CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES, MUMBAI V. DIT (E), MUMBAI

ITA 4048/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101011 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Charitable institution
• Section: 143(3); 12A; 12AA; 263

Judgement Text

1 CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES ITA 4048/MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JU DICIAL MEMBERITA ITA NO. : 4048 /MUM/20 14 (ASSESSMENT YEAR: 200 9 - 1 0 ) CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES, 7 TH FLOOR, SME DEVELOPMENT CENTRE, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400 051 .: PAN: AAA TC 2613 D VS DIT(E), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ARVIND SONDE RESPONDENT BY : SHRI PRAVEEN KUMAR /DATE OF HEARING : 16 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 11 - 09 - 201 5 ORDER , : PER AMIT SHUKLA , JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 27.03.2014 PASSED BY THE DIRECTO R OF INCOME - TAX ( EXEMPTION S ) [HEREIN REFERRED TO AS DIT(E)] , U/S 263 FOR THE ASSESSMENT YEAR 2009 - 10 , CANCELLING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) DATED 28.12.2011. 2. BRIEF FACTS ARE THAT, ASSESSEE I.E. CREDIT GUARANTEE FUN D TRUST FOR M ICRO AND S MALL E NTERPRISES IS A TRUST SET - UP BY GOVERNMENT OF INDIA AND SIDBI FOR THE PURPOSE OF PROVIDING EFFECTIVE CREDIT GUARANTEE OR COUNTER - GUARANTEE FOR SSI LOANS AND ADVANCES EXTENDED BY ELIGIBLE SCHEDULE C OMMERCIAL B ANKS AND R URAL BAN KS WITHOUT COLLATERAL SECURITY/THIRD PARTY GUARANTEES . THE SAID TRUST WAS REGISTERED U/S 12A , VIDE CERTIFICATE DATED 2 CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES ITA 4048/MUM/2014 18.10.2001 ISSUED BY DIT (E) , MUMBAI LOOKING TO ITS OBJECT AND PURPOSE, WHICH FALL WITHIN THE AMBIT OF CHARITABLE PURPOSES AS DEFINED IN S ECTION 2(15). THE TRUST WAS ALSO NOTIFIED U/S 10( 23 EB) BY THE FINANCE ACT, 2002 AND ACCORDINGLY, THE INCOME OF THE TRUST WAS EXEMPT FOR THE PERIOD OF FIVE YEARS COMMENCING FROM AY 2002 - 03 TO ASSESSMENT YEAR 2006 - 07. AFTER THE AY 2007 - 08, THE ASSESSEE HAS BEEN CLAIMING BENEFIT U/S 11 AND ACCORDINGLY IT WAS GRANTED BENEFIT OF SECTION 11 IN THE ASSESSMENT YEAR S 2007 - 08 & 2008 - 09. LATER ON AFTER THE AMENDMENT IN SECTION 2(15) BROUGHT BY THE FINANCE ACT, 2008, THEREBY A MEND ING THE DEFINITION OF CHARITABLE PURP OSES BY VIRTUE OF PROVISO THERETO, THE LD. DIT(E) VIDE ORDER DATED 07.10.2011 CANCELLED THE REGISTRATION U/S 12AA (3) W.E.F. AY 2009 - 10 . THUS, THE ASSESSEE WAS HELD NOT CHARITABLE TRUST AND CONSEQUENTLY NOT ELIGIBLE FOR BENEFIT U/S 11. T HE ASSESSEE HAD FIL ED ITS RETURN OF INCOME ON 30.09.2009 , OFFERING THE TAX UNDER THE NORMAL PROVISION , WITHOUT CLAIMING BENEFIT U/S 11 AND ACCORDINGLY, THE RETURN OF INCOME WAS FILED ON A TOTAL INCOME OF RS. 203,10,78,500/ - . LATER ON, THE ASSESSEE FILED REVISED COMPUTATION O N 19.12.2011 WHEREBY THE ASSESSEE HAD MADE CLAIM FOR 15% DEDUCTION AS PER SECTION 11(1)(A). HOWEVER, THE ASSESSING OFFICER VIDE ORDER DATED 28.12.2011 PASSED U/S 143(3) HELD THAT , SINCE REGISTRATION U/S 12A OF THE TRUST HAS BEEN WITHDRAWN BY THE DIT(E) VID E ORDER DATED 07.12.2011 PASSED U/S 12AA(3) , THEREFORE , THE ASSESSEE IS NOT ELIGIBLE FOR BENEFIT U/S 11. ACCORDINGLY, HE COMPLETED THE ASSESSMENT AT AN INCOME OF RS. 203,10,78,500/ - THAT IS, IN ACCORDANCE WITH THE ORIGINAL RETURN OF INCOME. IN OTHER WORDS , THE ASSESSING OFFICER HAS COMPLETELY DENIED THE EXEMPTION OF SECTION 11 AND TAXED THE ENTIRE INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. 3. LATER ON , THE LD. CIT ISSUED NOTICE U/S 263, PROPOSING TO CANCEL THE ASSESSMENT ORDER U/S 143(3) , MAINLY ON T HE GROUND THAT VOLUNTARY CONTRIBUTION RECEIVED DURING THE YEAR AND SURPLUS ACCUMULATION SET APART IN AYS 2007 - 08 & 2008 - 09 SHOULD BE 3 CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES ITA 4048/MUM/2014 BROUGHT TO TAX AS INCOME OF THE ASSESSEE - TRUST IN AY 2009 - 10. THE MAIN REASON FOR HOLDING SO WAS THAT , THE ASSESSEE IS NO L ONGER ELIGIBLE FOR CLAIM OF EXEMPTION U/S 11, AS THE REGISTRATION GRANTED U/S 12A HAS BEEN WITHDRAWN VIDE ORDER DATED 07.10.2011 . RELEVANT FINDING OF THE LD. D IT( E ) IN THIS REGARD HAS BEEN DEALT ELABORATELY FROM PAGES 13 TO 18 OF THE IMPUGNED ORDER. 4. BE FORE US, LD. SENIOR COUNSEL, SHRI ARVIND SONDE, SUBMITTED THAT THE ORDER PASSED U/S 12AA(3) BY DIT (E) FOR CANCELLING THE REGISTRATION HAS NOW BEEN SET ASIDE BY THE TRIBUNAL , THAT IS , TH E SAID ORDER HAS BEEN QUASHED INTER ALIA BY HOLDING THAT REGISTRATION GRANTED TO THE ASSESSEE HAS WRONGLY BEEN WITHDRAWN AND ASSESSEE S REGISTRATION U/S 12A HAS BEEN RESTORED AND NOW IT IS LIABLE FOR EXEMPTION U/S 11. THIS DECISION OF THE TRIBUNAL HAS BEEN PRONOUNCED ON 28.05.2014 , I.E. AFTER THE PASSING OF THE IMPUGNED ORD ER BY THE DIT. THEREFORE, ALL THE OBSERVATIONS MADE BY THE DIT U/S 263 HAVE BECOME INFRUCTUOUS IN AS MUCH AS THE VERY BASIS FOR HIS CANCELLING THE ASSESSMENT ORDER AND SETTING ASIDE TO TAX THE VOLUNTARY CONTRIBUTION AND EARLIER ACCOMMODATION SET APART, NO LONGER EXISTS AND THEREFORE , THE ORDER OF THE ASSESSING OFFICER SHOULD BE RESTORED DESPITE THE FACT THAT ASSESSEES REGISTRATION U/S 12AA STANDS. 5. AFTER HEARING BOTH THE PARTIES AND IN VIEW OF THE AFORESAID ADMITTED FACTS THAT THE REGISTRATION GRANTED U/S 12A , WHICH WAS CANCELLED BY DIT (E) U/S 12AA(3) HAS BEEN RESTORED BY THE TRIBUNAL. THE ENTIRE SUBSTRATUM OF THE IMPUGNED ORDER U/S 263, THAT THE ASSESSEE IS NO LONGER CHARITABLE TRUST AND REGISTRATION U/S 12A HAVE BEEN CANCELLED , NO LONGER STANDS . B ECAU SE NOW BY VIRTUE OF THE ORDER OF THE TRIBUNAL DATED 28.05.2014 , THE REGISTRATION U/S 12A HAS BEEN RESTORED AND THE ASSESSEE IS NOW AGAIN ELIGIBLE FOR DEDUCTION U/S 11. THUS, TAXING OF VOLUNTARY CONTRIBUTION AND ACCUMULATION SET - APART FOR THE AY 2007 - 08 & A Y 2008 - 09 CANNOT BE BROUGHT TO TAX AS HELD BY DIT. HERE IN THIS CASE, THE ASSESSING 4 CREDIT GUARANTEE FUND TRUST FOR MICRO & SMALL ENTERPRISES ITA 4048/MUM/2014 OFFICER HAS NOT GIVEN ANY BENEFIT OF SECTION 11 ALBEIT HAS DENIED THE ENTIRE BENEFIT CLAIMED BY THE ASSESSEE IN THE REVISED COMPUTATION. THE SAID ASSESSMENT ORDER HAD EVEN ATTAINED FINALITY AS THE ASSESSEE HAS NOT CHALLENGED THE SAME. THEREFORE, THE ORDER U/S 143(3) OF THE ASSESSING OFFICER DATED 28.12.2011 STANDS. THE IMPUGNED ORDER U/S 263 IS HEREBY CANCELLED, BECAUSE SAME IS BASED ON THE PREMISE THAT REGISTRATION U/S 12AA HAS BEEN CANCELLED AND ASSESSEE CONSEQUENTLY IS LIABLE FOR TAX ON THE ITEMS AS DISCUSSED BY HIM AND IS NO LONGER ENTITLED TO DERIVE BENEFIT U/S 11. THUS, THE GROUND S RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED , SOLELY ON THE AFORESAID GROUND. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER , 2015. SD/ - SD/ - ( ) ( ) (G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, DATE: 11 TH SEPTEMBER , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 2 , MUMBAI. 4 ) THE CIT 1/ CONCERNED ______ , MUMBAI. 5 ) , , / THE D.R. C BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS