Indian Machine Tool Manufacturers Association, MUMBAI V. The Dy. D.I.T,(E) II (1), MUMBAI

ITA 312/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0628 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 30-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACCHIDANAND DUBEY
• Keywords: Business income
• Section: 12A; 12; 154; 11

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - I - BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL M EMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 312 /MUM/20 1 3 , / ASSESSMENT YEAR - 20 09 - 10 INDIA N MACHINE TOOL MANUFACTURERS ASSOCIATION KALYANIWALLA & MISTRY, ARMY & NAVY BUILDING, 148, MAHATMA GANDHI ROAD FORT, MUMBAI - 400 001. PAN: ASSESSEE CI 1369 M VS DDIT(EXEMP.)II(I) PIRAMAL CHAMBERS, 5TH FLOOR, ROOM NO.507 LALBAUG, PAREL MUMBAI - 400 012. ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :S HRI JITENDRA JAIN / REVENUE BY :SHRI SACCHIDANAND DUBEY - DR / DATE OF HEARING : 27 - 0 5 - 2015 / DATE OF PRONOUNCEMENT : 27 - 0 5 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 14.11.2012 OF CIT(A) - 1 , M UMBAI THE ASSESSEE , HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER THAT THE ACTIVITY OF THE APPELLANT IN HOLDING EXHIBITIONS WAS A BUSINESS ACTIVITY. 2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO CONSIDER THE OBJECTS FOR WHICH THE APPELLANT WAS FORMED. 3) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER THAT THE APPELLANT WAS N OT ELIGIBLE FOR THE BENEFITS OF SECTION 11 OR SECTION 12 OF THE ACT AS THE APPELLANT WAS COVERED BY THE AMENDMENT TO THE PROVISO TO SECTION 2(15) OF THE ACT. 4) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLDING THAT SINCE THE ACTIVITY OF HOLDING EXHIBITIONS WAS HELD TO BE A BUSINESS ACTIVITY, THE PROVISIONS OF SECTION 13(8) OF THE ACT WERE APPLICABLE TO THE INCOME OF THE APPELLANT. 5) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER THAT THE APPELLANT WAS NOT ENTITLED TO THE STATUTORY DEDUCTION U/S.11(1)(A) OF THE ACT, AS CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. 6) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE ISSUE OF MUTUALITY WAS NO T BEFORE THE ASSESSING OFFICER AND THAT THIS WAS A NEW ALTERNATIVE PLEA RAISED BY THE APPELLANT FOR THE FIRST TIME AT THE APPEAL STAGE AND HENCE NO DIRECTION COULD BE GIVEN TO THE ASSESSING OFFICER FOR DISPOSAL OF THE RECTIFICATION APPLICATION UNDER SECT ION 154 OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR AMEND THE ABOVE GROUNDS OF APPEAL AS AND WHEN ADVISED. ITA NO.312/13 ;AY:09 - 10 2 ASSESSEE - COMPANY IS REGISTE RED U/S.25 OF THE COMPANYS ACT, 1956 AND ITS MAIN OBJECT IS THE PROMOTION AND PROTECTION OF MACHINE TOO L INDUSTRY IN INDIA. IT IS ALSO REGISTERED U/S. 12A OF THE ACT. THE RETURN OF INCOME WAS FILED ON 30/9/2009 DECLARING TOTAL INCOME AT RS. NIL. THE ASSESSING OFFICER (A O ) COMPLETED THE ASSESSEMENT, ON 28.12.2011, U/S.143 (3) OF THE ACT DETERMINING THE INCOME OF TH E ASSESSEE AT RS. 18,22,51,810 / - . 2 . DURING THE COURSE OF ASSESSMENT THE AO FOUND THAT THE ASSESSEE HAS SHOWN INCOME FROM MEMBERSHIP SUBSCRIPTION FEE OF RS. 32.94 LACS ; EXHIBITION INCOME OF RS.41.87 C RORES; EXHIBITION CENTRE INCOME OF RS.30.00 CR ORE S, SEMINA RS AND OTHER ACTIVITIES INCOME RS.1.65 CR ORES A ND OTHER INCOME OF RS. 17.25 CR ORES. HE HELD THAT THE RECEIPTS SHOWN BY THE ASSESSEE IN THE INCOME AND EXPENDITURE ACCOUNT MADE IT CLEAR THAT IT WAS DOING REGULAR ACTIVITIES WHICH WERE IN THE NATURE OF BUSINESS , THAT IT WAS SYSTEMATICALLY GENERATING ITS INCOME THROUGH ITS ACTIVITIES WHICH WERE PURELY IN THE FIELD OF BUSINESS,THAT IT WAS DIRECTLY HIT BY THE PROVISO TO SEC.2(15) OF THE ACT . HE ISSUED A SHOW CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE ACTIVITIES CARRIED OUT BY IT SHOULD NOT BE TREATED AS BUSINESS ACTIVITIES AND THAT INCOME FROM SUCH ACTIVITIES SHOULD NOT BE TREATED AS BUSINESS INCOME U/S. 2(15) OF THE ACT. IT WAS ALSO ASKED TO EXPLAIN AS TO WHY THE EXEMPTION U/S. 11(4A) O F THE ACT SHOU LD NOT BE DENIED. THE ASSESSEE ,VIDE ITS LETTER DT.24.11.2011, FILED DE TAILED REPLY. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE AO HELD THAT ASSESSEE WAS PREDOMIN A - NT LY A MUTUAL ASSOCIATION, THAT IT WAS CARRYIN G OUT BUSINESS ACTIVITIES. FINALLY , HE REJECTED THE CLAIM OF EXEMPTION MADE BY THE ASSESSEE MADE U/S. 11 OF THE ACT. 3 . AGGRIEVED BY THE ORDER OF AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE FIRST APPELLATE AUTHORITY ( FAA ) . A FTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE HELD THAT THE PARTICIPATION FEE CHARGED BY IT WERE BASED ON COMMERCIAL RATES THAT IT WAS GENERAT - ING HUGE PROFITS. REFERRING TO THE ORDER OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 19 92 - 9,T HE FAA HELD THAT THE ISSUE AS TO WHETHER I T WAS CARRYING OUT BUSINESS ACTIVITY BY HOLDING EXHIBITION HAD BEEN ALREADY DECIDED, THAT SUBSEQUENT APPELLATE ORDER HAD CONFIRMED THE FINDING OF TRIBUNAL, THAT THE HOLDING OF EXHIBITION WAS A BUSINESS ACTIVITY. FOLLOWING THE ORDER OF THE TRIBUNAL AND HIS PREDECESSORS, HE HELD THAT ASSESSEE WAS CARRYING OUT BUSINESS ACTIVITIES. HE ALSO HELD THAT ASSESSEE WAS NOT ENTITLED TO THE BENEFITS OF S ECTION 11 OF THE ACT. 4. DURING THE COURSE OF HEARING BEFORE US, THE AR OF THE ASSESSEE FAIRLY CONCEDED THAT ISSUE HAD B EEN DECIDED AGAINST THE ASSESSEE VIDE TRIBUNAL ORDER DT.30/9/98 (ITA NO.9603/BOM/95) .H E ALSO REFERRED TO ORDER OF THE TRIBUNAL DT.17/7/2013 (ITA NOS.1019 & 448/MUM/2011 - ,AY.20 0 07 - 08). DEPARTMENTAL REPRESENTATIVE ( DR ) SUPPORTED THE ORDER OF THE FAA. 5 . WE HA VE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE EAR L IER YEARS THE TRIBUNAL HAS CLEARLY HELD THAT HOLDING OF EXHIBITION WAS BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE . WE FIND THAT THE TRIBUNAL HAS, WHILE DECIDING APPEA L FOR ASSESSMENT YEAR 2007 - 0 8 ( SUPRA ), DISMISSED THE GROUNDS FILED BY THE ASSESSEE WHICH ARE IDENTICAL TO THE GROUNDS FILED BY THE ASSESSEE IN THE PRESENT APPEAL. FOLLOWING THE ORDER OF THE TRIBUNAL OF EARLIER Y EA RS WE DECIDE THE GROUNDS NO.1 - 3 AGAINST THE ASSESSEE . GR OUND NO.4 HAS TO BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE RETROSPECTIVE INTRODUCTION OF PROVISIONS OF S.13(8) OF THE ACT W.E.F 1 ST APRIL 2009. SIMILARLY GR OUND NO.5 WOULD ALSO GO AGAINST THE ASSESSEE AS PROVISIONS OF S.13(8) OF THE ACT A RE APPLICABLE TO IT AND HENCE, THE INCOME FOR THE YEAR UNDER APPEAL WOULD NOT BE ENTITLED TO BENEFI T S OF S ECTION .11 OF THE A CT. THE AR FAIRLY ITA NO.312/13 ;AY:09 - 10 3 CONCEDED THAT THE ISSUES RAISED IN GROUNDS NO.4 AND 5 HAVE TO DECIDED AGAINST THE ASSESSEE.IN SHORT,GROUNDS NO.1 - 5 ARE DISMISSED. 6. LAST GR OUND OF APPEAL DEALS WITH THE ISSUE OF MUTUALITY. IT WAS STATED THAT AN APPLICATION WAS FILED BEF ORE THE AO U/S. 154 OF THE ACT. THE AR REFERRED TO P AGE NO S .25 AND 26 OF THE PAPER BOOK AND STATED THAT DIRECTION SHOULD BE GIVEN TO AO TO DISPOSE OFF THE PENDING RECTIFICATION APPLICATION. DR STATED THAT HE HAD NO OBJECTION IF THE ISSUE WAS RESTORED TO THE FILE OF AO WITH DIRECTION TO DISPOSE OFF THE RECTIFICATION APPLICATION. CONSIDERING THE FACTS OF THE CASE WE DIRECT THE AO TO PASS NECESSARY ORDER WITH REGARD TO THE APPLICATION FILED BY THE ASSESSEE U/S. 154 OF THE ACT. GROUND NO.6 IS ALLOWED IN FAVOUR OF THE ASSESSEE IN PART. AS A RESULT APPEAL FILED BY ASSESSEE IS STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH , MAY ,2015. 27 , 2015 SD/ - SD/ - ( /I . P . BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 27 .0 5 .2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.