DCIT (E), Ghaziabad V. M/s. Meerut Development Authority, Meerut

ITA 4401/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1366 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 11-08-2016
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.4400/DEL./2016 (ASSESSMENT YEAR : 2011-12) ITA NO.4401/DEL./2016 (ASSESSMENT YEAR : 2012-13) ACIT, EXEMPTION CIRCLE, VS. M/S. MEERUT DEVELOPMEN T AUTHORITY, GHAZIABAD. VIKAS BHAWAN, MEERUT. (PAN : AAALM0124D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : MS. PRAMITA M. BISWAS, CIT DR DATE OF HEARING : 27.08.2019 DATE OF ORDER : 11.09.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. 2. APPELLANT, ACIT, EXEMPTION CIRCLE, GHAZIABAD. (H EREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 28.03.2016 & 16 .05.2016 ITA NO.4400 & 4401/DEL./2016 2 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEAL S), MEERUT QUA THE ASSESSMENT YEARS 2011-12 & 2012-13 RESPECTI VELY ON THE GROUNDS INTER ALIA THAT :- AY 2011-12 1. THE LD. CIT (A) HAS ERRED IN LAW ON FACTS IN ALL OWING THE APPEAL OF THE ASSESSEE TO ALLOW THE REGISTRATION U/ S 12A IN THE CASE THE DEPARTMENTAL APPEAL IS PENDING BEFORE THE HONBLE ALLAHABAD HIGH COURT ON THIS GROUND. 2. THE ORDER OF LD. CIT (A) BE CANCELLED AND THE OR DER OF THE AO BE RESTORED. AY 2012-13 1. THAT THE LD. CIT (A) HAS ERRED IN LAW IN FACT ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE DISALLOW ANCE OF VARIOUS ADDITION OF RS.97,49,24,270/- IGNORING THE FACTS. 2. THE LD. CIT (A) HAS ERRED IN LAW ON FATS IN ALLO WING THE APPEAL OF THE ASSESSEE TO ALLOW THE REGISTRATION U/ S 12A IN THIS CASE THE DEPARTMENTAL APPEAL IS PENDING BEFORE THE HONBLE HIGH COURT OF ALLAHABAD ON THIS GROUND. 3. THE ORDER OF LD. CIT (A) BE CANCELLED AND THE OR DER OF THE AO BE RESTORED. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE IS AN AUTHORITY CONSTI TUTED UNDER U.P. URBAN PLANNING AND DEVELOPMENT ACT, 1973 TO PROCURE AND SECURE THE DEVELOPMENT OF AREAS ACCORDING TO PLAN AND FOR THAT PURPOSE, IT IS EMPOWERED TO ACQUIRE, HOLD, MANAGE AND DISPOSE L AND AND OTHER PROPERTIES TO CARRY OUT BUILDING ACTIVITIES, ENGINE ERING, MINING AND OTHER OPERATIONS, TO EXECUTE WORKS IN CONNECTION WI TH THE SUPPLY OF ELECTRICITY AND WATER TO DISPOSE OF SEWAGE AND TO P ROVIDE AND ITA NO.4400 & 4401/DEL./2016 3 MAINTAIN OTHER SERVICES AND AMENITIES AND GENERALLY TO DO ANYTHING NECESSARY OR EXPEDIENT FOR THE PURPOSE OF SUCH DEVE LOPMENT. ASSESSEE AUTHORITY WAS ACCORDED REGISTRATION UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 WHICH WAS LATER WITHDRAWN BY THE CIT, MEERUT BUT THE ORDER OF CIT HAS BEEN OVERTURNED BY THE TRIBUNAL VIDE ORDER DATED 29.08.2013 AND DECIDED IN FAVOUR O F THE ASSESSEE AND APPEAL AGAINST THE SAID ORDER IS REPORTEDLY PEN DING ADJUDICATION BEFORE THE HONBLE HIGH COURT. ASSESSING OFFICER ( AO) DECLINING THE CONTENTION OF THE ASSESSEE AUTHORITY TREATED IT AS ARTIFICIAL JURIDICAL PERSON AS AGAINST CHARITABLE TRUST / INST ITUTION AND DENIED THE EXEMPTION U/S 11 & 12 OF THE ACT BY INVOKING TH E FIRST PROVISO TO SECTION 2(15) OF THE ACT AND THEREBY MADE DISALL OWANCE ON ACCOUNT OF RS.91,02,28,130/- & RS.97,49,24,270/- IN AYS 2011-12 & 2012-13 RESPECTIVELY. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS BY PARTLY ALL OWING THE APPEALS. FEELING AGGRIEVED, THE REVENUE HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.4400 & 4401/DEL./2016 4 5. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER RELIED UPON THE ORDER PASSED BY THE AO. HOWEVER, O N THE OTHER HAND, LD. AR FOR THE ASSESSEE CONTENDED THAT THE IS SUE IN CONTROVERSY IS ALREADY COVERED BY THE DECISIONS REN DERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASES OF MORADABAD DEVELOPMENT AUTHORITY (ASSESSEE) VS. ACIT IN ITA NO S.4631 & 4632/DEL/2017 FOR AYS 2012-13 & 2013-14 ORDER DATED 04.01.2018 AND DCIT VS. HAPUR PILKHUWA DEVELOPMENT AUTHORITY, ITA NOS.1384, 1385 & 1386/DEL/2016 FOR A YS 2009- 10, 2010-11 & 2011-12 ORDER DATED 06.06.2018 AND THE DECISION RENDERED BY THE HONBLE HIGH COURT OF KARNATAKA IN CIT VS. HUBLI DHARWAD URBAN DEVELOPMENT AUTHORITY IN ITA NO.593 O F 2015 ORDER DATED 20.02.2019 . 6. FROM THE GROUNDS RAISED BY THE ASSESSEE IN THE P RESENT APPEALS, ARGUMENTS ADDRESSED AND FROM THE ORDERS PA SSED BY THE LOWER REVENUE AUTHORITIES, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER ASSESSEE AUTHORITY WHICH IS REGISTER ED U/S 12A OF THE ACT IS HIT BY AMENDED PROVISIONS CONTAIN ED U/S 2(15) OF THE ACT AND IS NOT ENTITLED FOR EXEMPT ION U/S 11 & 12 OF THE ACT AS CONTENDED BY THE LD. DR FOR T HE REVENUE? ITA NO.4400 & 4401/DEL./2016 5 7. IF THE AFORESAID QUESTION IS DECIDED IN FAVOUR O F THE ASSESSEE, ADDITION / DEMAND MADE BY THE REVENUE FOR AYS 201 1-12 & 2012-13 WOULD NOT BE SUSTAINABLE. 8. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF THE ASSESSEE (SUPRA) EXAMINED THE IDENTICAL ISSUE AT LENGTH VIS- -VIS THE EFFECT OF PROVISO OF SECTION 2 (15) OF THE ACT AND AFTER FOLL OWING THE DECISION RENDERED BY HONBLE ALLAHABAD HIGH COURT IN CASE OF REVENUES APPEAL FOR AY 2009-10 (IN ASSESSEES CASE) BY FOLLO WING ANOTHER JUDGMENT OF THE COORDINATE BENCH IN CIT VS. YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY & ORS. VIDE ORDER DATED 03.05.2017 REACHED THE CONCLUSION THAT THE ASSESSEE WHICH IS ENGAGED IN CONSTRUCTION AND SALE OF PLOTS WERE INCI DENTAL TO THE MAIN OBJECT OF TOWN PLANNING AND AS SUCH ENTITLED F OR EXEMPTION U/S 11 OF THE ACT. FOR READY PERUSAL, OPERATIVE PA RT OF THE ORDER PASSED BY THE TRIBUNAL IS EXTRACTED AS UNDER :- 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN, AS IS EVIDENT FROM PARA 4.1 OF THE IMPUGNED ORDER ITSELF, THAT TH E ASSESSEE WAS ALLOWED EXEMPTION U/S 11 OF THE ACT BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 2008-09 AND 2009- 10. IT IS AN ADMITTED POSITION THAT THE REGULAR ASSESSM ENT FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 WAS NO T TAKEN UP AND THE CLAIM FOR EXEMPTION U/S 11 OF THE ACT GOT AUTOMATICALLY ALLOWED. WE HAVE GONE THROUGH THE LEAD ORDER PASSED BY THE TRIBUNAL FOR THE ASSESSMEN T YEAR 2009-10, WHOSE COPY IS AVAILABLE ON PAGE 75 OF THE PAPER BOOK. IN THIS ORDER, THE TRIBUNAL CONSIDERED THE EFFECT OF PROVISO TO SECTION 2(15) AND, THEREAFTER, HELD ITA NO.4400 & 4401/DEL./2016 6 THAT THE ACTIVITIES OF THE ASSESSEE OF CONSTRUCTION AND SALE OF PLOTS WERE INCIDENTAL TO THE MAIN OBJECT OF TOWN PLANNING AND, HENCE, EXEMPTION U/S 11 WAS TO BE GRANTED. THE SAID ORDER OF THE TRIBUNAL WAS CHALLE NGED BY THE DEPARTMENT BEFORE THE HON'BLE ALLAHABAD HIGH COURT. VIDE ITS JUDGMENT DATED 03.05.2017, A COPY O F WHICH IS AVAILABLE ON PAGE 80 OF THE PAPER BOOK, TH E HON'BLE ALLAHABAD HIGH COURT DISMISSED THE REVENUE S APPEAL BY FOLLOWING ANOTHER JUDGMENT OF THE CO- ORDINATE BENCH IN CIT VS. YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY & ORS., IN WHICH SIMILAR QUESTIONS WERE ANSWERED AGAINST THE REVENUE . A COPY OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY & ORS., IS AVAILAB LE ON PAGE 93 OF THE PAPER BOOK. THE HON'BLE HIGH COUR T IN ITS JUDGMENT HAS CONSIDERED ALL THE RELEVANT ASP ECTS OF THE ISSUE THREADBARE AND, THEREAFTER, DECIDED SI MILAR ISSUE AGAINST THE REVENUE. 4. IT IS, ERGO, PALPABLE THAT THE ASSESSEE HAS BEE N ALLOWED EXEMPTION U/S 11 OF THE ACT CONSISTENTLY IN THE PAST, EITHER BY THE AO HIMSELF OR BY VIRTUE OF THE ORDERS OF THE TRIBUNAL AS AFFIRMED BY THE HONBLE HIGH COU RT. THIS SETTLED POSITION OUGHT NOT TO HAVE BEEN ORDINA RILY DISTURBED. THE AUTHORITIES BELOW HAVE CHOSEN TO DEV IATE FROM THE EARLIER CONSISTENT VIEW BY HARPING ON THE DISMISSAL OF SLP AGAINST THE JUDGMENT OF THE HON'BL E J&K HIGH COURT IN JAMMU DEVELOPMENT AUTHORITY. THERE ARE TWO REASONS FOR NOT ACCEPTING THE DEPARTMENTAL STAND. FIRSTLY, THE ISSUE BEFORE THE HONBLE JAMMU AND KASHMIR HIGH COURT WAS CANCELLATION OF REGISTRATION BY THE CIT U/S 12AA(3) OF THE ACT AND NOT THE DENIAL OF EXEMPTION, AS IS PREV AILING IN THE EXTANT CASE. ADMITTEDLY, THE ASSESSEES REGISTRATION HAS NOT BEEN CANCELED BY THE COMMISSIONER. FURTHER, IT IS A SETTLED LEGAL POSITI ON THAT A SUMMARY DISMISSAL OF SLP CANNOT BE CONSTRUED AS A DECLARATION OF LAW BY THE HON'BLE SUPREME COURT UND ER ARTICLE 141 OF THE CONSTITUTION. A MERE DISMISSAL O F SLP WITHOUT GIVING ANY REASONS, CANNOT BE EQUATED WITH EXPOSITION OF LAW BY THE HONBLE SUPREME COURT SO A S TO INDICATE THE IMPRIMATUR ON THE REASONING AND/OR THE ITA NO.4400 & 4401/DEL./2016 7 RATIO DECIDENDI OF THE HIGH COURT IN THE JUDGMENT. IN SUCH CIRCUMSTANCES, THERE IS NO MERGER OF THE JUDGM ENT OF THE HONBLE HIGH COURT. THE HON'BLE APEX COURT I N HEMALATHA GARGYA VS. CIT (2003) 259 ITR 1 (SC), HAS HELD THAT DISMISSAL OF SLP IN LIMINE: COULD NOT OP ERATE AS A CONFIRMATION OF THE REASONING IN THE DECISION SOUGHT TO BE APPEALED AGAINST... SIMILAR VIEW HA S BEEN TAKEN BY THE HON'BLE SUMMIT COURT IN KUNHAYAMMED & ORS VS. STATE OF KERALA AND ANR (2000) 245 ITR 360 (SC), IN WHICH THEIR LORDSHIPS H AVE HELD THAT AN ORDER REFUSING SPECIAL LEAVE TO APPEAL DOES NOT STAND SUBSTITUTED IN PLACE OF ORDER UNDER CHALL ENGE. IN THE HUE OF THE ABOVE DISCUSSION, IT IS AMPLY VIV ID THAT THE MERE DISMISSAL OF SLP BY THE HON'BLE SUPREME COURT AGAINST THE JUDGMENT OF THE HON J&K HIGH COURT IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY CANNOT BE CONSTRUED AS HAVING THE EFFECT OF ELOCUTI ON OF LAW BY THE HON'BLE SUPREME COURT ON THE SUBJECT AGAINST THE ASSESSEE. IN OTHER WORDS, THE VIEW POIN T OF THE DEPARTMENT THAT THE MANDATE OF THE HON'BLE JURISDICTIONAL HIGH COURT ON THE ISSUE HAS CEASED I TS BINDING FORCE AND HENCE PREFERENCE SHOULD BE GIVEN TO THE JUDGMENT OF THE HON'BLE J&K HIGH COURT AS SLP AGAINST THE SAME HAS BEEN DISMISSED, CANNOT BE COUNTENANCED. WE, THEREFORE, HOLD THAT THE DECISION TAKEN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN SEVERAL CASES INCLUDING THAT OF THE ASSESSEE ITSELF HOLDS THE FIELD AND, ACCORDINGLY, THE BENEFIT OF EXEMPTIO N U/S 11 OF THE ACT CANNOT BE DENIED. THE IMPUGNED ORDER ON THE ISSUE IS OVERTURNED AND IT IS DIRECTED TO GRANT EXEMPTION U/S 11 OF THE ACT. 9. FOLLOWING THE DECISION RENDERED BY THE COORDIN ATE BENCH OF THE TRIBUNAL WHICH IS BASED UPON THE FINDINGS RETUR NED BY HONBLE ALLAHABAD HIGH COURT IN REVENUES APPEAL FOR AY 200 9-10 IN ASSESSEES CASE, WE ARE OF THE CONSIDERED VIEW THAT ACTIVITIES OF THE ASSESSEE AUTHORITY INTER ALIA TO PROMOTE AND SECURE DEVELOPMENT ITA NO.4400 & 4401/DEL./2016 8 AREAS ACCORDING TO PLAN TO HOLD, MANAGE, DISPOSE OF LAND AND OTHER PROPERTIES TO CARRY OUT BUILDING ACTIVITIES, ENGINE ERING, MINING, ETC. ARE INCIDENTAL TO THE MAIN OBJECTIVE OF THE TOWN PL ANNING, THUS ENTITLED FOR EXEMPTION U/S 11 OF THE ACT AS REGISTR ATION U/S 12A OF THE ASSESSEE AUTHORITY HAS NEVER BEEN CANCELLED / W ITHDRAWN. WE FIND NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED OR DERS PASSED BY THE LD. CIT (A), HENCE BOTH THE APPEALS FILED BY TH E REVENUE BEARING ITA NOS. 4400/DEL/2016 & 4401/DEL/2016 FO R AYS 2011-12 & 2012-13 RESPECTIVELY ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF SEPTEMBER, 2019. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF SEPTEMBER, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.