Asstt. Commissioner of Income Tax-1, Kanpur V. Uttar Pradesh Cricket Association, Kanpur

ITA 664/LKW/2013

• Counselvise Citation: 66423714 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-08-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 06-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Benefit of exemption
• Section: 143(3); 12A; 12; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 664/LKW/2013 ASSESSMENT YEAR: 2003 - 04 ASSTT. CIT - 1 KANPUR V. UTTAR PRADESH CRICKET ASS OCIATION KAMLA TOWER KANPUR PAN: AAATU0035B (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. R.K. RAM, D.R. RESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 21 09 2014 DATE OF PRONOUNCEMENT: 15 10 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS , WHICH ARE AS UNDER: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GHAZIABAD HOLDING CONCURRENT JURISDICTION OF CIT (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE, IN DELETING THE ADDITION OF RS.10,51, 075/ - MADE BY THE ASSESSING OFFICER AS PER PROVISIONS OF SECTION 11(3) OF I.T. ACT, 1961 WITHOU T APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS),GHAZIABAD HOLDING CONCURRENT JURISDICTION OF CIT (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT THE ASSESSEE SOCIETY HAS INCURRED EXPENDITU RE TOWARDS THE RUNNING THE SPORTS ACADEMY AND HAS ENCASHED THE FDR WHICH WERE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : MADE U/S 11 (2) FOR THE PURPOSE OF ESTABLISHMENT OF SPORTS ACADEMY. 3 . THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS), GHAZIABAD HOLDING CONCURRENT JURISDICTION OF CIT (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN HOLDING THAT MATTER CANNOT BE TAKEN UP FOR RECTIFICATION U/S. 154 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACTS THAT THE ASSESSING OFFICER HAS PASSED THE ORDER U/S. 154 /143(3) OF THE I.T. ACT, 1961 DATED 31.10.2008 TO COMPUTE THE INCOME OF THE ASSESSEE AS PER PROVISIONS OF SEC. 11, 12 AND 13 OF THE ACT IN PURSUANCE TO THE ORDER DATED 05.06.2008 OF LD. CIT - 1, KANPUR ORDER PASSED U/S. 12AA/254 OF I.T ACT, 1961 IN COMPLIANCE WITH THE DIRECTIONS OF HON'BLE IT AT DATED 24.08.2007 IN ITA NO.306/LUC/07 IN THE CASE OF THE ASSESSEE. 4 . THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) , GHAZIABAD HOLDING CONCURRENT JURISDICTION OF CIT (APPEALS) - II, KANPUR DATED 10.06.2013 NEEDS TO BE QUASHED AND THE ORDER PAS SED BY THE ASSESSING OFFICER DATED 31.10.2008 BE RESTORED. 2 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE DELETION OF ADDITION OF RS.10,51,075/ - MADE BY THE ASSESSING OFFICER HAVING INVOKED THE PROVISIONS OF SECTION 11(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 3 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSMENT WAS INITIALLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 23.3.2006 DENYING THE BENEFIT OF EXEMPTION UNDER SECTION 11(2) OF THE ACT AND THE TOTAL INCOME WAS ASSESSED AT RS. 30,42,215/ - AS AGAINST THE INCOME RETURNED BY THE ASSESSEE , ON THE GROUND THAT REGISTRATION UNDER SECTION 12A OF THE ACT HAVE BEEN GRANTED TO THE ASSESSEE - SOCIETY W.E.F. 1.4.2003 RELEVANT TO THE FINANCIAL YEAR 2003 - 04 . LATER ON , VIDE ORDER DATED 5.6.2008, THE LD. COMMISSIONER OF INCOME - TAX, KANPUR GRANTED REGISTRATION TO THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : ASSESSEE - SOCIETY UNDER SECTION 12A OF THE ACT W.E.F. ASSESSMENT YEAR 2003 - 04 IN VIEW OF THE DIRECTIONS OF THE TRIBUNAL CONTAINED IN I TS ORDER DATED 24.8.2007 IN I.T.A. NO.306/LUC/2007. CONSEQUENTLY APPLICATION UNDER SECTION 154 OF THE ACT WAS MOVED BY THE ASSESSEE - SOCIETY AND THE ASSESSING OFFICER HAS PASSED AN ORDER DATED 4.8.2008 AND COMPUTED THE INCOME UNDER SECTION 11(2) OF THE ACT AND EFF ECT OF THE AMOUNT SET APART FOR THE SPORTS ACADEMY OF RS.15 LAKHS AND DEDUCTION UNDER SECTION 11(2) OF THE ACT WAS GIVEN TO THE ASSESSEE. HE, HOWEVER, DISALLOWED DEDUCTION OF RS.10,51,075/ - BEING THE CLAIM ON ACCOUNT OF AMOUNT INVESTED IN ESTABL ISHMENT OF SPORTS ACADEMY. 4 . AGAINST THE DISALLOWANCE, AN APPEAL WAS FILED BEFORE THE LD. CIT(A) ALONG WITH DETAILS OF EXPENSES INCURRED AND THE LD. CIT(A) RELYING UPON HIS ORDER FOR ASSESSMENT YEAR 2004 - 05 DELETED THE ADDITION. 5 . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6 . DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER AND THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001 - 02 IN WHICH IDENT ICAL ISSUE WAS RAISED AND THE TRIBUNAL HAS HELD THAT THE EXPENSES INCURRED ON ACCOUNT OF RENOVATION OF KAMLA CLUB GROUND, RENOVATION OF DRESSING AND CHANGING ROOM OF KAMLA CLUB, REPAIRING OF FOUNTAIN AT KMALA CLUB, ETC AR E THE APPLICATION OF THE FUND FOR T HE OBJECT OF THE SOCIETY. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE ASSESSMENT ORDER , A PORTION OF WHICH HAS BEEN RECORDED BY THE LD. CIT(A) IN HIS ORDER , WITH THE SUBMISSION THAT THE DISALLOWANCE WAS MADE ON THE BASIS OF D ISALLOWANCE MADE IN ASSESSMENT YEAR 2004 - 05. 7 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER, BESIDES CONTENDING THAT THE FUNDS WERE ACCUMULATED FOR THE PURPOSE OF PURCHASE OF LAND IN ORDER TO ESTABLISH PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : SPORTS A CADEMY , BUT INSTEAD OF PURCHASING THE LAND THE FUNDS WERE UTILIZED IN RENOVATION OF KAMLA CLUB GROUND, RENOVATION OF DRESSING AND CHANGING ROOM OF KAMLA CLUB, REPAIRING OF FOUNTAIN AT KMALA CLUB, ETC. AFTER ENCASHING THE FDRS. THEREFORE, THE DISALLOWANCE WAS RIGHTLY MADE BY THE ASSESSING OFFICER. 8 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSING OFFICER HAS DISAL LOWED THE APPLICATION OF RS.10,51,075/ - AFTER ENCASHING FDRS FOR THE MAINTENANCE/RENOVATION OF KAMLA CLUB GROUND, HAVING OBSERVED THAT THE EXPENDITURES IN RENOVATION / MAINTENANCE OF KAMLA CLUB GROUND CANNOT BE CALLED TO BE APPLICATION OF FUND FOR ESTABLISHM ENT OF SPORTS ACADEMY FOR WHICH FUNDS WERE ACCUMULATED AND ALLOWED DURING THE RESPECTIVE YEARS. BUT DURING THE INSTANT ASSESSMENT YEAR , THE ASSESSING OFFICER HAS INITIALLY DENIED THE BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT ON THE GROUND THAT THE REGISTRATION UNDER SECTION 12A OF THE ACT WAS NOT AVAILABLE WITH THE ASSESSEE. BUT LATER ON WHEN THE REGISTRATION WAS GRANTED BY THE LD. COMMISSIONER OF INCOME - TAX WITH EFFECT FROM THE IMPUGNED ASSESSMENT YEAR , T HE ASSESSING OFFICER HAS PASSED AN ORDER UN DER SECTION 154 OF THE ACT ON THE REQUEST OF THE ASSESSEE, BUT HE MADE DISALLOWANCE OF EXPENDITURE INCURRED FOR RENOVATION OF KAMLA CLUB GROUND AFTER ENCASHING THE FDRS ACCUMULATED EARLIER FOR THE ESTABLISHMENT OF THE SPORTS ACADEMY. THE LD. CIT(A) HAS KN OCKED DOWN THE RECTIFICATION PROCEEDINGS ON THE GROUND THAT IT IS A DEBATABLE ISSUE, BUT SINCE RECTIFICATION WAS DONE BY THE ASSESSING OFFICER ON THE BASIS OF REGISTRATION GRANTED BY THE LD. COMMISSIONER OF INCOME - TAX WITH EFFECT FROM THE IMPUGNED ASSESSME NT YEAR, WE FIND NO INFIRMITY IN THE ORDER OF RECTIFICATION FOR GRANTING BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : 2 . SO FAR AS THE DISALLOWANCE OF RS.10,51,075/ - TOWARDS RENOVATION AND MAINTENANCE OF KAMLA CLUB GROUND IS CONCERNED, WE FIND THAT THI S ISSUE WAS EXAMINED BY THE TRIBUNAL IN ASSESSMENT YEAR 2001 - 02 AND THE TRIBUNAL HAS CONSIDERED THAT THESE FACTS ARE NOT SUFFICIENT FOR REOPENING THE ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HERE UNDER: - 6. THE CASE OF THE ASSESSING OFFICER AND LEARNED CIT(A) IS THAT THE ENCASHMENT OF FDR FOR THE PURPOSE OF OPENING OF SPORTS ACADEMY CANNOT BE SAID TO HAVE BEEN UTILIZED FOR THE SAID PURPOSE WITHOUT ACTUALLY PURCHASING LAND AND BUILDING FOR THE PUR POSE OF SPORTS ACADEMY. WE FAIL TO UNDERSTAND THE BASIS FOR SAYING SO THAT WITHOUT PURCHASING OWN LAND AND BUILDING, SPORTS ACADEMY CANNOT BE ESTABLISHED. AS PER THE DETAILS OF THE EXPENSES AVAILABLE ON PAGE NO. 10 OF THE PAPER BOOK, WE FIND THAT THE EXPEN SES WERE INCURRED ON ACCOUNT OF RENOVATION OF KAMLA CLUB GROUND, RENOVATION OF DRESSING & CHANGING ROOM OF KAMLA CLUB, REPAIRING OF FOUNTAIN AT KAMLA CLUB, NEW TUBE WELL AT KAMLA CLUB, BOWLING MACHINE, XEROX FAX MACHINE, DIESEL GENERATING SET AND POWER ROL LER & ROTARY GRASS CUTTER. THIS IS NOT THE OBJECTION OF THE AUTHORITIES BELOW THAT THESE EXPENSES ARE NOT IN RELATION TO A SPORTS ACADEMY. THE ONLY OBJECTION OF THE AUTHORITIES BELOW IS THAT SINCE THE ASSESSEE HAS NOT PURCHASED ITS OWN LAND AND BUILDING, I T CANNOT BE SAID THAT THE ASSESSEE IS STARTING OR ESTABLISHING A SPORTS ACADEMY. WE DO NOT FIND ANY MERIT IN THIS OBJECTION BECAUSE IN OUR CONSIDERED OPINION, A SPORTS ACADEMY CAN BE ESTABLISHED AND RUN EVEN ON RENTED/LEASED PREMISES. WE, THEREFORE, HOLD T HAT THE OBJECTION OF THE AUTHORITIES BELOW IS NOT VALID. HENCE, THE REOPENING IS ALSO NOT VALID BECAUSE THE SAME IS WITHOUT A VALID REASON. SINCE THE REOPENING ITSELF IS NOT VALID, THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER CONSEQUENT TO SUCH REOPENING IS LIABLE TO BE QUASHED. WE ORDER ACCORDINGLY. AS A RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : 3 . SINCE THE EXPENDITURES FOR RENOVATION OF KAMLA CLUB GROUND, RENOVATION OF DRESS ING AND CHANGING ROOM OF KAMLA C LUB, REPAIRING OF FOUNTAIN AT K A MAL A CLUB, NEW TUBEWELL AT KAMLA CLUB, BOWLING MACHINE, XEROX FAX MACHINE, DIESEL GENERATING SET AND POWER ROLLER AND ROTARY GRASS CUTTER WERE AFTER ENCASHMENT OF FDRS WE RE CONSIDERED TO BE PROPER APPLICATION OF FUND TOWARDS THE OBJECT OF THE SOCIETY, FOR WHI CH FUNDS WERE ACCUMULATED , BY THE TRIBUNAL IN EARLIER YEARS , WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS YEAR. WE ACCORDINGLY HOLD THAT THE EXPENDITURES INCURRED IN RENOVATION AND MAINTENANCE OF KMALA CLUB IS APPLICATION OF FUND FOR ACHIEVING THE OBJECT FOR WHICH IT WAS ACCUMULATED IN EARLIER YEARS. ACCORDINGLY WE APPROVE THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. 4 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER D ATED: 15 TH OCTOBER , 2014 JJ: 2309 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )