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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “B” BENCH : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER I.T.A.Nos.560 & 561/PUN./2023 Assessment Years 2016-2017 & 2017-2018 Pune Metropolitan Region Development Authority, The Dy. Commissioner of PCNTDA New Income Tax, Exemptions Administrative Building, Circle, Aaykar Bhavan, vs. Near Akurdi Railway Swargate, Pune. Station, Pune – 411 035 PIN - 411 002 Maharashtra. Maharashtra. PAN AAALP1603L (Appellant) (Respondent) For Assessee : Shri Prathmesh Borkar For Revenue : Shri Ajay Kumar Keshari, CIT (DR) Date of Hearing : 13.02.2024 Date of Pronouncement : 13.02.2024 ORDER PER SATBEER SINGH GODARA, J.M. :
These assessee’s twin appeals I.T.A.Nos.560 & 561/PUN./2023, for assessment years 2016-2017 and 2017- 2018, arise against the National Faceless Appeal Centre’s [in short the “NFAC”] Delhi’s as many Din(s) and Order(s) nos. ITBA/NFAC/S/250/2022-23/1050430613(1), 1050430864(1), respectively, both dated 06.03.2023, in proceedings u/sec.143(3) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case files perused.
2 I.T.A.Nos.560 & 561/PUN./2023 2. The assessee pleads the following identical substantive grounds in the instant appeals :
“On the facts and in the circumstances of the case the learned assessing officer has erred in denying the claim of PMRDA for exemption under section 10(46) of the Income Tax Act, 1961 albeit the fact that PMRDA is satisfying all the substantive conditions required to claim exemption under section 10(46) of the Income Tax Act, 1961. The recognition of the claim by the Central Board of Direct Taxes in the Gazette is a matter that merely falls under the procedural domain and cannot be held to be a “sine qua non” for claiming exemption under section 10(46). The order of assessment is contrary to the judgment of Hon. Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. v. Deputy Commissioner 1991 (55) E.L.T. 437 (S.C.). 2. On the facts and in the circumstances of the case, Pune Metropolitan Region Development Authority (PMRDA) while performing functions in its capacity as a Special Planning Authority is acting as an agent of the Government of Maharashtra. PMRDA is thereby not liable to pay Income tax on the funds collected by it on behalf of the Government of Maharashtra while acting as a Special Planning Authority in view of article 289 of the Constitution of India.
3 I.T.A.Nos.560 & 561/PUN./2023 Ref - Mumbai Metropolitan Region Development Authority v. Dy. DIT 2014 TaxPub(DT) 4751 (Bom-HC) : (2015) 273 CTR 0317. 3. On the facts and in the circumstances of the case the learned assessing officer has grossly erred to tax the amounts collected by PMRDA in the capacity of “Special Planning Authority” in the hands of PMRDA, albeit the fact that a “Special Planning Authority” is merely a trustee of the funds which are collected by it on behalf of the Government of Maharashtra. The true owner of the funds collected is in fact the Government of Maharashtra and the said receipts cannot be taxed in the hands of PMRDA. Ref : Kishanchand Lunidasing Bajaj v. CIT, [1966] 60 ITR 500 (SC). Poona Electric Co. Ltd. v. CIT, [1965] 57 ITR 521 (SC). 4. On the facts and in the circumstances of the case the learned assessing officer has grossly erred treating the sums received by PMRDA as its income, without having regard to the fact that the receipts would not be taxable in the hands of PMRDA on the principles of mutuality. The sums received by PMRDA are from persons residing/ carrying on business within the jurisdiction in which PMRDA is functioning, and the funds would have to be utilized for the benefit of the persons residing within that
4 I.T.A.Nos.560 & 561/PUN./2023 area. The receipts would therefore not be regarded as income in the hands of PMRDA. 5. On the facts and in the circumstances of the case, the disallowance of exemption claimed under section 10(46) without first disposing off the application filed by the appellant is bad in law. Revenue is not justified in raising enormous tax demands on a matter which the revenue itself is undecided. Ref- Shrikar Hotels (P.) Ltd v. CIT [2017] 394 ITR 657 (All). 6. On the facts and in the circumstances of the case, the assessment order is bad in law as the assessee was not provided a proper opportunity of being heard. The learned assessing officer failed to provide the assessee with a personal hearing in spite of a specific request by the assessee. 7. On the facts and in the circumstances of the case the learned assessing officer has grossly erred in denying the assessee the right of a proper re-hearing as stipulated under section 129 of the Income Tax Act in spite of the fact that the assessee has made a specific demand for rehearing. This act of the assessing officer is in contravention to all known principles of natural justice and equity and as such the assessment order is liable to be quashed for being bad in law.
5 I.T.A.Nos.560 & 561/PUN./2023 8. The appellant craves the leave to add, amend, modify, alter, and delete any of the grounds of appeal during the course of appellate proceedings.”
The first and foremost identical issue that arises for our apt adjudication in both these cases is that of the assessee’s sec.10(46) exemption claim. Learned counsel could hardly dispute that the assessee has not been a “notified” authority u/sec.10(46)(c) of the Act which forms the precise reason for the Assessing Officer as well as the NFAC to decline the same. The very factual position has continued before us as well.
3.1. Learned counsel at this stage informed us that the assessee has also filed it’s writ petition(s) before the hon’ble jurisdictional high court and the same is yet to be decided. Be that as it may, we note that this tribunal is nowhere a party in the said proceedings pending before their lordships. Nor there is any stay order against us in both these appeals. Faced with this situation, we hardly see any reason to disturb the learned lower authorities findings declining the assessee’s sec.10(46) exemption claim for want of it’s statutory notification.
Next comes the assessee’s identical third substantive ground that the Assessing Officer as well as the NFAC have erred in law and on facts in rejecting it’s claim that various grants received from the state government do not form
6 I.T.A.Nos.560 & 561/PUN./2023 it’s taxable income. The Revenue could hardly dispute the clinching fact that not only the NFAC’s impugned twin orders have been passed ex-parte but also they have not considered the assessee’s identical third substantive ground herein. It rather emerges from a perusal of learned NFAC’s discussion at page-9 in the latter assessment year 2017-2018 that some judicial precedents dealing with sec.10(20) exemption have been discussed rather than deciding the foregoing core issue of taxability of various sums released by the state government. We thus deem it as a fit instance in both these cases to restore the assessee’s identical third substantive ground to the NFAC’s for afresh appropriate adjudication as per law preferably within three effective opportunities of hearing. It is made clear that in case the assessee fails to appear, lead and prove all necessary facts before the NFAC in the prescribed mode at it’s own risk and responsibility, our remand instant directions herein shall stand automatically vacated.
The impugned delay of 5 days each herein is condoned as per assessee’s solemn averments in light of Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) having settled the law long back that all such technical aspects must make a way for the cause of substantial justice.
7 I.T.A.Nos.560 & 561/PUN./2023 6. These assessee’s twin appeals I.T.A.Nos.560 & 561/ PUN./2023 are partly allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 13.02.2024.
Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 13th February, 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The NFAC, Delhi. 4. The Pr. CIT, Pune concerned 5. D.R. ITAT, “B” Bench, Pune. 6. Guard File.
//By Order// //True Copy //
Assistant Registrar, ITAT, Pune Benches, Pune.