The Improvement Trust Sangrur, Sangrur V. DCIT, Chandigarh

ITA 665/CHANDI/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2386 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Business income; Notional interest
• Section: 12A; 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH !, ' # , . %.. . & , '( # BEFORE: SMT. DIVA SINGH, JM & DR. B.R.R. KUMAR , A M ./ ITA NO. 665/CHD/2017 '* + ,+ / ASSESSMENT YEAR : 2014-15 THE IMPROVEMENT TRUST SANGRUR, KAULA PARK, SANGRUR THE DCIT CIRCLE-I(EXEMPTION) CHANDIGARH ./ PAN NO: AAATI6009F / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI. Y.K. SUD / REVENUE BY : SMT. CHANDRAKANTA ! ' # / DATE OF HEARING : 26/09/2018 $%&'() # / DATE OF PRONOUNCEMENT : 01/11/2018 '-/ ORDER PER DR. B.R.R. KUMAR, A.M.: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A), PATIALA DT. 22/02/2017. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. THAT CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADD ITION OF RS. 11412209/- ON ACCOUNT OF NOTIONAL INTEREST MADE BY THE DCIT WHILE SUSTAINING THE ADDITION HE NOT ONLY IGNORES THE FACTS OF THE CASE BUT ALSO IGN ORED THE EXPLANATION OF THE ASSESSEE. 2. THAT CIT(A) FAILED TO APPRECIATE WHILE SUSTAINING T HE ADDITION OF RS. 11412209/- THAT THE DCIT HAD COMPUTED THE BUSINESS INCOME AND THEN MADE THE ADDITION BY DENYING THE EXEMPTION U/S 11 OF THE INCOME TAX A CT, 1961.. 3. THAT THE CIT(A) FURTHER FAILED TO APPRECIATE THAT O NCE HE HAS ALLOWED THE EXEMPTION U/S 11 ON THE INCOME OF TRUST FROM SALE A ND PURCHASE OF PLOTS AND HOUSES BY CONSIDERING IT AS CHARITABLE ACTIVITY NO ADDITION OF ANY KIND COULD HAVE BEEN MADE ON THE SAME. THE ACTION OF CIT(A) IN CONF IRMING THE ADDITION IS CONTRADICTORY TO HIS OWN FINDINGS. 4. THAT THE CIT(A) HAS GIVEN A WRONG FINDING THAT THE APPELLANT HAD NOT PRESSED THE GROUND OF ADDITION BEFORE HIM. HE IGNORED THE S UBMISSION MADE BY THE COUNSEL OF APPELLANT THAT ONCE DEDUCTION U/S 11 HAS BEEN ALLOWED NO ADDITION COULD HAVE BEEN MADE ON ACCOUNT OF NOTIONAL INTERES T MADE BY THE AO WHILE COMPUTING THE BUSINESS INCOME. 5. THAT THE ORDERS OF THE AO AND THE CIT(A) ARE AGAINS T THE LAW AND FACTS OF THE CASE. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN ARTIFICIAL JURIDICAL PERSON HAVING INCOME FROM PLANNING, DEVELOPMENT AND IMPROVEMENT OF CITIES AND THE SAME WAS SHOWN AS INCOME FROM OTHER SOURCES . THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S 12AA OF THE I.T. ACT. THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF SALE & PURCHAS E OF RESIDENTIAL HOUSES, MULTI- STOREYED HOUSES AND COMMERCIAL PLOTS BY WAY OF AUCT ION, WHICH IS IN THE NATURE OF TRADE, COMMERCE AND BUSINESS, BUT DOES NOT FALL WITHIN THE MEANING OF WORDS 'THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY' U/S 2(15) OF THE INCOME TAX ACT, 1961. HOWEVER, THE ASSESSEE TRUST H AS STATED DURING ASSESSMENT PROCEEDINGS THAT IT WAS NOT CARRYING ON ANY BUSINES S ACTIVITY THAT BUT THAT THE OBJECT OF TRUST IS PLANNING, DEVELOPMENT AND IMPROV EMENT OF CITY. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE CONTENTION OF THE ASSESSEE WAS NOT CORRECT IN VIEW OF AMENDMENT OF SECTION 2(15) OF THE INCOME TA X ACT, 1961 BY THE FINANCE ACT, 2008 & 2010, W.E.F 01.04.2009 I.E. A.Y.2009-10 AND ALSO IN VIEW OF THE FACT THAT THE BUSINESS ACTIVITIES WERE CARRIED OUT FOR S ALE OF RESIDENTIAL PLOTS/HOUSES & COMMERCIAL PLOTS/COMPLEX BY AUCTION AND CHARGING OF HUGE FEES FROM THE CLIENTS IN THE NATURE OF COMPOUNDING FEE, LATE CONS TRUCTION FEES, MISC. INCOME AND INTEREST INCOME ETC. 4. THE LD. CIT(A) BASED ON THE ORDERS OF THE TRIBUN AL AND ALSO THE ORDER OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT(E) VS. IMPROVEMENT TRUST MOGA IN ITA NO. 147/CHD/2016 DT. 23/12/2016 A LLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 11 R.W.S 12A OF INCOME TAX ACT,1961. 5. BEFORE US, THE ASSESSEE CONTENDED THAT THE ADDIT ION MADE BY THE AO ON ACCOUNT OF NOTIONAL INTEREST OF RS. 1,14,12,209/- C ALCULATED @ 12% OF RS. 9,51,00,243/-, WHICH WERE GIVEN AS ADVANCES AND SHO WN AS SUNDRY DEBTORS DURING THE YEAR UNDER CONSIDERATION OUGHT TO HAVE B EEN DELETED BY THE LD.CIT(A) AS NO ADDITION COULD BE SUSTAINED ONCE TH E EXEMPTION UNDER SECTION 11 HAS BEEN ALLOWED ON THE INCOME OF THE TRUST BY C ONSIDERING ACTIVITIES OF THE TRUST AS CHARITABLE IN NATURE. 6. WE HAVE GONE THROUGH THE RECORDS BEFORE US, THE LD. CIT(A) HELD THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE DID NOT FILE ANY REPLY OR EXPLANATION ON THIS ISSUE. THEREFORE, THE AO MAD E THE IMPUGNED ADDITION U/S 13(L)(D) RW SEC. 11(5) AND 164(2) OF THE ACT. RELIA NCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F DIRECTOR OF INCOME TAX, 3 CHENNAI VS. WORKING WOMEN'S FORUM, 235 TAXMAN - 516 (SC) AND ALSO THE LD. CIT(A) HELD THAT DURING THE COURSE OF APPELLATE PRO CEEDINGS, THE ASSESSEE DID NOT PRESS THIS ISSUE NOR FILED ANY SUBMISSIONS WITH REGARD THERETO THIS ISSUE AND HENCE HE DISMISSED THE APPEAL OF THE ASSESSEE ON TH IS GROUND. 7. HAVING HEARD THE ARGUMENTS OF BOTH THE PARTIES A ND AFTER CONSIDERING THE FACTS AVAILABLE ON RECORD, GROUNDS TAKEN BY THE ASS ESSEE BEFORE THE LD. CIT(A) AND ALSO THE REASONING GIVEN BY THE LD. CIT(A) IN T HE PARA 6.1 OF HIS ORDER THAT THE ASSESSEE DID NOT PRESS THE ISSUE NOR FILED ANY SUBMISSIONS WITH REGARD THERETO AND ALSO HELD THAT THAT IT IS PRESUMED THAT THE ASS ESSEE HAS ACCEPTED THE ACTION OF THE ASSESSING OFFICER AND ON THIS GROUND LD. CIT(A) DISMISSED THE GROUNDS. WHEREAS THE ASSESSEE HAS COME BEFORE US ON THE GROUNDS THAT ONCE THE CHARITABLE ACTIVITY HAS BEEN ACCEPTED BY THE LD . CIT(A) NO ADDITION OF ANY KIND COULD HAVE BEEN MADE. HENCE KEEPING IN VIEW TH IS PARADOXICAL SITUATION, WE HOLD THAT THE INTEREST OF JUSTICE WOULD BE WELL SERVED IF THE MATTER IS REMANDED BACK TO THE FILE OF THE LD.CIT(A) TO ADJUD ICATE ON THIS ISSUE. WE ALSO DIRECT THE ASSESSEE TO FURNISH ALL THE SUBMISSIONS WHICH HE MAY RELY ON BEFORE THE LD. CIT(A) DURING THE COURSE OF PROCEEDINGS. 8. AS A RESULT THE APPEAL OF THE ASSESSEE IS SET AS IDE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ! . %.. . & , (DIVA SINGH) (DR. B.R.R. KUMAR) ' #/ JUDICIAL MEMBER '( #/ ACCOUNTANT MEMBER AG DATE: 01/11/2018 *% + ,- . -(/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. * * ! // CIT 4. * * ! / ()/ THE CIT(A) 5. - 23 4, * # *4), 67839/ DR, ITAT, CHANDIGARH 6. 38 :'/ GUARD FILE