Asst. Commissioner of Income Tax, (Exemptions), Hyderabad V. Hyderabad Metropolitan Development Authoirity(formerly Hyderabad Urban Development Authority), Hyderabad

ITA 615/Hyd/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3756 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 27-11-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Condonation of delay
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 615/HYD/2018 ASSESSMENT YEAR: 2014-15 ASST. COMMISSIONER OF INCOME TAX (EXEMPTIONS), HYDERABAD CIRCLE, HYDERABAD VS HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY (FORMERLY HYDERABAD URBAN DEVELOPMENT AUTHORITY) , SECUNDERABAD [PAN: AAALH0058D] (APPELLANT) (RESPONDENT) C.O. NO. 26/HYD/2018 (IN ITA NO. 615/HYD/2018) ASSESSMENT YEAR: 2014-15 HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY (FORMERLY HYDERABAD URBAN DEVELOPMENT AUTHORITY) , SECUNDERABAD [PAN: AAALH0058D] VS ASST. COMMISSIONER OF INCOME TAX (EXEMPTIONS), HYDERABAD CIRCLE, HYDERABAD (CROSS-OBJECTOR) (RESPONDENT) FOR REVENUE : SHRI Y.V.S.T.SAI, CIT-DR FOR ASSESSEE : SHRI S.RAMA RAO, AR DATE OF HEARING : 27-11-2019 DATE OF PRONOUNCEMENT : 28-11-2019 O R D E R PER D.KARUNAKARA RAO, A.M. : THIS APPEAL OF REVENUE IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-9, HYDERABAD, DATED 31-01-2018, FOR THE AY.2014-15. ITA NO. 615/HYD/2018 CO NO. 26/HYD/2018 :- 2 -: 2. THE ASSESSEE HAS FILED CROSS-OBJECTION AGAINST THE APPEAL OF REVENUE WITH A DELAY OF 11 (ELEVEN) DAYS, FOR WHICH THE ASSESSEE HAS FILED AN AFFIDAVIT, SEEKING CONDONATION OF DELAY . CONSIDERING THE PETITION FOR CONDONATION OF DELAY IN RE SPECT OF ASSESSEE AND BEING SATISFIED WITH THE REASONABLE CAUS E FOR THE DELAY, WE HEREBY CONDONE THE DELAY IN FILING THE CRO SS-OBJECTION OF ASSESSEE, WHICH IS ADMITTED AND BEING HEARD ON MERITS. 3. BRIEF FACTS OF THE CASE ARE THAT, ASSESSEE-LOCAL AU THORITY IS AN URBAN DEVELOPMENT AUTHORITY CONSTITUTED UNDER THE ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975, BELATEDL Y FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 0 3-07-2015, DECLARING LOSS OF RS.66,63,11,294/-. FURTHER, THE AUD IT REPORT DT.24-06-2015 WAS ALSO FILED BELATEDLY. THE SAME WAS TAKEN UP FOR SCRUTINY BY ISSUING NOTICE U/S.143(2) OF THE INCOME T AX ACT [ACT] ON 19-09-2016. THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 30-12-2016 BY COMPUTING THE ASSESSED INCOME AT RS.2,14,55,61,460/- BY MAKING THE FOLLOWING ADDITIONS : AMOUNT (RS) A. DEPRECIATION ON MEGA CITY PROJECTS 6,94,45,882 B. UN - UTILIZED DEVELOPMENT CHARGES BEING LESS THAN 85% 1,66,27,65,283 C. SALE PROCEEDS FROM SALE OF PLOTS AS REDUCED BY DEVELOPMENT CHARGES 23,78,74,141 D. DISALLOWANCE OF LOSS OF SERVICE CHARGES 1,96,31,398 E. DEVELOPMENT CHARGES COLLECTED BY GHMC ON BEHALF OF HMDA 63,27,00,000 F. ADDITION TOWARDS INTEREST CHARGEABLE @12% 12,87,33,847 3.1. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(A). THE LD.CIT(A) AFTER CONSIDE RING THE ITA NO. 615/HYD/2018 CO NO. 26/HYD/2018 :- 3 -: SUBMISSIONS MADE BY THE ASSESSEE, REMANDED THE ISSUE BACK TO THE FILE OF AO TO RE-COMPUTE THE INCOME IN THIS YEAR AS IN EARLIER YEARS, FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRI BUNAL IN ITA NO.03/HYD/2017 AND OTHERS IN PARA NO.18, FOR THE AYS. 2003-04 TO 2013-14, VIDE ORDER DT.31-10-2017. 3.2. AGGRIEVED, NOW THE REVENUE IS IN APPEAL BEFORE US, BY RAISING THE FOLLOWING GROUNDS: 1) THE ORDER OF THE LD.CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) LD.CIT(A) ERRED IN NOT ADJUDICATING THE FOLLOWIN G ADDITIONS MADE BY THE AO WHICH ARE INDEPENDENT FROM GRANTING REGISTRA TION U/S. 12AA AND BEYOND ELIGIBILITY OF EXEMPTION U/S. 11 OF THE ACT. DEPRECIATION ON MEGA CITY PROJECTS RS. 6,94,45,882/ - UN-UTILISED DEVELOPMENT CHARGES BEING LESS THAN 85% RS. 16,62,76,583/- SALE PROCEEDS FROM SALE OF PLOTS AS REDUCED BY DEV. CHARGES RS. 23,78,74,141/- DISALLOWANCE OF LOSS OF SERVICE CHARGES RS. 1,96,31 ,398/- DEVELOPMENT CHARGES COLLECTED BY GHMC RS. 63,27,00,000/- ADDITION TOWARDS INTEREST CHARGEABLE @ 12% RS. 12,87,33,847/- 3) CIT(A) IS ERRED IN DIRECTING THE AO TO RE-COMPUT E THE INCOME AFTER CONSIDERING 12AA REGISTRATION GRANTED BY THE ITAT I NSPITE OF THE FACT THAT THE REGISTRATION GRANTED U/S. 12AA W.E.F 01-04-2002 RELYING ON 1ST PROVISO OF SEC. 12A(2) OF IT ACT, IS NOT CORRECT WH EN THIS SECTION WAS APPLICABLE ONLY TO APPLICATIONS MADE ON OR AFTER 01 -06-2007 & ASSESSEE HAD APPLIED ON 02.03.2017. 4) CIT(A) ERRED IN CONSIDERING THAT COMMISSIONER OF INCOME TAX HAS TO OVER LOOK OR IGNORE THE ACTUAL ACTIVITIES EVEN THOU GH IT IS AVAILABLE ON RECORDS EXPLAINING CONSISTENT COMMERCIAL ACTIVITY. 5) CIT(A) OUGHT TO HAVE APPRECIATE THE FACT THAT PR OVISO TO SEC. 12(A)(1)(A) WAS SQUARELY APPLICABLE TO THIS CASE. ITA NO. 615/HYD/2018 CO NO. 26/HYD/2018 :- 4 -: 6) CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIATING THA T CIT(E) IS DUTY BOUND TO LOOK INTO THE NATURE AND QUANTUM OF COMMERCIAL R ECEIPT AVAILABLE ON RECORDS WHILE DECIDING THE ASSESSEE'S APPLICATION F OR GRANT OF REGISTRATION U/S. 12AA OF THE ACT. 7. CIT(A) ERRED CONSIDERING THE GRANTING REGISTRATI ON U/S. 12AA FOR AY 2009-10 ONWARDS IN SPITE OF THE FACT THAT ASSESSEE IS CONSISTENTLY EARNING INCOME FROM COMMERCIAL ACTIVITIES IN CONTRAVENTION OF PROVISIONS OF SEC. 2(15) OF THE IT ACT. 8. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING OF THE CASE. 4. WE HEARD BOTH THE COUNSELS AND THE MATERIAL PLACED O N RECORD, ALONG WITH THE DECISION OF THE CO-ORDINATE BENC H OF ITAT IN THIS REGARD. WE OBSERVE THAT IDENTICAL ISSUE HAS BEEN D ECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.03/HY D/2017 AND OTHERS, VIDE ORDER DT.31-10-2017 FOR THE AYS.2003-04 TO 2013-14. FOR THE SAKE OF COMPLETENESS, RELEVANT LINES (PARA NO. 18) ARE EXTRACTED HERE UNDER: SINCE WE HAVE ALREADY HELD THAT THE ASSESSEE IS EN TITLED FOR REGISTRATION U/S.12A OF THE ACT W.E.F.01-04-2002 ONWARDS AND ALS O FROM THE AY.2009- 10 ONWARDS, WE ARE OF THE OPINION THAT ALL THESE AS SESSMENTS HAVE TO BE REMANDED TO THE FILE OF THE AO FOR RE-CONSIDERATION OF THE ISSUES IN THE LIGHT OF THE REGISTRATION GRANTED TO THE ASSESSEE U/S.12A OF THE IT ACT W.E.F. 01-04-2002. 4.1. SINCE THE FACTS BEFORE US ARE IDENTICAL TO ONE AS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL, RESPECTFULLY FOL LOWING THE SAME, WE UPHOLD THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO RE-COMPUTE THE INCOME IN THIS YEAR AS IN EARLIER YEA RS, AS DIRECTED BY THE CO-ORDINATE BENCH OF ITAT. THE GROUNDS RAISED BY REVENUE ARE ACCORDINGLY DISMISSED. ITA NO. 615/HYD/2018 CO NO. 26/HYD/2018 :- 5 -: 4.2. SINCE THE APPEAL OF REVENUE IS DISMISSED, THE C ROSS- OBJECTION OF ASSESSEE BECOMES INFRUCTUOUS AND THE SAM E IS ALSO DISMISSED. 5. TO SUM-UP, THE APPEAL OF REVENUE AS WELL AS THE C ROSS- OBJECTION RAISED BY ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2019 SD/- SD/- (V. DURGA RAO) (D. KARUNAKARA R AO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH NOVEMBER, 2019 TNMM ITA NO. 615/HYD/2018 CO NO. 26/HYD/2018 :- 6 -: COPY TO : 1. THE ASST.COMMISSIONER OF INCOME TAX(EXEMPTIONS) , HYDERABAD CIRCLE, HYDERABAD. 2. HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY (FORMERLY HYDERABAD URBAN DEVELOPMENT AUTHORITY), H UDA COMPLEX, TARNAKA, SECUNDERABAD. 3. CIT(APPEALS)-9, HYDERABAD. 4. CIT(EXEMPTIONS)-HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.