M/s. Petroleum Conservation Research Association, New Delhi V. ADIT (E), New Delhi

ITA 5346/DEL/2010

• Counselvise Citation: 534620114 RSA 2010
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 14-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PROF S SAMPATH
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH F DELHI ] BEFORE SHRI R. P. TOLANI, JM AND SHRI K. D. RANJ AN, AM I. T. APPEAL NO. 5346 (DEL) OF 2010. ASSESSMENT YEAR : 2006-07. M/S. PETROLEUM CONSERVATION ADDL. DIRECT OR OF INCOME-TAX, RESEARCH ASSOCIATION, VS. [ E X E M P T I O N ]; S A N R A K S H A N B H A W A N, TRUST C IRCLE : IV, 10 BHIKAJI CAMA PLACE, N E W D E L H I. N E W D E L H I. PAN / GIR NO. AAATP 1161D. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : PROF. S. SAMPATH, C.A.; DEPARTMENT BY : SHRI ROHIT GARG, SR. D. R. O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 06-07 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)XXI, NEW DELHI. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO EXEM PTION OF INCOME UNDER SECTION 10(21) OF THE INCOME TAX ACT, 1961. THE FACTS OF THE CASE ST ATED IN BRIEF ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY UNDER THE SOCIETY REGISTRATION A CT 1860 AND IS AN AUTONOMOUS BODY UNDER THE MINISTRY OF PETROLEUM & NATURAL GAS. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED THE INCOME EXEMPT UNDER SECTION 10(21) READ WITH SECTION 35(1) (II) OF THE ACT IN RESPECT OF EXCESS INCOME OVER EXPENDITURE AMOUNTING TO RS.1,51,72,636/-. TH E ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NO T ENGAGED WHOLLY IN SCIENTIFIC RESEARCH. IT 2 I. T. APPEAL NO. 5346 (DEL) OF 2010. WAS ENGAGED PARTLY IN SCIENTIFIC RESEARCH. THEREFO RE, BENEFIT OF SECTION 10(21) OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE. ON APPEAL THE LD. CIT ( APPEALS) CONFIRMED THE STAND TAKEN BY THE ASSESSING OFFICER. 3. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS A REGISTERED SOCIETY UNDER SOCIETIES ACT, 1860. CENTRAL BOARD OF DIRECT TAXES VIDE NOTIFICATION DATED 28 TH FEBRUARY, 2006 HAS NOTIFIED THE ASSESSEE FOR THE PURPOSE OF C LAUSE (II) OF SUB SECTION (1) OF SECTION 35 OF THE INCOME TAX ACT, 1961 READ WITH RULE 6 OF THE INCOME TAX RULES, 1962 FOR THE PERIOD FROM 1/04/2003 TO 31 ST MARCH, 2006 UNDER THE CATEGORY OF INSTITUTION PA RTLY ENGAGED IN THE RESEARCH. THE LD. AR OF THE ASSESSEE, THEREFORE, SUBMITTED TH AT INCOME OF THE ASSESSEE WILL BE EXEMPT UNDER SECTION 10(21) OF THE ACT. HE FURTHER SUBMITTED TH AT THE ASSESSING OFFICER AS WELL AS THE LD. CIT (APPEALS) HAVE DISALLOWED THE CLAIM OF THE ASSESSEE MERELY ON THE GROUND THAT THE ASSESSEE WAS NOT ENGAGED WHOLLY AND EXCLUSIVELY IN SCIENTIFIC RE SEARCH. HE, THEREFORE, SUBMITTED THAT SINCE THE ASSESSEE IS NOTIFIED UNDER SECTION 35(1)(II) BY THE CBDT THE INCOME OF THE ASSESSEE WILL BE EXEMPT UNDER SECTION 10(21) OF THE ACT. ON THE OTH ER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE HAS BEEN NOTIFIED BY THE CENTRAL GOVT. FOR THE PURPOSE OF SECTION 35(1)(II) OF THE I. T. ACT, FOR THE PERIOD 1/4/2003 TO 31 ST MARCH, 2006 UNDER THE CATEGORY OF INSTITUTION PARTLY ENGAGED IN RESEARC H. UNDER SECTION 10(21) ANY INCOME OF A SCIENTIFIC RESEARCH ASSOCIATION FOR THE TIME BEING APPROVED FOR THE PURPOSE OF CLAUSE (II) OR CLAUSE (III) OF SUB SECTION (1) OF SECTION 35 SHALL NOT BE INCLUDED WHILE COMPUTING ITS TOTAL INCOME PROVIDED THAT THE SCIENTIFIC RESEARCH ASSOCIATION A PPLIES ITS INCOME OR ACCUMULATES IT FOR APPLICATION WHOLLY AND EXCLUSIVELY TO THE OBJECT FO R WHICH IT IS ESTABLISHED. THE PROVISIONS OF SUB SECTION (2) AND (3) OF SECTION 11 SHALL APPLY I N RELATION TO SUCH ACCUMULATION. THE ASSESSING OFFICER HAS DENIED THE EXEMPTION UNDER SECTION 10(2 1) MERELY ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED WHOLLY IN SCIENTIFIC RESEARCH. UNDER S ECTION 10(21) OF THE ACT THE SCIENTIFIC RESEARCH ASSOCIATION, WHICH IS APPROVED FOR THE PURPOSE OF C LAUSE (II) OF SECTION 35 AND APPLIES ITS INCOME OR ACCUMULATE IT FOR APPLICATION WHOLLY AND EXCLUSI VELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED, THE INCOME OF SUCH ASSOCIATION WILL BE EXEMPT. THE ASSESSING OFFICER HAS NOT MADE OUT A CASE THAT THE INCOME WAS NOT APPLIED BY THE ASSESSEE OR ACCUMULATED FOR APPLICATION WHOLLY AND 3 I. T. APPEAL NO. 5346 (DEL) OF 2010. EXCLUSIVELY TO THE OBJECTS OF THE ASSOCIATION. IN FACT, NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT THE INCOME OF THE ASSESSEE HAS NOT BEE N APPLIED WHOLLY AND EXCLUSIVELY FOR THE OBJECTS OF THE ASSOCIATION. IN OUR CONSIDERED OPIN ION, THE ASSESSING OFFICER AS WELL AS THE LD. CIT (A) HAVE GONE WRONG TO DECLINE THE CLAIM OF THE ASS ESSEE FOR EXEMPTION ON MERE TECHNICAL GROUND THAT THE ASSESSEE WAS NOT ENGAGED WHOLLY AND EXCLUSIVELY IN THE RESEARCH WORK. NOWHERE IN SECTION 10(21) OF THE ACT THERE IS ANY CONDITION THAT THE ASSESSEE SHOULD BE ENGAGED WHOLLY AND EXCLUSIVELY FOR RESEARCH WORK. THE MOMENT AN I NSTITUTION IS NOTIFIED UNDER SECTION 35(1)(II) OF THE ACT THE INCOME WILL BE EXEMPT UNDER SECTION 10(21) UNLESS A CASE IS MADE OUT BY THE AO THAT INCOME WAS NOT APPLIED OR ACCUMULATED WHOLLY A ND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT WAS ESTABLISHED OR THERE WAS VIOLATION OF PROVISION S OF SECTION 11(2) OR 11(3) OF THE ACT. SINCE NO SUCH VIOLATION OR OBJECTION AS TO APPLICATION OF INCOME HAS BEEN RAISED BY THE ASSESSING OFFICER, IN OUR CONSIDERED OPINION, THE LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO DENYING THE CLAIM OF THE ASSESSEE UNDER SECTION 10(21) OF THE ACT. SINCE THE INSTITUTION IS NOTIFIED BY THE CENTRAL BOARD OF DIRECT TAXES, GOVT . OF INDIA, THE INCOME OF THE ASSESSEE WILL BE EXEMPT UNDER SECTION 10(21) OF THE ACT. THE ASSES SING OFFICER IS DIRECTED TO ALLOW EXEMPTION UNDER SECTION 10(21) OF THE ACT. 5. SINCE THE OTHER GROUNDS WERE NOT ARGUED AND, THE REFORE, WE DO NOT FEEL IT NECESSARY TO DISPOSE OF THESE GROUNDS IN VIEW OF THE FACT THAT T HE CLAIM OF THE ASSESSEE UNDER SECTION 10(21) OF THE ACT HAS BEEN ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 14 TH NOVEMBER, 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14 TH NOVEMBER, 2011. *MEHTA * 4 I. T. APPEAL NO. 5346 (DEL) OF 2010. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.