Gujarat Industrial Development Corpn.Ltd., Gandhinagar V. The ACIT., GNR Circle, Gandhinagar

MA 188/AHD/2012

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1567 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 09-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER MA NO.188/AHD/2012 (ARISING OUT OF ITA NO.3252/AHD/2009 A.Y. 2006-07 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION, BLOCK NO.4, 2 ND FLOOR, UDYOG BHAVAN, SECTOR- 11, GANDHINAGAR PAN: AABCG 8033D VS THE ACIT, GANDHINAGAR CIRCLE, GANDHINAGAR. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI T. SHANKAR, D.R. ASSESSEE(S) BY : SHRI S.N. SOPARKAR WITH MS. URVASHI SHODHAN, AR / DATE OF HEARING : 21/02/2014 / DATE OF PRONOUNCEMENT: 12/03/2014 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS MISC. APPLICATION HAS FILED BY THE APPLICANT O N 9TH OF OCTOBER, 2012 AND THE MAIN GRIEVANCE AS CONVEYED BY LEARNED AR, MR. S.N. SOPARKAR IS THAT ALTHOUGH THE RESPECTED TRIBUN AL IN THE IMPUGNED ORDER DATED 03.12.2010 HAS CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT PRONOUNCED IN THE CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. CIT REPORTED AS 227 ITR 414 (SC) , (THE ASSESSEE ITSELF) BUT FAILED TO CONSIDER A DECISION REFERRED THEREIN, VIZ., SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY LTD. VS. STATE OF MAHARASHTRA (AIR 1970 SC 1771, (1970) 3 SCC 323 (PA GE 1776 OF AIR 1970 (SC) . LEARNED AR HAS MENTIONED THAT A COPY OF DECISION OF SRI MA NO.188/AHD/2012 IN ITA NO.3252/AHD/2009 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT , GANDHINAGAR. FOR A.Y. 2006-07 - 2 - RAMTANU (SUPRA) WAS ALSO PLACED BEFORE RESPECTED BE NCH. THE IMPACT OF THE NON CONSIDERATION OF THE SAID DECISION OF THE H ONBLE SUPREME COURT WAS THAT THE TRIBUNAL HAS WRONGLY MADE AN OBSERVATI ON IN PARAGRAPH 13, PAGE 28 IN THE FOLLOWING MANNER: AT PRESENT, THERE IS NO NECESSITY TO EXHAUSTIBLY D EAL WITH THIS DEFINITION AND WE ARE BOUND TO ACCEPT THAT THE ASSESSEE CAN BE SAI D TO BE AN UNDERTAKING WHICH HAS CARRIED OUT AN ADVENTURE IN THE NATURE OF TRADE. PURCHASE OF LAND AND SALE OF LAND BEING THE PRIMARY ACTIVITY OF THIS ORGANIZATION CAN BE SAID TO BE A BUSINESS ACTIVITY BUT MERELY BY HOLDING THAT T HE UNDERTAKING IS A BUSINESS UNDERTAKING WHETHER THE PROFITS ARISING THEREFROM CAN BE SUBJECTED TO TAX BY INVOKING SECTION 11(4) OF THE I T ACT?. THIS SECTION SAYS THAT IN RESPECT OF SUCH AN UNDERTAKING WHERE A CLAI M IS MADE THAT THE INCOME ARISING THEREFROM NOT TO BE INCLUDED IN THE TOTAL I NCOME, THEN THIS SECTION MUST NOT BE APPLIED. THIS SECTION CAN BE APPLIED WHERE T HE ASSESSING OFFICER INVOKES THE POWER TO DETERMINE THE INCOME OF SUCH A N UNDERTAKING AND THEREUPON DETERMINED AN INCOME WHICH IS IN EXCESS O F THE INCOME AS SHOWN IN THE ACCOUNTS OF THE UNDERTAKING, THEN SUCH EXCESS I NCOME SHALL BE DEEMED TO BE THE INCOME NOT APPLIED FOR THE PURPOSES OF THE T RUST. 2. LEARNED AR HAS ALSO REFERRED PARAGRAPHS 3 & 4 OF THE MISC. APPLICATION, FOR READY REFERENCE REPRODUCED BELOW: 3. THE APPLICANT SUBMITS THAT GROUND NO.1 HAD TWO DISTINCT FACTS. FIRSTLY, THAT ITS INCOME IS NOT AT ALL ASSESSABLE AS BUSINES S INCOME FOR WHICH THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE SU PREME COURT IN ITS OWN CASE, I.E., GUJARAT INDUSTRIAL DEVELOPMENT CORPORAT ION VS. CIT, 227 ITR 414 (SC). COPY OF THE SAID JUDGMENT OF THE HONBLE SUPR EME COURT WAS ALSO SUBMITTED DURING THE COURSE OF HEARING OF APPEAL. I T IS ALSO TO BE NOTED THAT DUE COGNIZANCE OF THE SAID JUDGMENT HAS BEEN TAKEN IN THE ORDER OF HONBLE ITAT. SECONDLY, THAT IN ANY CASE, SEC. 11(4) HAS NO APPLICATION. THE APPLICANT SUBMITS THAT WHEREAS THE SECOND FACT OF THE CONTROV ERSY IS ADJUDICATED BY THE HONBLE TRIBUNAL IN ITS FAVOUR, THE FIRST FACT IS N OT DEALT WITH AT ALL. 4. IT IS SUBMITTED THAT DURING THE COURSE OF HEARIN G THE APPLICANT HAD POINTED OUT THAT IN ITS OWN CASE (227 ITR 414 (SC) THE HON BLE SUPREME COURT HAS REFERRED TO ITS JUDGMENT BY LARGER FOUR MEMBER BENC H IN CASE OF SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY LTD. VS. STATE OF MAHA RASHTRA (AIR 1970 SC 1771, (1970) 3 SCC 323 (PAGE 1776 OF AIR 1970 (SC). THE APPELLANT HAS IN SUPPORT OF ITS CLAIM IN GROUND NO.1, ALSO PLACED RE LIANCE ON THE JUDGMENT IN CASE OF SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY ( SUPRA) AND HAS ALSO SUBMITTED THE COPY THEREOF DURING THE COURSE OF HEA RING OF APPEAL. IT MAY KINDLY BE NOTED THAT THE HONBLE SUPREME COURT WHIL E DECIDING THE JUDGMENT IN CASE OF THE APPELLANT (227 ITR 414 (SC) (SUPRA) AS THE PROVISIONS OF THE MA NO.188/AHD/2012 IN ITA NO.3252/AHD/2009 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT , GANDHINAGAR. FOR A.Y. 2006-07 - 3 - MAHARASHTRA INDUSTRIAL DEVELOPMENT ACT, 1961, ARE A LMOST ANALOGOUS TO THE GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962. 2.1 LEARNED AR HAS ALSO CLARIFIED THAT THE REASON F OR FILING OF THIS MISC. APPLICATION IS THE AMENDMENT IN SECTION 2(15) TOOK PLACE AND A PROVISO IS INSERTED WHICH SAYS THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TR ADE, COMMERCE OR BUSINESS. THEREFORE, ACCORDING TO HIS ARGUMENT IN T HE YEARS TO COME, THE REVENUE DEPARTMENT MADE AN ADVERSE VIEW BY NOT GRAN TING THE STATUS OF CHARITABLE PURPOSE TO THE ASSESSEE. THEN LEARNED AR HAS DRAWN OUR ATTENTION ON THE PORTION OF THE DECISION OF RAMTANU (SUPRA) REPRODUCED IN THE MISC. APPLICATION AS FOLLOWS: THE HARD CORE OF TRADING CORPORATION IS ITS COMMER CIAL CHARACTER. COMMERCE CONNOTES TRANSACTIONS OF PURCHASE AND SALE OF COMMODITIES, DEALING IN GOODS. THE FORMS OF BUSINESS TRANSACTION S MAY BE VARIED BUT THE REAL CHARACTER IS BUYING AND SELLING. THE TRUE CHAR ACTER OF THE CORPORATION IN THE PRESENT CASE IS TO ACT AS AN ARCHITECTURAL AGEN T OF THE DEVELOPMENT AND GROWTH OF INDUSTRIAL TOWNS BY ESTABLISHING AND DEVE LOPING THE INDUSTRIAL ESTATES AND INDUSTRIAL AREAS. WE ARE OF OPINION THA T THE CORPORATION IS NOT A TRADING ONE. 3. FROM THE SIDE OF THE REVENUE, LEARNED DR HAS CON TESTED THAT A DETAILED JUDGMENT WAS PASSED BY THE TRIBUNAL AND TH ERE IS NO APPARENT MISTAKE IN THE SAID ORDER AS SUGGESTED BY THE APPLI CANT. THE TRIBUNAL HAD DULY CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT PRONOUNCED IN THE CASE OF GIDC, 227 ITR 414 . MEANING THEREBY THE TRIBUNAL HAS DULY CONSIDERED ALL THE DECISIONS WHICH WERE QUOTED IN THE DECISION OF GIDC. THEREUPON THE TRIBUNAL HAS COMMENTED THAT A C HARITABLE ORGANIZATION MAY FALL WITHIN THE AMBITS OF THE DEFI NITIONS OF SECTION 2(15) OF THE IT ACT, BUT SUCH AN ORGANIZATION AS WE LL CAN BE ENGAGED IN BUSINESS ACTIVITY IN VIEW OF SECTION 11(4) OF IT AC T (REFER PAGE 12 OF ITAT ORDER). FOR THE YEAR UNDER CONSIDERATION A FIN DING WAS GIVEN AT MA NO.188/AHD/2012 IN ITA NO.3252/AHD/2009 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT , GANDHINAGAR. FOR A.Y. 2006-07 - 4 - PAGE 25 THAT THE OBJECTS OF THE ASSESSEE WERE VERY MUCH COVERED UNDER THE DEFINITION OF SECTION 2(15) OF IT ACT. THEREFOR E, AT THIS STAGE, MERELY ON AN APPREHENSION THIS MISC. APPLICATION HAS BEEN MOVED WHICH IS UNFOUNDED; HENCE, DESERVES TO BE REJECTED. 3.1 LEARNED DR HAS FURTHER ARGUED THAT AN ANOTHER D ECISION OF THE HONBLE SUPREME COURT PRONOUNCED IN THE CASE OF ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY VS. UNION OF INDIA, (200 6) 153 TAXMAN 107 (SC) , (REFERRED AT PAGE 21 OF THE ORDER OF THE TRIBUNAL ) WAS CONSIDERED BY THE TRIBUNAL AND IN THAT ORDER OF THE SUPREME COURT, THERE WAS A MENTION OF THE DECISION OF SHRI RAMTANU CO-OPERATIVE HOUSING SOCIETY (SUPRA). MEANING THEREBY, WHILE CONSIDERING THE DE CISION OF ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY (SU PRA) , ALL THE DECISIONS REFERRED THEREIN HAVE DULY BEEN APPRECIAT ED BY THE TRIBUNAL; HENCE, IT IS WRONG ON THE PART OF THE APPLICANT TO ALLEGE THAT A PARTICULAR DECISION WAS NOT CONSIDERED BY THE TRIBUNAL. LEARNE D DR HAS FILED WRITTEN SUBMISSION, RELEVANT PORTION IS REPRODUCED BELOW: C.1 THE ASSESSEE'S ARGUMENTS ARE INCORRECT AND DESERVE TO BE REJECTED OUTRIGHT. THE FACTUAL POSITION IN THE ORDER NO. 325 2/AHD/2009 DATED 03.12.2010 OF THE HON'BLE TRIBUNAL REPORTED IN 129 ITD 73, IS COMPLETELY DIFFERENT. - STARTING FROM PARA 8 OF THE ORDER, THE HON'BLE TRIBUNAL HAS DEALT AT LENGTH, WITH THE ACTIVITIES OF THE ASSESSEE. THE GID ACT HA S ALSO BEEN LOOKED INTO IN PARA 8.1 OF THE ORDER. - IN PARA 8.3 OF THE ORDER, THE DECISION OF GUJAR AT INDUSTRIAL DEVELOPMENT CORPN. V. CIT [1997] 227 ITR 414 (SC), HAS ALSO BEE N CITED AND DISCUSSED. - IN PARA 8.6, 'TO OUR HUMBLE UNDERSTANDING, THIS SECTION NOTABLY DEALS A SITUATION WHERE A TRUST ALSO COMPOSE A BUSINESS HEN CE FOR THAT PURPOSE IT SAYS 'PROPERTY HELD UNDER TRUST' MAY CONSIST OF A BUSINE SS UNDERTAKING.' . THIS DISCUSSION CONTINUES FURTHER IN SUBSEQUENT PARAGRAP HS. C.2. AS REGARDS THE CONTENTION OF ASSESSEE THAT D ECISION OF HONBLE APEX COURT IN THE CASE OF SRI RAMTANU CHS WAS NOT CONSID ERED, THE FOLLOWING ARE SUBMITTED: THE SAID DECISION OF SRI RAMTANU CHS WAS RENDERED I N THE CONTEXT OF LAND ACQUISITION PROCEEDINGS. MA NO.188/AHD/2012 IN ITA NO.3252/AHD/2009 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT , GANDHINAGAR. FOR A.Y. 2006-07 - 5 - IN PARA 9, THE HON'BLE TRIBUNAL HAS SPECIALLY REFER RED TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ADITYAPUR INDU STRIAL AREA DEVELOPMENT AUTHORITY V. UNION OF INDIA [2006] 153 TAXMANN 107. THEREAFTER THE HON'BLE TRIBUNAL HAS GIVEN A FINDING THAT THE INCOME OF THE ASSESSEE IS SUBJECT TO TAX UNDER INCOME-TAX ACT AND DO NOT FALL UNDER THE EXEM PTED CLAUSES OF ARTICLE 289(1) OF INDIAN CONSTITUTION. C.3. THE DECISION OF SRI RAMTANU CHS WAS SPECIFICAL LY CITED IN PARA 16 OF THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF A DITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY V. UNION OF INDIA [2006] 153 TAXMANN 107, 283 ITR 97. IN PARA 17 OF THE ORDER, THE HON'BLE APEX COURT ITSELF HAS HELD AS UNDER: ' IN (SRI RAMTANU CHS 1970 (3) SCC323) THE QUESTION W HICH ARISES FOR CONSIDERATION IN THE INSTANT APPEAL DID NOT ARISE AT ALL. THE QUE STION WAS WHETHER THE STATE OF MAHARASHTRA WAS COMPETENT TO ENACT THE MAHARASHTRA INDUSTRIAL DEVELOPMENT ACT, 1961 AND WHETHER THE IMPUGNED LEGISLATION FELL WITH IN ENTRY 43 LIST I OF THE SEVENTH SCHEDULE OF THE CONSTITUTION SO THAT ONLY THE PARLI AMENT WAS EMPOWERED TO ENACT SUCH LEGISLATION AND NOT THE STATE OF MAHARASHTRA. .... 'THUS, WHEN THE DECISION OF ADITYAPUR INDUSTRIAL AREA DEVELOPMENT AUTHORITY IS CITED BY THE HON'BLE TRIBUNAL IN PARA 9 OF ITS ORDER AND DISCUSSED EXTEN SIVELY, IT CANNOT BE STATED THAT THE DECISION OF SRI RAMTANU CHS WAS NOT CONSID ERED BY THE TRIBUNAL. THE CONTENTIONS OF THE ASSESSEE ARE MISLEADING AND NOT ACCEPTABLE. 4. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERUS ED THE MISC. APPLICATION FILED BY THE ASSESSEE AS WELL AS WRITTE N SUBMISSION OF THE REVENUE DEPARTMENT. THE TRIBUNAL HAS PASSED A LENGT HY ORDER CONSIDERING SEVERAL SECTIONS OF THE IT ACT AND THEI R APPLICABILITY ON THE ISSUE INVOLVED. IT IS INCORRECT ON THE PART OF THE LEARNED AR TO ARGUE THAT THE TRIBUNAL HAS EXCEEDED IN COMMENTING THE NATURE OF ACTIVITY OF THE UNDERTAKING BY HOLDING THAT THE UNDERTAKING HAD CAR RIED OUT AN ADVENTURES IN THE NATURE OF TRADING. IN FACT, WHILE DISCUSSING THE PROVISIONS OF SECTION 11(4) OF IT ACT, IT WAS NECES SARY TO CONSIDER THE ACTIVITY OF THE UNDERTAKING, BECAUSE THIS SECTION S AYS, QUOTE FOR THE PURPOSES OF THIS SECTION PROPERTY HELD UNDER TRUST INCLUDES A BUSINESS UNDERTAKING SO HELD, AND WHERE A CLAIM IS MADE THAT THE INCOME OF ANY SUCH UNDERTAKING SHALL NOT BE INCLUDED IN THE TOTAL IN COME OF THE PERSONS IN RECEIPT THEREOF, THE [ASSESSING] OFFICER SHALL H AVE POWER TO DETERMINE THE INCOME OF SUCH UNDERTAKING IN ACCORDANCE WITH T HE PROVISIONS OF THIS MA NO.188/AHD/2012 IN ITA NO.3252/AHD/2009 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT , GANDHINAGAR. FOR A.Y. 2006-07 - 6 - ACT RELATING TO ASSESSMENT; AND WHERE ANY INCOME SO DETERMINED IS IN EXCESS OF THE INCOME AS SHOWN IN THE ACCOUNTS OF TH E UNDERTAKING, SUCH EXCESS SHALL BE DEEMED TO BE APPLIED TO PURPOSES OT HER THAN CHARITABLE OR RELIGIOUS PURPOSES. 4.1 DUE TO THIS REASON, THE PROVISIONS OF SECTION 1 1(4) WERE REQUIRED TO BE DISCUSSED ALONG WITH PROVISIONS OF SECTION 2(15) OF IT ACT. CONSIDERING THOSE SECTIONS, A FINAL CONCLUSION WAS MADE BY THE TRIBUNAL THAT, QUOTE THEREFORE, WE ARE OF THE CONSCIENTIOUS VIEW THAT EVEN IF THIS UNDERTAKING MAY COME WITHIN THE PURVIEW OF BUSINES S UNDERTAKING BUT BEING NO EXCESS INCOME WAS FOUND UTILIZED OTHER THA N FOR THE PURPOSES OF THE OBJECT OF THE TRUST; HENCE, OUT OF THE AMBITS O F THE PROVISION OF SECTION 11(4) OF THE IT ACT., UNQUOTE. AS FAR AS THE ORDER UNDER CONSIDERATION IS CONCERNED THE FINAL RESULT OF THE APPEAL VIDE THIS PARAGRAPH WAS NOT AGAINST THE ASSESSEE; HENCE, THIS MISC. APPLICATION APPEARS TO BE NOT BASED UPON A SOUND FOOTING OR CAN BE SAID TO BE AN ILL FOUNDED M.A. FURTHER IT APPEARS THAT THE PETITION HAS BEEN MOVED MERELY UNDER AN APPREHENSION. THIS APPREHENSION IS PREMATURE; HENCE , THE MISC. APPLICATION IS DISMISSED. 4.2 OTHERWISE ALSO, THE TRIBUNAL HAS CONSIDERED FAC TS OF THE CASE AT LENGTH AS WELL AS THE APPLICABLE CASE LAW; THEREFOR E, THERE WAS NO APPARENT MISTAKE ON RECORD. IN THE CASE OF KAMALBHAI ISMILJI, (2005) 288 ITR 297 (ALLD) , IT HAS BEEN HELD THAT THE TRIBUNAL HAS NO POWER T O REVIEW ITS ORDER. EVEN, IN THE CASE OF RAMESH ELECTRIC AND TRADE COMPANY, 203 ITR 497 (BOM.) , IT IS HELD THAT THE MISTAKE WHICH THE TRIBUNAL IS ENTITLED TO CORRECT IS NOT AN ERROR OF JUDGMENT BUT A MISTAKE WHICH IS APPARENT FROM THE RECORD ITSELF. IN AN UNREPORTED DECISION OF HONBLE ITAT HYDREBAD MA NO.188/AHD/2012 IN ITA NO.3252/AHD/2009 GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ACIT , GANDHINAGAR. FOR A.Y. 2006-07 - 7 - BENCH, VIZ. SMT. RUHINA AHMAD, 54 SOT 123 (26 TAXMANN.COM 223) , CERTAIN POINTS IN RESPECT OF THE SCOPE OF AMBIT OF APPLICABILITY OF SECTION 254(2) HAS BEEN NARRATED. WE ARE OF THE VIEW THAT T HE PRESENT MISC. APPLICATION DOES NOT FALL UNDER ANY OF THE AMBITS O F SECTION 254(2) OF IT ACT. WE HEREBY HOLD THAT A CONSCIENTIOUS VIEW WAS T AKEN IN RESPECT OF THE ACTIVITY CARRIED ON BY THE ASSESSEE UNDERTAKING AND THAT VIEW WAS NOT A MISTAKE AT ALL; WHAT TO SAY AN APPARENT MISTAKE. THE APPLICATION HAS NO FORCE IN THE EYES OF LAW; HENCE, HEREBY DISMISSED. SD/- SD/- (T.R. MEENA) (MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 12/03/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD