ITO (E) 2(1), MUMBAI V. SHREE NASIK PANCHVATI PANJRAPOLE, MUMBAI

ITA 4993/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9937 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 142(1); 12A; 12AA; 10B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4993 / MUM/ 20 15 ( / ASSESSMENT YEAR: 2011 - 12 ) ITO (E) 2(1) R.NO. 512, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG MU MBAI PIN:400012 / VS. SHREE NASIK PANCHVATI PANJRAPOLE 1 ST FLOOR, LENTIN CHAMBERS, FORT MUMBAI PIN:400020 ./ ./ PAN/GIR NO. : AAATN 0236 C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 03.07 .2017 / DATE OF PRONOUNCEMENT : 14.07. 2017 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 3 0 .0 7 .2015 FOR THE A.Y. 2011 - 1 2 , PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE AY.2011 - 1 2 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE PERFORMS A CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) OF THE REVENUE BY: S HRI RAM TIWARI (CIT DR ) ASSESSEE BY : SHRI SANJAY PARIKH SHREE NAISK PANCHVATI PANJRAPOLE 2 INCOME TAX ACT, 1961 EVEN THOUGH THE INCO ME FROM MILK DISTRIBUTION IS RS. 2,22,65,6611 - ' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN IGNORING THAT THE ASSESSEE IS A BUSINESS TRUST AS PER THE CIRCULAR NO. 77 DATED 3.12.1954 ISSUED BY CHARITY COMMIS SIONE,BOMBAY. AS PER THE CIRCULAR I F THE GROSS INCOME FROM DAIRY BUSINESS OR TRADE IS MORE THAN HALF OF IT'S TOTAL GROSS ANNUAL INCOME THEN GOSHALA OR A PANJARPOLE SHOULD BE CONSIDERED A BUSINESS TRUST WITHIN THE MEANING OF RULE 32(4) OF BOMBAY PUBLIC TRUS TS RULES, 1951. AS PER ASSESSSEE'S OWN CALCULATIONS RECEIPTS FROM MILK SALE ARE 57.39% OF TOTAL RECEIPTS (A.O. HAS COMPUTED IT AT 9796).' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN DIRECTING ASSESSING OFFI CER TO ALLOW EXEMPTION U/S 11 OF THE I.T. ACT 1961' 4. 'THE APPELLANT PRAYS THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 5. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3 . THE BRIEF FACTS OF THE CASE , ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2011 ALONG WITH INCOME AND EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM NO. 10B DECLARING TOTA L INCOME OF RS. NIL. THE CASE WAS SE LECTED FOR SCRUTINY. THEREFORE , NOTICE U./S 143(2) OF THE I.T. ACT DATED 31.07.2012 WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. THEREAFTER, NOTICE U/S 142(1) OF THE I.T. ACT DATED 13.08.2013. WAS ALSO ISSUED. ON VERIFI CATION , THE INCOME OF THE ASSESSEE ON ACCOUNT OF MILK DISTRIBUTION WAS FOUND TO THE TUNE OF RS .2,22,65,661/ - .T HE TOTAL RECEIPT OF THE ASSESSEE WAS FOUND TO THE TUNE OF RS.2,28,63,082/ - WHICH CONSTITUTES 97% OF THE TOTAL RECEIPTS. THEREAFTER, THE INCOME O F THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 2,28,63,082/ - . FEELING AGGRIEVED THE APPEAL WAS FI LED BEFORE THE CIT(A) WHO ALLOWED OF THE CLAIM OF THE ASSESSEE AND SHREE NAISK PANCHVATI PANJRAPOLE 3 DIRECTED TO GRANT THE EXEMPT U/S 11 OF THE ACT 1961. FEELING AGGRIEVED THE REVENUE HAS FILE D THE PRESENT APPEAL BEFORE US. ISSUE NO.1 , 2 & 3 : - 4 . T HESE ISSUE S ARE NTERCONNECTED THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. IN FACT, UNDER THESE ISSUES THE REVENUE HAS CHALLENGED THE ALLOWANCE OF EXEMPTION GRANTED BY THE CIT(A) U/S 11 OF THE I.T. ACT ON ACCOUNT OF INCOME FROM MILK DISTRIBUTION TO THE TUNE OF RS. 2,22,65,661/ - . B EFORE GOING FURTHER , IT IS NECESSARY TO THE ADVERT OF THE FINDING OF THE CIT(A) ON RECORD ON THIS ISSUE : - I HAVE CONSIDERED THE FACTS OF THE CASE THE ASSESSM ENT ORDER OF THE AO SUBMISSIONS OF THE APPELLANT AND ALSO DISCUSSED THE CASE WITH THE AR OF THE APPELLANT. THE APPELLANT HAS STATED THAT THE HON I TAT , MUMBAI HAS RESTORED 12A CERTIFICATE WHICH WAS WITHDRAWN BY THE DIT IN AY 2009 - 10. IT WA S ALSO STATED TH AT THE HON. ITAT HAS CLEARLY GIVEN A FINDING THAT THE AMENDED PROVISIONS OF SECTION 2(15) WILL NOT APPLY SINCE THE ASSESSEE IS NOT CONDUCTING ITS AFFAIRS ON COMMERCIAL MANNER WITH PROFIT MOTIVE. THE OBSERVATIONS OF HONBLE ITAT CONTAINED IN THE ORDER DATED 26 MARCH 2014 FOR A.Y. 2009 - 10 IN THIS REGARD ARE REPRODUCED AS UNDER - 28 A FTER CONSIDERING THE ENTIRE FAC TS IN TOTALITY, IN THE LIGHT OF THE DECISIONS DISCUSSED HEREINABOVE AND ALSO DRAWING SUPPORT FROM THE SPEECH OF THE HONBLE FINANCE MINISTER AND SU BSEQUENT CLARIFICATIONS ISSUED BY THE CBDT WITHIN THE FRAME WORK OF THE AMENDED PROVISIONS OF SEC. 2(15) OF THE ACT, IN OUR CONSIDERED VIEW, THERE WAS NO MATERIAL WHICH MAY SUGGEST THAT THE ASSESSEE TRUST WAS CONDUCTING ITS AFFAIRS SOLELY ON COMMERCIAL LIN ES WITH A MOTIVE TO EARN PROFIT . THERE IS ALSO NO MATERIAL BROUGHT ON RECORD WHICH COULD SUGGEST THAT THE ASSESSEE TRUST HAS DEVIATED FROM ITS OBJECTS WHICH IT HAS BEEN PURSUING SINCE LAST 130 YEARS, IN OUR HUMBLE OPINION AND UNDERSTANDING OF LAW, THE PROV ISO TO SEC. 2(15) OF THE ACT IS NOT APPLICABLE ON THE FACTS OF THE CASE AND THE ASSESSEE OBSERVES SHREE NAISK PANCHVATI PANJRAPOLE 4 CONTINUANCE OF REGISTRATION U./S. 12AA OF THE ACT. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE DIT (EXEM.) AND DIRECT THE DIT FOR THE CONTINUANCE OF THE REGIST RATION. 34. AGGRIEVED, ASSESSEE IS BEFORE US. WE HAVE DISCUSSED AT LENGTH THE OBJECTS OF THE TRUST IN THE LIGHT OF THE AMENDED PROVISIONS OF SEC. 2(15) OF THE ACT IN ASSESSEES APPEAL IN ITA NO. 1198/M/12 WHEREIN AFTER A DETAILED DISCUSSION, WE HAVE HELD T HAT THE ASSESSEE IS ELIGIBLE FOR THE CONTINUANCE OF REGISTRATION U/S 12A OF THE ACT AND IS NOT HIT BY THE PROVISO TO SEC. 2(15) OF THE ACT. IN THE LIGHT OF THE DETAILED DISCUSSION IN ITA NO. 1198/M/12, WE HOLD THAT THE ACTIVITY OF SALE OF MILK DOES NOT AMO UNT TO CARRYING ON OF ANY BUSINESS ACTIVITY AND IS NOT IN CONTRAVENTION TO THE PROVISO TO SEC. 2(15) OF THE ACT. FOLLOWING OUR DECISION IN ITA NO. 1198/M/12, THE ASSESSEE WILL CONTINUE TO AVAIL EXEMPTION U/S 11 OF THE ACT. 5 . ON A PP RAISAL OF THE ABOVE MENTIONED FI NDING , WE NOTICED THAT THIS ISSUE HAS CA ME BEFORE THE ITAT IN THE ASSESSMENT YEAR 2009 - 10 VIDE WHICH HONBLE ITAT MUMBAI HAS RESTORED THE 12A CERTIFICATE WHICH WAS WITHDRAWN BY THE DIT (E) IN A.Y. 2009 - 10. IT WAS OBSERVED T HAT THE PROVISION OF SECTION 2(15) OF THE ACT WILL NOT APPLY IN THE CASE OF THE ASSESSEE. THEREAFTER, ON THE SAME FACTS THE MATTER CAME BEFORE THE CIT(A) IN THE A.Y. 2010 - 11. THE CIT(A) ALSO DIRECTED THE AO TO GRANT EXEMPTION BY RELYING UPON THE JUDGMENT O F HONBLE GUJARAT HIGH COURT IN CASE TITLED AS CIT VS. SABARMATI ASHRAM GOSHALA TRUST 362 ITR 539 . T HE FACTS AND CIRCUMSTANCES HAVE NOT BEEN CHANGED IN THE A.Y. 2011 - 12 .T HE EXEMPTION U/S 12A WAS GRANTED FOR THE A.Y. 2009 - 10 AND 2010 - 11 BY THE HONBLE IT AT AS WELL AS CIT(A) RESPECTIVELY . ON THE BASIS OF THE SAID DECISION , THE CIT(A) ALLOWED THE CLAIM OF THE AS SESSEE . T HE OTHER IMPORTANT THIN G WHICH CAME INTO NOTICE THAT IN THE ASSESSEES OWN CASE THE H ONBLE SHREE NAISK PANCHVATI PANJRAPOLE 5 HIGH COURT OF BOMBAY HAS DECIDED THE MATTER O F CONTROVERSY IN FAVOUR OF ASSESSEE IN ITA N. 1695 OF 2014 FOR THE A.Y. 2009 - 10 IN WHICH ASSESSEE WAS ALLOWED EXEMPTION U/S 12A OF THE ACT . NOW NO DISTINGUISHABLE FACTS HAVE BEEN PLACED ON RECORD FROM DEVIATING THE FINDING OF THE CIT(A) IN QUESTION . I N VIE W OF THE ABOVE SAID CIRCUMSTANCE S, WE ARE OF THE VIEW THAT CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT REQUIRED TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDING LY, THESE ISSUES HAVE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST T HE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HERE BY ORDERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.07. 2017 . SD/ - SD/ - ( R.C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 14.07.2017 V.P. SINGH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FI LE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR)