Appeal details
Counselvise Citation
59423114 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 8 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-02-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2008-2009
Appeal Filed On
11-06-2012
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 594/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 RAJASTHAN HOUSING BOARD JANPATH, JYOTI NAGAR, JAIPUR CUKE VS. THE DCIT CIRCLE- 6 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAALR 0046 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY : MRS. ROLEE AGARWAL (CIT-DR). LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06/01/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27 /02/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 16-03-2012 FOR THE ASSESSME NT YEAR 2008-09 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N NOT ALLOWING EXEMPTION U/S 10(2) OF THE ACT BY NOT TREA TING THE APPELLANT AS LOCAL AUTHORITY. ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 2 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT IS NOT ENTITLED TO EXEMP TION U/S 11 AND 12 OF THE I.T. ACT, 1961 2.1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONSIDERING THE AMOUNT UTILIZED BY THE ASSESSEE TOW ARDS ITS OBJECTIVE BEING UTILIZED NOT OUT OF THE INCOME BUT OUT OF OTHER MONIES WITHOUT ANY BASIS AND JUSTIFICATION. H E HAS FURTHER ERRED IN IGNORING THE AUDIT REPORT OF THE C HARTERED ACCOUNTANT IN THE PRESCRIBED STATUTORY FORM CERTIFY ING THE APPLICATION OF INCOME BY THE APPELLANT 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT DIRECTING THE ASSESSING OFFICER TO GRANT THE BENEFI T OF SECTION 36(1)(XII) OF THE ACT ON ACCEPTANCE OF APPL ICATION FILED BEFORE THE CENTRAL GOVT. FOR NOTIFICATION IN OFFICIAL GAZETTE UNDER THE SAID CLAUSE. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I.E. RAJASTHAN HOUSING BOARD IS ESTABLISHED BY GOVT. OF RAJASTHAN PURSUANT TO AND IN ACCORDANCE WITH THE PROVISION OF RAJASTHAN HOUSING BOARD ACT, 1970 WITH THE PRINCIPAL OBJECTIVES OF TO PROVIDE FOR MEASURES T O BE TAKEN TO DEAL WITH AND SATISFY THE NEED OF HOUSING ACCOMMODATION IN TH E STATE OF RAJASTHAN. ACCORDINGLY THE ASSESSEE FUNCTIONS WI TH THE MAIN OBJECTIVE OF PROVIDING LOW COST HOUSING ACCOMMODATION TO THE PUBLIC OF RAJASTHAN ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 3 ON COST/ MARGINAL PROFIT AND BELOW COST TO THE ECON OMICALLY WEAKER SECTIONS OF THE SOCIETY. 2.2 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY ITAT ORDER DATED 4-5-2012 IN IT A NO. 100/JP/2012 WHICH IS PASSED AFTER PASSING OF THE IMPUGNED ORDER BY THE LD. CIT(A) DATED 16-03-2012, CONSEQUENTLY LD. CIT(A) DID NOT H AVE THE BENEFIT OF ITAT ORDER. BY THE SAID ORDER ITAT FOLLOWING ITS E ARLIER DATED 31-03- 2009 IN ITA NO. 1599/JP/2008 HELD THE ASSESSEE TO B E ELIGIBLE FOR EXEMPTION U/S 11/12 OF I T ACT BY FOLLOWING OBSERVA TIONS:- 9. THE OBJECTIVES OF THE INSTITUTION HAVE ALREADY BEEN EXAMINED BY THE TRIBUNAL WHO DIRECTED TO GRANT REGI STRATION TO THE PRESENT INSTITUTION. THERE IS NO DOUBT IN THIS REG ARD. THEREFORE, LD. CIT WAS NOT JUSTIFIED IN HOLDING THAT IN VIEW OF AME NDED PROVISIONS OF SECTION 2(15), THE INSTITUTION DOES NOT REMAIN A CHARITABLE INSTITUTION AND, THEREFORE, THE OBJECTIVES OF THE IN STITUTION ALSO DOES NOT REMAIN AS CHARITABLE AND ACCORDINGLY WITHD RAWAL OF REGISTRATION, IN OUR CONSIDERED VIEW, WAS NOT JUSTIF IED. 10. ON SIMILAR FACTS, IN THE CASE OF GUJARAT CRICKE T ASSOCIATION, AHMEDABAD VS DIT(E) (SUPRA), THE TRIB UNAL BY PASSING A DETAILED ORDER HAS HELD THAT THE REGISTRATION CAN CELLED BY DIT(E) ON THE BASIS OF AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT WAS NOT JUSTIFIED AS AMENDED PROVISIONS DOES NOT FALL WI THIN THE PERMISSIBLE LIMIT OF SECTION 12AA(3) OF THE ACT AND ACCORDINGLY THE ORDER OF DIT(E) WAS CONSIDERED BAD IN LAW AND THE A PPEAL OF THE INSTITUTION WAS ALLOWED. ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 4 11. IN THE CASE OF CANE DEVELOPMENT COUNCIL, MAWANA VS CIT (SUPRA) SIMILAR VIEW HAS BEEN EXPRESSED BY DELH I BENCH OF THE TRIBUNAL. IT HAS BEEN HELD THAT OBJECTIVES OF THE I NSTITUTION DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(15) AND THEREFORE, THE ASSESSEE WAS ENTITLED TO REGISTRATION U/S 12AA OF T HE ACT. IN VIEW OF THE DISCUSSION OF OURS AND IN VIEW OF THE DECISI ON OF TRIBUNAL, WE ARE OF THE VIEW THAT LD. CIT WAS NOT CORRECT IN WIT HDRAWING REGISTRATION ALREADY GRANTED BY THE ORDER OF THE TR IBUNAL TO THE INSTITUTION. IF IN ANY YEAR, THE GROSS RECEIPTS OF THE INSTITUTION EXCEEDS RS. 10 LAKHS OR RS. 25 LAKHS, AS THE CASE M AY BE, THEN IN THAT YEAR, THE ASSESSING OFFICER IS EMPOWERED TO EX AMINE THE ALLOWABILITY OF EXEMPTION U/S 11 BUT THE SAME HAS N O EFFECT ON GRANTING THE REGISTRATION U/S 12AA OF THE ACT. ACC ORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT AND RESTORE THE REGISTR ATION ALREADY GRANTED U/S 12AA OF THE ACT. THUS,, THE APPEAL OF THE INSTITUTION IS ALLOWED. IT IS FURTHER CONTENDED THAT ONCE THE ASSESSEE IS E NTITLED TO EXEMPTION U/S 11 AND 12, THE NEXT ISSUE IS HOW THE APPLICATION OF INCOME IS TO BE COMPUTED IN ARRIVING AT THE INCOME. IN THIS CONNECT ION THE ASSESSEE HAS FILED THE AUDIT REPORT IN FORM NO.10B SHOWING THE COMPUTATION OF INCOME U/S 11. AS PER ANNEXURE TO THIS REPORT THE INCOME OF THE BOARD OF RS.42,95,36,433/- BEFORE INCOME TAX, DISALLOWANC E U/S 43B AND 40(A)(IA) HAS BEEN APPLIED TO THE EXTENT OF RS.56, 73,33,163/- TOWARDS THE OBJECT OF THE BOARD. THE AO HAS HOWEVER SOUGHT TO D ENY THE APPLICATION OF INCOME CLAIMED BY THE ASSESSEE ON THE GROUND THA T IT HAS NOT CONSIDERED THE DEPOSIT RECEIVED AND RECOVERY FROM D EBTORS IN CONSIDERING ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 5 THE APPLICATION OF INCOME. IT IS SUBMITTED THAT THE INCREASE IN DEBTORS CANNOT BE REDUCED FROM THE APPLICATION OF INCOME AS THE DEBTORS ARISE WHEN THE SALES ARE BOOKED. THE SALE IS ALREADY CONS IDERED IN INCOME/RECEIPT AND THEREFORE THE REDUCTION IN DEBTO RS CANNOT BE REDUCED FROM THE APPLICATION OF INCOME. SIMILARLY THE DEPOS ITS RECEIVED DO NOT CONSTITUTE INCOME OF THE ASSESSEE BEING IN THE NATU RE OF EARNEST MONEY DEPOSITED BY THE PROSPECTIVE ALLOTTEES OR BY THE CO NTRACTORS TOWARDS THE WORK WHICH IS TO BE REPAID OR ADJUSTED AGAINST THE INCOME/ EXPENDITURE. THESE ARE NEITHER THE INCOME OF THE ASSESSEE NOR WO ULD GO TO REDUCE THE APPLICATION OF INCOME. THEREFORE, THE DEPOSITS RECE IVED AND RECOVERIES FROM THE DEBTORS CANNOT BE REDUCED FROM THE AMOUNT OF APPLICATION OF INCOME. FURTHER, THE AO HAS CONSIDERED THE SURPLUS AT RS.44,61,86,515/- WITHOUT CONSIDERING THE DEPRECIATION OF RS.1,66,50 ,082/- AND INCOME TAX PAYMENT OF RS.18,08,60,576/-, WHICH IS INCORRECT. HON'BLE DELHI HIGH COURT IN CASE OF DIT VS. INDRAPRASTHA CANCER SOCIET Y 1I2 DTR 345 (2014) DATED 18-11-2014 AFTER CONSIDERING THE AMEN DMENT MADE BY FINANCE (NO.2) ACT, 2014 HELD THAT A CHARITABLE IN STITUTION WHICH HAS PURCHASED CAPITAL ASSET AND TREATED THE AMOUNT SPEN D ON THE PURCHASE OF CAPITAL ASSET AS APPLICATION OF INCOME, IS ENTITLED TO CLAIM DEPRECIATION ON ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 6 THE SALE OF CAPITAL ASSET UTILIZED FOR BUSINESS. SI MILARLY, HON'BLE GUJARAT HIGH COURT IN 162 ITR 612 HELD THAT ALL OUTGOINGS INCLUDING INCOME TAX HAVE TO BE DEDUCTED IN COMPUTING THE INCOME OF THE TRUST. THEREFORE, AFTER CONSIDERING THE DEPRECIATION AND INCOME TAX PAID TH E SURPLUS WOULD BE RS.24,86,75,857/- AS AGAINST RS. 44,61,86,515/-CONS IDERED BY THE LOWER AUTHORITIES. BOTH THE LOWER AUTHORITIES HAVE ASSUME D THAT AMOUNT APPLIED BY THE ASSESSEE TOWARDS ITS OBJECTIVE IS NOT OUT OF INCOME BUT OUT OF THE DEPOSITS RECEIVED OR RECOVERIES FROM DEBTORS. THE LD. CIT(A) HAS FURTHER HELD THAT LOAN AND ADVANCES GIVEN AND AMOUNT TRANSF ERRED TO SUSPENSE ACCOUNT (WORK) IS NOT APPLICATION OF INCOME. IT IS SUBMITTED THAT THE ASSESSEE HAS REPAID THE LOAN OF RS. 3.70 CRORES WHICH IS APPLICATION OF INCOME AS HELD BY KARNATAKA HIGH COURT IN CASE OF C IT VS. JANMA BHUMI 242 ITR 457. SIMILARLY THE ADVANCE INCLUDE PAYMENT OF INCOME TAX OF RS. 18,08,60,576/- WHICH IS TO BE CONSIDERE4D AS APPLIC ATION OF INCOME AS HELD BY MADRAS HIGH COURT IN 153 ITR CASE IT IS NOT REDUCED IN ARRIVING THE SURPLUS OF THE ASSESSEE. AT THE SAME TIME THE DEPOSIT RECEIVED OR RECOVERY OF DEBTORS IS NOT INCOME AS EXPLAINED ABOV E AND THEREFORE THE SAME CANNOT BE REDUCED FROM THE APPLICATION OF INCO ME. IN VIEW OF ABOVE, THE AO BE DIRECTED TO ASSESS THE INCOME OF T HE ASSESSEE AT RS. NIL ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 7 U/S 11 OF THE INCOME TAX ACT, 1961. IT IS CLAIMED T HAT ASSESSEE'S INCOME BEING EXEMPT U/S 11 AND 12 OF THE ACT. THERE WILL BE NO TAXABLE INCOME. IN ANY CASE, THE DEDUCTION U/S 36(1)(XII) DENIED BY THE LD. CIT(A) IS ELIGIBLE TO THE ASSESSEE EVEN WITHOUT REGISTRATION U/S 11 AND IN ACCORDANCE WITH NOTIFICATION (SENT BY REGISTERED POST ON 6-05- 2007) ISSUED IN THE OFFICIAL GAZETTE. 2.3 THE LD. DR IS HEARD. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THIS BENCH OF ITAT IN ITS TWO EARLIER ORDERS INCLUDING THE ONE FOR THE SAME ASSESSMENT YEAR HAS HELD THAT THE ASSESSEE WOULD BE ELIGIBLE FOR BENEFITS OF SECTION 11 AND 12 . THE LD. CIT(A) PASSED THE IMPUGNED ORDER WITHOUT BENEFIT OF ITAT O RDER DATED INASMUCH AS THE IMPUGNED ORDER IS PASSED BY THE LD. CIT(A) O N 16-03-2012. CONSEQUENTLY, THE ISSUE OF APPLICABILITY OF SECTION 11 AND 12 INCLUDING THE ISSUE OF SEC 36(1)(XII) STANDS DECIDED IN FAVOU R OF THE ASSESSEE AND THE MATTER IS RESTORED BACK TO THE FILE OF THE AO TO EX TEND THE BENEFIT OF SECTION 11 AND 12 TO THE ASSESSEE IN ACCORDANCE WIT H LAW. ITA NO. 594/JP/2012 RAJASTHAN HOUSING BOARD VS. DCIT, CIRCLE- 6, JAIPUR . 8 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/201 5. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH FEB, 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- RAJASTHAN HOUSING BOARD , JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE- 6, JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), JAIPUR 3. VK;DJ VK;QDR@ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.594/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR
