Nagpur Improvement Trust, Nagpur V. Asstt.Comm.of Income Tax,Circle-2, Nagpur

ITA 52/NAG/2009

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1727 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 09-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: SUDHIR DABIR; K P DEWANE
• Section: 143(3); 144; 154

Judgement Text

1 IT A NO.52/NAG/2009 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 52/NAG/2009 ASSESSMENT YEAR : 2005 - 06 NAGPUR IMPROVEMENT TRUST, ASSTT. COMMISSIONER OF INCOME - TAX, KINGSWAY, SADAR, V/S. CIRCLE - 2, NAGPUR NAGPUR. PAN AAALN 0004D APPELLANT. RESPONDENT. APPELLANT BY : SHRI K.P. DEWANE & SHRI SUDHIR DABIR. . RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 2 7 - 07 - 2015 DAT E OF PRONOUNCEMENT : 21 ST AUGUST, 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. . THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 24 - 11 - 2008. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE APPELLANT IS A LOCAL AUTHORITY. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPELS) OUGHT TO HAVE DIRECTED THE AO TO ACCEPT THE LOSS AS SHOWN IN THE RETURN. 3. THE ORDER P ASSED BY AO IN THE STATUS OF AOP IS ILLEGAL, INVALID AND BAD IN LAW. 2 IT A NO.52/NAG/2009 2. IN RESPECT OF THE ISSUE AS RAISED IN THE GROUNDS OF APPEAL THE ASSESSING OFFICER HAS PASSED AN ORDER UNDER SECTION 143(3) READ WITH SECTION 144 OF I.T. ACT DATED 26 TH DEC., 2007 IN TH E STATUS OF AOP. THE ASSESSEE HAS FILED THE RETURN AT ` . NIL ON THE GROUND THAT IT WAS ENGAGED IN IMPROVEMENT AND EXPANSION OF NAGPUR C IT Y UNDER NAGPUR IMPROVEMENT TRUST ACT, 1936. HOWEVER, THE ASSESSING OFFICER HAS NOT ALLOWED CERTAIN EXPENDITURE CLAIMED AND ASSESSED THE INCOME AT ` .75,45,540/ - . 3. IT MAY NOT BE OUT OF PLACE TO MENTION THAT THEREAFTER AN ORDER UNDER SECTION 154 WAS PASSED F OR ASSESSMENT YEAR 2005 - 06 ON 25 TH OF JANUARY, 2008 AND THE MISTAKE WAS RECTIFIED ON ACCOUNT OF THE FACT THAT THE RETURN OF LOSS WAS FILED BY THE ASSESSEE. SINCE THE ASSESSEE HAD FURNISHED A RETURN OF LOSS AT ` . ( - ) 2,34, 02,090/ - AND THE ADDITIONS WERE TO THE TUNE OF ` .75,45,540, THEREFORE, THE FINALLY ASSESSED LOSS WAS COMPUTED BY THE ASSESSING OFFICER AT ` . ( - ) 1,58,56,550/ - . DUE TO THIS REASON, GR.NO.2, AS PER ABOVE, HAS BECOME REDUNDANT. 4. AS FAR AS THE ISSUE IN RESPECT OF STATUS IS CONCERNED, WHEN THE SAME WAS AGITATED BEFORE THE LEARNED CIT(APPEALS) THE SAME WAS REJECTED AFTER ASSIGNING THE FOLLOWING REASONS : 3.0 I HAVE CONSIDERED SUBMISSIONS OF THE APPELLANT, REMAND REPORT SUBMITTED BY THE AO AND COUNTER TO THE REMAND REPORT FILED BY THE APP ELLANTS AR. ON A CAREFUL ANALYSIS AND CONSIDERATION OF THE MAT6TER I AGREE WITH THE VIEW EXPRESSED BY THE AO THAT THE STATUS OF LOCAL AUTHORITY CANNOT BE CONFERRED ON THE ASSESSEE. 3.1 I AGREE WITH THE COMMENTS OF THE AO THAT THE STATUS AND CATEGORIZATION OF CERTAIN BODIES IN A PARTICULAR STATUS WILL BE ACCEPTABLE ONLY S DEFINED UNDER IT ACT, 1961; ANY OTHER STATUS CONFERRED ON ASSESSEE UNDER ANY OTHER ACT SUCH AS NIT ACT, 1929 WOULD NOT HAVE ANY BEARING ON THE INCOME TAX ASSESSMENT. IT I S ALSO CORRECT TO SAY THAT UNDER THE IT ACT, ONLY SUCH BODY CAN BE TREATED AS LOCAL AUTHORITY WHICH IS SPECIFICALLY MENTIONED IN SECTION 10(20) AND THE DESCRIPTION AND CATEGORIZATION SUPPLIED 3 IT A NO.52/NAG/2009 THEREIN WOULD APPLY TO ANY ASSESSEE. I AM ALSO OF THE VIEW T HAT ASSESSEES ARGUMENT THAT THERE WAS A MOVE TO MERGE NIT AND NMC TOGETHER WILL NOT HAVE ANY IMPACT ON THE IT ASSESSMENT OF THE APPELLANT. THE AO HAS ALSO POINTED OUT THAT THE SCOPE OF DEFINITION OF LOCAL AUTHORITY HAS BEEN RESTRICTED TO A GREAT EXTE NT BY THE EXPLANATION TO SECTION 10(20) APPLICABLE FROM 01 - 04 - 2003. AND ALSO SECTION 10(20) HAS BEEN DELETED RESTRICTING THE SCOPE OF DEFINITION OF LOCAL AUTHORITY. I ALSO CONCUR WITH THE VIEW EXPRESSED BY THE AO THAT THE STATUS OF MUNICIPAL BODY CANN OT AUTOMATICALLY BE CONFERRED ON THE APPELLANT IN VIEW OF ITS CLAIM THAT NITS AREA OF JURISDICTION IS SAME AS THAT OF NMC. 3.2 EVEN IF THE ASSESSEE HAS BEEN CLAIMING ITS STATUS IN THE PAST AS LOCAL AUTHORITY FOR LAST MANY YEARS IT WOULD NOT AMOUNT TO ACCEPTANCE OF THE FACT THAT IT IS A LOCAL AUTHORITY. RATHER THE AO HAS BEEN DIRECTED TO TAKE REMEDIAL ACTIONS WHEREVER POSSIBLE WITH REGARD TO CORRECT STATUS OF THE ASSESSEE IN THE PAST YEARS AS WELL. IF A WRONG STATUS IS CLAIMED BY THE ASSESSEE, DEPA RTMENT IS ENTITLED TO RECTIFY THE SAME AS AND WHEN THE ERROR IS DETECTED. 3.3 THUS, ON THE STRENGTH OF VARIOUS ARGUMENTS PUT FORTH BY THE AO AND ALSO IN THE LIGHT OF SPECIFIC PROVISIONS OF THE ACT, I AM OF THE CONSIDERATE OPINION THAT APPELLANTS STA TUS HAS CORRECTLY BEEN TAKEN BY THE AO AS AOP. APPEAL ON THIS ISSUE IS DISMISSED. 5. WITH THIS BRIEF BACKGROUND WE HAVE HEARD BOTH THE SIDES. THE ADMITTED FACTUAL POSITION WAS THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD FURNISHED THE RETURN UNDER THE STATUS OF AOP (TRUST). IN ADDITION TO THIS, THE DECISION OF ITAT IN THE CASE OF IMPROVEMENT TRUST, JAGADHIR V/S. DCIT IN ITA NO. 1222/CHD/2009 DATED 30 TH APRIL, 2010 HA S ALSO BEEN PLACED BEFORE US, NEEDLESS TO MENTION, FAIRLY BY LEARNED A.R. MR. K.P. D EWANI APPEARED ALONG WITH MR. SUDHIR DABIR. 6. THE CITED DECISION IS PARALLEL TO THE FACTS OF THE APPEAL IN HAND BECAUSE IN THAT CASE THE SAID TRUST WAS CONSTITUTED BY GOVERNMENT OF HARYANA AS A IMPRO VEMENT TRUST UNDER SECTION 3 OF PUNJAB TOWN IMPROVEMENT TRUST ACT, 1922. THE FUNCTION OF THE SAID TRUST WAS ALSO TO IMPROVE AND DEVELOP THE LOCALITY 4 IT A NO.52/NAG/2009 WITHIN THE MUNICIPAL LIMITS. IN THE SAID CASE THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 10(20) OF I .T. ACT ON THE GROUND THAT THE STATUS WAS A LOCAL AUTHORITY. WHEN THE MATTER WAS CARRIED BEFORE THE TRIBUNAL, AFTER CONSIDERING THE PROVISIONS OF THE ACT AND ANOTHER ORDER OF THE TRIBUNAL, NAMELY, AMBALA IMPROVEMENT TRUST (ITA NO. 621/CHD/2007) DATED 2 5 - 03 - 2009 IT WAS HELD THAT THE SAID ASSESSEE WAS NOT A LOCAL AUTHORITY AND CONSEQUENTLY NOT ENTITLED FOR THE CLAIM OF EXEMPTION UNDER SECTION 10(20) OF THE I.T. ACT. IT IS ALSO WORTH TO MENTION THAT IN THE SAID DECISION THE RESPECTED COORDINATE BENCH HAS FOLLOWED A DECISION OF HONBLE SUPREME COURT PRONOUNCED IN THE CASE OF AGRICULTUR AL PRODUCE MARKET COMMITTEE, NARELA V/S. CIT 305 ITR 1(SC). HAVING REGARD TO THE LEGAL POSITION AND THE PRECEDENTS CITED HEREIN ABOVE, WE ARE OF THE CONSIDERED OPINION THAT T HERE WAS NO FALLACY IN THE VIEW TAKEN BY THE LEARNED CIT(APPEALS). WE ARE NOT INCLINED TO INTERFERE WITH THE STATUS OF THE ASSESSEE AS ADOPTED BY THE REVENUE AUTHORITIES. HENCE THE GROUND RAISED BY THE ASSESSEE IN THIS REGARD IS HEREBY DISMISSED. 7. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF AUGUST, 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 21 ST AUGUST, 2015. 5 IT A NO.52/NAG/2009 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR