DCIT (Exemption), New Delhi V. M/s. NDDB Dairy Services, New Delhi

ITA 5309/DEL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1977 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFAL SWROOP
• Keywords: Opportunity of being heard
• Section: 143(3); 244A; 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.5309/DEL/2016 ASSESSMENT YEAR : 2012-13 DCIT (EXEMPTION), CIRCLE- 2(1), NEW DELHI. VS. NDDB DAIRY SERVICES, NDDB HOUSE, SAFDARJUNG ENCLAVE, NEW DELHI. PAN : AADCN1059J (APPELLANT) (RESPONDENT) C.O. NO.50/DEL/2018 (IN ITA NO.5309/DEL/2016) ASSESSMENT YEAR : 2012-13 NDDB DAIRY SERVICES, NDDB HOUSE, SAFDARJUNG ENCLAVE, NEW DELHI. VS. DCIT (EXEMPTION), CIRCLE- 2(1), NEW DELHI. PAN : AADCN1059J (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. SHEFAL SWROOP, CIT (DR) ASSESSEE BY : SHRI VISHAL KALRA, ADV. DATE OF HEARING : 23-08-2018 DATE OF PRONOUNCEMENT : 10-09-2018 O R D E R PER BECNH : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 08.07.2016 OF THE CIT(A)- 40 (EXEMPTION), NEW DELHI RELATING TO ASSESSMENT 2 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 YEAR 2012-13. THE ASSESSEE HAS FILED THE CROSS OBJ ECTION AGAINST THE APPEAL FILED BY THE REVENUE. FOR THE SAKE OF CONVENIENCE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.5309/DEL/2016 (BY REVENUE) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 ON 12.10.2009. THE ASSESSEE COMPANY OBTAINED LICENSE U/S 25 OF THE COMPANIES AC T, 1956. THE ASSESSEE COMPANY IS REGISTERED U/S 12A OF THE I.T. ACT, 1961 VIDE ORDER NO.DIT(E)/2011- 12/DEL-NR22004-13042012/24 DATED 13.04.2012. THE A SSESSEE FILED ITS RETURN OF INCOME ON 29.09.2012 DECLARING NIL INCOME. THE RETURN WAS ACCOMPANIED WITH AUDIT REPORT DATED 28.09.2012. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E OBJECTIVES AS PER MEMORANDUM OF ASSOCIATION (MOA) ARE AS UNDER :- 1. TO PROMOTE COMMERCE BY UNDERTAKING OPERATIONS W ITH RESPECT TO LIVESTOCK PRODUCTION, PRODUCTIVITY ENHANCEMENT AND EXTENSION AS UNDER :- A. ALL INSEMINATION ACTIVITIES INCLUDING PRODUCTION , PURCHASE, SALE DELIVERY OF SEMEN, LIQUID NITROGEN AND OTHER ASSOCIATED PRODUCT S; B. ALL NUTRITION ACTIVITIES INCLUDING PRODUCTION AN D SUPPLY OF CATTLE FEED, MIXTURE, NUTRACEUTICALS FODDER, FODDER SEEDS AND OTHER ASSOC IATED PRODUCTS; RATION BALANCING ON NON COMMERCIAL BASIS; 2. TO UNDERTAKE OPERATIONS RELATING TO PROMOTE COOP ERATIVE STRATEGY BY CARRYING OUT ALL ACTIVITIES INCLUDING SETTING UP FACILITIES RELATING TO MILK PROCUREMENT PROCESSING TRANSPORTATION, MARKETING AND QUALITY AS SURANCE BY ITSELF AND THROUGH DAIRY AND OTHER COOPERATIVES, PRODUCER COMP ANIES AND OTHER ENTITIES BY PROVIDING TECHNICAL MANAGERIAL AND FINANCIAL SUP PORT. 3. TO COLLECT, COMPILE, ANALYZE AND DISSEMINATE REL EVANT DATA/STATISTICS, NECESSARY FOR EFFICIENT MANAGEMENT OF ALL THE LIVES TOCK RELATED ACTIVITIES. 3 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 4. TO SET UP ALL KINDS DAIRY AND ANIMAL HUSBANDRY R ELATED INFRASTRUCTURE FOR PRODUCER COMPANIES AND OTHER COOPERATIVES ON BUILD, OPERATE AND TRANSFER BASIS (BOT). 5. ENHANCING WATER AND BIOMASS AVAILABILITY THROUGH WATERSHED MANAGEMENT PROGRAMMES AND CONTROLLING GREEN HOUSE GAS EMISSION S. 3. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN UND ER WHICH LIMB OF SECTION 2(15) OF THE I.T. ACT, 1961 THE CASE FALLS AND EXPL AIN AS TO WHY IT SHOULD NOT BE HIT BY PROVISO TO SECTION 2(15) OF THE I.T. ACT, 19 61. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVING THAT THE ASSESS EE IS CARRYING ON COMMERCIAL ACTIVITIES AND GOVERNED BY PROVISO TO SECTION 2(15) AND, THEREFORE, NOT ENTITLED TO THE BENEFIT OF SECTION 11 OF THE I.T. ACT, THE ASSE SSING OFFICER REJECTED THE CLAIM OF EXEMPTION U/S 11 AND 12 AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.19,05,14,430/-. WHILE DOING SO, HE OBSERVED THA T EVEN IF THE ASSESSEES CASE IS CONSIDERED TO BE ENGAGED IN ADVANCEMENT OF GENER AL PUBLIC UTILITY STILL THE SAME IS CLEARLY COVERED BY NEW PROVISO TO SECTION 2 (15) OF THE I.T. ACT. 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ALLEGATIONS MADE BY THE ASSESSING OFFICER ARE DEVOID OF ANY MERIT AND HE HA S NOT BROUGHT OUT ANY FACTS/FINDINGS ON RECORD AS TO HOW THE CASE OF THE ASSESSEE FALLS UNDER THE PROVISO TO SECTION 2(15) OF THE I.T. ACT. IT WAS S UBMITTED THAT SINCE THE ASSESSEE HAS NIL COMMERCIAL RECEIPTS, THEREFORE, THE PREREQU ISITE REQUIREMENT FOR APPLICATION OF FIRST PROVISO TO SECTION 2(15) FOR H AVING COMMERCIAL RECEIPT FROM CARRYING ON TRADE, COMMERCE AND BUSINESS ACTIVITIES IS NOT SATISFIED IN THE 4 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 PRESENT CASE. THE ASSESSEE HAS SUCCESSFULLY SUBMIT TED POINT BY POINT REBUTTAL TO THE ALLEGATIONS MADE BY THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER AND HAS VERY STRONGLY DISTINGUISHED THE FACTS OF THE CASE V IS--VIS CASE LAWS RELIED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. FURTHER , IT HAS BEEN EXAMINED FROM AUDITED FINANCIALS AND SUBMISSIONS MADE BY THE ASSE SSEE THAT THE ONLY FACTUAL FINDING ON WHICH THE ASSESSING OFFICER HAS CONCLUDE D THAT THE ASSESSEE IS CARRYING ON COMMERCIAL ACTIVITIES IS INCURRING OF A UDITORIUM USER CHARGES AND ADVERTISEMENT FEES IS COMPLETELY INCORRECT AS NO SU CH EXPENDITURE HAS BEEN INCURRED BY ASSESSEE DURING THE ASSESSMENT YEAR CON CERNED. 5. THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSING O FFICER HAS FAILED TO APPRECIATE THE FACTS OF THE CASE WHILE FRAMING THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS BROUGHT THE ENTIRE RECEIPTS O F RS.19,05,14,430/- TO TAX WITHOUT ALLOWING ANY EXPENSES OF RS.18,90,60,296/- INCURRED ON ACTIVITIES/ OBJECTIVES DEFINED IN ITS MOA. ALSO EVEN WHEN THE ASSESSING OFFICER WAS NOT IN AGREEMENT OF ASSESSEES SUBMISSION IN RESPECT OF CLAIM U/S 11 OF THE I.T. ACT, IT SHOULD HAVE ALLOWED DEDUCTION OF RS.18,90,60,296 /- INCURRED DURING THE RELEVANT ASSESSMENT YEAR. 6. IT WAS SUBMITTED THAT WHILE FRAMING THE ASSESSME NT ORDER, THE ASSESSING OFFICER DID NOT CONSIDER THAT FOR THE IMMEDIATELY P RECEDING YEAR, THE LD. CIT(A) HAS GRANTED FAVOURABLE ORDER IN THE CASE OF THE ASS ESSEE ON SAME FACTS HOLDING 5 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 THE ACTIVITIES OF THE ASSESSEE TO BE ENTIRELY OF CH ARITABLE NATURE. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, V IDE LETTER DATED 27.02.2015, THE ASSESSING OFFICER WAS DULY PROVIDED WITH DETAIL ED NOTE ON PRINCIPLES EMERGING FROM THE ORDER OF THE LD. CIT(A). HOWEVER , THE SAME WAS COMPLETELY IGNORED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER OF ASSESSMENT YEAR 2012-13 U/S 143(3) ON 13.03.2015. FURTHER, THE ASSESSEE HAD THE SAME SOURCE OF RECEIPTS AND UTILIZATION OF FUND S DURING THE IMMEDIATELY SUCCEEDING YEAR I.E. ASSESSMENT YEAR 2013-14 WHERE THE ASSESSEES CLAIM OF SECTION 11 WAS ACCEPTED BY THE ASSESSING OFFICER WH ILE ASSESSING ASSESSEES INCOME U/S 143(3) OF THE I.T. ACT. 7. BASED ON THE ARGUMENT ADVANCED BY THE ASSESSEE, THE LD. CIT(A) ALLOWED THE CLAIM OF EXEMPTION U/S 11 ON THE GROUND THAT TH E ASSESSING OFFICER HAS NOT BROUGHT IN ANY FACTS/FINDINGS ON RECORD TO SUBSTANT IATE AS TO HOW THE ASSESSEES CASE FALLS UNDER THE PROVISO TO SECTION 2(15) AND O N WHAT BASIS ITS ACTIVITIES ARE IN NATURE OF TRADE, COMMERCE AND BUSINESS AND NOT C HARITABLE. HE OBSERVED THAT OBSERVATION GIVEN BY THE ASSESSING OFFICER THAT THE ASSESSEE IS INCURRING OF AUDITORIUM USER CHARGES AND ADVERTISEMENT FEES WHIC H AMOUNTS TO CARRYING ON COMMERCIAL ACTIVITIES IS INCORRECT WHICH IS EVIDENT FROM THE AUDITED FINANCIAL STATEMENTS. HE FURTHER NOTED THAT HIS PREDECESSOR IN ASSESSMENT YEAR 2011-12 HAS HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE CH ARITABLE IN NATURE AND THE 6 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 ASSESSING OFFICER HIMSELF IN ASSESSMENT YEAR 2013-1 4 ACCEPTED THE ACTIVITIES OF THE ASSESSEE AS CHARITABLE IN NATURE. THEREFORE, T HE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND DEVOID OF AN Y MERITS. HE ACCORDINGLY ALLOWED THE CLAIM OF EXEMPTION U/S 11 OF THE I.T. A CT. 8. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 9. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE A SSESSING OFFICER. 10. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE LD. CIT(A) IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE REVENUE HAS NOT CHALLENGED THE ORDER OF THE LD. CIT(A). FURTHER, IN ASSESSMENT YEAR 2013-14 THE ASSESSING OFFICER HIMSE LF HAS TREATED THE ACTIVITIES OF THE ASSESSEE AS CHARITABLE IN NATURE. THEREFORE , IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT ON RECORD THE ORDER OF THE LD. CIT (A) SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSESSING OFFICER IN THE INSTANT CASE DENIED THE CLAIM OF EXEMPTION U/S 11 A ND 12 OF THE I.T. ACT ON THE GROUND THAT THE ACTIVITIES OF NDDB (I.E. THE ASSESS EE) INVOLVED THE RENDERING OF SERVICES IN RELATION TO CARRYING ON COMMERCIAL OR B USINESS ACTIVITIES AND IS 7 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 CLEARLY COVERED BY THE NEW PROVISO TO SECTION 2(15) OF THE I.T. ACT AND, THEREFORE, THE ASSESSEE CANNOT BE TREATED TO BE ENG AGED IN CHARITABLE ACTIVITIES. WE FIND THE LD. CIT(A) ALLOWED THE CLAIM OF EXEMPTI ON U/S 11 AND 12 ON THE GROUND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF EXEMPTION U/S 11 AND THE REVEN UE HAS NOT CHALLENGED THE SAME. FURTHER, IN THE IMMEDIATELY SUCCEEDING ASSES SMENT YEAR THE ASSESSING OFFICER HIMSELF HAS ALLOWED THE CLAIM OF EXEMPTION U/S 11 BY TREATING THE ACTIVITIES OF THE ASSESSEE AS CHARITABLE IN NATURE. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. C IT(A) SINCE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE LD. CIT(A) HAS ALLOWE D THE CLAIM OF EXEMPTION U/S 11 WHICH HAS ATTAINED FINALITY AND THE ASSESSIN G OFFICER HIMSELF IN THE SUBSEQUENT ASSESSMENT YEAR HAS TREATED THE ACTIVITI ES OF THE ASSESSEE AS CHARITABLE IN NATURE AND HAS ALLOWED THE CLAIM OF E XEMPTION U/S 11 OF THE I.T. ACT, THEREFORE, THE ORDER OF THE LD. CIT(A) IS UPHE LD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. C.O. NO.50/DEL/2018 (BY ASSESSEE) : 12. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSE E READS AS UNDER :- THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER (A.O.) AGAINST THE ORDER OF COMMISSIONER OF INCOM E-TAX (APPEALS)- 40 (EXEMPTION), NEW DELHI [CIT(A)], DATED JULY 8, 20 16, PASSED UNDER SECTION 250(6) OF THE ACT, FOR THE ASSESSMENT YEAR (A.Y.) 2012-1 3. 8 ITA NO.5309/DEL/2016 C.O. NO.50/DEL/2018 13. AFTER HEARING BOTH THE SIDES, WE FIND THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING SHORT COMPUTATION OF INTEREST U/S 244A BY COMPUTING INTEREST FOR THE PERIOD TILL ISSUANCE OF REFUND INSTEAD OF THE PERIO D TILL RECEIPT OF REFUND. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AS SESSING OFFICER WITH A DIRECTION TO COMPUTE CORRECT INTEREST U/S 244A AS PER LAW. N EEDLESS TO SAY, THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE WHILE CALCULATING SUCH INTEREST. THE GROUND RAISED BY TH E ASSESSEE IN THE CROSS OBJECTION IS ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSES. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH SEPTEMBER, 2018. SD/- SD/- (DIVA SINGH) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10-09-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI