ACIT (Exemptions), Chandigarh V. M/s Haryana State Pollution Control Board, Panchkula

ITA 668/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9012 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Assessee Lawyers: RATTAN KAUR
• Keywords: Competent authority; Capital expenditure
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 668/CHD/2016 ASSESSMENT YEAR: 2012-13 THE ACIT (EXEMPTIONS), VS HARYANA STATE POLLUTION CIRCLE 2, CONTROL BOARD, C-II, CHANDIGARH. SECTOR 6, PANCHKULA. PAN: AAAJH0446F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI SARANGAL, C IT -DR RESPONDENT BY : MS. RATTAN KAUR, C.A. DATE OF HEARING : 27.10.2016 DATE OF PRONOUNCEMENT : 04.11.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 22.03.201 6 FOR ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUND S : I THAT WORTHY COMMISSIONER OF INCOME LAX (APPE AL) HAS ERRED ON THE FACTS AND CIRCUMSTANCES THE CASE IN DELETING THE AD DITION OF RS. 15,15,89,376/-- SINCE THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10(23) (VI) WHEREAS THE EXEMPTION WAS GRANTED BY THE WORTHY CIT(EXEMPTION) CHANDIGARH VIDE ORDER DATED 01/03/2016 FROM A.Y. 2006-07 TO A.Y. 2011-12. NO EX EMPTION HAD NOT BEEN GRANTED FOR THE A.Y. 2012-13. 2. THAT WORTHY CIT(A) HAS ERRED IN AND CIRCUMSTANCE S OF THE CASE IN DELETING THE ADDITION MADE AS EVEN AFTER GRANTING O F EXEMPTION U/S 10(23)(IV) OF 2 THE INCOME TAX ACT. THE ACCOUNTS OF THE ASSESSEE HA VE NOT REFLECTING HE TRUE AFFAIRS OF THE ACTIVITIES AND SUCH THE EXEMPTION IS NOT ALLOWABLE TO THE ASSESSEE. 3. THAT WORTHY COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED ON THE FACTS AND CIRCUMSTANCES THE CASE IN DELETING THE AD DITION OF RS.1,52,03,549 MADE BY THE A.O ON ACCOUNT OF DISALLOWANCE OF CAPIT AL, EXPENDITURE U/S 37(1) OF THE INCOME TAX ACT.. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 3. ON GROUND NOS. 1 AND 2, BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME DECLARING NIL INCOME. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS HAVING INCOME OF RS. 15,15,89,376/- BU T AFTER CLAIMING EXEMPTION UNDER SECTION 10(23C)(IV) OF THE ACT, ASSESSEE SHOWED NIL INCOME IN THE RETURN OF INCOME. THE ASSESSING OFFICER ASKED THE ASSESSEE T O FURNISH CERTIFICATE OF APPROVAL OF PRESCRIBED AUTHO RITY UNDER SECTION 10(23C)(IV) OF THE INCOME TAX ACT AND WAS ASKED TO EXPLAIN WHY THE DEDUCTION CLAIMED IN ABOVE PROVISIONS SHOULD NOT BE DISALLOWED AS NO APPROVAL FROM COMPETENT AUTHORITY WAS AVAILABLE WITH THE ASSESSEE . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE'S CLA IM FOR GRANT OF EXEMPTION WAS REJECTED BY THE CCIT, PANCHK ULA. FURTHER, SIMILAR CLAIMS FOR ASSESSMENT YEAR 2006-07 TO 2011-12 HAVE BEEN REJECTED UNDER SECTION 143(3) OF THE ACT AND SUBSEQUENT UPHELD BY THE LD. CIT(APPEALS), PANCHKULA. THEREFORE, EXEMPTION UNDER SECTION 10(23C)(IV) WAS DENIED AND INCOME WAS ASSESSED. 3 4. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT EXEMPTION UNDER THE ABOVE PROVISION WAS DISALLOWED ON THE FACT THAT ON THE DATE OF COMPLETI ON OF THE ASSESSMENT, ASSESSEE WAS NOT HAVING APPROVAL FO R REGISTRATION UNDER THE ABOVE PROVISION FROM PRESCRI BED AUTHORITY BUT ACTIVITIES OF THE ASSESSEE BOARD ARE CHARITABLE IN NATURE AS DEFINED UNDER SECTION 2(15) OF THE INCOME TAX ACT. AFTER REJECTION OF THE APPLICA TION BY CCIT, PANCHKULA, LATER ON HON'BLE PUNJAB & HARYANA HIGH COURT ALLOWED FOR FRESH ORDER AFTER CONSIDERIN G THE MATTER IN ITS ENTIRETY. THE CIT (EXEMPTION) CHANDI GARH ALLOWED THE CLAIM OF THE ASSESSEE FOR GRANT OF EXEM PTION UNDER SECTION 10(23C)(IV) OF THE ACT VIDE ORDER DAT ED 01.03.2016 AND EXEMPTION UNDER ABOVE PROVISIONS WAS GRANTED W.E.F. ASSESSMENT YEAR 2006-07 TO 2011-12. THE ASSESSEE FURTHER SUBMITTED THAT AS PER CIRCULAR NO. 7/2010, THE APPROVAL ONCE GRANTED AFTER 01.12.2006 WILL BE ONE TIME APPROVAL WHICH WOULD BE VALID UNTIL IT IS WITHDRAWN. SINCE THE ASSESSEE HAS BEEN GRANTED APPROVAL UNDER SECTION 10(23C)(IV) ON 01.03.2016 W. E.F. ASSESSMENT YEAR 2006-07 THOUGH TILL ASSESSMENT YEAR 2011-12, THE SAME IS VALID EVEN FOR ASSESSMENT YEAR UNDER APPEAL I.E. 2012-13 AS PER CIRCULAR NO. 7/201 0. 5. THE LD. CIT(APPEALS) CONSIDERING EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE BOARDS CIRCULAR HELD THAT ONCE APPROVAL HAS BEEN GRANTED UNDER SECTION 10(23C)(IV) OF THE ACT WOULD MEAN THAT APPROVAL HAV E 4 BEEN GRANTED AND IS VALID UNTIL WITHDRAWN. THE EXEMPTION IS, THEREFORE, AVAILABLE TO THE ASSESSEE IN ASSESSMENT YEAR 2012-13 UNDER APPEAL. THE ASSESSIN G OFFICER WAS, THEREFORE, DIRECTED TO ALLOW EXEMPTION UNDER SECTION 10(23C)(IV) OF THE ACT. THESE GROUND S WERE, ACCORDINGLY, ALLOWED. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY MERIT IN THESE GROUNDS OF APPEAL OF THE REVENUE . IT IS WELL SETTLED LAW THAT BOARDS CIRCULARS ARE BIND ING ON INCOME TAX AUTHORITIES. THE LD. CIT(APPEALS), THER EFORE, CORRECTLY RELIED UPON BOARDS CIRCULAR NO. 7/2010 F OR THE PROPOSITION THAT ONCE APPROVAL UNDER SECTION 10(23C )(IV) HAVE BEEN GRANTED TO THE ASSESSEE, IT WOULD BE VALI D UNTIL WITHDRAWN. THE LD. DR COULD NOT CONTRIBUTE ANYTHING ON THIS ISSUE AND NO INFIRMITY HAVE BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(APPEALS). THESE GROUNDS OF APPEAL OF THE REVENUE ARE, ACCORDINGLY, DISMISSED. 7. ON GROUND NO. 3, THE FACTS ARE THAT ASSESSING OFFICER NOTED THAT ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 1.52 CR. THE ASSESSING OFFICER ASKED THE ASSES SEE WHY CAPITAL EXPENDITURE CLAIMED SHOULD NOT BE DISALLOWED. THE ASSESSEE FAILED TO FURNISH PLAUSIB LE EXPLANATION THEREFORE, ASSESSING OFFICER CONSIDERIN G IT TO BE CAPITAL EXPENDITURE, DISALLOWED UNDER SECTION 37(1) OF THE INCOME TAX ACT. 5 8. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT IT HAS NOT CLAIMED CAPITAL EXPENDITURE IN INCO ME & EXPENDITURE ACCOUNT BUT HAD SHOWN THE REVENUE GRANT S IN THE INCOME SIDE AFTER REDUCING THE AMOUNT UTILIZ ED FROM GRANTS FOR CAPITAL EXPENDITURE. IT IS ALSO MA TTER OF FACT THAT CAPITAL EXPENDITURE HAS NOT BEEN CHARGED TO PROFIT & LOSS ACCOUNT SO THERE IS NO QUESTION OF DISALLOWANCE. THE 3 RD PROVISO TO PROVISIONS OF SECTION 10(23C) PROVIDES FOR APPLIES TO ITS INCOME WHOLLY OR EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLIS HED. THUS, THE AMOUNT HAS BEEN SPENT BY ASSESSEE TOWARDS OBJECT. THEREFORE, ADDITION IS WHOLLY UNJUSTIFIED. THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASS ESSEE AND DELETED THE ADDITION. 9 AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FI ND ANY MERIT IN THESE GROUNDS OF APPEAL OF THE REVENUE . THE LD. CIT(APPEALS), ON PERUSAL OF THE INCOME & EXPENDITURE ACCOUNT, FOR YEAR ENDING 31.03.2012 FOU ND THAT REVENUE GRANTS ON INCOME SIDE HAVE BEEN SHOWN AFTER REDUCING THE AMOUNT UTILIZED FOR CAPITAL EXPENDITURE. NO FURTHER EXPENDITURE HAS BEEN DEBIT ED. THESE FINDING OF FACTS RECORDED BY LD. CIT(APPEALS) HAVE NOT BEEN REBUTTED IN ANY MANNER. FURTHER THE AMOUN TS SPENT BY ASSESSEE ARE CLEARLY APPLICATION OF ITS IN COME IN NATURE WHICH HAVE BEEN SPENT TO ACHIEVE THE OBJE CTS OF THE ASSESSEE. FURTHER, WHEN ASSESSEE HAS BEEN GRANTED APPROVAL UNDER SECTION 10(23C)(IV) OF THE I NCOME 6 TAX ACT AND EXEMPTION IS AVAILABLE TO THE ASSESSEE, THERE IS NO QUESTION OF DISALLOWING ANY AMOUNT OF T HIS NATURE. THIS GROUND IS ACCORDINGLY, DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH S AINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 4 TH NOVEMBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD