Gujarat Maritime Board, Gandhinagar V. The Jt.CIT, Gandhinagar Circle, Gandhinagar

ITA 2991/AHD/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5942 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A Y TO ARI SE FROM
• Assessee Lawyers: SIX
• Keywords: Business income; Depreciation; Charitable institution; Earning of tax free income; Retrospective amendment; Capital receipt; Benefit of exemption; Cancellation of registration; Revenue expenditure; Capital expenditure; Rule 8D
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER GUJARAT MARITIME BOARD, GMB BHAVAN, SECTOR 10A, OPP. AIR FORCE STATION, GNDHINAGAR - 382010 PAN: AABCG6676L (APPELLANT) VS THE JT. DCIT - (EXEMPTION) , CIRCLE - 1 , AHMEDABAD (RESPONDENT) THE DY. DCIT , GANDHINAGAR CIRCLE , GANDHINAGAR (APPELLANT) VS GUJARAT MARITIME BOARD, GMB BHAVAN, SECTOR 10A, OPP. AIR FOR CE STATION, GNDHINAGAR - 382010 PAN: AABCG6676L (RESPONDENT) REVENUE BY : S H RI O.P. SHARMA & SHRI L.P. JAIN , SR. D . R S . ASSESSEE BY: SHRI S.N. SOPARKAR & SHRI H.P. SINGH , A.R S . DATE OF HEARING : 17 - 07 - 2 019 DATE OF PRONOUNCEMENT : 30 - 07 - 2 019 I T A NO S. 2991/AHD/2013, 361, 1622 / AHD/20 1 4, 829, & 830 / A HD/20 17 A SS ESSMENT YEAR 2009 - 10 TO 2013 - 14 ITA NO S. 91 , 330, 22 83/AHD/2014 , 752, 753 & 2321 /AHD/20 17 ASS ESSMENT YEAR 2009 - 10 TO 2014 - 15 I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 2 / ORDER P ER BENCH : - THESE ELEVEN APPEALS FILED FIVE BY ASSESSEE AND SIX BY REVENUE FOR A.Y. 2009 - 10 TO 2014 - 15 , ARI SE FROM ORDER OF THE CIT(A), GANDHINAGAR, AHMEDABAD , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - ITA NO. 2991AHD/2013 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AC IN HOLDING THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT WERE NOT IN THE NATURE OF CHARITY BUT IN THE NATURE OF BUSINESS AND CONFIRMED COMPUTATION OF THE EXCESS OF INCOME OVER EXPENDITURE OF PREVIOUS YEAR ARISING OUT OF CHARITABLE ACTIVITY OF APPELL ANT AS INCOME FROM BUSINESS. BOTH THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACT THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION U/S. 12A OF THE ACT QUALIFYING ITS INCOME EXEMPT FROM TAXATION AS TOTAL EXPENDITURE (CAPITAL AND ' REVENUE) INCURRED BY T HE APPELLANT IS FOR 'ADVANCEMENT OF THE OBJECT OF GENERAL PUBLIC UTILITY'. 2. LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER I N NOT GRANTING EXEMPTION BENEFIT OF OF ACCUMULATION OF 15% OF THE GROSS SURPLUS. 3. THE ID. CIT(A) HAS ERRED IN NOT ALLOWING DEDUCTION IN RELATION TO INCREASE IN THE FIXED ASSETS BEING APPLICATION OF INCOME AMOUNTING TO RS. 34,49,94,135. 4. LD. CIT(A) OUG HT TO HAVE WORKED OUT THE DEFICIENCY AND PERMITTED THE SAME LO BE CARRIED FORWARD. 3. THERE ARE MULTIPLE COMMON ISSUES INVOLVED IN ALL THE APPEALS FILED, THEREFORE, FOR THE SAKE OF CONVENIENCE, WE ADJUDICATE ITA NO. 2991/AHD/2013 FOR ASSESSMENT YEAR 200 9 - 10 AS LEAD CASE AND ITS FINDING WILL BE APPLICABLE TO ALL THE SIMILAR ISSUE INVOLVED IN OTHER GROUNDS OF APPEAL S OF ASSESSEE AND REVENUE. 4. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARING LOSS OF RS. 94 , 15 , 94 , 712/ - WAS FILED ON 30 TH SEP, 2009. SUBSEQUENTLY, THE CASE WAS I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 3 SELECTED UNDER BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 28 TH AUGUST, 2010. THE ASSESSEE GUJARAT MARITIME BOARD IS CONSTITUTED UNDER THE GUJARAT MAR I TIME BOARD ACT, 1981 ENGAGED IN THE ACTIVITY OF ADMINISTERING, CONTROLL ING AND MANAGING MINER PORTS IN THE STATE OF GUJARAT. T HE ASSESSEE WAS ALSO REGISTERED U/S. 12AA OF THE ACT. THE COMMISSIONER OF INCOME , GANDHINAGAR VIDE ORDER DATED 1 5/06/2005 HAD GRANTED THE REGISTRATION U/S. 12AA OF THE ACT WITH RETROSPECTIVE EFFECT F ROM 1 ST APRIL, 2002 . T HE PR. COMMISSIONER OF INCOME TAX , GANDHINAGAR VIDE ORDER DATED 7 TH DECEMBER, 2010 HAD CANCELLED THE REGISTRATION U/S. 12AA(3) OF THE ACT W.E.F. 1 ST APRIL, 2008 APPLICABLE TO ASSESSMENT YEAR 2009 - 10. THE PR. CIT, GANDHINAGAR CANCE LLE D THE REGISTRATION AS CITED A BO V E BECAUSE OF THE FOLLO WING OBSERVATIONS: - 2.2 THE ACTIVITY OF THE ASSESSEE IS RELATED TO LEVYING VARIOUS FEES OF CHARGES FROM THE USERS OF THE PORTS UNDER VARIOUS HEADS LIKE (1) PORT INFRASTRUCTURE FACILITIES (2) MARINE SE RVICES (3) CLEARING, FORWARDING AND HARBORING (4) STORAGE AREA AND LAND RENTAL (5) EQUIPMENT & HARBOR CRAFT RENTAL (6) LICENSE FEES (7) INCOME FROM OTHER PORT SERVICES. SIMILARLY, THE ASSESSEE USED TO KEEP PAYMENT TO VARIOUS BODIES AND GOVT. OF GUJARAT BY WAY OF FEES, CHARGES ETC. THE DESCRIPTION OF RECEIPTS AND EXPENDITURE INCURRED BY THE ASSESSEE SHOWS THAT THE ASSESSEE RUNS ITS ACTIVITIES IN A PROFESSIONAL AND BUSINESS LIKE MANNER FROM THESE ACTIVITIES. IT IS ALSO CLEAR THA T THE ASSESSEE DERIVED PROFIT O UT OF VARIOUS BUSINESS ACTIVITIES. THUS, THERE BEING NO FREE SERVICES OR UTILITIES TO PUBLIC, THE COST OF THE ENTIRE ACTIVITIES BEING FULLY RECOUPED, THERE WAS NO CHARITY MEANT FO R PUBLIC WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. AS THE ACTIVITIES CA RRIED OUT BY THE ASSESSEE I.E. GUJARAT MARITIME BOARD WERE MORE OF COMMERCIAL NATURE RESULTING IN COMMERCIAL INCOME.' THE PR. CIT, GANDHINAGAR HAS ALSO OBSER VED THAT THE ASSESSSEE S ACTIVITIES WERE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECT AS PER DEF INITION OF CHARITABLE PURPOSE FOR WHICH REGI STR ATION WAS GRANTED ON 15 TH JUNE, 2005 W.E.F. 1 ST APRIL, 2002 IN VI E W OF THE AMENDMENT MADE IN THE DEFINITION OF CHARITABLE PURPOSE W.E.F. 1 ST APRIL, 2008 BY AMENDING THE FINANCE ACT, 2010 AS THE TOTAL RECEIPT O F THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS MORE THAN RS. 10 LACS AS PRESCRIBED FOR ELIGIBLE CHARITABLE PURPOSE UNDER THE FOURTH LIMB I.E. ADVANCEMENT OF OBJECT OF GENERAL UTILITY. IN VIEW OF THE I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 4 ABOVE MENTIONED FACTS AND CIRCUMSTANCES , THE ASSE SSING OFFICER HAS REJECTED THE CLAIM OF DEDUCTION U/S. 11 & 12 OF THE ACT. 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS REJECTED THE APPEAL OF THE ASSESSEE. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT ASSESSEE IS CONSTITUTED UNDER THE GUJARAT MARITIME BOARD ACT, 1981 AND ITS MANAGEMENT AND CONTROL OF THE BOARD IS WITH THE STATE GOVERNMENT AND THERE IS NO PROFIT MOTIVE AS INDICATED BY T H E PROVISION OF SECTI ON 73 AND 74 AND 75 OF THE GUJARAT MARITIME BOARD ACT, 1981. IT IS SUBMITTED THAT INCOME OF THE ASSESSEE IS DEPLOYED FOR THE DEVELOPMENT OF MINER PORTS IN GUJARAT. THE ASSESSEE IS UNDER OBLIGATION TO APPLY INCOME DIRECTLY AND SUBSTANTIALLY FOR THE OBJECT OF THE BOARD . THE LD. COUNSEL HAS ALSO SUBMITTED THAT AFTER INTRODUCTION OF PROVISO TO SEC TION 2(15) BY THE FINANCE ACT, 2009, T HE ASSESSEE HAS NOT HIT BY THE SAME AS PREDOMINANT OBJECT IS FOR DEVELOPMENT OF MINER PORTS IN THE STATE OF GUJARAT AND PROFI T EARNED IS ONLY INCIDENTAL TO ATTAINMENT OF THE MAIN OBJECT OF THE BOARD. THE LD. COUNSEL HAS ALSO PLACED DECISION S OF GUJARAT MARTIME BOARD VS. CIT VIDE ITA 36/AHD/2011 DATED 20 - 02 - 2012 , GUJARAT MARITIM E BOARD VS. ACIT VIDE ITA 2933/A HD/2009 DATED 27 - 0 4 - 2016, CIVIL APPEAL NO. 7186 OF 2014 IN THE CASE OF CIT III PUNE VS. RAJASTHAN AND G UJARAT CHARITABLE FOUNDATION PU NE DATED 13 TH DEC, 2017 [402 ITR 441 (SC) ] AND H E HAS ALSO PLACED RELIANCE ON THE DECISION OF CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPOR ATION 83 TAXMAN.COM 366 (GUJ) AND AHMEDABAD URBAN DEVELOPMENT I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 5 AUTHORITY 396 ITR 323 (GUJ). ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL O N RECORD. THE ASSESSEE GUJARAT MAR I TIME BOARD IS CONSTITUTED UND ER THE PROVISION OF GUJARAT MAR ITIME BOARD, 1981 AND ESTABLISHED U/S. 3 OF THE ACT FOR THE PURPOSE OF ADMINISTERING, CONTROLLING AND MANAGING MINOR PORTS IN THE STATE OF GUJARAT. AS PER SECT ION 4 OF THE ACT, THE BOARD SHALL CON STITUTE OF SUCH MEMBER OF BOARD NOT BEING LESS THAN 5 AND NOT MORE THAN 12 WHO SHALL BE APPO INTED BY THE STATE GOVERNMENT AS MENTIONED IN THE SECTION 4 OF GUJARAT MARITIME BOARD ACT, 1981. SECTION 73 FOR THE GUJARAT M A RITIME ACT, 1981 STATE THAT ALL MONEY RE CEIVED BY IT SHALL BE CREDITED TO A FUND CALLED THE GENERAL ACCOUNT OF THE MINER PORTS AND SECTION 74 OF THE ACT STATE THAT AMOUNT CREDITED TO THE GENERAL ACCOUNT U/S. 73 SHAL L BE APPLIED BY THE BOARD IN PAYMENT OF C HARGES AS SPECIFIED IN SECTION 74 OF THE ACT. UNDER THE GUJARAT MARITIME BOARD ACT, 1981 RULES AND REGULATIONS HAS BEEN ESTABLISHED FOR THE ESTABLISHMENT OF GUJARAT MAR ITIME BOARD, STAFF OF THE BOARD, PROPERTY AND CONTRACT WORKS AND SERVICES TO BE PROVIDE D AT MINER PORTS BY THE BOARD , IMPOSIT ION AND RECOVERY OF RATES AT POR TS , BORROWING POWER OF BOARD , REVENUE EXPENDITURE , SUPERVISION AND CONTROL OF STATE GOVERNMENT, PENALTIES , MISCELLANOUS ETC. AFTER PERUSAL OF THE VARIOUS PROVISIONS OF THE GUJARAT MARIT I ME BOARD ACT, 1981, IT IS OBSERVED THAT MANAGEMENT AND CONTROL OF THE ASSESSEE TRUST WAS WITH T H E STATE GOVERNMENT AND THERE WAS NO PROFIT MOTIVE WHICH IS CATEGORICALLY CLEAR FROM THE PROVISION OF SECTION 73, 74 AND 75 OF THE GUJARAT MAR I TIME BOARD ACT, 1 981. WE HAVE ALSO GONE THROUGH THE JUDICIAL PRONOUNCEMENTS REFERRED BY T H E LD. COUNSEL ON THE ISSUE IN THE I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 6 APPEAL. IN THE CASE OF THE ASSESSEE ITSELF, THE CO - ORDINATE BENCH OF THE ITAT VIDE ITA NO. 2933/AHD/2009 FOR ASSESSMENT YEAR 2003 - 04 ADJUDICATED ON 27 TH APRIL, 2016 HELD THAT ASSESSEE IS A CHARITABLE TRUST ENGAGED IN THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY ENUMERATED IN SECTION 2(15) OF THE INCOME TAX ACT, IS NOT BUSINESS UNDERTAKING. THE RELEVANT PART OF THE DECISION OF THE CO - ORDINATE BENCH OF THE ABOVE REFERRED CASE IS REPRODUCED AS UNDER : - 7.5 FROM GOING THROUGH THE ABOVE DECISION OF THE CO - ORDINATE BENCH WHICH IS RELIED ON THE DECISION OF HON'BLE APEX COURT, THAT TOO IN ASSESSEE'S OWN CASE, I.E., CIT VS. GUJARAT MARITIME B OARD, REPORTED IN (2007) 295 ITR 561 (SC), WHEREIN THE HON'BLE APEX COURT HAS OBSERVED THAT THE APPELLANT IS ESTABLISHED FOR THE PREDOMINANT PURPOSES OF DEVELOPMENT OF MINOR PORTS WITHIN THE STATE OF GUJARAT, THE MANAGEMENT AND CONTROL OF THE BOARD IS ESSE NTIALLY WITH THE STATE GOVERNMENT AND THERE IS NO PROFIT MOTIVE, AS INDICATED BY THE PROVISIONS OF SECTION 73, 74 AND 75 OF THE 1981 ACT. THE INCOME EARNED BY THE BOARD IS DEPLOYED FOR THE DEVELOPMENT OF MINOR PORTS IN THE STATE OF GUJARAT AND THEREFORE, T HEY ARE ENTITLED TO BE REGISTERED AS CHARITABLE TRUST U/S 12A OF THE INCOME - TAX ACT, 1961. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE APEX COURT AND THE CO - ORDINATE BENCH, AHMEDABAD (SUPRA) IN ASSESSEE'S OWN CASE, WE ARE INCLINED TO BELIEV E THAT THE ASSESSEE IS A CHARITABLE TRUST CARRYING ON ACTIVITY OF ADVANCEMENT OF PUBLIC UTILITY WITHOUT ANY PROFIT MOTIVE AND IS REQUIRED TO BE ASSESSED AS PER THE PROVISIONS OF SECTION 11(1) OF THE INCOME - TAX ACT, 1961. ACCORDINGLY, THIS GROUND OF THE ASS ESSEE IS ALLOWED. WE HAVE ALSO GONE THROUGH THE DECISION OF CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF ASSESSEE ITSELF VIDE ITA NO. 36/AHD/2011 PRONOUNCED ON 28 TH JAN, 2012 WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF DECISION IS REPRODUCED AS UNDER: - 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, THE PROVISIONS OF SECTION 12AA(3) PRESCRIBES THAT ONCE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION U/S. 2AA(3) AN D SUBSEQUENTLY IF THE COMMISSIONER FINDS THA T ONE OF THE CONDITION, VIZ. THE ACTIVITY OF THE TRUST IS NOT GENUINE OR THAT THE ACTIVITY OF TRUST NOT BEEN CARRIED OUT, THEN THE COMMISSIONER HAS POWER TO CANCE L THE REGISTRATION GRANTED U/S. 2AA(L) OF IT ACT. IN THE ABOVE CITED DECISION OF AHMEDABAD URB AN DEVELOPMENT(SUPRA), IT WAS HELD THAT WHEN UNDER THE ACT A SPECIFIC PROVISION FOR CANCELLATION OF REGISTRATION IS PRESCRIBED AND THE CANCELLATION IS POSSIBLE UNDER SPECIFIC CONDITION THEN FULFILLMENT OF THOSE CONDITIONS ARE NECESSARY FOR INVOKING THE JUR ISDICTION U/S. 2AA(3). IN THE PRESENT CASE THE REASON FOR CANCELLATION FOR REGISTRATION WAS THAT THE DEFINITION OF CHARITABLE PURPOSE U/S. 2(15) HAS BEEN AMENDED THEREFORE THE ASSESSEE HAS NOT CARRIED OUT THE ACTIVITY AS PER THE D EFINITION OF 'CHARITABLE P URPOSE S'. THIS VERY ISSUE HAS ALREADY BEEN DEALT WITH BY THE RESPECTED BENCHES, THEREFORE RESPECTFULLY FOLLOWING THESE DECISIONS WE HEREBY REVERSE THE VIEW TAKEN BY THE ID.COMMISSIONER AND DIRECT NOT TO CANCEL THE REGISTRATION U/S. 21AA(3) OF THE I. T. ACT. GROUNDS RAISED BY THE ASSESSEE ARE HEREBY ALLOWED. I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 7 WE HAVE ALSO GONE THROUGH THE DECISION OF HON BLE GUJARAT HIGH COURT VIDE 83 TAXMAN.COM 366 (GUJ) CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION DATED 28 TH JUNE, 2017 WHEREIN AFTER FOLLOWING D ECISION OF AHMEDABAD URBAN DEVELOPMENT AUTHORITY VIDE 83 TAXMAN.COM 78 IT IS HELD THAT CLAIM OF FEES OR CESS IS INCIDENTAL TO THE OBJEC T AND P UR POS E OF THE AC T AND EVEN THE CASE WOULD NOT FALL UNDER THE SECOND PART OF PROVISO TO SECTION 2(15) OF T H E ACT. IT IS FURTHER HELD THAT AS THE ACTIVITIES OF THE ASSESSEE IS FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITIES, THE SAME CAN BE O F OR CHARITABLE PURPOSE AND THEREFORE THE ASSSESSEE CORPORATION SHALL BE ENTI TLED TO EXEMPTION U/S. 11 OF THE AC T . I N THE CASE OF THE AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. ACIT(E) 92017) 83 TAXMAN.COM 78 , THE DIVISION BENCH OF THE HON BLE JURISDICTIONAL HIGH COURT HAS HELD THAT T H E ACTIVITY CARRIED BY THE AHMEDABAD URBAN DEVELOPMENT AUTHORITY CANNOT BE SAID TO BE FOR COMMERCIAL PURPOSE AND PROVISO TO SECTION 2(15) OF THE I.T. AC SHALL NOT BE APPLICABLE AND THAT THE SAID AHMEDABAD URBAN DEVELOPMENT AUTHORITY SHALL BE ENTITLED TO EXEMPTION U/S. 11 OF THE ACT. THE DIVISION BENCH OF THE HON BLE GUJARAT HIGH COURT HAS ALSO OBSERVED THAT MERELY BECAUSE AUDA IS CHAR G ING FEES AND/OR CESS, THE ACTIVITIES CANNOT BE SAID TO BE IN THE NATURE OF TRAD E, COMMER CE OR BUSINESS AND CONSEQUENTLY HELD THAT THE PROVISO TO SECTION 2(15) OF THE ACT SHALL NOT BE APPLICABLE AND THEREFO RE THE ASSESSEE IS ENTITLED TO EXEMPTION U/S. 11 OF THE ACT. AT PARA 27 OF THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION , IT IS ALSO HELD THAT THE CHARITABLE ACTIVITIES REQUIRE OPERATIONAL/RUN NING EXPENSES AS WELL AS CAPITAL EXPENSES TO BE ABLE TO SUSTAIN AND CONTINUE IN LONG RUN AND THE PETITION ER HAS TO BE SUBSTANTIALLY S ELF SUSTAINING IN LONG TERM AND SHOULD NOT DEPEND UPON I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 8 GOVERNMENT. IN OTHER WORDS, TAX PAYERS SHOULD NOT SUBSIDIZE THE SAI D ACTIVITIES WHICH NEVERTHELESS ARE CHARITABLE. IN THE CONCLUDING PARA IN THE CASE OF CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION 83 TAXMAN 363 (GUJ) HON BLE GUJARAT HIGH COURT HAS ADJUDICATED THE ISSUE IN FAVOUR OF THE A SSESSEE WHEREIN IT IS HELD AS UNDER: - 17. APPLYING THE AFORESAID DECISION TO THE FACTS OF THE CASE ON HAND AND THE OBJECTS AND PURPOSE FOR WHICH THE ASSESSEE - CORPORATION IS ESTABLISHED AND CONSTITUTED UNDER THE PROVISIONS OF THE GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962 AND COLLECTI ON OF FEES OR CESS IS INCIDENTAL TO THE OBJECT AND PURPOSE OF THE ACT, AND EVEN THE CASE WOULD NOT FALL UNDER THE SECOND PART OF PROVISO TO SECTION 2 [15] OF THE IT ACT. AS THE ACTIVITIES OF THE ASSESSEE IS FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PU BLIC UTILITY, THE SAME CAN BE FOR 'CHARITABLE PURPOSE' AND THEREFORE, THE ASSESSEE CORPORATION SHALL BE ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT. NO ERROR HAS BEEN COMMITTED BY THE LEARNED TRIBUNAL IN HOLDING SO. WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE LEARNED TRIBUNAL. IN THE LIGHT OF THE ABOVE FACTS AND FINDINGS, IT IS CLEAR THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE IS FOR ADVAN CE MENT OF ANY OTHER OBJECT OF G E NER A L PUBLIC UTILITY WITHOUT ANY INTENTION OF THE PROFIT MOTIVE AFTER CONSIDERING THE PROVISION OF THE GUJARAT M ARITIME BOARD ACT, 1981 AND FACT OF THE CASE , IT CANNOT BE SAID THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE IN THE NATURE OF TRADE COMMERCE OR BUSINESS. IT IS OBSERVED THAT PREDOMINANT OBJECT OF THE ASSESSEE IS TO ADMINISTER CONTROL ON MINER PORTS IN THE STATE OF GUJARAT AND THERE IS NO PROFIT MOTIVE AS DEMONSTRATED BY THE PROVISION OF SECTION 73, 74 AND 75 OF THE GUJARAT MARITIME BOARD ACT, 1981. THE GUJARAT MARITIME BO ARD IS UNDER LEGAL OBLIGATION T O APPLY THE INCOME WHICH ARISES DIRECTLY AND SUBSTANTIALLY FROM THE BUSINESS HELD UNDER TRUST FOR THE DEVELOPMENT OF MINO R PORTS IN THE STATE OF GUJARAT. FURTHER AFTER FOLLOWING THE DECISION OF HON BLE GUJARAT HIGH C OURT IN THE CASE OF AUDA AND GIDC , THE FEES COLLECTED BY THE ASSESSEE IS INCIDENTAL TO THE OBJECT AND PURPOSE OF ATTAINMENT OF THE MAIN OBJECT FOR DEVELOPMENT OF MINING PORTS AS ENUMERATED IN THE PROVISION OF THE GUJARAT MARITIME BOARD ACT, 1981, I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 9 THEREFORE , WE CONSIDER THAT ACTIVITY OF THE ASS ESSEE IS FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND N OT HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT, THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 11 OF THE ACT. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWE D. 8. SINCE GROUND NOS. 2 AND 3 OF THE ASSESSEE ARE CONSEQUENTIAL OF DISALLOWING THE CLAIM OF DEDUCTION U/S. 11 AND 12 OF THE ACT BY THE ASSESSING OFFICER THEREFORE THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED SINCE THE CLAIM OF DEDUCTION U/S. 11 AND 12 AS PER GROUND NO. 1 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO . 91/AHD/2014 FILED BY REVENUE 9. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING RS.144,23,00, 000/ - AS INCOME. 2. WITHOUT PREJUDICE TO THE FACT THAT GROUNDS FOR APPEAL HAS NOT BEEN RAISED ON ALLOWANCE OF DEPRECIATION ON ROADS AS INCOME BEING CONSIDERED AS BUSINESS INCOME BY THE AO & CIT(A), HOWEVER THE DEPARTMENT RESERVES THE RIGHT TO RAISE THE ISS UE OF DEPRECIATION IN CASE INCOME OF THE ASSESSEE IS TREATED AS INCOME OTHERWISE THAN BUSINESS INCOME UNDER SECTION 11 & 12 OF THE IT ACT, IN THAT CASE THE ASSESSEE CANNOT CLAIM DEPRECIATION ON SUCH ASSETS, WHERE 100% OF COST OF ASSET WAS ALLOWED AS APPLIC ATION OF INCOME. GROUND NO. 1 DELETING THE ADDITION OF RS. 144.23 CRORES AS INCOME 10 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER ON THE BASIS OF AUDIT REPORT OF THE CONTROLLER AND AUDITOR GENERAL OF INDIA S TAT ED THAT ASSESSEE HAS UNDE RSTATED ITS INCOME OF R S. 144.23 CRORES AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 10 11 . THE L D . CIT(A) HAS DELETED THE ADDITION STA TING THAT THE ASSESSING OFFICER HAS ADDED THE CUMULATIVE FIGURE ON THE BASIS OF AUDIT PARAS PERTAIN ING TO DIFFERENT YEARS WITHOUT ANY CLARIFICATION . THE LD. CIT(A) HAS OBSERVED THAT AS ON 31 ST MARCH, 2002 COMMUTATIVE CAPITAL RECEIPTS WAS OF R S. 142 , 76 , 17 , 893/ - WHICH WAS ACCOUNTED UNDER THE PROVISION OF SECTION 10(20) OF THE ACT . THE RECEIPT OF THE ASSESS EE WAS ENTITLED FOR EXEMPTION U/S. 10(20) OF THE ACT UPTO 31 - 03 - 2002 THEREFORE HE HAS HELD THAT NO SUCH RECEIPT CAN BE TAXED DURING THE YEAR UNDER CON SIDERA T I ON. 12 . WE HAVE HEARD THE RIVAL CON T ENTION S ON THIS ISSUE AND NOTICED THAT LD. CIT(A) HAS RIGHTLY HELD THAT THE IMPUGNED RECEIPT WAS OF COMMUTATIVE NATURE AND NOT RECEIVED DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE WAS ALSO ENTITLED FOR EXEMPTION U/S . 10(20) OF THE ACT UPTO 31 - 03 - 2002. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT C ONTRADICT THE FINDING OF LD. CIT(A) THEREFORE WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL OF THE ASSESSEE OF THE REVENUE AND THE SAME IS DISMISSED. GROUND NO. 2 OF REVENUE IS PERTAINED TO THE ISSUE THAT THE ASSESSEE CANNOT CLAIM DEPRECIATION OF SUCH ASSET S WAS ALLOWED AS APPLICATION OF INCOME. 13 . DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSES SEE HAS CLAIMED DEPRECATION OF R S. 2 , 89 , 11 , 256/ - ON ROADS AND RAILS. THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEPRECIATION ON THE G ROUND THAT ROAD S WERE NOT INCLUDED IN THE LIST OF BUILDING. 14 . IN THE APPEAL THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER FOLLOWING THE DECISION OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2008 - 09 I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 11 STATING THAT BUILDING INCL UDE ROAD, BRI DGES, CULVERTS, TUBEWELLS. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE REVENUE HAS RAISED THE ISSUE THAT THE DEPARTMENT RESERVES THE RIGHT TO RAISE THE I SSUE OF DEPRECIATION IN CASE INCOME OF THE ASSESSEE IS TREATED AS I N COME OTHERWISE THAN BUSINESS INCOME U/S. 11 AND 12 OF THE ACT. IN TH AT CASE, THE ASSESSEE CANNOT CLAIM DEPRECATION ON SUCH ASSETS WHERE 100% OF COST OF ASSETS WAS ALLOWED AS APPLICATION OF INCOME. 15 . WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. THE LD. CIT(A) HAS REFERRED THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. GWALIOR RAYON SILK MANUFACTURING CO. LTD. 1961 ITR 149 STATING THAT THE DEFINITION OF BUILDING WOULD INCLUDE ROAD. THEREFORE, WE CONSIDER THAT L D. CIT(A) HAS RIGHTLY HELD THAT CAPITAL EXPENDITURE INCURRED THEREON IS ADMISSIBLE TO DEPRECIATION ON WRITTEN DOWN VALUE. REGARDING OTHER ALTERNATIVE OF THE REVENUE, WE CONSIDER THAT HON BLE SUPREME COURT IN THE CASE OF CIT VS. RAJASTHAN AND GUJ ARAT CHARI TABLE FOUNDATION, PU NE VIDE CIVIL APPEAL NO. 7186 OF 2014 AFTER FOLLOWING THE D ECISION OF HON BLE MUMBAI HIGH C OURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTION (I BPS) (2003) 130 TAXMAN 386 HELD THAT INCOME OF THE TRUST IS REQUIRED TO B E COMPUTED U/ S. 11 ON COMMERCIAL PRINCIP L ES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. THEREFORE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS DISMISSED. ITA NO. 361 / AHD/2014 FILED BY ASSESSEE 16. THE ASSESSEE IS HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 12 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT WERE IN THE NATURE OF BUSINESS AND CONFIRMED COMPUTATION OF THE EXCESS OF INCOME OVER EXPENDITURE OF PREVIOUS YEAR ARISING OUT OF CHARITABLE ACTIVITY OF APPELLANT AS INCOME FROM BUSINESS AS PER THE MANNER PRESCRIBED U/S. 11 (4) OF THE ACT. BOTH THE LOWER AUTHORITI ES HAVE NOT APPRECIATED THE FACT THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION U/S. 12A OF THE ACT QUALIFYING ITS INCOME EXEMPT FROM TAXATION AS TOTAL EXPENDITURE (CAPITAL AND REVENUE) INCURRED BY THE APPELLANT IS FOR 'ADVANCEMENT OF THE OBJECT OF GENER AL PUBLIC UTILITY'. 2. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING EXEMPTION BENEFIT OF 15% OF ITS GROSS RECEI PTS. 3. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING DEDUCTION OF 'ADDITION TO ASSETS' RS. 82,29,99,071 AS APPL ICATION OF INCOME. 4. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT SINCE ADDITION OF ASSETS WAS CLAIMED AS DEDUCTION U/S. 11 OF THE ACT AS APPLICATION OF INCOME, NO DEPRECIATION CAN BE ALLOWED THEREON IN VI EW OF THE DECISION IN CASE OF LISSIE MEDICAL INSTITUTIONS 348 ITR 344 (KER). 17. THE IDENTICAL ISSUES ON SIMILAR FACTS HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITA NO. 2991/AHD/2013 ASSESSMENT YEAR 2009 - 10 AS ABOVE IN THIS ORDER, THEREFORE, F OLLOWING THE ABOVE REFERRED FINDINGS THE APPEAL OF THE ASSESSEE ON GROUNDS OF APPEAL 1 TO 4 ARE ALLOWED. ITA NO . 330 /AHD/2014 FILED BY REVENUE 18 . THE REVENUE IS HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - 1. THE LEARNED CIT(APPEALS) HAS E RRED IN LAW AND FACTS IN DIRECTING THE AO TO ALLOW DEPRECIATION OF RS.104950198/ - WITHOUT CONSIDERING THAT DEPRECIATION IS NOT ALLOWABLE ON ASSETS WHICH HAVE ALREADY CLAIMED AS APPLICATION OF INCOME. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACT S IN NOT INCLUDING PROFIT IN SALE OF ASSETS OF RS.19004722/ - IN COMPUTING INCOME. 3. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING PENSION TRUST FUND OF RS.35,62,50,000/ - BY IGNORING SECTION 36(IV) READ WITH RULES 87 AND 88. 19. GROUND NO . 1 IS PERTAINED TO THE IS SUE OF CLAIM OF DEPRECIATION STATING TH A T DEPRECIATION IS NOT ALLOWABLE ON ASSETS WHICH HAVE ALREADY CLAIM ED AS APPLICATION OF INCOME. ON THE IDENTICAL ISSUE ON SIM ILAR FACTS, WE HAVE ADJUDICATED THE GROUND NO. 2 IN TH E APPEAL OF THE R E V ENUE VIDE ITA 91/AHD/2014 FOR ASSESSMENT YEAR 2009 - 10 AS REFERRED ABOVE IN THIS ORDER I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 13 WHEREIN THE IDENTICAL ISSUE ON SIMILAR FACTS WAS DECIDED AGAINST T H E REVENUE THEREFORE APPLYING THE FINDING OF IT A 91/AHD /2014 , THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. GROUND NO. 2 OF THE REVENUE REGARDING NOT INCLUDING PROFIT IN SALE OF OF ASSETS OF RS. 19004722/ - IN COMPUTING INCOME 20. DURING THE ASSESSMENT, THE ASSESSIN G OFFICER NOTICED FROM THE SCHEDULE OF OTHER INCOME THAT ASSESSEE HA S SHOWN PROFIT ON SALE OF ASSETS TO THE AMOUNT OF R S 1 , 90 , 04 ,722/ - AND HE WAS OF THE VIEW THAT ASSESSEE HAS NOT INCLUDED THE SAME IN THE TOTAL INCOME. THEREFORE, HE HAS INCLUDED THE AFORESAID PROFIT ON SALE OF ASSETS TO THE TOTAL INCOME OF THE ASSESSEE. 21. THE LD. CIT(A) HAS DELETED THE ADDITION STATING THAT ASSESSEE HAS ALREADY INCLUDED THE AFORESAID INCOME WHILE COMPUTING ITS BUSINESS INCOME THEREFORE THE ASSESSING OFFICER WAS DIRECTED TO DELETE THE AFORESAID ADDITION AFTER VE RIFICATION OF THE FACT THAT SUCH IN COME WAS ALREADY INCLUDED AS PART OF BUSINESS INCOME COMPUTED BY HIM. 22. WE HAVE HEARD THE RIVAL CON T E NTION ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. W E DO NOT FIND ANY SUBSTANCE IN THE G ROUND OF APPEAL OF REVENUE AS LD. CI T(A) AFTER CONSIDERING THE MATERIAL ON RECORD HAS DIRECTED THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION AFTER VERIFICATION OF THE MATERIAL FACT THAT SAID PROFIT ON SALE OF ASSETS HAS ALREADY BEEN INCLUDED IN THE COMPUTATION OF BUSINESS INCOME OF T HE ASSESSEE. THEREFORE, THIS APPEAL OF THE REVENUE IS ALSO REJECTED. I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 14 GROUND NO. 3 AL LOWING DEDUCTION OF RS. 3 , 56 , 25 , 00 0/ - AS CONTRIBUTION TO WARDS PENSION FUND 23 . DURING ASSES SMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED RS. 4 7,50 ,00 , 0 00 / - AS CONTRIBUTION TO PENSION FUND IN INCOME AND EXPENDITURE ACCOUNT. THE ASSESSING OFFICER WAS OF THE VIEW THAT ANY SUM PAID BY THE ASSESSEE AS A N EMPLOYER BY WAY OF CONTRIBUTION TOWARDS A PENSION SCHEME AS REFERRED TO ANY SECTION 80CCD ON ACCOUNT OF AN EMPLOYEE TO THE EXTENT IT DOES NOT EXCEED 10% OF THE SALARY OF THE EMPLOYEE IN THE PREVIOUS YEAR . THE ASSESSING OFFICER STATED THAT ASSESSEE HAS NOT FURNISHED WORKING OF ITS CLAIM AS PER CONDITIONS LAID DOWN THEREFORE 25% OF THE AMOUNT CLAIMED BY THE ASSESSEE WAS ALLOWED AND 75% OF THE CLAIM WAS DISALLOWED. THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. 24. WE HAVE HEARD RIVAL CON T E N TIONS AND PERUSED THE MATERIAL ON RECORD AND NOTICED THAT LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASS ESSEE AFTER TAKING INTO CONSIDERATION THE FACT THAT GUJARAT MARITIME BOARD EMPLOYEES PENSION TRUST FUND WAS DULY APPROVED BY CIT, GANDHINAGAR W.E.F. 28 TH MARCH, 2003 AND TAKEN INTO CONSIDERATION THAT CONTRIBUTION HAS BEEN PAID IN COMPLIANCE OF THE TERMS OF APPOINTMENT ON RESPECTIVE ERSTWHILE STATE GOVERNMENT EMPLOYEES AND IN EARLIER YEARS ALSO THE SAME CONTRIBUTION WAS ALLOWED CONSTANTLY BY THE DEPARTMENT. RELEVANT PAR OF THE FINDING OF LD. CIT(A) IS REPRODUCED AS UNDER: - 10.3 I HAVE CONSIDERED THE FACT S OF THE CASE, ISSUE IN HAND AND THE SUBMISSION MADE BY THE APPELLANT. THE AO ON PERUSAL OF INCOME & EXPENDITURE ACCOUNT NOTICED THAT THE APPELLANT HAS CLAIMED SALARY EXPENSES OF RS.49.81 CRORES WHICH IS ALMOST EQUAL TO THE AMOUNT OF SALARY, WHICH IS CLAIM ED AS CONTRIBUTION TO THE PENSION FUND. AFTER CONSIDERING THE REPLY MADE BY THE APPELLANT BEFORE THE AO, THE AO HAS DISALLOWED THE CLAIM OF PENSION TRUST FUND OF RS.35,62,50,000/ - . IT IS SUBMITTED BY THE APPELLANT THAT IN ALL EARLIER YEARS ALSO, SINCE GETT ING REGISTRATION AS A CHARITABLE ENTITY W.E.F. 1/4/2002, THE APPELLANT HAS BEEN CONSISTENTLY CONTRIBUTING TO ITS 'GMB I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 15 EMPLOYEES PENSION TRUST FUND' AFTER BEING ACCORDED BY CIT, GANDHINAGAR W.E.F. 28/3/2003. FURTHER, IT IS ALSO SUBMITTED BY THE APPELLANT TH AT THE TOTAL CONTRIBUTION AGGREGATED TOGETHER UNDER ONE HEAD OF CLAIM AS 'CONTRIBUTION TO PENSION FUND' NOT ONLY FORMS OUT OF 'ANNUAL CONTRIBUTION' ONLY BUT ALSO A LUMP - SUM FIGURE NEEDED FOR AUGMENTATION OF CORPUS OF FUND NECESSARY TO ENSURE SEAMLESS SERVI CE OF ITS ANNUAL PENSION SERVICING OBLIGATIONS FROM YEAR TO YEAR AND FORMING ITS LEGAL LIABILITY IN TERMS OF CONDITIONS OF EMPLOYMENT OF ITS EMPLOYEES WHO ARE GOVERNED BY THE CONDITIONS OF EMPLOYMENT AT PAR WITH THE STATE GOVERNMENT. MOREOVER, IT IS CONTEN DED BY THE APPELLANT RULE 88 ITSELF LAYS DOWN LIMIT VIS - A - VIS IN RESPECT OF PAST SERVICES OF ANY EMPLOYEE ADMITTED TO THE BENEFITS OF A FUND, WHICH IS NOT, VERIFIED BY THE AO. THE APPELLANT HAS ALSO CONTENDED THAT THE AO HAS POINTED OUT A CLAUSE INSERTED W .E.F. 1/4/2012 ADDING TO HIS COMMENT THAT SAID INSERTION WAS TO KEEP CHECK ON SUCH ISSUES BUT OVERLOOKED AND IGNORED THE PROVISIONS OF SECTION 36(L)(XII) INSERTED W.E.F. 1/4/2002 WHICH ARE APPLICABLE IN THE CASE OF THE APPELLANT. IN VIEW OF ABOVE FACTS AND CONTENTIONS OF THE APPELLANT, THE PART DISALLOWANCE OF CONTRIBUTORY PENSION FUND OF RS.35,62,50,000/ - BY THE AO IS NOT JUSTIFIED AND IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. THE LD. D.R. COULD NOT CONTROVERT THE AFORESAID FINDINGS OF LD. CIT(A). AFTER CONSIDERING THE DETAILED FINDINGS OF THE LD. CIT(A) AS ELABORATED ABOVE, WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED . ITA NO. 1622/AHD/2014 FILED BY ASSESSEE 25 . THE REVENUE IS HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT WERE IN THE NATURE OF BUSINESS AND CONFIRMED COMPUTATION OF THE EXCESS OF INCOME OVER EXPENDITURE OF PREVIOUS YEAR ARISING OUT OF CHARITABLE ACTIVITY OF APPELLANT AS INCOME FROM BUSINESS AS PER THE MANNER PRESCRIBED U/S. 11(4) OF THE ACT. BOTH THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACT THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION U/S. 12A OF THE ACT QUALIFYING ITS INCOME EXEMPT FROM TAXATION AS TOTAL EXPENDITURE (CAPITAL AND REVENUE) INCURRED BY THE APPELLANT IS FOR 'ADVANCEMENT OF THE OBJECT OF GENERAL PUBLIC UTILITY'. 2. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING EXEMPTION BENEFIT OF 15% OF ITS GROSS RECEIPTS. 3. L EARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING DEDUCTION OF 'ADDITION TO ASSETS' RS. 10,27,34,707 AS APPLICATION OF INCOME. 4. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT SINCE ADDITION OF ASSETS WAS CLAIMED AS DEDUCTION U/S. 11 OF THE ACT AS APPLICATION OF INCOME, NO DEPRECIATION CAN BE ALLOWED THEREON IN VIEW OF TH E DECISION IN CASE OF LISSIE MEDICAL INSTITUTIONS 348ITR 344 (KER). I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 16 26. THE IDENTICAL ISSUES ON SIMILAR FACTS HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITA NO. 2991/AHD/2013 ASSESSMENT YEAR 2009 - 10 AS ABOVE IN THIS ORDER, THEREFORE, FOLLOWI NG THE ABOVE REFERRED FINDINGS THE APPEAL OF THE ASSESSEE ON GROUNDS OF APPEAL 1 TO 4 ARE ALLOWED. ITA N O. 2283/AHD/2014 FILED BY REVENUE 27. THE REVENUE IS HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - 1. THE LEARNED CIT(APPEALS) HAS ERRED I N LAW AND ON FACTS IN ALLOWING THE DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS.23,26,26,496/ - . 2. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE DISALLOWANCE OF PROFIT ON SALE OF ASSESTS AMOUNTING TO RS.35,83,305/ - . 28. THE IDEN TICAL ISSUE ON SIMILAR FACTS, THE APPEAL OF THE REVENUE WAS DISMISSED VIDE ITA NO. 330/AHD/2014. THEREFORE, APPLYING THE FINDING OF THE SAME, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 829 /AHD/2017 FILED BY ASSESSEE 29. THE ASSESSE E IS HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT WERE IN THE NATURE OF BUSINESS AND CONFIRMED COMPUTATION O F THE EXCESS OF INCOME OVER EXPENDITURE OF PREVIOUS YEAR ARISING OUT OF CHARITABLE ACTIVITY OF APPELLANT AS INCOME FROM BUSINESS AS PER THE MANNER PRESCRIBED U/S. 11(4) OF THE ACT. BOTH THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACT THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION U/S. 12A OF THE ACT QUALIFYING ITS INCOME EXEMPT FROM TAXATION AS TOTAL EXPENDITURE (CAPITAL AND REVENUE) INCURRED BY THE APPELLANT IS FOR 'ADVANCEMENT OF THE OBJECT OF GENERAL PUBLIC UTILITY'. 2. LEARNED CIT(A) HAS ER RED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE APPELLANT IS COVERED BY THE FIRST AND THE SECOND PROVISO TO SECTION 2(15) OF THE ACT AND HENCE, PROVISIONS OF SECTION 13(8) WOULD BE APPLICABLE. 3. LEARNED CIT (A) HAS ER RED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING EXEMPTION BENEFIT OF 15% OF ITS GROSS RECEIPTS. 4. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING DEDUCTION OF 'ADDITION TO ASSETS' RS. 20,87,15,339 AS APPLICATION OF INCOME. 5. LEARNED CIT (A) HAS CORRECTLY HELD THAT THE DIVIDEND INCOME AS EXEMPT INCOME OF THE APPELLANT BUT ERRED IN LAW AND ON FACTS IN HOLDING THAT THE SAME WAS SUBJECT WAS TO DISALLOWANCE AS PER PROVISIONS OF RULE 8D(III). I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 17 30 . THE IDENTICAL ISSUES ON SIMILAR FACTS HAV E BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITA NO. 2991/AHD/2013 ASSESSMENT YEAR 2009 - 10 AS ABOVE IN THIS ORDER, THEREFORE, FOLLOWING THE ABOVE REFERRED FINDINGS THE APPEAL OF THE ASSESSEE ON GROUNDS OF APPEAL 1 TO 4 ARE ALLOWED. 31 . GROUND NO. 5 : S INCE THE ASSESSEE HAS BEEN ALLOWED EXEMPTI ON U/S. 11 AND 12 OF THE ACT THEREFORE THE DISALLOWANCE MADE UNDER RULE 8D(II ) MADE BY THE ASSESSING OFFICER BY TREATING THE ASSESSEE AS AOP IS DELETED. ITA NO. 752/AHD/2017 FILED BY REVENUE 32. THE REVENUE IS HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IS THE LD. CIT (A) JUSTIFIED IN ALLOWING THE DISALLOWANCE OF DEPRECIATION. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES IS T HE LD. CIT(A) JUSTIFIED IN ALLOWING DISALLOWANCE OF PROFIT ON SALE OF ASSETS. 33 . THE IDENTICAL ISSUE ON SIMILAR FACTS, THE APPEAL OF THE REVENUE WAS DISMISSED VIDE ITA NO. 330/AHD/2014. THEREFORE, APPLYING THE FINDING OF THE SAME, THIS GROUND OF APPEA L OF THE ASSESSEE IS DISMISSED. ITA NO. 830 /AHD/2017 34. THE ASSESSEE IS HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE ACTIVITIES CARRIED OU T BY THE APPELLANT WERE IN THE NATURE OF BUSINESS AND CONFIRMED COMPUTATION OF THE EXCESS OF INCOME OVER EXPENDITURE OF PREVIOUS YEAR ARISING OUT OF CHARITABLE ACTIVITY OF APPELLANT AS INCOME FROM BUSINESS AS PER THE MANNER PRESCRIBED U/S. 11(4) OF THE ACT . BOTH THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACT THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION U/S. 12A OF THE ACT QUALIFYING ITS INCOME EXEMPT FROM TAXATION AS TOTAL EXPENDITURE (CAPITAL AND REVENUE) INCURRED BY THE APPELLANT IS FOR 'ADVANCEM ENT OF THE OBJECT OF GENERAL PUBLIC UTILITY'. 2. LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VIEW TAKEN BY AO IN HOLDING THAT THE APPELLANT IS COVERED BY THE FIRST AND THE SECOND PROVISO TO SECTION 2(15) OF THE ACT AND HENCE, PROV ISIONS OF SECTION 13(8) WOULD BE APPLICABLE. I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 18 3. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING EXEMPTION B ENEFIT OF 15% OF ITS GROSS RECEIPTS. 4. LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CONTENTION OF THE AO THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE BUSINESS IN NATURE AND ERRED FURTHER IN NOT GRANTING DEDUCTION OF 'ADDIT ION TO ASSETS' RS. 26,87,21,682 AS APPLICATION OF INCOME. 5. LEARNED CIT (A) HAS CORRECTLY HELD THAT THE DIVIDEND INCOME AS EXEMPT INCOME OF THE APPELLANT BUT ERRED IN LAW AND ON FACTS IN HOLDING THAT THE SAME WAS SUBJECT WAS TO DISALLOWANCE AS PER PROVISIONS OF RULE 8D(III). 6. LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 1,10,97,838 DONE BY AO SUPPOSEDLY BEING INTEREST ON INCOME - TAX REFUND FOR AY 2012 - 2013 WITHOUT SEEKING THE DATE, IF ANY OF THE CREDIT OF AFORESAID REFUND TO THE ACCOUNT OF APPELLANTS ALONG WITH OTHER RELEVANT FACTS OF THIS UNSUBSTANTIATED ADDITION IN SPITE OF REPEATED REQUESTS BY APPELLANT FOR SAME . 35. THE IDENTICAL ISSUES ON SIMILAR FACTS HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE ITA NO. 2991/AHD /2013 ASSESSMENT YEAR 2009 - 10 AS ABOVE IN THIS ORDER, THEREFORE, FOLLOWING THE ABOVE REFERRED FINDINGS THE APPEAL OF THE ASSESSEE ON GROUNDS OF APPEAL 1 TO 4 ARE ALLOWED. SINCE THE ASSESSEE HAS BEEN ALLOWED EXEMPTION U/S. 11 AND 12 OF THE ACT THEREFORE T HE DISALLOWANCE MADE UNDER RULE 8D(II) MADE BY THE ASSESSING OFFICER BY TREATING THE ASSESSEE AS AOP IS DELETED. GROUND NO. 6 36 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS BEEN ISSUED INCOME TAX REFUND ON 17 T H AUGUST, 2 012 WITH INTEREST ON REFUND OF R S. 1 , 10 , 97 , 838/ - . HOWEVER , THE ASSESSEE HAS NOT INCLUDED INTEREST AMOUNT IN TOTAL INCOME IN THE RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER HAS ADDED THE AMOUNT OF INTEREST O F IT REFUND TO THE AMOUNT OF R S. 1 , 10 , 97 , 838/ - TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE HAS FIELD APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO VERIFY FROM RECORD THE FINANCIAL YEAR IN WHICH THE SAID REFUND HAS BEEN CREDITED IN THE ACCO UNT OF THE ASSESSEE , IN CASE THE I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 19 FINANCIAL YEAR IS 12 - 13 THEN ONLY IT WOULD BE THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2013 - 14. 37 . WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISSU E AND PERUSED THE MATERIAL ON RECORD . IN THE LIGHT OF THE ABOVE FA CTS AND FINDING OF LD. CIT(A), WE DIRECT THE ASSESSING OFFICER TO DECIDE THIS ISSUE AFRESH AFTER VERIFICATION FROM THE RECORD THE DATE OF CREDIT OF THE REFUND IN THE ACCOUNT OF THE ASSESSEE. ACCORDINGLY THIS ISSUE IS RESTORED TO THE FILE OF ASSESSING OFFI CER AS DIRECTED ABOVE FOR DECIDING AFRESH. IN THE RESULT, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 753 /AHD/2017 FILED BY REVENUE 38 . THE REVENUE IS HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: - I. W HETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IS THE LD. CIT (A) JUSTIFIED IN ALLOWING THE DISALLOWANCE OF DEPRECIATION. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES IS THE LD. CIT(A) JUSTIFIED IN ALLOWING DISALLOWANCE OF PROFIT ON SALE OF ASSETS. 39 . THE IDENTICAL ISSUE ON SIMILAR FACTS, THE APPEAL OF THE REVENUE WAS DISMISSED VIDE ITA NO. 330/AHD/2014. THEREFORE, APPLYING THE FINDING OF THE SAME, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 2321 /AHD/2017 FILED BY R EVENUE 4 0 . THE REVENUE IS HAS RAISED FOLLOWING SUBSTANTIVE GROUND OF APPEAL: - 1. LD. CIT (A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,09,76,276/ - MADE ON ACCOUNT OF DISALLOWANCE OF PROFIT ON SALE OF ASSETS. I.T.A NOS. 2991/AHD/2013 & TEN OTHERS A .Y. 2009 - 10 TO 2014 - 15 PAGE NO GUJARAT MARITIME BOARD VS. DCIT (EXEMPTION) 20 4 1 . THE IDENTICAL ISSUE ON SIMILAR FACTS, THE APPEAL OF THE REVENUE WAS DISMISSED VIDE ITA NO. 330/AHD/2014. THEREFORE, APPLYING THE FINDING OF THE SAME, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 42. APPEAL ITA 2991/AHD/2013, 361/AHD/2014, 16 22/AHD/2014, 829/AHD/2017 & 830/AHD/2017 FILED BY ASSSESSEE ARE ALLOWED AND APPEAL ITA 91/AHD/2014, 330/AHD/2014, 2283/AHD/2014, 752/AHD/2017, 753/AHD/2017 AND 2321/AHD/2017 FILED BY REVENUE ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 30 - 07 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 30 /07 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,