Dy.Director of Income Tax, Exemptions-I, Hyderabad V. Institute for Development & Research in Banking Technology,, Hyderabad

ITA 804/HYD/2014

• Counselvise Citation: 80422514 RSA 2014
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12A; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 804/HYD/2014 ASSESSMENT YEAR : 2010-11 DY. DIRECTOR OF INCOME-TAX (EXEMPTIONS) I, HYDERABAD INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TECHNOLOGY, HYDERABAD PAN AAAAI0204K (APPELLANT) (RESPONDENT) REVENUE BY SHRI D. SUDHAKAR RAO ASSESSEE BY SHRI LAXMINIWAS SHARMA DATE OF HEARING 04-09-2014 DATE OF PRONOUNCEMENT -09-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER DATED 14/02/2014 OF THE CIT(A)-IV, HYDERABAD PERTAI NING TO AY 2010- 11. 2. THOUGH THE DEPARTMENT HAS RAISES AS MANY AS THIR TEEN GROUNDS, BUT THE BASIC IN DISPUTE, IS IN RELATION TO ALLOWAN CE OF ASSESSEES CLAIM OF EXEMPTION U/S 11 BY LEARNED CIT(A). 3. BRIEFLY THE FACTS ARE, ASSESSEE A SOCIETY, REGIS TERED UNDER THE AP (TELEGANA AREAS) PUBLIC SOCIETIES REGISTRATION A CT, 1350 FASLI, WAS ESTABLISHED BY THE RESERVE BANK OF INDIA (RBI) IN 1996. ASSESSEE SOCIETY IS ALSO REGISTERED UNDER SECTION 1 2A OF THE ACT. FOR THE AY UNDER DISPUTE, IT FILED ITS RETURN OF INCOME ON 30/09/2010 2 ITA NO.804/HYD/2014 INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TEC HNOLOGY DECLARING NIL INCOME AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT INITIALL Y. SUBSEQUENTLY, ASSESSEES CASE WAS SELECTED FOR SCRUTINY. DURING S CRUTINY ASSESSMENT PROCEEDING, AO NOTICED THAT ASSESSEE HAS NOT APPLIED 85% OF THE INCOME, HENCE, WAS REQUIRED TO SET APART IN THE PRESCRIBED MODE U/S 11(2)(A) AND 11(2)(B) OF THE ACT. ASSESSEE FAILED TO FULFILL THE CONDITIONS AS LAID DOWN IN THESE PROVISIONS BY FILING NOTICE OF INTIMATION IN FORM NO. 10 BEFORE TIME ALLOWED U/S 1 39(1) AND CLAUSE (B) OF SECTION 11(2) & 11(5) OF THE ACT. ACCORDINGLY, AO REQUIRED ASSESSEE TO EXPLAIN WHY THE CLAIM OF EXEMPTION SHAL L NOT BE REJECTED. THOUGH, ASSESSEE CONTESTED THE OBSERVATION OF THE A O BY STATING THAT BEING REGISTERED U/S 12A OF THE ACT, AND HAVING FUL FILLED ALL OTHER CONDITIONS, IT IS ELIGIBLE FOR EXEMPTION U/S 11 BUT THE AO FOR THE REASONS MENTIONED IN PARA NO. 3 IN CIT(A)S ORDER, COMPLETED THE ASSESSMENT BY REJECTING ASSESSEES CLAIM OF EXEMPTI ON U/S 11 OF THE ACT. IN VIEW OF DENIAL OF EXEMPTION U/S 11, AO PROC EEDED TO COMPUTE THE INCOME OF THE ASSESSEE ON COMMERCIAL PRINCIPLES BY MAKING SEVERAL STATUTORY DISALLOWANCES, WHICH ULTIMATELY R ESULTED IN DETERMINATION OF INCOME AT RS. 16,12,95,285, WHICH WAS SUBSEQUENTLY REVISED TO RS. 21,12,87,495 BY VIRTUE OF ORDER DATE D 24/06/13 PASSED U/S 154 OF THE ACT. 4. IN COURSE OF HEARING OF APPEAL BEFORE CIT(A), AS SESSEE STRONGLY CONTESTING AOS FINDING IN RESPECT OF THE DENIAL OF EXEMPTION U/S 11 OF THE ACT, SUBMITTED, IN THE PRECEDING ASSESSMENT YE ARS ALSO, AO HAD DENIED EXEMPTION U/S 11 OF THE ACT IN THE COURSE OF ASSESSMENT PROCEEDING, WHICH WAS CHALLENGED BEFORE THE CIT(A) AND THE DISPUTE ULTIMATELY CAME UP FOR CONSIDERATION BEFORE THE ITA T. THE ITAT, HOWEVER, HELD THAT ASSESSEE IS ELIGIBLE FOR EXEMPTI ON U/S 11 OF THE ACT. IN THIS CONTEXT, ASSESSEE RELIED UPON THE ORDE R OF THE ITAT IN ITA NO. 259/HYD/2011 DATED 06/01/12 FOR THE AY 2007-08. CIT(A) ON GOING THROUGH THE ORDER OF THE ITAT, FOUND THAT THE TRIBUNAL AFTER CONSIDERING IDENTICAL NATURE OF DISPUTE HAS ALLOWED ASSESSEES CLAIM 3 ITA NO.804/HYD/2014 INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TEC HNOLOGY OF EXEMPTION U/S 11 OF THE ACT. ACCORDINGLY, FOLLOW ING THE ORDER PASSED BY THE ITAT IN ASSESSEES OWN CASE, LEARNED CIT(A) ALLOWED ASSESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT. SI NCE ASSESSEES CLAIM OF EXEMPTION U/S 11 WAS ALLOWED BY CIT(A), SH E HELD THAT DISALLOWANCES MADE BY THE AO BY APPLYING COMMERCIAL PRINCIPLE WOULD ALSO NOT SURVIVE. ACCORDINGLY, THOSE DISALLOW ANCES WERE ALSO DELETED BY THE CIT(A). BEING AGGRIEVED OF THE AFOR ESAID ORDER, THE REVENUE IS IN APPEAL BEFORE US. 5. LEARNED AR, AT THE OUTSET, SUBMITTED BEFORE US T HAT RIGHT FROM THE ASSESSMENT YEAR 2003-04 TILL 2009-10, AO IN A ROUTINE MANNER HAS COMPLETED ASSESSMENT BY DENYING ASSESSEES CLAI M OF EXEMPTION U/S 11 OF THE ACT. THOUGH, IN EACH OF THESE ASSESSM ENT YEARS, TRIBUNAL HAS ACCEPTED ASSESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT, BUT, THE AO IGNORING/OVERLOOKING ORDERS OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE IS CONTINUING TO PASS ASSESSMEN T ORDERS DENYING ASSESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT. IT WAS, THUS, CONTENDED BY LEARNED AR THAT CIT(A) HAVING FOLLOWED CONSISTENT VIEW OF THE TRIBUNAL, THE APPEAL ORDER NEEDS TO BE UPHEL D. 6. LEARNED DR, THOUGH, AGREED WITH THE FACT THAT AS SESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT HAS BEEN UPHELD BY T HE ITAT FOR THE PRECEDING ASSESSMENT YEARS, BUT, AT THE SAME TIME S UBMITTED, AS ORDER OF THE TRIBUNAL HAS BEEN APPEALED AGAINST BEF ORE THE HONBLE HIGH COURT OF AP, THE ISSUE HAS NOT ATTAINED FINALI TY. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF TH E REVENUE AUTHORITIES ON THIS ISSUE. ON GOING THROUGH THE ORD ER PASSED BY THE ITAT IN ITA NO. 147/H/12 DATED 28/06/12, A COPY OF WHICH IS PLACED BEFORE US, IT TRANSPIRES THAT RIGHT FROM AY 2003-04 TILL 2007-08, ASSESSMENTS IN CASE OF THE ASSESSEE ARE BEING COMPL ETED DENYING THE CLAIM OF EXEMPTION U/S 11 OF THE ACT. HOWEVER, THE TRIBUNAL IN 4 ITA NO.804/HYD/2014 INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TEC HNOLOGY ORDERS PASSED FOR ALL THESE AFORESAID ASSESSMENT YE ARS HAVE ALLOWED THE ASSESSEES CLAIM OF EXEMPTION U/S11 OF THE ACT. IN THE LATEST ORDER FOR AY 2008-09 AND 2009-10 IN ITA NO. 17 & 18/HYD/2 013 DATED 22/04/2013, THE TRIBUNAL FOLLOWING ITS EARLIER ORDE RS ALLOWED ASSESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT. AS IS EVIDENT FROM THE AFORESAID FACTS, THE TRIBUNAL WHILE DECIDING TH E ISSUE RELATING TO CLAIM OF EXEMPTION U/S 11 HAS BEEN TAKING A CONSIST ENT VIEW THAT ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE AC T. MERELY BECAUSE THE DEPARTMENT HAS PREFERRED APPEAL AGAINST THE ORD ER PASSED BY THE ITAT BEFORE THE HONBLE HIGH COURT WILL NOT BE A GR OUND TO HOLD THAT ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF TH E ACT. THEREFORE, CIT(A) HAVING FOLLOWED THE CONSISTENT VIEW OF THE T RIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE LEARNED CIT(A) IN ALLOWING ASSESSEES CLAIM OF EXEM PTION U/S 11 OF THE ACT. THEREFORE, ORDER OF THE CIT(A) ON THIS ISS UE IS UPHELD. 8. SO FAR AS THE OTHER ADDITIONS MADE BY THE AO WHI LE COMPUTING ASSESSEES INCOME ON COMMERCIAL PRINCIPLES, WE AGRE E WITH LEARNED CIT(A) THAT SINCE ASSESSEES CLAIM OF EXEMPTION U/S 11 OF THE ACT HAS BEEN ACCEPTED, THE DISALLOWANCES/ADDITIONS MADE BY APPLYING COMMERCIAL PRINCIPLES CANNOT SURVIVE. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) BY DISMISSING GROUNDS RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 12/09/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 12 TH SEPTEMBER, 2014 5 ITA NO.804/HYD/2014 INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TEC HNOLOGY KV COPY TO:- 1) ASST. DIRECTOR OF INCOME-TAX (E)-I, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004 2) INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TECHNOLOGY, MASAB TANK, HYDERABAD 3) CIT(A)-IV, HYDERABAD. 4) DIT(E), HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.