Agra Development Authority, Agra V. C.I.T.-I, Agra

ITA 447/AGR/2011

• Counselvise Citation: 44720314 RSA 2011
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-02-2012
• Assessment Year: misc
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOHAIL AKHTAR
• Assessee Lawyers: R K AGARWAL; RAHUL AGARWAL S
• Keywords: Charitable institution; Source of fund
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.447/AGR/2011 AGRA DEVELOPMENT AUTHORITY, VS. COMMISSIONER OF I NCOME TAX-1 JAIPUR HOUSE, AGRA. AGRA. (PAN: AAALA 0081 F). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K. AGARWAL & SHRI RAHUL AGARWAL, ADVOCATES RESPONDENT BY : SHRI SOHAIL AKHTAR, JR. D.R. DATE OF HEARING : 29.02.2012 DATE OF PRONOUNCEMENT : 02/03/2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25.11.2011 PASSED BY THE CIT-I, AGRA. 2. THE ASSESSEE HAS RAISED AS MANY AS 8 GROUNDS OF APPEAL, BUT THE EFFECTIVE GROUND IS THAT THE CIT-I ERRED IN LAW AND ON FACTS IN WITHDRAWING REGISTRATION ITA NOS.447/AGR/2011 2 GRANTED UNDER SECTION 12AA OF THE INCOME TAX ACT, 1 961 (THE ACT HEREINAFTER) W.E.F. 2009-10. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E AUTHORITY WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT W.E.F. 0 1.04.2003. THE CIT, IN ORDER TO EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF C HANGE IN DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT, ISSUED A N OTICE TO THE ASSESSEE FOR WITHDRAWAL OF REGISTRATION W.E.F. ASSESSMENT YEAR 2 009-10 ON 17.10.2011 UNDER SECTION 12AA(3) READ WITH SECTION 293C OF THE ACT. THE CIT, AFTER CONSIDERING THE ASSESSEES SUBMISSION, HAS WITHDRAWN THE REGIST RATION UNDER SECTION 12AA OF THE ACT W.E.F. 2009-10 AS UNDER :- IN REGARD TO PARA-WISE REPLY TO THIS OFFICE OBSERV ATIONS, BRIEFLY MENTIONED IN PARA 5.2 ABOVE, THE ASSESSEE HAS MAINL Y CONTENDED THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT CONNECTED WI TH BUSINESS OR COMMERCE, AND THAT THE OBSERVATIONS MADE BY THE UND ERSIGNED IN THE NOTICE FOR WITHDRAWAL OF REGISTRATION, WA.E.F. A.Y. 2009-10, ISSUED UNDER SECTION 12AA(3) READ WITH SECTION 293C, ARE W RONG AND CONTRARY TO THE FACTS AND CIRCUMSTANCES. NO EVIDEN CE OR RELEVANT MATERIAL HAS BEEN PLACED BEFORE ME TO SUPPORT SUCH CLAIM OR TO CONTROVERT THE FINDINGS MENTIONED IN THE SHOW-CAUSE NOTICE. THE ABOVE ARGUMENTS OF THE AR ARE FOUND TO BE INCON SISTENT WITH THE ANNUAL STATEMENT/ACCOUNTS FURNISHED BY THE ASSESSEE, FACTS OF THE CASE & NATURE OF ACTIVITIES PERFORMED BY THE AS SESSEE. THESE HAVE BEEN ADVANCED WITHOUT ADDUCING ANY SUPPORTING EVIDE NCE. AS OBSERVED ABOVE, THE ASSESSEE IS A BODY CORPORATE (A S DEFINED IN SECTION 4 (2) OF UPUPD ACT, 1973) WHICH HAS EARNED AN INCOME OF ` 44.24 CRORES, AS PER ITS OWN BOOKS OF ACCOUNTS AND HAS SHOWN A ITA NOS.447/AGR/2011 3 GENERAL RESERVE OF ` 523 CRORES, ACCUMULATED OVER THE YEARS. THE SOURCES OF INCOME AND THEIR NATURE CLEARLY SHOW ACT IVITY IN THE NATURE OF TRADE AND BUSINESS. IN ADDITION TO ABOVE, ANOTHER FACT TO BE NOTED IS T HAT STATUTORY BODIES WITH SIMILAR OBJECTS AND ACTIVITIES LIKE PUN JAB URBAN DEVELOPMENT AUTHORITY, HARYANA URBAN DEVELOPMENT AU THORITY, INDORE DEVELOPMENT AUTHORITY, JALANDHAR DEVELOPMENT AUTHORITY ETC. WERE NOT PROVIDED WITH EXEMPTION U/S 12AA EVEN BEFO RE A.Y. 2009-10. WHEN PROVISO TO SECTION 2(15) WAS NOT ADDED BY THE FINANCE ACT, 2008, EVEN THEN THESE AUTHORITIES WERE HELD TO BE N OT FOR CHARITABLE PURPOSE AS PER THEN DEFINITION U/S 2(15). ITAT, A MRITSAR IN JALANDHAR DEVELOPMENT AUTHORITY VS. CIT (ITA NO.562 /ASR/2008) HAS DISCUSSED VARIOUS CASE LAWS AND UPHELD THE ORDER OF CIT, JALANDHAR WHO HAD REJECTED THE REGISTRATION OF JALANDHAR DEVE LOPMENT AUTHORITY U/S 12AA HOLDING THAT THE AUTHORITY IS NOT FOR CHA RITABLE PURPOSE AS MENTIONED IN SEC.2(15). THIS POSITION OF LAW HAS C HANGED CONSIDERABLY BY INSERTION OF PROVISO TO SECTION 2(1 5) BY FINANCE ACT, 2008 WHICH HAS CONSIDERABLY RESTRICTED AND LIMITED THE EXEMPTION CLAIMED BY ASSESSES WHO'S CHARITABLE PURPOSE FALL S IN THE FOURTH LIMB I.E. ANY OTHER OBJECT OF GENERAL PUBLIC UTILIT Y. IN ITS REPLY DATED 14-11-2011, THE ASSESSEE HAS TRI ED TO DIFFERENTIATE THE FACTS OF THIS CASE AND THE FACTS OF JALANDHAR DEVELOPMENT AUTHORITY. THE CONTENTIONS OF THE ASSE SSEE ARE NON- SPECIFIC, AND NOT CONVINCING. IN THE SAME REPLY THE ASSESSEE HAS FURTHER CONTENDE D THAT THE THEN CIT-I, AGRA GRANTED REGISTRATION AFTER SATISFY ING CONDITIONS LAID DOWN IN SECTION 12AA. HE HAS FURTHER DISCUSSED THE PROVISIONS OF SECTION 12AA. THE CONTENTIONS OF THE ASSESSEE ARE I RRELEVANT, WHEN THERE HAS BEEN AMENDMENT TO SECTION 2(15) BROUGHT B Y FINANCE ACT, 2008, EFFECTIVE FROM A.Y. 2009-10. THE CASE LAWS R ELIED UPON THE ASSESSEE, IN ITS REPLY DATED 14-11-2011, ARE OF NO HELP TO IT BECAUSE THESE RELATE TO THE PERIOD PRIOR TO AMENDMENT TO SE CTION 2(15) BROUGHT BY FINANCE ACT, 2008, EFFECTIVE FROM A.Y. 2009-10. FROM THE DISCUSSION ABOVE, I AM CONVINCED THAT THE ACTIVITIES OF THE ASSESSEE ARE COVERED BY THE PROVISO TO SECTION 2(15) INSERTED BY FINANCE ACT, 2008, AND ARE NOT FOR CHARITABLE PURP OSE. ITA NOS.447/AGR/2011 4 IN VIEW OF ABOVE, THE REGISTRATION OF THE ASSESSEE U/S 12AA IS HEREBY WITHDRAWN W.E.F. A.Y. 2009-2010. 4. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE OBJECTED TO THE ACTION OF THE CIT ON THE GROUND THAT SHOW CAUSE NOTICE ISSUED BY THE CIT UNDER SECTION 293C OF THE ACT IS NOT IN ACCORDANCE WITH LAW. THEREFORE, THE ORDER OF CIT IS WITHOUT JURISDICTION. THE LD. AUTHORISED REPRESENTATIVE, I N SUPPORT OF HIS CONTENTION, RELIED UPON THE ORDER OF I.T.A.T., MUMBAI BENCHES I N THE CASE OF BRAHMAN SABHA TRUST IN ITA NO.1944/MUM/2010 ORDER DATED 22.03.201 1. THE RELEVANT FINDING OF THE I.T.A.T. IS REPRODUCED AS UNDER :- 6. IT IS THE LEGALITY OF THE AFORESAID ORDER WHICH IS BEING CHALLENGED BEFORE US IN THIS APPEAL. ONE OF THE PR ELIMINARY OBJECTIONS OF THE APPELLANT IS THAT THERE IS NO PROVISION IN S ECTION 12AA TO ENABLE THE CIT TO CANCEL THE REGISTRATION EARLIER GRANTED UNDER SECTION 12A OF THE ACT. WE ARE OF THE VIEW THAT THE ABJECTION IS WELL FOUNDED. SECTION 12AA(3) PROVIDES THAT WHERE A TRUST OR AN INSTITUTI ON HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) TH EREOF AND SUBSEQUENTLY THE CIT IS SATISFIED THAT THE ACTIVITI ES OF THE TRUST WERE NOT GENUINE OR THEY WERE BEING CARRIED OUT NOT IN A CCORDANCE WITH THE OBJECTS OF THE TRUST, HE SHALL PASS AN ORDER IN WRI TING CANCELLING THE REGISTRATION OF THE TRUST. SUB-SECTION (3) OF SECT ION 12AA WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004, WITH EFFECT FROM 0 1.10.2004. THIS SUB-SECTION, AS IT WAS ORIGINALLY INSERTED, IS NOT APPLICABLE TO THE PRESENT CASE BECAUSE HEREIN THE ASSESSEE-TRUST WAS NOT GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OF SECTION 12AA OF THE ACT. IT WAS GRANTED REGISTRATION UNDER SECTION 12A (A) OF THE ACT BY ORDER DATED 22.02.2002. IT WAS HOWEVER POINTED OUT ON BEHALF OF THE INCOME-TAX DEPARTMENT THAT THE FINANCE ACT, 2010, H AS INTRODUCED AN AMENDMENT TO SECTION 12AA(3) TO THE EFFECT THAT THE CIT CAN CANCEL REGISTRATION OBTAINED BY THE ASSESSEE AT ANY TIME U NDER SECTION 12A, AS IT STOOD BEFORE BEING AMENDED BY THE FINANCE (NO .2) ACT, 1996. IT ITA NOS.447/AGR/2011 5 IS ACCORDINGLY CONTENDED THAT THE CIT CAN EVEN CANC EL REGISTRATION GRANTED TO THE TRUST UNDER SECTION 12A OF THE ACT. WE HOWEVER FIND THAT THIS AMENDMENT WAS MADE BY THE FINANCE ACT, 20 10, WITH EFFECT FROM 01.06.2010, WHICH MEANS THAT AN ORDER CANCELLI NG REGISTRATION GRANTED UNDER SECTION 12A CAN BE PASSED BY THE CIT UNDER SECTION 12AA(3) ONLY ON AND FROM 01.06.2010. THE PRESENT O RDER HAS BEEN PASSED BY THE CIT ON 11.01.2010 AND THEREFORE CANNO T BE SUSTAINED. 7. THE LEARNED CIT DR DREW OUR ATTENTION TO SECTION 293C OF THE ACT. IN FACT EVEN THE CIT HAS RELIED ON THIS PROVI SION IN THE LAST PARAGRAPH OF THE IMPUGNED ORDER. THIS SECTION IS T ITLED POWER TO WITHDRAW APPROVAL. IT WAS INTRODUCED BY THE FINAN CE (NO.2) ACT, 2009, WITH EFFECT FROM 01.10.2009. CIRCULAR NO.5 O F 2010 ISSUED BY THE CBDT ON 03.06.2010, (2010) 324 ITR (STATUTES) 2 93 EXPLAINS THE PROVISIONS OF THE SAID FINANCE ACT. PARAGRAPH 57 E XPLAINS THE PROVISIONS OF SECTION 293C AND THE SAME IS AS UNDER :- 57. POWER TO WITHDRAW APPROVALS 57.1 UNDER THE EXISTING PROVISIONS OF INCOME-TAX AC T, AN APPROVAL IS REQUIRED TO BE GRANTED BY INCOME-TAX AU THORITY FOR AVAILING OF VARIOUS INCENTIVES BY THE ASSESSEES . WHILE SOME PROVISIONS OF INCOME-TAX ACT SPECIFICALLY CONT AIN PROVISIONS FOR WITHDRAWAL OF APPROVAL BUT IN MANY C ASES THERE IS NO SUCH SPECIFIC PROVISIONS CONTAINING POW ER OF WITHDRAWAL. 57.2 IN ORDER TO PROVIDE SUCH EXPLICIT PROVISIONS F OR POWER TO WITHDRAW APPROVAL, A NEW SECTION 293C HAS BEEN INSERTED TO PROVIDE THAT THE CENTRAL GOVERNMENT OR THE BOARD OR AN INCOME-TAX AUTHORITY, WHO HAS AUTHORITY TO GRANT APPROVAL, SHALL ALSO HAVE THE POWER TO WITHDR AW THE APPROVAL AT ANY TIME. HOWEVER, SUCH WITHDRAWAL CAN BE MADE ONLY AFTER GIVING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST THE PROPOSED WITHDRAWAL TO THE CONCER NED ASSESSEE. 57.3 APPLICABILITY THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFECT FROM 1 ST OCTOBER, 2009, AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 20 10-11 AND SUBSEQUENT ASSESSMENT YEARS. ITA NOS.447/AGR/2011 6 THERE IS A DISTINCTION BETWEEN AN APPROVAL AND REGISTRATION. THE ACT ITSELF USES BOTH THE EXPRE SSIONS. SECTION 12A SPEAKS OF REGISTRATION. THERE ARE OTHER SECTIONS IN THE ACT WHICH SPEAKS OF APPROVAL. FOR EXAMPLE, SECTION 80G(5)( VI) SPEAKS OF THE INSTITUTION OR FUND BEING APPROVED BY THE COMMISSIO NER. AGAIN SECTION 35(2) SPEAKS OF ANY SURVEY OR ENGINEERING S ERVICES CARRIED OUT BY THE ASSESSEE HIMSELF OR BY A CONCERN WHICH IS FO R THE TIME BEING APPROVED IN THIS BEHALF BY THE BOARD. SECTION 35CC B(2) SPEAKS OF THE DEDUCTION UNDER THAT SECTION BEING ALLOWED SUBJECT TO THE CONDITION THAT THE PAYMENT OF THE AMOUNT BY THE ASSESSEE SHAL L BE TO AN ASSOCIATION OR INSTITUTION WHICH IS FOR THE TIME BE ING APPROVED IN THIS BEHALF BY THE PRESCRIBED AUTHORITY. SECTION 35CCA( 2A) ALSO REFERS TO AN APPROVAL GRANTED TO THE ASSOCIATION OR INSTITUTI ON TO WHOM THE ASSESSEE HAS PAID THE AMOUNT IN RESPECT OF WHICH A CLAIM FOR DEDUCTION IS MADE UNDER THE SECTION. IT IS NOT NEC ESSARY TO MULTIPLY INSTANCES. SECTION 293C USES THE EXPRESSION APPRO VAL. IT CANNOT THEREFORE APPLY TO A CASE OF REGISTRATION. THEREFO RE, THE SECTION CANNOT INFUSE VALIDITY TO THE IMPUGNED ORDER. 8. FOR THE ABOVE REASONS WE UPHOLD THE PRELIMINARY OBJECTION RAISED BY THE ASSESSEE AND ANNUL THE IMPUGNED ORDER WHICH HAS BEEN PASSED WITHOUT JURISDICTION. THE APPEAL OF THE ASS ESSEE IS ALLOWED WITH NO ORDER AS TO COSTS. 5. THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTEN TION ON THE SHOW-CAUSE NOTICE OF WHICH COPY HAS BEEN PLACED AT PAGE NOS.5 TO 10 OF THE ASSESSEES PAPER BOOK AND SUBMITTED THAT THE CIT ISSUED SHOW CAUSE N OTICE UNDER SECTION 293C OF THE ACT. THUS, THE CIT ISSUED SHOW-CAUSE NOTICE UN DER SECTION 293C OF THE ACT. ON IDENTICAL SET OF FACTS, THE I.T.A.T., MUMBAI BEN CHES IN THE CASE OF BRAHMAN SABHA TRUST (SUPRA) HAS HELD THAT THE ORDER OF CIT IS WITHOUT JURISDICTION. WE RESPECTFULLY FOLLOW THE ABOVE ORDER OF I.T.A.T. MUM BAI BENCHES. IN THE LIGHT OF THE FACTS, WE UPHOLD THE PRELIMINARY OBJECTION RAIS ED BY THE LD. AUTHORISED ITA NOS.447/AGR/2011 7 REPRESENTATIVE AND ANNUL THE IMPUGNED ORDER WHICH I S PASSED WITHOUT JURISDICTION. SINCE THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSE E ON PRELIMINARY OBJECTION, THEREFORE, WE ARE NOT EXPRESSING ANY OPINION IN RES PECT OF MERIT AND OTHER ASPECTS OF THE MATTER. HOWEVER, THE CIT IS AT LIBERTY TO T AKE ACTION IN ACCORDANCE WITH LAW, IF SUGGESTED SO. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 2 ND MARCH, 2012 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY