JCIT (OSD), (E), C-I, CHANDIGARH vs. M/S SEMI CONDUCTOR LABORATORY SCL, MOHALI

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘B’, CHANDIGARH

BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA Nos.465 to 467/Chd/2018 (Assessment Years : 2013-14 to 2015-16) The J.C.I.T., Vs. M/s Semi Conductor Laboratory SCL Ciricle-1(Exemptions), Phase-8, Industrial Area, Sector 72, Chandigarh. Mohali. PAN: AAGTS0959N (Appellant) (Respondent)

Appellant by : Mrs.Mona Mohanty, CIT DR Respondent by : Shri A.K.Sood, CA Date of hearing : 19.07.2018 Date of Pronouncement : 27.08.2018 ORDER PER BENCH:

All the above appeals have been preferred by the

Revenue against separate orders of Ld. Commissioner of

Income Tax (Appeals)-2, Chandigarh, all relating to the

same assessee and all dated 19.1.2018, but pertaining to

different assessment years i.e. assessment years 2013-14,

2014-15 and 2015-16 .

It was common ground that the issue involved in all

the appeals was identical, being denial of exemption u/s 11

of the Income Tax Act,1961, (hereinafter referred to as

Act).Therefore all the impugned appeals were heard together

and are being disposed off by this consolidated order for the

sake of convenience.

ITA No.465 to 467/Chd/2018 2 A.Y.2013-14 to 2015-16

the authorities below, are that the assessee trust, a society,

is a body working under Department of Space, Government

of India. The main objective of the assessee society, as per

its Memorandum of Association and rules & regulations was

to undertake, aid, promote, guide and coordinate research

and development in the field of semiconductor technology,

micro-electro mechanical systems and process technologies,

relating to semiconductor processing. The assessee had

developed CMOS technologies as well as specialised

technologies through in-house R&D efforts. The assessee

society had been granted registration as a charitable society

u/s 12A of the Act . For the impugned assessment years the

assessee society had filed returns declaring 'Nil' income.

During assessment proceedings the assessing officer

observed that the assessee was doing manufacturing of

LSI/VLSI devices for private parties and then selling it for

profit and that it was not doing any work related to

charitable activities. Accordingly, after seeking due

explanation from the assessee on the issue, with which he

was not satisfied, he held that the objective of the assessee

did not fall within the purview of “General Public Utility”

and that the assessee was carrying out business/commercial

activities. He further noted that the assessee had not

maintained separate books of accounts for grants/receipts

from properties of trust. The Assessing Officer, therefore,

held that the assessee was not eligible for exemption u/s 11

of the Act.

ITA No.465 to 467/Chd/2018 3 A.Y.2013-14 to 2015-16

Ld.CIT(Appeals),who noted that identical issue had been

decided by the I.T.A.T. in assessee’s own case for

assessment years 2010-11 and 2011-12 vide their order in

ITA No.151/Chd/2014 & ITA No.858/Chd/2014 dated

12.5.2016, holding that the assessee’s case is not hit by the

proviso to section 2(15) of the Act and, therefore, the

assessee is eligible for exemption u/s 11 of the Act.

Following the said orders the appeal was decided in favour

of the assessee.

appeal before us raising the following grounds:

“1. That on the facts and circumstances of the case, the Ld.CIT(A) has erred in law in holding that the proviso to section 2(15) of the IT. act, 1961 was not applicable in the case of the assessee whereas the activities of the assessee were of commercial/business in nature. 2. That on the facts and circumstances of the case, the Ld.CIT(A) has erred in law in interpreting the provisions of section 2(15) vis-a-vis the facts of assessee's case that the assessee's activities were not for profit motives even as the proviso entails preclusion of all activities, in the nature of trade, business or commerce, from the ambit of charitable purpose in cases professing to pursue advancement of any other object of general public utility. 3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law by relying on the fact that the society is a registered entity and ignoring that the statutory provisions entail first the examination of income that qualifies under section 11 & 12 and then the utilization of the same for charitable purposes. 4. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law deleting the additions when the activities of the trust are non-charitable and the provisions of section 11(4A) of the IT. Act are squarely applicable to the case.

ITA No.465 to 467/Chd/2018 4 A.Y.2013-14 to 2015-16

covered by the order of the I.T.A.T. in the preceding years as

pointed out by the Ld.CIT(Appeals) in his order. The Ld.

counsel for assessee placed copy of the order of the I.T.A.T.

passed in the preceding years referred to by the

Ld.CIT(Appeals) while deciding the appeal in favour of the

assessee.

preceding years and find that in the said years also the

assessee society had been denied exemption u/s 11 of the

Act, since it was found to be engaged in commercial

activities of sale and purchase. The I.T.A.T. found that the

said activity was carried out in consonance with its object

on the basis of which it was granted registration u/s 12AA of

the Act and was carried out without any profit motive which

was evident from the fact on record that the assessee was

making sales at less than the market price and its ultimate

object was not to give benefit to some specific person as per

its memorandum of association. The I.T.A.T. therefore held

that the said activities were charitable in nature, not hit by

the proviso to section 2(15) of the Act. The claim of the

assessee to exemption u/s 11 of the Act was accordingly

allowed.

to that in the preceding year with the assessee having been

ITA No.465 to 467/Chd/2018 5 A.Y.2013-14 to 2015-16

denied exemption u/s 11 of the Act for having been found to

have indulged in commercial activities of sale and purchase.

No distinguishing facts have been brought to our notice by

the Ld. DR. The issue therefore is squarely covered by the

order of the I.T.A.T. in the preceding years, which we hold

has been rightly followed by the CIT(Appeals), allowing the

assessees appeal. We therefore see no reason to interfere in

the order of the CIT(Appeals).

therefore, dismissed.

Order pronounced in the Open Court.

Sd/- Sd/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 27th, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR

Assistant Registrar, ITAT, Chandigarh