The ACIT, Circle-1(1), Range-1, Visakhapatnam V. M/s Cargo Handling Private Workers Pool, Visakhapatnam

MA 71/VIZ/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4736 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 08-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: C P RAMASWAMI
• Keywords: Reassessment proceedings
• Section: 12A; 12; 11

Judgement Text

PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER M.A. NO.71/VIZAG/2010 (ARISING OUT OF ITA NO. 272 TO 274/VIZAG/2005 AND 2 96 TO 297/VIZAG/2006 AND 342/VIZ/2008) ASSESSMENT YEAR: 1999-2000 TO 2004-2005 ACIT, CIRCLE-1 (1), RANGE-1, VISAKHAPATNAM CARGO HANDLING PRIVATE WORKERS POOL, VISAKHAPATNAM (PAN NO. AAATC 1920 F) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR, DR RESPONDENT BY: SHRI C.P. RAMASWAMI, ADVOCATE ORDER PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE REVENUE HAS FILED THIS PETITION SEEKING RECTIF ICATION OF ORDER DATED 8 TH JANUARY, 2010 PASSED FOR THE ASSESSMENT YEARS 1999- 2000 TO 2004-05 U/S 254(1) OF THE ACT IN RESPECT OF APPEALS FILED BY TH E ABOVE CITED ASSESSEE. THOUGH THE REVENUE HAS NOT MENTIONED ANY SECTION UN DER WHICH THIS PETITION WAS FILED, APPARENTLY THIS PETITION SEEMS TO HAVE B EEN FILED U/S 254 (2) OF THE ACT. 2. THE PRAYER OF THE REVENUE IN THE SAID PETITION I S EXTRACTED BELOW: ASSESSEE HAD CONTESTED BEFORE HON'BLE TRIBUNAL REG ARDING ALLOWABILITY OF EXEMPTION U/S 11 OF THE ACT. HON'BL E TRIBUNAL OPINED THAT ASSESSING OFFICER IS NOT CORRECT IN PRO BING THE OBJECTS OF THE TRUST DURING THE COURSE OF ASSESSMEN T PROCEEDINGS SUBSEQUENT TO GRANTING OF REGISTRATION U/S 12A OF THE IT ACT BY THE CIT. FURTHER, HON'BLE ITAT INFERR ED THAT THE ASSESSEE TRUST FALLS IN THE CATEGORY OF ONE OF THE SERVICES AS DEFINED IN THE MEASURES OF PORT TRUST ACT, 1963. TH E HON'BLE TRIBUNAL CONCLUDED THAT THE ACTIVITIES CARRIED OUT WITHOUT ANY PAGE 2 OF 4 PROFIT MOTIVE BUT FOR THE WELFARE OF THE WORKERS. W ITH RESPECT TO VIOLATION OF PROVISIONS OF SECTION 11(5) AND SEC TION 13(1) (C ) R.W.S.13(2) OF THE ACT HON'BLE TRIBUNAL INFERRED TH AT THERE IS NO VIOLATION OF SEC.11 (5) OF THE ACT. WITH RESPECT TO VIOLATION OF SECTION 13(1) ( C ) R. W.S. 13 (2) THE HON'BLE ITAT HAS OBSERVED IN PARA-11.4 THAT ADVANCE S MADE BY THE ASSESSEE TO THE AUTHORS OF THE TRUST WITH AD EQUATE SECURITY AND ADEQUATE INTEREST AND THE INTEREST WAS COLLECTED SUBSEQUENTLY. IN THIS RESPECT HON'BLE ITAT HAS DISC USSED THE CONTENTION OF THE ASSESSEE AT PARA-14 & PARA-15 OF THE ORDER. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE INTER EST WAS CHARGED ON THE ADVANCES MADE BY THE ASSESSEE AND SI NCE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING THE INTEREST IS OFFERED TO TAX ONLY IN THE YEAR OF RECEIPT. IN THIS RESPECT FOLLOWING FACTS NEEDS TO BE CONSIDERED. 1. THE ASSESSEE VIDE ITS LETTER DATED 17.03.2004 HAS S TATED THAT THE LOANS WERE GIVEN WITHOUT INTEREST. THEREFO RE, THE ASSESSEES STAND THAT IT HAS ADVANCED LOANS TO SIST ER CONCERNS AND CHARGED INTEREST IS ONLY AN AFTER THOU GHT. 2. FURTHER, IT IS OBSERVED THAT THE ASSESSEE HAD PASSE D THE RESOLUTION FOR CHARGING INTEREST AFTER PASSING OF T HE ORIGINAL ASSESSMENT ORDER. 3. IT IS ALSO NOTICED THAT IN RESPECT OF VISAKHAPATNAM STEVEDORES ASSOCIATION THE INTERESTS HAS BEEN ADJUS TED FIRST AND THE PRINCIPAL HAS BEEN ADJUSTED LATER. HOWEVER, IN THE CASE OF VISAKHAPATNAM CLEARING AND FORWARDING AGENT S ASSOCIATION, THE PRINCIPAL HAS BEEN ADJUSTED FIRST AND THE INTEREST LATER REFLECTING IN-CONSISTENCIES WITH REG ARD TO ACCOUNTING ASPECTS. 4. THE BASIS FOR ALLOCATION OF AMOUNTS RETURNED BY THE ASSOCIATION IS PRINCIPAL AND INTEREST COMPONENTS. THE ABOVE CLEARLY ESTABLISHES THAT ORIGINALLY THE F UNDS WERE ADVANCED TO THE TWO ASSOCIATIONS (ADMITTEDLY INTERE STED PERSONS) WERE WITHOUT ANY INTEREST OR SECURITY AND ONLY WHEN REASSESSMENT PROCEEDINGS WERE INITIATED INTEREST WA S COLLECTED. HENCE, IT CLEARLY PROVES THE INTENT OF T HE TRUST AND HENCE, THE PROVISIONS OF SEC.13 APPLY SQUARELY. IN VIEW OF THE ABOVE INCONSISTENCIES THE PETITION IS BEING FILED FOR RECONSIDERATION. FURTHER, IT IS ALSO MENTIONED HERE THAT DURING THE HEARING, LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED A WRITTEN SUBMISSION CITING SEVERAL JUDICIAL PRONOUNCEMENTS W HICH ARE NOT DISCUSSED IN THE ORDER. HENCE, WE ARE REQUESTING FOR RECONSIDERATION OF THE APPEAL FOR ALL THESE ASSESSMENT YEARS PAGE 3 OF 4 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO FILED WRITTEN SUBMISSION WHICH CONSISTS OF TWO PARTS. THE FIRST P ART OF THE WRITTEN SUBMISSION READS AS UNDER: 01 THE APPELLATE TRIBUNAL ERRED IN SETTING ASIDE THE ORDER OF ASSESSMENT AS CONFIRMED BY CIT (APPEALS). 02. THE APPELLATE TRIBUNAL ERRED IN HOLDING THAT GR ANT OF REGISTRATION U/S 12A OF THE INCOME-TAX ACT IS FINAL AND BINDING ON THE DEPARTMENT AND IT IS NOT OPEN TO THE ASSESSI NG OFFICER TO COLLATERALLY ADJUDICATE THE QUESTION WHETHER THE ASSESSEE CONFORMS TO THE SPECIFICATIONS OR REQUIREMENTS OF S ECTION 11 AND 12 OF THE I.T. ACT. 03. THE APPELLATE TRIBUNAL OUGHT TO HAVE HELD THAT, POWER TO ADJUDICATE SUCH A QUESTION, IS WELL WITHIN THE PURV IEW OF THE ASSESSING OFFICER, WHILE MAKING THE ASSESSMENT AND DENY THE BENEFIT OF SECTION11 OF THE ACT, IN THE EVENTUALITY OF THE ASSESSEE NOT CONFIRMING TO REQUIREMENTS OF SECTION 11 TO 13 OF THE I.T. ACT. 04. WITH GREAT RESPECT, THE APPELLANT SUBMITS THAT THE DECISION REPORTED IN 300 ITR 214 (ACIT VS. SURAT CITY GYMKHA NA) IS NOT AN AUTHORITY FOR THE PROPOSITION THAT GRANT OF REGI STRATION U/S 12A ONCE DONE IS A FAIT ACCOMPLISH AND IT ESTOPS TH E ASSESSING OFFICER FROM ADJUDICATING THE SAME QUESTION ONCE OV ER COLLATERALLY IN THE ASSESSMENT. 05. WITH GREAT RESPECT, THE REVENUE SUBMITS THAT, A T BEST, IT IS AN AUTHORITY FOR THE PROPOSITION THAT REVENUE CANNO T BE PERMITTED TO FILE AN APPEAL AGAINST AN ORDER, IF IT HAD IN THE PAST ACCEPTED SIMILAR ORDER, FOLLOWING WHICH THE LA TTER ORDER HAS BEEN PASSED. 06. AT ANY RATE, THE REVENUE SUBMITS THAT, EVEN THE SAID VIEW DOES NOT REPRESENT CORRECT POSITION OF LAW. A DIVIS ION BENCH OF HE HON'BLE SUPREME COURT HEADED BY THREE JUDGES IN 1995 (4) SCC 683 (STATE OF MAHARASHTRA VS. DIGAMBAR) HELD TH AT MERELY BECAUSE STATE DID NOT PREFER A APPEAL AGAINST EARLI ER ORDER, IT DOES NOT ESTOP THE STATE FROM CHALLENGING THE SUBSE QUENT ORDERS PASSED BY THE HIGH COURT ADVERSE TO ITS INTE REST. THEREFORE, THE REVENUE RESPECTFULLY SUBMITS THAT TH E VIEW OF THE HON'BLE SUPREME COURT IN 300 ITR 214 DOES NOT R EPRESENT CORRECT LEGAL POSITION. 07. THE ORDER OF THE HON'BLE ITAT IS PERVERSE IN SO FAR AS IT RELATES TO THE FINDINGS ON THE METHOD OF ACCOUNTANC Y AND NON- PAGE 4 OF 4 APPRECIATION OF THE FACTS RELATING TO THE APPLICABI LITY OF PROVISIONS OF SEC.13(2) (A) OF THE INCOME-TAX ACT. 4. ON A CAREFUL READING OF THE PRAYER OF THE REVENU E AS WELL AS THE WRITTEN SUBMISSION, WE NOTICE THAT THE REVENUE IS REQUESTIN G THE TRIBUNAL TO REVIEW THE ORDER PASSED U/S 254 (1) OF THE ACT. IT IS A WELL S ETTLED PROPOSITION OF LAW THAT THE POWER VESTED WITH THE TRIBUNAL U/S 254 (2) IS C ONFINED TO THE PARAMETERS LAID DOWN IN THAT SUB SECTION, THAT IS TO SAY, THE APPELLATE TRIBUNAL MAY AMEND ANY ORDER PASSED BY IT U/S 254 (1) WITH A VIEW TO R ECTIFY ANY MISTAKE APPARENT FROM THE RECORD. APPARENTLY IN THE INSTANT CASE TH E REVENUE HAS FAILED TO POINT OUT ANY MISTAKE WHICH IS APPARENT FROM THE RECORD. INSTEAD, AS STATED EARLIER, THE REVENUE SEEKS REVIEW, WHICH THE TRIBUNAL IS NOT EMPOWERED TO DO. IN VIEW OF THE ABOVE, WE ARE UNABLE TO INTERFERE WITH THE O RDER PASSED EARLIER. 5. IN THE RESULT THE MISCELLANEOUS PETITION FILED BY THE REVENUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 20 TH JULY, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 20-07-2010 PVV/SPS VISAKHAPATNAM, COPY TO 1 M/S CARGO HANDLING PVT. WORKERS POOL, C/O SHRI C. P. RAMASWAMY, ADVOCATE, FLAT NO.303, GITANJALI APARTMENTS, PLOT NO.108, SRI NAGAR COLONY, HYDERABAD 500073 2 THE ACIT, CENTRAL CIRCLE, VISAKHAPATNAM 3 THE CIT, VISAKHAPATNAM 4 THE CIT(A), VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM