DCIT, EXEMPTION CIRCLE, GHAZIABAD V. HARIDWAR DEVELOPMENT AUTHORITY, HARIDWAR

ITA 5320/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2230 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 17-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRTI SANKRATYAAN
• Assessee Lawyers: MAHESH B CHIBBER
• Keywords: Charitable institution; Cancellation of registration
• Section: 143(3); 12A; 12AA; 250; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.6796/DEL/2017 (ASSESSMENT YEAR 2013-14) ITA NO.5320/DEL/2017 (ASSESSMENT YEAR 2014-15) DY. CIT (EXEMPTION) CIRCLE-GHAZIABAD. VS. M/S HARIDWAR DEVELOPMENT AUTHORITY, MAYAPUR, HARIDWAR. PAN AAALH 0055Q (APPELLANT) (RESPONDENT) APPELLANT BY MS. KIRTI SANKRATYAAN, SR. DR RESPONDENT BY SH. MAHESH B. CHIBBER, ADV. DATE OF HEARING 05.04.2021 DATE OF PRONOUNCEMENT 30.06.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THE PRESENT APPEALS ARE FIL ED BY THE DEPARTMENT AGAINST ORDERS PASSED BY THE LD. COMM ISSIONER OF INCOME TAX (APPEALS), DEHRADUN {CIT (A)} U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT FOR ASSESSMENT 2 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY YEARS (AY) 2013-14 AND 2014-15. SINCE COMMON ISSUE IS INVOLVED IN BOTH THESE APPEALS, THEY ARE BEING DECIDED TOGETHER FOR THE SAKE OF CONVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A DEVELOPMENT AUTHORITY SET UP BY UTTAR PRADESH GOVER NMENT WITH THE OBJECT OF DEVELOPMENT OF HARDWAR, PAURI, TEHRI A ND PART OF DEHRADUN. ALL DEVELOPMENTAL SCHEMES AS WELL AS BEAU TIFICATION OF THESE DISTRICTS ARE TO BE DONE BY THE ASSESSEE. THE ASSESSMENT FOR YEARS UNDER CONSIDERATION WAS FRAMED U/S 143(3) OF T HE ACT AFTER DISALLOWANCE OF CLAIM OF EXEMPTION U/S 11 AND MAKING FURTHER ADDITION OF RS. 2,15,12,580/- BEING NET AMOUNT TRAN SFERRED TO INFRASTRUCTURE DEVELOPMENT FUND AS INCOME OF THE AS SESSEE- AUTHORITY. THE ASSESSING OFFICER DISALLOWED THE CLA IM OF EXEMPTION U/S 11 BY DISPUTING THE CHARITABLE NATURE OF ACTIVI TIES CARRIED OUT BY THE ASSESSEE IN TERMS OF SECTION 2(15) OF THE AC T. 2.1 THE ASSESSEE, AGGRIEVED BY THE ASSESSMENT ORD ER PASSED U/S 143(3), PREFERRED APPEAL BEFORE THE LD. CIT (A) AND THE SAME WAS PARTLY ALLOWED WHEREIN THE CLAIM OF EXEMPTIO N U/S 11 WAS ALLOWED AND ADDITION OF RS.2,15,12,580/- BEING INC OME TRANSFERRED 3 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY TO INFRASTRUCTURE DEVELOPMENT FUND WAS UPHELD. THE D EPARTMENT IS NOW IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD . CIT (A) AND IDENTICAL GROUNDS HAVE BEEN RAISED IN BOTH THE YEAR S UNDER APPEAL AS UNDER: ITA NO. 6796/DEL/17: 1. THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN DE LETING ADDITION UPTO RS. 7,70,82,351/- MADE BY THE AO. 2. THE ORDER OF LD. CI T(A) BE CANCELLED AND THE OR DER OF THE AO BE RESTORED. ITA NO.5320/DEL/17: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN APPRECIATING THE FACT THAT THE AO DENIAL TO THE EXE MPTION CANNOT BE UPHELD, SINCE THE DEPARTMENT IS IN APPEAL BEFORE HONBLE SUPREME COURT ON THE SAME PLEA IN THE CASE OF JHANSI DEVELOPMENT AUTHORITY AGAINST THE ORDER OF H ON,BLE HIGH COURT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING DISALLOWANCE TO THE EXTENT TO RS. 3,90,13,806/-. 3. THE ORDER OF LD. CIT (A) BE CANCELLED AND THE O RDER OF THE AO BE RESTORED. 2.0 AS THE LD. CIT (A) HAS PARTLY UPHELD THE ASSE SSMENT ORDER, THE GRIEVANCE OF THE DEPARTMENT IN THE PRESE NT APPEALS IS LIMITED TO ALLOWANCE OF CLAIM OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. 4 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 3.1 THE LD. DR SUPPORTED THE ASSESSMENT ORDER AND VEHEMENTLY ARGUED THAT THE ASSESSEE-AUTHORITY FAILS TO SATISFY THE CRITERIA FOR CLAIMING EXEMPTION U/S 11 OF THE ACT. IT WAS SUBMITTED THAT ACTIVITIES OF THE ASSESSEE-AUTHORITY ARE OF CO MMERCIAL NATURE AND FAIL TO SATISFY THE DEFINITION AS GIVEN IN SECT ION 2(15) OF THE ACT. 3.2 ON THE OTHER HAND, THE LD. AR APPEARING FOR T HE ASSESSEE-AUTHORITY SUBMITTED THAT THE ISSUE IN HAND IS COVERED BY THE DECISION OF THIS TRIBUNAL (ITAT) AND THEREAFTER BY THE ORDER GRANTING REGISTRATION U/S 12AA PASSED BY THE LD. CI T (EXEMPTION). IT WAS HIGHLIGHTED THAT THE ITAT, VIDE ORDER DATED 2 5/07/2014, HELD THAT OBJECTS OF ASSESSEE AUTHORITY ARE CHARITABLE I N TERMS OF SECTION 2(15) AND DIRECTED THE LD. CIT (EXEMPTION) TO GRANT REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 WITH EFFECT FROM 01/ 04/2002. IT WAS FURTHER SUBMITTED THAT THE ORDER OF THE ITAT HAS SUBSEQUENTLY BEEN UPHELD BY THE HONBLE ALLAHABAD HIGH COURT VID E ORDER DATED 18/07/2017 IN INCOME TAX APPEAL NO. 90 OF 2015. THE COPIES OF THE ORDERS WERE PLACED ON RECORD. IT WAS ACCORDINGLY SUB MITTED THAT THE LD. CIT (A) HAS RIGHTLY ALLOWED THE CLAIM OF EXEMPT ION U/S 11 OF THE ACT. 5 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 4.0 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE FACTS OF THE CASE. THE SURVIVING I SSUE BEFORE US IS REGARDING NATURE OF ACTIVITIES CARRIED OUT BY THE A SSESSEE-AUTHORITY IN TERMS OF SECTION 2(15) AND VALIDITY OF CLAIM OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS REJECTED THE CLAIM OF EXEMPTION U/S 11 ON THE GROUND THAT THE AS SESSEE FAILED TO JUSTIFY THAT ITS ACTIVITIES FELL WITHIN THE DEFINITI ON OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT. THE ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE IS PRIMARILY ENGAGED IN THE A CTIVITY OF DEVELOPMENT AND SALE OF PROPERTY AND SAME IS IN THE NATURE OF BUSINESS AND HIT BY PROVISO TO SECTION 2(15) OF THE ACT. THE LD. CIT (A), AFTER TAKING NOTE OF DECISION OF THE COORDINAT E BENCH OF THIS TRIBUNAL, VIDE ORDER DATED 25/07/2014 IN ITA NO. 30 56/DEL/12, 3013/DEL/13 AND 6058/DEL/12, IN ASSESSEES OWN CASE AND OTHER ORDERS PASSED IN THE CASE OF OTHER DEVELOPMENT AUTH ORITIES WITH SIMILAR OBJECTS ALLOWED THE CLAIM OF EXEMPTION U/S 11 BY HOLDING THAT ASSESSEE-AUTHORITY IS A CHARITABLE ORGANIZATIO N AND NOT HIT BY PROVISO TO SECTION 2(15) OF THE ACT. THE FINDING OF THE LD. CIT (A) ARE REPRODUCED HEREUNDER: 6 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY I HAVE DULY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO HAS DISALLOWED THE EXEMPTION OF THE ASSESSEE AUTHORITY BY RELYING UPON THE DECISION OF THE HON'BLE JAMMU & KASHMIR HIGH COURT IN ITA NO. 164/2012 DATED 07.11.2013, WH ICH HAS SINCE BEEN CONFIRMED BY THE HON'BLE SUPREME COURT I N SPECIAL LEAVE TO APPEAL NO. 4990/2014 DATED 24.07.2014. THE AO HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF ITAT COCHIN IN THE CASE OF GREATER COCHIN DEVELOPMENT AUTHORITY VS JCIT (OS D) (EXEMPTION) IN ITA NO. 792/93/ COCHIN/2013 WHEREIN THE HON'BLE ITAT HAS HELD THAT THE DEVELOPMENT AUTHORIT Y COULD NOT BE HELD AS CHARITABLE. HOWEVER, THE HON'BLE ITAT IN THE ASSESSEE'S CASE IN ITA NO. 3056/DEL/2012 & 3013/DEL /2013 & IN ITA NUMBER 6058/ DEL/2012 VIDE THEIR ORDER DATED 25.07.2014 HAVE DISTINGUISHED THE CASE OF THE ASSES SEE FROM THE CASE OF PUNJAB URBAN PLANNING AND DEVELOPMENT A UTHORITY VS. CIT (2006) 103 TTJ (CHD) 988 AND JALANDHAR DEVE LOPMENT AUTHORITY VS CIT (2009) 124 TTJ (ASR) 598. IT IS FU RTHER SEEN THAT THE HON'BLE ITAT IN THE CASE OF JAMMU DEVELOPMENT A UTHORITY, WHICH WAS LATER ON CONFIRMED BY THE HON'BLE J&K HIG H COURT, FOLLOWED THE ORDER IN THE CASE OF JALANDHAR DEVELOP MENT AUTHORITY, AS THE FACTS IN THAT CASE WERE IDENTICAL TO THE CASE OF JALANDHAR DEVELOPMENT AUTHORITY. HOWEVER, IN THE AS SESSEE'S CASE, THE HON'BLE ITAT DISTINGUISHED THOSE CASES AN D HELD THAT THE DECISION IN THE CASE OF PUNJAB URBAN PLANNING A ND DEVELOPMENT AUTHORITY (SUPRA) AND JALANDHAR DEVELOP MENT 7 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY AUTHORITY (SUPRA) WERE NOT APPLICABLE TO THE ASSESS EE'S CASE BECAUSE THE ASSESSEE WAS CONSTITUTED UNDER THE UTTA R PRADESH NAGAR YOJNA EVAM VIKAS ADHINIYAM 1973 AND WAS UNDER THE JURISDICTION OF THE HON'BLE ALLAHABAD HIGH COURT. I T THEREFORE FOLLOWED THE DECISION RENDERED BY THE HON'BLE ALLAH ABAD HIGH COURT IN THE CASE U.P. AWAS EVAM VIKAS PARISHAD IN ITA NO. 1690(LUCK)/2003 DATED 25.07.2005, MUZZAFARNAGAR DEVELOPMENT AUTHORITY VS. CIT, CIT VS. KRISHI UTAPA DAN MANDI SAMITI (2010) 1 ALL LJ 817 AND M/S KHURJA DEVELOPME NT AUTHORITY VS. CIT IN ITA NO 1851(DEL)2009 ORDER DAT ED 14.07.2009 TO HOLD THAT THE ASSESSEE WAS CHARITABLE ORGANIZATION THAT WAS NOT HIT BY THE PROVISION OF S ECTION 2 SUBSECTION (15) OF I.T. ACT, 1961 BECAUSE THE ASSES SEE AUTHORITY WAS NOT CARRYING OUT ANY ACTIVITY WITH ANY PROFIT M OTIVE BUT THE PRE DOMINANT OBJECTIVE WAS THE WELFARE OF THE PEOPL E AT LARGE AND IN VIEW OF THE FACT THAT IT WAS OF THE OPINION THAT THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF U.P . AWAS EVAM VIKAS PARISHAD (SUPRA) WAS APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE, THEREFORE IT DID NOT FIND ANY REAS ON TO REFER TO THE DECISION OF PUNJAB URBAN PLANNING AND DEVELOPME NT AUTHORITY (SUPRA) AND JALANDHAR DEVELOPMENT AUTHORI TY (SUPRA). IN VIEW OF THE FACT THAT THE JURISDICTIONAL BENCH O F ITAT AFTER EXAMINING THE ASSESSEE'S CASE IN THE LIGHT OF UTTAR PRADESH NAGAR YOJNA EVAM VIKAS ADHINIYAM 1973, HAS HELD THA T THE ASSESSEE IS A CHARITABLE ORGANIZATION NOT HIT BY TH E PROVISIONS OF 8 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY SECTION 2(15) OF THE ACT, THE DECISION OF THE AO TO DENY THE EXEMPTION CANNOT BE UPHELD. THIS IS MORE SO BECAUSE THE CIT(EXEMPTION) HAS SINCE GRANTED REGISTRATION U/S 1 2AA OF THE I.T. ACT, 1961 VIDE HIS ORDER DATED 20.09.2016, IN PURSUANCE OF THE JUDGMENT OF HON'BLE ITAT. 4.1 ON A CLOSE PERUSAL OF THE ORDER OF THE COORDI NATE BENCH OF THIS TRIBUNAL RESTORING THE REGISTRATION U /S 12AA, WE FIND THAT THIS TRIBUNAL, AFTER EXAMINING THE ENTIRE GAMU T OF FACTS AND OBJECTS OF THE ASSESSEE AUTHORITY, GAVE A CATEGORIC AL FINDING THAT THE ASSESSEE-AUTHORITY IS NOT CARRYING OUT ANY ACTIVITY WITH ANY PROFIT MOTIVE, BUT ITS PREDOMINANT OBJECT IS WELFARE OF PE OPLE AT LARGE. IT WAS FURTHER HELD THAT THE ASSESSEE-AUTHORITY HAS BEE N CREATED WITH THE OBJECT OF GENERAL PUBLIC UTILITY WHICH IS A CHAR ITABLE OBJECT WITHIN THE MEANING OF SECTION 2(15) AND THE PROVISO TO SECTION 2(15) IS NOT APPLICABLE. THE ORDER OF THIS TRIBUNAL HAS S INCE BEEN UPHELD BY THE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATE D 18/07/2017 IN INCOME TAX APPEAL NO. 90 OF 2015. 4.2 WE WOULD LIKE TO STRESS UPON THE FACT THAT TH E ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY NEW OR DISTINGUISHING FEATURE TO COUNTER THE FACTS WHICH WER E THERE BEFORE 9 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY THIS TRIBUNAL AT THE TIME OF DECIDING THE APPEAL AG AINST CANCELLATION OF REGISTRATION U/S 12AA OF THE ACT. UNDISPUTEDLY, IT IS NOT A CASE WHERE THERE IS ANY CHANGE IN THE OBJECTS OF THE ASSE SSEE-AUTHORITY OR ANY ALLEGATION THAT THE ASSESSEE WAS ENGAGED IN ANY ACTIVITY BEYOND ITS OBJECTS AND AS SUCH THERE IS NO COMPELLI NG REASON FOR US TO DEVIATE FROM FINDING GIVEN BY THE COORDINATE BEN CH. WE ALSO TAKE NOTE THAT THE LD. CIT (A), WHILE DECIDING THIS ISSUE IN FAVOUR OF ASSESSEE, HAS PLACED RELIANCE ON VARIOUS DECISIONS RENDERED BY THE COORDINATE BENCHES OF THIS TRIBUNAL AND THE VARIOUS HONBLE HIGH COURTS IN OTHER CASES OF STATUTORY AUTHORITIES FORM ED WITH SIMILAR OBJECTS, WHICH, IN OUR VIEW, SUPPORTS THE CASE OF TH E ASSESSEE AUTHORITY. 4.3 WE ALSO DRAW STRENGTH FROM RATIO LAID DOWN IN FOLLOWING DECISIONS: I. ITO (E) V. SAHARANPUR DEVELOPMENT AUTHORITY (ITA NO. 4113/D/17) (24/03/2021) (DELHI-TRIB) II. JHANSI DEVELOPMENT AUTHORITY V. DCIT [2021] 123 TAXMANN.COM 247 (AGRA - TRIB.) III. CIT V. GHAZIABAD DEVELOPMENT AUTHORITY (ITA NO . 2400/D/14) (DELHI-TRIB) IV. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION V. A CIT (ITA NO. 278/AHD/13)(AHMEDABAD-TRIB.) V. BANGALORE DEVELOPMENT AUTHORITY V. ADDL. CIT [20 19] 104 TAXMANN.COM 266 (BANGALORE-TRIB.) 10 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY VI. GUJARAT HOUSING BOARD (GHB) V. DCIT(E) (ITA NO. 3297/AHD/2016)(AHMEDABAD-TRIB.) VII. MORADABAD DEVELOPMENT AUTHORITY V. ACIT (EXEMP TION) (ITA NO. 4631 & 32/D/17) (DELHI-TRIB) VIII. FIROZABAD SHIKOHABAD DEVELOPMENT AUTHORITY V. CIT [2018] 169 ITD 202 (AGRA - TRIB.) IX. AHMEDABAD URBAN DEVELOPMENT AUTHORITY V. ACIT [ 2017] 396 ITR 323 (GUJ HIGH COURT) X. CIT V. JODHPUR DEVELOPMENT AUTHORITY [2016] 287 CTR 473 (RAJ HC) XI. CIT V. LUCKNOW DEVELOPMENT AUTHORITY [2014] 265 CTR 433 (ALL HC) XII. NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY V. C IT(E) (ITA NO. 172/DEL/2016) (DELHI-TRIB.) 4.4 IN VIEW OF ABOVE AND RESPECTFULLY FOLLOWING TH E DECISION OF THE HONBLE ALLAHABAD HIGH COURT AND TH E COORDINATE BENCH IN ASSSESSEES OWN CASE, WE ARE OF THE CONSIDE RED VIEW THE ASSESSEE-AUTHORITY IS CARRYING OUT CHARITABLE ACTIV ITIES WITH OBJECT OF GENERAL PUBLIC UTILITY IN ACCORDANCE WITH SECTION 2( 15) OF THE ACT AND THE SAME CANNOT BE TERMED AS COMMERCIAL OR OF BUSIN ESS NATURE FOR THE PURPOSE OF PROVISO TO SECTION 2(15) OF THE ACT. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD . CIT (A) ALLOWING BENEFIT OF APPLICATION AND EXEMPTION U/S 11 OF THE ACT. 4.5 AS A RESULT, THE GROUNDS RAISED BY THE REVE NUE ARE DISMISSED. 11 ITA NOS. 6796, 5320/DEL/2017 DCIT (E) VS. HARIDWAR D EVELOPMENT AUTHORITY 5.0 IN THE FINAL RESULT, BOTH THE APPEA LS FILED BY THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED ON 30 TH JUNE, 2021. SD/- SD/- (N.K. BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/06/2021 *DRAGON* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI