BULANDSHAHR DEVELOPMENT AUTHORITY,BULANDSHAHR vs. ACIT, EXEMPTION CIRCLE, GHAZIABAD

PDF · subscribers
ITA 4024/DEL/2017Status: DisposedITAT Delhi23 December 2020AY 2012-136 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee's 12A registration had been restored by a previous Tribunal order. Following this precedent, the Tribunal restored the issue of exemption and the infrastructure reserve fund to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee claimed exemption for a surplus under sections 11 and 12 of the Income Tax Act. The Assessing Officer denied this exemption as the assessee's registration under section 12AA was withdrawn, and also added an infrastructure reserve fund amount as income. The CIT(A) upheld these actions.

What were the issues?

Whether the assessee is entitled to exemption under sections 11 and 12 when its 12A registration was restored, and how the infrastructure reserve fund should be treated.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 12AA,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI

Before: SHRI O.P. KANT & MS. SUCHITRA KAMBLE

For Appellant: Shri Rakesh Gupta, Adv. &, Shri Somil Agarwal, Adv
For Respondent: Shri Sohail Malik, Sr.DR
Hearing: 23.12.2020Pronounced: 23.12.2020

This appeal by the assessee is directed against order dated 22/06/2016 passed by the learned Commissioner of Income-tax (Appeals), Ghaziabad [in short ‘the Ld. CIT(A)’] for assessment year 2012-13 raising following grounds: 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not allowing the exemption u/s 11 & 12 and more so when registration u/s 12AA has been allowed to the appellant by Hon’ble Allahabad High Court.

2. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 2,99,11,347/- on account of surplus in infrastructure reserve fund by treating it revenue receipts instead of earmarked fund as claimed by the appellant and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice.

3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in not allowing the exemption u/s 11&12 and in making addition of Rs.2,99,11,347/- on account of surplus in infrastructure reserve fund, is bad in law and against the facts and circumstances of the case.

4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B of Income Tax Act, 1961.

5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.

2. Briefly stated facts of the case are that the assessee filed its return of income on 27/09/2012, declaring Nil income. The assessee claimed surplus of ₹ 8,46,06,884/- as exempt under the provisions of section 11 and 12 of the Income-tax Act, 1961 (in short ‘the Act’). The return of income filed by the assessee was selected for scrutiny assessment and statutory notices were issued and complied with. During the scrutiny proceedings, the Assessing Officer noted that registration granted to the assessee under section 12A of the Act was withdrawn under section 12AA of the Act by the Commissioner of Income-tax, Meerut. He further observed that the Income Tax Appellate Tribunal (in short ‘the Tribunal’) vide order dated 29/04/2014 set aside the order of the learned Commissioner of Income-tax, Meerut and against which the Department has filed appeal before the Hon’ble High Court, which was pending at the time of passing the assessment order and, therefore, the Assessing Officer did not allow benefit of exemption eligible to trust/entity registered under section 12A of the Act. The learned Assessing Officer also held the amount of infrastructure fund of ₹ 2,99,11,347/- taken directly by the assessee in balance-sheet, as income of the assessee during the year under consideration. 2.1 On further appeal, the Learned CIT(A) upheld the denial of exemption claimed under section 11 to 13 of the Act by the assessee. He also sustained addition of ₹ 2,99,11,347/- on account of surplus in infrastructure reserve funds. Aggrieved with the finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal raising the grounds as reproduced above.

3. Before us, both the parties appeared through Videoconferencing facility. The assessee filed a paper-book electronically containing pages 1 to 51. 4. We have heard rival submission of the parties and perused the relevant material on record. Before us, the Learned Counsel of the assessee has submitted that issue in ground No. 1 of the appeal is covered by the order of the Tribunal in the case of the assessee for assessment year 2009-10 and 2010-11. The relevant finding of the Tribunal in and 4293/Del./2014 for assessment year 2009-10 and 2010-11 is reproduced as under:

“5. After considering the relevant finding given in the impugned order and the submissions made by the parties, we find that the Assessing Officer has taxed the surplus amount as revealed from the Income & Expenditure account, on the ground that 12A registration granted earlier by the CIT has been withdrawn u/s. 12AA(3) of the Act. Now' the said order of the CIT, cancelling registration u/s. 12A, has been set aside and registration u/s. I2A of the Act has been restored by the Tribunal (supra). Once registration u/s. 12A of the Act has been restored and is fait accompli, then the income has to be computed in accordance W'ith section 11 of the Act. Accordingly, we are remanding the matter back to the file of the Assessing Officer to compute the income in accordance with section 11 to 13 of the Act after examining the income and expenditure account and records and after giving due opportunity to the assessee to represent its case.”

5.

We find that the registration under section 12A of the Act has been restored by the Tribunal and till date said order has not been reversed by higher appellate forum, therefore, the assessee is entitled to the benefit of exemption under section 11 to 13 of the Act. Respectfully following the finding of the Tribunal (supra), we are reminding matter back to the file of the Assessing Officer to compute the income in accordance with section 11 to 13 of the Act, after examining the records and after providing the opportunity of being heard to the assessee. The ground No.1 of the appeal is accordingly allowed for the statistical purposes., 6. Regarding ground No. 2 & 3, the learned counsel submitted that issue in dispute is covered by the decision of the Tribunal in the case of Khurja Development Authority (ITA No. 4290; 4291/Del./2014 and ITA No. 5103/Del./2016). The relevant finding of the Tribunal (supra) is reproduced as under:

“15 After considering the rival submissions, we are of the view tht this issue also requires reconsideration at the level of the AO. The assessee has now been granted registration u/s 12AA of the Act and thus, assess is entitled for exemption from income u/s 11 of the Act as per law. Even if, the infrastructure reserve fund may be treated as income of assessee, it will have to be examined, whether, assessee is entitled for exemption u/s 11 of the Act on the same income. Therefore, it would depend upon fundings with regard to exemption u/s 11 of the Act. We have already restored the issue of exemption u/s 11 of the Act to the AO for fresh decision as per law. Further, the authorities below have not appreciated the fact that assessee claimed that infrastructure fund was received for development activities from the State Authorities, the assessee has to spend the amount on the same as per approval of the State Authorities. Thus, there may not be any profit element out of the same sources. It may also be noted here that whatever amount has been spent by assessee on the same issue, the AO has accepted that assessee spent the same amount as per the directions of the State Authorities. Then in that event it is difficult to believe that part amount is capital receipt and part would be Revenue in nature. Therefore, there was no justification for Ld. CIT(A) to hold that the impugned receipt is Revenue in nature. This issue also requires reconsideration in view of the fact that assessee is entitled for exemption u/s 11 of the Act. We, accordingly, set aside the orders of the authorities below on the issue of infrastructure fund as well and restore the issue to the file of AO with direction to redecide the issue as per law by giving reasonable opportunity of being heard to the assessee.”

7.

We find that the Tribunal has held that there may not be any profit element in receipt of infrastructure fund from state authorities for infrastructure development activities. The Tribunal has held that it is difficult to believe that part amount could be capital receipt and part would be revenue in nature. Respectfully following the finding of the Tribunal (supra), we set aside the order of the authorities below on the issue of the infrastructure fund and restore the matter to the file of the Assessing Officer with the direction to decide the issue in accordance with law after giving adequate and reasonable opportunity of being heard to the assessee. The grounds No. 2 & 3 of the appeal are accordingly allowed for statistical purposes.

8.

The grounds No. 4 & 5, being consequential in nature, they are dismissed as infructuous.

9.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 23rd December, 2020.

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →