DDIT (E) 1(2), MUMBAI V. SLUM REHABILITATIN AUTHORITY, MUMBAI

ITA 5150/MUM/2010

• Counselvise Citation: 515019914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 24-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIWAS RAO
• Assessee Lawyers: M SUBRAMANIAM
• Keywords: Charitable institution; Maximum Marginal Rate

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI PRAMIOD KUMAR, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.5150/MUM/2010 (ASSESSMENT YEAR: 2007-08) DY. DTE(E)-I(2), R. NO.504, PIRAMAL CHAMBERS, 5TH FLOOR, PAREL, MUMBAI -400 012 ....... APPELLANT VS SLUM REHABILITATION AUTHORITY, GRIHA NIRMAN BHAVAN, BANDRA (E), MUMBAI -400 051 ..... RESPONDENT PAN: AAAJS 1094 A APPELLANT BY: SHRI GOLI SRINIWAS RAO RESPONDENT BY: SHRI M. SUBRAMANIAM DATE OF HEARING: DATE OF PRONOUNCEMENT: 24.08.2011 30.09.2011 O R D E R PER R.S. PADVEKAR, JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-1, MUMBAI DATED 26.02.2010 FOR THE A.Y. 2007-08. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN DIRECTING THE AO TO ALLOW EXEMPTION U/S.11 OF THE I T ACT, 1961 IGNORING THE ELABORATE DISCUSSION OF THE ISSUE S AND FACTS AND CIRCUMSTANCES OF THE CASE BY THE AO. ITA 5150 /MUM/2010 SLUM REHABILITATION AUTHORITY 2 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE IS A LOCAL AUTHORITY CREATED BY THE GOVT. OF MAHARASHTRA BY EN ACTING SRA ACT, 1971. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2007-08 ON 30.10.2007 DECLARING NIL TOTAL INCOME. THE RETUR N OF INCOME WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT DETERMINING TAXABLE INCOME OF THE ASSESSEE AT ` 36,96,48,303/-. 3. THE FACTS PERTAINING TO THE ISSUE IN CONTROVERSY ARE AS UNDER. THE ASSESSEE HAS CLAIMED EXEMPTION U/S.11 OF THE I. T. ACT. UPTO ASSESSMENT YEAR 2002-03, AS PER THEN PROVISIONS OF SECTION 10(2) & 10(20A), THE ASSESSEES INCOME WAS EXEMPT UNDER THE INCOME-TAX ACT BUT THERE WERE LEGISLATIVE CHANGES BY THE FINANCE A CT, 2002 AND SEC. 10(20A) WAS DELETED AND SEC. 10(20) WAS AMENDED. I N THE AMENDED PROVISIONS, IN THE NEW DEFINITION OF THE LOCAL AUTH ORITIES MORE PARTICULARLY IN SEC. 10(2) WHEREIN PANCHAYAT, MUNIC IPALITY, MUNICIPAL COMMITTEE AND DISTRICT BOARDS AND CANTONMENT BOARDS ARE ONLY INCLUDED AND AUTHORITIES LIKE MHADA, MMRDA, SRA, MA RKETING COMMITTEES, HOUSING BOARDS, GOVT. UNDERTAKINGS INCL UDING I.E. PRESENT ASSESSEE WERE EXCLUDED. IN SUM AND SUBSTAN CE, THE BENEFIT OF THE EXEMPTION TO THE ASSESSEE U/S.10(2) / 10(20A) O F THE I.T. ACT WERE NO LONGER AVAILABLE FOR THE A.Y. 2002-03. THE ASSE SSEE APPLIED FOR GETTING THE REGISTRATION U/S.12AA OF THE ACT AND TH E SAME WAS ALSO GRANTED TO THE ASSESSEE AND ACCORDINGLY, THE ASSESS EE CLAIMED THE EXEMPTION OF THE ENTIRE INCOME U/S.11 OF THE ACT. IN THE PRECEDING YEARS I.E. A.YS. 2003-04, 2004-05 AND 2006-07, THE EXEMPTION WAS DENIED TO THE ASSESSEE BUT ON APPEAL BEFORE LD. CIT (A), ASSESSEE SUCCEEDED AND WHEN THE MATTER REACHED BEFORE THE TR IBUNAL BY WAY OF APPEAL BY THE DEPARTMENT, CHALLENGING THE RESPECTIV E IMPUGNED ORDERS OF THE LD. CIT (A), THE SAME WERE DISMISSED ON THE REASON OF WANT OF THE COD APPROVAL. THE A.O., THEREFORE, PRO CEEDED TO DETERMINE CLAIM OF THE ASSESSEE IN A.Y. 2007-08 ON MERIT AND DENIED THE EXEMPTION U/S.11 AND ACCORDINGLY DETERMINED THE TAXABLE INCOME. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A) ITA 5150 /MUM/2010 SLUM REHABILITATION AUTHORITY 3 AND THE LD. CIT (A) FOLLOWING THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT MARITIME BOAR DS 295 ITR 561 AS WELL ACIT VS. SURAT CITY GYMKHANA 300 ITR 214 ALLOW ED THE APPEALS OF THE ASSESSEE. NOW, THE REVENUE IS IN APPEAL BEF ORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES, PERUSED THE RECORDS AND GONE THROUGH THE CASE LAWS RELIED ON BY THE PARTIES. WE FIND THAT, IN THE PRECEDING YEARS, WHEN THE REVENUE S APPEALS WERE DISMISSED FOR WANT OF THE COD APPROVAL. SO FAR AS MERITS OF THE CASE IS CONCERNED, IN OUR OPINION, THE PRINCIPLES LAID D OWN BY THE HONBLE SUPREME COURT IN THE CASE OF GUJARAT MARITIME BOARD S (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE. 5. IT IS NECESSARY TO REPRODUCE SUB-SEC. (15) OF S EC. 2 OF THE ACT, WHICH DEFINES TERM CHARITABLE PURPOSE WHICH READS AS UNDER:- CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, E DUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT INCLUDI NG WATERSHEDS, FORESTS AND WILDLIFE AND PRESERVATION O F MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTO RIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NAT URE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. ITA 5150 /MUM/2010 SLUM REHABILITATION AUTHORITY 4 6. IN THE CASE OF GUJARAT MARITIME BOARDS (SUPRA) WHILE INTERPRETING THE EXPRESSION CHARITABLE PURPOSE IN SECTION 2(15) OF THE I.T. ACT, THE HONBLE SUPREME COURT HAS HELD AS UND ER:- 14. WE HAVE PERUSED NUMBER OF DECISIONS OF THIS CO URT WHICH HAVE INTERPRETED THE WORDS, IN SECTION 2(15), NAMEL Y, ANY OTHER OBJECT OF GENERALLY PUBLIC UTILITY. FROM THE SAID DECISIONS IT EMERGES THAT THE SAID EXPRESSION IS OF THE WIDEST C ONNOTATION. THE WORD GENERAL IN THE SAID EXPRESSION MEANS PER TAINING TO A WHOLE CLASS. THEREFORE, ADVANCEMENT OF ANY OBJECT O F BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUIS HED FROM BENEFIT TO AN INDIVIDUAL OR A GROUP OF INDIVIDUALS WOULD BE A CHARITABLE PURPOSECIT V. AHMEDABAD RANA CASTE ASSOCIATION [19 83] 140 ITR 1 (SC). THE SAID EXPRESSION WOULD PRIMA FACIE I NCLUDE ALL OBJECTS WHICH PROMOTE THE WELFARE OF THE GENERAL PU BLIC. IT CANNOT BE SAID THAT A PURPOSE WOULD CEASE TO BE CHARITABLE EVEN IF PUBLIC WELFARE IS INTENDED TO BE SERVED. IF THE PRIMARY PU RPOSE AND THE PREDOMINANT OBJECT ARE TO PROMOTE THE WELFARE OF TH E GENERAL PUBLIC THE PURPOSE WOULD BE CHARITABLE PURPOSE. WHE N AN OBJECT IS TO PROMOTE OR PROTECT THE INTEREST OF A PARTICUL AR TRADE OR INDUSTRY THAT OBJECT BECOMES AN OBJECT OF PUBLIC UT ILITY, BUT NOT SO, IF IT SEEKS TO PROMOTE THE INTEREST OF THOSE WHO CO NDUCT THE SAID TRADE OR INDUSTRY CIT V. ANDHRA CHAMBER OF COMMERCE 55 ITR 722 (SC). IF THE PRIMARY OR PREDOMINANT OBJECT OF A N INSTITUTION IS CHARITABLE, ANY OTHER OBJECT WHICH MIGHT NOT BE CHA RITABLE BUT WHICH IS ANCILLARY OR INCIDENTAL TO THE DOMINANT PU RPOSE, WOULD NOT PREVENT THE INSTITUTION FROM BEING A VALID CHAR ITYADDL. CIT V. SURAT ART SILK CLOTH MFRS. ASSOCIATION 121 ITR 1 ( SC). 15. THE PRESENT CASE IN OUR VIEW IS SQUARELY COVERE D BY THE JUDGMENT OF THIS COURT IN THE CASE OF CIT V. ANDHRA PRADESH STATE ROAD TRANSPORT CORPN. 159 ITR 1 IN WHICH IT HAS BEE N HELD THAT ITA 5150 /MUM/2010 SLUM REHABILITATION AUTHORITY 5 SINCE THE CORPORATION WAS ESTABLISHED FOR THE PURPO SE OF PROVIDING EFFICIENT TRANSPORT SYSTEM, HAVING NO PRO FIT MOTIVE, THOUGH IT EARNS INCOME IN THE PROCESS, IT IS NOT LI ABLE TO INCOME- TAX. IN THE PRESENT CASE, THE SLUM DEVELOPMENT AUTHORITI ES IS ESTABLISHED FOR PROVIDING RESIDENTIAL SETTLEMENTS TO THE SLUM D WELLERS WITHOUT ANY PROFIT MOTIVE. M OREOVER, PRIMARY PURPOSE AND THE PREDOMINANT OBJECT ARE TO PROMOTE THE WELFARE OF THE GENERAL PUBLIC BY PROVIDING BETTER RESIDENTIAL ACCOMMODATIONS TO SLUM DWELLERS AND ECO NOMICALLY DEPRIVED CLASS OF SOCIETY AND SAID PURPOSE WOULD BE CHARITABLE IN NATURE ONLY. HENCE, IN OUR HUMBLE OPINION ASSESSEE S CASE IS SQUARELY COVERED BY THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GUJARAT MARITIME BOARDS (SUPRA ). 7. IN OUR OPINION, THE ACTIVITIES OF THE SRA, PRESE NT ASSESSE ARE CHARITABLE IN NATURE AND HENCE, THE ASSESSEE IS ENT ITLED FOR EXEMPTION U/S.11 OF THE I.T. ACT. MOREOVER, THE ASSESSEE HAS BEEN ALSO GRANTED THE REGISTRATION U/S.12AA THAT HAS NOT BEEN CANCELL ED. THEREFORE, IN OUR OPINION, IN THE LIGHT OF OUR ABOVE DISCUSSION N O INTERFERENCE IS CALLED IN THE ORDER UNDER CHALLENGED BEFORE US AND WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT (A) AND DISMISS TH E GROUND TAKEN BY THE REVENUE. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH SEPTEMBER 2011. SD/- SD/- ( PRAMIOD KUMAR ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATED: 30TH SEPTEMBER 2011 COPY TO:- ITA 5150 /MUM/2010 SLUM REHABILITATION AUTHORITY 6 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -1, MUMBAI. 4) THE DIT (EXEMPTION), MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 5150 /MUM/2010 SLUM REHABILITATION AUTHORITY 7 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.09.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 24.09.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER