DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR V. RAJASTHAN HOUSING BOARD, Jaipur

ITA 513/JPR/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0682 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 16-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Depreciation; Benefit of exemption
• Section: 12; 11; 143(3); 12AA; 10B; 13

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 512 & 513/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 & 2015-16 THE DCIT(E), CIRCLE, JAIPUR. CUKE VS. M/S RAJASTHAN HOUSING BOARD, JANPATH JYOTI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAALR 0046 D VIHYKFKHZ@ APPELL ANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/09/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 01/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-3, JAIPUR DATED 23.02.2018 FOR THE ASSES SMENT YEARS 2014- 15 & 2015-16 RESPECTIVELY. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER. 2. IN ITA NO. 512/JP/2018 FOR AY 2014-15, THE REVEN UE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 2 1. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LA W THE LD. CIT(APPEALS) HAS ERRED IN ALLOWING EXEMPTION U/S 11 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACTS THE AO HAS GIVEN DETAILED REASONS IN THE ASSESSMENT ORDER TO ESTABLI SHES THAT ACTIVITIES OF THE ASSESSEE ARE NOT CHARITABLE IN VI EW OF AMENDED PROVISIONS OF SECTION 2(15) OF I.T. ACT, 1961 DESPI TE IT BEING REGISTERED U/S 12AA OF THE ACT AND THEREFORE, IT IS NOT ENTITLED FOR BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITIONS OF RS. 9,79,79,97,625/- MADE ON ACCOUNT OF DISALLOWANCE MA DE U/S 11 & 12 OF THE I.T. ACT, 1961. 3. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION MAD E ON ACCOUNT OF CONTINGENCIES AND EQUALIZATION RESERVE (CER) FUN D OF RS. 50,97,94,544/-. 4. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN IGNORING THE FACTS THAT T HE OPENING BALANCE OF CONTINGENCIES AND EQUALIZATION RESERVE- (CER) FUND WAS FIRST TO BE UTILIZED AND THEN FURTHER CLAIM CAN BE ALLOWED. 5. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN IGNORING THE FACTS THAT CONTINGENCIES AND EQUALIZATION RESERVE- (CER) IS NOT ASCERTAINED LIABILITY BUT A CONTINGENT LIABILITY WHICH IS NOT ALLOWABLE. 6. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF UNDISCLOSED PROFIT FROM AUCTIONED PROPERTY AMOUNTING TO RS. 53, 72,71,648/- MADE BY THE AO. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE ACTIVITY OF DEVELOPING HOUSING SCHEM ES IN THE STATE OF RAJASTHAN. THE ASSESSMENT WAS FRAMED U/S 143(3) VID E ORDER DATED 30.11.2016 WHEREIN THE AO OBSERVED THAT THOUGH THE ASSESSEES ACTIVITY ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 3 FALLS UNDER THE AMBIT OF GENERAL PUBLIC UTILITY, HOWEVER THEY ARE OF COMMERCIAL IN NATURE AND COVERED BY THE FIRST AND SECOND PROVISO TO SECTION 2(15) OF THE ACT. IT WAS HELD BY THE AO THA T EVEN THROUGH THE ASSESSEE IS REGISTERED U/S 12AA OF THE ACT, NO BENE FIT UNDER SECTION 11 AND 12 CAN BE PROVIDED TO THE ASSESSEE IN TERMS OF SECTION 13(8) R.W. FIRST AND SECOND PROVISO TO SECTION 2(15). ACCORDIN GLY, THE INCOME OF THE ASSESSEE WAS COMPUTED WITHOUT GIVING ANY BENEFI T FOR APPLICATION OF INCOME AND ACCUMULATION OF INCOME FOR THE OBJECTS O F THE HOUSING BOARD AND INCOME WAS COMPUTED IN ACCORDANCE WITH CO MMERCIAL PRINCIPALS AND THE ADJUSTED NET SURPLUS AMOUNTING T O 97,79,97,625/- WAS BROUGHT TO TAX. FURTHER, THE AO MADE AN ADJUSTM ENT TOWARDS CONTINGENCIES EQUALIZATION RESERVE AMOUNTING TO RS. 50,57,94,544/- HOLDING THE SAME AS CONTINGENT LIABILITY AND NOT AS AN ASCERTAINED LIABILITY. FURTHER, ADDITIONS WERE MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS. 2,06,97,523/- AND UND ISCLOSED PROFIT FROM AUCTION OF THE PROPERTIES AMOUNTING TO RS. 53, 72,71,648/-. 4. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF TH E ASSESSING OFFICER, PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE EARLIER ORDER PASSED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE AND HIS OWN DECISION FOR AY 2013-14. NOW THE REVENUE IS IN APPEAL BEFORE US AGA INST THE SAID FINDINGS OF THE LD. CIT(A). 5. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE MAT TER IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN ITA NO. 21/JP/2013 FOR A.Y. 2009-10 DATED 20.01.2017 WHEREIN ALL THESE GROUNDS OF APPEAL ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 4 WERE DECIDED IN FAVOUR OF THE ASSESSEE. IT WAS ACCO RDINGLY SUBMITTED THAT THE SAME MAY KINDLY BE FOLLOWED. 6. IN ITA NO. 21/JP/2013 FOR A.Y. 2009-10, THE COO RDINATE BENCH HAS HELD AS UNDER:- 23.2. WE HAVE HEARD RIVAL CONTENTION, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE COORDINATE BENCH HAS DEALT WITH THE IDENTI CAL ISSUE ELABORATELY IN THE CASE OF HOSHIARPUR IMPROVEMENT TRUST & OTHER S VS. ITO IN ITA NO. 200/ASR/2010. THE COORDINATE BENCH HAS CONSIDE RED VARIOUS JUDGMENTS AND CAME TO THE CONCLUSION THAT AS LONG A S BROADER PUBLIC CAUSE IS SERVED, WHETHER BY THE STATE FUNDING OR BY EFFICIENT REGULATION OF THE AFFAIRS, IT IS AN OBJECT OF GENERAL PUBLIC U TILITY. AUTHORITIES BELOW WERE NOT JUSTIFIED IN DECLINING THE BENEFIT OF SECT ION 11 READ WITH SECTION 2(15) TO THE ASSESSEE, AND IN HOLDING THAT THE ASSE SSEE TRUST WAS NOT COVERED BY ADVANCEMENT OF ANY OBJECT OF GENERAL PUB LIC UTILITY. THE COORDINATE BENCH HAS HELD THAT EVEN IF THE ACTIVITI ES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC. ARE UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF ADVANCEMENT OF ANY OBJECT OF GENERA L PUBLIC UTILITY, TILL THE END OF THE PREVIOUS YEAR RELEVANT TO THE ASSESS MENT YEAR 2016-17, THE ACTIVITIES WILL CONTINUE TO BE COVERED BY THE S COPE OF SECTION 2(15). THE YEAR UNDER APPEAL IS 2009-10, THEREFORE, RESPEC TFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE CASE OF HOS HIARPUR IMPROVEMENT TRUST & OTHERS VS. ITO IN ITA NO. 200/A SR/2010, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A). GROUND NOS. (II) AND (III) ARE REJECTED. ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 5 24.2 WE HAVE HEARD RIVAL CONTENTION, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE LD. CIT (A) HAS DECIDED THE ISSUE IN PARA 13 OF HIS ORD ER AS UNDER :- AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEEN THAT CER OF RS. 26,99,65,069/- IS NOT DEBITED IN THE P&L ACCOUNT. T HE DISALLOWANCE OF THE RESERVE DOES NOT AFFECT THE APPELLANTS ELIGIBI LITY OF CLAIMING EXEMPTION U/S 11. SECTION 11 STATES THAT 85% OF THE TOTAL INCOME OF THE INSTITUTION SHOULD BE APPLIED TOWARDS THE OBJECTS F OR WHICH IT WAS CREATED. AS THE APPLICATION OF INCOME BY THE BOARD DURING THE YEAR OF R. 232,59,28,849/- AS SPECIFIED IN FORM 10B AUDIT REPO RT IS MUCH MORE THAN THE TOTAL INCOME OF THE APPELLANT SHOWN AT RS. 98,90,80,448/- IN THE STATEMENT OF TOTAL INCOME FILED WITH THE RETURN . IT WAS INFORMED BY THE LD. ARS THAT SOURCE OF APPLICATION OF R. 232 CR ORES ARE CAPITAL LOANS OF R. 27 CRORES (APPROX) TAKEN BY THE APPELLANT AND DEPOSITS MADE BY THE PERSONS INTERESTED IN BUYING HOUSES OF RS. 360 CRORES ODD AND ALO INCOME OF RS. 98 CRORE ODD SHOWN IN THE RETURN. THE APPELLANT HAS BEEN HELD AS A CHARITABLE ORGANIZATION FOLLOWING HONBLE ITAT JAIPUR BENCH ORDER DATED 4.5.2012 AND ITS INCOME TO THE EXTENT O F APPLICATION AS MENTIONED IN SECTION 11 IS EXEMPT FROM TAXATION U/S 11, THEREFORE THERE IS NO JUSTIFICATION FOR MAKING THE DISALLOWANCE OF RS. 26,99,65,069/- SPECIALLY WHEN THE RESERVE HAS BEEN INFORMED CREATE D FROM THE SALE PROCEEDS OF HOUSES AND NOT APPROPRIATED FROM PROFIT SHOWN IN THE P&L ACCOUNT CALLED REVENUE ACCOUNT AS PRESUMED BY THE A O. ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 6 SINCE WE HAVE AFFIRMED THE VIEW OF THE LD. CIT (A) REGARDING ENTITLEMENT OF EXEMPTION U/S 11, THE LD. CIT (A) HA S GIVEN A FINDING OF FACT IN RESPECT OF APPLICATION OF INCOME BY THE BOA RD. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY CONFIRMED. THE GROUND OF THE REVENUE IS REJE CTED. 26.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT (A) H AS GIVEN A FINDING OF FACT THAT THE ADDITION HAS BEEN MADE AT 30% WITHOUT ANY BASIS WITH THE PRESUMPTION THAT THE PROFIT OF 30% SHOULD HAVE BEEN EARNED ON AUCTION OF COMMERCIAL PROPERTIES BY THE BOARD. THIS FINDING OF FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A), WHICH IS HEREBY CONFIRMED. 7. UNDISPUTEDLY, THERE ARE NO CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE OR IN THE LEGAL POSITION FOR THE IMPUGNED ASSESSMENT YEAR. FOLLOWING THE DECISION OF THE COOR DINATE BENCH IN ASSESSEES OWN CASE REFERRED (SUPRA), THE GROUNDS O F APPEAL TAKEN BY THE REVENUE ARE HEREBY DISMISSED. 8. IN ITA NO. 513/JP/2018 FOR AY 2015-16, THE REVEN UE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN ALLOWING EXEMPTION U/S 11 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACTS THE AO HAS GIVEN DETAILED REASONS IN THE ASSESSMENT ORDER TO ESTABLI SHES THAT ACTIVITIES OF THE ASSESSEE ARE NOT CHARITABLE IN VI EW OF AMENDED ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 7 PROVISIONS OF SECTION 2(15) OF I.T. ACT, 1961 DESPI TE IT BEING REGISTERED U/S 12AA OF THE ACT AND THEREFORE, IT IS NOT ENTITLED FOR BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITIONS OF RS. 74,27,12,228/- MADE ON ACCOUNT OF DISALLOWANCE MADE U/S 11 & 12 OF THE I.T. ACT, 1961. 3. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION MAD E ON ACCOUNT OF CONTINGENCIES AND EQUALIZATION RESERVE (CER) FUN D OF RS. 52,13,31,492/-. 4. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN IGNORING THE FACTS THAT T HE OPENING BALANCE OF CONTINGENCIES AND EQUALIZATION RESERVE- (CER) FUND WAS FIRST TO BE UTILIZED AND THEN FURTHER CLAIM CAN BE ALLOWED. 5. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN IGNORING THE FACTS THAT CONTINGENCIES AND EQUALIZATION RESERVE- (CER) IS NOT ASCERTAINED LIABILITY BUT A CONTINGENT LIABILITY WHICH IS NOT ALLOWABLE. 6. ON THE FACTS AND CIRCUMSTANCE OF CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF UNDISCLOSED PROFIT FROM AUCTIONED PROPERTY AMOUNTING TO RS. 28, 22,11,361/- MADE BY THE AO. 9. BOTH THE PARTIES FAIRLY SUBMITTED THAT THE FAC TS AND CIRCUMSTANCES OF THE PRESENT CASE ARE EXACTLY IDENTICAL FACTS TO ITA NO. 512/JP/2018 AND THEREFORE, OUR FINDINGS AND DIRECTIONS CONTAINE D IN ITA NO. 512/JP/2018 SHALL EQUALLY APPLY TO THIS APPEAL AS W ELL. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVEN UE ARE DISMISSED. ITA NO. 512 & 513/JP/2018 DCIT(E) VS. M/S RAJASTHAN HOUSING BOARD, JAIPUR 8 ORDER PRONOUNCED IN THE OPEN COURT ON01/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:-01/10/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT(E), CIRCLE, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S RAJASTHAN HOUSING BOARD, JAIPUR . 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 512 & 513/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR