Gujarat State Board Of School Text Books, Gandhinagar V. The Asstt. Commissioner of Income Tax, Gandhinagar Circle, Gandhinagar

MA 198/AHD/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5272 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Bonafide mistake
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I R. P. TOLANI , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER GUJARAT STATE BOARD OF SCHOOL TEXT BOOK, SECTOR 10A, GANDHINAGAR, PAN: AAATG4671P (APPELLANT) VS THE ACIT, GANDHINAGAR CIRCLE, GANDHINAGAR (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI M.K. PATEL , A.R. DATE OF HEARING : 20 - 01 - 2 017 DATE OF PRONOUNCEMENT : 28 - 02 - 2 017 / ORD ER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - BOTH THE MA S WERE FILED AGAINST THE ORDER S IN ITA NO S . 796/AHD/2010 & 1022/AHD/2012 FOR ASSESSMENT YEAR 2006 - 07 & 2008 - 09; RESPECTIVELY . M. A. NO S . 198 & 199/AHD/20 16 (IN I T A NO S . 796 / A HD/20 10 & 1022/AHD/2012) A SSESSMENT YEAR 200 6 - 07 & 2008 - 09 M A NO S . 198 & 199 /AHD/20 16 A.Y. 2006 - 07 & 2008 - 09 PAGE NO GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VS. ACIT 2 2. AS THE FACTS IN THESE TWO MAS ARE IDENTICAL, SO WE DECIDE BOTH THE MAS BY TAKING THE FACTS OF THE MA NO. 198/AHD/2016 . THE SUBMISSION OF THE ASSESSEE AS PER THE ABOVE MA IS REPRODUCED AS UNDER: - (1) THAT THE ABOVE APPEAL FILED BY THE ASSESSEE ABOVE NAMED FOR THE A.Y. 2006 - 07 BEARING ITA NO.796/AHD/2010 IS DECIDED BY HON'BLE ITAT VIDE ORDER DATED 21.09.2016. ON PERUSAL OF THE SAME, THE FOLLOWING MISTAKES APPARENT ON RECORD ARE SEEN : (2) SECOND GROUND REGARDING THE ACCUMULATION @ 15% U/S. 11(1) (A) OUGHT TO HAVE BEEN GIVEN ON THE GROSS INCOME AND NOT ON THE NET I NCOME, IS DECIDED VIDE PAGE 18, PARA 6.3 OF THIS ORDER. THE LIST OF JUDGMENTS CITED AND RELIED ON AT THE TIME OF HEARING OF THE APPEAL ON 12.08.2016 IS REPRODUCED IN PARA 6.4 OF THIS ORDER, WHICH ARE AS BELOW: 1) 248 ITR 1(SC) PROGRAMME FOR COMMUN ITY ORGANIZATION. 2) 272 ITR (AT) 67(MUMBAI - SPECIAL BENCH) BAI SONABAI 3) 163 ITR 832 (MP) PARSI ZORASTRIAN ANJUMAN TRUST. 4) 131 ITD 335(LUCKNOW) KRISHI UTPADAN MANDLI SAMITI. 5) ITA.NO. 664/BANG/2015 PUBLIC EDUCATION SOCIETY. ORDER DATED 25/08/2 015. (3) A PERUSAL OF THE SAME WILL SHOW THAT THE FIRST JUDGMENT IS OF HON'BLE APEX COURT, WHICH IS FOLLOWED BY THE JUDGMENT AT SR. NO. 2, WHICH IS A SPECIAL BENCH ORDER OF HON'BLE MUMBAI ITAT. FURTHER, THE APEX COURT JUDGMENT IS ALSO FOLLOWED BY HON'BLE H IGH COURT OF MP, WHICH IS THE JUDGMENT AT SR. NO. 3. (4) HOWEVER, ON PERUSAL OF THE FINDING GIVEN ON PAGE 20, PARA 6.6 OF THE ABOVE ORDER, IT SEEN THAT NONE OF THE ABOVE JUDGEMENTS CITED ARE DISCUSSED NOR CONSIDERED IN THE ORDER, AND THE ISSUE IS DECIDED AGAINST THE ASSESSEE BY FOLLOWING A DIVISION BENCH ORDER OF BANGALORE ITAT REPORTED IN 128 ITD 166 (BANG) . IT IS RESPECTFULLY SUBMITTED THAT THE JUDGMENT CITED BY THE ASSESSEE AT SR. NO. 2 IS A SPECIAL BENCH ORDER AND AS PER THE RULE OF BINDING PREC EDENT, IT OUGHT TO HAVE BEEN FOLLOWED RATHER THAN A DIVISION BENCH ORDER, WHICH HAS NOT EVEN CONSIDERED THE SPECIAL BENCH ORDER. IT IS HELD BY THE HON'BLE APEX COURT IN THE CASE OF CIT V/S TRILOKNATH MEHROTRA AND OTHERS 231 ITR 278 (SC) THAT WHEN THERE M A NO S . 198 & 199 /AHD/20 16 A.Y. 2006 - 07 & 2008 - 09 PAGE NO GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VS. ACIT 3 ARE CONFLICTING DECISIONS, THE DECISION OF THE LARGER BENCH WILL PREVAIL. THIS IS A MISTAKE APPARENT ON RECORD AND RECTIFIABLE U/S 254(2) OF THE ACT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. 295 ITR 466 (SC) . FURTHER , THE JUDGMENT AT SR. NO. 3 CITED BY THE ASSESSEE IS THE SOLITARY JUDGMENT OF MP HIGH COURT WHICH HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE, AND NO CONTRADICTORY JUDGMENT IS CITED BY THE DEPARTMENT. HENCE, THIS JUDGMENT OUGHT TO HAVE BEEN FOLLOWED B Y THIS HON'BLE TRIBUNAL, AS HELD BY HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT V/S MAGANLAL MOHANLAL PANCHAL(HUF) 210 ITR 580(GUJ). THUS, FAILURE TO APPLY THE RATIO OF THE HON'BLE SUPREME COURT AND THE JURISDICTIONAL HIGH COURT IS ALSO A MISTAKE APPARENT ON RECORD, AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ACIT V/S SAURASHTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227 (SC) . (5) SECONDLY, IT IS RESPECTFULLY SUBMITTED THAT THERE IS BONAFIDE MISTAKE IN NOT DEC IDING GROUND NO. 3 BEFORE ITAT REGARDING THE ALTERNATE CLAIM U/S 11(2) OF THE ACT. (6) HENCE, IT IS RESPECTFULLY PRAYED THAT THE ABOVE MISTAKES APPARENT ON RECORD MAY KINDLY BE RECTIFIED AND / OR THE ABOVE ORDER MAY KINDLY BE RECALLED, TO THE ABOVE EXTENT, AND OBLIGE. 3 . DURIN G THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE LD. COUNSEL CONTENDED THAT THE ASSESSEE CLAIMED ACCUMULATION OF INCOME @ 15% U/S. 11(1)(A) ON GROSS INCOME AND NOT ON NET INCOME. IN THIS MA, HE STATED THAT NONE OF THE ABOVE JUDGMENTS CITED IN THE MA WE RE DISCUSSED NOR CONSIDERED IN THE ORDER OF THE ITAT AND THE ISSUE WAS DECIDED AGAINST THE ASSESSEE BY FOLLOWING A DIVISION BENCH ORDER OF BANGALORE ITAT REPORTED IN 128 ITD 166 (BANGALORE). ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ITAT. M A NO S . 198 & 199 /AHD/20 16 A.Y. 2006 - 07 & 2008 - 09 PAGE NO GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VS. ACIT 4 4 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD . T HE FINDING OF THE ITAT ON THIS ISSUE AT PARA 6.6 OF THE ORDER IS REPRODUCED AS UNDER: - 6.6 WE FIND THAT THE WORDS USED IN SECTION 11(1)(A) IS INCOME AND NOT GROSS RECEIPTS. THE ABOVE CITED DECISION OF THE ITAT IS ON THE IDENTICAL ISSUE IN WHICH IT HAD BEEN DECIDED THAT INCOME UNDER SECTION 11(1)(A) IT IS TO BE COMPUTED ON A COMMERCIAL PRINCIPLES AND NOT ON GROSS RECEIPTS. SIMILARLY, IN THE CASE OF THE ASSESSE E IN THE ASSESSMENT YEARS 2008 - 09 THE LD. CIT(A) DECIDED THE IDENTICAL MATTER ACCORDING TO THE DECISION OF ITAT BANGALORE THAT ACCUMULATION OF INCOME AS MANDATED BY SECTION 11(1)(A) IS WITH REFERENCE TO NET INCOME FROM PROPERTIES HELD UNDER TRUST. IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS THE GROUND OF APPEAL OF THE ASSESSEE THAT ACCUMULATION OF INCOME AT THE RATE OF 15% U/S 11(1)(A) ALLOWABLE ON GROSS INCOME AND NOT ON NET INCOME IS REJECTED. 5 . IN THIS CONNECTION, THE JUDGMENT S CITED BY THE ASSESSE E ARE DISCUSSED AS UNDER: - I . 248 ITR 1 (SC) PROGRAMME FOR COMMUNITY ORGANIZATION : - THIS JUDGEMENT OF THE HON BLE APEX COURT WAS MADE ON 28 TH NOV, 2000. THE HON BLE SUPREME COURT HAS HELD THAT EXEMPTION U/S. 11(1)(A) IS TO BE COMPUTED NOT WITH REFERENCE T O THE INCOME LEFT AFTER APPLICATION BUT ON INCOME BEFORE APPLICATION AND NOWHERE IT WAS HELD THAT EXEMPTION IS TO BE COMPUTED WITH REFERENCE TO GROSS RECEIPT. II . 272 ITR (AT) 67 (MUMBAI - SPECIAL BENCH) BAI SONABHAI HIRJI AGIAR Y TRUST. : - THE DECISION MADE ON 22 SEPTEMBER, 2004. IN THIS CASE, IT WAS HELD T HAT MERIT OF THE ISSUE WAS CLEARLY COVERED BY THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. PROGRAMME FOR COMMUNITY ORGANIZATION (2001) 248 ITR 1 . IN THIS JUDGMENT , IT WAS STATED THAT M A NO S . 198 & 199 /AHD/20 16 A.Y. 2006 - 07 & 2008 - 09 PAGE NO GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VS. ACIT 5 ANY EXPE NDITURE WHICH IS IN THE SHAPE OF APPLICATION OF INCOME IS NOT TO BE TAKEN INTO ACCOUNT. IT WAS ALSO HELD THAT HAVING REGARD TO THE CLEAR PRONOUNCEMENT OF THEIR LORDSHIP OF THE SUPREME COURT, IT IS DIFFICULT T O ACCEPT THAT OUTGOING WHICH ARE IN THE NATURE OF APPLICATION OF INCOME ARE TO BE EXCLUDED. III . 163 ITR 832 (MP) PARSI ZORASTRIAN ANJUMAN TRUST: - THIS JUDGMENT WAS DELIVERED ON 28 TH JULY, 1986. IT WAS HELD THAT THE REFERENCE IN SUB - SECTION (1)(A) OF SECTION 11 IS TO INCOME NOT TO TOTAL INCOME AS DE FINED IN SECTION 2(45) OF THE ACT. IV . 131 ITD 335 (LUCKNOW) KRISHI UTPADAN MANDALI SAMITI: - THIS JUDGMENT WAS DELIVERED ON 7 TH JUNE, 2010. IN THIS JUDGMENT ALSO THE PRINCIPLE LAID DOWN BY THE APEX COURT IN THE CASE OF PROGRAMME FOR C OMMUNITY O RGANIZAT ION WAS FOLLOWED. V . ITA NO. 664/BANG/2015: PUBLIC EDUCATION SOCIETY ORDER DATED 25/08/2015. THE CASE WAS DECIDED IN SMC BENCH IN WHICH IT WAS STATED THAT IDENTICAL ISSUE WAS CONSIDERED BY THE APEX COURT WHICH WAS ALSO APPLIED BY THE SPECIAL BENCH OF THE ITAT MUMBAI HOLDING THAT THE EXPRESSION SUCH INCOME MEANS GROSS INCOME AND NOT THE NET INCOME AFTER DEDUCTING THE ADMINISTRATIVE EXPENDITURE. 6 . AFTER PERUSAL OF THE JUDICIAL PRONOUNCEMENTS (SUPRA) IN THIS ORDER, WE FIND THAT THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF PRORAMME FOR COMMUNITY ORGANIZATION WAS FOLLOWED. THE M A NO S . 198 & 199 /AHD/20 16 A.Y. 2006 - 07 & 2008 - 09 PAGE NO GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VS. ACIT 6 SPECIAL BENCH ITAT MUMBAI IN THE CASE OF BAI SONALBHAI HIRJI AGIARY TRUST HAS ALSO FOLLOWED THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. PROGRAMME FOR COMMU NITY ORGANIZATION. WE FIND THAT THE HON BLE SUPREME COURT HAS HELD THAT EXEMPTION UNDER SECTION 11(1)(A) IS TO BE COMPUTED BEFORE APPLICATION AND NOWHERE IT WAS HELD THAT EXEMPTION WITH REFERENCE TO GROSS RECEIPT. IN VIEW OF THIS, WE ALLOW THE MA OF THE ASSESSEE TO THE EXTENT TO ALLOW THE EXEMPTION ACCORDING TO THE PRINCIPLE LAID DOWN BY THE HON BLE APEX COURT AND THE SPECIAL BENCH OF MUMBAI ITAT BEFORE APPLICATION OF INCOME. 7 . THE REFERENCE TO GROUND NO. 3 IN THE MA PERTAINING TO ASSESSMENT YEAR 200 6 - 07 REGARDING THE ALTERNATIVE CLAIM U/S. 11(2) OF THE ACT HAS BECOME INFRUCTUOUS AS THE GROUND OF THE MA HAS BEEN CONSIDERED AND DECIDED ACCORDING TO THE PRINCIPLES LAID DOWN BY THE APEX COURT AND THE SPECIAL B ENCH OF MUMBAI AS SUPRA IN THIS ORDER. 8 . IN THE RES ULT, BOTH THE M.AS. OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 28 - 02 - 201 7 SD/ - SD/ - ( R. P. TOLANI ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHME DABAD : DATED 28 /02 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE M A NO S . 198 & 199 /AHD/20 16 A.Y. 2006 - 07 & 2008 - 09 PAGE NO GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VS. ACIT 7 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,