DCIT (E), New Delhi V. M/s Technology Development Board, New Delhi

ITA 6630/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3231 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 14-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAURAV JUNEJA
• Assessee Lawyers: P K GUPTA
• Keywords: Charitable institution; Question of law; Benefit of exemption
• Section: 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. R.S.SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 6630/DEL/2015 (ASSESSMENT YEAR: 2011-12) DCIT(E) CIRCLE-2(1) NEW DELHI VS TECHNOLOGY DEVELOPMENT BOARD WING-A, GROUND FLOOR, VISHKARMA BHAWAN, SAHEED JEET SINGH MARG, NEW DELHI PAN: AAALT0531B APPELLANT) (RESPONDENT) ASSESSEE BY : SH. P.K.GUPTA, CA REVENUE BY : SH. GAURAV JUNEJA, SR. DR. DATE OF HEARING : 13.11.2017 DATE OF PRONOUNCEMENT : 14.11.2017 O R D E R PER BEENA A. PILLAI, J.M : PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAIN ST ORDER DATED 07/09/15 PASSED BY LD. CIT (A)-40, NEW DELHI FOR ASS ESSMENT YEAR 2011-12, ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION U/S 11 DISREGARDING THE FACTS OF THE CASE. 2 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS AP PARENTLY NOT INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS, WITHOUT APPRECIATI NG THE FACT THAT THE ASSESSEE SOCIETY WAS DOING BUSINESS BY EARNING ROYA LTY IN A SYSTEMATIC MANNER WITHIN THE MEANING OF AMENDED PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT. 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE ADDITION ON ACCOUN T OF ROYALTY WITHOUT DISCUSSING ANY FACTS IN THE ORDER. 4.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE WITHOUT SPECIFICALLY ADJUDICATING THE ISSUE OF PROVISION FOR GRATUITY. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION DECLARING TOTAL INCOME AT NIL AFTER CLAIMING APPL ICATION OF INCOME AS PER THE PROVISIONS OF SECTION 11 AND 12 OF THE A CT. RETURN WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT AND NOT ICE UNDER SECTION 143 (2) OF THE ACT WAS ISSUED AND SERVED UPON THE AS SESSEE. REPRESENTATIVES OF ASSESSEE ATTENDED THE PROCEEDING S BEFORE THE LD.AO AND FILED ALL NECESSARY DOCUMENTS/EVIDENCES/D ETAILS AS CALLED FOR. 3. DURING THE ASSESSMENT PROCEEDINGS LD. AO OBSERV ED THAT ASSESSEE HAD EARNED INCOME FROM GRANTS, ROYALTY, IN TEREST, DIVIDENDS AND OTHER MISCELLANEOUS INCOME. IT IS ALS O OBSERVED THAT ASSESSEE HAS BEEN REGISTERED UNDER SECTION 10 (23C) (IV) OF THE ACT. LD. AO OBSERVED THAT ASSESSEE HAD RECEIVED ROYALTY AMOUNTING TO 3 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D RS.58,20,551/-. LD. AO WAS THUS OF THE OPINION THAT AS THE AFORESAID RECEIPT WAS IN THE NATURE OF BUSINESS/COMM ERCE RECEIPT, IT COULD NOT BE INCLUDED, AS ASSESSEE WAS DOING BUSI NESS IN THE GARB OF BEING A CHARITABLE ORGANISATION. LD. AO THEREFOR E ASKED ASSESSEE TO FURNISH EXPLANATION AS TO WHY NOT, ROYALTY RECEIV ED TO BE COVERED UNDER THE 1 ST PROVISO TO SECTION 2 (15) OF THE ACT. 4. ASSESSEE VIDE LETTER DATED 25/02/14 SUBMITTED ITS REPLY, WHEREIN IT WAS SUBMITTED THAT, ONE OF THE OBJECTS OF THE ASSESSEE WAS TO PROVIDE ASSISTANCE IN THE FIELD OF RESEARCH A ND DEVELOPMENT INSTITUTIONS ENGAGED IN DEVELOPING INDIGENOUS TECHN OLOGY OR ADAPTION OF IMPORTED TECHNOLOGY FOR COMMERCIAL APPL ICATION AS MAY BE RECOGNIZED BY THE CENTRAL GOVERNMENT. IT WAS ALSO SUBMITTED THAT THE COLLECTION WAS A VERY SMALL PERCENTAGE OF T HE TOTAL OUTLAY AND DOES NOT VITIATE THE TRUE CHARACTER OF THE FUND S AND DOES NOT ALSO WOULD IPSO FACTO CHANGE THE SAME TO BE REALISED FROM AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS ACTIVITY. 5. LD. AO THUS DISALLOWED THE CLAIM OF ASSESSE D, AND INVOKED THE 1 ST PROVISO TO SECTION 2 (15) OF THE ACT. LD. AO ALSO DISALLOWED AN AMOUNT OF RS. 38,000/- WHICH WAS A PROVISION MADE TOWA RDS PAYMENT OF GRATUITY FOR RETIRING EMPLOYEE TOWARDS T HE END OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDE R CONSIDERATION. 6. AGGRIEVED BY THE ORDER PASSED BY LD. AO, ASSE SSEE PREFERRED APPEAL BEFORE LD. CIT (A). 4 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D 7. LD. CIT (A) OBSERVED THAT ASSESSEE IS PROMO TED BY THE MINISTRY OF SCIENCE AND TECHNOLOGY, AND SENIOR GOVERNMENT OFFICERS ARE THE EX-OFFICIO MEMBERS OF THE GOVERNING BODY OF THE ASSESSEE. IT WAS ALSO OBSERVED BY LD. CIT (A) THAT ASSESSEE IS MAINL Y INVOLVED IN THE PROMOTION AND COMMERCIALIZATION OF INDIGENIZED TECH NOLOGY AND GIVE LOANS AND GRANTS TO THE INDUSTRY FOR DEVELOPMENT AN D PROMOTION OF TECHNOLOGY AND RECEIVES FEES OR ROYALTY IN CASE THE RE IS SUCCESSFUL LAUNCH OF THE TECHNOLOGY BY THE INDUSTRY OR THE PAR TY. 8. LD.CIT (A) ALSO OBSERVED THAT ASSESSEE HAD B EEN ENJOYING THE BENEFIT OF EXEMPTION UNDER SECTION 11(1) AND THAT L D. AO HAD DENIED EXEMPTION FOR THE 1 ST TIME FOR ASSESSMENT YEAR 2010-11 ON THE SAME GROUND THAT, ASSESSEE WAS INVOLVED IN TRA DE, COMMERCE OR BUSINESS. LD. CIT (A) THUS WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE RELIED UPON THE DECISION OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANISA TION VERSUS DGIT (E) REPORTED IN 53 TAXMANN.COM 404 (DELHI) 201 5 WHEREIN THE HONBLE COURT HAS HELD THAT ON MERE RECEIPT OF FEE OR CHARGE CANNOT BE SAID THAT ASSESSEE IS INVOLVED IN ANY TRADE, COM MERCE OR BUSINESS. LD. CIT (A) OBSERVED AS UNDER: 3.10. AFTER CONSIDERING ALL THE FACTS AND CIRCUMST ANCES OF THE CASE, I AM OF THE VIEW THAT APPARENTLY THE ASSESSEE IS NOT INV OLVED IN ANY TRADE, COMMERCE OR BUSINESS AND AS SUCH THE MISCHIEF OF PR OVISO OF SECTION 2 (15) IS NOT APPLICABLE AND THE CASE OF THE ASSESSEE IS ALSO COVERED BY THE ASSESSEES OWN CASE BY APPELLATE ORDER DATED 18/03/ 15 AND THE ASSESSEE CAN BE ALLOWED AS A RELIEF OR EXEMPTION UN DER SECTION 11 (1) AS A CHARITABLE INSTITUTION AND ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE 5 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D EXEMPTION UNDER SECTION 11 (1) WITH ALL THE CONSEQU ENTIAL BENEFITS AND THE ADDITIONS MADE BY AO ARE DELETED. 9. AGGRIEVED BY THE ORDER OF LD. CIT (A) REVENUE IS IN APPEAL BEFORE US NOW. 10. GROUND NO. 1 RAISED BY REVENUES GENERAL IN NATURE AND THEREFORE DOES NOT CALL FOR ADJUDICATION. 11. GROUND NO. 2 AND 3 HAS BEEN RAISED BY REVENUE AGAINST THE FINDINGS OF LD. CIT (A) IN RESPECT OF ASSESSEE NOT BEING INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS. 12. AT THE OUTSET LD.AR SUBMITTED THAT HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2 010-11 HAS PASSED AN ORDER DECIDING THE ISSUE IN FAVOUR OF ASS ESSEE VIDE ORDER DATED 09/12/16 IN ITA NO. 416/2016. HE PLACED RELIA NCE UPON THE DECISION PASSED BY HONBLE DELHI HIGH COURT, AND SU BMITTED THAT THE ISSUE HAS NOW BEEN SETTLED BY THE ORDER PASSED B Y HONBLE COURT FOR ASSESSMENT YEAR 2010-11. 13. LD.SR.DR DID NOT RAISE ANY ARGUMENTS AFTER PE RUSING THE ORDER PASSED BY HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE. 14. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY B OTH THE SIDES IN THE LIGHT OF THE RECORDS AND THE DECISIONS RELIE D UPON BY LD. AR. HONBLE DELHI HIGH COURT HAS DECIDED THE ISSUE REGA RDING THE RECEIPT OF ROYALTY FEES AS UNDER: 6 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D .. EVEN OTHERWISE, THE QUESTION OF LAW URGED, I. E., WHETHER THE ROYALTY RECEIVED FELL WITHIN THE MISCHIEF OF THE PR OVISO TO SECTION 2 (15) OF THE INCOME TAX ACT, 1961 IS ABSOLUTELY ILLEGAL GROU ND ON ACCOUNT OF SEVERAL JUDGMENTS BY THIS INCLUDING THAT THE JUDGME NT IN ITPO VS. DGIT (EXEMPTIONS) (2015) 371 ITR 333 (DELHI). NO SUBSTAN TIAL QUESTION OF LAW ARISES. THE APPEAL IS DISMISSED. 15. IT IS OBSERVED THAT HONBLE DELHI HIGH COURT HAS ALSO PLACED RELIANCE UPON ITS OWN DECISION WHICH WAS CONSIDERED BY LD. CIT (A) WHILE DECIDING THE ISSUE AT THE 1 ST APPELLATE STAGE. IN OUR CONSIDERED VIEW THE ISSUE NOW STANDS SETTLED BY VARIOUS DECISION S OF HONBLE JURISDICTIONAL HIGH COURT AS WELL AS PRECEDING ASSE SSMENT YEAR OF ASSESSEE ITSELF. WE THEREFORE DO NOT FIND ANY MERIT IN THE GROUND RAISED BY REVENUE. ACCORDINGLY GROUND NO.2 & 3 RAISED BY REVENUE STANDS DISMISSED. 16. GROUND NO. 4 IS IN RESPECT OF THE ISSUE OF P ROVISION FOR GRATUITY. LD. SR.DR SUBMITTED THAT LD. CIT (A) HAS FAILED TO ADJUDICATE THIS ISSUE. 17. ON PERUSAL OF THE ORDER PASSED BY LD.CIT (A) , WE AGREE WITH THE SUBMISSIONS ADVANCED BY LD. SR.DR. WE ACCORDING LY ARE INCLINED TO SET ASIDE THIS ISSUE BACK TO THE FILE O F LD. CIT (A) IN DIRECTING HIM TO ADJUDICATE UPON THIS ISSUE. LD. CI T (A) MAY DECIDE THE ISSUE AS PER LAW. 7 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D 18. ACCORDINGLY THIS GROUND RAISED BY THE REVEN UE STANDS ALLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT APPEAL FILED BY THE REVENUE ST ANDS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT 14/1 1/2017.) SD/- SD/- (R.S.SYAL) (BEENA A. PILLAI) VICE PRESIDENT JUD ICIAL MEMBER DATE: 14.11.2017 BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI 8 ITA NO. 6630/DEL/2015 TECHNOLOGY DEVELOPMENT BOAR D S.NO. DETAILS DATE 1 DRAFT DICTATED ON 13.11.2017 2 DRAFT PLACED BEFORE AUTHOR 13.11.2017 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE A.R. 10 DATE OF DISPATCH OF ORDER