ACIT (E), Circle- 1(1), New Delhi V. India International Centre, New Delhi

ITA 6771/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0189 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K KAPOOR
• Keywords: Depreciation; Tax effect
• Section: 143(3); 10(23C); 263; 10

Judgement Text

ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G.S. PANNU, HONBLE VICE PRESIDENT & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NOS.-6771 & 6772/DEL/2017 (ASSESSMENT YEARS: 2013-14 & 2014-15) ACIT(E), CIRCLE 1(1) ROOM NO. 2418, 24 TH FLOOR, E-2, PRATYAKSH KAR BHAWAN, DR. SHYAM PRASAD MUKHERJEE CIVIC CENTRE, J.L.N. MARG, NEW DLEHI. VS. INDIA INTERNATIONAL CENTRE 40, MAX MUELLER MARG, LODHI ESTATE, NEW DELHI. PAN NO. AAAT10660C APPELLANT RESPONDENT REVENUE BY MS. SUNITA SINGH, CIT DR ASSESSEE BY SH. R.K. KAPOOR, ADV. DATE OF HEARING: 30 .12.2020 DATE OF PRONOUNCEMENT : 30 .12.2020 ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDERS OF THE COMMISSIONER OF INCOM E TAX (APPEALS) - 40, DELHI (LD. CIT(A)) IN THE CASE OF INDIA INTER NATIONAL CENTRE (THE ASSESSEE), FOR THE ASSESSMENT YEARS 2013-14 AND 20 14-15, REVENUE PREFERRED THESE APPEALS ON IDENTICAL GROUNDS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INSTITUTION CAME INTO EXISTENCE BY WAY OF CREATION OF A TRUST VIDE TRUST DEED DATED 23.05.1961, AND ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 2 HAS BEEN ENGAGED IN CULTURAL AND INTELLECTUAL ACTIV ITIES, LIKE CONDUCTING SEMINARS, TALKS, DISCUSSIONS AND CULTURAL ACTIVITIE S. ITS OBJECTIVES INCLUDE, EXCHANGING KNOWLEDGE THEREOF, AND BY PROVIDING SUCH OTHER FACILITIES AS WOULD LEAD TO THEIR UNIVERSAL APPRECIATION; TO UNDERTAKE, ORGANIZE AND FACILITATE STUDY COURSES, CONFERENCES, SEMINARS, LECTURES AND RESEAR CH IN MATTERS RELATING TO DIFFERENT CULTURAL PATTERNS OF THE WORLD; TO UNDERT AKE, FACILITATE AND PROVIDE FOR THE PUBLICATION OF NEWS-LETTERS, RESEARCH PAPERS AN D BOOKS AND OF A JOURNAL FOR THE EXPOSITION OF CULTURAL PATTERNS AND VALUES PREV AILING IN DIFFERENT PARTS OF THE WORLD; TO ESTABLISH AND MAINTAIN LIBRARIES AND INFORMATION SERVICES TO FACILITATE THE STUDY OF WORLD CULTURES AND SPREADIN G INFORMATION IN REGARD THERETO; TO CONSTITUTE OR CAUSE TO BE CONSTITUTED R EGIONAL CENTRES AT CONVENIENT PLACES IN INDIA TO PROMOTE THE OBJECTIVE S OF THE SOCIETY; TO CO- OPERATE WITH APPROVED INSTITUTIONS AND INTERESTED B ODIES FOR THE PURPOSES OF HELPING THE CAUSE OF UNDERSTANDING AMONGST PEOPLES OF DIFFERENT CULTURES; TO ORGANIZE AND MAINTAIN AS FAR AS POSSIBLE ON NO-PROF IT NO-LOSS BASIS, LIMITED RESIDENTIAL ACCOMMODATION, WITH CULTURAL AND EDUCAT IONAL AMENITIES, FOR THE MEMBERS OF THE SOCIETY COMING TO PARTICIPATE IN THE ACTIVITIES OF THE SOCIETY AND OF OTHER BODIES WITH COGNATE OBJECTIVES, AS WEL L AS NON-MEMBERS SPECIALLY INVITED TO PARTICIPATE IN THE ACTIVITIES OF THE SOC IETY; TO INVITE, AS AND WHEN FEASIBLE, CULTURAL LEADERS, SCHOLARS, SCIENTISTS AN D CREATIVE ARTISTS, WHO MAY OR MAY NOT BE MEMBERS OF THE SOCIETY, TO TAKE ADVANTAG E OF THE FACILITIES OFFERED BY THE SOCIETY. 3. DURING THE SCRUTINY OF RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2013- 14 AND 2014-15, LEARNED ASSESSING OFFICER FOUND THA T THOUGH THE TAXABLE INCOME AS PER AUDIT REPORT IN FORM NO 10BB WORKS OU T TO NIL, AND IN ITS RETURN FILED IN ITR-7, THE ASSESSEE HAS SHOWN ONLY INCOME FROM OTHER SOURCES AND ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 3 CLAIMED THE SAME TO BE EXEMPT U/S. 10(23C)(IV), BUT SO FAR AS THE SURPLUS/ DEFICIT IN RESPECT OF INCOME/EXPENDITURE OTHER THAN THAT REPORTED IN FORM NO.10BB IS CONCERNED, BOTH THE RETURN OF INCOME AS WELL AS THE FORM NO. 10BB ARE SILENT. LEARNED ASSESSING OFFICER FURTHER FOUN D THAT THE ACTIVITIES OF THE ASSESSEE ARE HYBRID, PARTLY COVERED BY PROVISIONS O F SECTION 10(23C)(IV) READ WITH SECTION 2(15) AND PARTLY BY PRINCIPLE OF MUTUA LITY. ACCORDING TO THE LEARNED ASSESSING OFFICER, AN ASSESSEE CAN HAVE INC OME FROM DIFFERENT HEADS OR INCOME FROM DIFFERENT SOURCES, BUT IT CANNOT HAV E ITS INCOME AND EXPENDITURE FROM THE SAME SOURCE APPORTIONED ON THE BASIS OF DIFFERENT PRINCIPLES, AS CLAIMED BY THE ASSESSEE, AND, THEREF ORE, THE ASSESSEE CANNOT BE ALLOWED TO COMPARTMENTALIZE ITS ACTIVITIES AND INCO ME ARISING THERE FROM, UNDER CHARITABLE ACTIVITIES AND MUTUAL ACTIVITIES, SINCE ALL THE ACTIVITIES HAVE TO BE SEEN IN THE TOTALITY. LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT WHILE THE CULTURAL AND INTELLECTUAL ACTIVITIES OF THE ASS ESSEE ARE OPEN TO GENERAL PUBLIC THE ACCOMMODATION AND RELATED ACTIVITIES ARE RESTRICTED ONLY TO ITS MEMBERS AS WELL AS NON-MEMBERS SPECIALLY INVITED TO PARTICIPATE IN THE ACTIVITIES OF THE SOCIETY AND, HENCE THERE IS NOT C OMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND PARTICIPATORS AND THUS THE ASSESSE E CANNOT BE CONSIDERED TO BE COVERED BY THE PRINCIPLE OF MUTUALITY. 3. BY TAKING INTO CONSIDERATION THE ENTIRE ACTIVITI ES OF THE ASSESSEE, LEARNED ASSESSING OFFICER OBSERVED THAT THESE ALSO INCLUDE PROVIDING OF SERVICES, SUCH AS ACCOMMODATION, FOOD & BEVERAGES E TC FOR PAYMENT OF CHARGES, COVERED BY PROVISO 1 & 2 TO SECTION 2(15) READ WITH 3 RD PROVISO TO SECTION 143(3) OF THE INCOME TAX ACT. 1961. ON THIS PREMISE, LEARNED ASSESSING OFFICER HELD THAT THE CLAIM OF THE ASSESSEE THAT IT S ACTIVITIES ARE NOT ON COMMERCIAL LINES IS NOT TENABLE AND PROVISIONS OF P ROVISO 1 & 2 TO SECTION 2(15) ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 4 READ WITH 3 RD PROVISO TO SECTION 143(3) OF THE ACT HAVE TO BE IN VOKED. CONSEQUENTLY LEARNED ASSESSING OFFICER DENIED THE E XEMPTION U/S 10(23C)(IV) AND COMPUTED THE INCOME OF THE ASSESSEE UNDER CHAPT ER IV OF THE ACT. 4. AS AGAINST THESE ORDERS, ASSESSEE PREFERRED APPE AL. BY WAY OF IMPUGNED ORDERS, LEARNED CIT(A) HAS GRANTED RELIEF TO THE AS SESSEE BECAUSE THE REASONS FOR NOT GRANTING RELIEF TO THE ASSESSEE U/S 10(23C) (IV) OF THE INCOME TAX ACT BY THE LEARNED ASSESSING OFFICER IN THE ASSESSMENT ORD ERS FOR ASSESSMENT YEARS 2013-14 AND 2014- 15 ARE IDENTICAL AS HAD BEEN RAIS ED BY THE EARLIER ASSESSING OFFICERS IN THE ASSESSMENT ORDERS OF EARLIER YEARS, AND IN RESPECT OF THE EARLIER YEARS BASING ON THE ORDERS FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13 IN ASSESSEES OWN CASE BY HIS PREDECESSOR AND ALSO BY THE TRIBUNAL. 