Kakatiya Urban Development Authority, Warangal, Warangal V. ACIT, Circle-1, Warangal, Hyderabad

ITA 329/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2589 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-02-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution; Condonation of delay
• Section: 143(3); 12A; 12AA; 12; 144; 11

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. A.Y APPELLANT RESPONDENT 326/HYD/2017 2009-10 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. PAN-AAAJK1465B THE ACIT, CIRCLE-1, WARANGAL. 327/HYD/2017 2010-11 328/HYD/2017 2011-12 329/HYD/2017 2012-13 330/HYD/2017 2013-14 635/HYD/2017 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. PAN-AAAJK1465B CIT (EXEMPTIONS), HYDERABAD. ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : SHRI R. LAXMAN DATE OF HEARING : 07-02-2018 DATE OF PRONOUNCEMENT : 09-02-2018 ORDER PER SMT P MADHAVI DEVO, JM: ITA NO. 635/HYD/2017 IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(E), HYDERABAD DATED 26.09.2016, REJECTING THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT, WHILE THE APPEALS IN ITA NOS. 326 TO 330/HYD/2017 ARE THE APPEALS AGAINST THE ASSESSMENTS MADE U/S 144 OF THE IT ACT FOR THE A.YS 2009-10 TO 2013-14. 2. BRIEF FACTS OF THE CASE IN ITA NO. 635/HYD/2017 ARE THAT THE ASSESSEE FILED ITS APPLICATION IN FORM NO. 10A ON 01.03.2016 SEEKING REGISTRATION U/S 12AA OF THE ACT. THE CIT(E) CALLED FOR VARIOUS DETAILS AND ON PERUSAL THEREOF, HE OBSERVED THAT THE 2 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. ASSESSEE IS A BODY WHICH HAS COME INTO EXISTENCE BY WAY OF NOTIFICATION ISSUED BY THE GOVERNMENT OF ANDHRA PRADESH VIDE G.O.MS. NO. 32 M.A DATED 19.01.1982 AS PER THE ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975 AND THAT THE OBJECTS OF THE ASSESSEE AS PER SEC. 5 OF THE ANDHRA PRADESH URBAN AREA DEVELOPMENT ACT, ARE TO PROMOTE AND SECURE THE DEVELOPMENT OF ALL THE, OR ANY OF THE AREAS COMPRISED IN THE DEPLOYMENT AREA CONCERNED ACCORDING TO PLAN, FOR THE PURPOSE, AND TO HOLD, MANAGE, PLAN, DEVELOP AND MORTGAGE OR OTHERWISE DISPOSE OF LAND AND OTHER PROPERTY, TO CARRY OUT BY OR ON ITS BEHALF BUILDING, ENGINEERING, MINING AND OTHER OPERATIONS. THE CIT(E) OBSERVED THAT THE ABOVE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL ACTIVITIES AND THAT IT HAS BEEN RENDERING SERVICES FOR A FEE. HE CONSIDERED THE APPLICABILITY OF THE PROVISO TO SEC. 2(15) OF THE ACT TO HOLD THAT THE ASSESSEES ACTIVITIES DO NOT FALL UNDER ANY OF THE LIMBS OF CHARITABLE ACTIVITY U/S 2(15) OF THE ACT. FURTHER, HE ALSO OBSERVED THAT DURING THE RELEVANT FINANCIAL YEAR THE ASSESSEE HAS RECEIVED MORE THAN RS. 25 LAKHS FROM ITS ACTIVITIES. HENCE, HE HELD THAT THE ASSESSEE HAS NOT FULFILLED ONE OF THE PRE-REQUISITE CONDITIONS LAID DOWN U/S 2(15) OF THE ACT. HE, THEREFORE, DENIED REGISTRATION U/S 12AA OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE HAD ARISEN BEFORE THIS TRIBUNAL IN THE CASE OF HMDA LTD., AND THE B BENCH OF THIS TRIBUNAL IN ITA 03/HYD/2017 AND OTHERS, VIDE ORDERS DATED 31.08.2017 HAD CONSIDERED THE OBJECTS OF THE ASSESSEE THEREIN, AND HELD IT TO BE FALLING UNDER THE CATEGORY OF GENERAL PUBLIC UTILITY AND THEREFORE FALL WITHIN THE DEFINITION OF CHARITABLE INSTITUTION. HE SUBMITTED THAT BY WAY OF THE INSERTION OF THE PROVISO TO SEC. 2(15) OF THE ACT, THE DEFINITION OF CHARITABLE ACTIVITY HAS EXCLUDED CERTAIN ACTIVITIES FROM ITS PURVIEW ON THE BASIS OF ITS GROSS RECEIPTS DURING THE RELEVANT FINANCIAL YEAR, BUT, IN VIEW OF THE VARIOUS JUDICIAL PRECEDENTS, THE REGISTRATION U/S 12AA CANNOT BE DENIED ON THIS GROUND ALONE. HE SUBMITTED THAT THE APPLICABILITY OF THE PROVISO TO SEC. 2(15) OF THE ACT, WOULD HAVE TO BE CONSIDERED WHILE EXAMINING THE ASSESSEES CLAIM OF DEDUCTION U/S 11 OF THE IT ACT AND NOT AT THE TIME OF REGISTRATION U/S 12AA OF THE ACT. 4. THE LD. DR, HOWEVER SUPPORTED THE ORDERS OF THE CIT(E). 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE OBJECTIVES OF THE ASSESSEE SOCIETY ARE THE SAME AS THE OBJECTIVES OF HMDA AND THE ONLY DIFFERENCE IS BETWEEN THEIR AREA OF OPERATION. SINCE, WE HAVE ALREADY HELD THAT HMDA IS ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT, WE DIRECT THE CIT(E) TO 4 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. GRANT THE REGISTRATION TO THE ASSESSEE AS WELL. FOR THE PURPOSE OF CONVENIENCE AND READY REFERENCE THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IN THE CASE OF HMDA IS REPRODUCED HEREUNDER: 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD AND THE CASE LAW RELIED UPON BY BOTH THE PARTIES, WE FIND THAT THE OBJECTIVES OF THE ASSESSEE BEING CHARITABLE IN NATURE IS NOT IN DISPUTE AND THE CIT(E), ACCEPTING THE SAME, HAS GRANTED REGISTRATION FOR THE A.Y 2007-08 AND 2008-09. THE REGISTRATION U/S 12A OF THE IT ACT IS NOT ANNUAL BUT IS FOR ALL THE SUBSEQUENT YEARS UNTIL IT IS WITHDRAWN U/S 12AA OF THE IT ACT. HAVING GRANTED REGISTRATION FOR THE A.Y 2007-08, HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR THE REGISTRATION FOR THE A.YS 2009-10 ONWARDS WILL AMOUNT TO REJECTION OR CANCELLATION OF THE REGISTRATION GRANTED EARLIER. IN THESE CIRCUMSTANCES, IN OUR VIEW, THE CBDT CIRCULAR NO. 21 OF 2016 WOULD APPLY AND THE CBDT CIRCULARS BEING BINDING ON THE REVENUE AUTHORITIES, THE CIT(E) OUGHT NOT TO HAVE REJECTED THE REGISTRATION U/S 12A OF THE ACT FOR THE SUBSEQUENT ASSESSMENT YEARS EVEN IF IT IS PRESUMED AND ACCEPTED THAT THE PROVISO TO SEC. 2(15) OF THE ACT IS APPLICABLE TO THE ASSESSEE. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT(E) VS. M/S WATER AND LAND MANAGEMENT TRAINING AND RESEARCH INSTITUTE, HIMAYATH NAGAR, HYDERABAD IN ITTA NO. 56 OF 2017, VIDE JUDGMENT DATED 15.03.2017 HAS HELD THAT THE CLAUSE (II) OF THE PROVISO TO SEC. 2(15) OF THE ACT CLEARLY PROVIDES THAT THE PROVISO WOULD APPLY ONLY IF THE TURNOVER OF THE ASSESSEE TRUST CROSSES RS. 25 LAKHS AND THEREFORE ON THIS GROUND THE REGISTRATION U/S 12A CANNOT BE DENIED. THEREFORE WE HAVE NO HESITATION IN HOLDING THAT EVEN IF THE PROVISO TO SEC. 2(15) OF THE ACT IS APPLICABLE TO ASSESSEE FOR THE A.YS 2009-10 ONWARDS, IT CANNOT BE DENIED REGISTRATION U/S 12A OF THE ACT. THE STANDING COUNSELS OBJECTION THAT BY VIRTUE OF SEC. 13(8) OF THE ACT, THE ASSESSEE WOULD NOT BE ENTITLED TO EXEMPTION SEC. 11 AND 12 OF THE ACT, EVEN IF THE REGISTRATION U/S 12A OF THE ACT IS GRANTED AND THEREFORE, THERE IS NO USEFUL PURPOSE IN GRANTING REGISTRATION U/S 12A OF THE IT ACT AT THIS STAGE, IS NOT ACCEPTABLE TO US, BECAUSE IN OUR OPINION THE APPLICABILITY OF SEC. 13(8) OF THE ACT CAN BE CONSIDERED ONLY WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT AND EXAMINING THE ALLOWABILITY OF EXEMPTION U/S 11 AND 12 OF THE ACT. 12. FURTHER, AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE CIT(E) OR EVEN THE A.O HAS NOT EXAMINED 5 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. THE APPLICABILITY OF THE PROVISO TO SEC. 2(15) OF THE IT ACT TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAD RELIED UPON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS THAT THE PROVISO TO SEC. 2(15) OF THE IT ACT ARE NOT APPLICABLE TO THE ASSESSEE: (I) [2014] 52 TAXMANN.COM 25 (JAIPUR TRIB.)-JAIPUR DEVELOPMENT AUTHORITY VS. CIT. (II) [2017] 81 TAXMANN.COM 208 (ALLAHABAD)- CIT VS. YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY. (III) [2015] 155 ITD 0318 (DELHI)- HARIDWAR DEVELOPMENT AUTHORITY VS. CIT. 13. HOWEVER, SINCE THIS ISSUE IS TO BE CONSIDERED IN THE ASSESSMENTS U/S 143(3) OF THE IT ACT, WE REFRAIN FROM GIVING ANY FINDING ON THIS ISSUE AT THIS STAGE. AS REGARDS THE ASSESSEES PRAYER TO GRANT REGISTRATION W.E.F. 01-04-2002 AS THE ASSESSMENTS FOR THE RELEVANT ASSESSMENT YEARS WERE PENDING AS ON THE DATE OF REGISTRATION IS CONCERNED, WE FIND THAT THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF THE SINGLE MEMBER CASE SMC AT AHMADABAD IN THE CASE OF SHRI BHANUSHALI MITRAMANDALI TRUST VS ITO REPORTED IN (2016) 68 TAXMAN.COM 205 AHMADABAD TRIBUNAL WHEREIN IT WAS HELD THAT WHERE THE REGISTRATION IS GRANTED IN THE SUBSEQUENT YEAR, THE BENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS ALSO UNDER THE FIRST PROVISO TO SEC. 12A(2) OF THE ACT, AND THAT SUCH PROVISO IS APPLICABLE EVEN TO APPEALS PENDING BEFORE THE CIT(E). 14. THE LD. COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE APPLICATION U/S 12A OF THE IT ACT WAS INITIALLY REJECTED BY THE CIT(E) AND THE ISSUE WAS RESTORED TO THE FILE OF THE CIT(A) BY THE ITAT, AND THEREFORE, THE EARLIER ORDER OF THE CIT(E) GOT NULLIFIED AND THE ASSESSEES APPLICATION FOR REGISTRATION GOT RESTORED AND HAS TO BE CONSIDERED AS PENDING FOR CONSIDERATION BY THE CIT(E). HE SUBMITTED THAT AT THE TIME WHEN THE CIT(E) WAS CONSIDERING THE ASSESSEES APPLICATION AFRESH, THE ASSESSEE HAD FILED A LETTER SEEKING REGISTRATION W.E.F. 01-04-2002 AND THEREFORE THE ISSUE WAS VERY MUCH BEFORE THE CIT(E) WHILE GRANTING REGISTRATION W.E.F. A.Y 2007-08. HE SUBMITTED THAT AS PER THE FIRST PROVISO OF 12A(2) OF THE IT ACT, THE REGISTRATION GRANTED IN THE SUBSEQUENT YEAR SHALL BE APPLIED TO THE EARLIER ASSESSMENT YEARS ALSO, WHEREVER THE ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE A.O. HE SUBMITTED THAT THE ASSESSMENTS IN THE CASE OF THE ASSESSEE FOR ALL THE ASSESSMENT YEARS FROM 2003-04 ON WARDS WERE PENDING BEFORE THE A.O AND HENCE THE PROVISO WAS 6 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. APPLICABLE AND ASSESSEE SHOULD BE GRANTED REGISTRATION W.E.F 01-04-2002. 15. THE LD. SR. STANDING COUNSEL FOR THE DEPARTMENT, ON THE OTHER HAND, SUBMITTED THAT ASSESSEES APPLICATION WAS ALREADY REJECTED BY THE CIT(E) AND IN THE EARLIER APPLICATION THE ASSESSEE HAD NEVER CLAIMED THE EXEMPTION W.E.F 01-04-2002 NOR HAS IT FILED ANY APPLICATION FOR CONDONATION OF DELAY GIVING REASONS AS TO WHY THE APPLICATION COULD NOT BE FILED EARLIER. 16. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT BY VIRTUE OF REMAND TO THE CIT(E) FOR RE- CONSIDERATION OF THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT, THE ASSESSEES APPLICATION HAS BEEN REVIVED. AS ON THE DATE WHEN THE CIT(E) WAS CONSIDERING THE APPLICATION FOR REGISTRATION PURSUANT TO THE REMAND BY THE ITAT, THE PROVISO TO SEC. 12A(2) OF THE IT ACT HAS COME INTO THE STATUTE BOOK AND THEREFORE IT IS VERY MUCH APPLICABLE TO ALL THE PENDING ASSESSMENTS BEFORE THE A.O. THE SMC BENCH OF THIS TRIBUNAL AT AHMADABAD, IN THE CASE OF SHRI BHANUSHALI MITRAMANDALI TRUST VS ITO (CITED SUPRA) HAS ALSO HELD SO. PARTICULARLY IN THE CASE OF HAND, WE FIND THAT THERE IS NO CHANGE IN THE OBJECTS OF THE ASSESSEE FROM THE EARLIER AND IN THE SUBSEQUENT ASSESSMENT YEARS AND THERE IS NO FINDING THAT THE ASSESSEE HAS CARRIED ON ANY ACTIVITY NOT IN ACCORDANCE WITH ITS OBJECTIVES. IN VIEW OF THE SAME, WE ARE OF THE OPINION THAT THE ASSESSEE IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE IT ACT W.E.F 01-04-2002 AND ACCORDINGLY, WE DIRECT THE CIT(E) TO MODIFY THE ORDER OF REGISTRATION U/S 12AA OF THE ACT W.E.F. 01-04-2002 I.E FROM A.Y 2003-04 ONWARDS. IN THE RESULT THE ASSESSEE APPEAL IN ITA NO. 03/HYD/2017 IS ALLOWED. 5.1 SINCE, THE FACTS AND CIRCUMSTANCES BEFORE US ARE SIMILAR, THE ASSESSEES APPEAL IS ALLOWED. 6. THE OTHER APPEALS ITA NOS. 326/HYD/2017 TO 330/HYD/2017 ARE AGAINST THE REGULAR ASSESSMENTS U/S 144 OF THE IT ACT, DONE AFTER REJECTION OF THE REGISTRATION U/S 12AA OF THE ACT. SINCE WE HAVE DIRECTED THE CIT(E) TO GRANT REGISTRATION TO THE ASSESSEE U/S 12AA OF THE ACT, THE ASSESSMENTS FOR THE A.Y 2009- 7 KAKATIYA URBAN DEVELOPMENT AUTHORITY, WARANGAL. 10 TO 2013-14 ARE SET ASIDE TO THE FILE OF THE A.O WITH A DIRECTION TO RE-DO THE ASSESSMENTS AFTER GRANT OF REGISTRATION BY CIT(E). 7. IN THE RESULT, ALL THE APPEALS FILED BY ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 09 TH FEBRUARY, 2018. SD/- SD/- (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 09 TH FEBRUARY, 2018. KRK 1 KUDA, WARANGAL H. NO. 6-1-240, KUDA COMPLEX, BEHIND ASHOKA HOTEL, HANMKONDA, WARANGAL-506001. 2 ACIT, CIRCLE-1, WARANGAL. 3 4 CIT(E), HYDERABAD. CIT(A)-3, HYDERABAD 5 6 7 PCIT-3, HYDERABAD. THE DR, ITAT, HYDERABAD. GUARD FILE