ITO, Kota V. URBAN IMPROVEMENT TRUST, Kota

ITA 407/JPR/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1985 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: MUKUL KHURANA ADVICATE DHK
• Keywords: Reopening of assessment; Business income; Business expenditure; Onus to prove; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 234B; 147; 69; 145; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 407/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. THE INCOME TAX OFFICER, WARD-1(2), KOTA. CUKE VS. M/S. URBAN IMPROVEMENT TRUST, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 457/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. M/S. URBAN IMPROVEMENT TRUST, KOTA. CUKE VS. THE INCOME TAX OFFICER, WARD-1(2), KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 423/JP/2017 ) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. M/S. URBAN IMPROVEMENT TRUST, KOTA. CUKE VS. THE ACIT, CIRCLE - 1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 571/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. THE INCOME TAX OFFICER, WARD-1(2), KOTA. CUKE VS. M/S. URBAN IMPROVEMENT TRUST, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT 2 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. CROSS OBJECTION NO. 43/JP/2015 ( ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 571/JP/2015 ) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. M/S. URBAN IMPROVEMENT TRUST, KOTA. CUKE VS. THE INCOME TAX OFFICER, WARD-1(2), KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 344/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. THE ACIT, CIRCLE - 1, KOTA. CUKE VS. M/S. URBAN IMPROVEMENT TRUST, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 256/JP/2017 ) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. M/S. URBAN IMPROVEMENT TRUST, KOTA. CUKE VS. THE ACIT, CIRCLE - 1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MUKUL KHURANA (ADVICATE) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.10.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 06/10/2017. VKNS'K@ ORDER PER BENCH : ALL THESE APPEALS/CROSS APPEALS/ CROSS OBJECTION AR E FILED BY THE REVENUE AND ASSESSEE AGAINST THE SEPARATE ORDERS OF LD. CIT (A) , KOTA DATED 21.03.2014, 3 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. 27.03.2015, 02.02.2017 AND 15.03.2017 PERTAINING TO ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13. IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEALS, THEREFORE, SAME ARE TAKEN UP TOGETHER AND ARE BEING DECIDED BY A CONSOLIDATED ORDER, FOR THE SAKE OF CONVENIENCE. THE GROUNDS TAKEN IN THESE APPEALS ARE AS UNDER :- ITA NO. 407/JP/2014 (REVENUE) : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN (I) TREATING THE RENTAL INCOME OF RS. 32.32 LAKHS ASSES SED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSIN ESS; (II) ALLOWING THE EXPENSES OF RS. 3634.99 LAKHS BY TREAT ING THE SAME AS REVENUE EXPENDITURE; (III) ALLOWING THE DEDUCTION OF RS. 1599.37 LAKHS BY HOLD ING THAT GROUND RENT, CONVERSION CHARGES, TRANSFER FEE ETC. COLLECT ED BY THE ASSESSEE ALSO CONSTITUTED THE SHARES OF STATE GOVERNMENT AND MUNICIPAL BODIES AND WERE NEVER PART OF ASSESSEES INCOME. (IV) ALLOWING EXPENSES OF RS. 3862.49 LAKHS OUT OF TOTAL EXPENSES CLAIMED AT RS. 7514.92 LAKHS UNDER THE HEAD OTHER MISCELLA NEOUS EXPENSES AND DISALLOWED BY THE AO; (V) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. ITA NO. 457/JP/2014 (ASSESSEE) : 1) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS), KOTA HAS ERRE D IN NOT DECLARING THE REASSESSMENT PROCEEDINGS, INITIATED UNDER SECTI ON 147/148 OF THE INCOME TAX ACT, 1961, AS INVALID/NULLITY AND THEREB Y NOT QUASHING THE ASSESSMENT ORDER ITSELF PASSED IN CONSEQUENCE THERE OF. 2) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS), KOTA HAS ERRE D IN NOT QUASHING/NULLIFYING THE EX-PARTE ASSESSMENT ORDER P ASSED UNDER SECTION 144 READ WITH SECTION 147 OF THE INCOME TAX ACT, 19 61. 3) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS), KOTA HAS ERRE D IN NOT ALLOWING 4 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. EXEMPTION UNDER SECTION 10(20) OF THE INCOME TAX AC T, 1961 WHILE COMPUTING THE TOTAL INCOME OF THE APPELLANT TRUST. 4) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS), KOTA HAS ERRE D IN NOT ALLOWING THE VARIOUS EXPENDITURES INCURRED BY THE APPELLANT TRUS T IN ENTIRETY. 5) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS), KOTA HAS ERRE D IN NOT ALLOWING CARRY FORWARD AND SET OFF OF LOSSES FOR COMPUTATION OF THE TOTAL INCOME OF THE APPELLANT TRUST. 6) UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS), KOTA HAS ERRE D IN SUSTAINING THE CHARGING OF INTEREST UNDER SECTIONS 234A AND 234B O F THE INCOME TAX ACT, 1961 AS CHARGED BY THE LD. INCOME-TAX OFFICER, WARD 1(2), KOTA. 7) THE APPELLANT CRAVES TO ADD, ALTER, AMEND AND MODIF Y ANY GROUNDS OF APPEAL. ITA NO. 571/JP/2015 (REVENUE) : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN (I) DELETING THE ADDITIONS SO MADE BY THE ASSESSING OFF ICER BY REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE IN COME-TAX ACT, 1961 INSPITE THE FACT THAT THE ACTION OF THE ASSESSING O FFICER HAS BEEN UPHELD BY THE LD. CIT (A) STATING THAT THE ASSESS EE HAS NOT MAINTAINED BOOKS OF ACCOUNT ON MERCANTILE BASIS. TH E SAME WERE NOT MAINTAINED ON DOUBLE ENTRY BOOK-KEEPING SYSTEM; (II) TREATING THE RENTAL INCOME OF RS. 56.43 LAKHS ASSES SED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS INCOME FROM BUSINE SS; (III) ALLOWING DEDUCTION OF RS. 49,84,283/- TO THE ASSESS EE BEING DEDUCTION MADE OUT OF PAYMENTS MADE TO CONTRACTORS SINCE THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING; (IV) ALLOWING THE DEDUCTION OF RS. 1087.86 LAKHS TO THE ASSESSEE BY HOLDING THAT GROUND RENT, CONVERSION CHARGES, TRANSFER FEE ETC. COLLECTED BY THE ASSESSEE AS SHARE OF STATE GOVERNMENT AND MUNICIPAL BODIES IS NOT PART OF ASSESSEES INCOME SINCE THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE REGARDING PAYMENT OF THESE AMO UNTS TO THE MUNICIPAL AUTHORITIES/STATE GOVERNMENT; 5 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. (V) ALLOWING THE EXPENSES OF RS. 9020.79 LAC TO THE ASS ESSEE BY HOLDING THAT THE EXPENSES ARE AS PER THE OBJECTS OF THE ASS ESSEE AND ARE ALLOWABLE AS BUSINESS EXPENDITURE. THE LD. CIT (A) HAS NOT APPRECIATED THAT THE AO HAD DISALLOWED THESE EXPENSES SINCE THE SE WERE EITHER CAPITAL EXPENDITURE OR NOT RELATED TO THE BUSINESS INCOME SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION; (VI) ALLOWING THE EXPENSES OF RS. 2238.63 LAKHS TO THE A SSESSEE BY HOLDING THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOU NTING AND HENCE THE EXPENSES ARE ALLOWABLE IN THE YEAR IN WHICH THESE W ERE INCURRED. THE LD. CIT (A) HAS NOT APPRECIATED THAT THE ASSESSEE H AD FAILED TO DISCHARGE THE ONUS TO PROVE THAT EXPENSES OF RS. 22 38.63 LAC WERE INCURRED FOR THE PURPOSE OF EARNING THE INCOME FOR THE YEAR UNDER CONSIDERATION; (VII) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMEND THE GROUNDS OF APPEAL AT THE TIME OF H EARING. CROSS OBJECTION NO. 43/JP/2015 (ASSESSEE) : (1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (APPEALS), KOTA HAS ERRED IN NOT ALLOWING EXEMPTION UNDER SECTION 10(20) OF THE INCOME TAX ACT, 1961 WHILE COMPUTING THE TOT AL INCOME OF THE APPELLANT TRUST. (2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (APPEALS), KOTA HAS ERRED IN HOLDING THAT THE APPEL LANT TRUST IS ENGAGED IN CARRYING ON BUSINESS. (3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (APPEALS), KOTA HAS ERRED IN UPHOLDING THE REJECTIO N OF BOOKS OF ACCOUNTS OF THE APPELLANT TRUST BY THE LD. ASSESSING OFFICER , UNDER SECTION 145 OF THE INCOME TAX ACT, 1961. (4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (APPEALS), KOTA HAS ERRED IN HOLDING THE SHARE OF M UNICIPAL CORPORATION IN SALE OF CERTAIN LAND AS THE INCOME OF THE APPELLANT TRUST. THE LD. CIT (APPEAL), KOTA HAS FURTHER ERRED IN NOT ALLOWING TH E SHARE OF MUNICIPAL CORPORATION AS AN EXPENSE TO THE APPELLANT TRUST. (5) THE RESPONDENT CRAVES TO ALTER, AMEND AND MODIFY AN Y GROUND OF CROSS OBJECTION. 6 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. ITA NO. 344/JP/2017 (REVENUE) : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN :- (I) DELETING THE ADDITION OF GRANT OF RS. 5,76,27,000/- RECEIVED BY THE ASSESSEE UNDER URBAN INFRASTRUCTURE DEVELOPMENT SCH EME, IGNORING THE FACT THAT THE EXPENDITURE INCURRED ON THE SCHEM E WAS CLAIMED BY THE ASSESSEE AS ITS BUSINESS EXPENDITURE IN THE INC OME & EXPENDITURE ACCOUNT. (II) DELETING THE ADDITION OF GRANT OF RS. 20 CRORE RECE IVED BY THE ASSESSEE UNDER URBAN NATIONAL RIVER CONSERVATION PLAN SCHEME , IGNORING THE FACT THAT THE EXPENDITURE INCURRED ON THE SCHEME WA S CLAIMED BY THE ASSESSEE AS ITS BUSINESS EXPENDITURE IN THE INCOME & EXPENDITURE ACCOUNT. (III) DELETING THE ADDITION OF GRANT OF RS. 5 CRORE RECEI VED BY THE ASSESSEE UNDER INTEGRATED NATIONAL HOUSING & SLUM DEVELOPME NT PROGRAMM SCHEME IGNORING THE FACT THAT THE EXPENDITURE INCUR RED ON THE SCHEME WAS CLAIMED BY THE ASSESSEE AS ITS BUSINESS EXPENDI TURE IN THE INCOME & EXPENDITURE ACCOUNT. (IV) DELETING THE ADDITION OF RECEIPT OF BSUP SHELTER FU ND OF RS. 13,54,241/-, IGNORING THE FACT THAT THE EXPENDITURE INCURRED ON THE SCHEME WAS CLAIMED BY THE ASSESSEE AS ITS BUSINESS EXPENDITURE IN THE INCOME & EXPENDITURE ACCOUNT. (V) DELETING ADDITION OF RS. 20,22,66,568/- ON ACCOUNT OF RECEIPTS FROM SALE OF LAND AT RAJIV GANDHI NAGAR, IGNORING THE FA CT THAT THE ASSESSEE FOLLOWS SINGLE ENTRY CASH SYSTEM OF ACCOUNTING AND NOTHING HAD BEEN PAID BY THE ASSESSEE DURING THE YEAR TO THE GOVERNM ENT; (VI) DELETING ADDITION OF RS. 407,87,711/- BEING ADDITIO N ON ACCOUNT OF NIYEMAN AVAM URBAN TAX, IGNORING THE FACT THAT THE ASSESSEE FOLLOWS SINGLE ENTRY CASH SYSTEM OF ACCOUNTING AND NOTHING HAD BEEN PAID BY THE ASSESSEE DURING THE YEAR TO THE GOVERNMENT; (VII) DELETING ADDITION OF RS. 410 LACS BEING ADDITION ON ACCOUNT OF PAYMENT TO RUIDP; (VIII) DELETION ADDITION OF HOUSE RENT OF RS. 80,435/- WIT HOUT APPRECIATING THE FACTS MENTIONED BY THE AO IN THE ASSESSMENT ORD ER; (IX) DELETING ADDITION OF RS. 1,61,554/- AS INCOME BY WA Y OF SAZAWATI SHULK IGNORING THE FACTS MENTIONED BY THE AO IN THE ASSES SMENT ORDER; 7 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. (X) DELETING ADDITION OF RS. 8,65,80,109/- MADE ON ACCO UNT OF WITHHELD MONEY FROM PAYMENTS OUT OF CONTRACTORS; (XI) DELETING ADDITION OF CAPITAL EXPENDITURE OF RS. 100 91.53 LAKHS CLAIMED AS REVENUE EXPENDITURE WITHOUT APPRECIATING THE FAC TS MENTIONED BY THE AO IN THE ASSESSMENT ORDER; (XII) DELETING ADDITION OR RECEIPTS OF RS. 101.30 LAKHS F ROM ALLOTTEES OF PREM NAGAR SOCIETY; (XIII) DELETING THE ADDITION OF RS. 1,26,132/- MADE ON ACC OUNT OF AMOUNT DEDUCTED FROM ADVERTISEMENT EXPENSES AND RETAINED W ITH IT UNDER PATRAKAR KOSH; (XIV) DELETING THE DISALLOWANCE OF RS. 29,500/- MADE U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS FROM THE PAYMENTS M ADE TO M/S. MAHAVIR SAMRIYA TOWARDS SWIMMING POOL & GYM EXPENSE S; (XV) DELETING THE DISALLOWANCE OF RS. 26,894/- MADE U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS FROM THE PAYMENTS T O CAD CENTRE; (XVI) DELETING THE DISALLOWANCE OF RS. 13,000/- MADE U/S (A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS FROM THE PAYMENTS TO SHRI S .N. KUMAWAT TOWARDS LEGAL EXPENSES; (XVII) DELETING ADDITION OF RS. 5,89,43,321/- ON ACCOUNT O F CHEQUES ISSUED, BUT TIME BARRED DUE TO NOT BEING PRESENTED FOR PAYM ENT; (XVIII) DELETING ADDITION OF RS. 8,03,93,856.79 MADE U/S 69 A WITHOUT APPRECIATING THE FACTS MENTIONED BY THE AO IN THE A SSESSMENT ORDER; (XIX) DELETING ADDITION OF RS. 16,652/- ON ACCOUNT OF UNA CCOUNTED BANK DEPOSITS; (XX) THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONAL GR OUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. ITA NO. 256/JP/2017 (ASSESSEE) : 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ORDER PASSED BY THE LD. CIT (A) UNDER SECTION 250(6) OF T HE INCOME TAX ACT, 1961 IS PERVERSE, ARBITRARY AND BAD IN LAW. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN NOT ALLOWING THE BENEFIT OF EXEMP TION UNDER SECTION 8 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. 10(20) OF THE INCOME TAX ACT, 1961 WHILE COMPUTING THE TOTAL INCOME OF THE APPELLANT TRUST. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN UPHOLDING THE ACTION OF THE LD. A O IN GETTING THE ACCOUNTS AUDITED OF THE APPELLANT TRUST UNDER SECTI ON 142(2A) OF THE INCOME TAX ACT, 1961. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF FO LLOWING EXPENDITURE AS CLAIMED BY APPELLANT TRUST BY TREATING THE SAME AS CAPITAL EXPENDITURE : A. EXPENDITURE INCURRED ON COMPUTER WORK AT RS. 15,81, 587/-. B. EXPENDITURE INCURRED ON CONSTRUCTION OF AUDITORIUM AT RS. 71,07,826/-. C. EXPENDITURE INCURRED ON OFFICE EQUIPMENT, FURNITURE AND COMPUTERIZATION AT RS. 42,61,338/- 5) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN NOT ALLOWING THE EXPENDITURE INCU RRED IN RELATION TO EXPENSES PAID TO MUNICIPAL CORPORATION AMOUNTING TO RS. 13,05,89,000/-. 6) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN CONFIRMING THE FOLLOWING ADDITION S IN RESPECT OF ENTRIES REFLECTED IN THE BANK RECONCILIATION STATEMENT OF T HE OBC BANK ACCOUNT NO. 11342040000010. A. ADDITION OF RS. 9,14,738/- CREDITED IN THE BANK ACC OUNT WHICH WAS SHOWN IN THE BANK RECONCILIATION STATEMENT. B. ADDITION OF RS. 83,307/- ON ACCOUNT OF DIFFERENCE I N THE VARIOUS AMOUNTS CREDITED BY THE BANK AND RECORDED AS PER BO OKS OF ACCOUNTS. C. ADDITION OF RS. 51,04,529/- ON ACCOUNT OF AMOUNT CR EDITED BY THE BANK IN THE MONTH OF MARCH 2012. 7) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN CONFIRMING THE ADDITION OF RS. 4, 47,634/- ON ACCOUNT OF INTEREST CREDITED BY PD TREASUERY SBBJ BANK WHICH I S ALREADY OFFERED TO TAX IN THE RETURN OF THE INCOME FOR THE YEAR UNDER CONSIDERATION. 8) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN CONFIRMING THE FOLLOWING ADDITION S ON ACCOUNT OF INTEREST CREDITED IN BANK ACCOUNT. 9 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. A. ADDITION OF RS. 2,27,353/- ON ACCOUNT OF INTEREST C REDITED BY AXIS BANK. B. ADDITION OF RS. 3,43,398/- ON ACCOUNT OF INTEREST C REDITED BY IDBI BANK. C. ADDITION OF RS. 859/- ON ACCOUNT OF INTEREST CREDIT ED BY AXIS BANK. 9) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN CONFIRMING THE ADDITION OF RS. 26 ,98,429/- BEING TAX DEDUCTION AT SOURCE MADE BY THE BANK FROM THE INTER EST CREDITED IN THE BANK. 10) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/ S 234A, 234B AND 234C. 11) THE APPELLANT TRUST CRAVES TO ALTER, AMEND AND MODI FY ANY GROUND OF APPEAL. ITA NO. 423/JP/2017 (ASSESSEE) : 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ORDER PASSED BY THE LD. CIT (A) UNDER SECTION 250(6) OF T HE INCOME TAX ACT, 1961 IS PERVERSE, ARBITRARY AND BAD IN LAW. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN UPHOLDING PENALTY OF RS. 2,14,43, 271/- UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A), KOTA HAS ERRED IN UPHOLDING THE LEVYING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 EVEN THOUGH APPEAL FOR APPLICA BILITY OF SECTION 10(20) OF THE INCOME TAX ACT, 1961, ON THE APPELLAN T TRUST IS PENDING BEFORE THE HONBLE JURISDICTIONAL HIGH COURT, JAIPU R. 4) THE APPELLANT TRUST CRAVES TO ALTER, AMEND AND MODI FY ANY GROUND OF APPEAL. FIRST, WE TAKE UP ITA NO. 407/JP/2014. 2. FACTS IN BRIEF ARE THAT WHILE FRAMING THE ASSESS MENT UNDER SECTION 144 READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS THE ACT) OBSERVED THAT THE TRIBUNAL IN ITA NO. 367/JP/2010 H ELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 10(20) OF THE ACT. THEREFORE, HE TREATED THE 10 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. RECEIPTS AS BUSINESS INCOME AND ALSO MADE FURTHER A DDITION OF INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES. THE ASSESS EE PREFERRED APPEAL AGAINST THIS ORDER BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL, THEREBY HE UPHELD THE ACTION OF THE AO FOR REOPENING OF ASSESSMENT AND REJECTING THE CLAIM OF EXEMPTION U/S 10(20) OF THE ACT. HOWEVER, HE PARTLY ALLOWED THE OTHER GROUNDS RAISED AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER. AGAINST THIS ORDER, BOTH THE ASSESSEE AND THE REVENUE HAVE FILED THE APPEAL. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT HONBLE RAJASTHAN HIGH COURT IN DB INCOME TAX APPEAL NO. 357 OF 2011 IN THE CASE OF UIT, KOTA VS. ITO HELD THAT THE ASSESSEE IS A LOCAL AUTHORITY FOR THE PURPOSE OF CARRYING OUT OF IMPROVEMENT AND DEVELOPMENT FUNCTION OF STATE. HE D REW OUR ATTENTION TO PARA 16 TO 18 OF THE JUDGMENT OF HONBLE HIGH COURT (SUPRA) . THEREFORE, HE SUBMITTED THAT THE ISSUES ARE TO BE RESTORED TO THE AO FOR FRESH D ETERMINATION IN THE LIGHT OF THE JUDGMENT OF THE HONBLE HIGH COURT IN ASSESSEES OW N CASE IN DB IT APPEAL NO. 357 OF 2011. 3.1. THE LD. D/R CONCEDED THAT HONBLE JURISDICTION AL HIGH COURT HAS DECIDED THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 10(20) OF TH E ACT, HENCE THE ASSESSMENT IS REQUIRED TO BE FRAMED AFRESH IN THE LIGHT OF THE JU DGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA). 3.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE MAIN CRUX OF THE ISSUE INVOLVED IN THES E APPEALS IS WHETHER ASSESSEE TRUST DISCHARGES THE FUNCTIONS OF A LOCAL AUTHORIT Y AS CONTEMPLATED UNDER SECTION 10(20) OF THE INCOME TAX ACT, 1961. IN THIS REGARD , IT IS BROUGHT TO OUR NOTICE BY 11 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. THE LD. COUNSEL FOR THE ASSESSEE THAT IDENTICAL ISS UES INVOLVED IN THE PRESENT APPEALS HAVE BEEN ADJUDICATED BY THE HONBLE JURISDICTIONAL HIGH COURT IN DB INCOME TAX APPEAL NO. 357/2011 TITLING URBAN IMPROVEMENT TRUST , KOTA VS. THE INCOME-TAX OFFICER, WARD 1(2), KOTA WHEREIN THE HONBLE JURISD ICTIONAL HIGH COURT HAS ANSWERED THE QUESTION IN FAVOUR OF THE ASSESSEE. THE RELEVAN T PARA 15 TO 19 OF THE ORDER IS REPRODUCED AS UNDER :- 15. IT IS TRUE THAT THE FUNCTIONS WHICH ARE CARRI ED OUT BY THE ASSESSEE ARE STATUTORY FUNCTIONS AND CARRY ON FOR T HE BENEFIT OF THE STATE GOVERNMENT FOR URBAN DEVELOPMENT THEREFORE, I N OUR CONSIDERED OPINION, THE FUNCTIONS CARRIED OUT BY THE AUTHORITY IS A SUPREME FUNCTION AND FALL WITHIN THE ACTIVITY OF THE STATE GOVERNMENT. 16. IN THAT VIEW OF THE MATTER, THE JUDGMENTS WHICH ARE STRONGLY RELIED UPON BY THE COUNSEL FOR THE DEPARTMENT ARE O F NO HELP IN THE FACTS OF THE CASE AS THE CASE RELIED UPON BY THE DE PARTMENT WAS IN RESPECT OF INDUSTRIAL CORPORATION WHICH WAS UNDER T HE STATUTE FOR THE PURPOSE OF MAKING PROFIT. THE FEES AND OTHER CHARGE S WHICH ARE COVERED ARE STATUTORILY FOR THE DEVELOPMENT OF THE URBAN AREA. IN THAT VIEW OF THE MATTER, THE JUDGMENT WHICH SOUGHT TO BE RELIED UPON BY THE COUNSEL FOR THE RESPONDENTS, IN OUR CONSIDERED OPINION, WOULD BE OF IMPORTANCE AND THE FUNCTIONS WHICH ARE CARRIED OUT BY THE ASSESSEE IS STATUTORY FUNCTION. IN OUR CONSIDERED OPINION, UNDE R CLAUSE-10(20) & SUB-CLAUSE (3) MUNICIPAL COMMITTEE AND DISTRICT BOA RD ARE LEGAL ENTITY ENTRUSTED BY THE FUNCTION OF THE GOVERNMENT WITHIN THE CONTROL OR MANAGEMENT OF THE MUNICIPAL OR LOCAL AUTHORITY AND WILL TRY TO HELP THE ASSESSEE. 17. IN THAT VIEW OF THE MATTER, THE RELIANCE PLACED BY COUNSEL FOR THE DEPARTMENT REGARDING 10(20) AND EXPLANATION A W ILL NOT MAKE ANY DIFFERENCE. TAKING INTO CONSIDERATION INCOME OF AUT HORITY IS UNDER CONSTITUTION OF INDIA VIDE ORDER ENACTED EITHER FOR THE PURPOSE OF 12 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. DEALING WITH OR SETTING UP THE HOUSING SCHEME FOR T HE PURPOSE OF PLANNING AND DEVELOPMENT OF THE IMPROVEMENT OF THE CITIES, TOWN AND VILLAGES OR BOTH FOR WHICH THE AUTHORITY ARE CREATE D TO CARRY OUT THE FUNCTION OF STATE WHICH ARE SOVEREIGN WHEREAS THE U RBAN DEVELOPMENT AND CALCULATION OF DEVELOPMENT CHARGES WILL FALL UN DER THE DEVELOPMENT CHARGES. 18. IN THAT VIEW OF THE MATTER, DELETION OF 20A WIL L NOT MAKE DIFFERENCE IN CASE OF ASSESSEE. IN OUR CONSIDERED O PINION, CLAUSE-3 WILL COME IN THE HELP OF THE ASSESSEE. IN THAT VIEW OF T HE MATTER, WE ARE CONSIDERED OPINION, THAT THE AUTHORITY ASSESSEE IS A LOCAL AUTHORITY FOR THE PURPOSE OF CARRYING OUT OF THE IMPROVEMENT AND DEVELOPMENT FUNCTION OF THE STATE. 19. IN THAT VIERW OF THE MATTER, THE ISSUE IS REQUI RED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AGAINST THE DEPARTMENT. I N VIEW OF THE ANSWER, OTHER ISSUES ARE BECOME ACADEMIC, THEREFORE , WE ARE NOT DECIDING THOSE ISSUE. IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTION AL HIGH COURT, WE HEREBY SET ASIDE THE IMPUGNED ORDER AND DIRECT THE AO TO MAKE DENOVO ASSESSMENT. 4. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5. NOW, WE TAKE UP THE APPEALS OF THE ASSESSEE IN I TA NO. 457/JP/2014, 256/JP/2017 PERTAINING TO A.Y. 2010-11 AND 2012-13 RESPECTIVELY AND CROSS OBJECTION NO. 43/JP/2015 AND REVENUES APPEAL IN IT A NO. 571/JP/2015 & 344/JP/2017 PERTAINING TO A.Y. 2011-12 & 2012-13 RE SPECTIVELY. 6. IN ALL THESE APPEALS/CROSS OBJECTION IDENTICAL I SSUES ARE INVOLVED AS RAISED IN ITA NO. 407/JP/2014 ABOVE. SINCE WE HAVE ADJUDICAT ED THE IDENTICAL ISSUE IN ITA NO. 407/JP/2014, THEREFORE, FOLLOWING THE DECISION ARRIVED IN THAT APPEAL, WE SET ASIDE THE IMPUGNED ORDERS AND DIRECT THE AO TO MAKE DENOVO ASSESSMENT. 13 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA. 7. IN THE RESULT, APPEALS/CROSS OBJECTION ARE ALLOW ED FOR STATISTICAL PURPOSES. 8. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN IT A NO. 423/JP/2017 PERTAINING TO ASSESSMENT YEAR 2010-11 CHALLENGING T HE IMPOSITION OF PENALTY UNDER SECTION 271(1)(A) OF THE ACT. 9. SINCE WE HAVE SET ASIDE THE ASSESSMENT IN QUANTU M APPEAL IN ITA NO. 407/JP/2014 AND DIRECTED THE AO FOR DENOVO ASSESSME NT, THE IMPOSITION OF PENALTY IS ALSO SET ASIDE AND THE APPEAL OF THE ASSESSEE IN ITA NO. 423/JP/2017 IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 11. IN TOTALITY, APPEALS OF THE REVENUE IN ITA NO. 407/JP/2014, 571/JP/2015 & 344/JP/2017 AND APPEALS/CROSS OBJECTION OF THE ASSE SSEE IN ITA NO. 457/JP/2014, 256/JP/2017, 423/JP/2017 AND C.O. NO. 43/JP/2015 AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.10.2 017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 06 /10/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ITO, WARD-1(2), KOTA. 2. THE RESPONDENT M/S. URBAN IMPROVEMENT TRUST, K OTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 407(7)/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 14 ITA NOS. 407(7)/JP/2014 URBAN IMPROVEMENT TRTUST, KOTA.