5. REVENUE IS, THEREFORE, BEFORE US IN THESE APPEAL S AND IT IS ARGUED THAT THE ACTIVITIES OF THE ASSESSEE FALLS WITHIN THE PUR VIEW OF COMMERCIAL ACTIVITIES AS IT HAD PROVIDED BENEFITS ONLY TO SELECTED PERSON S AND NOT TO PUBLIC AT LARGE, AND THESE ACTIVITIES CANNOT BE CALLED AS CHARITABLE ACTIVITY WITHIN THE PURVIEW OF SECTION 2(15) OF THE ACT; THATBEING NOTIFIED U/S . 10(23C)(IV) DOES NOT MAKE ASSESSEE ENTITLED TO CLAIM EXEMPTION TILL IT IS PRO VED THAT THE ACTIVITIES CARRIED OUT BY IT ARE WITHIN THE SCOPE OF ACTIVITIES ENUMER ATED IN THE SAID SECTION, AND THE ASSESSEE INSTITUTION IS ALSO HIT BY 7TH PROVISO TO SECTION 10(23C) AS THE ACTIVITIES OF SALE OF FOOD AND BEVERAGES AND LICENS E FEE ETC. ARE THE ACTIVITY OF PROFIT OR GAIN OF BUSINESS WHICH IS NOT INCIDENTAL TO THE ATTAINMENT OF ITS OBJECTIVE FOR WHICH IT HAS BEEN MAINTAINING ACCOUNT S FOR THE SAID ACTIVITY; AND THAT ALLOWANCE OF DEPRECIATION ON THE FIXED ASSETS ACQUISITION OF WHICH HAS BEEN ALLOWED AS APPLICATION OF INCOME IN EARLIER YE ARS WILL TANTAMOUNT TO DOUBLE DEDUCTION. ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 5 6. PER CONTRA, LD. AR SUBMITTED THAT WHEN THE LD. C IT(A) FOLLOWED THE EARLIER EDITIONS OF THE HONBLE DELHI HIGH COURT AN D ALSO THE TRIBUNAL, WITHOUT ESTABLISHING ANY CHANGE IN THE FACTS ARE LAW, IT IS NOT OPEN FOR THE REVENUE TO CONTEND THAT THE CIT WENT WRONG IN GRANTING RELIEF TO THE ASSESSEE. COPIES OF THE ORDERS ARE PRODUCED BEFORE US. 7. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. RECORD REVEALS THAT THE MAIN REASON S OF DENYING EXEMPTION U/S 10(23C)(IV) OF THE INCOME TAX ACT BY THE LEARNED AS SESSING OFFICER IS THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE HIT BY THE PRO VISO TO SECTION 2(15) OF THE ACT AND ACCORDING TO THE LEARNED ASSESSING OFFICER, ASS ESSEES ACTIVITIES OF PROVIDING FOOD AND BEVERAGES, ACCOMMODATION AGAINST WHICH CHARGES ARE MADE FROM THE MEMBERS AND NON-MEMBERS CONSTITUTE CO MMERCIAL ACTIVITIES AND THEREFORE ACCORDING TO THE ASSESSING OFFICER, T HE ACTIVITIES OF THE ASSESSEE TRUST ARE NOT GOVERNED BY THE PROVISO TO SECTION 10 (23C)(IV) OF THE ACT. LD. ASSESSING OFFICER HAS ALSO NOTED THAT ALTHOUGH THE ASSESSEE CLAIMS THAT IT IS WORKING ON NO PROFIT AND NO LOSS BASIS, YET THE I NCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE TRUST REVEALS THAT IT EARNI NG SURPLUS YEAR AFTER YEAR. 8. IT IS NOT IN DISPUTE THAT THE REASONS FOR DENYIN G THE EXEMPTION BY THE LEARNED ASSESSING OFFICER IN 2013-14 AND 2014-15 OR IDENTICAL TO THE REASONS RECORDED FOR EARLIER YEARS, NAMELY, ASSESSMENT YEAR 2009-10 BY THE LEARNED DIT IN HIS ORDER U/S 263 OF THE INCOME TAX ACT AND THEREAFTER, ON THE IDENTICAL GROUNDS AND BY MAKING SIMILAR OBSERVATIONS THE EXEM PTION HAS BEEN DENIED. IT IS ALSO NOT IN DISPUTE THAT THE ORDER U/S 263 FO R THE ASSESSMENT YEAR 2009-10 WAS QUASHED BY A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 3124/DEL/2014 VIDE ITS ORDER DATED 11.05.2015 WHEREIN IT WAS HELD THAT THE ACTIVITIES OF THE TRUST OF PROVIDING ACCOMMODATION AND FOOD AND BEVER AGES ETC. DOES NOT ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 6 CONSTITUTE COMMERCIAL ACTIVITIES AND ACTIVITIES OF THE TRUST ARE NOT HIT BY ANY PROVISO TO SECTION 2(15) OF THE ACT. THERE IS NO DE NIAL OF THE FACT CONTENDED BY THE LD. AR THAT THOUGH REVENUE CARRIED THE MATTER I N APPEAL TO THE HONBLE DELHI HIGH COURT, SUCH AN APPEAL WAS DISMISSED BY H ONBLE HIGH COURT. FURTHER THERE IS NO DENIAL OF THE CONTENTION OF THE ASSESSEE THAT THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2009- 10 WAS F OLLOWED ANOTHER BENCH OF THIS TRIBUNAL IN ASSESSMENT YEAR 2011-12 IN ITA NO. 5288/DEL/2015 BY ORDER DATED 09.10.2017, AGAINST WHICH THE REVENUE CHALLEN GED BEFORE THE HONBLE DELHI HIGH COURT AND IT WAS DISMISSED VIDE ORDER DA TED 14.03.2018 IN ITA NO. 300 OF 2018. APPEAL AGAINST THE ORDER ORDER OF HON BLE DELHI HIGH COURT TO THE HONBLE SUPREME COURT IN SLP WAS ALSO DISMISSED BY THE HONBLE SUPREME COURT IN CIVIL APPEAL NO. 12034 OF 2018 VIDE ITS OR DER DATED 17.01.2020 DUE TO LOW TAX EFFECT. 9. IT IS, THEREFORE, CLEAR THAT THE FINDINGS GIVEN IN APPEAL NO. 3124/D/2014 FOR 2009-10 BY THE TRIBUNAL WERE FOLLOW ED IN ASSESSMENT YEAR 2011-12 AND ACCEPTED AT ALL LEVELS. LD. AR THEREFOR E PRAYS THAT SUCH FINDINGS FOR THE ASSESSMENT YEAR 2009-10 AND 2011-12 OR EQUA LLY APPLICABLE TO THE YEARS UNDER CONSIDERATION, AND THE SAME MAY PLEASE BE FOLLOWED AND APPEALS FILED BY THE REVENUE MAY PLEASE BE DISMISSE D. 10. IN THE CIRCUMSTANCES, SINCE THE LEARNED CIT(A) FOLLOWED THE ORDER OF TRIBUNAL IN ITA NO. 3124/DE!/2014 AND ALSO THE ORDER S OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2011-12 AND 2012-13, WHICH ORDE RS HAVE BECOME FINAL BECAUSE EVEN THE APPEAL FILED BY THE DEPARTMENT BEF ORE THE HONBLE HIGH COURT IN ASSESSMENT YEAR 2011-12 HAS BEEN DISMISSED , WE FIND IT DIFFICULT TO HOLD THAT THE IMPUGNED ORDERS SUFFER ANY ILLEGALITY OR IRREGULARITY. SINCE NO INTERFERENCE IS WARRANTED IN THESE APPEALS, WHILE C ONFIRMING THE FINDINGS OF ITA NOS. 6771 & 6772/DEL/2017 INDIA INTERNATIONAL CENTRE 7 THE LD. CIT(A), WE HOLD THAT THE ROUNDS OF APPEAL A RE DEVOID OF MERITS AND ARE LIABLE TO BE DISMISSED. APPEALS ARE ACCORDINGLY DISMISSED. 11. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTE R THE CONCLUSION OF THE HEARING IN THE VIRTUAL COURT ON 30/12/2020. SD/- SD/- (G.S. PANNU) (K. NARSIMHA CHA RY) VICE PRESIDENT JUDICIAL MEMBER DATED 30.12.2020 *KAVITA ARORA, SR. PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI