The Improvement Trust, Sangrur V. DCIT, Circle -1 (Exemptions), Chandigarh

ITA 96/CHANDI/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2640 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 20-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Notional interest; Set aside
• Section: 11; 12A; 12AA

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठच瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठ , च瀃डीगढ़ च瀃डीगढ़च瀃डीगढ़ च瀃डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 96/CHD/2022 नधा रण वष / Assessment Year : 2014-15 The Improvement Trust, Sangrur, Kaula Park, Sangrur. बनाम VS The DCIT, Circle-1 (Exemptions), Chandigarh. थायी लेखा सं./PAN No: AAATI6009F अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Y.K.Sud, CA राज व क! ओर से/ Revenue by : Dr. Ranjeet Kaur, Sr.DR स ु नवाई क! तार&ख/Date of Hearing : 04.07.2022 उदघोषणा क! तार&ख/Date of Pronouncement : 27.07.2022 आदेश/ORDER The present appeal has been filed by the assessee wherein the correctness of the order dated 21.12.2021 of NFAC, Delhi sitting as First Appellate Authority pertaining to 2014–15 assessment year is assailed on the following grounds : 1. That the CIT (A) was not justified in dismissing the appeal of the assessee on the ground that appeal has been filed in the manual form on 14-11-18. 2. That the CIT despite the clarification of the appellant dismissed the appeal on the wrong and imaginary facts without applying his mind. 3. That the order of CIT is against the law and facts of the case. 2. At the time of hearing, ld. AR inviting attention to the delay of one day pointed out by the Registry submitted that the ITA 96/CHD/2022 A.Y. 2014-15 Page 2 of 6 due date for filing of the appeal before the ITAT was 20.02.2022 and the appeal documents were sent by Registered Post from Jalandhar on 18.02.2022 which have been received in the office of ITAT on 21.0-2.2022. Accordingly, it was his prayer that the delay may be condoned. 3. The ld. Sr.DR posed no objection to the condonation of delay application. 4. We have heard the rival submissions and perused the material available on record. It is seen that 19 th and 20 th Feb.,2022 were Saturday and Sunday and on account of this fact, the Appeal Memo could be delivered at the ITAT only on 21.02.2022. In these circumstances, we find that the delay pointed out by the Registry has been adequately addressed by the ld. AR. The delay, accordingly, is condoned. 5. The parties were directed to make submissions on the appeal. 6. The ld. AR inviting attention to the impugned order submitted that the sole grievance of the assessee is that the ld. CIT(A) has dismissed the appeal on the reasoning that the appeal has been filed in a manual form. Inviting attention to the order of the ITAT placed at Paper Book page 1 to 3 it was his submission that the jurisdiction before the First Appellate Authority arose in view of the order in assessee's case in ITA 665/CHD/2017 dated 01.11.2018 wherein after considering the ITA 96/CHD/2022 A.Y. 2014-15 Page 3 of 6 submissions of the parties before the Bench, a remand back to the CIT(A) was directed. It was his submission that the First Appellate Authority in the NFAC Delhi Forum presumably incorrectly understood that the appeal had been filed in a manual form on 14.11.2018 as noticed in para 1 of the order. It was his submission that since the assessee was not heard and the order was passed without hearing the assessee, this fact could not be brought to the notice of the First Appellate Authority. 6.1 In the circumstances, it was his limited prayer that the issue may be remanded back to the First Appellate Authority for a decision after hearing the assessee. 7. The ld. Sr.DR relied upon the impugned order and submitted that it appears that the appeal of the assessee was filed in a manual form on 14.11.2018. 8. The ld. AR Mr.Sud gave his statement at Bar that this is an incorrect fact and since the order was passed without hearing him, the statement at Bar, it was his prayer may be accepted and a remand may be directed. 9. Accordingly, the ld. Sr.DR in terms of the above request agreed that a remand back may be made. 10. We have heard the rival submissions and perused the material available on record. It is a matter of fact that the case of the assessee in the year under consideration came up ITA 96/CHD/2022 A.Y. 2014-15 Page 4 of 6 before ITAT. The Co-ordinate Bench considering the appeal filed numbered as ITA 665/CHD/2017 heard it on 26.09.2018 and passed the order on 01.11.2018. In the said order, the issues as considered by the ITAT and remanded back for adjudication afresh to the First Appellate Authority is borne out from record. For ready reference, relevant extract of the order dated 01.11.2018 is reproduced hereunder : “The present appeal has been filed by the Assessee against the order of the Ld. CIT(A), Patiala dt. 22/02/2017. 2. In the present appeal Assessee has raised the following grounds: 1. That CIT(A) was not justified in sustaining the addition of Rs. 11412209/- on account of notional interest made by the DOT While sustaining the addition he not only ignores the facts of the case but also ignored the explanation of the assessee. 2. That C)T(A) failed to appreciate while sustaining the addition of Rs. 11412209/-that the DOT had computed the business income and then made the addition by denying the exemption u/s 11 of the Income Tax Act. 1961. 3. That the CIT(A) further failed to appreciate that once he has allowed the exemption u/s 11 on the income of trust from sale and purchase of plots and houses by considering it as charitable activity no addition of any kind could have been made on the same. The action of CIT(A) In confirming the addition is contradictory to his own findings. 4. That the CIT(A) has given a wrong finding that the appellant had not pressed the ground of addition before him. He ignored the submission made by the counsel of appellant that once deduction u/s 11 has been allowed no addition could have been made on account of notional interest made by the AO while computing the business income. 5. That the orders of the AO and the CIT(A) are against the law and facts of the case. 3. The brief facts of the case are that the assessee is an artificial Juridical person having income from planning, development and improvement of cities and the same was shown as income from other sources. The assessee has been granted registration u/s 12AA of the I J. Act. The Assessing Officer held that the assessee was carrying on business of sale & purchase of residential houses, multi-storeyed houses and commercial plots by way of auction, which is in the nature of trade, commerce and business, but does not fall within the meaning of words "the advancement of any other object of general public utility' u/s 2(15) of the Income Tax Act, 1961. However, the assessee trust has stated during assessment proceedings that it was not carrying on any business activity that but that the object of trust is planning, development and improvement of city. The Assessing Officer further observed that the contention of the assessee was not correct in view of amendment of section 2(15) of ITA 96/CHD/2022 A.Y. 2014-15 Page 5 of 6 the Income Tax Act, 1961 by the Finance Act, 2008 8. 2010, w.e.f 01.04.2009 i.e. A.Y.2009- 10 and also in view of the fact that the business activities were carried out for sale of residential plots/houses & commercial plots/complex by auction and charging of huge fees from the clients in the nature of compounding fee, late construction fees, misc. income and interest income etc. 4. The Ld. CIT(A) based on the orders of the Tribunal and also the order of the Hon'ble Punjab & Haryana High Court in the case of CIT(E) Vs. Improvement Trust Moga in ITA NO. 147/CHD/2016 dt. 23/12/2016 allowed the exemption claimed by the assessee under section 11 r.w.s 12A of Income Tax Act, 1961. 5. Before us, the assessee contended that the addition made by the AO on account of notional interest of Rs. 1,14,12,209/- calculated @ 12% of Rs. 9,51,00,24'3/-, which were given as advances and shown as sundry debtors during the year under consideration ought to have been deleted by the Ld.CIT(A) as no addition could be sustained once the exemption under section 11 has been allowed on the Income of the Trust by considering activities of the Trust as Charitable in nature. 6. We have gone through the records before us, the Ld. CIT(A) held that during the course of assessment proceedings, the assessee did not file any reply or explanation on this issue. Therefore, the AO made the impugned addition u/s 13(1)(d) rw Sec. 11(5) and 164(2) of the Act. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Director of Income Tax, Chennai Vs. Working Women's forum, 235 Taxman - 516 (SC) and also the Ld. CIT(A) held that during the course of appellate proceedings, the assessee did not press this issue nor filed any submissions with regard thereto this issue and hence he dismissed the appeal of the assessee on this ground. 7. Having heard the arguments of both the parties and after considering the facts available on record, grounds taken by the assessee before the Ld. CIT(A) and also the reasoning given by the Ld. CIT(A) in the para 6.1 of his order that the assessee did not press the issue nor filed any submissions with regard thereto and also held that that it is presumed that the assessee has accepted the action of the Assessing Officer and on this ground Ld. CIT(A) dismissed the grounds. Whereas the assessee has come before us on the grounds that once the charitable activity has been accepted by the Ld. CIT(A) no addition of any kind could have been made. Hence keeping in view this paradoxical situation, we hold that the interest of justice would be well served if the matter is remanded back to the file of the Ld.CIT(A) to adjudicate on this issue. We also direct the assessee to furnish all the submissions which he may rely on before the Ld. CIT(A) during the course of proceedings. 8. As a result the appeal of the Assessee is set aside.” Order pronounced in the open Court.” 11. Accordingly, in terms of the prayer made, the impugned order is set aside back to the file of the ld. CIT(A) with direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. Said order was pronounced in the Open Court at the time of hearing itself. ITA 96/CHD/2022 A.Y. 2014-15 Page 6 of 6 12. In result appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 27 th July,2022. Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा लेखालेखा लेखा सद瀡य सद瀡यसद瀡य सद瀡य/ Accountant Member 瀈याियक 瀈याियक瀈याियक 瀈याियक सद瀡य सद瀡यसद瀡य सद瀡य/ Judicial Member “प ू नम” आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant – 2. . यथ / The Respondent 3. .आयकर आय ु /त/ CIT 4. .आयकर आय ु /त (अपील)/ The CIT(A) 5. -वभागीय त न2ध, आयकर अपील&य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar