ACIT, Cuttack V. Gram Utthan, Kendrapada

ITA 488/CTK/2012

• Counselvise Citation: 48822114 RSA 2012
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-10-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: SUNIL MISHRA
• Keywords: Charitable institution

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 488/CTK/2012 / ASSESSMENT YEAR 2009 - 10 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), CUTTACK. - - - VERSUS - GRAM UTTHAN,AT/P.O.PIMPUDI, VIA: RAJAKANIKA, DIST.KENDR APARA 754 220 PAN: AAATU 1223 F ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.C.MOHA NTY, DR / FOR THE RESPONDENT: / SHRI SUNIL MISHRA, AR / DATE OF HEARING: 26.1 1.2012 / DATE OF PRONOUNCEMENT: 14.12.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE DEPARTMENT HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) DT.24. 7.2012 FOR THE ASSESSMENT YEAR 2009 - 10 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES: 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED HAVING REGARD TO THE RATIO OF DECISION PASSE D BY THE HONBL E ITAT, CUTTACK BEN CH, CUTTACK IN ITA NO:396/CTK/2010 DATED 30.06.2011 TO CONSIDER THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.12A OF THE I.T.ACT FOR THE IMPUGNED ASSESSMENT YEAR I.E.2009 - 1O WHERE THE GRANT OF REGISTRATION HAS BEEN REVOKED U/S.12AA(3) BY T HE LD.CIT,CUTTACK FROM 01.04.2009 AS THE COMMERCIAL SURPLUS EARNED BY THE ASSESSEE SOCIETY FROM ITS MICRO FINANCING BUSINESS IS NOT ELIGIB LE FOR EXEMPTION U/S.11 OF THE I. T.ACT AS PER AMENDED PROVISION OF SECTION 2(15) W.E.F 01.04.2009. 2) WHETHER THE LD. FI RST APPELLATE AUTHORITY WAS JUSTIFIED TO CLEARLY IGNORE THE STATUTORY RESTRICTIONS STATED IN SECTION 2(15) FIRST PROVISO EFFECTIVE FROM 01.04.2009 THAT UTILIZATION OF COMMERCIAL SURPLUS FROM ACTIVITIES OF GENERAL PUBLIC UTILITY IN ANY CHARITABLE L INE SHALL NOT ENTITLE ANY TRUST/ ASSOCIATION/NGO / SOCIETY /INSTITUTION TO I.T.A.NO. 488/CTK/2012 2 THE EXEMPTION CONTEMPLATED U/S.11 OF THE I.T.ACT,1961 W.E.F A/Y:2009 - 10 ONWARDS AS COMMERCIAL ACTIVITIES OF MICRO CREDIT FINANCING BEING THE PRINCIPAL OBJECT OF THE TRUST ALL OTHER CHARITABLE A CTIVITIES WERE ONLY INCIDENTAL TO MAIN ACTIVITY OF COMMERCIAL B USINESS OF MICRO CREDIT FINANCE. 3) WHETHER THE LD.CIT(A) IS JUSTIFIED TO TOTALLY IGNORE THE SPECIFIC FINDINGS GIVEN BY THE HONBLE ITAT, BANGALORE BENCH, BANGALORE IN THE CASE OF JANALAXMI SOCIA L SERVICES VRS DIT (EXEMPTION) - WHERE THE ITAT HAD HELD THAT MICRO FINANCING BUSINESS IF DONE ON COMMERCIAL LINES CANNOT BE CONSIDERED AS CHARITABLE ACTIVITY. 4) WHETHER THE LD.CIT(A) IS JUSTIFIED TO RELY ON THE RATIO OF DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF SANJIBHAMA HANUMANTA GOUDA CHARITABLE TRUST VRS. DIT(EXEMPTION) DATED 13.03.2006 WHICH HAS NO RELEVANCE TO CASE FOR A/Y:2009 - 10 ONWARDS. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE RAISED BY THE REVENUE AND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, THE UNDISPU TED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE WAS REGISTERED U/S.12A W.E.F. 19.12.2004. THE LEARNED CIT HAS REVOKED THE REGISTRATINOOF THESOCIETY U/S.12A W.E.F THE ASSESSMENT YEAR 2009 - 10 AS THE VERY OBJECTS OF THE ASSESSEE COULD NO MORE BE TREATED AS CHARITABLE IN NATURE SPECIFICALLY IN ACCORDANCE WITH THE AMENDED PROVISIONS OF SECTION 2(15) OF THE I.T.ACT,1961 VIDE HIS ORDER DT.14.7.23010. IN VIEW OF SUCH ORDE R OF THE LEARNED CIT, THE ASSESSING OFFICER HAS ISSUED NOTICE U/S.148 ON 1.9.2010 ASKING THE ASSESSEE TO FURNISH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ,IN RESPONSE TO WHICH THE ASSESSEE CLAIMED EXEMPTION U/S.12A.THE ASSESSING OFFICER THEN TRE ATED THE SURPLUS INCOME OVER EXPENDITURE AMOUNTING TO RS.48,56,440 AS INCOME AND BROUGHT TO TAX. 5. AGGRIEVED BY THIS ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE AND CONSIDERING THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS FILED APPEAL BEFORE THIS I.T.A.NO. 488/CTK/2012 3 BENCH OF THE TRIBUNAL IN ITA NO.396/CK/2010 AGAINST ORDER OF REVOCATION OF THE LEARNED CIT DT.14.7.2010 STATED SUPRA. THE TRIBUNAL HAS PASSED THE ORDER DT.30.6.2011 HOLDING THAT THE ORDER PASSED B Y THE LEARNED CIT IS NOT VALID ONE BY ALLOWING THE APPEAL OF THE ASSESSEE. A COPY OF THE SAID ORDER WAS PLACED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) AFTER CONSIDERING THE ORDER OF THIS TRIBUNAL DT.30.6.2012 IN ITA NO.396/CTK/2010, WHEREIN THE REVOC ATION ORDER OF THE LEARNED CIT DT.14.7.2010 WAS SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE. CONSIDERING THIS ASPECT THE LEARNED CIT(A) HAS COME TO THE CONCLUSION THAT THE ORDER OF THE TRIBUNAL IS BINDING ON THE TAXING AUTHORITIES FUNCTIONING UNDER TH E JURISDICTION OF THE TRIBUNAL BY RELYING ON THE DECISION OF HONBLE MP HIGH COURT IN THE CASE OF AGRAWAL WAREHOUSING AND LEASING LTD V. CIT (257 ITR 235) WHICH WAS RENDERED BY FOLLOWING THE HONBLE APEX COURT DECISION, WHEREIN IT IS CATEGORICALLY HELD THAT THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. THE MERE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT ACCEPTABLE TO THE DEPART MENT - IN ITSELF AN OBJECTIONABLE PHRASE - AND IS THE SUBJECT MATTER OF AN APPEAL CAN FURNISH NO GROUND FOR NOT FOLLOWING IT UNLESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. IF THIS HEALTHY RULE IS NOT FOLLOWED, THE RESULT WILL ONLY BE UNDUE HAR ASSMENT TO ASSESSE E S AND CHAOS IN ADMINISTRATION OF TAX LAWS . ACCORDINGLY, THE LEARNED CIT(A) HAS COME TO THE CONCLUSION THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.12A OF THE ACT BY ALLOWING THE APPEAL OF THE ASSESSEE. 6. AGGRIEVED BY THIS ORDER OF TH E LEARNED CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 7. ON CAREFUL ANALYSIS OF THE ORDER S PASSED BY THE AUTHORITIES BELOW IN THE LIGHT OF RIVAL SUBMISSIONS OF THE PARTIES AND THE ORDER DT.30.6.2011 I.T.A.NO. 488/CTK/2012 4 PASSED BY THIS BENCH OF THE TRI BUNAL IN ITA NO.396/CTK/2010 IN CASE OF THE ASSESSEE WHEREIN THE REVOCATION ORDER OF THE LEARNED CIT DT.14.7.2010 WAS SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT(A) HAS EXTRACTED THE OPERATIVE PORTIO N OF THE ORDER DT.30.6.2011 (SUPRA) OF THIS BENCH OF THE TRIBUNAL AND RELYING ON THE DECISION OF MP HIGH COURT WHICH HAS BEEN GIVEN BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT (SUPRA) HAS ALLOWED THE APPEAL OF THE ASSESSEE AND HENCE, WE ARE OF THE C ONSIDERED VIEW THAT THE ISSUES RAISED BY THE DEPARTMENT ARE NOT AT ALL SUSTAINABLE FOR LEGAL SCRUTINY AND THEY ARE HEREBY FOUND DEVOID OF MERITS AND THEREFORE, DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 14.12.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), CUTTACK. 2 / THE RESPONDENT: GRAM UTTHAN,AT/P.O.PIMPUDI, VIA: RAJAKANIKA, DIST.KENDRAPARA 75 4 220 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 07.12.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PL ACED BEFORE THE DICTATING MEMBER 11.12.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.12.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.