AI Insights
The case involves the Ahmedabad Urban Development Authority (AUDA) appealing against the order of the Principal Commissioner of Income Tax (Exemption), which had invoked revisionary powers under section 263 of the Income Tax Act, 1961. The Principal CIT had found the assessment order passed by the AO to be erroneous and prejudicial to the interests of the Revenue, as it allowed capital expenditure without proper examination in light of section 13(8) of the Act. The Tribunal, however, noted that the issue had been previously decided in favor of the assessee by the Gujarat High Court and affirmed by the Supreme Court, leading to the dismissal of the Principal CIT's order.
Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 131368 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-04-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
27-03-2023
Assessment Year
2017-2018
Appeal Filed On
13-03-2022
Judgement Text
THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Ah medabad Urban Develop ment Authority, Us man pura, Ah me dab ad PAN: AAAL A0233B (Appellant) Vs DCIT (Ex emp tio n), Ah med abad (Resp ondent) Asses see b y : Shri S. N. Sopa rkar, Sr. A. R. & Shri Parin Shah, A. R. Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 28-03 -2 023 Date of pronouncement : 19-04 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Exemption), Ahmedabad, in proceeding u/s. 263 of the Act vide order dated 08/02/2022. 2. The assessee has raised the following grounds of appeal:- ITA No. 66/Ahd/2022 Assessment Year : 2017-18 I.T.A No. 66/Ahd/2022 A.Y. 2017-18 Page No. Ahmedabad Urban Development Authority (AUDA) vs. DCIT (Exemption) 2 “1. Ld. CIT (Exemptions) erred in law and on facts invoking the provisions of Sec. 263 if the Act to hold scrutiny assessment order passed u/s 143(3) of the Act as erroneous and prejudicial to the interest of Revenue. 2. Ld. CIT (E) erred in law and on facts in holding order as erroneous and prejudicial to the interest of revenue on account of AO having allowed capital expenditure of Rs. 2, 03, 54, 26,000/- without properly examining the expenses in view of provisions of Sec. 13(8) of the Act as well as case records of preceding year and without obtaining any supporting details and/or proper verification. 3. Ld. CIT (E) erred in law and on facts holding order passed by AO following favorable judgment of Hon'ble Gujarat High Court in case of appellant as erroneous and prejudicial to the interest of Revenue since SLP filed by the department is admitted & pending for adjudication by Hon'ble Apex Court. 4. Ld. CIT (E) erred in law and on facts in invoking revisionary powers despite AO making full inquiry, analyzing the accounts, submissions & explanation of the appellant before passing assessment order u/s 143(3) of the Act. 5. Ld. CIT (E) erred in law and on facts directing AO to disallow capital expenditure of Rs. 2, 03, 54, 26,000/- ignoring the submissions that order of AO based on jurisdictional high court judgment which is operative" cannot be treated as erroneous.” 3. The brief facts of the case are that the assessee filed return of income for assessment year 2017-18 declaring total income of Nil. Su bsequently, the case was selected under CASS and assessment was finalized under section 143(3) of the Act at an income of 94,91,81,330/-. The Principal CIT observed that though the claim of deduction of the assessee has been withdrawn by the assessing officer in light of provisions of section 13(8) of the Act by stating that the decision of the Honourable High Court of Gujarat I.T.A No. 66/Ahd/2022 A.Y. 2017-18 Page No. Ahmedabad Urban Development Authority (AUDA) vs. DCIT (Exemption) 3 is not being considered in the instant case till the issue is finally settled by the Honourable Supreme Court, where SLP of the Department has been admitted and is pending adjudication, however, the AO still allowed the claim of capital expenditures incurred by the assessee to the tune of 2,03,54,26,000/-. As per the Principal CIT, if the exemption claimed by the assessee is withdrawn in the light of the provisions of section 13(8) of the Act, then the capital expenditure is also required to be disallowed and added back to the total income of the assessee. The Principal CIT observed that in the immediately preceding year i.e. assessment year 2016-17, the capital expenditure was disallowed by the then AO in the light of the provisions of section 13(8) of the Act. However, during the year under consideration, the AO has allowed the capital expenditure incurred by the assessee amounting to 2,03,54,26,000/ -. In view of the above, the Principal CIT held that the order passed by the assessing officer, by allowing the above claim of the assessee with respect to capital expenditure incurred by the assessee, without properly examining the expenses in view of the provisions section 13(8) of the Act as well as case records of earlier assessment years, is erroneous and prejudicial to the interests of the Revenue. 4. The assessee is in appeal before us against the aforesaid order passed by Principal CIT. The counsel for the assessee submitted that Principal CIT erred in holding that the assessment order passed by the AO is erroneous and prejudicial to interest of Revenue. The Principal CIT has failed to appreciate that the Gujarat High Court, at the time when the 263 proceedings were initiated by him, had already decided the issue in favour of the assessee by I.T.A No. 66/Ahd/2022 A.Y. 2017-18 Page No. Ahmedabad Urban Development Authority (AUDA) vs. DCIT (Exemption) 4 holding that the assessee is a charitable organization within the meaning of section 2(15) of the Act. The Ld. Counsel for the assessee submitted that at the time when the 263 proceedings were initiated, the Gujarat High Court in the case of Ahmedabad Urban Development Authority v. ACIT 83 taxmann.com 78 (Gujarat) had held that assessee-society constituted under Gujarat Town Planning and Urban Development Act, 1976, to execute works in connection with supply of water, disposal of sewerage and provision of other services and amenities, could be said to be providing general public utility services within meaning of section 2(15) of the Act. Further, subsequently the Supreme Court of India (in ACIT v. Ahmedabad Urban Development Authority 143taxmann.com 278 (SC)) also upheld/affirmed the order passed by the Gujarat High Court and held that Statutory Corporations, Boards, Authorities, Commissions, etc. (by whatsoever names called) in housing development, town planning, industrial development sectors are involved in advancement of objects of general public utility, and are therefore entitled to be considered as charities in general public utility categories. Accordingly, since both the Gujarat High Court as well as Honourable Supreme Court have both decided the issue in favour of the assessee, the order passed by the assessing officer cannot be held to be erroneous and prejudicial to the interests of the revenue. Further, the counsel for the assessee placed reliance on the case of GM Mittal Stainless Steel 263 ITR 255 (SC), wherein the Supreme Court has held that where the decision of the jurisdictional High Court is operative at the time when 263 proceedings were initiated by the Principal CIT, the assessing officer could not have been said to have erred in law by relying on the decision of jurisdictional High Court and the power of the Principal CIT I.T.A No. 66/Ahd/2022 A.Y. 2017-18 Page No. Ahmedabad Urban Development Authority (AUDA) vs. DCIT (Exemption) 5 under section 263 of the Act must be exercised on the basis of the material that was available to him when he exercised the revisionary power under section 263 of the Act. Therefore, since at the time when the 263 proceedings were initiated by the Principal CIT, the Gujarat High Court had taken a view in favour of the assessee, then in view of the aforesaid decision, the order passed by the assessing officer could not be held to be erroneous and prejudicial to the interests of the Revenue. Further, the counsel for the assessee submitted that when the view taken by the assessing officer in the assessment order was subsequently confirmed by the Honourable Supreme Court in the case of ACIT v. Ahmedabad Urban Development Authority 143taxmann.com278 (SC), further confirms the fact that the order passed by the assessing officer cannot be held to be erroneous and prejudicial to the interests of the Revenue. 5. In response, the DR placed reliance on the observations made by the Principal CIT in the 263 order. 6. We have heard the rival contentions and perused the material on record. Section 13(8) of the Act states that the exclusion provided in section 11 or section 12 shall not be available to the assessee, if the first proviso to section 2(15) of the Act becomes applicable in case of such person. However, we observe that at the time when the 263 proceedings were initiated by the Principal CIT, the jurisdictional Gujarat High Court had already decided the issue in favour of the assessee and had held that assessee-society constituted under Gujarat Town Planning and Urban Development Act, 1976, to execute works in connection with supply of I.T.A No. 66/Ahd/2022 A.Y. 2017-18 Page No. Ahmedabad Urban Development Authority (AUDA) vs. DCIT (Exemption) 6 water, disposal of sewerage and provision of other services and amenities, could be said to be providing general public utility services within the meaning of section 2(15) of the Act. Further, subsequently the Supreme Court of India also affirmed/upheld the view of the jurisdictional Gujarat High Court in the aforesaid case. Accordingly, in view of the above, we are of the considered view that the order passed by the assessing officer cannot be held to be erroneous and prejudicial to the interest of Revenue. Accordingly, the 263 order passed by the ld. Principal CIT is dismissed. 7. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 19-04-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 19/04/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद
