ITO, Bangalore V. M/s Karnataka State Co-Operative Federation Ltd., Bangalore

ITA 922/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0413 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 10

Judgement Text

ITA.922/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A NO.922/BANG/2014 (ASSESSMENT YEAR : 2010-11) INCOME-TAX OFFICER, WARD 6(2), BENGALURU .. APPELLANT V. M/S. KARNATAKA STATE CO-OPERATIVE FEDERATION LTD, NO.32, 3 RD FLOOR, D. DEVRAJ URS ROAD, RACE COURSE ROAD, BENGALURU 560 001 .. RESPONDENT PAN : AAAJK0471H ASSESSEE BY : SHRI. SANDEEP, CA REVENUE BY : SHRI. P. DHIVAHAR, JCIT HEARD ON : 05.04.2016 PRONOUNCED ON : 2904.2016 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DT.03.03.2014 OF CIT (A)-II, BENGALURU, FOR A. Y. 2 010-11. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS : ITA.922/BANG/2014 PAGE - 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN HOLDING THAT THE AO HAS MADE ADDI- TIONS/DISALLOWANCE AMOUNTING TO RS 2,95,98,463 WHER EAS, THE ASSESSEE ITSELF HAD DECLARED RS 2,52,18,534 AS PROF IT IN COLUMN 43 OF P&L A/C IN ITS RETURN OF INCOME AND DECLARED 'NIL' TAXABLE INCOME IN SCHEDULE BP WITHOUT SETTING OFF THE ABOVE INCOME OR CLAIMING ANY EXEMPTION OR DEDUCTION WHATSOEVER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN LAW IN HOLDING THAT ALL OF THE ADDI- TIONS/DISALLOWANCES MADE BY THE AO ARE EXEMPT BY PL ACING RELI- ANCE ON HER EARLIER ORDER FOR AY 2005-06, WITHOUT A PPRECIAT- ING THE FACT THAT THE ASSESSEE HAS NOT CLAIMED ANY EXEMPTION U/S 10 OR ANY DEDUCTION UNDER CHAPTER VIA IN ITS RETURN OF INCOME FILED, WHICH IS THE SUBJECT MATTER OF APPEAL FOR AY 2010-1 1 AN THE SAME CANNOT BE ALLOWED IF NOT CLAIMED IN THE RETURN OF I NCOME BY THE AS- SESSEE. 3. ASSESSEE IS A COOPERATIVE SOCIETY ESTABLISHED BY TH E GOVERNMENT OF KARNATAKA AND REGISTERED UNDER THE KARNATAKA COOPER ATIVE SOCIETIES REGISTRATION ACT, 1959. FOR THE YEAR UNDER CONSIDE RATION ASSESSEE FILED ITS RETURN OF INCOME ON 28.03.2011. THE RETURN WAS PRO CESSED U/S.143(1)(A)(II) OF THE INCOME-TAX ACT, 1961 ('THE ACT' IN SHORT), VIDE INTIMATION DT.10.05.2011. IN THE SAID INTIMATION THE AO AT CP C PROCESSED THE RETURN AND ADDED A SUM OF RS.2,95,98,463/- UNDER THE HEAD ' INCOME FROM BUSINESS OR PROFESSION' AND RAISED A DEMAND OF RS.2,35,69,27 8/-. ITA.922/BANG/2014 PAGE - 3 4. AGGRIEVED BY THE SAID ADDITION AND CONSEQUENTIAL DE MAND, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) AND CONTENDED TH AT THE ASSESSEE HAS SHOWN NIL INCOME IN THE RETURN OF INCOME. IT WAS P OINTED OUT THAT IN THE RETURN OF INCOME AGAINST COMPUTATION OF PROFITS OF BUSINESS OR PROFESSION IT HAD DISCLOSED THE INCOME AND THEN CLAIMED EXEMPTION IN RESPECT OF THE SAID INCOME THUS THE ASSESSEE CONTENDED THAT THE ULTIMAT E RESULT IS NIL INCOME. CIT (A) NOTED THE FACT THAT IN THE CASE OF THE ASSE SSEE THERE APPEARS A TYPOGRAPHICAL ERROR WITH RESPECT OF THE SCHEDULE B P COMPUTATION OF PROFITS OF BUSINESS OR PROFESSION, WHERE THE FIGUR E IS WRONGLY MENTIONED AS NIL, WHEREAS IT SHOULD HAVE BEEN RS.2,52,18,534/ -. CIT (A) ACCORDINGLY ISSUED A REMAND ORDER TO THE AO FOR VERIFICATION. BUT DESPITE SEVERAL REMINDERS OVER A PERIOD OF 18 MONTHS, AO DID NOT SU BMIT ITS REPORT. CIT (A) HAS DECIDED THE APPEAL OF THE ASSESSEE BY ALLOW ING THE CLAIM AND DELETING THE ADDITION. 5. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. LD. DR HAS SUBMITTED THAT THE CIT (A) HAS ALLOWED THE CLAIM OF EXEMPTION U/S.10 WHICH WAS NOT CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME AND FURTHER THE CL AIM WAS ALLOWED WITHOUT EXAMINATION OF THE ELIGIBILITY OF THE ASSESSEE FOR CLAIM OF EXEMPTION OF THE ITA.922/BANG/2014 PAGE - 4 SAID INCOME. THEREFORE HE HAS PLEADED THAT IN THE ABSENCE OF ANY EXAMINATION OF THE CLAIM, CIT (A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF EXEMPTION. 6. ON THE OTHER HAND, LD. AR HAS SUBMITTED THAT THE CI T (A) HAS GIVEN SUFFICIENT OPPORTUNITY TO THE AO BY ISSUING THE REM AND ORDER, BUT THE AO DID NOT SUBMIT HIS REMAND REPORT THEREAFTER THE CIT (A) ALLOWED THE CLAIM. HE HAS FURTHER SUBMITTED THAT MAINLY BECAUSE THERE IS AN ERROR IN THE RETURN OF INCOME IN MENTIONING THE BUSINESS INCOME AND THE N CLAIMING EXEMPTION OF THE SAME, CANNOT BE A REASON FOR MAKING SUCH ADD ITION BY THE AO WHEN THE INCOME WAS OTHERWISE NOT TAXABLE IN THE HANDS O F THE ASSESSEE. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DE CISION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF SHRIKANT REAL ESTAT ES P. LTD V. ITO [22 ITR (TRIB) 266]. LD. AR POINTED OUT THAT THIS IS A BON AFIDE MISTAKE IN THE E- RETURN FILED BY THE ASSESSEE AND THEREFORE THE AO W AS NOT JUSTIFIED IN MAKING THE ADDITION WITHOUT EXAMINING THE CLAIM OF THE ASSESSEE OF EXEMPTION. 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, AT THE OUT SET WE NOTE THAT IN THE RETURN OF INCOME THE ASSESSEE HAS NOT ADMITTED ANY INCOME BUT THE TOTAL INCOME WAS SHOWN AT ITA.922/BANG/2014 PAGE - 5 NIL. THOUGH THE ASSESSEE HAS NOT SHOWN THE BUSINES S INCOME OF RS.2,52,18,534/- IN THE RELEVANT COLUMN OF THE RETU RN AND THEN AGAIN NO CLAIM OF EXEMPTION WAS MADE, HOWEVER, WHEN THE ASSE SSEE HAS NOT ADMITTED ANY INCOME IN THE RETURN OF INCOME, THEN W HILE MAKING THE ADDITION / ADJUSTMENT U/S.143(1) OF THE ACT, THE AO CANNOT CONSIDER ONLY ONE ASPECT OF THE MATTER BEING THE INCOME WHICH WAS NOT DISCLOSED BY THE ASSESSEE IN A PARTICULAR COLUMN. BUT THE ELIGIBILI TY OF THE SAID INCOME FOR EXEMPTION U/S.80P OF THE ACT AND FURTHER EXEMPTION U/S.10 OF THE ACT, AS THE GOVERNMENT GRANT ARE EXEMPTED U/S.10(23C)(IIIB) OF THE ACT, WAS ALSO REQUIRED TO BE EXAMINED. WE FIND THAT WHEN THIS MI STAKE WAS POINTED OUT BEFORE THE CIT (A), A REMAND ORDER WAS ISSUED TO TH E AO FOR VERIFICATION. THE RELEVANT PART OF THE IMPUGNED ORDER OF CIT (A) IS IN PARA 3.1 AND 3.2 AS UNDER : 3.1 IT APPEARS TO BE A CASE OF TYPOGRAPHICAL ERROR WITH RE- SPECT TO SCHEDULE BP WHERE THE FIGURE AT PART AL IS WRONG- LY MENTIONED AS NIL WHEREAS IT SHOULD HAVE BEEN RS.2,52,18,534/- AS PER ITEM NO.43 OF PART A OF P/L PARA IN THE RETURN OF INCOME. THE SAME FIGURE SHOULD HAVE BEEN CLAIMED IN ITEM NO.A-5(D) OF SCHEDULE BP. THE MATTER WAS AL SO RE- MANDED TO THE AO FOR VERIFICATION BUT, DESPITE SEVERAL RE- MINDERS OVER A SPAN OF 18 MONTHS, NO REPLY HAS BEEN RECEIVED FROM THE AO. THEREFORE, ON THE BASIS OF THE MATERIA LS AVAILABLE ON RECORD, APPELLANT'S ARGUMENTS AND RECORDS AND CERTA IN FILES, THE CASE HAS BEEN DECIDED. ITA.922/BANG/2014 PAGE - 6 3.2 THE AO [IN THIS CASE THE ACIT (CPC)] WAS, THERE FORE, NOT JUSTIFIED IN MAKING THE ADDITIONS OR DISALLOWANCES. HOWEVER, NO AT- TEMPT IS MADE HERE TO ANNUL THE INTIMATION U/S 143( 1) OF THE ACT THOUGH SUCH AN ACTION IS CALLED FOR IN THE APPELLAT E PROCEEDINGS SINCE THE ADDITIONS/DISALLOWANCES MADE BY THE AO AR E DELETED. THE REMAND REPORT CALLED FOR FROM THE AO HAS NOT B EEN RECEIVED DESPITE SEVERAL REMINDERS. THE FINDINGS IN THIS ORD ER ARE BASED ON THE EARLIER ORDER, AVAILABLE FACTS ON THE FILE, WHICH HOWEVER DO NOT PRECLUDE THE AO FROM TAKING ACTION AS PER LA W. 8. AS IT IS CLEAR THAT DESPITE THE EXPIRY OF MORE THAN 18 MONTHS, AO DID NOT RESPOND TO THE REMAND ORDER OF THE CIT (A) AND THEREFORE THE CIT (A) WAS LEFT WITH NO OPTION BUT TO DECIDE THE APPEAL OF THE ASSESSEE WITHOUT HAVING THE BENEFIT OF THE REMAND REPORT OF THE AO. WE FIND THAT THERE IS NO JUSTIFICATION OR EXPLANATION BY THE DEPARTMENT AS T O WHY THE AO HAS NOT SUBMITTED THE REMAND REPORT OR OTHER REPORT OF NOT SUBMITTING THE REMAND REPORT. THEREFORE IT IS CLEAR THAT THE AO WAS NOT HAVING ANY EXPLANATION OR REASON FOR NOT FILING THE REMAND REPORT. EVEN OTHE RWISE, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IS NOT ENTITLED FOR T HE RELIEF U/S.80P AS WELL AS U/S.10(23C) OF THE ACT. THEREFORE WHEN THE ENTIRE INCOME OF RS.2,52,18,534/- WAS ELIGIBLE FOR EXEMPTION, THEN A LLOWING THE CLAIM OF THE ASSESSEE BY THE CIT (A) IS PROPER AND JUSTIFIED. M UMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHRIKANT REAL ESTATATES P. LTD, (SUPRA) WHILE DEALING WITH AN ISSUE OF A MISTAKE IN THE RETURN HAS HELD I N PARAS 7 AND 8 OF ITS ITA.922/BANG/2014 PAGE - 7 ORDER, AS UNDER : 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE COPY OF THE REVISED E-RET URN FILED BY THE AS- SESSEE. IN THE PRESENT SYSTEM OF E-FILING OF RETURN WHICH IS TOTALLY DE- PENDENT UPON THE USAGE OF SOFTWARE, IT IS POSSIBLE THAT SOME CLERICAL ERRORS MAY OCCUR AT THE TIME OF ENTERING THE DATA I N THE ELECTRONIC FORM. THE RETURN IS PREPARED ELECTRONICALLY WHICH I S CONVERTED INTO AN XML FILE EITHER THROUGH THE FREE DOWNLOADABLE SO FTWARE PROVIDED BY THE CBDT OR BY THE SOFTWARE AVAILABLE IN THE MAR KET. IN EITHER CASE, THERE IS EVERY POSSIBILITY OF ENTERING INCORR ECT DATA WITHOUT HAVING THE EXPERT KNOWLEDGE OF PREPARING AN XML FIL E. XML FILE SO CREATED IS UPLOADED TO THE OFFICIAL WEBSITE, I.E. WWW.INCOMETAXINDIAEFILING.GOV.IN. ONCE THE RETURN I S UPLOADED, ITR-V, WHICH IS THE ACKNOWLEDGMENT OF THE RETURN SO FILED, IS GENER- ATED BY THE SYSTEM ITSELF AND IF THE RETURN IS NOT SIGNED DIGITALLY, THE ITR-V SO GENERATED HAS TO BE SIGNED AND SENT TO THE CENTRAL PROCESS- ING CENTRE, BENGALURU WITHIN 120 DAYS. 8. KEEPING IN MIND THIS SYSTEM OF E-FILING OF THE R ETURNS, COMING BACK TO THE FACTS OF THE CASE, WE FIND THAT THE ASSESSEE HAS CLAIMED SHORT- TERM CAPITAL GAINS AND HAS SHOWN IT IN THE REVISED E-RETURN BUT THE SAME FIGURE DID NOT APPEAR UNDER THE ITEM WHERE THE SHORT-TERM CAPITAL GAIN IS TO BE TAXED AT SPECIAL RATE UNDER S ECTION 111A OF THE ACT, I.E., INTERNAL PAGE 19 OF THE RETURN UNDER SCH EDULE CGCAPITAL GAINS UNDER ITEM NO. 7. HOWEVER, AT THE SAME TIME W E FIND THAT UN- DER SCHEDULE SIINCOME CHARGEABLE TO INCOME TAX AT SPECIAL RATES IB WHICH IS AT INTERNAL P-24 OF THE RETURN, THE ASS ESSEE HAS SHOWN SHORT-TERM CAPITAL GAINS (IIIA) AT SPECIAL RATE OF 10 PER CENT. ON IN- COME OF RS. 2,65,853, I.E., TAX THEREON OF RS. 26,5 85 WHICH CLEARLY ES- TABLISHES THAT THE ASSESSEE HAS SHOWN SHORT-TERM CA PITAL GAINS LIABLE TO BE TAXED AT THE SPECIAL RATE OF 10 PER CENT. ACC ORDINGLY, REVERSING THE FINDING OF THE LEARNED COMMISSIONER OF INCOME-T AX (APPEALS), WE DIRECT THE ASSESSING OFFICER TO ALLOW CREDIT OF THE SHORT-TERM CAPITAL GAINS SUBJECT TO SPECIAL RATE OF TAX AS PER PROVISI ONS OF SECTION 111A OF THE ACT AND RECTIFY THE INTIMATION UNDER SECTION 143(1) ACCORD- INGLY. ITA.922/BANG/2014 PAGE - 8 9. IN THE CASE ON HAND, WHEN THE CIT (A) HAS ALREADY ISSUED A REMAND ORDER GIVING FULL OPPORTUNITY TO THE AO FOR EXAMINA TION OF THE CLAIM, THEN IN THE ABSENCE OF ANY CLAIM OF THE REVENUE THAT ASS ESSEE IS NOT ENTITLED FOR THE EXEMPTION U/S.80P AND 10(23C) OF HE ACT, WE DO NOT FIND ANY ERROR OR REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT (A). ACCORDINGLY WE DISMISS THE APPEAL OF THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH APRIL, 2 016. SD/- SD/- (INTURI RAMA RAO) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIA L MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR