National Horticulture Board, Gurgaon V. ITO, Gurgaon

ITA 5576/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86829 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA SENIOR
• Keywords: Charitable institution
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 5576 /DEL./201 3 ASSESSMENT YEAR : 20 10 - 1 1 NATIONAL HORTICULTURE BOARD, VS. ITO, WARD - II(I), 85, INSTITUTIONAL AREA, SECTOR - 18, GURGAON. GURGAON. (PAN : A AATN 0804 F ) (APPELLANT) (RESPONDENT) DATE OF HEARING : 2 7 .02.2015 DATE OF PRONOUNCEMENT : 05 . 0 3 .2015 APPELLANT BY : SHRI VED JAIN ,CA SHRI V.M. CHAURASIYA, ADVOCATE RESPONDENT BY : SHRI P. DAM KANUNJHA, SENIOR DR ORDER PER : GEORGE GEORGE K., JUDICIAL MEMBER : 1. THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE , IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 2 8 . 02 .201 3 . THE RELEVANT ASSESSMENT YEAR IS 20 10 - 11 . 2. THE SOLITARY EFFECTIVE GROUND RAISED READS AS FOLLOWS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.3,67,69,564/ - CONSIDERING THE INCIDENTAL RECEIPTS ON ACCOUNT OF COST OF APPLICATION FEES & SCHEME BROCHURE IN THE NATURE OF BUSINESS, TRADE OR COMMERCE. 2 ITA NO. 5576 / DEL/2013 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED BY ORDER DATED 07.12.2012 . THE AO DENIED EXEMPTION U/S 1 1 OF THE ACT FOR THE REASON THAT ASSESSEE S ACTIVITY DID NOT FALL WITHIN THE MEANING OF CHARITABLE PURPOSES . ACCORDING TO THE ASSESSING OFFICER, THE ACTIVITY OF THE ASSESSEE WAS HIT BY THE PROVISO TO SECTION 2(15) OF THE IT ACT. THE VIEW OF THE ASSESSING OFFICER WAS CONFIRMED BY THE CIT(A). 4. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL , FOR THE IMMEDIATELY P RECEEDING ASSESSMENT YEAR IN ITA NO.4521/DEL/2012 DATED 16.01.2015. 5. THE LD. DR PRESENT WAS DULY HEARD. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE TRIBUNAL IN ASSESSEE S OWN CASE FOR AY 2009 - 10 (SUPRA) HELD THAT THE FIR ST PROVISO TO SECTION 2(15) OF THE ACT IS NOT APPLICABLE TO THE ASSESSEE S CASE. THE RELEVANT FINDING OF THE COORDINATE BENCH OF THE TRIBUNAL FOR AY 2009 - 10 (SUPRA) IS REPRODUCED BELOW: P ARA 16 IN VIEW OF THESE DISCUSSIONS, IN OUR CONSIDERED VIEW, THE AUTHORITIES BELOW WERE CLEARLY IN ERROR IN INVOKING FIRST 3 ITA NO. 5576 / DEL/2013 PROVISO TO SECTION 2(15), PARTICULARLY AS IT HAS NOT EVEN BEEN THEIR CASE THAT THE ASSESSEE WAS CARRYING OUT ANY BUSINESS ACTIVITY IN CHARGI NG THE PROCESSING FEES OR SERVICE FEES, EVEN IF RECEIPTS ON ACCOUNT OF APPLICATION FORMS CAN BE CONSTRUED AS SUCH, FROM THE APPLICANTS FOR THE SUBSIDY. PARA 17 WE HAVE ALSO NOTED THAT THE ASSESSEE HAS RECEIVED GRANT AND SUBSIDIES AGGREGATING TO RS 122,47, 00,000 AND, AS AGAINST THIS AMOUNT, THE RECEIPTS ON I.T.A. NO.: 4521/DEL/12ASSESSMENT YEAR: 2009 - 10 ACCOUNT OF WHAT IS SAID TO BE SERVICE CHARGES AND PROCESSING FEES AGGREGATE TORS. 2,20,57,529. THESE FIGURES DONOT SUGGEST THAT THE SERVICE CHARGES OR PROCE SSING FEES CONSTITUTE A SOURCE OF BUSINESS ACTIVITY WHICH IS, IN THE LIGHT OF LAW LAID DOWN BY HON BLE DELHI HIGH COURT AS ELABORATED ABOVE, A CONDITION PRECEDENT FOR INVOKING ANY PART OF FIRST PROVISO TO SECTION 2(15). THE MERE FACT THAT SERVICE CHARGES H AVE BEEN RECEIVED BY THE ASSESSEE DO NOT VITIATE THE CHARITABLE NATURE OF ASSESSEE S ACTIVITIES AND, AS OBSERVED BY HON BLE DELHI HIGH COURT IN THE CASE OF GS 1(SUPRA), THAT A SMALL CONTRIBUTION BY WAY OF FEE THAT THE BENEFICIARY PAYS WOULD NOT CONVERT CH ARITABLE ACTIVITY INTO BUSINESS, COMMERCE OR TRADE IN THE ABSENCE OF CONTRARY EVIDENCE AND THAT QUANTUM OF FEE CHARGED, ECONOMIC STATUS OF THE BENEFICIARIES WHO PAY, COMMERCIAL VALUE OF BENEFITS IN COMPARISON TO THE FEE, PURPOSE AND OBJECT BEHIND THE FE E ETC. ARE SEVERAL FACTORS WHICH WILL DECIDE THE SEMINAL QUESTION, IS IT BUSINESS . THERE IS NOTHING ON THE RECORD TO EVEN SUGGEST THAT THE FEES CHARGED BY THE ASSESSEE IS SUCH THAT IT SUGGESTS THAT IT IS IN NATURE OF A BUSINESS, NOR IS IT EVEN THE CASE O F THE ASSESSING OFFICER. IT WAS, THEREFORE, NOT A FIT CASE FOR HOLDING THAT MERELY BECAUSE THE ASSESSEE HAS CHARGED A FEES, EVEN IF THAT BE SO, FOR PROCESSING THE SUBSIDY APPLICATIONS, THE ASSESSEE S ACTIVITIES CEASE TO BE CHARITABLE ACTIVITIES UNDER SECTI ON 2(15). PARA 18 AS REGARDS THE ASSESSING OFFICER S FREQUENT REFERENCES TO THE FINDINGS OF THE CHIEF COMMISSIONER IN DENYING APPROVAL UNDER SECTION 10(23C)(IV) TO THE ASSESSEE, WE MAY USEFULLY REFER TO A DECISION OF THE COORDINATE BENCH IN THE CASE OF D CIT VS GENERAL ELECTRIC CO PLC [(2001) 71 TTJ 973]. AS EVIDENT FROM THE OBSERVATIONS TO THE EFFECT THAT .......IT IS NOT IN DISPUTE THAT THE NO OBJECTION CERTIFICATE WAS ISSUED AT THE INSTANCE OF THE CHIEF CIT AND THE AO DID NOT EVEN HAVE THE LIBERTY OF APPLYING HIS INDEPENDENT MIND TO THE TAXABILITY OF 4 ITA NO. 5576 / DEL/2013 CAPITAL GAINS ARISING FROM THE TRANSFER OF SHARES IN QUESTION , THAT WAS ALSO A CASE IN WHICH THE IMPACT OF STAND TAKEN BY THE CHIEF COMMISSIONER ON THE ASSESSMENT BEING FRAMED BY THE ASSESSING OFFICER CAM E UP FOR CONSIDERATION OF THE BENCH. IT WAS IN THIS BACKDROP THAT THE BENCH OBSERVED THAT SUCH AN I.T.A. NO.: 4521/DEL/12 ASSESSMENT YEAR: 2009 - 10 ISSUANCE OF NOC CANNOT FETTER AO S EXCLUSIVE DOMAIN OF POWERS OF FRAMING THE ASSESSMENT ORDER; THERE IS NO S COPE FOR ANY ADMINISTRATIVE INTERFERENCE IN AOS QUASI - JUDICIAL POWERS TO ASSESS THE INCOME OF THE ASSESSEE . THE SAME IS THE POSITION IN THIS CASE. THE OBSERVATIONS OF THE CHIEF COMMISSIONER OF INCOME TAX, FOR THIS REASON ALONE, CANNOT HAVE A DECISIVE IMPA CT ON THE EXERCISE OF QUASI - JUDICIAL POWERS BY THE ASSESSING OFFICER. PARA 19. THE OBSERVATIONS MADE BY THE CHIEF COMMISSIONER HAVE BEEN HELD, BY US EARLIER IN THIS ORDER, TO BE CONTRARY TO THE CORRECT LEGAL POSITION. THE MERE FACT THAT THE CHIEF COMMISSI ONER OF INCOME TAX ALSO HELD THIS VIEW SHOULD NOT HAVE INFLUENCED THE DECISION OF THE ASSESSING OFFICER. THERE IS NO SCOPE FOR ANY ADMINISTRATIVE INTERFERENCE IN ASSESSING OFFICER S EXCLUSIVE DOMAIN OF QUASI - JUDICIAL POWERS TO ASSESSEE INCOME OF THE ASSESS EE. PARA 20. FOR THE REASONS SET OUT ABOVE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. THE ASSESSING OFFICER IS, ACCORDINGLY, DIRECTED TO DELETE THE IMPUGNED ADDITION OF RS 2,20,57,530. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 7. SINCE THE FACTS OF THE INSTANT CASE IS IDENTICAL TO THE FACTS CONSIDERED BY THE TRIBUNAL FOR THE AY 2009 - 10, WE FOLLOW THE COORDINATE B ENCH ORDER OF THE TRIBUNAL FOR AY 2009 - 10 AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 5 ITA NO. 5576 / DEL/2013 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 05 TH DAY OF MARCH , 2015. SD/ - SD/ - ( B.C. MEENA) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 05 TH DAY OF MARCH , 2015 AKS. COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI