DDIT (Exemptions), CHENNAI V. The Indian Officers Association, CHENNAI

ITA 684/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5038 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-05-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 11-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: G BASKAR
• Section: 12; 154; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 684/MDS/2010 ASSESSMENT YEAR : 2002-03 THE DY. DIRECTOR OF INCOME TAX (EXEMPTIONS) I, CHENNAI 600 034. (APPELLANT) V. M/S THE INDIAN OFFICERS ASSOCIATION, NEW NO.69/OLD NO.35, THIRU VI KA ROAD (ROYAPETTAH HIGH ROAD), CHENNAI 600 014. PAN : AAATT7858F (RESPONDENT) APPELLANT BY : SHRI B. SRINIVAS RESPONDENT BY : SHRI G. BA SKAR O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANCE IS THAT THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE THAT REPAYMENT OF LOAN SHOULD BE CONSIDERED AS APPLICATION OF INCOME WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. I.T.A. NO. 684/MDS/10 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE, A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1970, HAD ALS O SOUGHT REGISTRATION UNDER SECTION 12A(A) OF INCOME-TAX ACT , 1961 (HEREINAFTER CALLED THE ACT). MEMBERS OF THE ASS ESSEE-SOCIETY CONSISTED OF OFFICERS BELONGING TO DIFFERENT GOVERN MENT SERVICES INCLUDING JUDGES. RETURN FOR THE IMPUGNED ASSESSME NT YEAR WAS FILED BY THE ASSESSEE DECLARING NIL INCOME WHICH WAS PROC ESS UNDER SECTION 143(1) OF THE ACT. ASSESSING OFFICER THERE AFTER ISSUED A NOTICE ON 4.3.2009 UNDER SECTION 154 OF THE ACT PRO POSING RECTIFICATION OF A MISTAKE REGARDING SHORTFALL IN C OMPLETING APPLICATION. AS PER THE A.O., REPAYMENT OF LOAN OF ` 33,20,947/- CONSIDERED BY THE ASSESSEE AS APPLICATION OF INCOME WAS NOT CONSISTEN T WITH THE STAND TAKEN EARLIER AND IN THE SUBSEQUENT ASSESSMENT YEAR S. HE, THEREFORE, RECTIFIED THE ASSESSMENT AND REWORKED TH E INCOME OF THE ASSESSEE EXCLUDING THE REPAYMENT OF LOAN WHICH WAS CONSIDERED EARLIER AS APPLICATION OF INCOME. 3. IN ITS APPEAL BEFORE THE CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT A.O. HAD TAKEN UP AN ISSUE WHICH WAS HIGHLY I.T.A. NO. 684/MDS/10 3 DEBATABLE, IN A RECTIFICATORY PROCEEDING UNDER SECT ION 154 OF THE ACT. AS PER THE ASSESSEE, REPAYMENT OF LOAN WAS AN APPLI CATION OF INCOME EVEN BY CBDT CIRCULAR NO.100 (F.NO.195/1/72-IT(A1) DATED 24.1.1973. ASSESSEE ALSO RELIED ON VARIOUS DECISIO NS OF DIFFERENT HIGH COURTS, INCLUDING THAT OF HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT V. NAGI REDDI CHARITIES (241 ITR 431) A ND IN THE CASE OF CIT V. KANNIKA PARAMESWARI DEVASTHANAM & CHARITIES (133 ITR 779). ITS CONTENTION WAS THAT REPAYMENT OF LOAN WA S APPLICATION OF INCOME. IN ANY CASE, AS PER THE ASSESSEE, CONSIDER ATION OF SUCH AN ISSUE WHICH WAS HIGHLY DEBATABLE AS AMENABLE TO REC TIFICATORY PROCEEDING UNDER SECTION 154 OF THE ACT, WAS INCORR ECT. LD. CIT(APPEALS) WAS APPRECIATIVE OF THIS CONTENTION. ACCORDING TO HIM, HON'BLE APEX COURT IN THE CASE OF HERO CYCLES (P) L TD. (228 ITR 463) CLEARLY HELD THAT THE POINT WHICH WAS NOT EXAMINED ON FACT OR IN LAW COULD NOT BE CONSIDERED AS MISTAKE APPARENT FROM RE CORD SINCE RECTIFICATION UNDER SECTION 154 COULD ONLY BE MADE ON CLEAR MISTAKE OF FACT OR LAW WAS COMMITTED BY THE OFFICER. RELIA NCE WAS ALSO PLACED BY LD. CIT(APPEALS) IN THE CASE OF T.S. BALARAMAN, ITO V. VOLKART BROS (82 ITR 50) (SC) FOR RULING THAT A.O. HAD TRAN SGRESSED HIS I.T.A. NO. 684/MDS/10 4 POWERS IN INVOKING SECTION 154 OF THE ACT. HE QUAS HED THE ORDER OF THE A.O. 4. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF THE CIT(APPEALS), SUBMITTED THAT REPAYMENT OF LOAN COUL D NOT BE CONSIDERED AS APPLICATION OF INCOME AND THIS WAS AN OBVIOUS ERROR AND CORRECTLY IT WAS RECTIFIED BY THE A.O. 5. PER CONTRA, LEARNED A.R. STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(APPEALS). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE QUESTION RAISED BEFORE US IS WHETHER THE ISSUE REGARDING REPAYMENT OF LOAN TO BE CONSIDERED AS APPLICATION O F INCOME OR NOT IS A DEBATABLE ONE OR NOT. OBVIOUSLY, IT IS NOT ONLY A DEBATABLE ONE SINCE CIRCULAR NO.100 DATED 24.1.1973 (SUPRA) CLEAR LY MENTION THAT A REPAYMENT OF DEBT TAKEN BY A TRUST FOR THE PURPOSE OF TRUST WOULD AMOUNT TO APPLICATION OF INCOME BUT THE CIRCULAR AL SO GOES TO FULLY SUPPORT THE ASSESSEES CLAIM. IT IS TRITE LAW THAT A CIRCULAR INSTRUCTION IS BINDING ON THE OFFICERS OF THE REVENUE. IN ANY CASE, THERE ARE PLETHORA OF DECISIONS IN FAVOUR OF ASSESSEE HOLDING THAT REPAYMENT OF I.T.A. NO. 684/MDS/10 5 LOAN IS APPLICATION OF INCOME IN SO FAR AS COMPUTAT ION UNDER SECTIONS 11 AND 12 ARE CONCERNED. WHATEVER THIS MAY BE, THE RE CANNOT BE ANY DOUBT THAT EVEN IF IT WAS CONSIDERED A DEBATABL E ISSUE, IT WAS NOT AMENABLE UNDER A RECTIFICATATORY PROCEEDING. FOR A MISTAKE TO BE APPARENT ON RECORD, IT HAS TO BE OBVIOUS AND ONE WH ICH CAN BE ESTABLISHED WITHOUT LONG DRAWN PROCESS OF REASONING . WE ARE OF THE OPINION THAT LD. CIT(APPEALS) RIGHTLY APPRECIATED T HIS AND QUASHED THE RECTIFICATION EFFECTED BY THE A.O. UNDER SECTION 15 4 OF THE ACT. NO INTERFERENCE IS CALLED FOR. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE TWENTY FOURTH DAY OF MAY, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 24 TH MAY, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-XII, CHENNAI- 34/ DIT (EXEMPTIONS), CHENNAI/D.R./GUARD FILE