Asst. Commissioner of Income Tax, (Exemptions), Hyderabad V. Andhra Pradesh State Civil Supplies Corporation Limited, Hyderabad

ITA 986/Hyd/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 2692 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKARAJ VAMSHI JAIN
• Assessee Lawyers: SATYA DINAKAR
• Keywords: Charitable institution
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 986 /HYD/2018 ASSESSMENT YEAR: 2013 - 14 ACIT (EXEMPTIONS), HYDERABAD. VS. ANDHRA PRADESH STATE CIVIL SUPPLIES CORPORATION LIMITED, HYDERABAD. PAN: AABCA 7164 R (APPELLANT) (RESPONDENT) C.O. NO. 29 /HYD/2018 (ARISING OUT OF ITA NO. 986 /HYD/2018) ANDHRA PRADESH STATE CIVIL SUPPLIES CORPORATION LIMITED, HYDERABAD. PAN: AABCA 7164 R VS. ACIT (EXEMPTIONS), HYDERABAD. (CROSS OBJECTOR) (APPELLANT IN APPEAL) ASSESSEE BY: SRI SATYA DINAKAR REVENUE BY: SMT. ALKARAJ VAMSHI JAIN, CIT - DR DATE OF HEARING: 08.10.2018 DATE OF PRONOUNCEMENT: 12 .10 .2018 ORDER PER SMT. P. MADHAVI DEVI, JM: THE CAPTIONED APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - 1, HYDERABAD DATED 13.02.2018 WHILE THE CROSS OBJECTION IS FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE CIT(A). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2 2. LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DENIAL OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 11 AMOU NTING TO RS. 7,71,85,211 / - BY RELYING ON THE DECISION OF ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10, 2010 - 11 & 2012 - 13. 3. LD. CIT(A) IS ERRED IN CONCLUDING THAT THE ASSESSEE HAS NOT CARRIED OUT ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE AND BU SINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO TRADE AS STATED IN PROVISO TO SECTION 2(15) OF THE ACT IN SPITE OF ADMITTED FACTS THAT THE ACTIVITIES OF ASSESSEE CONSIST OF PURCHASE AND SALE OF VARIOUS COMMODITIES. 4. CIT(A) OUGHT NOT TO HAV E CONSIDERED THE SUBMISSIONS OF THE ASSESSEE THAT THE ACTIVITIES OF THE ASSESSEE OF PURCHASE AND SALE OF VARIOUS COMMODITIES DO NOT CONSTITUTE TRADE, COMMERCE AND BUSINESS OR / AND FOR SERVICE RENDERED IN CONNECTION WITH IT AND PROVISO TO SECTION 2(15) OF THE ACT ARE NOT APPLICABLE TO ASSESSEE ON MERE FACT THAT THE ASSESSEE WAS CONSTITUTED AS STATE GOVERNMENT CORPORATION AND IT SELLS THE COMMODITIES AT PREDETERMINED PRICE AND GETS SUBSIDY FROM GOVERNMENT. 5. CIT(A) IS NOT JUSTIFIED IN TREATING THE ASSESSEE AS CHARITABLE ORGANIZATION ELIGIBLE FOR DEDUCTION U/S 11, 12, 12A OF THE ACT ON THE BASIS OF DECISION OF HONBLE AP HIGH COURT IN THE CASE OF APPEAL OF REVENUE IN CR. NO. 59/1992 DATED 04/03/2003, DECISION OF APEX COURT IN SURAT ART SILK CLOTH MFRS ASSOCIA TION 130 ITGR 28 (SC) AND OTHER DECISIONS WITHOUT APPRECIATING THE FACT THAT ALL THESE DECISIONS WERE RENDERED BEFORE INTRODUCTION OF PROVISION TO SECTION 2(15) OF IT ACT W.E.F 01.04.2009 AND HENCE, DISTINGUISHABLE FROM THE FACTS AND CIRCUMSTANCES OF ASSE SSEES CASE AND NOT APPLICABLE? 6. CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSEE SOCIETY INVOLVED IN PURCHASE AND SALE OF ESSENTIAL COMMODITIES AT THE PRICES FIXED BY THE GOVERNMENT AND IN TURN GETS SUBSIDY AND COMMISSION FROM THE GOVERNMENT AND THEREFORE, IT IS IN THE TRADING BUSINESS WITH A MOTIVE TO EARN PROFIT AND HENCE DOES NOT FALL WITHIN THE AMBIT OF SECTION 2(15) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY, OWNED BY THE GOVERNMENT OF ANDHRA PRADESH, ENGAGED IN THE BUSINESS OF SUPPLY OF ESSENTI AL COMMODITIES TO THE PEOPLE IN GENERAL AND TO THOSE BELOW POVERTY LINE IN PARTICULAR UNDER THE PUBLIC DISTRIBUTION SYSTEM (PDS), FILED ITS RETURN OF INCOME ON 30.08.3013 CLAIMING EXEMPTION U/S 11 OF THE ENTIRE INCOME OF RS. 7,71,85,211/ - . DURING THE ASS ESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A.O. OBSERVED THAT THE TERM CHARITABLE PURPOSE U/S 2(15) OF THE ACT HAS UNDERGONE AMENDMENT WHEREIN ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, 3 CANNOT BE TREATED AS CHARITABLE IN NATURE. THEREFORE, OBSERVING THAT THE ASSESSEE IS INVO LVED IN SUCH ACTIVITY, HE DENIED THE EXEMPTION U/S 11 OF THE ACT AND BROUGHT IT TO TAX. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), WHO GRANTED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.YS 2009 - 10 & 2011 - 12. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE A.O, WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ITA NO.117/HY/2017 FOR THE A.Y. 2012 - 13, DATED 10.08.2017. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN THE EARLIER YEARS ALSO THE A.O HAD DISALLOWED THE CLAIM OF DEDUCTION U/S 11 OF THE ACT ON THE GROUND THAT THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT A PPLIES TO THE ASSESSEE. WE FIND THAT THIS ISSUE HAD COME UP BEFORE THE TRIBUNAL FOR CONSIDERATION IN THE AYS 2009 - 10 AND 2011 - 12 AND THE ITAT HAD ALLOWED THE EXEMPTION U/S 11 R.W.S 2(15) OF THE ACT AND THE SAME WAS FOLLOWED BY THE COORDINATE BENCH OF THE TRIBUNAL FOR THE A.Y. 2012 - 13. HOWEVER, SINCE THE CIT(A) HAS ONLY FOLLOWED THE PRECEDENT ON THE ISSUE AND THERE IS NO MATERIA L FILED BEFORE US BY THE DEPARTMENT SHOWING THAT THE HONBLE HIGH COURT AT HYDERABAD HAS SUSPENDED OR SET - ASIDE THE O RDER OF THE TRIBUNAL, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE REVENUES APPEAL IS DISMISSED. 7. THE CROSS OBJECTION RAISED BY THE ASSESSEE IS ONLY IN SUPPORT OF THE ORDER OF THE CIT(A) AND THEREFOR E NEEDS NO ADJUDICATION. ACCORDINGLY, THE C O ALSO IS DISMISSED. 4 8. IN THE RESULT, APPEAL OF THE REVENUE AND THE CO FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2018. SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 12 TH OCTOBER, 2018 OKK COPY TO: - 1) M/S. ANDHRA PRADESH STATE CIVIL SUPPLIES CORPORATION LTD., HYDERABAD, D.NO.6 - 3 - 655/1/1, CIVIL SUPPLIES BHAVAN, SOMAJIGUDA, HYDERABAD.. 2) ACIT (EXEMPTIONS), HYDERABAD CIRCLE, 2 ND FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD - 500 004. 3) THE CIT(A) - 1, HYDERABAD 4) THE PR. CIT - 1, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE