Wadia Institute Of Himalayan Geology, Meerut V. Addl. CIT, Dehradun

ITA 4271/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91020 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKER
• Keywords: Competent authority; Capital receipt; Capital expenditure
• Section: 143(3); 142(1); 12A; 12AA; 139

Judgement Text

ITA NO. 4271 /DEL/201 1 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO. 4271 /DEL/201 1 A.Y. : 200 7 - 08 WADIA INSTITUTE OF HIMALAYAN GEOLOGY, C/O M/S MALIK & CO. 305, THAPAR NAGAR, MEERUT (PAN: AAAAW0384L) VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE - 2, DEHRADUN (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJAY MALIK, ADV. DEPARTMENT BY : SH. JP CHANDRAKER, SR. DR DATE OF HEARING : 05 - 05 - 2015 DATE OF ORDER : 08 - 05 - 2015 ORDER PER H.S. SIDHU : J M THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 10 / 6 /20 11 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I , NEW DELHI ON THE FOLLOWING GROUNDS: - 1. IN THE COURSE OF CARRYING ON RESEARCH ACTIVITY, THE APPELLANT SOCIETY RECEIVED GRANT - IN - AID AS A CAPITAL RECEIPT NOT INVOLVING ELEMENT OF INCOME CHARGEABLE TO TAX. THUS, ON FACTS AND IN LAW, THE SUBSIDY RECEIVED BY THE APPELLA NT, NOT BEARING CHARACTER OF REVENUE RECEIPT, COULD NOT BE MADE THE BASIS FOR COMPUTATION OF INCOME ASSESSABLE TO TAX. 2. THAT IN ADDITION TO THE GRANT - IN - AID, THE APPELLANT DERIVED INCOME FROM INTEREST ON DEPOSITS WITH THE BANK WHICH WAS ALSO ITA NO. 4271 /DEL/201 1 2 NOT CHARGEA BLE TO TAX IN VIEW OF THE DECISION OF HON'BLE KARNATAKA HIGH COURT 284 ITR 582 (KARN). 3. THAT IN THE COURSE OF RESEARCH ACTIVITY, THE APPELLANT INCURRED R EVENUE EXPENDITURE AS WELL AS CAPITAL EXPENDITURE. THE AGGREGATE EXPENDITURE UNDER THE TWO HEADS WAS LIABLE FOR DEDUCTION OUT OF THE SUBSIDY RECEIPTS. 4. THAT THE SURPLUS REPRESENTING DIFFERENCE BETWEEN THE SUBSIDY RECEIPTS/INTEREST INCOME AND AGGREGATE EXPENDITURE OF REVENUE AND CAPITAL NATURE WAS NOT CHARGEABLE TO TAX BEING EXEMPT. 5. THAT THE AUTHOR ITIES BELOW, ON FACTS AND IN LAW, AND THE GROUNDS TAKEN AND THE BASIS ADOPTED WENT WRONG TO DENY THE EXEMPTION AND TO HOLD THE SURPLUS OF RS. 1,15,59,308/ - CONSTITUTED INCOME CHARGEABLE TO TAX. IMPUGNED FINDING DESERVE TO BE QUASHED BEING ERRONEOUS AND UN TENABLE ON FACTS AND IN LAW AND THE EXEMPTION AS CLAIMED DESERVE TO BE ALLOWED. 6. THE ASCERTAINED TAX LIABILITY INCLUDING INTEREST U/S 234 ( A) AND 234 ( B) ON THE BASIS OF ASSESSED INCOME AS PER ASSESSMENT ORDER DESERVE TO BE QUASHED BEING VOID, ILLEGAL AND WITHOUT JURISDICTION. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE INSTITUTION IS STATE TO BE 100% AIDED BY GRANTS IN AID RECEIVED FROM THE DEPARTMENT OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA FOR SPECIFIC PRE - DETERMINED PURPOSES. THE INSTITUTE IS STATED TO BE AUTONOMOUS ORGANIZATION BUT CANNOT GENERATE ITS OWN INCOME NOR CAN MANAGE ITS OWN FUNDS. IT WAS STATED TO BE FULLY DEPENDENT ON THE CENTRAL GOVT. ITA NO. 4271 /DEL/201 1 3 FOR FULFILLING ALL ITS FINANCIAL NEEDS AND THE GRANTS ARE EXPENDED AS PER THE DIRECTIONS ISSUED BY THE CENTRAL GOVT. 2. 1 IN THIS CASE T HE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 VIDE ORDER DATED 26.10.06 OF THE COMMISSIONER OF INCOME TAX, DEHRADUN WHICH IS EFFECTIVE FROM 07.04 . 06. THE ASSESSEE ALSO ENJOYS APPROVAL BY THE CENTRAL GOVERN MENT FOR THE PURPOSE OF SECTION 35( 1)(II) OF THE INCOME TAX A C T, 1961 W.E.F. 01.04.98 VIDE NOTIFICATION DATED 10.04.08 OF THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CBDT. THE RETURN OF INCOME FOR THE ABOVE NOTED ASSESSMENT YEAR HA S BEEN FURNISHED ON 23.12.08 IN THE 0 / 0 ACIT, C IR CLE - 2 , DEHRADUN. THE RETURN HAS BEEN PROCESSED U / S 143(1) OF THE INCOME TAX ACT, 1961 UNDER THE DCR NO. 1455/08 - 09 ON 29.01.09. THE CASE HAS BEEN SELECTED FOR COMPULSORY SCRUTINY A S PER GUIDELINES OF THE CB DT ISSUED IN RESPECT OF F.Y. 2008 - 09. ACCORDINGLY, NOTICES ULS 143(2) OF THE INCOME TAX ACT, 1961 WERE ISSUED ON 29.04.08 AND 23.04.09 WHICH WERE DULY SERVED ON THE ASSESSEE AS PER RECORD. NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 29.07.0 9 BY THE DCIT, CIRCLE - 2, DEHRADUN WHO HAS JURISDICTION OVER THIS CASE. ASSESSEE FILED ITS REPLY WHICH THE AO PLACED ON RECORD. LATER ON THE CASE WAS ASSIGNED TO THE ADDL. CIT, RANGE - 2, DEHRADUN BY THE COMMISSIONER OF INCOME TAX, DEHRADUN ULS 127 OF THE IN COME TAX ACT, 1961. ACCORDINGLY, NOTICE ULS 143(2) WAS ISSUED BY THE HIM ON 12.10.09 AND 24.12.09 WHICH HAVE BEEN DULY SERVED UPON THE ASSESSEE . IT WAS FOUND THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS APPLIED RS. 13,62,38,103/ - OUT OF TOTAL I NCOME OF RS. 14,77,97,411 / - . FURTHER THE ASSESSEE HAS FAILED TO C OMPLY WITH THE PRO VISIONS OF SUB - SECT IO N (2) OF SECTI ON 11 IN RESPECT OF ACCUMULATION IF ANY, FOR APPLICATION WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED AS NO FORM NO. 10 HAS BEEN ITA NO. 4271 /DEL/201 1 4 FURNISHED BY THE ASSESSEE AS PRESCRIBED IN SECTION 11 (2) OF THE INCOME TAX ACT, 1961 . THE ASSESSEE HAS NO T FURNISHED ANY EVIDENCE OF HAVING GIVEN NOTICE IN WRITING TO THE PRESCRIBED AUTHORITY IN THE PRESCRIBED MANNER SPECIFYING THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET A PART. IN RESPONSE TO NOTICE U/S 143(2) DATED 23.04.09, THE ASSESSEE HA S FURNISHED FORM NO. 10 WHICH IS ADDRESSED TO THE COMMISSIONER OF INCOME TAX U/S 11 (2) OF THE INCOME TAX ACT, 1961. IN THIS FO RM NO. 10 THE ASSESSEE HAS EXERCISED IS O PTION OF ACC UMU LATING RS. 1,15,59,308/ - BEING 7 .82% OF THE INCOME OF THE ASSESSEE INSTITU TION. ACCO RDINGLY, THE ASSESSEE WAS RE QUIRED TO EXPLAIN AS TO HOW FURNISHING OF ABOVE NOTED FORM NO. 10 TO THE AO THAT TOO O N 11.05.09 FULFILLS THE CONDITIONS OF SECTION 11 (2) OF THE INCOME TAX ACT, 1961 READ WITH RULE 17 OF INCOM E TAX RULES , 1962 BECAUSE AS SUCH FORM NO. 10 IS TO BE DELIVERED TO THE PRESCRIBED AUTHORITY BEFORE THE EXPIRY OF TIME AL LOWED UNDER SUB - SECTION (1) OF SE CTION 1 39 OF THE INCOME TAX ACT, 1961 FOR FURNISHING THE RETURN OF INCOME AND THE DATE FOR F URNISHING OF RETURN OF INCOME IN AS SESSEE'S CASE FOR A.Y. 2007 - 08 H A D EXPIRED ON 02.11.07 WHEREAS THE RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSE E ON 23.12.08. THE ASSESSEE HAS NOT ELABORATED UPON THE FACTS AND CIRCUMSTANCES RELATING TO LATE SUBMISSION OF INCOME TAX RETURN AS WELL AS FORM NO. 10 STATING THAT THE SAME ARE SIMILAR AS IN THE PRECEDING ASSESSMENT YEAR. IT IS NOTICED THAT IN THE A.YS 2003 - 04, 2004 - 05 & 2005 - 06 SUCH DELAY WAS CONDONED BY THE COMMISSIONER OF INCOME TAX, DEHRADUN. HOWEVER, THE ASSESSEE'S CONTENTION THAT FACTS AN D CIRCUMSTANCES BEING THE SAME, THE DELAY DESERVES TO BE CONDONED IN PURSUANCE OF THE ORDER OF THE SUPERIOR AUTHORITY I .E. COMMISSIONER OF INCOME TAX, DEHRADUN . AO DID NOT AC C E P T THE CONTENTION OF THE ASSESSEE AND STATED THAT AS THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS AND THE ASSESSEE HAS FAILED TO GET DELAY IN FURNISHING ITA NO. 4271 /DEL/201 1 5 FORM NO. 10 CONDONED BY THE APPROPRIATE AUTHORITY. HE CONCLUDED THAT THE ASSESSEE HAS FAILED TO FULFILLS THE CONDITIONS OF SECTION 10(21)(A) OF TH E INCOME TAX ACT, 1961. THEREFORE, THE EXEMPTION WITHIN THE MEANING OF SECTION 10(21) IS NOT AVAILABLE TO THE ASSESSEE. AO COMPLETED THE ASSESSMENT ON THE TOTAL INCOME OF RS. 1,15,59,308/ - VIDE ORDER DATED 31.12.2009 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 10.6.2011 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. AGAINST THE IMPUGNED ORDER THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE REITERATED THE CONTENTION RAISED IN THE GROUNDS OF APPEAL AND REQUESTED THAT THE IMPUGNED ORDER MAY BE QUASHED AND ASSESSEE S APPEAL MAY BE ALLOWED. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND HAS REQUESTED THAT THE SAME MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND WE ARE OF THE VIEW THAT THE AO HAS DENIED THE EXEMPTION U/S. 10(21) OF THE I.T. ACT TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH THE FORM 10 WITHIN TIME AND GET THE DELAY CONDONED FROM THE COMPETENT AUTHORITY. T HE LD. CIT(A) HELD THAT THE AO WAS NOT CORRECT IN DENYING THE BENEFIT TO THE ASSESSEE MERELY ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE FORM NO. 10 WITHIN TIME BEFORE THE PRESCRIBED AUTHORITY , BECAUSE IT WAS APPROVED FOR THE PURPOSES OF SECTION 35 OF THE I.T. A CT, AND THERE IS NOTHING ON RECORD TO SUGGEST THAT IT VIOLATED ANY OF THE OTHER CONDITIONS FOR EXEMPTION, ITS ITA NO. 4271 /DEL/201 1 6 ELIGIBILITY FOR EXEMPTION U/S. 10(21) OF THE I.T. ACT IS OTHERWISE NOT IN DISPUTE. LD. CIT(A) HAS ALSO HELD THAT THE ASSESSEE WAS REGISTERED U/S. 12AA OF THE I.T. ACT W.E.F. 7.4.2006 AND ITS INCOME IS EXCLUSIVELY BY WAY OF GRANTS/ AIDS AND INTEREST ON BANK DEPOSITS, NEITHER OF WHICH ACCRUED IN THE FIRST WEEK OF APRIL, 2006. AS REGARDS ITS INCOME ACCRUING AFTER 7.4.2006, IT WAS ALSO ELIGIBLE FOR EXE MPTION U/S. 11 OF THE I.T. ACT. THUS, IT WAS ELIGIBLE FOR EXEMPTION IN RESPECT OF ITS INCOME UNDER SECTION 10(21) AS WELL AS 11 OF THE I.T. ACT AND WAS NOT REQUIRED TO FURNISH THE DECLARATION IN FORM NO. 10 IN RESPECT OF PART OF THE INCOME ACCUMULATED BY IT. LD. CIT(A) HAS GRANTED THE RELIEF TO THE ASSESSEE, AS REQUESTED BY IT BY PASSING AN ELABORATE IMPUGNED ORDER. IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER AS PER LAW AND ON THE BASIS OF VARIOUS HON BLE HIGH COURT DECI SIONS MENTIONED IN THE IMPUGNED ORDER. THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), HENCE, WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE ASSESSEE. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 08 / 0 5 /20 1 5 . SD/ - SD/ - [ R .S. SYAL ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 08 / 0 5 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES