF THE INCOME TAX ACT ON 5/1/1985. THE MAIN OBJECT OF THE ASSESSEE SOCIETY IS TO ASSIST GRASS ROOT LEVEL ORGANIZATIONS, NGOS, SELF HELP GROUP AND SMALL ENT REPRENEUR ENGAGED IN THE HANDICRAFTS TO ENHANCE AND ADOPT SKILL THROUGH DESI GN INTERVENTIONS, ENHANCE PRODUCTIVITY AND INCOME THROUGH TECHNICAL UP GRADAT ION, THE SOCIETY SUSTAINABLE DEVELOPMENT AND RESPONSIBLE WORKING CON DITIONS, ASSIST IN MAKING THROUGH DOMESTIC AND INTERNATIONAL CHANNELS AND PRO VIDE ASSISTANCE AND GUIDANCE FOR ACHIEVING BETTER SOCIAL ENVIRONMENT. RETURN OF INCOME WAS FILED ON 23/9/2015 DECLARING INCOME OF RS. 8,29,540/-. H OWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED C OMPUTATION OF INCOME WHEREIN INCOME HAS BEEN DECLARED AT NIL AFTER CLAIM ING BENEFIT OF EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT. THE ASSESSING O FFICER OBSERVED THAT THE ASSESSEE IS NEITHER IN THE FIELD OF EDUCATION NOR I N THE FIELD OF MEDICAL RELIEF OR RELIEF OF POOR, PRESERVE OF ENVIRONMENT (INCLUDING WATER SHEDS, FORESTS AND WILD LIVES) AND PRESERVATION OF MONUMENTS OR PLACES OR O BJECTS OF ARTISTIC OR HISTORIC INTEREST. THE ASSESSING OFFICER HELD THAT THE ENTI RE RECEIPTS OF SALES ARE ARISING OUT OF COMMERCIAL TRANSACTIONS AND THUS MADE ADDITI ON OF RS. 46,48,967/- TOWARDS THE DEDUCTION OF ADMISSIBLE EXPENSES. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE DENIAL OF CREDIT O F TDS ON RENTAL INCOME COLLECTED BY THE ASSESSEE UNDER AN AGREEMENT ON BEH ALF OF THE DEVELOPMENT COMMISSIONER (HANDICRAFTS), MINISTRY OF TEXTILE IN RESPECT OF RAJIV GANDHI HANDICRAFTS BHAWAN, NEW DELHI WAS NOT JUST AND PROP ER. THE LD. AR SUBMITTED THAT AS THE ACTIVITIES CANNOT BE STATED T O BE RUNNING OF SERVICES IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS AS PER THE PROVISIONS OF SECTION 196, NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE FR OM ANY INTEREST OR DIVIDEND OR OTHER SUMS PAYABLE TO THE GOVERNMENT. THE RENTA L INCOME PERTAINS TO THE GOVERNMENT AND THAT IT WAS MERELY ACTING AS N AGENT /LICENSEE AND WAS 3 ITA NO. 2723/DEL/2019 COLLECTING RENT ON BEHALF OF THE GOVERNMENT. THE L D. AR SUBMITTED THAT THE ASSESSING OFFICER WAS NOT RIGHT IN DEDUCTING TDS FR OM THE ASSESSEE AS THE ASSESSEE IS NOT A SERVICE PROVIDER OR THE BENEFICIA RY/RECIPIENTS OF THE PAYMENT. THEREFORE, THE APPEAL OF THE ASSESSEE BE ALLOWED. 6. THE LD. DR SUBMITTED THERE IS NO PROVISION UNDER THE INCOME TAX ACT, WHEREIN CREDIT FOR TAX DEDUCTED IS GIVEN TO A PERSO N OTHER THAN IN WHOSE HAND THE INCOME IS ASSESSABLE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. FACTS BRIEFLY SHOW THAT THE ASSESSEE WAS C OLLECTING RENT ON BEHALF OF GOVERNMENT OF INDIA FROM THE TENANTS AND THEN REMIT S THAT RENT AS IT IS BACK TO THE GOVERNMENT. THE BUILDING IS OWNED BY THE GOVERN MENT OF INDIA. THE ASSESSEE IS NOT THE BENEFICIAL OWNER OF THE RENT AS PROPERTY WAS GIVEN BY THE GOVERNMENT TO THE ASSESSEE FOR ITS USE. THE ASSESSE E WAS MERELY COLLECTING THE RENT. THUS, THE RENT COLLECTED BY THE ASSESSEE IS D EFINITIVELY ITS INCOME AND RENT PAID BACK TO THE GOVERNMENT IS ITS EXPENSES. IT IS A LEASE IN & LEASE OUT AGREEMENT/UNDERSTANDING. THEREFORE, ON THE RENT PAI D TO THE ASSESSEE BY THE TENANTS, TAX IS DEDUCTIBLE UNDER SECTION 194I OF TH E INCOME TAX ACT, 1961. AS ASSESSEE PAYS THE SAME TO THE GOVERNMENT, IT DOES N OT NEED TO DEDUCT TAX AT SOURCE ON ITS REPAYMENT TO THE GOVERNMENT. THUS, IN ALL PRACTICAL PURPOSES RENT COLLECTED BY THE ASSESSEE FROM ITS TENANTS AND RENT PAID TO THE GOVERNMENT (ACTUAL TRANSFER OF RENT TO THE GOVERNMENT) IS ITS OUTGO. THEREFORE, TAX DEDUCTED BY THE TENANT SHOULD BE GRANTED AS REFUND TO THE AS SESSEE AS RENT COLLECTED IS ITS INCOME IN HANDS OF THE ASSESSEE AND RENT PAID T O THE GOVERNMENT IS ITS EXPENSES. THEREFORE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) WAS NOT RIGHT IN DENYING THE CREDIT OF TDS TO THE ASSESSEE. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4 ITA NO. 2723/DEL/2019 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THIS 15TH DAY OF MAY, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/05/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 2723/DEL/2019 DATE OF DICTATION 17.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 5 . 0 5 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER