BULANDSHAHR DEVELOPMENT AUTHORITY, BULANDSHAHR V. ACIT, EXEMPTION CIRCLE, GHAZIABAD

ITA 4024/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0480 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Capital receipt; Benefit of exemption; Set aside
• Section: 234B; 12A; 12AA; 13; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: A NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.4024/DEL./2017 ASSESSMENT YEAR: 2013-14 M/S. BULANDSHAHR DEVELOPMENT AUTHORITY, RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI VS. ACIT, EXEMPTION CIRCLE, GHAZIABAD PAN :AAALB0116G (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 22/06/2016 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS), GHAZIABAD [IN SHORT THE LD. CIT(A)] FO R ASSESSMENT YEAR 2012-13 RAISING FOLLOWING GROUNDS: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT ALL OWING THE APPELLANT BY SHRI RAKESH GUPTA, ADV. & SHRI SOMIL AGARWAL, ADV. RESPONDENT BY SHRI SOHAIL MALIK, SR.DR DATE OF HEARING 23.12.2020 DATE OF PRONOUNCEMENT 23.12.2020 2 ITA NO.4024/DEL./2017 EXEMPTION U/S 11 & 12 AND MORE SO WHEN REGISTRATION U/S 12AA HAS BEEN ALLOWED TO THE APPELLANT BY HONBLE ALLAHA BAD HIGH COURT. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIR MING THE ACTION OF LD. AO IN MAKING ADDITION OF RS. 2,99,11,347/- ON A CCOUNT OF SURPLUS IN INFRASTRUCTURE RESERVE FUND BY TREATING IT REVENUE RECEIPTS INSTEAD OF EARMARKED FUND AS CLAIMED BY THE APPELLA NT AND IMPUGNED ADDITION HAS BEEN MADE BY RECORDING INCORR ECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NA TURAL JUSTICE. 3. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN NOT AL LOWING THE EXEMPTION U/S 11&12 AND IN MAKING ADDITION OF RS.2, 99,11,347/- ON ACCOUNT OF SURPLUS IN INFRASTRUCTURE RESERVE FUN D, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE . 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REV ERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234B OF INCOME T AX ACT, 1961. 5. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODI FY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED ITS RETURN OF INCOME ON 27/09/2012, DECLARING NIL INCOM E. THE ASSESSEE CLAIMED SURPLUS OF 8,46,06,884/- AS EXEMPT UNDER THE PROVISIONS OF SECTION 11 AND 12 OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT). THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTI CES WERE ISSUED AND COMPLIED WITH. DURING THE SCRUTINY PROCE EDINGS, THE ASSESSING OFFICER NOTED THAT REGISTRATION GRANTED T O THE ASSESSEE UNDER SECTION 12A OF THE ACT WAS WITHDRAWN UNDER SE CTION 12AA OF THE ACT BY THE COMMISSIONER OF INCOME-TAX, MEERU T. HE FURTHER OBSERVED THAT THE INCOME TAX APPELLATE TRIBUNAL (IN SHORT THE TRIBUNAL) VIDE ORDER DATED 29/04/2014 SET ASIDE TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX, MEERUT AND AGAI NST WHICH 3 ITA NO.4024/DEL./2017 THE DEPARTMENT HAS FILED APPEAL BEFORE THE HONBLE HIGH COURT, WHICH WAS PENDING AT THE TIME OF PASSING THE ASSESS MENT ORDER AND, THEREFORE, THE ASSESSING OFFICER DID NOT ALLOW BENEFIT OF EXEMPTION ELIGIBLE TO TRUST/ENTITY REGISTERED UNDER SECTION 12A OF THE ACT. THE LEARNED ASSESSING OFFICER ALSO HELD TH E AMOUNT OF INFRASTRUCTURE FUND OF 2,99,11,347/- TAKEN DIRECTLY BY THE ASSESSEE IN BALANCE-SHEET, AS INCOME OF THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION. 2.1 ON FURTHER APPEAL, THE LEARNED CIT(A) UPHELD THE D ENIAL OF EXEMPTION CLAIMED UNDER SECTION 11 TO 13 OF THE ACT BY THE ASSESSEE. HE ALSO SUSTAINED ADDITION OF 2,99,11,347/- ON ACCOUNT OF SURPLUS IN INFRASTRUCTURE RESERVE FUNDS. AGGRIEVED WITH THE FINDING OF THE LD. CIT(A), THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, BOTH THE PARTIES APPEARED THROUGH VIDEOCONFERENCING FACILITY. THE ASSESSEE FILED A PAP ER-BOOK ELECTRONICALLY CONTAINING PAGES 1 TO 51. 4. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE US, THE LEA RNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT ISSUE IN GROUND NO. 1 OF THE APPEAL IS COVERED BY THE ORDER OF THE TRIBUNAL IN T HE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 AND 2010-11. T HE RELEVANT FINDING OF THE TRIBUNAL IN ITA NO. 4292 AND 4293/DE L./2014 FOR ASSESSMENT YEAR 2009-10 AND 2010-11 IS REPRODUCED A S UNDER: 5. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AND THE SUBMISSIONS MADE BY THE PARTIES, WE F IND THAT THE ASSESSING OFFICER HAS TAXED THE SURPLUS AMOUNT AS R EVEALED FROM THE INCOME & EXPENDITURE ACCOUNT, ON THE GROUND THA T 12A 4 ITA NO.4024/DEL./2017 REGISTRATION GRANTED EARLIER BY THE CIT HAS BEEN WI THDRAWN U/S. 12AA(3) OF THE ACT. NOW' THE SAID ORDER OF THE CIT, CANCELLING REGISTRATION U/S. 12A, HAS BEEN SET ASIDE AND REGIS TRATION U/S. I2A OF THE ACT HAS BEEN RESTORED BY THE TRIBUNAL (SUPRA ). ONCE REGISTRATION U/S. 12A OF THE ACT HAS BEEN RESTORED AND IS FAIT ACCOMPLI, THEN THE INCOME HAS TO BE COMPUTED IN ACC ORDANCE W'ITH SECTION 11 OF THE ACT. ACCORDINGLY, WE ARE REMANDIN G THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO COMPUT E THE INCOME IN ACCORDANCE WITH SECTION 11 TO 13 OF THE ACT AFTER E XAMINING THE INCOME AND EXPENDITURE ACCOUNT AND RECORDS AND AFTE R GIVING DUE OPPORTUNITY TO THE ASSESSEE TO REPRESENT ITS CASE. 5. WE FIND THAT THE REGISTRATION UNDER SECTION 12A OF THE ACT HAS BEEN RESTORED BY THE TRIBUNAL AND TILL DATE SAI D ORDER HAS NOT BEEN REVERSED BY HIGHER APPELLATE FORUM, THEREFORE, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF EXEMPTION UNDER SECTI ON 11 TO 13 OF THE ACT. RESPECTFULLY FOLLOWING THE FINDING OF THE TRIBUNAL (SUPRA), WE ARE REMINDING MATTER BACK TO THE FILE OF THE ASS ESSING OFFICER TO COMPUTE THE INCOME IN ACCORDANCE WITH SECTION 11 TO 13 OF THE ACT, AFTER EXAMINING THE RECORDS AND AFTER PROVIDIN G THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GRO UND NO.1 OF THE APPEAL IS ACCORDINGLY ALLOWED FOR THE STATISTIC AL PURPOSES., 6. REGARDING GROUND NO. 2 & 3, THE LEARNED COUNSEL SU BMITTED THAT ISSUE IN DISPUTE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF KHURJA DEVELOPMENT AUTHORITY (ITA NO. 4 290; 4291/DEL./2014 AND ITA NO. 