Construction Industry Development Council, New Delhi V. ITO (Exemption), New Delhi

ITA 5983/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2675 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-04-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SUDHA KUMARI
• Assessee Lawyers: VINOD KR BINDAL SANJEEV BINDAL
• Keywords: Business income; Charitable institution; Opportunity of being heard; Benefit of exemption
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-5983/DEL/2012 (ASSESSMENT YEAR-2009-10) CONSTRUCTION INDUSTRY DEVELOPMENT COUNCIL, VS ITO ( EXEMPTION), 801, HEMKUNT CHAMBER, TRUST WARD-III, 89, NEHRU PLACE, DELHI. NEW DELHI-110019. PAN-AAATC4750F (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VINOD KR. BINDAL, SANJEEV BINDAL, CA RESPONDENT BY: DR. SUDHA KUMARI, CIT DR. ORDER PER DIVA SINGH, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 15.11.2012 OF CIT(A)-XXI, NEW DELHI PERTAINING TO 2009-10 ASSE SSMENT YEAR ON THE FOLLOWING GROUNDS :- 1. THE LD. APPELLATE AUTHORITY ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ACTIVITIES OF THE APPELLANT-COUNCIL AS BUSINESS ACTIVITIES AND TAXING THE RECEIPTS U/S 28(III) OF T HE ACT, AND, THUS, DENYING EXEMPTION U/SS 11 AND 12 BY ALLEGING THAT V ARIOUS ACTIVITIES CARRIED ON BY IT FELL WITHIN THE PURVIEW OF THE PROHIBITORY PROVISO TO THE AMENDED DEFINITION OF C HARITABLE PURPOSE AS PER SECTION 2(15) OF THE ACT, THOUGH WH ICH IS FACTUALLY INCORRECT. THUS, THE ASSESSMENT MADE AT BUSINESS INCOME OF RS.1,80,66,987/- ON MERE SURMISES AND CON JECTURES SHOULD BE REVERSED AND THE EXEMPTION U/SS 11 AND 12 OF THE ACT SO DENIED SHOULD BE ALLOWED. 2. THE LD. APPELLATE AUTHORITY ERRED IN LAW AND ON FAC TS IN CONFIRMING THE DISALLOWANCE OF RS.6,37,84,921/- MAD E U/S 40(A)(IA) ALLEGING NON-DEDUCTION OF TDS ON PAYMENTS MADE TO CIVTA BY IGNORING THAT THE PROVISIONS OF CHAPTER XV II-B ARE NOT I.T.A .NO.-5983/DEL/2012 2 APPLICABLE ON THE SHARING OF COLLECTIONS. THUS, TH E DISALLOWANCE SO MADE SHOULD BE DELETED. 3. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUTE, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE IN THE YEAR UNDER CONSIDERATION FILED ITS RETURN ON 29.09.2009, DECLA RING NIL INCOME ALONGWITH AUDIT REPORT IN FORM NO.-10B AND ALSO BALANCE-SHEET , INCOME AND EXPENDITURE ACCOUNT WITH RELEVANT SCHEDULES. THE CASE WAS PROC ESSED U/S 143(1) ON 24.01.2011 AND SUBSEQUENTLY BY ISSUANCE OF NOTICE U /S 143(2) ACCOMPANIED WITH QUESTIONNAIRE ETC. U/S 142(1), IT WAS SELECTED FOR SCRUTINY. 2.1. THE AO IN THE SCRUTINY ASSESSMENT OBSERVED THA T THE ASSESSEE STANDS REGISTERED U/S 12A VIDE LETTER NO.-DIT(EXEMPTIONS)/ 96-97/C-461/96/270 DATED 17.10.1996 AND IS A SOCIETY FORMED ON 07.03.1996 WI TH CONTRIBUTION OF RS.2.47 CRORE MADE TOWARDS ITS CORPUS BY THE PLANNING COMMI SSION OF INDIA WITH CERTAIN CONDITIONS AS PER SANCTION LETTER DATED 12.11.1997. THE AO EXTRACTED FROM THE ASSESSEES MA THE FOLLOWING OBJECTIVES:- - TO PROMOTE, UPGRADE STRENGTHEN AND DEVELOP THE CONSTRUCTION INDUSTRY IN INDIA IN ALL ASPECTS, ITS MAGNITUDE, CO RPORATE STRENGTH, ITS DIVERSITY AND SPECIALIZATION PROJECT EXECUTION SYSTEM MACHINERY AND MATERIALS BANKING AND FINANCIAL SUPPORT SYSTEM ETC. - TO ENGENDER QUALITY SPEED ECONOMY AND EFFICIENCY IN ALL TYPE OF CONSTRUCTION ACTIVITY NECESSARY FOR ACHIEVING THE O BJECTIVES. - TO BE RESPONSIVE TO THE ECONOMIC TECHNICAL ENVIR ONMENTAL AND SOCIAL CHANGES AND POLICES. - TO ACT AS A NODAL AGENCY FOR AN OVERALL GROWTH AND DEVELOPMENT OF THE CONSTRUCTION SECTOR. 2.2. HOWEVER BEING OF THE VIEW THAT THE ASSESSEE IS NEIT HER IN THE FIELD OF EDUCATION NOR IN THE FIELD OF MEDICAL RELIEF OR REL IEF OF POOR, THE AO REQUIRED THE ASSESSEE TO EXPLAIN HOW THE BENEFIT OF EXEMPTION U/ S 11/12 WAS AVAILABLE IN VIEW OF THE PROVISO TO SECTION 2(15) SINCE ACCORDING THE ASSESSEES ACTIVITIES WERE CONSIDERED TO BE FALLING WITHIN THE SCOPE OF GENER AL PUBLIC UTILITY. I.T.A .NO.-5983/DEL/2012 3 2.3. THE AO TOOK NOTE OF THE FACT THAT THE RECEIPT OF INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS FROM THE FOLLOWIN G HEADS :- S.NO. HEADS SCHEDULE NO. AMOUNT (RS.IN LAKH) 1. SUBSCRIPTION 10 18.20 2. RECEIPTS FROM CONFERENCE AND SEMINARS 11 34.94 3. WORKSHOPS, TRAINING PROGRAMMES & PROJECTS 12 1724.27 4. OTHER INCOME 14 8.37 2.4. THE ASSESSEE EXPLAINED THAT THE MAIN ACTIVITY WAS TO IMPART TRAINING TO THE CONSTRUCTION, WORK FORCE WITH A VIEW TO EDUCATE THE M IN VOCATIONS RELATING TO CIVIL CONSTRUCTIONS SO THAT THEY ARE ABLE TO SUPPORT THEI R LIVELIHOOD; AND ITS EDUCATION AND TRAINING PROGRAMMES ARE DESIGNED FOR THE WEAKER AND MARGINAL SECTIONS OF THE INDIAN SOCIETY WITH A PARTICULAR FOCUS ON WOMEN ; MEMBERS OF SOCIALLY CHALLENGED GROUPS, UNEMPLOYED YOUTH AND PEOPLE LIVI NG BELOW THE POVERTY LINE. THIS IS DONE IN TERMS OF THE DIRECTION OF THE GOVER NMENT OF INDIA AND THAT THE ASSESSEES SOCIETY WAS SET UP IN 1996 BY THE PLANNI NG COMMISSION OF GOVERNMENT OF INDIA, PRIMARILY TO ACT AS THE APEX N ODAL AUTHORITY TO LOOK INTO CONSTRUCTION RELATED PROBLEMS COMMON TO ALL SECTOR S UNDER DIFFERENT WINGS OF THE GOVERNMENT. THESE ARGUMENTS ARE FOUND RECORDED IN PAGE 3-4 OF THE ASSESSMENT ORDER. 2.5. HOWEVER, NOT CONVINCED, THE AO RELYING UPON TH E JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF SOLE TRUSTEE LOK SHIKSHAN TRUST VS CIT, 101 ITR 234 (SC) HELD THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE FALL OUTSIDE THE PURVIEW OF CHARITABLE PURPOSE AS PER THE DEFINITI ON CONTAINED IN SECTION 2(15) OF THE ACT. THE ASSESSEES CASE WAS HELD TO BE CLE ARLY HIT BY THE AMENDMENT MADE BY WAY OF PROVISO TO SECTION 2(15) OF THE INCO ME TAX ACT, 1961. AS SUCH IT WAS HELD THAT THE ASSESSEE WOULD NOT BE ENTITLED FO R EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT. I.T.A .NO.-5983/DEL/2012 4 2.6. THE AO FURTHER OBSERVED THAT SINCE THE PROVISO IS APPLICABLE W.E.F ASSESSMENT YEAR 2009-10, A PROPOSAL FOR WITHDRAWAL OF REGISTRATION U/S 12AA HAS ALREADY BEEN MOVED TO THE DIT(E). 3. IN APPEAL BEFORE THE CIT(A), THE ACTION OF THE A O WAS CONFIRMED. 4. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEF ORE THE TRIBUNAL. LD. AR MR. VINOD KR. BINDAL, INVITING ATTENTION TO THE SY NOPSIS FILED ALONGWITH THE MEMORANDUM OF ASSOCIATION & ARTICLES OF ASSOCIATION ACCOMPANIED WITH PAPER BOOK OF CASE-LAWS AND REPORT OF THE WORKING GROUP O N CONSTRUCTION FOR THE 11 TH FIVE YEAR PLAN (2007-2012) CONTENDED THAT CLAUSE 2. 1 OF THE MEMORANDUM OF ASSOCIATION WOULD SHOW THAT THE ASSESSEE COUNCIL IS A NON-PROFIT CHARITABLE PROFESSIONAL SOCIETY WITH THE AVOWED OBJECTS TO PRO MOTE, UPGRADE STRENGTHEN AND DEVELOP THE CONSTRUCTION INDUSTRY IN INDIA AS HAS B EEN NOTED IN THE ASSESSMENT ORDER ITSELF AND IT ACTS AS A NODAL AGENCY FOR AN O VERALL GROWTH AND DEVELOPMENT OF THE CONSTRUCTION SECTOR AS A WHOLE. ATTENTION W AS INVITED TO PAGES 11 OF THE PAPER BOOK WHICH ADDRESS THE VOCATIONAL TRAINING IN ITIATIVES; PAPER BOOK PAGE 18 WAS REFERRED TO IN ORDER TO EMPHASIZE THAT VARIOUS SCHEMES WERE LAUNCHED BY THE ASSESSEE UNDER THE MINISTRY OF LABOUR & EMPLOYMENT, DIRECTORATE GENERAL OF EMPLOYMENT & TRAINING AND HAD EVOLVED A SKILL DEVEL OPMENT INITIATIVE SCHEME (SDIS) BASED ON MODULAR EMPLOYABLE SKILLS (MES) TO TRAIN, TEST AND CERTIFY SKILLS OF YOUNG POPULATION IN THE COUNTRY TO INCREA SE THEIR EMPLOYABILITY AND PRODUCTIVITY TO MEET WORKFORCE REQUIREMENTS, AS WEL L AS TO IMPROVE GLOBAL COMPETITIVENESS OF INDUSTRIES. FOCUS ON CERTIFICAT ION OF SKILLS RECOGNIZED NATIONALLY AND INTERNATIONALLY WHEREIN THE LIST OF ASSESSING BODIES INCLUDES THE ASSESSEES NAME MENTIONED AT SERIAL NO.-4 WAS REFER RED TO. IT WAS SUBMITTED THAT THE PERSONS DESIROUS OF UNDERGOING TRAINING UNDER T HE SCHEME COULD CONTACT CONCERNED REGIONAL DIRECTORS OF APPRENTICESHIP TRAI NING (RDATS) OF THE CONCERNED STATE. INVITING ATTENTION TO PAPER BOOK PAGE-7, IT WAS SUBMITTED THAT IT CONTAINS THE PHOTOCOPY OF THE APPLICATION OF THE CI DC PROGRAMME FOR TESTING & CERTIFICATION OF CONSTRUCTION WORKERS; PAPER BOOK P AGE 20-24 WERE ADDRESSED TO I.T.A .NO.-5983/DEL/2012 5 SHOW THE AFFILIATIONS AND AUTHORIZATION IN WHICH TH E ASSESSEE HAD ENTERED INTO. INVITING ATTENTION TO PAPER BOOK PAGE NO-29-31, IT WAS SUBMITTED THAT A WELL- DEVELOPED AND DOCUMENTED PROCEDURE FOR TESTING AND CERTIFICATION WAS ADDRESSED; PAGES 32-34, IT WAS SUBMITTED WOULD SHOW THAT CIDC TRAINING CENTRE IN INTERIORS OF CHHATTISGARH, MADHYA PRADESH, UTTAR PRADESH, BI HAR, RAJASTHAN, HARYANA, MAHARASHTRA, JHARKHAND ETC. WERE RUNNING AND PAPER BOOK PAGE 34 WOULD SHOW THAT THERE WAS ALSO A PLACEMENT SOCIETY WHO ORGANIZ ED ROJGAR MELA ETC. ACCORDINGLY IT WAS HIS CONTENTION THAT THE ASSESSEE IS IMPARTING EDUCATION AS HAS BEEN CONSIDERED BY VARIOUS DECISIONS. SPECIFIC AT TENTION WAS INVITED TO NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND RESEARCH ( NICMAR) VS ITO (1990) 34 ITD 445 (BOM.), COPY OF THE SAME IS PLACED AT PA GE 14-20. ATTENTION WAS ALSO INVITED TO PAPER BOOK PAGE 20A TO 20D WHEREIN THE ASSESSEE SOUGHT TO MAKE A COMPARISON WITH THE OBJECTS OF NICMAR WITH THE ASSE SSEE ON THE BASIS OF WHICH IT WAS HIS SUBMISSION THAT THE CASE IS FULLY COVERE D IN THE ASSESSEES FAVOUR. SPECIFIC ATTENTION WAS PLACED ON DECISIONS REFERRED TO IN SERIAL NO.-11-12 AS UNDER : 11. THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VS DGIT 2011-TIOL-614-HC-DEL-IT; 12. PHD CHAMBER OF COMMERCE & INDUSTRY VS DIT 2012-TIOL - 906-HC-DEL-IT 4.1. INVITING ATTENTION TO PAGES 31-33 OF THE PAPER BOOK, IT WAS HIS SUBMISSION THAT THIS WOULD SHOW HOW FOR THE PURPOSES OF CERTIF ICATION, ASSESSMENTS OF SKILLS ARE MADE AND HOW THE WEIGHTAGE IS GIVEN TO TRAINING IN THE CLASS-ROOM AND ON THE TRAINING SITE ITSELF. ACCORDINGLY IT WAS HIS SUBM ISSION THAT INFACT THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF SOLE TRUST EE LOK SHIKSHAN TRUST VS CIT, 101 ITR 234 (SC), SUPPORTS THE CASE OF THE ASS ESSEE. IT WAS ALSO HIS SUBMISSION THAT TILL DATE THE REGISTRATION GRANTED U/S 12AA HAS NOT BEEN WITHDRAWN BY THE DEPARTMENT. I.T.A .NO.-5983/DEL/2012 6 5. THE LD. CIT DR PLACED HEAVY RELIANCE UPON THE IM PUGNED ORDER AS WELL AS THE ASSESSMENT ORDER HOWEVER IN RESPONSE TO A QUERY FROM THE BENCH AS TO WHERE IS THE SPECIFIC DISCUSSION ON THE FACTS QUA THE CLA IM OF THE ASSESSEE THAT IT IS ENGAGED IN IMPARTING EDUCATION. LD. CIT DR PLACED RELIANCE UPON THE IMPUGNED ORDER. IT WAS POINTED OUT TO THE LD. DR THAT THE A O HAD PROCEEDED ON THE FOOTING THAT THE ASSESSEES CASE IS COVERED UNDER THE GENE RAL PUBLIC UTILITY AS PER SECTION 2(15) OF THE ACT AND LOOKING AT THE CONSIST ENT CLAIM BEFORE THE AO AND CIT(A). ON THE ISSUE OF IMPARTING EDUCATION AND H AVING VARIOUS CENTRES OF LEARNING IN INTERIOR PARTS OF THE COUNTRY, IT IS SE EN THAT THESE IS NO DISCUSSION. IT IS SEEN THAT THE CONSISTENT STAND OF THE ASSESSEE THAT IT IMPARTS EDUCATION WHEREIN IT HAS AFFILIATION WITH VARIOUS UNIVERSITIES AND COLLE GES HAS SPECIFIC AND SCIENTIFIC WAYS OF GRADING AND CERTIFYING AND IS RUNNING VARIO US CENTRES WHEREIN TRAINING HAS BEEN IMPARTED WHERE SPECIFIC MODULES FOR GRADIN G AND CERTIFYING AS WELL AS ASSESSING THE SKILL IMPARTED TO THE STUDENTS HAS AL L BEEN ELABORATELY ADDRESSED THE ORDERS ARE SILENT AND HAVE PROCEEDED ON LEGAL PRINC IPLES. THERE IS NO DISCUSSION IN THE IMPUGNED ORDER AS WELL AS THE ASSESSMENT ORD ER ON THE SPECIFIC FACTS OF THE ASSESSEES CASE. THE DISCUSSION ON LEGAL PRINCIPLE S HAS RELEVANCE ONLY ONCE THE FACTS ARE ADDRESSED. IN THE ABSENCE OF DISCUSSION ON FACTS THE DISCUSSION ON LEGAL PRINCIPLES IS WITHOUT ANY MERIT. ACCORDINGLY WE DE EM IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AS WELL AS THE ASSESSMENT ORDER AND RESTORE THE ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO COMPLETE T HE ASSESSMENT DENOVO. THE AO SHALL PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW DISCUSSING THE FACTS OF THE ASSESSEE AND AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. I.T.A .NO.-5983/DEL/2012 7 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES.. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2013. SD/- SD/- (P.K.BANSAL) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/05/2013 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, DELHI