National Academy of Construction, Hyderabad V. ADIT, Hyderabad

MA 14/HYD/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9369 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 08-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: MURALI KRISHNA MURTHY
• Keywords: Charitable institution; Retrospective amendment
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER SL.NO. M.A. NO. A.Y. APPLICANT RESPONDENT 1. 13/H/10 (IN ITA NO. 193/H/10) 2006 - 07 NATIONAL ACADEMY OF CONSTRUCTION, HYDERABAD ASST. DIRECTOR OF INCOME-TAX (EXEMPTION) I, HYDERABAD 2. 14/H/10 (IN ITA NO. 800/H/06 2003 - 04 - DO - - DO - 3. 15/H/10 (IN ITA NO. 627/H/07) 2004 - 05 - DO - - DO - 4. 16/H/10 (IN ITA NO. 1305/H/08) 2005 - 06 - DO - - DO - 5. 129/H/10 (IN ITA NO. 1067/HYD/05) 2002 - 03 - DO - - DO - APPLICANT BY : SHRI MURALI KRISHNA MURTHY RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 28/09/2012 DATE OF PRONOUNCEMENT : 09 /11/2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THESE MISCELLANEOUS APPLICATION FILED BY THE ASSESS EE ARISE OUT OF THE ORDERS OF ITAT A BENCH, HYDERABAD BENC HES, HYDERABAD, IN THE RESPECTIVE APPEALS AS MENTIONED I N THE CAUSE LIST. 2. THE APPLICANT, NATIONAL ACADEMY OF CONSTRUCTION (IN SHORT NAC), IS A SOCIETY PROMOTED BY GOVT. OF ANDHRA PR ADESH, WITH THE MAIN OBJECTS OF SERVICING AND BENEFITING THE CO NSTRUCTION AND ALLIED INDUSTRIES BY IMPARTING TRAINING FOR INCREAS ING THEIR M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 2 RELEVANCE TO THE NATIONAL GOOD AND TO IMPROVE QUALI TY IN CONSTRUCTION INDUSTRY TO THE INTERNATIONAL STANDARD S AND TO CREATE INFRASTRUCTURAL FACILITIES FOR THE DEVELOPMENT CONS TRUCTION INDUSTRY. IN PURSUANCE OF ITS MAIN OBJECTIVES, NAC PROMOTED CONSTITUENT UNITS TO OFFER SKILL IMPROVEMENT PROGRA MMES. ONE OF THE UNITS IS INCORPORATED AS A JOINT STOCK COMPANY UNDER THE COMPANIES ACT, 1956. HYDERABAD INTERNATIONAL TRADE EXPOSITION LIMITED WAS THEREFORE FORMED AS A CONSTITUENT UNIT OF NAC. THE ONLY ISSUE INVOLVED IN THE APPEAL PERTAINS TO THE V IOLATION COMMITTED BY THE APPLICANT OF THE PROVISIONS OF SEC . 13(1)(D) AND THE CONSEQUENT DENIAL OF EXEMPTION U/S 11 OF THE IN COME-TAX ACT. IN VIEW OF SUCH VIOLATION, THE ASSESSING OFFICER R ESORTED TO TAX THE SURPLUS/EXCESS OF APPLICANTS INCOME OVER EXPEN DITURE ON COMMERCIAL PRINCIPLE. 3. ON FURTHER BEFORE THE CIT(A) FOR THE ASSESSMENT YEAR 2002- 03, THE CIT(A) HELD THAT THE QUESTION HERE IS NOT D IVERSION OF INCOME SURPLUS BUT A PART OF THE CAPITAL ITSELF. TH E CIT(A) OBSERVED THAT THE APPLICANT ADMITTEDLY HAS INVESTED RS. 1.50 CRORES OUT OF THE MEMBERSHIP FEES WHICH IS A CAPITA L RECEIPT. THE CIT(A) FURTHER HELD THAT THE APPLICANT HAS VIOLATE D BOTH THE FORM AND SUBSTANCE OF SECTION 11(5)R.W.S. 13(1)(D). THE CIT(A) ALSO HELD THAT THE INCOME TAX LAW NOWHERE PERMITTED DIVE RSION OF CAPITAL FOR ANY SUCH PURPOSE, THEREFORE, THERE IS A CLEAR VIOLATION OF SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT. HE, TH EREFORE, HELD THAT THE EXEMPTION CLAIMED U/S 11 OF THE ACT HAD RI GHTLY BEEN DENIED BY THE ASSESSING OFFICER. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE TRIBUNAL FOR ASSESSMENT YEAR 2002-03. M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 3 5. THE TRIBUNAL BY ITS ORDER IN A BENCH VIDE ITS ORDER DATED 30/06/2006 IN ITA NO. 1607/HYD/2005 HELD THAT THE A SSESSEE SOCIETY HAS VIOLATED THE PROVISIONS OF SECTION 13(1 )(D) OF THE ACT, AND IT LOOSES EXEMPTION 11 OF THE ACT ON WHOLE OF I TS INCOME AND NOT ONLY OF THAT PART WHICH IS EARNED FROM SUCH INV ESTMENT AND REJECTED THE GROUNDS OF THE APPLICANT AND DISMISSED THE APPEAL. 6. THE CIT(A) FOR THE SUBSEQUENT ASSESSMENT YEARS 2 003-04 TO 2006-07 OBSERVED THAT THE ISSUE OF VIOLATION OF THE PROVISIONS OF SECTION 13(1)(D) HAD INITIALLY ARISEN IN ASSESSMENT YEAR 2002-03 AND THE ASSESSING OFFICERS STAND CONFIRMED BY THE HONBLE ITAT, A BENCH HYDERABAD VIDE THEIR ORDER DT. 30/06/2006 I N ITA NO. 1067/HYD/2005 ALSO. HE FURTHER OBSERVED THAT ADMITT EDLY, THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, EXCEPT FOR THE INCREASE IN THE INVESTMENTS IN THE TWO COMPANIE S INVOLVED IN EARLIER YEARS. FOLLOWING THE DECISION OF THE ITAT, THE CIT(A) HELD THAT THE APPLICANT SOCIETY HAS INDEED VIOLATED THE PROVISIONS OF SECTION 13(1)(D) OF THE ACT AND HENCE, IS NOT ELIGI BLE FOR EXEMPTION U/S 11 FOR THE WHOLE OF THE INCOME. ACCOR DINGLY, HE DISMISSED THE GROUNDS OF APPEAL OF THE ASSESSEE. 7. ON FURTHER APPEAL TO THE TRIBUNAL FOR THE ASSESS MENT YEARS 2003-04 TO 2006-07, THE TRIBUNAL HELD AS FOLLOWS:- 2. THE ASSESSEE HAS RAISED AN ADDITIONAL' GROUND. ACCORDING TO SHRI MURALI KRISHNA MURTHY, LEARNED REPRESENTATIVE FOR THE ASSESSEE, THE ASSESSEE RECEIVED 0.25% FROM THE CONT RACTORS IN PURSUANCE TO GOVERNMENT ORDER, TOWARDS CORPUS FUND. THEREFORE, THE AMOUNT RECEIVED TOWARDS CORPUS FUND IS NOT A RE VENUE RECEIPT. ACCORDINGLY, THE SAME IS NOT LIABLE FOR TAXATION. T HE LEARNED REPRESENTATIVE FURTHER SUBMITTED THAT SINCE THE ASS ESSEE RECEIVED CORPUS FUND FROM THE CONTRACTORS IN PURSUANCE TO GO VERNMENT ORDER THE SAME IS EXEMPTED FROM INCOME TAX UNDER SEC. 12 OF THE IT ACT. REFERRING TO THE ORDER OF THE GOVERNMENT IN G.O.MS .NO.98 DATED 5- 7-2000, THE LEARNED REPRESENTATIVE SUBMITTED THAT THE GOVERNMENT M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 4 OF ANDHRA PRADESH DIRECTED THE CONTRACTORS TO PAY 0 .25% AS CORPUS FUND. THIS GOVERNMENT ORDER AND THE RECEIPT OF CORP US FUND WAS NOT CONSIDERED BY THE LOWER AUTHORITIES AND BY THIS TRI BUNAL FOR ASST. YEAR 2002-03. THEREFORE, THE ORDER OF THIS TRIBUNAL FOR AY 2002-03 IN ITA NO. 1067/HYD/2005 DATED 30/06/2006 MAY NOT B E APPLICABLE TO THE FACTS OF THIS CASE. 3. THE LEARNED REPRESENTATIVE FURTHER SUBMITTED THA T WHILE PASSING THE ORDER FOR THE AY 2002-03, THE TRIBUNAL HAS NOT TAKEN INTO CONSIDERATION THE JUDGMENT OF THE APEX COURT I N THE CASE OF ADDL. CIT VS. ALN RAO, CHARITABLE TRUST, 216 ITR 69 7. ACCORDING TO THE LEARNED REPRESENTATIVE, IF THE ASSESSEE ACCUMUL ATED 20% OF THE AMOUNT, THEN IT IS ENTITLED FOR EXEMPTION U/S 11 OF THE INCOME-TAX ACT. SINCE THIS JUDGMENT OF THE APEX COURT WAS NOT CONSIDERED, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL FOR AY 2002-03. 4. THE LEARNED REPRESENTATIVE FURTHER SUBMITTED THA T THE INVESTMENT MADE BY THE ASSESSEE IN EQUITY SHARES OF HYDERABAD INTERNATIONAL TRADE EXPOSITION LIMITED IS ONLY AN A PPLICATION OF INCOME AND, THEREFORE, THERE CANNOT BE VIOLATION OF SEC. 13 OF THE IT ACT. 5. ON THE CONTRARY, SHRI S.V. JADHAV, LEARNED DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT IT IS NOT CORRECT TO SAY THAT THIS TRIBUNAL HAD NOT CONSIDERED THE GOVERNMENT ORDER IS SUED BY THE STATE GOVERNMENT DIRECTING THE CONTRACTORS TO PAY 0 .25% AS CORPUS FUND. REFERRING TO THE ORDER OF THIS TRIBUNAL AT PA GE 10 PARA 14.2 OF THE ORDER IN ITA NO. 1067/HYD/2005 DATED 30/06/2006 , THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE AS SESSEE CONTRIBUTED RS. 1.5 CRORES FROM THE CORPUS FUND. TH IS TRIBUNAL OBSERVED THAT THE CONTRIBUTION WAS MADE ONLY FROM T HE CORPUS FUND. THE TRIBUNAL FURTHER OBSERVED THAT WHETHER THE FUND S WERE CONTRIBUTED FROM THE CORPUS FUND OR FROM OTHER FUND S, IT IS AN INVESTMENT MADE IN VIOLATION OF SEC. 13(1)(D) OF TH E IT ACT. THEREFORE, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE CONTRIBUTION HAS BEEN MADE OUT OF THE ACCUMULATED INCOME OR OUT OF THE CORPUS FUND. THEREFORE, MERELY BECAUSE THE CONTRIBUTION TO EQUITY SHARES WAS MADE FROM THE CORPUS FUND COLLECTED FROM THE CO NTRACTORS IN PURSUANCE TO GOVERNMENT ORDER, IT WILL NOT MAKE ANY DIFFERENCE AS OBSERVED BY THIS TRIBUNAL IN THE ASSESSEES OWN CAS E FOR AY 2002- 03. REFERRING TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF ALN RAO CHARITABLE TRUST (SUPRA), THE LEARNED DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT THIS TRIBUNAL REFERRE D TO THE JUDGMENT AT PAGES 7 OF ITS ORDER. THEREFORE, IT IS NOT CORRE CT TO SAY THAT THE ATTENTION OF THIS TRIBUNAL WAS NOT DRAWN TO THE JUD GMENT OF THE APEX COURT IN THE CASE OF ALN RAO CHARITABLE TRUST. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT IN THE CASE M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 5 BEFORE THE APEX COURT, THE ISSUE WAS REGARDING ACCU MULATION OF FUNDS U/S 11(1)(A) AND SEC. 11(1)(B) OF THE IT ACT. THE APEX COURT HAS NOT CONSIDERED THE ISSUE OF INVESTMENT OF FUNDS U/S 13(1)(D) OF THE ACT. THEREFORE, THIS JUDGMENT OF THE APEX COURT MAY NOT BE RELEVANT TO THE FACTS OF THIS CASE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. LET US FIRST DISCUSS THE ADDITIONAL GROUND RAISED BY THE ASSESSEE WITH R EGARD TO RECEIPT OF CORPUS FUND. THE MAIN CONTENTION OF THE ASSESSEE IS THAT IN PURSUANCE TO GOVERNMENT ORDER THE CONTRACTORS PAID 0.25% TOWARDS CORPUS FUND; THEREFORE, IT IS EXEMPT UNDER SEC. 12 OF THE INCOME- TAX ACT. THE RECEIPT OF CORPUS FUND WAS NOTICED BY THE AO IN THE ASSESSMENT ORDER. THEREFORE, IT IS NOT CORRECT TO S AY THAT THE AD HAS NOT TAKEN IT INTO CONSIDERATION. MOREOVER, AS RIGHT LY POINTED ,OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THIS TRIBU NAL, IN THE ASSESSEE'S OWN CASE FOR THE ASST. YEAR 2002-03, HEL D THAT THE CONTRIBUTION OF RS.1.5 CRORES TO THE EQUITY SHARES OF HYDERABAD INTERNATIONAL TRADE EXPOSITION LTD. WAS OUT OF THE CORPUS FUND OF THE ASSESSEE. THIS TRIBUNAL FURTHER OBSERVED THAT IT DO ES NOT MAKE ANY DIFFERENCE WHETHER THE CONTRIBUTION WAS OUT OF ACCU MULATED INCOME OR OUT OF CORPUS FUN D. IN VIEW OF THE FINDING RECO RDED BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S O WN CASE FOR ASST. YEAR 2002-03, IN OUR OPINION, IT DOES NOT MA KE ANY DIFFERENCE MERELY BECAUSE THE INVESTMENT WAS MADE OUT OF CORPU S FUND. 7. NOW, COMING TO THE JUDGMENT OF THE APEX COURT I N THE CASE OF A.L.N. RAO CHARITABLE TRUST (SUPRA), AS RIGHTLY POI NTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE ATTENTION OF THE BENCH WAS DRAWN TO THIS JUDGMENT, WHICH IS EVIDENT FROM T HE ORDER OF THE TRIBUNAL, MORE PARTICULARLY AT PAGE 7 OF THE ORDER. AS RIGHTLY POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE APEX COURT WAS CONCERNED ABOUT THE ACCUMULATION OF INCOME UNDER SE C. 11(1)(A) AND SEC. 11(1)(B) OF THE INCOME-TAX ACT. THE INVEST MENT OF FUNDS AS PROVIDED IN SEC. 13(1)(D) WAS NOT THE SUBJECT MA TTER BEFORE THE APEX COURT. THEREFORE, T:HE JUDGMENT OF THE APEX CO URT IN THE CASE OF A.L.N. RAO CHARITABLE TRUST (SUPRA) MAY NOT BE O F ANY ASSISTANCE TO THE ASSESSEE. SEC. 13(1)(D) REFERS TO INVESTMEN T OR DEPOSIT OF ANY FUNDS OF THE TRUST. THEREFORE, IF THE FUNDS WER E DEPOSITED IN VIOLATION OF THE PROVISIONS OF SEC. 13 AND IF SUCH DEPOSIT OR INVESTMENT CONTINUED AS PROVIDED, THEN THERE WAS CL EAR VIOLATION OF THE PROVISIONS OF SEC. 13(10(D) OF THE IT ACT. IN T HIS CASE, A CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OW N CASE FOR AY 2002-03 HELD THAT INVESTMENT OF RS. 1.5 CRORE IN TH E EQUITY OF HYDERABAD INTERNATIONAL TRADE EXPOSITION LTD. IS IN VIOLATION OF SEC. 13(1)(D). ADMITTEDLY, THIS INVESTMENT CONTINUES EVE N FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. THEREFORE, TH E DECISION OF M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 6 THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSES SEES OWN CASE FOR AY 2002-03 EQUALLY APPLICABLE FOR THE ASSESSMENT YE ARS UNDER CONSIDERATION. THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IS BINDING ON THIS BENCH. 8. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CON FIRMED. 9. IN THE RESULT, ALL THESE APPEALS OF THE ASSESSEE STAND DISMISSED. 8. AGAINST THE ORDERS OF ITAT, THE ASSESSEE FILED T HE PRESENT APPEALS. IN THE M.AS. FILED FOR AY 2002-03 TO 2006- 07, THE ASSESSEE STATED AS FOLLOWS: THE APPELLANT, NATIONAL ACADEMY OF CONSTRUCTION, HYDERABAD WAS ESTABLISHED BY THE GOVERNMENT OF ANDH RA PRADESH FOR THE UNIQUE PURPOSE OF IMPARTING TRAININ G TO PERSONS EMPLOYED IN THE CONSTRUCTION ACTIVITY WITH A VIEW TO HELP UNEMPLOYED YOUTH GAIN EMPLOYMENT IN CONSTRUCTI ON INDUSTRY. TO PROVIDE FINANCES TO THE APPELLANT TO CARRY ON IT S ACTIVITIES, THE GOVT. OF AP ISSUED ORDERS IN G.O. N OS. 92 TR&B (B.1) DEPT. DATED 19/05/1998 TO DEDUCT 0.25% F ROM THE GROSS BILLS OF THE CONTRACTORS AND REMIT TO THE APPELLANT- SOCIETY AS THEIR CONTRIBUTION. OUT OF THESE CONTRIB UTIONS SO RECEIVED, THE APPELLANT-SOCIETY HAS TO CARRY OUT IT S ACTIVITIES, ALL OF WHICH ARE CHARITABLE IN NATURE OVER WHICH TH ERE IS NO DISPUTE. THE GOVT. ALSO HAD ALLOTTED 167 ACRES OF L AND IN S.NO. 5/2 AND 5/3 AT IZZATNAGAR VILLAGE, LINGAMPALL Y (M), R.R. DIST FOR THE PURPOSE OF RAISING BUILDINGS FOR ITS ACTIVITIES. THE MEMORANDUM OF ASSOCIATION FOR THE SOCIETY, AMON G OTHERS, PROVIDES TO DEVELOP CONSTITUENT UNITS TO HO LD EXHIBITIONS, ETC ALL OF WHICH FORM AN INTEGRAL PART OF THE PROMOTION OF EMPLOYMENT IN CONSTRUCTION AND IMPARTI NG TRAINING TO THE TRAINEES. IT HAS A GOVERNING BODY I N WHICH SEVERAL HEADS OF GOVERNMENT DEPARTMENTS ARE REPRESE NTED AND IT IS CHAIRED BY THE HONBLE CHIEF MINISTER OF ANDHRA PRADESH. FOR THE ASSESSMENT YEAR 2002-03 IN ITS MEETING HELD IN THE CHAMBERS OF THE HONBLE CHIEF MINISTER ON 16/10/200 0, IT WAS DECIDED THAT THE APPELLANT SHOULD CONTRIBUTE RS . 2.00 CRORES TO A CONSTITUENT UNIT NAMED CONSTRUCTION EXP O, M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 7 HYDERABAD (HITEX) TO ENABLE IT TO CONSTRUCT EXHIBIT ION STALLS, ETC. AND ALSO LEASE 100 ACRES OF THE APPELL ANTS LAND TO THE SAID CONSTITUENT. PURSUANT TO THE SAID DIRECTION, THE APPELLANT LEASE D 100 ACRES AND ALSO CONTRIBUTED A SUM OF RS. 1.50 CRORES TO THE CONSTITUENT UNIT IN THE RELEVANT YEAR UNDER CONSIDE RATION ON 05/01/2002. 10. FOR THE M.AS. FILED FOR ASSESSMENT YEARS, 2003- 04 TO 2006-07, THE ASSESSEE IN THE M.AS. REGARDING DEPLOY MENT OF FUNDS STATED AS UNDER:- I)FOR 2003-04: A SUM OF RS. 2.00 WAS DIRECTED TO BE DEPLOYED IN ONE OF THESE CONSTITUENT UNITS, NAMELY, HITEX. HENCE, A SUM OF RS. 50 LAKHS WAS DEPLOYED DURING TH E ASSESSMENT YEAR 2003-04 IN ADDITION TO THE AMOUNT O F RS. 1.5 CRORES DEPLOYED DURING THE ASSESSMENT YEAR 2002 -03. II)FOR 2004-05: BY RESOLUTION DATED 04/07/2003 A SU M OF RS.50.5 LAKHS WAS DEPLOYED IN ANOTHER UNIT, NAMELY, NACIEL DURING THE ASSESSMENT YEAR 2004-05. III)FOR 2005-06: OF THE CORPUS SO RECEIVED, IN PURS UANCE OF THE BY RESOLUTIONS DATED 16/10/2002, AND 04/07/2003 AN AMOUNT OF RS. 50 LAKHS WAS DEPLOYED IN HYDERABAD INTERNATINAL TRADE EXPOSITION LTD. (HITEX) AND RS. 49.49 LAKHS WAS DEPLOYED IN NAC INFRASTRUCTURE EQUIPMENT LTD. (NACIEL), CONSTITUENT UNITS OF THE NAC. THIS WAS IN ADDITION TO THE DEPLOYMENT OF RS. 250.50 LAKHS ALREADY MADE DURING THE EARLIER YEARS. WITH A VIEW TO SAFEGUARD THIS SU M FROM BEING MISUTILIZED, IT WAS DECIDED THAT THE SUM TO B E SO CONTRIBUTED MUST BE TREATED AS PART OF THE CAPITAL OF THE HITEX AND NACIEL. IT IS THUS A CLEAR APPLICATION OF FUNDS FOR THE FURTHERANCE OF ITS OBJECTIVES, FOLLOWING THE MA NDATE OF THE MANAGING COMMITTEE. IV)FOR 2006-07 IN PURSUANCE RESOLUTION DATED 16/10/ 2002 AND 04/07/2003 AN AMOUNT OF RS. 25 LAKH DEPLOYED IN HITEX IN ADDITION TO THE DEPLOYMENT OF RS. 349.99 LAKHS A LREADY MADE DURING THE EARLIER YEARS IN HITEX AND NACL. THE APPELLANT FILED ITS RETURN OF INCOME SHOWING NI L INCOME. THE AO WHILE COMPLETING THE ASSESSMENT TOOK THE STA ND THAT THE CONTRIBUTION SO MADE BY THE APPELLANT TO ITS C ONSTITUENT, AS PER THE DIRECTIONS OF THE GOVERNMENT, AMOUNTED T O INVESTMENT NOT IN THE FORM AND MODE AUTHORIZED BY SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE INCOME-TAX ACT, M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 8 1961. THE AO WAS OF THE OPINION THAT THIS IS AN IN VESTMENT VIOLATING THE PROVISIONS OF SECTION 13(1)(D)R/W 11( 5) OF THE ACT. THE AO DISAGREED WITH THE VIEW THAT THE AMOUNT SO CONTRIBUTED WAS ONLY APPLICATION OF ITS INCOME FOR THE PURPOSE OF ACHIEVING ITS OBJECTIVES WHICH ARE ALL E NUMERATED IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION. THE CIT(A) ALSO AGREED WITH THE VIEW OF THE AO AND DISMISSED T HE APPELLANTS APPEAL. ON SECOND APPEAL BEFORE THE HONBLE TRIBUNAL, IT IS SEEN THAT THE APPELLANT HAD RAISED TWO GROUNDS THAT GO TO THE ROOT OF THE MATTER NAMELY- A. THE CONTRIBUTION MADE TO A CONSTITUENT UNIT CONS TRUCTION EXPO, HYDERABAD (HITEX) TO ENABLE THE CONSTRUCTION OF EXHIBITION OF HALLS, ETC. IN PURSUANCE OF THE DIREC TIONS OF THE GOVERNMENT OF ANDHRA PRADESH WAS NOT INVESTMENT. B. THAT THE SAID AMOUNT WAS APPLICATION OF INCOME OF THE FUNDS FOR ACHIEVING ITS OBJECTIVES. THE APPELLANT RELIED ON SEVERAL CASE LAW TO SUPPORT ITS VIEW INCLUDING THE DECISION OF THE APEX COURT IN ADDL. C IT VS. ALN RAO CHARITABLE TRUST REPORTED IN 216 ITR 697 (SC). THE HONBLE TRIBUNAL WHILE DISPOSING THE APPEAL HAD ELABORATELY DISCUSSED HOW THIS CONTRIBUTION SHOULD BE REGARDED AS INVESTMENT BUT THERE WAS NO DISCUSSION ABOUT THE APPLICATION OF INCOME OR FUNDS AND DISMISSED TH E APPEAL. THE HONBLE TRIBUNAL ONLY NOTED THE CONTENTION OF T HE APPELLANT IN PARA 14 OF THE SAID ORDER. THERE WAS O NLY A SOLITARY OBSERVATION MADE IN PASSING IN THE PENULTI MATE SENTENCE OF ITS ORDER WITHOUT GIVING ANY REASONS. T HIS IS A VITAL POINT WHICH GOES TO THE VERY ROOT OF THE ASSE SSMENT. THIS, IT IS RESPECTFULLY SUBMITTED A MISTAKE/OMISSI ON, WHICH NEEDS TO BE RECTIFIED IN THE INTEREST OF JUSTICE, E QUITY AND FAIR PLAY. IN THE CIRCUMSTANCES, IT IS PRAYED THAT THE HONBLE BENCH BE PLEASED TO RECALL THE ORDER AND FURTHER BE PLEASED TO POST THE PETITION FOR HEARING TO CLARIFY THE POINTS AND RECTIFY THE MISTAKES POINTED ABOVE AND OBLIGE, FOR WHICH ACT OF KINDNESS THE APPELLANT-SOCIETY SHALL EVER REMAIN GRATEFUL. M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 9 9. THE LEARNED DR VEHEMENTLY OBJECTED TO THE MA FIL ED BY THE ASSESSEE. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. WE ARE OF THE OPINION THAT THE TRIBUNAL BY ITS ORDER DATED 30/06/2006 (SUPRA) FIRSTLY HELD THAT HI TEX IS NOT A PUBLIC SECTOR COMPANY AND THAT EVEN IF IT IS CONSID ERED THAT INVESTMENT OF RS. 1.5 CRORES HAS BEEN MADE IN HITEX , THE SAME HAS NOT BEEN MADE IN THE MODE AND FORM AS MENTIONED IN SECTION 11(5) OF THE ACT. THE QUESTION WHICH WAS DECIDED BY THE TRIBUNAL WAS WHETHER THE AMOUNT OF RS. 1.5 CRORES INVESTED IN HITEX BY THE ASSESSEE-SOCIETY IS AN APPLICATION OF INCOME FO R ACHIEVING ITS OBJECTS AND WHETHER THE SAME IS IN CONTRAVENTION OF SECTION 13(1)(D) OF THE ACT. IF IT IS IN CONTRAVENTION OF S ECTION 13(1)(D) OF THE ACT, THE SOCIETY WOULD FORFEIT EXEMPTION U/S 11 OF THE ACT. FURTHER, THE QUESTION ADDRESSED BY THE TRIBUNAL WAS WHETHER THE ASSESSEE WILL LOOSE THE EXEMPTION U/S 11 FOR WHOLE OF THE INCOME OR ONLY ON THE INCOME EARNED FROM THE VENTURE HITEX WILL BE TAXABLE UNDER THE ACT. THE TRIBUNAL AFTER ELABORAT E DISCUSSIONS CONCLUDED THAT THE ASSESSEE-SOCIETY HAS VIOLATED TH E PROVISIONS OF SECTION 13(1)(D) AND, HENCE, IT LOOSE EXEMPTION U/S 11 FOR WHOLE OF THE INCOME. THE TRIBUNAL AT PARA 14.4 OF ITS OR DER HAS CLEARLY TAKEN A VIEW THAT THE ASSESSEE HAS MADE INVESTMENT IN CONTRAVENTION OF SECTION 13(1)(D) DURING THE RELEVA NT PREVIOUS YEAR AND IT CANNOT BE SAID THAT A CONTRIBUTION OF R S. 1.5 CRORES TO HITEX IS AN APPLICATION OF INCOME TO ACHIEVE THE OB JECTS OF THE SOCIETY. THE TRIBUNAL, AGAIN, AT PARA 14.1 HAS GIV EN A FINDING THAT AS HITEX IS FORMED WITH A MOTIVE OF EARNING PR OFIT, THE CONTRIBUTION OF RS. 1.5 CRORE TOWARDS ITS EQUITY BY THE ASSESSEE- SOCIETY WOULD CONSTITUTE INVESTMENT IN VIEW OF THE HONBLE DELHI COURTS DECISION IN THE CASE OF CIT VS. SIR SOBHA S INGH PUBLIC CHARITABLE TRUST, 250 ITR 475(DEL.) M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 10 11. IN THE WRITTEN SUBMISSIONS FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE SHRI MURALI KRISHNA MURTHY BEFORE THE BENCH, THE LEARNED COUNSEL CHALLENGED THE VALIDITY OF COLLECT ION OF THE MONIES OF 0.25% FROM THE CONTRACTORS THROUGH THE GO S, AND GAVE A NOTE ON THE SAME, WHICH IS AS FOLLOWS: - COPY B 12. THE LEARNED COUNSEL SUBMITTED THAT AS A CONS EQUENCE OF THE DECISIONS OF THE HONBLE HIGH COURT AND CONFIRM ED BY THE APEX COURT AND THE LATEST GO ISSUED BY THE GOVERNME NT OF AP, IT HAS IMPOSED A LIABILITY ON THE ASSESSEE TO REFUND T HE MONIES TO THE CONTRACTORS WITH RETROSPECTIVE EFFECT. THUS, TH ESE AMOUNTS COLLECTED HAVING BECOME A LIABILITY TO BE REFUNDED AND CEASED TO BE INCOME OF THE ASSESSEE OF ANY NATURE. THE LEARN ED COUNSEL FOR THE ASSESSEE FILED A COPY OF THE LATEST JUDGMENT OF THE HIGH COURT WHERE IT WAS HELD THAT THE AMOUNTS COLLECTED WERE TOWARDS CORPUS. 13. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE AMOUNT COLLECTED, IF ANY, CEASED TO BE THE I NCOME OF THE ASSESSEE DESERVES TO BE DELETED. 14. WE FIND THAT THE ISSUE IS NOT WHETHER THE AMOUN TS COLLECTED IS INCOME OF THE ASSESSEE OR NOT, BUT, THE ISSUE IS WHETHER THE ASSESSEE HAS VIOLATED BY MAKING INVESTMENT, WHICH I S NOT ACCORDING TO THE MODES SPECIFIED U/S 11(5) OF THE A CT. FURTHER, THE TRIBUNAL HAS HELD AT PARA 6 THAT IT DOES NOT MA KE ANY DIFFERENCE WHETHER THE CONTRIBUTION WAS OUT OF ACCU MULATED INCOME OR OUT OF CORPUS FUND. HENCE, THE LEARNED CO UNSELS SUBMISSION HIGHLIGHTING THE FACT THAT THE HIGH COUR T HAS HELD THAT THE AMOUNTS COLLECTED TOWARDS CORPUS IN THE M.A. IS A SUPERFLUOUS ARGUMENT. SINCE THE TRIBUNAL HAS ALREADY HELD THAT IT DOES NOT M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 11 MAKE ANY DIFFERENCE MERELY BECAUSE THE INVESTMENT W AS MADE OUT OF CORPUS FUND. 15. NOW, BEFORE US, THE ASSESSEE PLACED VARIOUS ARG UMENTS TO RECALL THE ORDER OF THE TRIBUNAL CITED SUPRA. ACCOR DING TO THE LEARNED COUNSEL FOR THE ASSESSEE THE ORDER SUFFERED FROM VARIOUS INFIRMITIES AND IT HAS TO BE RECTIFIED/RECALLED. IN OUR OPINION, THE ORDER PASSED BY THE TRIBUNAL IS IN ACCORDANCE WITH LAW AND CONSIDERATION OF THE PRESENT ARGUMENTS OF THE COUNS EL FOR THE ASSESSEE AMOUNTS TO REVIEWING OF EARLIER TRIBUNAL O RDER RATHER THAN RECTIFICATION. THE POWER SO CONFERRED ON THE T RIBUNAL TO RECTIFY AN ERROR APPARENT ON THE RECORD HAS A LIMIT ED APPLICATION. IT DOES NOT ENABLE THE TRIBUNAL TO REVERSE, REVISE OR REVIEW THE EARLIER ORDER OF THE TRIBUNAL BUT IT PERMITS ONLY S UCH ERROR WHICH IS ON THE FACE OF THE RECORD TO BE CORRECTED. HOWEV ER, IT DOES NOT PERMIT TO REVIEW OR REWRITE THE ORDER OF THE TRIBUN AL. THE JURISDICTION U/S. 254(2) IS LIMITED TO RECTIFYING T HE ERROR WHICH IS PATENT, MANIFEST AND SELF-EVIDENT WHICH DOES NOT RE QUIRE ELABORATE DISCUSSION OF EVIDENCES OR ARGUMENTS TO E STABLISH IT. WHAT CAN BE RECTIFIED U/S. 254(2) SHOULD BE APPAREN T AND PATENT AND IN THIS CASE, THE TRIBUNAL HAS ELABORATELY DISC USSED THE RELEVANT PROVISIONS OF THE ACT APPLICABLE TO THE AS SESSEES CASE AND TAKEN A DECISION. WE FIND NO MISTAKE IN THE ORD ER OF THE ITAT AND, HENCE, THE M.A.S FILED BY THE ASSESSEE ARE DIS MISSED. 16. IN THE RESULT, ALL THE M.AS. FILED BY THE ASSES SEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 09/11/2012 M.A. NO. 129/HYD/09 & 13 TO 16/H/10 NATIONAL ACADEMY OF CONSTRUCTION 12 KV COPY TO:- 1) NATIONAL ACADEMY OF CONSTRUCTION, NAC CAMPUS, IZZAT NAGAR (V), KONDAPUR (P), SHERLINGAMPALLY (M), HYDERABAD. 2) ADIT(EXEMPTIONS), O/O THE DIT (EXEMPTIONS), 1 ST FLOOR, LB STADIUM, HYDERABAD. 3) THE CIT (A)-IV, HYDERABAD 4) THE CIT, AP, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.