Moradabad Development Authority, Moradabad V. ACIT(Exemption), Lucknow

ITA 4632/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4163 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 17-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM
• Keywords: Cancellation of registration
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NOS.4631 & 4632/DEL/2017 ASSESSMENT YEARS : 2012-13 & 2013-14 MORADABAD DEVELOPMENT AUTHORITY, KANTH ROAD, NEAR VIVEKANAND HOSPITAL, MORADABAD (UP). PAN: AAJFM7731M VS. ACIT (EXEMPTION), LUCKNOW. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI PIYUSH KAUSHIK, ADVOCATE DEPARTMENT BY : MS ALKA GAUTAM, SR. DR DATE OF HEARING : 03.01.2018 DATE OF PRONOUNCEMENT : 04.01.2018 ORDER PER R.S. SYAL, VP: THESE TWO APPEALS FILED BY THE ASSESSEE RELATE TO THE ASSESSMENT YEARS 2012-13 & 2013-14. SINCE COMMON ISSUE IS RAI SED IN BOTH THE ITA NOS.4631 & 4632/DEL/2017 2 APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE T HEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, AN AUTHORITY FORMED UNDER THE RULES AND REGULATIONS OF THE UP UR BAN PLANNING AND DEVELOPMENT ACT, 1973, WAS GRANTED REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED `THE ACT). RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 WAS FILED DE CLARING NIL INCOME, AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT. THE AS SESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT THE OBJECTS OF THE ASSESSEE WERE NOT CHARITABLE IN NATURE AND, HENCE, EXEMPTION U/S 11 WAS NOT AVAILABLE. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THE EXEMPTION BE NOT DENIED AS THE ASSESSEE WAS ENGAGED IN THE REAL ESTATE BUSINESS AND THE PROVISIONS OF THE FIRST PROVISO TO SECTION 2(15) WE RE APPLICABLE, THE ASSESSEE SUBMITTED THAT ITS ACTIVITIES WERE OF CHAR ITABLE NATURE AND THE FIRST PROVISO TO SECTION 2(15) WAS NOT APPLICABLE. IN SU PPORT OF THIS CONTENTION, THE ASSESSEE RELIED ON VARIOUS JUDICIAL PRONOUNCEME NTS INCLUDING CERTAIN JUDGMENTS OF THE HON'BLE JURISDICTIONAL HIGH COURT, AS IS EVIDENT FROM PARA 6.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFF ICER TOOK NOTE OF AN ITA NOS.4631 & 4632/DEL/2017 3 ORDER PASSED BY THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY IN WHICH, THE ORDER U/S 12AA( 3) OF THE CIT CANCELLING REGISTRATION TO THE JAMMU DEVELOPMENT AU THORITY, WAS APPROVED AND SUCH ORDER WAS UPHELD BY THE HON'BLE J AMMU & KASHMIR HIGH COURT. THE ASSESSING OFFICER FURTHER OBSERVED THAT SLP AGAINST THE SAID JUDGMENT CAME TO BE DISMISSED BY THE HON'BLE S UPREME COURT. IN VIEW OF THE FACT THAT THERE WERE TWO SETS OF DECISI ONS ONE IN WHICH THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND THE OTHER, BEING, THE DISMISSAL OF THE SLP- DIRECTION U/S 144A OF THE ACT WAS SOUGHT FROM THE ADDITIONAL COMMISSIONER OF INCOME-TAX ON THE ELIGIB ILITY OF EXEMPTION U/S 11 OF