ITO (E), New Delhi V. Management Development Institute, New Delhi

ITA 750/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4603 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Capital expenditure
• Section: 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NO.-750/DEL/2014 ( ASSESSMENT YEAR: 2009-10) ITO (E) TRUST WARD-IV NEW DELHI. VS MANAGEMENT DEVELOPMENT INSTITUTE IFCI TOWER, 14 TH FLOOR, 61, NEHRU PLACE, NEW DELHI. AAATM0612L ASSESSEE BY SH. SUMANT CHADHA, CA REVENUE BY SH. PRADEEP KUMAR, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL CHALLENGING THE ORDER DATED 12.11 .2013 IN APPEAL NO. 399/2011-12 PASSED BY THE LD. COMMISSION ER OF INCOME TAX (APPEALS)-XXI, NEW DELHI (HEREINAFTER FO R SHORT CALLED AS LD. CIT (A)). DATE OF HEARING 04.09.2017 DATE OF PRONOUNCEMENT 19.09.2017 2 ITA NO.750/DEL/2014 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY AND REGISTERED U/S 12AA OF THE ACT, AND ITS INCOME WAS EXEMPT U/S 11 OF THE ACT. ASSESSEE HAS BEEN SPONSO RED BY THE IFCI (INDUSTRIAL FINANCIAL CORPORATION OF INDIA LTD .) WHICH IS A PSU (PUBLIC SECTOR UNDERTAKING). ASSESSEE HAS BEEN IN THE FIELD OF EDUCATION FOR PROVIDING EDUCATION AND TRAINING FOR THE COURSES OF MANAGEMENT LIKE MBA ETC. AND WAS ESTABLISHED IN 197 3. FOR THE AY 2009-10 THE ASSESSEE FILED THEIR RETURN OF INCOM E ON 30.09.2009 DECLARING THE TOTAL INCOME AS NIL. HO WEVER, DURING THE SCRUTINY THE ASSESSING OFFICER HAS DENIED EXEMP TION U/S 11 TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS INV OLVED IN COMMERCIAL ACTIVITY SINCE THE ASSESSEE RECEIVES CON SULTANCY CHARGES FOR VARIOUS RESEARCH PRODUCTS TAKEN UP BY T HEM. AO COMPUTED THE TOTAL INCOME OF THE ASSESSEE AT RS. 13 ,27,75,036/-. IN THE APPEAL, BY WAY OF IMPUGNED ORDER, LD. CIT (A ) FOUND THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE AC T AND CONSEQUENTLY HE DELETED THE ADDITION OF RS. 51,957/ - UNDER THE HEAD OF SALE OF ASSETS, RS. 2,39,77,823/- UNDER T HE HEAD OF CAPITAL EXPENDITURE, RS. 11,10,00,000/- UNDER THE HEAD OF ACCUMULATION OF INCOME AND ALSO ALLOWED CARRY FOR WARD THE 3 ITA NO.750/DEL/2014 EARLIER YEAR DEFICITS. CHALLENGING THE IMPUGNED OR DER THE REVENUE IS IN APPEAL BEFORE US. 3. IT IS THE ARGUMENT OF THE LD. DR THAT THE LD. CI T (A) ERRED IN ALLOWING THE ASSESSEE TO CARRY FORWARD THE DEFICIT OF THE CURRENT YEAR AND TO SET OFF THE SAME AGAINST THE INCOME OF THE SUBSEQUENT YEARS AND IN THAT PROCESS HE IGNORED THAT THE DETER MINATION OF INCOME U/S 11 TO 13 IS A SEPARATE CODE AND DOES NOT CONTAIN SUCH PROVISIONS AS CONTAINED IN CHAPTER VI OF THE ACT. HE FURTHER SUBMITTED THAT THE LD. CIT (A) ERRED IN HOLDING THA T THE ASSESSEE IS IN THE FIELD OF EDUCATION OF MANAGEMENT AND COMES W ITHIN THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE A CT AND AS A MATTER OF FACT THE ASSESSEE IS NOT COVERED UNDER TH E PROVISIONS OF SECTION 11(4A) OF THE ACT AS THE BUSINESS OF GIVING CONSULTANCY TO BUSINESS HOUSES/OTHER ENTITIES BY CHARGING FEES, IS NOT INCIDENTAL TO THE OBJECTS OF THE SOCIETY. HE LASTLY CONTENDED THAT WITHOUT ADJUDICATING THE ISSUE OF CONTRAVENTION OF PROVISIO NS OF SECTION 13(1)(C) & 13(1)(D) OF THE ACT THE ASSESSEE CANNOT BE HELD TO BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. 4 ITA NO.750/DEL/2014 4. PER CONTRA, IT IS THE ARGUMENT OF THE LD. AR THA T THE SIMILAR ISSUE HAD ARISEN IN ASSESSEES OWN CASE FOR THE AY 2004-05 BUT THE LD. CIT (A) VIDE ORDER DATED 05.10.2007, ALLOWED TH E CLAIM OF THE ASSESSEE AND THE SUCCESSIVE APPEALS PREFERRED BY TH E DEPARTMENT TO THIS TRIBUNAL, HIGH COURT AND THE HONBLE SUPREM E COURT WERE DISMISSED BY ORDERS DATED 12.03.2010, 03.02.2011 & 27.02.2012 RESPECTIVELY, AS SUCH, THE ORDER OF THE LD. CIT (A) IN THIS MATTER FOLLOWING THE JUDICIAL PRECEDENT WHILE GRANTING THE EXEMPTION U/S 11 OF THE ACT BY HOLDING THAT THE EDUCATION OF MANA GEMENT COMES UNDER THE DEFINITION OF CHARITABLE PURPOSES U/S 2(1 5) OF THE ACT AND A CONSEQUENT RELIEVES GRANTED BY THE LD.CIT (A) , CANNOT BE INTERFERED WITH BY THIS TRIBUNAL. IT IS SUBMITTED THAT FOR THE AY 2007-08 ALSO A SIMILAR RELIEF WAS GRANTED BY A COOR DINATE BENCH OF THIS TRIBUNAL IN ITA NO. 1143/DEL/2011. LD. AR PRO DUCED THE COPY OF THE ORDER DATED 27.07.2010 IN ITA NO. 589/D EL/2008 & 930/DEL/2009 OF THE HONBLE JURISDICTIONAL HIGH COU RT, WHERE UNDER A RELIEF WAS GRANTED TO THE ASSESSEE. ORDER DATED 30.09.2011 PASSED BY THE HONBLE SUPREME COURT IN A SSESSEES OWN CASE IS ALSO PRODUCED. 5 ITA NO.750/DEL/2014 5. IN THE LIGHT OF THE ABOVE ARGUMENTS ADVANCED BEF ORE US, WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW AS WELL AS THE ORDER OF A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 1143/DEL/2011, ORDERS OF THE HONBLE HIGH COURT IN ITA NO. 589/DEL/2008 AND ITA NO. 930/DEL/2009 AND ALSO THE ORDER DATED 30.09.2011 PASSED BY THE HONBLE SUPREME COUR T IN ASSESSEES OWN CASE DISMISSING THE SPECIAL LEAVE PE TITION PREFERRED BY THE REVENUE. THERE IS NO DENIAL OF THE FACTUAL MATRIX SET OUT BY THE LD. CIT (A) IN PARAGRAPH NO. 2.2 IN HIS ORDER T HAT FOR THE AY 2004-05 SIMILAR DENIAL OF EXEMPTION U/S 11 WAS MADE BY THE ASSESSING OFFICER BUT THE LD. CIT (A) VIDE ORDER DA TED 05.10.2007 ALLOWED THE APPEAL, THE APPEAL PREFERRED BY THE DEP ARTMENT BY SUCH A FIRST APPELLATE ORDER WAS DISMISSED BY A COO RDINATE BENCH OF THIS TRIBUNAL BY ORDER DATED 12.03.2010 IN ITA N O. 170/DEL/2008, THE HONBLE JURISDICTIONAL HIGH COURT DISMISSED THE FURTHER APPEAL IN ITA NO. 1431/DEL/2010 BY ORDE R DATED 03.02.2011 AND ULTIMATELY THE HONBLE SUPREME COURT BY ORDER DATED 30.09.2011 DISMISSED THE SPECIAL LEAVE PETITI ON PREFERRED BY THE DEPARTMENT AGAINST THE ORDER OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN ITA NO. 1431/DEL/2010. SO WHILE RESP ECTFULLY 6 ITA NO.750/DEL/2014 FOLLOWING THESE ORDERS VIDE PARAGRAPH NO. 2.3 THE L D. CIT (A) REACHED THE CONCLUSION THAT THE ASSESSEE IS IN THE FIELD OF EDUCATION OF MANAGEMENT AND, AS SUCH, COMES WITHIN THE DEFINITION OF CHARITABLE PURPOSES U/S 2(15) OF THE ACT AND ELIGIBLE FOR EXEMPTION U/S 11 OF THE SAME. IN VIEW OF THIS, WE ARE UNABLE TO FIND ANY ILLEGALITY OR IRREGULARITY IN THE FINDINGS OF THE LD. CIT (A) IN RESTORING THE EXEMPTION U/S 11 OR DELETING THE ADDI TION OF RS. 51,957/- UNDER THE HEAD OF SALE OF ASSETS OR RS. 2,39,77,823/- UNDER THE HEAD OF CAPITAL EXPENDITURE OR RS. 11,1 0,00,000/- UNDER THE HEAD OF ACCUMULATION OF INCOME OR IN AL LOWING CARRY FORWARD OF THE EARLIER YEAR DEFICIT AGAINST THE CUR RENT YEARS INCOME. FURTHER BASING ON THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN CIT VS. BANKING PERSONNEL SELECTION ( 2003) 131 TAXMAN 386 (BOM.) (HC) LD. CIT (A) HELD THAT SINCE THE EXEMPTION U/S 11 HAS BEEN ALLOWED TO THE ASSESSEE, THERE IS N O PROPER JUSTIFICATION FOR THE DENIAL OF ADJUSTMENT OF EARLI ER YEARS DEFICITS AGAINST THE CURRENT YEARS INCOME. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT (A) AND WE , ACCORDINGLY, UPHOLD THE SAME. WITH THIS VIEW OF THE MATTER, WE HOLD THAT THE 7 ITA NO.750/DEL/2014 APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED AND THE SAME IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.09.2017 SD/- SD/- (N.K. SAINI) (K.N. CHA RY) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 19.09.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 05.09.2017/ 13.09.2017 DRAFT PLACED BEFORE AUTHOR 13.09.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 19.9.2017 APPROVED DRAFT COMES TO THE SR.PS/PS 19.09.2017 KEPT FOR PRONOUNCEMENT ON 19.09.2017 FILE SENT TO THE BENCH CLERK 19.09.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK.