ACIT, CHENNAI v. M/s. Chennai Port Trust, CHENNAI

ITA 1154/CHNY/2011 | 2005-2006
Pronouncement Date: 07-09-2011 | Result: Dismissed

Appeal Details

RSA Number 115421714 RSA 2011
Assessee PAN AAALC0025B
Bench Chennai
Appeal Number ITA 1154/CHNY/2011
Duration Of Justice 2 month(s) 20 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. Chennai Port Trust, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 07-09-2011
Date Of Final Hearing 06-09-2011
Next Hearing Date 06-09-2011
Assessment Year 2005-2006
Appeal Filed On 17-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER I.T.A.NOS. 1152 1153 & 1154/MDS/2011 AND C.O.NOS. 121 122 & 123/MDS/2011 (IN ITA NOS.1152 1153 & 1154/MDS/2011) (ASSESSMENT YEARS : 2003-04 2004-05 & 2005-06) THE ASSISTANT DIRECTOR OF INCOME-TAX(EXEMPTIONS)-II CHENNAI 600 034. VS. M/S. CHENNAI PORT TRUST RAJAJI SALAI CHENNAI 600 001. PAN AAALC 0025 B (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI SHAJI P. JACOB IRS CIT RESPONDENT BY : SHRI K.MEENATCHI SUNDARAM FCA DATE OF HEARING : 6 TH SEPTEMBER 2011 DATE OF PRONOUNCEMENT : 7 TH SEPTEMBER 2011 O R D E R PER DR. O.K. NARAYANAN VICE-PRESIDENT THESE THREE APPEALS ARE FILED BY THE REVENUE. THE CROSS OBJECTIONS ARE FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 2003-04 2004-05 AND 2005-06. THE APPEAL S AND CROSS OBJECTIONS ARE DIRECTED AGAINST THE ORDERS OF THE C OMMISSIONER OF ITA 1152 TO 1154 & C O 121 TO 123/11 :- 2 -: INCOME-TAX(APPEALS)IX AT CHENNAI DATED 23.3.2011 AND ARISE OUT OF THE ASSESSMENTS COMPLETED UNDER SEC.143(3) R EAD WITH SEC.147 OF THE INCOME-TAX ACT 1961. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN ALL THES E THREE APPEALS IS THAT THE COMMISSIONER OF INCOME-TAX (APP EALS) HAS ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE TOWARDS EXEMPTION UNDER SEC.11. IT IS THE CASE OF THE REVENUE THAT M ERE GRANT OF REGISTRATION UNDER SEC.12AA DOES NOT MAKE THE ASSES SEE ELIGIBLE FOR EXEMPTION UNDER SECTIONS 11 AND 12 AND THE ASSE SSEE HAS TO SATISFY THE PREREQUISITES LAID DOWN IN THESE SECTIO NS. 3. WE CONSIDERED THIS ISSUE. IN FACT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SEC.12AA OF THE ACT ON 1 6.6.2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2002. THE REGISTRAT ION WAS GRANTED BY THE DIRECTOR OF INCOME-TAX(EXEMPTIONS) CHENNAI VIDE HIS ORDER NO.2(1135)/05-06 DATED 16.6.2008. 4. THE ASSESSEE FILED ITS RETURNS IN THE STATUS OF A LOCAL AUTHORITY. BUT THE ASSESSING AUTHORITY HELD THAT A LOCAL AUTHORITY CANNOT CLAIM EXEMPTION UNDER SEC.11 HE HELD THAT THE STATUS OF THE ASSESSEE SHOULD HAVE BEEN ASSOCIATION OF PERSO NS. 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE CONTENTION OF THE ASSESSING AUTHORITY THAT EXEMPTIO N UNDER SEC.11 ITA 1152 TO 1154 & C O 121 TO 123/11 :- 3 -: IS AVAILABLE TO AN ASSOCIATION OF PERSONS AND NOT A VAILABLE TO A LOCAL AUTHORITY IS AGAINST THE PROVISIONS OF LAW. HE HELD THAT THE BENEFIT OF SEC.11 IS AVAILABLE TO A PERSON INCLUD ING A LOCAL AUTHORITY. HE ACCORDINGLY ACCEPTED THE CONTENTION OF THE ASSESSEE AND DIRECTED THE ASSESSING AUTHORITY TO EX TEND THE BENEFIT OF SEC.11 TO THE ASSESSEE. THE REVENUE IS AGGRIEVED AND THEREFORE THE SECOND APPEAL BEFORE US. 6. WE HEARD BOTH SIDES IN DETAIL. THE ASSESSEE H AS BEEN GRANTED REGISTRATION UNDER SEC.12AA. THE REGISTRAT ION CONFIRMS DECLARATION OF THE ASSESSEE THAT IT IS A CHARI TABLE INSTITUTION. IT IS NOT NECESSARY THAT THE ASSESSEE MUST BE AN ASSOCIATION OF PERSONS SO AS TO CLAIM THE STATUS OF A CHARITAB LE INSTITUTION. A PARTNERSHIP MAY NOT BE ENTITLED TO BE CLASSIFIED AS A CHARITABLE INSTITUTION FOR THE REASON THAT IT IS CONSTITUTED FOR THE PURPOSE OF SHARING THE PROFIT AND LOSS OF A BUSINES S CARRIED ON BY THE FIRM. SO ALSO IN THE CASE OF A COMPANY AS WELL IT CANNOT BE A CASE OF A CHARITABLE INSTITUTION FOR TH E REASON THAT THE OBJECT OF A COMPANY IS TO CARRY ON BUSINESS FOR PR OFIT. THE COMPANIES ACT HAS SPECIFICALLY EXEMPTED UNDER S EC.25 OF THAT ACT THE CASE OF A CHARITABLE COMPANY. A CO-OP ERATIVE SOCIETY ALSO MAY NOT BE TREATED AS A CHARITABLE INSTITUTION AGAIN ITA 1152 TO 1154 & C O 121 TO 123/11 :- 4 -: FOR THE REASON THAT THE OBJECT OF A CO-OPERATIVE SO CIETY IS TO DECLARE DIVIDENDS OUT OF THE PROFITS EARNED BY IT. BUT THE ABOVE STATED INHERENT CLASSIFICATION DOES NOT APPLY NOT O NLY TO AN ASSOCIATION OF PERSONS BUT ALSO TO A LOCAL AUTHOR ITY. A LOCAL AUTHORITY IS NOT TREATED AS AN AUTHORITY CONSTITUTE D FOR THE PURPOSE OF CARRYING ON BUSINESS AND DIVIDING THE PROFIT AMO NG THE SHAREHOLDERS. A MUNICIPAL CORPORATION IS A LOCAL A UTHORITY BY STATUS AND NOT SUPPOSED TO CARRY ON BUSINESS ONLY F OR PROFIT. THEY ARE PERFORMING THE DUTIES OF A LOCAL GOVERNMENT. L IKEWISE THE PORT TRUST CONSTITUTED UNDER INDIAN MAJOR PORT TRUS T ACT IS A STATUTORY AUTHORITY TREATED AS A LOCAL AUTHORITY UN DER THE PROVISIONS OF GENERAL CLAUSES ACT. IT IS AFTER CON SIDERING ALL THESE ORGANIZATIONAL FEATURES THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SEC.12AA OF THE INCOME-TAX ACT 1961. 7. THEREFORE THE ASSESSING OFFICER CANNOT DENY THE BENEFIT OF SEC.11 TO THE ASSESSEE ONLY ON THE BASIS OF STATUS CLAIMED BY THE ASSESSEE. THE EXEMPTION CAN BE DENIED FOR VIOL ATION OF OTHER CONDITIONS LAID DOWN IN SEC.11 12 AND 13. THE ASS ESSING AUTHORITY HAS NO SUCH CASE. IN THE FACTS AND CIRCU MSTANCES OF THE CASE WE FIND THAT THE COMMISSIONER OF INCOME-TAX ( APPEALS) HAS ITA 1152 TO 1154 & C O 121 TO 123/11 :- 5 -: RIGHTLY DIRECTED THE ASSESSING OFFICER TO GRANT THE BENEFIT OF SEC.11 TO THE ASSESSEE. 8. THE APPEALS FILED BY THE REVENUE ARE THEREFORE LIABLE TO BE DISMISSED. 9. THE THREE CROSS OBJECTIONS FILED BY THE ASSESSEE IN FACT SUPPORT THE ORDERS PASSED BY THE COMMISSIONER OF IN COME-TAX (APPEALS). THEREFORE THE CROSS OBJECTIONS ARE ALS O LIABLE TO BE DISMISSED. 10. IN RESULT THE APPEALS AS WELL AS THE CROSS OBJ ECTIONS ARE DISMISSED. ORDERS PRONOUNCED ON WEDNESDAY THE 7 TH OF SEPTEMBER 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI DATED THE 7 TH SEPTEMBER 2011 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR