Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 82856 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-12-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2011-2012
Appeal Filed On
28-04-2014
Judgement Text
1 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 309/JP/2014 ASSTT. YEAR- 2011-12 PAN NO. AAAAB 1612 N M/S BHATIA BIRADARI PRABANDH SAMITI, THE C.I.T. , JAIPUR-II, BHATIA BHAWAN, RAJA PARK, VRS. N.C.R. BUILDIN G, STATUTE CIRCLE, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI P.C. PARWAL. DEPARTMENT BY :- SHRI SUBHASH CHANDRA. DATE OF HEARING : 14/10/2014 DATE OF PRONOUNCEMENT : 12/12/2014 O R D E R PER: R.P. TOLANI, J.M. THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER DAT ED 31/03/2014 PASSED BY THE LEARNED C.I.T., JAIPUR-II, JAIPUR. FOLLOWIN G TWO GROUNDS HAVE RAISED:- 1. THE ORDER PASSED BY LD CIT U/S 263 IS ILLEGAL A ND BAD IN LAW AND ON FACTS. 2. LD. CIT ERRED IN HOLDING THAT ACTIVITY OF LETTIN G OUT OF BUILDINGS BY ASSESSEE SAMITI FOR MARRIAGES AND OTHER SOCIAL FUNC TIONS IS AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS AS PER THE FIRST PROVISO TO SEC. 2(15) OF THE ACT AND THEREBY DIRECTING THE AO TO TAX THE RECEIPT SHOWN AS BHAWAN VIKAS UNDER TH E HEAD BUSINESS AND COMPUTE THE TOTAL INCOME OF ASSESSEE W ITHOUT ALLOWING ANY BENEFIT OF SECTION 11 & 12 OF THE ACT. 2 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT 2. ASSESSEE IS A SOCIETY REGISTERED UNDER RAJASTHA N SOCIETY REGISTRATION ACT, 1958 VIDE REGISTRATION NO. 324/78 -79. IT IS ALSO REGISTERED U/S 12A(A) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) W.E.F. 27.12.2001. THE MAIN OBJECT OF THE ASSESSEE ARE PROVIDE RELIEF TO NEEDY, TO WORK FOR IMPROVEMENT OF HEALTH AND EDUCAT ION OF ONE AND ALL, TO PROMOTE SOCIAL HARMONY. THEY INCLUDED TO CONSTRUCT BHATIA BHAWAN AND OTHER BUILDINGS FOR USE BY COMMUNITIES AT LARGE FOR DIFFERENT OCCASIONS IN PUBLIC INTEREST ON MINIMUM RENT AND ON NO PROFIT AN D NO LOSS BASIS AND SIMILAR OBJECTS. IN PURSUANCE OF THESE OBJECTS ASSE SSEE IS ALSO CONDUCTING VARIOUS SOCIAL WELFARE PROGRAMS FOR WEAKER SECTIONS , EMPOWERMENT OF WOMEN LIKE RUNNING DISPENSARY, CONDUCTING SEWING CO URSES FOR WOMEN, PROVIDING HELP TO NEEDY. 3. THE ASSESSEE FILED ITS RETURN DECLARING NIL INC OME AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT ACCOMPANIED BY DULY AUDITED BALANCE SHEET, INCOME & EXPENDITURE ACCOUNT AND OTHER NECESSARY DO CUMENTS. IN COURSE OF ASSESSMENT PROCEEDINGS LD. AO CALLED FOR VARIOUS INFORMATION AND WAS HELD THAT ACTIVITIES OF THE ASSESSEE FELL UNDER THE AMBIT OF RELIEF TO POOR AND OTHER OBJECTS OF GENERAL PUBLIC UTILITY AS PRO VIDED BY THE AMENDED DEFINITION OF CHARITABLE PURPOSE AS READ WITH SEC. 2(15) OF THE ACT AND ALLOWED ITS INCOME TO BE ELIGIBLE FOR EXEMPTION U/S 11 BY FOLLOWING OBSERVATIONS. 3 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT THE ASSESSEE IS A REGISTERED SOCIETY UNDER RAJASTH AN SOCIETY REGISTRATION ACT, 1958. THE ASSESSEE IS ALSO REGIST ERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. THE OBJEC TIVE OF THE TRUST IS TO WORK FOR SOCIAL, PHYSICAL, MENTAL A ND EDUCATIONAL DEVELOPMENT OF THE COMMON MAN. THE ASSESSEE ORGANIZ ATION ALSO PROVIDES FINANCIAL HELP TO POOR FAMILIES AND W IDOWS ALONGWITH RUNNING OF MARRIAGE BUREAU THROUGH WHICH PROVIDING BIO DATA FOR MALE AND FEMALE AND ORGANIZING PARICHA Y SAMMELAN ONCE IN A YEAR. DURING THE RELEVANT ASSESS MENT YEAR THE ASSESSEE HAS APPLIED MORE THAN 85% OF ITS INCOM E FOR THE PURPOSES OF THE INSTITUTION WHICH IS EVIDENT FROM P ERUSAL OF THE DOCUMENTS AVAILABLE ON RECORD. IN MY OPINION, THE ASSESSEES ACTIVITIES FALL UNDER THE AMBIT OF RELIEF TO THE POOR AND GENERAL PUBLIC UTILITY AS PROVIDED UNDER SECTION 2(15) OF THE INCOME TAX ACT, 1961. SINCE TH E ASSESSEE IS REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961, HE IS ENTITLED TO EXEMPTION U/S 11 TO 13 OF THE INC OME TAX ACT, 1961. 4. LEARNED CIT, HOWEVER, IN EXERCISE OF HIS POWER S U/S 263 AND ON EXAMINATION OF THE RECORD WAS OF THE VIEW THAT RECE IPT OF RS.38,52,975/- SHOWN BY THE ASSESSEE FROM LETTING OUT THE BUILDING S TO GENERAL PUBLIC FOR ORGANIZING SOCIAL FUNCTIONS AMOUNTED TO COMMERCIAL ACTIVITY AND WAS HIT BY FIRST PROVISO TO SECTION 2(15). IT WAS HELD THAT AO HAS FAILED TO CONSIDER THAT LETTING OUT THE BUILDING IS CONDUCTED IN REGUL AR AND CONTINUOUS MANNER WITH PROFIT MOTIVE AND CONSTITUTED COMMERCIA L ACTIVITY IN TERMS OF PROVISO. THEREFORE, BENEFITS OF SEC 11 WERE NOT AVA ILABLE QUA THIS RECEIPT 4 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT AND THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. LD. CIT RELIED ON THE DECISIONS OF: (I) MADRAS HIGH COURT IN THE CASE OF HALAI NEMON ASSOCI ATION 243 ITR 439 FOR THE PROPOSITION THAT HALL USED FOR SOCIAL AND PUBLIC FUNCTIONS IS COMMERCIAL ACTIVITY AND THE RECEIPTS IN THIS BEHALF VERY BUSINESS RECEIPTS. (II) ITAT BANGALORE BENCH IN THE CASE OF SUBHRAM TRUST 3 17 ITR (AT) 65 FOR THE PROPOSITION ACTIVITY OF RUNNING KALYAN MANDAPAM IS COVERED BY OBJECT OF GENERAL PUBLIC UTI LITY AND WAS COMMERCIAL ACTIVITY AND IRRESPECTIVE OF THE INC OME BEING USED OR APPLIED FOR THE PURPOSES OF THE TRUST WAS NOT ELIGIBLE FOR BENEFITS OF SEC. 11. (III) DELHI HIGH COURT JUDGMENT IN THE CASE OF ICAI V DGIT(EXEMPTIONS) 202 TAXMAN - O1 HOLDING THAT IF TH E ACTIVITY IS DRIVEN BY PROFIT MOTIVE, IT WILL BE REG ARDED AS BUSINESS ACTIVITY. 5. LEARNED CIT IN VIEW OF ABOVE PASSED THE IMPUGNED ORDER U/S 263 OF THE ACT BY FOLLOWING CONCLUSIVE DIRECTIONS: IN VIEW OF THE DISCUSSION MADE ABOVE REGARDING THE ACTIVITY OF LETTING OUT THE BUILDINGS BHATIA BHAWAN AND BHAGWANO SADAN FOR MARRIAGES AND OTHER SOCIAL FUNCT IONS AND THE DECISION OF HONBLE ITAT, BANGALORE IN THE CASE OF SUBHRAM TRUST (SUPRA), I HOLD THAT THE SAID ACTI VITY WAS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AS PROVIDED IN FIRST PROVISO OF SEC. 2(15) OF THE ACT. HENCE, 5 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT THE SAID ACTIVITY CANNOT BE TREATED AS FOR CHARITA BLE PURPOSE. FURTHER, SECTION 13(8) INSERTED BY THE FINANCE ACT, 2012 W.R.E.F. 01/04/2009, PROVIDES THAT- NOTHING CONTAI NED IN SECTION 11 OR SEC. 12 SHALL OPERATE SO AS TO EXCLUD E ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SEC. 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. SIN CE, THE ASSESSEE TRUST IS HIT BY THE FIRST PROVISO TO SEC. 2(15) OF THE ACT, IT WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 AND 12 OF THE ACT ON ITS TOTAL INCOME OF A.Y. 2011-12. THE A.O. IS DIRECTED TO TAX THE RECEIPTS SHOWN AS BHAWAN VIKAS UNDER THE HEAD BUSINESS AND RECOMPUTED THE TOTAL INCOME OF THE ASSESSEE WITHOUT ALLOWING ANY BENEFIT OF SEC. 11 AND 12 OF THE ACT. 6. THE AO IN PURSUANCE OF THIS DIRECTION PASSED TH E CONSEQUENT ORDER U/S 143(3)/263 ON 28.04.2011 HOLDING THE GROS S RENTAL RECEIPT AS BUSINESS INCOME, NOT DEDUCTION OF CORRESPONDING EXP ENSES AS PROVIDED BY LAW AS BUSINESS EXPENDITURE WAS GIVEN. THUS THE ORDER LANDED THE ASSESSEE INTO TAXATION OF GROSS RENTAL OF RS.38,52, 975/- AS INCOME OF THE TRUST. 7. AGGRIEVED ASSESSEE IS BEFORE US AGAINST THE 263 ORDER PASSED BY LD. CIT. LD. COUNSEL FOR THE ASSESSEE SHRI P C PARW AL SUBMITTED THAT IN COURSE OF ASSESSMENT PROCEEDINGS LD. AO RAISED DETA ILED QUESTIONNAIRE COMPRISING OF 28 POINTS, REQUIRING THE ASSESSEE TO EXPLAIN VARIOUS ISSUES 6 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT INCLUDING TO FILE A NOTE ON THE OBJECTS OF THE TRUS T AND ITS ACTIVITIES WITH DOCUMENTARY EVIDENCE AND TO EXPLAIN HOW ITS ACTIVIT IES ARE CHARITABLE IN NATURE. THE SAME WAS REPLIED BY THE ASSESSEE VIDE L ETTER DT. 06.11.2013, WHICH IS PART OF THE RECORD. IN PARA 9 THEREOF ASSE SSEE EXPLAINED IN DETAIL THE NATURE OF CHARITABLE ACTIVITIES CARRIED OUT DURING THE YEAR, OBJECTS BEHIND CONSTRUCTING COMMUNITY BUILDING AND ITS BENEFITS TO PUBLIC AT LARGE, NATURE OF NO PROFIT AND NO LOSS RE CEIPTS FROM LETTING OUT OF THE BUILDING AND WHY THE ASSESSEE WAS CARRYING O N SUCH ACTIVITIES WITHOUT PROFIT, RELEVANT EXTRACT OF THE LETTER IS A S UNDER:- THE ASSESSEE IS EARNING INCOME FROM ACTIVITY OF BHAWAN VIKAS MEANS BY LETTING THE BUILDING. THE BUILDING OF THE INSTITUTION BHATIA BHAWAN AND BHAGWAN SADAN IS OPEN FOR GEN ERAL PUBLIC FOR ORGANISING THE SOCIAL FUNCTIONS AT NOMINAL RATE S. THE BUILDING OF THE SOCIETY IS BEING USED FOR MARRIAGE AND OTHER SIMILAR KIND OF SOCIAL FUNCTIONS. THE BUILDING IS BEING RENTED AT V ERY NOMINAL RATES COMPARED TO BUSINESS INSTITUTIONS. THE OBJECT OF THIS ACTIVITY IS TO HELP THE PEOPLE AT LARGE TO ORGANISE THEIR MA RRIAGE FUNCTIONS WITH HONOUR AND PRIDE, NOT TO MAKE PROFIT. BOOKING A BHAWAN IS MADE ON FIRST COME FIRST SERVE BASIS. MANY TIMES TH E BUILDING IS BEING USED BY OTHER INSTITUTIONS/SANSTHANS AT CONCE SSIONAL RATES OR AT FREE OF COST FOR ORGANISING CHARITABLE ACTIVI TIES. 7.1 IT IS CONTENDED THAT THE IMPUGNED ASSESSMENT WA S FRAMED BY LD. AO AFTER CONDUCTING RELEVANT INQUIRIES AND RECORD, VERIFICATION AND EXAMINATION OF THE ACTIVITIES CARRIED OUT BY THE AS SESSEE AND THE NATURE OF 7 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT ITS RECEIPTS. BY A PROPER ASSESSMENT EXERCISE LD AO HELD THAT ASSESSEES ACTIVITY FALL UNDER THE AMBIT OF SECTION 2(15) OF T HE ACT. IT IS CONTENDED THAT THE LD. AO HAS DULY CONSIDERED THE PROVISIONS OF SECTION 2(15) OF THE ACT VIS A VIS ACTIVITIES OF THE TRUST, IT IS UNJUST IFIED ON PART OF THE CIT TO HOLD THAT AO HAS FAILED TO EXAMINE THE APPLICABILIT Y OF THE PROVISO TO SECTION 2(15). 7.2 IT IS CONTENDED CONSEQUENT TO AMENDMENT CBDT BY CIRCULAR NO. 11/2008 DT. 19.12.2008 HAS CLARIFIED THAT ONLY BECA USE A CHARITABLE INSTITUTION IS PURSUING THE OBJECT OF GENERAL PUBLI C UTILITY AND HAVING RECEIPT OF MORE THAN PRESCRIBED LIMIT FROM ACTIVITIES IN TH E NATURE OF TRADE, COMMERCE OR BUSINESS, IT WOULD NOT AUTOMATICALLY LO OSE THE EXEMPTION U/S 11. CIRCULAR MAKES IT CLEAR THAT THE PROVISO TO SECTION 2(15) WOULD APPLY ONLY WHEN THE ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND SECTION 2(15) IS USED ONLY AS A MASK O R A DEVICE TO HIDE THE TRUE PURPOSE WHICH IS TRADE, COMMERCE OR BUSINESS. THEREFORE, THE GENUINE INSTITUTIONS WHO CARRIES OUT THE ACTIVITY O F GENERAL PUBLIC UTILITY FOR THE GENERAL WELFARE OF PUBLIC AT LARGE WITHOUT ANY PROFIT MOTIVE WOULD NOT BE HIT BY THE PROVISO TO SECTION 2(15) EVEN WHEN IT CHARGES FEES OR CONSIDERATION FOR THE SERVICES RENDERED BY IT AND T HE SAME EXCEEDS THE PRESCRIBED LIMIT. SAME PROPOSITION IS LAID DOWN BY VARIOUS JUDICIAL PRECEDENTS; RELIANCE IS PLACED ON THE FOLLOWING DEC ISIONS:- 8 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT (I) CAI VS. DGIT (EXEMPTIONS) [2011] 347 ITR 99/ 20 2 TAXMAN 1 (DEL.) (HC) SECTION 2(15) DEFINES THE TERM CHARITABLE PURPOSE . THEREFORE, WHILE CONSTRUCTING THE TERM BUSINESS FOR THAT SECTI ON, OBJECT & PURPOSE OF THE SAID SECTION HAS TO BE KEPT IN MIND. A VERY BROAD AND EXTENDED DEFINITION OF THE TERM BUSINESS AS P ER SEC. 2(13) IS NOT INTENDED FOR THE PURPOSE OF INTERPRETING AND APPLYING THE FIRST PROVISO TO S. 2(15) TO INCLUDE ANY TRANSACTIO N FOR A FEE OR MONEY. AN ACTIVITY WOULD BE CONSIDERED BUSINESS I F IT IS UNDERTAKEN WITH A PROFIT MOTIVE, BUT IN SOME CASES THIS MAY NOT BE DETERMINATIVE; IN SUCH CASES, THERE SHOULD BE EV IDENCE AND MATERIAL TO SHOW THAT ACTIVITY HAS CONTINUED ON SOU ND AND RECOGNIZED BUSINESS PRINCIPLES AND PURSUED WITH REA SONABLE CONTINUITY. (EMPHASIS SUPPLIED) (II) ICAI VS. DGIT (EXEMPTIONS) 90 DTR 161/ 358 ITR 91(DEL.)(HC) (2013) IF THE OBJECT OR PURPOSE OF AN INSTITUTION IS CHARI TABLE, THE FACT THAT IT COLLECTS CERTAIN CHARGES DOES NOT ALTER THE CHARACTER OF THE INSTITUTION. THE EXPRESSION TRADE, COMMERCE AND BUSINESS AS OCCURRING IN THE FIRST PROVISO TO SECTION 2(15) MUST BE READ IN THE CONTEXT OF THE INTENT AND PURPORT OF SECTION 2( 15) AND CANT BE INTERPRETED TO MEAN ANY ACTIVITY WHICH IS CARRIE D ON IN AN ORGANISED MANNER. THE PURPOSE AND THE DOMINANT OBJE CT FOR WHICH AN INSTITUTION CARRIES ON ITS ACTIVITIES IS M ATERIAL TO DETERMINE WHETHER THE SAME IS BUSINESS OR NOT. THE PURPORT OF THE FIRST PROVISO TO SECTION 2(15) IS NOT TO EXCLUD E ENTITIES WHICH ARE ESSENTIALLY FOR CHARITABLE PURPOSE BUT ARE COND UCTING SOME ACTIVITIES FOR A CONSIDERATION OR FEE. THE OBJECT O F INTRODUCING THE 9 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT FIRST PROVISO IS TO EXCLUDE ORGANISATIONS WHICH ARE CARRYING ON REGULAR BUSINESS FROM THE SCOPE OF CHARITABLE PURPO SE. THE EXPRESSION BUSINESS, TRADE OR COMMERCE AS USE D IN THE FIRST PROVISO MUST, THUS, BE INTERPRETED RESTRICTIV ELY AND WHERE THE DOMINANT OBJECT OF AN ORGANISATION IS CHARITABL E, ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT W OULD NOT FALL WITHIN THE EXPRESSION BUSINESS, TRADE OR COMME RCE(PARA 67). (III) DIRECTOR OF INCOME-TAX (EXEMPTION) V. SABARMATI ASH RAM GAUSHALA TRUST 362 ITR 539 (GUJ.) IN THIS CASE THE ASSESSEE-TRUST WAS ENGAGED IN THE ACTIVITY OF BREEDING MILK CATTLE TO IMPROVE THE QUALITY OF COWS AND OXEN AND OTHER RELATED ACTIVITIES. THE ASSESSING OFFICER APP LIED THE PROVISO TO SECTION 2(15) HOLDING THAT THE TRUST COULD NOT B E CONSIDERED AS ONE CREATED FOR CHARITABLE PURPOSES. HE ANALYSED TH E ACCOUNTS OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT CONSID ERABLE INCOME WAS GENERATED FROM THE ACTIVITY OF MILK PROD UCTION AND SALE. THEREFORE, FOR THE ASSESSMENT YEAR 2009-10, H E DENIED THE BENEFIT OF SECTIONS 11 AND 12 TO THE ASSESSEE. THE TRIBUNAL NOTED THAT THE OBJECTS WERE ADMITTEDLY CHARITABLE I N NATURE. THE SURPLUS GENERATED WAS WHOLLY SECONDARY. THEREFORE, IT HELD THAT THE PROVISO TO SECTION 2(15) OF THE ACT WOULD NOT A PPLY AND THE ASSESSEE WAS ENTITLED TO THE EXEMPTION. ON APPEAL T O THE HIGH COURT HELD THAT THE MAIN OBJECTIVES OF THE TRUST WE RE TO BREED CATTLE AND ENDEAVOR TO IMPROVE THE QUALITY OF THE C OWS AND OXEN IN VIEW OF THE NEED FOR GOOD OXEN AS INDIA IS PROMI NENTLY AN AGRICULTURAL COUNTRY. ALL THESE WERE OBJECTS OF GEN ERAL PUBLIC UTILITY AND WOULD SQUARELY FALL UNDER SECTION 2(15) OF THE ACT. 10 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT PROFIT MAKING WAS NEITHER THE AIM NOR OBJECT OF THE TRUST. IT WAS NOT THE PRINCIPAL ACTIVITY. MERELY BECAUSE WHILE CA RRYING OUT THE ACTIVITIES FOR THE PURPOSE OF ACHIEVING THE OBJECT OF THE TRUST, CERTAIN INCIDENTAL SURPLUSES WERE GENERATED, THAT W OULD NOT RENDER THE ACTIVITY IN THE NATURE OF TRADE, COMMERC E OR BUSINESS. THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTIO N 11. (IV) GSI INDIA V. DIRECTOR GENERAL OF INCOME-TAX (E XEMPTION) 360 ITR 138 (DEL) ON WRIT, THE COURT HELD THAT THE CODING SYSTEM OF T HIS NATURE IF MARKETED ON COMMERCIAL LINES WITH PROFIT MOTIVE WOU LD AMOUNT TO BUSINESS BUT WHEN THE UNDERLYING AND PROPELLING MOTIVE WAS NOT TO EARN PROFITS OR COMMERCIALLY EXPLOIT THE RIG HTS BUT 'GENERAL PUBLIC GOOD', I.E., TO PROMOTE AND MAKE TH E GS1 CODING SYSTEM AVAILABLE TO INDIAN TRADERS, MANUFACT URERS, GOVERNMENT, ETC., IT WOULD FAIL THE TEST OF BUSINES S AND MEET THE TOUCHSTONE OF CHARITY. THIS WAS NOT A CASE OF C OMMERCIAL EXPLOITATION OF INTELLECTUAL PROPERTY RIGHTS TO EAR N PROFITS BUT RATHER A CASE WHERE A TOKEN FEE HAD BEEN FIXED AND WAS PAYABLE BY THE USER OF THE GLOBAL IDENTIFICATION SY STEM. CHARGING A NOMINAL FEE TO USE THE CODING SYSTEM AND TO AVAIL OF THE ADVANTAGES AND BENEFITS THEREIN WAS NEITHER REFLECT IVE OF BUSINESS APTITUDE NOR INDICATIVE OF PROFIT ORIENTED INTENT. THE INTENTION BEHIND THE ENTIRE ACTIVITY WAS PHILANTHRO PIC AND NOT TO RECOUP OR REIMBURSE IN MONETARY TERMS WHAT WAS GIVE N TO THE BENEFICIARIES. ONLY DIRECT EXPENSES INCURRED HAD BE EN SET OFF FROM THE FEE EARNED FROM REGISTRATION AND RENEWAL. THERE WAS NO ALLEGATION OR STATEMENT IN THE ORDER DATED NOVEM BER 17, 2008, THAT THE ASSESSEE HAD VIOLATED THE CONDITION OR 11 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT REQUIREMENTS OF THE STATUTE. NO DOUBT THE ASSESSEE HAD TO MAKE PAYMENT OF PART OF FEES COLLECTED TO GS1 GLOBA L SERVICES, BUT THIS WAS NATURAL AS THE GS1 SYSTEM WAS A GLOBAL AND WORLDWIDE SYSTEM. THE ASSESSEE HAD POINTED OUT THAT DURING THE PAST YEARS IT HAD BEEN RECEIVING AMOUNTS FROM T HE GOVERNMENT OF INDIA FOR FURTHERANCE OF ITS OBJECTIV ES. THE ASSESSEE WAS NOT ONLY CONCERNED WITH ENROLLMENT OF MEMBERS WHO WERE ENTITLED TO THE GS1 IDENTIFICATION SYSTEM BUT INVOLVED IN PROMOTING AND SPREADING AWARENESS ABOUT THE GS1 IDENTIFICATION SYSTEM AND MAKING IT AVAILABLE TO IN DIANS FOR A SMALL FEE. THE ASSESSEE WAS NOT CARRYING ON ANY IND EPENDENT, SEPARATE OR INCIDENTAL ACTIVITY, WHICH COULD BE CLA SSIFIED AS A BUSINESS TO FEED AND PROMOTE CHARITABLE ACTIVITIES. THE ACT OR ACTIVITY OF THE ASSESSEE BEING ONE A SINGLE SET OF BOOKS OF ACCOUNT WAS MAINTAINED, AS WHAT WAS TREATED AND REG ARDED BY THE REVENUE AS 'BUSINESS' WAS NOTHING BUT ACTS INTR INSICALLY CONNECTED WITH THE ATTAINMENT OF THE OBJECTS AND GO ALS OF THE ASSESSEE. THE ASSESSEE WAS NOT CARRYING ON ANY BUSI NESS, TRADE OR COMMERCE AND, HENCE, THE QUESTION OF REQUIREMENT OF SEPARATE BOOKS OF ACCOUNT FOR THE BUSINESS, TRADE O R COMMERCE WAS REDUNDANT. THE BENEFICIARIES OF THE GS1 SYSTEM WERE NOT CONFINED OR RESTRICTED TO PERSONS FROM TRADE, COMME RCE OR BUSINESS. THE BENEFICIARIES WERE PRESENT EVERYWHERE AND THE ADVANTAGES WERE PERMEATING AND UNIVERSAL AND WOULD INCLUDE CONSUMERS, GOVERNMENT, BENEFICIARIES OF PDS, ETC. T HE ASSESSEE COULD NOT BE DENIED THE BENEFIT OF REGISTR ATION/ NOTIFICATION UNDER SECTION 10(23C)(IV).THE ORDER WA S LIABLE TO BE QUASHED.(EMPHASIS SUPPLIED) 12 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT (V) BUREAU OF INDIAN STANDARDS VS. DGIT 89 DTR 93/ 358 ITR 78 (DEL.)(HC) (2013) EXEMPTION GRANTED TO ASSESSEE U/S 10(23C)(IV) WAS W ITHDRAWN BY DIT (EXEMPTIONS) FOR THE REASON THAT ACTIVITIES OF ASSESSEE FULFIL ALL THE ATTRIBUTES OF BUSINESS IN AS MUCH AS ASSESSEE AWARDS LICENSES UNDER VARIOUS PRODUCTS CERTIFICATIO N SCHEMES FOR WHICH A FEE OR CONSIDERATION IS CHARGED AND THUS AS SESSEE IS DIRECTLY HIT BY PROVISO BELOW SEC. 2(15). IT WAS HELD THAT THE DESIGNATED FUNCTION OF ASSESSE E FALL UNDER THE CATEGORY OF ADVANCEMENT OF OBJECT OF GENERAL P UBLIC UTILITY. BIS PERFORMS SOVEREIGN AND REGULATORY FUN CTION, IN ITS CAPACITY OF AN INSTRUMENTALITY OF THE STATE. THEREF ORE, IT IS NOT INVOLVED IN CARRYING ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. BIS RENDERS SERVICES IN RELAT ION TO TRADE, COMMERCE OR BUSINESS BY GRANTING CERTIFICATION/QUAL ITY MARKS IN RETURN OF LICENSE FEES. HOWEVER, RENDERING ANY SER VICE IN RELATION TO TRADE, COMMERCE OR BUSINESS CANNOT REC EIVE SUCH A WIDE CONSTRUCTION AS TO ENFOLD REGULATORY AND SOVER EIGN AUTHORITIES, SET UP UNDER STATUTORY ENACTMENTS, AND TASKED TO ACT AS AGENCIES OF THE STATE IN PUBLIC DUTIES WHICH CANT BE DISCHARGED BY THE PRIVATE BODIES. IF ANY PROFIT/REV ENUE IS EARNED IT IS PURELY INCIDENTAL. (VI) KODAVA SAMAJ VS. DIT [2013] 28 ITR(TRIB.) 224 (BANG.) ASSESSEE A CHARITABLE SOCIETY REGISTERED U/S 12A WA S IMPARTING EDUCATION AS WELL AS LETTING OUT KALAYANA MANDAP OW NED BY IT AND RUNNING A RECREATION CLUB. IN VIEW OF RETROSPEC TIVE AMENDMENT OF SECTION 2(15), DIT(E) CANCELLED REGIST RATION 13 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT ALREADY GRANTED TO ASSESSEE U/S 12A ON THE GROUND T HAT ASSESSEE SOCIETY WAS CARRYING ON ACTIVITY IN NATURE OF TRADE, COMMERCE OR BUSINESS. DIT(E) HELD THAT THOUGH ASSES SEE WAS RUNNING SCHOOLS & COLLEGES, BUT ITS PREDOMINANT OBJ ECT WAS NOT EDUCATION SINCE IT WAS RUNNING A RECREATION CLUB HA VING A LIQUOR BAR AND PROVIDED TABLES FOR PLAYING CARDS AND SUCH ACTIVITIES CANNOT BE CALLED 'CHARITABLE'. IT WAS HELD THAT, RE GISTRATION ALREADY GRANTED CAN BE CANCELLED ON; (A) SATISFACTI ON OF COMMISSIONER THAT ACTIVITIES OF TRUST OR INSTITUTIO N ARE NOT GENUINE (B)ACTIVITIES OF TRUST OR INSTITUTION ARE N OT BEING CARRIED OUT IN ACCORDANCE WITH OBJECTS OF TRUST OR INSTITUT ION. THERE WAS NO FINDING ON SATISFACTION OF ANY OF CONDITIONS PRO VIDE IN SEC. 12AA(3) IN ORDER OF DIT(E). MERELY BECAUSE, INCOME OF SOCIETY COMPRISED OF RECEIPTS FROM ACTIVITY OF LETTING OUT A KALYANAMANDAPA OWNED BY IT ON RENT, FEES RECEIVED F ROM MEMBERS ON SALE OF LIQUOR IN BAR RUN BY ASSESSEE, I T CANNOT BE SAID THAT ACTIVITIES OF ASSESSEE ARE NOT GENUINE OR THAT ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH OBJECT S OF ASSESSEE. THUS, REGISTRATION ALREADY GRANTED TO THE ASSESSEE CANNOT BE CANCELLED ON THE GROUND THAT THE ASSESSEE WHICH PURSUES AS CHARITABLE PURPOSE, ADVANCEMENT OF OBJE CTS OF GENERAL PUBLIC UTILITY CARRIES ON COMMERCIAL ACTIV ITIES. THEREFORE, THE ORDER OF DIT(E) IS QUASHED. 7.3 FROM THE ABOVE DECISIONS, IT IS EVIDENT THAT SI MPLY BECAUSE A FEES/ CONSIDERATION IS CHARGED FOR AVAILING FACILIT IES PROVIDED BY THE TRUST ON NO PROFIT BASIS, WOULD NOT MAKE A CHARITABLE ORG ANIZATION, NON- CHARITABLE. THE PROVISO WOULD APPLY ONLY WHEN THE A CTIVITY CARRIED OUT BY IT 14 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS WIT H THE OBJECT OF EARNING PROFIT. THEREFORE, WHEN A NO PROFIT BASED CONSIDERA TION IS CHARGED IN FULFILMENT OF THE CHARITABLE OBJECT OF THE INSTITUT ION, THE SAME CANNOT BE SAID TO BE CARRYING ON ANY ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS OR FOR RENDERING ANY SERVICE IN RELATION T HERETO PROVIDED IT DO NOT INVOLVE PROFIT MOTIVE. THE CIT IS, THEREFORE, INCOR RECT IN PRESUMING THAT ACTIVITY OF LETTING OUT THE BUILDING OWNED BY SOCIE TY FOR MARRIAGES AND OTHER SOCIAL FUNCTIONS IS ON TRADE AND COMMERCIAL L INES AND THEREFORE IT IS NOT ENTITLED FOR BENEFIT OF EXEMPTION U/S 11 & 12 O F THE ACT. 7.4 THE LD. CIT WHILE HOLDING THAT THE PLETHORA OF CASES RELIED BY THE ASSESSEE ARE DISTINGUISHABLE HAS GIVEN NO COGENT CO MPARABILITY AND SUMMARILY DISCARDED THE JUDICIAL PRECEDENTS CRUCIAL TO DETERMINING THE ISSUE. THERE IS NO BASIS FOR SUCH ASSUMPTION THAT A CTIVITIES OF LETTING OF USE OF TRUST COMMUNITY BUILDING TO GENERAL PUBLIC, FOR SOCIAL FUNCTIONS, MARRIAGES WHICH ARE GUIDED BY CHARITABLE MOTIVE, AT A SUBSIDISED RATE IN PUBLIC INTEREST AMOUNT TO COMMERCIAL TRANSACTIONS W ITH MOTIVE TO EARN PROFIT. LD. CIT FAILED TO APPRECIATE THAT: I. ASSESSMENT ORDER BEING PASSED AFTER DUE VERIFICA TION OF EVIDENCE ASKED FOR BY AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFO RE, NO REVISION U/S 263 WAS CALLED FOR. THUS THE ACTION IS BAD IN LAW. 15 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT II. CRUCIAL FACTS THAT LETTING OF COMMUNITY BUILDIN G WAS A RESULT OF CHARITABLE PURPOSE TO ENABLE THE GENERAL PUBLIC TO SOLEMNIZED VARIOUS SOCIAL FUNCTIONS LIKE, MARRIAGES , SOCIAL GATHERINGS, MEDICAL CAMPS, LAST RITUALS ETC. AT HEA VILY SUBSIDISED RATES. THE PURPOSE IS TO MAKE THESE ACTI VITIES AFFORDABLE FOR COMMON MASSES WITHOUT ANY DISCRIMINA TION. SUCH FACILITIES ARE USED BY POOR PEOPLE AND AMOUNT TO RELIEF OF POOR. III. THE ACTIVITY IS NOT DRIVEN BY ANY PROFIT MOTIV E AND IS DRIVEN BY THE OBJECTS OF BENEFITING THE PUBLIC AT LARGE. T HE SURPLUS OF THE SOCIETY FROM SUCH NON COMMERCIAL ACTIVITIES IS APPLIED FOR THE REPAIRS, MAINTENANCE OF COMMUNITY B UILDING AND OTHER OBJECTS OF THE TRUST. IV. THE TRUST IS ONE OF THE REPUTED INSTITUTIONS OF TOWN, THERE IS NO ADVERSE MATERIAL ON RECORD TO HOLD A VIEW THAT S OCIETY IS EXISTING AS A MASK TO CARRY OUT COMMERCIAL ACTIVITI ES IN THE GUISE OF LETTING OF COMMUNITY BUILDING. THE TRUST A ND ITS COMMUNITY IS A BIG SUPPORT TO THE MASSES AS EVERYBO DY CANT AFFORD TO USE HOTELS OR BANQUET HALLS FOR THE IR NEEDS. V. THE SOCIETY HAS NO PROFIT MOTIVE IS APPARENT FR OM THE RECORD THAT THE EXPENDITURE AS WELL AS APPLICATION OF FUNDS IS MORE THAN SUCH RECEIPTS. IT IS PLEADED THAT ON M ERITS ALSO THERE IS NO JUSTIFICATION IN DIRECTING THE AO TO WI THDRAW THE BENEFITS OF SEC 11 AND RE COMPUTE THE INCOME. 7.5 IT IS CLEAR FROM THE ABOVE FACTS ON RECORD THAT THE LD. AO ADOPTED A VIEW WHICH WAS ONE OF A PLAUSIBLE VIEW. IT IS A S ETTLED LAW THAT MERELY BECAUSE ANOTHER VIEW MAY ALSO BE POSSIBLE, THE ORDE R CANNOT BE TERMED AS ERRONEOUS. REVISION U/S 263 IS NOT PERMISSIBLE T O OVERRIDE ONE POSSIBLE 16 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT VIEW OVER ANOTHER POSSIBLE VIEW. APROPOS THE EXTENT AND MANNER TO WHICH AO SHOULD MAKE INVESTIGATION IS A MATTER LEFT TO HI S WISDOM U/S 143(3) AND IN SUCH CIRCUMSTANCES THE ORDER OF THE AO CANNO T BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E SO AS TO BE REVISED BY LD. CIT U/S 263. FOR THIS RELIANCE IS PLACED ON THE FOLLOWING CASES:- (I) MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 (SC) (II) CIT VS. NEW DELHI TELEVISION LTD. (2013) 360 ITR 44/ 94 DTR 21 (DEL.)(HC) 7.6 ALTERNATIVELY IT IS PLEASED THAT THE LD. CIT HA S DIRECTED THE AO TO ASSESS THE RECEIPT FROM THE ACTIVITY OF BHAWAN VIKA S UNDER THE HEAD BUSINESS. THESE DIRECTIONS ARE PATENTLY INCORRECT A S GROSS RECEIPT CANNOT BE CHARGED TO TAX. EXPENSES FOR EARNING THE RECEIPT HAVE TO BE ALLOWED AS DEDUCTION. THE ASSESSEE HAS INCURRED OFFICE & ADMIN ISTRATIVE EXPENSES OF RS.3.69 LACS, REPAIR & MAINTENANCE OF THE BUILDING AT RS.2.69 LACS, DEPRECIATION ON FURNITURE, FITTINGS ETC. IN THE BUI LDING AT RS.2.02 LACS AND HAS NOT CLAIMED DEPRECIATION ON BUILDING ALLOWABLE AT RS.14.74 LACS. THEREFORE, WITHOUT CONSIDERING THESE EXPENDITURES/ ALLOWANCES, DIRECTION OF THE CIT TO ASSESS THE RENT RECEIVED FROM THE BUI LDING UNDER THE HEAD BUSINESS AS SUCH IS ILLEGAL, BAD IN LAW AND AGAINST THE PROVISIONS OF THE ACT. 8. LD. CIT(DR) RELIED ON THE ORDER OF LD. CIT AND CONTENDS THAT: (I) WHEN THERE IS AN AMENDMENT IN LAW, IT IS THE DU TY OF AO TO GIVE A FINDING AFTER ANALYSING THE LAW AND ASSESSEE S CASE. 17 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT FAILING TO DO SO AMOUNTS TO FRAMING AN ORDER IN ERR ONEOUS MANNER WHICH IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. SUCH ERROR IS AMENABLE TO THE REVISIONARY JURISDICT ION OF CIT U/S 263. RELIANCE IS PLACED ON THE CASE LAWS RELIED ON BY LD. CIT IN HIS ORDER. (II) FROM THE P & L A/C OF THE SOCIETY IT EMERGES T HAT SUBSTANTIALLY ONE ACTIVITY OF LETTING THE BHAVAN IS CARRIED OUT SUCH ACTIVITY IS NOT A CHARITABLE ACTIVITY AND AT T HE MOST CONSTITUTES AN OTHER OBJECT OF GENERAL PUBLIC UTIL ITY. THIS BEING SO THE PROVISO TO SEC. 2(15) WAS APPLICABLE A ND THE GROSS RECEIPTS OF THE SOCIETY BEING MORE THAN THE S PECIFIED LIMIT, THE OTHER CONDITION IN THIS BEHALF IS ALSO S ATISFIED. APROPOS THE ISSUE OF PROFIT MOTIVE IT IS PLEADED TH AT THAT THE PROVISO ITSELF RULES THIS FACTOR. (III) THUS THE REVISIONARY POWER EXERCISED BY LD. CIT IS PROPER ON JURISDICTION AS WELL AS MERITS 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS HAVE BEEN NARRATED ABOVE IN DE TAILS. SEC. 2(15) READS AS UNDER: 2(15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRON MENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PR ESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HI STORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, I F IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR 18 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY :] [PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS [TWENTY-FIVE LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] A PLAIN READING WILL MAKE IT CLEAR THAT DEFINITION OF CHARITABLE PURPOSE IS INCLUSIVE AND INCLUDES OBJECT OF OTHER PUBLIC UTILI TY ALSO FOR EXTENDING BENEFITS OF SECTION 11, FIRST IT IS TO BE ASCERTAINED WHETHE R THE ACTIVITY IN QUESTION IS SIMPLY CHARITABLE OR OBJECT OF GENERAL PUBLIC UTILI TY; THEREAFTER IT IS TO BE ASCERTAINED DEPENDING ON PROFIT MOTIVE AND OTHER FA CTORS WHETHER THE ACTIVITY IS COMMERCIAL OR NOT. COURTS HAVE HELD THAT MERELY BECAUSE SOME FEE OR CESS IS CHARGED IN THE ABSENCE OF PROFIT MOTIVE THE ACTI VITY MAY NOT AMOUNT TO COMMERCIAL ACTIVITY. IN THAT CASE THE RIGOR OF PROV ISO MAY NOT BE ATTRACTED. FURTHER IF BY A PROPER EXAMINATION IT IS ULTIMATELY HELD THAT THERE EXIST COMMERCIAL PROFIT MOTIVE, IN THAT CASE ALSO LAW DOE S NOT POSTULATE TO TAX GROSS RECEIPT AS BUSINESS INCOME. IF THE ACTIVITY IS TREA TED AS COMMERCIAL IN NATURE; IN THAT CASE NECESSARY BUSINESS EXPENDITURE AS PER LAW IS TO BE ALLOWED TO ASSESSEE. IN OUR CONSIDERED VIEW AOS ORDER IS TECHNICALLY E RRONEOUS IN AS MUCH AS IN CATEGORICAL TERMS IT FAILS TO DECIDE WHETHER THE ACTIVITY OF LETTING BHAVAN IS DRIVEN BY PROFIT MOTIVE OR NOT AND WHETHER IT CA N BE HELD AS COMMERCIAL 19 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT ACTIVITY OR NOT. THERE ARE JUDGMENTS ON THE EITHER SIDE DEPENDING ON THE FACTS. THE ABSENCE OF THESE RELEVANT FINDINGS AND N ON CONSIDERATION OF EXCLUSION CLAUSE OF PROVISO TO SEC 2(15) CONSTITUTE S AN ERROR. WE MAY HASTEN TO ADD LD CITS ALSO HAS NOT DECIDED THE ISSUE WHET HER THERE WAS PROFIT MOTIVE IN THE ACTIVITIES. THOUGH JUDGMENT IN FAVOUR OF REV ENUE HAVE BEEN STRAIGHTWAY APPLIED BUT THE ONES SUPPORTING THE ASSESSEE HAVE N OT BEEN CONSIDERED. THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF VEGET ABLE PRODUCTS 88 ITR 192 HAS HELD THAT WHEN TWO VIEWS ARE POSSIBLE ON TH E SAME ISSUE, THE ONE FAVOURABLE TO ASSESSEE MAY BE ADOPTED. FURTHER WHAT IS DISTURBING IS LD. CIT HAS REFERR ED TO NET INCOME OF RS 28,65,918/-; THE AO HAS BEEN DIRECTED TO TAX THE RE CEIPTS FROM BHAVAN VIKAS UNDER THE HEAD BUSINESS. THE DIRECTION BEING NOT SPECIFIC AO IN TURN VIDE ORDER DTD. 28-4-2014 MADE ADDITION OF RS. 38,52,975 /- WHICH IS ACTUALLY THE FIGURE OF GROSS RECEIPTS. WE FURTHER FIND THAT THE CORRESPONDING EXPENDITURE INVOLVE VARIOUS ITEMS WHICH ARE DEDUCTIBLE IF THE I NCOME IS TO BE HELD AS BUSINESS INCOME, LIKE SALARIES, ELECTRICITY, WATER, MAINTENANCE, STAFF SALARY, DEPRECIATION ETC.. THUS IN OUR VIEW THERE ARE ERRORS IN THE ORDERS OF BOTH AUTHORITIES ON ONE ISSUE OR OTHER. IN OUR VIEW LD. CIT INSTEAD OF GIVING SPECIFIC DIRECTIONS OUGHT TO HAVE SET ASIDE THIS LIMITED PART OF ASSESS MENT TO AO FOR DE NOVO CONSIDERATION. IN THE ENTIRETY OF FACTS AND CIRCUMS TANCES WE ARE INCLINED TO TECHNICALLY UPHOLD THE ORDER OF LD. CIT HOLDING THE ASSESSMENT AS ERRONEOUS 20 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT AND PREJUDICIAL TO THE INTEREST OF REVENUE, ON LIMI TED ISSUE THAT LD. AO HAS FAILED TO CONSIDER WHETHER THE ACTIVITIES OF LETTIN G BHAVANS AMOUNT TO COMMERCIAL ACTIVITIES OR NOT. IN DE NOVO PROCEEDING S IF THE ANSWER IS FOUND IN AFFIRMATIVE THEN ASSESSING OFFICER IS REQUIRED TO R ECOMPUTE THE NET TAXABLE INCOME IN THIS BEHALF AFTER ALLOWING THE RELEVANT E XPENDITURE UNDER BUSINESS HEAD AS PER THE LAW. SINCE WE HAVE TECHNICALLY UPHELD THE ORDER OF LD. CIT WITH THESE OBSERVATIONS THE LOGICAL STEP WILL BE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF AO FOR A PROPER AND SPEAKING ORDER REFRAMING THIS I SSUE. TO ENSURE MEETING OF END OF JUSTICE, LD. AO WILL NOT BE GUIDED BY ANY OBSERVATION OR FINDINGS OF LD. CIT WHILE PASSING IMPUGNED ORDER U/S 263. THUS WE ARE MODIFYING 263 ORDER TO A SIMPLE SET ASIDE OF THIS ISSUE TO AO TO DECIDE IT DE NOVO IN ACCORDANCE WITH LAW; AFTER GIVING THE ASSESSEE AN A DEQUATE OPPORTUNITY OF BEING HEARD. WE EXPECT THAT LD. AO WILL EXPEDITE TH E ISSUE AT AN EARLIEST AS THE SUBSEQUENT ASSESSMENTS MAY ALSO BE INVOLVED. 10. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/12/2014. SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, DATED : 12 TH DECEMBER, 2014 * RANJAN 21 ITA 309/JP/2014 M/S BHATIA BIRADARI VS. CIT COPY FORWARDED TO :- 1. M/S BHATIA BIRADARI PRABANDH SAMITI, JAIPUR . 2. THE CIT, JAIPUR-II, JAIPUR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NO. 309/JP/2014) BY ORDER, AR ITAT JAIPUR.
Mehul