5103/DEL./2016). THE REL EVANT FINDING OF THE TRIBUNAL (SUPRA) IS REPRODUCED AS UN DER: 15 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THT THIS ISSUE ALSO REQUIRES RECONSIDERATION AT THE LEV EL OF THE AO. THE ASSESSEE HAS NOW BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT AND THUS, ASSESS IS ENTITLED FOR EXEMPTION FROM INC OME U/S 11 OF THE ACT AS PER LAW. EVEN IF, THE INFRASTRUCTURE RESERVE FUND MAY BE TREATED AS INCOME OF ASSESSEE, IT WILL HAVE TO BE E XAMINED, WHETHER, ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE AC T ON THE SAME 5 ITA NO.4024/DEL./2017 INCOME. THEREFORE, IT WOULD DEPEND UPON FUNDINGS WI TH REGARD TO EXEMPTION U/S 11 OF THE ACT. WE HAVE ALREADY RESTOR ED THE ISSUE OF EXEMPTION U/S 11 OF THE ACT TO THE AO FOR FRESH DEC ISION AS PER LAW. FURTHER, THE AUTHORITIES BELOW HAVE NOT APPRECIATED THE FACT THAT ASSESSEE CLAIMED THAT INFRASTRUCTURE FUND WAS RECEI VED FOR DEVELOPMENT ACTIVITIES FROM THE STATE AUTHORITIES, THE ASSESSEE HAS TO SPEND THE AMOUNT ON THE SAME AS PER APPROVAL OF THE STATE AUTHORITIES. THUS, THERE MAY NOT BE ANY PROFIT ELEM ENT OUT OF THE SAME SOURCES. IT MAY ALSO BE NOTED HERE THAT WHATEV ER AMOUNT HAS BEEN SPENT BY ASSESSEE ON THE SAME ISSUE, THE AO HA S ACCEPTED THAT ASSESSEE SPENT THE SAME AMOUNT AS PER THE DIRE CTIONS OF THE STATE AUTHORITIES. THEN IN THAT EVENT IT IS DIFFICU LT TO BELIEVE THAT PART AMOUNT IS CAPITAL RECEIPT AND PART WOULD BE REVENUE IN NATURE. THEREFORE, THERE WAS NO JUSTIFICATION FOR LD. CIT(A ) TO HOLD THAT THE IMPUGNED RECEIPT IS REVENUE IN NATURE. THIS ISSUE A LSO REQUIRES RECONSIDERATION IN VIEW OF THE FACT THAT ASSESSEE I S ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. WE, ACCORDINGLY, SET A SIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF INFRASTRUCTUR E FUND AS WELL AND RESTORE THE ISSUE TO THE FILE OF AO WITH DIRECTION TO REDECIDE THE ISSUE AS PER LAW BY GIVING REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 7. WE FIND THAT THE TRIBUNAL HAS HELD THAT THERE MAY NOT BE ANY PROFIT ELEMENT IN RECEIPT OF INFRASTRUCTURE FUN D FROM STATE AUTHORITIES FOR INFRASTRUCTURE DEVELOPMENT ACTIVITI ES. THE TRIBUNAL HAS HELD THAT IT IS DIFFICULT TO BELIEVE THAT PART AMOUNT COULD BE CAPITAL RECEIPT AND PART WOULD BE REVENUE IN NATURE . RESPECTFULLY FOLLOWING THE FINDING OF THE TRIBUNAL (SUPRA), WE S ET ASIDE THE ORDER OF THE AUTHORITIES BELOW ON THE ISSUE OF THE INFRASTRUCTURE FUND AND RESTORE THE MATTER TO THE FILE OF THE ASSE SSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE IN ACCORDANC E WITH LAW AFTER GIVING ADEQUATE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS NO. 2 & 3 OF THE APPEAL ARE A CCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. THE GROUNDS NO. 4 & 5, BEING CONSEQUENTIAL IN NATU RE, THEY ARE DISMISSED AS INFRUCTUOUS. 6 ITA NO.4024/DEL./2017 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2020. SD/- SD/- (SUCHITRA KAMBLE) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 RD DECEMBER, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI