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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD
Before: SHRI D.KARUNAKARA RAO & SHRI V.DURGA RAO
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD
BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER
I.T.A. No. 615/HYD/2018 Assessment Year: 2014-15 Asst. Commissioner of Income Hyderabad Metropolitan Tax (Exemptions), Development Authority Hyderabad Circle, Vs (formerly Hyderabad Urban Development Authority), HYDERABAD SECUNDERABAD [PAN: AAALH0058D] (Appellant) (Respondent) C.O. No. 26/HYD/2018 (in ITA No. 615/Hyd/2018) Assessment Year: 2014-15 Hyderabad Metropolitan Asst. Commissioner of Development Authority Income Tax (Exemptions), Vs (formerly Hyderabad Urban Hyderabad Circle, Development Authority), HYDERABAD SECUNDERABAD [PAN: AAALH0058D] (Cross-Objector) (Respondent) For Revenue : Shri Y.V.S.T.Sai, CIT-DR For Assessee : Shri S.Rama Rao, AR Date of Hearing : 27-11-2019 Date of Pronouncement : 28-11-2019 O R D E R PER D.KARUNAKARA RAO, A.M. :
This appeal of Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-9, Hyderabad, dated 31-01-2018, for the AY.2014-15.
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The assessee has filed Cross-Objection against the appeal of Revenue with a delay of 11 (Eleven) days, for which the assessee has filed an affidavit, seeking condonation of delay. Considering the petition for condonation of delay in respect of assessee and being satisfied with the reasonable cause for the delay, we hereby condone the delay in filing the Cross-Objection of assessee, which is admitted and being heard on merits.
Brief facts of the case are that, assessee-Local Authority is an Urban Development Authority constituted under the Andhra Pradesh Urban Areas (Development) Act, 1975, belatedly filed its return of income for the year under consideration on 03-07-2015, declaring loss of Rs.66,63,11,294/-. Further, the audit report dt.24-06-2015 was also filed belatedly. The same was taken up for scrutiny by issuing notice u/s.143(2) of the Income Tax Act [Act] on 19-09-2016. The assessment was completed u/s.143(3) of the Act on 30-12-2016 by computing the assessed income at Rs.2,14,55,61,460/- by making the following additions:
Amount (Rs) a. Depreciation on Mega City Projects 6,94,45,882 b. Un-utilized Development charges being less than 85% 1,66,27,65,283 c. Sale proceeds from sale of plots as reduced by development charges 23,78,74,141 d. Disallowance of loss of service charges 1,96,31,398 e. Development charges collected by GHMC on behalf of HMDA 63,27,00,000 f. Addition towards interest chargeable @12% 12,87,33,847
3.1. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). The Ld.CIT(A) after considering the
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submissions made by the assessee, remanded the issue back to the file of AO to re-compute the income in this year as in earlier years, following the decision of Co-ordinate Bench of the Tribunal in ITA No.03/Hyd/2017 and others in Para No.18, for the AYs.2003-04 to 2013-14, vide order dt.31-10-2017.
3.2. Aggrieved, now the Revenue is in appeal before us, by raising the following Grounds:
“1) The order of the Ld.CIT(A) is erroneous both on facts and in law.
2) Ld.CIT(A) erred in not adjudicating the following additions made by the AO which are independent from granting registration u/s. 12AA and beyond eligibility of exemption u/s. 11 of the Act.
Depreciation on Mega City Projects Rs. 6,94,45,882/- Un-utilised Development charges being Rs. 16,62,76,583/- less than 85% Sale proceeds from sale of plots as Rs. 23,78,74,141/- reduced by Dev. Charges Disallowance of loss of service charges Rs. 1,96,31,398/- Development charges collected by Rs. 63,27,00,000/- GHMC Addition towards interest chargeable @ Rs. 12,87,33,847/- 12%
3) CIT(A) is erred in directing the AO to re-compute the income after considering 12AA registration granted by the ITAT inspite of the fact that the Registration granted u/s. 12AA w.e.f 01-04-2002 relying on 1st proviso of sec. 12A(2) of IT Act, is not correct when this section was applicable only to applications made on or after 01-06-2007 & assessee had applied on 02.03.2017.
4) CIT(A) erred in considering that Commissioner of Income Tax has to over look or ignore the actual activities even though it is available on records explaining consistent commercial Activity.
5) CIT(A) ought to have appreciate the fact that proviso to sec. 12(A)(1)(a) was squarely applicable to this case.
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6) CIT(A) was not justified in not appreciating that CIT(E) is duty bound to look into the nature and quantum of commercial receipt available on records while deciding the assessee's application for grant of registration u/s. 12AA of the Act.
CIT(A) erred considering the granting registration u/s. 12AA for AY 2009-10 onwards in spite of the fact that assessee is consistently earning income from commercial activities in contravention of provisions of sec. 2(15) of the IT Act.
Any other ground that may be urged at the time of hearing of the case”.
We heard both the counsels and the material placed on record, along with the decision of the Co-ordinate Bench of ITAT in this regard. We observe that identical issue has been decided by the Co-ordinate Bench of the Tribunal in ITA No.03/Hyd/2017 and others, vide order dt.31-10-2017 for the AYs.2003-04 to 2013-14. For the sake of completeness, relevant lines (Para No.18) are extracted here under:
“Since we have already held that the assessee is entitled for registration u/s.12A of the Act w.e.f.01-04-2002 onwards and also from the AY.2009- 10 onwards, we are of the opinion that all these assessments have to be remanded to the file of the AO for re-consideration of the issues in the light of the registration granted to the assessee u/s.12A of the IT Act w.e.f. 01-04-2002”.
4.1. Since the facts before us are identical to one as decided by the Co-ordinate Bench of the Tribunal, respectfully following the same, we uphold the order of Ld.CIT(A) and direct the AO to re-compute the income in this year as in earlier years, as directed by the Co-ordinate Bench of ITAT. The Grounds raised by Revenue are accordingly dismissed.
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4.2. Since the appeal of Revenue is dismissed, the Cross- Objection of assessee becomes infructuous and the same is also dismissed.
To sum-up, the appeal of Revenue as well as the Cross- Objection raised by assessee, both are dismissed.
Order pronounced in the open court on 28th November, 2019
Sd/- Sd/- (V. DURGA RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 28th November, 2019 TNMM
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Copy to : 1. The Asst.Commissioner of Income Tax(Exemptions), Hyderabad Circle, Hyderabad.
Hyderabad Metropolitan Development Authority (Formerly Hyderabad Urban Development Authority), HUDA Complex, Tarnaka, Secunderabad.
CIT(Appeals)-9, Hyderabad.
CIT(Exemptions)-Hyderabad.
D.R. ITAT, Hyderabad.
Guard File.