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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI AMARJIT SINGH&
PER Ms. MADHUMITA ROY - JM:
The instant appeal filed by the Revenue along with a cross objection by the assessee is against the order dated 08.09.2017 passed by the Commissioner of Income Tax (Appeals)-9, Ahmedabad arising out of the order dated 18.03.2016 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to “The Act”) for the Assessment Year 2013-14 with the following grounds: 1. “The Ld CIT(A) has erred in allow and on facts in allowing the benefit of exemptions u/s 11 without considering the fact that assessee is involved in widespread commercial activities in nature of business and the activity of the assessee is covered under first and second proviso to Section 2(15) of the Act. 2. The Revenue carves over leave to add, alter, amend modify, substitute, delete and/or rescind all or any grounds of appeal on or before the final hearing in necessity so arises.”
- 2 - ITA No.2639/Ahd/2017 & CO No.07/Ahd/2019 DCIT vs. Animal Breeding Research Organization Asst.Year – 2013-14 2. The assessee is a public charitable trust registered with Assistant Charity Commissioner of Anand vide registration no. F/372/Anand. The trust is registered u/s. 12AA of the Income Tax Act vide registration No. BRD/SIB/ 1108-A/92-93 dated 03.08.1993 issued by Commissioner of Income-Tax, Baroda. The Trust is also registered u/s. 80G(5) of the I.T. Act vide certificate no. BRD/AA-II/Exe/104/58-A/2007-08 dated 23.07.2007 issued by Commissioner of Income-Tax-II, Baroda. The assessee filed its return of income on 29.09.2013 declaring its income at Rs. Nil after claiming exemption of Rs.10,48,84,431/- along with the Auditor’s Report u/s 44AB of the Act in Form No.3CA and 3CD and Auditor’s Report u/s 12A(b) of the Act in Form No.10B. Upon scrutiny notice u/s 143(2) of the Act was issued on 25.09.2014. Due to change of jurisdiction further notice u/s 143(2) r.w.s.129 of the Act was issued on 19.06.2015 along with a further notice u/s 142(1) asking for various details on the basis of which the return was filed by the assessee. During the Assessment Years 2010-11, 2011-12 and 2012-13, since the activities of the assessee was not considered as chargeable in nature in view of the first proviso to section 2(15) of the Act, a show cause notice dated 29.07.2015 was issued by the Revenue directing the assessee to explain as to why on the basis of the details submitted the activity of the Trust should not be covered as activity not falling under section 2(15) but by first proviso to section 2(15) in the nature of trade or business of the assessee. Admittedly, the assessee’s society has been established with a view to undertake and promote activities connected with the development of cattle and buffaloes with special reference to the breeding and genetic improvement and to engage in other allied activities such as development of draught animal power systems, feed and fodder development for live stock and to extend necessary support persons including dairy farmers for carrying out any of such activities in different parts of India and generally to promote economic upliftment of the farmers segment. But the justification so furnished by the assessee was not found tenable and the Learned AO ultimately treated the activities not chargeable but was taxed at business receipt in view of the disallowance of exemption claimed u/s 11 made in the Assessment Years 2010-11, 2011-12 and 2012-13.
- 3 - ITA No.2639/Ahd/2017 & CO No.07/Ahd/2019 DCIT vs. Animal Breeding Research Organization Asst.Year – 2013-14 In appeal, the same was reversed by deleting the addition made by the Assessing Officer. Hence the instant appeal filed by the Revenue before us.
A Cross Objection was also filed by the assessee in respect of the appeal preferred by the Revenue.
At the time of hearing of the instant appeal, the Leaned representative of the assessee submitted before us that the issue is covered in assessee’s own order in its favour by the Learned Tribunal for A.Y. 2011-12 in ITA No.2496/Ahd/2015 with CO No.184/Ahd/2015 as well as for A.Y. 2012-13 by and under the order passed by the Co- ordinate Bench in ITA No.773/Ahd/2017 with CO No.63/Ahd/2017. The copies of those orders were also handed over to us. On the other hand, Learned DR fails to controvert the submissions made by the assessee in support of his case.
We have heard the respective parties, perused the relevant materials available on record. We have also carefully considered the order passed by the Co-ordinate Bench; the relevant portion whereof is as follows: “4. Heard the respective parties perused the relevant materials available on record including the judgment relied upon by the Learned AR passed in assessee’s own case. It appears that the issue involved in this particular case is similar to that of the issue decided in ITA No. 2496/Ahd/2015 with CO No.184/ahd/2015 for Asst. Year 2011-12 relevant portion whereof is as follows: “3. While deciding the appeal, the ld.CIT(A) held that since facts of the present case were exactly similar to the assessee's case decided by the CIT(A) in para 5.14 . The ld.AR relied on the order of the co-ordinate Bench of the Tribunal in assessee's own case, and on similar grounds, the ITAT held that we have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the facts of the assessee trust are similar to the facts of Sabarmati Ashram Gaushala Trust, and in its order Hon'ble High Court's decisions have been discussed and the same is as under: "We are wholly in agreement with the view of the Tribunal. The objects of the Trust clearly establish that the same was for general public utility and where for charitable purposes. The main objectives of the trust are-to
- 4 - ITA No.2639/Ahd/2017 & CO No.07/Ahd/2019 DCIT vs. Animal Breeding Research Organization Asst.Year – 2013-14
breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominent agricultural country, to produce and sale the cow milk; to hold and cultivate agricultural lands; to keep grazing lands for cattle keeping and breeding, to rehabilitate and assist Rabaris and Bharwads; to make necessary arrangements for getting informatics and scientific knowledge and to do scientific, research with regard to keeping and breeding of the cattle, agriculture, use of milk and its various preparations, etc.; to establish other allied institutions like leather work and to recognize and help them in order to make the cow keeping economically viable; to publish study materials, books, periodicals, monthlies etc., in order to publicize the objects of the trust as also to open schools and hostels for imparting education in cow keeping and agriculture having regard to the trust objects.
All these were the objects of the general public utility and would squarely fall under section 2 (IS) of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of the Trust, certain incidental surpluses were generated, would not render the activity to the nature of trade, commerce or business. As clarified by the CBDT in its Circular No. 11/2008 dated 19th December 2008 the proviso aims to attract those activities which are truly in the regarded as business even when profit motive cannot be established/proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles, and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. The test as prescribed in Raipur Manufacturing Company [1967] 19 STC 1 (SC) and Soi Publication fund [2002] 258 ITR 70 (SC); {2002} 126 STC 288 (SC) can be applied. The six indicia stipulated in Lord fisher [1981] STC 238 are also relevant. Each case, therefore, has to be examined on its own facts.
In view of the aforesaid enunciation, the real issue and question is tht whether the petitioner-Institute pursues the activity of business, trade or commerce. To our mind, the respondent while dealing with the said question has not applied their mind to the legal principles enunciated above and have taken a rather narrow and myopic view by holding that the petitioner-Institute is holding coaching classes and that this amounts to business."
In the result, we do not find that the Tribunal has committed any error and the Tax Appeal is therefore dismissed."
- 5 - ITA No.2639/Ahd/2017 & CO No.07/Ahd/2019 DCIT vs. Animal Breeding Research Organization Asst.Year – 2013-14
Respectfully following the Hon'ble High Court's order and ITAT's order in assessee's own case, department allowed the claim and similar exemption was given by the department. In view of the above, we dismiss the appeal of the Revenue.
So far as CO is concerned, in CO the assessee has taken following grounds:
The Assessing officer while holding the appellant's income as business income erred in not granting set off of brought forward unabsorbed depreciation on the ground that it was deficit of earlier years which cannot be treated as business loss. It is submitted it be so held now. 3.1 The Assessing officer erred in holding that in earlier years, appellant would have got deduction of the capital expenditure as application of funds and set off of unabsorbed depreciation now would result in double deduction. The appellant submits that in the earlier years it has not claimed deduction of capital expenditure but had claimed only depreciation accordingly there is no double deduction. It is submitted it be so held now.
3.2 The Assessing officer erred in not appreciating the settled legal position that the unabsorbed depreciation can be set off against any income. It is submitted it be so held now.
The Assessing officer has erred in computing tax on the total income determined by him at flat rate of 30% in place of correct slab rate as applicable to an Association of Persons (AOP). It is submitted it be so held now. 6. The Assessing officer has erred in charging interest under section 234B of the Act & has erred in withdrawing interest under section 244A."
We have gone through relevant material. In connected appeal, ITA No.2496/Ahd/2015 we have given relief to the assessee and dismissed the appeal of the department. The ld.AR cited an order of this co-ordinate Bench in assesse's own case in ITA NO.2016/Ahd/201 and CO No.260/Ahd/2014, Asstt.Year 2010- 11. It was held by the co-ordinate Bench that coming to the cross objection of the assessee, we find that the deficit shown in the earlier years is eligible to be given set off for surplus, if any for the year under consideration. Therefore, the AO is directed to allow the set off of brought forward deficit while giving appeal effect to our order. In view of the ITAT's order, we allow ground nos.1, 2 and 3 in CO. So far as ground no.4 is concerned, the same has become infructous and as far as charging of interest under section 234B of the Act and withdrawing interest under section 244A, it needs not to be adjudicated because the same is consequential.
- 6 - ITA No.2639/Ahd/2017 & CO No.07/Ahd/2019 DCIT vs. Animal Breeding Research Organization Asst.Year – 2013-14
In the result, the appeal of the Revenue is dismissed and CO of the assessee is partly allowed.”
The appeal preferred by the Revenue against such order dated 09.11.2017 passed by the Hon’ble Tribunal before the Hon’ble Gujarat High Court was also rejected by its order dated 11.06.2018 relevant portion is as follows:
“4. The assessee carried the matter in appeal. Commissioner of Income Tax(Appeals) allowedthe assessee's appeal, upon which, the Revenue appr oched The Tribunal. The Tribunal by the impugned judgment, referring to the earlier judgment in case of this very assessee and relying upon the judgment of Division Bench of this Court in case of Director of Income Tax (Exemption) v. Sabarmati Ashram Gaushala Trust reported in [2014] 362 ITR 539 (Guj), rejected the Revenue's appeal.
In case of Sabarmati Ashram Gaushala Trust (supra), under somewhat similar background, this Court had observed as under:
"11. We are wholly in agreement with the view of the Tribunal. The objects of the Trust clearly establish that the same was for general public utility and where for charitable purposes. The main objectives of the trust are to breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominent agricultural country; to produce and sale the cow milk; to hold and cultivate agricultural lands; to keep grazing lands for cattle keeping and breeding; to rehabilitate and assist Rabarisand Bharwads; to mak e necessary arrangements for getting informatics and scientific knowledge and to do scientific research with regard to keeping and breeding of the cattle, agriculture, use of milk and its various preparations, etc.; to establish other allied institutions like leather work and to recognize and help them in order to make the cow keeping economically viable; to publish study materials, books, periodicals, monthlies etc., in order to publicize the objects of the trust as also to open schools and hostels for imparting education in cow keeping and agriculture having regard to the trust objects.
In the result, this tax appeal is dismissed.”
- 7 - ITA No.2639/Ahd/2017 & CO No.07/Ahd/2019 DCIT vs. Animal Breeding Research Organization Asst.Year – 2013-14 Respectfully, relying upon the order passed by the Co-ordinate Bench subsequently confirmed by the Hon’ble High Court, we dismiss the appeal preferred by the Revenue. 5. So far as Cross Objection No.63/Ahd/2017 is concerned same is consequential to the relief ask for by the Revenue. Since Revenue’s appeal is dismissed the CO becomes infructuous. Hence, the same is dismissed as infructuous. Respectfully relying upon the order passed by the Co-ordinate Bench and the order passed by the Hon’ble Jurisdictional High Court in favour of the assessee we dismiss the appeal preferred by the Revenue before us since the same is devoid of any merit.
The Cross Objection No. 07/Ahd/2019 filed by the assessee since consequential to the relief as asked for by the Revenue the same becomes infructuous in view of the dismissal of Revenue’s appeal as above.
In the result, revenue’s appeal is dismissed and assessee’s cross objection is also dismissed as infructuous. This Order pronounced in Open Court on 04/03/2019 Sd/- Sd/- ( AMARJIT SINGH ) ( Ms. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 04/03/2019 Priti Yadav, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-9, Ahmedabad. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad