DCIT, EXEMPTION CIRCLE, GHAZIABAD V. HARIDWAR DEVELOPMENT AUTHORITY, HARIDWAR

ITA 4616/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2234 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRTI SANKRATYAAN
• Assessee Lawyers: MAHESH B CHIBBER
• Keywords: Benefit of exemption
• Section: 143(3); 12A; 12AA; 13; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.4616/DEL/2017 (ASSESSMENT YEAR 2007-08) ITA NO.4617/DEL/2017 (ASSESSMENT YEAR 2008-09) DY. CIT (EXEMPTION) CIRCLE-GHAZIABAD. VS. M/S HARIDWAR DEVELOPMENT AUTHORITY, MAYAPUR, HARIDWAR. PAN AAALH 0055Q (APPELLANT) (RESPONDENT) APPELLANT BY MS. KIRTI SANKRATYAAN, SR. DR RESPONDENT BY SH. MAHESH B. CHIBBER, ADV. DATE OF HEARING 05.04.2021 DATE OF PRONOUNCEMENT 30.06.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THE PRESENT APPEALS ARE FILED BY THE DEPARTM ENT AGAINST ORDERS DATED 26/04/2017 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), DEHRADUN {CIT (A)} FOR ASSESSMENT YEARS (AY) 2007-08 AND 2008-09. SINCE COMMON ISSUE IS INVOLVED IN BOTH THESE 2 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY APPEALS, THEY ARE BEING DECIDED TOGETHER FOR THE SA KE OF CONVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A DEVELOPMENT AUTHORITY SET UP BY UTTAR PRADESH GOVER NMENT WITH THE OBJECT OF DEVELOPMENT OF HARDWAR, PAURI, TEHRI A ND PART OF DEHRADUN. ALL DEVELOPMENTAL SCHEMES AS WELL AS BEAU TIFICATION OF THESE DISTRICTS ARE TO BE DONE BY THE ASSESSEE. THE ORIGINAL ASSESSMENT FOR AY 2007-08 WAS FRAMED U/S 143(3) AFT ER MAKING ADDITION OF RS. 4,74,82,663/- BEING AMOUNT TRANSFER RED TO INFRASTRUCTURE DEVELOPMENT FUND AS REVENUE RECEIPT IN THE INCOME AND EXPENDITURE A/C. THE ASSESSING OFFICER ALSO DIS PUTED THE CHARITABLE NATURE OF ACTIVITIES CARRIED OUT BY ASSE SSEE IN TERMS OF SECTION 2(15) OF THE INCOME TAX ACT, 1961 (HEREINAF TER CALLED THE ACT). AT THE TIME OF ORIGINAL ASSESSMENT, THE ASSE SSEE WAS REGISTERED U/S 12A OF THE ACT AND WAS CLAIMING BENEFIT OF EXEMP TION U/S 11 OF THE ACT. THE SAID ASSESSMENT ORDER WAS SUBJECT MATTE R OF CHALLENGE BEFORE THE LD. CIT (A) AND, THEREAFTER, BEFORE THIS TRIBUNAL (ITAT) AND THE ASSESSMENT WAS FINALLY REMITTED BACK TO THE FILE OF THE 3 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY ASSESSING OFFICER FOR FRESH ADJUDICATION BY ITAT VI DE ORDER DATED 27/07/2012 IN ITA NO. 182 AND 183/DEL/2012. 2.1 PURSUANT TO THE ORDER OF THIS TRIBUNAL, THE A SSESSING OFFICER COMPLETED ASSESSMENT U/S 143(3)/254 OF THE ACT VIDE ORDER DATED 31/12/2013 THEREBY REJECTING THE BENEFIT OF E XEMPTION U/S 11 ON THE GROUND THAT REGISTRATION U/S 12A OF THE A CT GRANTED TO THE ASSESSEE STOOD CANCELLED AT THE TIME OF REMAND PROC EEDINGS. FURTHER, THE ADDITION OF RS. 4,74,82,663/- BEING AM OUNT TRANSFERRED TO INFRASTRUCTURE DEVELOPMENT FUND WAS R EITERATED. 2.2 THE ASSESSEE, AGGRIEVED BY THE ORDER U/S 143(3)/254 PREFERRED AN APPEAL BEFORE THE LD. CIT ( A) AND THE SAME WAS PARTLY ALLOWED WHEREIN THE CLAIM OF EXEMPTION U/S 11 WAS ALLOWED AND THE ACTION OF ASSESSING OFFICER IN TREA TING RS. 4,74,82,663/- AS INCOME WAS UPHELD. THE ASSESSING O FFICER IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. CIT ( A). 2.3 THE REVENUE HAS RAISED IDENTICAL GROUNDS IN B OTH THE YEARS UNDER APPEAL AND THE SAME ARE REPRODUCED AS UNDER: 4 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY GROUNDS OF APPEAL IN ITA NO.4616/DEL/2017: 1. THE LD. CIT (A) HAS ERRED IN LAW THE FACTS IN ALLOW ING THE AMOUNT TRANSFERRED DIRECTLY TO THE BALANCE SHEE T RS.4,74,82,663/- ON A/C OF INFRASTRUCTURE DEVELOPME NT RESERVE FUND. 2. THE LD. CIT (A) HAS ERRED IN ALLOWED THE EXE MPTION U/S 11 AND 12AA OF I.T. ACT, 1961 TO THE ASSESSEE. 3. THE ORDER OF LD. CIT (A) BE CANCELLED AND T HE ORDER OF THE AO BE RESTORED. GROUNDS OF APPEAL IN ITA NO.4617/DEL/2017: 1. THE LD. CIT (A) HAS ERRED IN LAW THE FACTS IN ALLOW ING THE AMOUNT TRANSFERRED DIRECTLY TO THE BALANCE SHEET RS.4,15,92,437/- ON A/C OF INFRASTRUCTURE DEVELOPME NT RESERVE FUND. 2. THE LD. CIT (A) HAS ERRED IN ALLOWE D THE EXEMPTION U/S 11 AND 12AA OF I.T. ACT, 1961. 3. THE ORDER OF LD. CIT (A) BE CANCELLED AND THE ORDER OF THE AO BE RESTORED. 5 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 3.0 IN THE ABOVE BACKGROUND, WE NOTE THAT GROUND NO. 1 OF THE APPEAL IS RELATING TO ISSUE OF ADDITION OF RS. 4,74,82,663/- BEING AMOUNT TRANSFERRED TO INFRASTRUCTURE DEVELOPM ENT FUND. HOWEVER, WE FIND THAT THE LD. CIT (A) HAS AFFIRMED THE ORDER OF ASSESSING OFFICER ON THIS COUNT AND AS SUCH THE ASS ESSING OFFICER COULD NOT BE AGGRIEVED BY SUCH ORDER. ACCORDINGLY, THIS GROUND RAISED BY THE REVENUE IS MISCONCEIVED AND DISMISSED AS IN FRUCTUOUS. 3.1 COMING TO GROUND NO. 2, WHICH IS REGARDING ISS UE OF CLAIM OF EXEMPTION U/S 11 READ WITH SECTION 12AA OF THE INCOME TAX ACT, 1961, THE ASSESSING OFFICER HAS CHALLENGED THE ORDER OF LD. CIT (A) IN ALLOWING BENEFIT OF APPLICATION OF INCOME IN TERMS OF SECTION 11 OF THE INCOME TAX ACT, 1961. 3.2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ISSUE IN HAND IS COVERED BY THE DECISION OF THE ITAT PASSED IN ASSESSEES OWN CASE RESTORING THE REGISTRATION U/S 12AA OF THE ACT. IT WAS HIGHLIGHTED THAT ITAT, VIDE ORDER DATED 25/07/2014, HELD THAT OBJECTS OF THE ASSESSEE AUTHORITY ARE CHARITABLE IN TERMS OF SECTION 2(15) OF THE ACT AND DIRECTED THE LD. CIT (EXEMPTIO N) TO GRANT 6 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 WIT H EFFECT FROM 01/04/2002. THE ORDER OF THE ITAT HAS SUBSEQUENTLY BEEN UPHELD BY THE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATE D 18/07/2017 IN INCOME TAX APPEAL NO. 90 OF 2015. THE COPIES OF THE SAID ORDERS WERE PLACED ON RECORD. IT WAS, ACCORDINGLY, SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY ALLOWED THE CLAIM OF EXEMPTION U/S 11 OF THE ACT. 3.3 THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ASSESSMENT ORDER. HOWEVER, SHE DID NOT DISPUTE THE LEGAL POSITION ARISING FROM THE ORDER OF ITAT AND THE HONBLE HIGH COURT IN ASSESSEES OWN CASE. 4.0 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS OF THE CASE. THE SURVIVING ISSUE BEFORE US IS REGARDING THE CHARITABLE STATUS OF THE RESPONDENT-A SSESSEE U/S 12A OF THE ACT AND VALIDITY OF CLAIM OF EXEMPTION U/S 1 1 OF THE INCOME TAX ACT, 1961. WE FIND THAT THE DENIAL OF CLAIM OF EXEMPTION BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS WAS ON T HE GROUND THAT REGISTRATION CERTIFICATE U/S 12AA ISSUED TO THE ASS ESSEE STOOD CANCELLED BY THE LD. CIT (EXEMPTION). THE LD. CIT ( A) CONSIDERED THE ENTIRE ISSUE AND DECIDED IN FAVOUR OF THE ASSESSEE AFTER TAKING NOTE 7 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY OF THE DECISION OF THE COORDINATE BENCH OF THIS TRI BUNAL VIDE ORDER DATED 25/07/2014 IN ITA NOS. 3056/DEL/12, 3013/DEL/ 13 AND 6058/DEL/12 RELATING TO AY 2006-07. 3.5 ON CAREFUL PERUSAL OF OVERALL FACTS OF THE CA SE AND THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 25/07/2014 AS AFORESAID, IT IS NOTED THAT THE ISSUE OF REGISTRATION U/S 12AA OF THE ACT HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH IN FAVOUR OF THE ASSESSEE WHEREIN THE LD. CIT (EXEMPTION) HAS BEEN DIRECTED TO GRANT REGISTRATION U/S 12AA W.E .F. 01/04/2002. THE DIRECTION OF THE ITAT IS REPRODUCED HEREUNDER: 7.15. IN VIEW OF ABOVE DISCUSSION WE HOLD THAT ASSE SSEE- AUTHORITY HAS BEEN CREATED WITH THE OBJECT OF GENER AL PUBLIC UTILITY WHICH IS A CHARITABLE OBJECT WITHIN THE MEA NING OF SECTION 2(15) AND THE PROVISO TO SECTION 2(15) IS NOT APPLI CABLE BECAUSE ASSESSEE-AUTHORITY IS NOT CARRYING OUT ACTIVITY WIT H ANY PROFIT MOTIVE BUT THE PREDOMINANT OBJECT IS WELFARE OF PEO PLE AT LARGE. .. 11. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HO NBLE ALLAHABAD HIGH COURT WE CONDONE THE DELAY AND DIREC T THE LD. COMMISSIONER TO GRANT REGISTRATION W.E.F. 1-4-2002. 3.6 IN ACCORDANCE WITH THE DIRECTION OF THIS TRIBU NAL, THE LD. CIT (EXEMPTION) GRANTED CERTIFICATE OF REGI STRATION U/S 12AA OF THE ACT VIDE ORDER DATED 20/09/2016. 8 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 3.7 EVENTUALLY, THE APPEAL OF THE REVENUE AGAINST THE ABOVE ORDER OF THE ITAT WAS DISMISSED BY THE HONBL E ALLAHABAD HIGH COURT VIDE ORDER DATED 18/07/2017 IN INCOME TA X APPEAL NO. 90 OF 2015. 3.8 IN THE PRESENT CASE, THE ASSESSING OFFICER DE NIED THE BENEFIT OF EXEMPTION ONLY ON THE GROUND OF CANCELLA TION OF REGISTRATION U/S 12AA OF THE ACT WITHOUT ASSIGNING A NY FURTHER REASON. HOWEVER, IN THE LIGHT OF THE ORDER OF THE C OORDINATE BENCH OF THIS TRIBUNAL AND IT BEING UPHELD BY THE HONBLE HI GH COURT, THE VERY BASIS OF DENIAL OF BENEFIT U/S 11OF THE ACT, A S ADOPTED BY THE ASSESSING OFFICER, STANDS VITIATED AND NON-EXISTENT . MOREOVER, WHILE DECIDING APPEALS FOR AY 2013-14 AND 2014-15 IN ITA NOS. ITA NO. 6796/DEL/17 AND ITA NO.5320/DEL/17 ON THE ISSUE OF CORRECTNESS OF CLAIM OF EXEMPTION U/S 11 VIS--VIS CHARITABLE N ATURE OF ACTIVITIES IN TERMS OF SECTION 2(15) OF THE ACT, WE HAVE HELD A S UNDER: 3.5 ON CLOSE PERUSAL OF ORDER COORDINATE BENCH RES TORING THE REGISTRATION U/S 12AA, WE FIND THAT ITAT AFTER EXAM INING ENTIRE GAMUT OF FACTS AND OBJECTS OF THE ASSESSEE AUTHORIT Y GAVE A CATEGORICAL FINDING THAT ASSESSEE AUTHORITY IS NOT CARRYING OUT ANY ACTIVITY WITH ANY PROFIT MOTIVE BUT THE PREDOMI NANT OBJECT IS WELFARE OF PEOPLE AT LARGE. IT WAS FURTHER HELD, AS SESSEE AUTHORITY HAS BEEN CREATED WITH THE OBJECT OF GENER AL PUBLIC UTILITY WHICH IS A CHARITABLE OBJECT WITHIN THE MEA NING OF SECTION 9 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 2(15) AND THE PROVISO TO SECTION 2(15) IS NOT APPLI CABLE. THE ORDER OF ITAT HAS SINCE BEEN UPHELD BY HONBLE ALLA HABAD HIGH COURT VIDE ORDER DATED 18/07/2017 IN INCOME TAX APP EAL NO. 90 OF 2015. 3.6 WE WOULD LIKE TO STRESS UPON THE FACT THAT ASSE SSING OFFICER HAS NOT BROUGHT ON RECORD ANY NEW OR DISTINGUISHING FEATURE TO COUNTER THE FACTS WHICH WERE THERE BEFORE ITAT AT T HE TIME OF DECIDING THE APPEAL AGAINST CANCELLATION OF REGISTR ATION U/S 12AA OF THE ACT. UNDISPUTEDLY, IT IS NOT A CASE WHE RE THERE IS ANY CHANGE IN OBJECT OF THE ASSESSEE AUTHORITY OR A NY ALLEGATION THAT ASSESSEE WAS ENGAGED IN ANY ACTIVITY BEYOND IT S OBJECTS AND AS SUCH THERE IS COMPELLING REASON FOR US TO DE VIATE FROM FINDING GIVEN BY COORDINATE BENCH. WE ALSO TAKE NOT E THAT CIT(A), WHILE DECIDING THIS ISSUE IN FAVOUR OF ASSE SSEE, HAS PLACED RELIANCE ON VARIOUS DECISIONS RENDERED BY CO ORDINATE BENCHES OF ITAT AND HONBLE HIGH COURTS IN OTHER CA SES OF STATUTORY AUTHORITIES FORMED WITH SIMILAR OBJECTS W HICH IN OUR VIEW SUPPORTS THE CASE OF THE ASSESSEE AUTHORITY. 3.7 WE ALSO DRAW STRENGTH FROM RATIO LAID DOWN IN F OLLOWING DECISIONS: I. ITO (E) V. SAHARANPUR DEVELOPMENT AUTHORITY (ITA NO. 4113/D/17) (24/03/2021) (DELHI-TRIB) II. JHANSI DEVELOPMENT AUTHORITY V. DCIT [2021] 123 TAXMANN.COM 247 (AGRA - TRIB.) III. CIT V. GHAZIABAD DEVELOPMENT AUTHORITY (ITA NO . 2400/D/14) (DELHI-TRIB) IV. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION V. A CIT (ITA NO. 278/AHD/13) (AHMEDABAD-TRIB.) V. BANGALORE DEVELOPMENT AUTHORITY V. ADDL. CIT [20 19] 104 TAXMANN.COM 266 (BANGALORE-TRIB.) VI. GUJARAT HOUSING BOARD (GHB) V. DCIT(E) (ITA NO. 3297/AHD/2016) (AHMEDABAD-TRIB.) VII. MORADABAD DEVELOPMENT AUTHORITY V. ACIT (EXEMP TION) (ITA NO. 4631 & 32/D/17) (DELHI-TRIB) VIII. FIROZABAD SHIKOHABAD DEVELOPMENT AUTHORITY V. CIT [2018] 169 ITD 202 (AGRA - TRIB.) 10 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY IX. AHMEDABAD URBAN DEVELOPMENT AUTHORITY V. ACIT [ 2017] 396 ITR 323 (GUJ HIGH COURT) X. CIT V. JODHPUR DEVELOPMENT AUTHORITY [2016] 287 CTR 473 (RAJ HC) XI. CIT V. LUCKNOW DEVELOPMENT AUTHORITY [2014] 265 CTR 433 (ALL HC) XII. NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY V. CIT(E) (ITA NO. 172/DEL/2016) (DELHI-TRIB.) 3.8 IN VIEW OF ABOVE AND RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ALLAHABAD HIGH COURT AND COORDINATE BENCH I N ASSSESSEES OWN CASE, WE ARE OF THE CONSIDERED VIEW THE ASSESSEE AUTHORITY IS CARRYING OUT CHARITABLE ACTIV ITIES WITH OBJECT OF GENERAL PUBLIC UTILITY IN ACCORDANCE WITH SECTION 2(15) OF THE ACT AND SAME CANNOT BE TERMED AS COMMERCIAL OR OF BUSINESS NATURE FOR THE PURPOSE OF PROVISO TO SECTI ON 2(15) OF THE ACT. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WI TH THE ORDER OF LD. CIT (A) ALLOWING BENEFIT OF APPLICATION AND EXE MPTION U/S 11 OF THE ACT. AS A RESULT, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 3.9 AS WE HAVE ALREADY DECIDED THIS ISSUE IN FAVOU R OF ASSESSEE IN AY 2013-14 AND 2014-15 AND IN ABSENCE O F ANY CHANGE OF FACTS OR CIRCUMSTANCES, WE UPHOLD THE ORDER OF T HE LD. CIT (A) ALLOWING THE CLAIM OF EXEMPTION U/S 11 OF THE ACT. 11 ITA NOS. 4616 & 4617/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 4.0 IN THE FINAL RESULT, BOTH THE APPEAL S OF THE DEPARTMENT STAND DISMISSED. ORDER PRONOUNCED ON 30 TH JUNE, 2021. SD/- SD/- (N.K. BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/06/2021 *DRAGON* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI