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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI PAVAN KUMAR GADALE
M/s. Mysore ESDM Cluster, No. 360, KIADB Industrial The Commissioner of Income Area, vs. Tax (Exemptions), Hebbal, Hootagalli, Bangalore. Mysore – 570 018. PAN: AAJCM8354K APPELLANT RESPONDENT Appellant by : Shri Ravi .G.R, CA Respondent by : Shri Pradeep Kumar, CIT (DR) Date of hearing : 14.02.2019 Date of Pronouncement : 15.02.2019 O R D E R Per Shri A.K. Garodia, Accountant Member These two appeals are filed by the assessee and these are directed against two separate orders of ld. CIT(E), Bangalore both dated 29.06.2016 passed u/s. 12AA and u/s. 80G(5) of IT Act. Both these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
2. The grounds raised
by the assessee in Principle of Natural Justice:
1. The order by the learned Commissioner in so far as it is against the Appellant, is opposed to law, weight of evidence and natural justice. The reply filed by the Appellant on 30' June, 2016 has been totally ignored by the Department. Hence the Appellant was not given a reasonable opportunity of being heard which is against the provision of section 12AA(1)(b)(ii) which states that: "Provided that no order under sub-clause (ii) to clause (b) of sub-section (1) of section 12AA shall be passed unless the applicant has been given a reasonable opportunity of being heard." Based on Merits:
2. The scheme in terms of which the company is setup envisages "increase in the manufacturing base of electronic products in the Country, attracting more investments, increase in employment, drive 2789/Bang/2017 Page 2 of 5 innovation and catalyzing economic growth of the Region."
3. The Learned Commissioner of Income Tax has erred in treating the activity of the Company as carrying on "Trade, Commerce or Business". He has failed to appreciate that In terms of Section 2(15) of the Income Tax Act, 1961, "charitable purpose" includes carrying on activities relating the advancement of any other object of general public utility. The activities of the Company is to provide a common platform to electronic component manufactures by developing, operating and maintaining infrastructure, amenities and common facilities for Electronic System Design and Manufacturing (ESDM) units which squarely fall within the "activities relating to advancement of general public utility" limb of Section 2(15).
The 2nd proviso to Section 2(15) states as below: [(ii) the aggregate receipts from such activity or activities during the previous year, donot exceed twenty per cent of the total receipts, of the trust or institution undertakingsuch activity or activities, of that previous year;] 5. The company expects substantial receipts of Grants from the Government and other donors, the aggregate of which would be in excess of 80% of the receipts of the Company. This is also proved by the fact that Government of India has sanctioned grant of Rs. 21.31 Crores ( Rupees Twenty One Crore and Thirty One Lakhs only). In view of the same, the Company would not attract the disqualification listed in the aforesaid proviso and hence would be entitled for registration u/s 12A and recognition u/s 80G of the Income Tax Act, 1961.
6. The Appellant craves to add, alter, delete or substitute any of the grounds urged above.
In view of the above and other grounds as may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”
The grounds raised
by the assessee in are as under: “Based on the Principle of Natural Justice:
1. The order by the learned Commissioner in so far as it is against the Appellant, is opposed to law, weight of evidence and natural justice. The reply filed by the Appellant on 30th June 2016 has been totally ignored by the Learned Commissioner of Income Tax and reasonable opportunity of being heard was not granted to the Appellant in the instant case. Based on Merits:
The scheme in terms of which the company is setup envisages "increase in the manufacturing base of electronic products in the Country, attracting more investments, increase in employment, drive innovation and catalyzing economic growth of the Region."
3. The Learned Commissioner of Income Tax has erred in treating the activity of the Company as carrying on "Trade, Commerce or Business" . He has failed to appreciate that In terms of Section 2(15) of the Income Tax Act, 1961, "charitable purpose" includes carrying on activities relating the advancement of any other object of general public utility. The activities of the Company is to provide a common platform to electronic component manufactures by developing, operating and maintaining infrastructure, amenities and common facilities for Electronic System Design and Manufacturing (ESDM) units which squarely fall within the "activities relating to advancement of general public utility" limb of Section 2(15). 4. The 2nd proviso to Section 2(15) states as below: [(ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;] 5. The company expects substantial receipts of Grants from the Government and other donors, the aggregate of which would be in excess of 80% of the receipts of the Company. This is also proved by the fact that Government of India has sanctioned grant of Rs. 21.31 Crores (Rupees Twenty One Crore and Thirty One Lakhs only). In view of the same, the Company would not attract the disqualification listed in the aforesaid proviso and hence would be entitled for recognition u/s 80G of the Income Tax Act, 1961. 6. The Appellant craves to add, alter, delete or substitute any of the grounds urged above. 7. In view of the above and other grounds as may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.” 4. The appeal filed by the assessee in in respect of proceedings u/s. 80G(5) of IT Act is filed after a delay of 476 days. The Registry has issued a defect memo to assessee pointing out that the appeal is time barred by 476 days. The assessee has moved an application for condonation of delay along with an affidavit of Shri Bhagya M.G stated to be an Authorized Signatory of the assessee. In this application for condonation of delay, it has been stated that against two order passed by ld. CIT(E) u/s. 2789/Bang/2017 Page 4 of 5 12AA and 80G(5), the assessee has earlier filed only one appeal referring to both the orders but in course of hearing of the said appeal on 26.10.2017, it was pointed out by the bench that the assessee is required to file separate appeals in respect of these two proceedings u/s 12AA and 80G(5). He submitted that under these circumstances, the delay was caused and this delay is because of bonafide reasons and wrong understanding of the assessee that filing of only one appeal is enough. The ld. DR of revenue strongly opposed condonation of delay.
We have considered the rival submissions. In view of the facts discussed above and by respectfully following the judgement of Hon’ble Apex Court rendered in the case of Collector, Land Acquisition Vs. Mst. Katiji& Others as reported in (1987) 167 ITR 471(SC), we condone the delay and admit the appeal. The conclusion of Hon’ble apex court in this case was this that "Sufficient cause" for the purpose of condonation of delay should be interpreted with a view to do even-handed justice on merits in preference to approach which scuttles a decision on merits. Hence, we condone the delay in the interest of justice.
Regarding the merit of the appeals, it is submitted by ld. AR of assessee that as per ground no. 1 in both appeals, this is the submission of the assessee that reply was filed by the assessee on 30.06.2016. It was submitted that although the application for registration was filed by the assessee on 14.12.2015, the first notice was issued by ld. CIT (E) on 16.06.2016 fixing the date of hearing on 24.06.2016. He submitted that because of short time of about a week from the date of notice till the date of hearing, the assessee could not complete the requirements by that date and the assessee would complete the requirements by 27.06.2016 and the same was filed in the office of the ld. CIT (E) on 30.06.2016. He submitted that copy of these submissions is available on page nos. 23 and 24 of the appeal memo. He submitted that in the interest of justice, the matter may be restored back to the file of CIT (E) for fresh decision after considering the submission of the assessee and after granting adequate opportunity of being heard to assessee. The ld. DR of revenue submitted that since the date of hearing was fixed on 24.06.2016 and no compliance was made on that date before the ld. CIT (E), no further opportunity should be provided to assessee.
2789/Bang/2017 Page 5 of 5 7. We have considered the rival submissions. We find that this is noted by CIT (E) in his order passed by him on 29.06.2016 u/s. 12AA of IT Act that the assessee trust filed an application for registration u/s. 12AA on 14.12.2015 and a letter dated 16.06.2016 was sent calling for certain details / information and the assessee was asked to explain how the objects are charitable in nature by posting the case on 24.06.2016 at 12.30 PM. Hence, it is seen that after receiving an application of the assessee on 14.12.2015, the first and only notice was issued by ld. CIT (E) on 16.06.2016 i.e. after six months and time allowed to assessee was only about a week. This is true that on 24.06.2016, no compliance was made by the assessee and assessee even did not appear before ld. CIT (E) to seek adjournment but still in the interest of justice, we feel it proper to restore both the matters back to the file of CIT (E) for fresh decision after considering the written submissions already filed by the assessee before him on 30.06.2016 and after providing adequate opportunity of being heard to assessee. We order accordingly. In view of this decision, no adjudication on merit is called for at the present stage.
In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.