THE ACT. CONSIDERING SUCH DIRECTION, THE ASSESSING OFFICER HELD THAT THE PROVISO TO SECTION 2(15) WAS APPLICABLE IN RESPECT OF THE DEVELOPMENT AUTHORITIES AND, HENCE, EXEMPTION U/S 1 1 WAS NOT AVAILABLE. THE LD. CIT(A) UPHELD THE ASSESSMENT ORDER DENYING THE EXEMPTION U/S 11 BY PRINCIPALLY RELYING ON THE DISMISSAL OF SLP BY T HE HON'BLE SUPREME COURT AGAINST THE JUDGMENT OF THE HON'BLE J&K HIGH COURT IN WHICH THE CANCELLATION OF REGISTRATION U/S 12AA(3) WAS APPROV ED. THE LD. CIT(A) TOOK NOTE OF THE ORDERS PASSED BY THE TRIBUNAL IN T HE ASSESSEES OWN CASE ITA NOS.4631 & 4632/DEL/2017 4 FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 SETTIN G ASIDE THE ORDERS OF THE ASSESSING OFFICER AND RESTORING THE EXEMPTION U /S 11 OF THE ACT. HOWEVER, IN HIS OPINION, THE DISMISSAL OF SLP AGAIN ST THE JUDGMENT OF THE HON'BLE J&K HIGH COURT CHANGED THE ENTIRE CONSPECTU S OF THE CASE AND HE, EX CONSEQUENTI, HELD THAT THE EARLIER TRIBUNAL ORDERS IN THE ASSES SEES OWN CASE COULD NOT BE FOLLOWED. THE ASSESSEE IS AGGRIE VED AGAINST THE DENIAL OF EXEMPTION U/S 11 OF THE ACT. 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH TH E RELEVANT MATERIAL ON RECORD. IT IS SEEN, AS IS EVIDENT FROM PARA 4.1 OF THE IMPUGNED ORDER ITSELF, THAT THE 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 ASSESSMENT FOR THE ASSESS MENT YEARS 2010-11 AND 2011-12 WAS NOT TAKEN UP AND THE CLAIM FOR EXEMPTIO N U/S 11 OF THE ACT GOT AUTOMATICALLY ALLOWED. WE HAVE GONE THROUGH T HE LEAD ORDER PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2009-10, WH OSE COPY IS AVAILABLE ON PAGE 75 OF THE PAPER BOOK. IN THIS ORDER, THE T RIBUNAL CONSIDERED THE EFFECT OF PROVISO TO SECTION 2(15) AND, THEREAFTER, HELD THAT THE ACTIVITIES OF THE ASSESSEE OF CONSTRUCTION AND SALE OF PLOTS WERE INCIDENTAL TO THE MAIN ITA NOS.4631 & 4632/DEL/2017 5 OBJECT OF TOWN PLANNING AND, HENCE, EXEMPTION U/S 1 1 WAS TO BE GRANTED. THE SAID ORDER OF THE TRIBUNAL WAS CHALLENGED BY TH E DEPARTMENT BEFORE THE HON'BLE ALLAHABAD HIGH COURT. VIDE ITS JUDGMEN T DATED 03.05.2017, A COPY OF WHICH IS AVAILABLE ON PAGE 80 OF THE PAPER BOOK, THE HON'BLE ALLAHABAD HIGH COURT DISMISSED THE REVENUES 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 JUDGME NT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. YAMUNA EXPRESSWAY INDUSTRIAL DEVELOPMENT AUTHORITY & ORS., IS AVAILABLE ON PAGE 93 OF THE PAPER BOOK. THE HON'BLE HIGH COURT IN ITS JUDGMENT HAS CONSIDERED ALL THE RELEVANT ASPECTS OF THE ISSUE THREADBARE AND, T HEREAFTER, DECIDED SIMILAR ISSUE AGAINST THE REVENUE. 4. IT IS, ERGO, PALPABLE THAT THE ASSESSEE HAS BEEN ALLOWED EXEMPTION U/S 11 OF THE ACT CONSISTENTLY IN THE PAST, EITHER BY T HE AO HIMSELF OR BY VIRTUE OF THE ORDERS OF THE TRIBUNAL AS AFFIRMED BY THE HONBLE HIGH COURT. THIS SETTLED POSITION OUGHT NOT TO HAVE BEEN ORDINARILY DISTURBED. THE AUTHORITIES BELOW HAVE CHOSEN TO DEVIATE FROM T HE EARLIER CONSISTENT ITA NOS.4631 & 4632/DEL/2017 6 VIEW BY HARPING ON THE DISMISSAL OF SLP AGAINST THE JUDGMENT OF THE HON'BLE J&K HIGH COURT IN JAMMU DEVELOPMENT AUTHORI TY. THERE ARE TWO REASONS FOR NOT ACCEPTING THE DEPARTMENTAL STAN D. 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 PREVAILING IN THE EXTANT CASE. AD MITTEDLY, THE ASSESSEES REGISTRATION HAS NOT BEEN CANCELED BY THE COMMISSIO NER. FURTHER, IT IS A SETTLED LEGAL POSITION THAT A SUMMARY DISMISSAL OF SLP CANNOT BE CONSTRUED AS A DECLARATION OF LAW BY THE HON'BLE SU PREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION. A MERE DISMISSAL OF SLP WITHOUT GIVING ANY REASONS, CANNOT BE EQUATED WITH EXPOSITION OF L AW BY THE HONBLE SUPREME COURT SO AS TO INDICATE THE IMPRIMATUR ON THE REASONING AND/OR THE RATIO DECIDENDI OF THE HIGH COURT IN THE JUDGMENT. IN SUCH CIRCUMSTANCES, THERE IS NO MERGER OF THE JUDGMENT O F THE HONBLE HIGH COURT. THE HON'BLE APEX COURT IN HEMALATHA GARGYA VS. CIT (2003) 259 ITR 1 (SC ), HAS HELD THAT DISMISSAL OF SLP IN LIMINE: COULD NOT OPERATE AS A CONFIRMATION OF THE REASONING IN THE DECISION SOU GHT TO BE APPEALED AGAINST... SIMILAR VIEW HAS BEEN TAKEN BY THE H ON'BLE SUMMIT COURT ITA NOS.4631 & 4632/DEL/2017 7 IN KUNHAYAMMED & ORS VS. STATE OF KERALA AND ANR (2000 ) 245 ITR 360 (SC), IN WHICH THEIR LORDSHIPS HAVE HELD THAT AN ORDER R EFUSING SPECIAL LEAVE TO APPEAL DOES NOT STAND SUBSTITUTED IN PLACE OF ORDER UNDER CHALLENGE. IN THE HUE OF THE ABOVE DISCUSSION, IT IS AMPLY VIVID 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 J AMMU DEVELOPMENT AUTHORITY CANNOT BE CONSTRUED AS HAVING THE EFFECT OF ELOCUTION OF LAW BY THE HON'BLE SUPREME COURT ON THE SUBJECT AGAINST TH E ASSESSEE. IN OTHER WORDS, THE VIEW POINT OF THE DEPARTMENT THAT THE MA NDATE 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 DISMISS ED, CANNOT BE COUNTENANCED. WE, THEREFORE, HOLD THAT THE DECISIO N TAKEN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN SEVERAL CASES INCLUDIN G THAT OF THE ASSESSEE ITSELF HOLDS THE FIELD AND, ACCORDINGLY, THE BENEFI T OF EXEMPTION U/S 11 OF THE ACT CANNOT BE DENIED. THE IMPUGNED ORDER ON TH E ISSUE IS OVERTURNED AND IT IS DIRECTED TO GRANT EXEMPTION U/S 11 OF THE ACT. ITA NOS.4631 & 4632/DEL/2017 8 5. BOTH THE SIDES ARE CONSENSUS AD IDEM THAT THE FACTS AND CIRCUMSTANCES OF THE APPEAL FOR THE ASSESSMENT YEAR 2013-14 ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE PRECEDING YEAR. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE VACATE THE IMPUGNED ORDER ON THE IS SUE AND DIRECT THE GRANTING OF EXEMPTION U/S 11 OF THE ACT. 6. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.01.20 18. SD/- SD/- [SUDHANSHU SRIVASTAVA] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 04 TH JANUARY, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.