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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI B. R. BASKARAN & SHRI P. K. GADALE
Per B. R. Baskaran, Accountant Member
All appeals filed by the Revenue are directed against the orders passed by the learned CIT(A), Davanagere and they relate to the Assessment Years 2008-09 to 2011-12.
At the time of hearing, the learned AR submitted that the appeals pertaining to Assessment Years 2008-09 to 2011-12 are covered by the Circular No.17/2019 dated 08-08-2019 issued by CBDT prescribing monetary limit of Rs.50.00 lakhs for the revenue for preferring appeals challenging the order passed by Ld CIT(A), since the tax effect involved in these appeals are less than 50 lakhs. The learned DR, in to 2021/Bang/2018 Page 2 of 9 principle, accepted the submissions made by the learned AR. However, he pleaded that the Revenue should be given liberty to move appropriate application for recall of the orders, if it is found later that the issues contested in these appeals are covered by exceptions provided in the circular issued from time to time.
We heard the parties and perused the record. Since the tax effect involved in the appeals pertaining to 2008-09 to 2010-11 is less than Rs.50.00 lakhs, the Revenue is precluded from pursuing this appeal as per CBDT Circular No.17/2019 Dt.8.8.2019. Accordingly, we dismiss the appeals filed by the Revenue for these three years. However, liberty is given to the Revenue to move appropriate application for recall of the order in accordance with law, if it is found later that the Circular is not applicable to these appeals.
We shall now take up the appeal pertaining to Assessment Year 2011-12, wherein following two issues are contested: a. Carry forward and set off of unabsorbed deficit b. Rejection of exemption under section 11 holding that the proviso to section 2(15) is applicable to the assessee.
The assessee is Urban Development Authority undertaking planned development of urban areas and sale of CA and other sites. The AO took the view that the assessee would be covered by the proviso to section 2(15) of the Act, since the activities carried on by the assessee are commercial in nature i.e., in the nature of carrying on of trade or business or commerce. In this regard, the AO took support of the decision rendered by ITAT, Panaji Bench, in the case of Belgaum Urban to 2021/Bang/2018 Page 3 of 9 Development Authority. Accordingly, he rejected the claim for exemption under section 11 of the Act. The assessee had claimed set off of brought forward unabsorbed deficit, which was also rejected by the AO.
In the appellate proceedings, the learned CIT(A) noticed that the issue relating to applicability of proviso to sec.2(15) was examined by Bangalore Bench of Tribunal in the case of Karnataka Industrial Area Development Board (KIADB) Vs. Addl. DIT (ITA No.378/Bang/2013 dated 04.09.2015), wherein the Tribunal has held that the activity of the KIADB in acquiring sites and developing industrial area and selling sites / factory sets to various persons will not be hit by the first proviso to section 2(15) of the Act. Accordingly, following the above said decision, the learned CIT(A) allowed the appeal of the assessee on this issue. With regard to the issue relating to set off of brought forward deficit, the learned CIT(A) followed the decision rendered by Co-ordinate Bench in the case of Seva Sadan Orphanage and Training Institute Vs. DCIT, wherein the Tribunal, by holding the decision rendered by Hon’ble Bombay High Court in the case of Institute of Banking and Hon’ble Gujarat High Court in the case of Shri Plot Swetamber Murti Pujak Jain Mandal, 211 ITR 293, wherein it was held that the assessee is entitled to set off of brought forward amount of excess application. The Revenue is aggrieved by the decision so rendered by learned CIT(A).
The learned AR submitted that the learned CIT(A) has followed the decision rendered by the Co-ordinate Benches in respect of both the issues. He further to 2021/Bang/2018 Page 4 of 9 submitted that an identical issue was considered by the Co-ordinate Bench in the case of Bangalore Development Authority Vs. DCIT (2019) 73 ITR Tribunal 711 (Bang.) wherein the Tribunal has held that the activities of the assessee therein was not hit by proviso to section 2(15) of the Act. The learned AR submitted that the objects of the assessee herein are identical with the objects of Bangalore Development Authority. In this regard, he took our attention to para 14 of Karnataka Urban Development Authorities Act and submitted the assessee herein as also formed with similar objectives. The learned AR further invited our attention to the submissions made before the learned CIT(A) which read as follows:
Accordingly, the learned AR submitted that the issue is fully covered by the decision of the Co-ordinate Bench in the case of Bangalore Development Authority. With regard to the second issue, the Ld A.R submitted that the same is covered by the decisions rendered by Hon’ble Bombay and Gujarat High Courts.
The learned DR, on the contrary, supported the order passed by the assessee.
We have heard the rival submissions. We notice that the learned CIT(A) has followed the decisions rendered by the Co-ordinate Benches in deciding the first issue, i.e., the issue relating to applicability of proviso to sec.2(15) of the Act and accordingly held that the said proviso will not apply to the activities carried on by the assessee. We also notice that the Ld CIT(A) has followed the decisions rendered by Hon’ble Bombay and Gujarat High Courts in holding that the assessee is entitled to to 2021/Bang/2018 Page 9 of 9 claim set off of brought forward excess application (deficit) during the year under consideration. Accordingly, we do not find any infirmity in the order passed by the CIT(A).
In the result, all the four appeals filed by the Revenue are dismissed.
Order pronounced in the open court on this day of 27th November, 2019.