Saharanpur Development Authority, Saharanpur v. Addl. CIT, Saharanpur

ITA 131/DEL/2009 | 2003-2004
Pronouncement Date: 08-04-2010 | Result: Dismissed

Appeal Details

RSA Number 13120114 RSA 2009
Bench Delhi
Appeal Number ITA 131/DEL/2009
Duration Of Justice 1 year(s) 2 month(s) 25 day(s)
Appellant Saharanpur Development Authority, Saharanpur
Respondent Addl. CIT, Saharanpur
Appeal Type Income Tax Appeal
Pronouncement Date 08-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 08-04-2010
Date Of Final Hearing 08-04-2010
Next Hearing Date 08-04-2010
Assessment Year 2003-2004
Appeal Filed On 13-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G: NEW DELHI BEFORE SHRI C.L.SETHI JM & SHRI SHAMIM YAHYA AM I.T. A. NOS.131 & 132/DEL OF 2009 ASSESSMENT YEARS: 2003-04 & 2005-06 SAHARANPUR DEVELOPMENT AUTHORITY VS ASSTT. COMMR . OF INCOME-TAX SAHARANPUR SAHARANPUR. APPELLANT RESPONDENT APPELLANT BY: SHRI SANJAY KUMAR RESPONDENT BY: MS PRATIMA KAUSHIK ORDER PER C.L. SETHI JM: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST TWO SEPARATE ORDERS NAMELY ORDER DATED 5.11.2008 PASS ED BY THE LEARNED CIT MUZAFFARNAGAR U/S 12AA/254 OF THE INCOME-TAX ACT 1 961 AND THE ORDER DATED 5.11.2008 PASSED BY THE CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S 143(3) OF THE INCOME-TAX ACT 1961 (THE ACT) FO R THE ASSTT. YEAR 2005- 06 RESPECTIVELY. 2. WE SHALL FIRST TAKE I.T.A. NO.131/DEL2009. 3. IN THIS APPEAL THE ASSESSEE HAS TAKEN A GROUND THAT CIT HAS ERRED IN LAW AND ON FACTS IN REFUSING CONDONATION OF APPLICA TION FOR REGISTRATION U/S 12AA WITH RETROSPECTIVE EFFECT FROM 1.4.2001. 2 4. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT THE ASSESSEE FILED AN APPLICATION FOR REGISTRATION U/S 12AA ON 1.6.200 7 AND ORDER THEREUPON U/S 12AA WAS PASSED BY THE CIT ON 1.11.2007. THE ASSES SEE MADE AN APPLICATION FOR REGISTRATION U/S 12AA TO BE GRANTED WITH RETROSPECTIVE EFFECT FROM 1.4.2001. HOWEVER LEARNED CIT HAS STATED THA T AS PER THE AMENDMENT BROUGHT BY THE FINANCE ACT 2007 THE PROVISION FOR CONDONING THE DELAY IN MAKING APPLICATION FOR REGISTRATION WOULD NOT BE AP PLICABLE IN RESPECT OF ANY APPLICATION FOR REGISTRATION FILED ON OR AFTER 1 ST JUNE 2007. HE THEREFORE HELD THAT ON THE DAY WHEN THE ASSESSEE SUBMITTED IT S APPLICATION FOR REGISTRATION ON 1.6.2007 NO POWER TO CONDONE THE D ELAY WAS AVAILABLE TO HIM UNDER THE ACT. THE CIT THEREFORE REJECTED THE AS SESSEES APPLICATION FOR CONDONATION OF DELAY IN FILING APPLICATION FOR REGI STRATION U/S 12AA. 5. BEING AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US . 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDER APPEALED AGAINST AS WELL AS THE PROVISIONS OF LAW C ONTAINED IN THAT BEHALF. IT IS NOT IN DISPUTE THAT U/S 12A(1)(A)(I) IF THE COM MISSIONER IS FOR THE REASONS TO BE RECORDED IN WRITING SATISFIED THAT THE PERSO N IN RECEIPT OF THE INCOME OF ANY TRUST OR INSTITUTION WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION FOR SUFFICIENT REASONS HE WILL GRANT REGISTRATION TO THE TRUST 3 FROM THE DATE OF THE CREATION OF THE TRUST OF THE I NSTITUTION. HOWEVER A PROVISO HAS NOW BEEN INSERTED BY THE FINANCE ACT 2 007 W.E.F. 1.6.2007 PROVIDING FURTHER THAT THE PROVISION OF THIS CLAUSE I.E. 12A(1)(A)(I) SHALL NOT APPLY IN RELATION TO ANY APPLICATION MADE ON OR AFT ER THE 1 ST DAY OF JUNE 2007. IT THUS MAKES IT CLEAR THAT POWER TO GRANT REGISTRATION FROM THE DATE OF CREATION OF THE TRUST OF THE ESTABLISHMENT OR FR OM ANY DATE EARLIER THAN THE DATE OF THE FIRST DAY OF FINANCIAL YEAR IN WHICH TH E APPLICATION IS MADE GIVEN TO THE COMMISSIONER HAS BEEN TAKEN AWAY BY THE STAT UTE BY INSERTING A PROVISO TO THAT CLAUSE IN RESPECT OF AN APPLICATION FOR REGISTRATION MADE ON OR AFTER 01.06.2007. SINCE NO POWER TO CONDONE THE DE LAY IS AVAILABLE TO THE COMMISSIONER IN RESPECT OF THE APPLICATION FOR REGI STRATION FILED U/S 12A ON OR AFTER 01.06.2007 THE QUESTION OF CONDONING THE DELAY ON HIS PART DID OR COULD NOT ARISE. 7. IN THIS VIEW OF THE MATTER WE HAVE TAKEN ABOVE WE THEREFORE HOLD THAT THE CIT HAS RIGHTLY HELD THAT IN RESPECT OF TH E APPLICATION MADE ON OR AFTER 1.6.2007 HE HAS NO POWER OF CONDONATION SO A S TO GRANT REGISTRATION FROM EARLIER DATE OTHER THAN THE FIRST DAY OF THE F INANCIAL YEAR IN WHICH THE APPLICATION FOR REGISTRATION IS MADE. THE ORDER OF CIT IS THUS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS REJECTED. 4 8. NOW WE SHALL COME TO ITA NO.132/DEL/2009 WHERE THE ASSESSEE HAS TAKEN THE GROUNDS READING AS UNDER: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN UPHOLDING THAT THE INTEREST OF RS.20 49 239/ EAR NED ON THE INVESTMENT FROM THE FUNDS OF INFRASTRUCTURE DEVELOPMENT FUND IS TAXABLE IN THE HANDS OF THE ASSESSEE DESPITE THE FACT THAT NEITHER THE ASSESSEE HAS ANY POWER TO SPEND THESE FUNDS NOR THE SAME ARE HEL D TO BE TAXABLE IN THE HANDS OF THE ASSESSEE. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DECIDING THE APPEAL WITHOUT CONSIDERING THE MATERIA L AND EVIDENCES PRODUCED BEFORE HIM. 3. THAT THE APPELLANT DENIES ITS LIABILITY OF INTER EST CHARGED UNDER SECTION 234B OF THE INCOME-TAX ACT 1961. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSTT. YEAR 2005- 06 IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS NOT CREDITED INTEREST AMOUNT OF RS.20 49 239/- IN THE INCOME AND RECEIPT ACCOUNT AND THEREFORE HE ISSUED A NOTICE TO THE ASSESSEE AS TO WHY THIS A MOUNT SHOULD NOT BE ADDED AS TAXABLE INCOME AS SO WAS ADDED IN THE LAST ASSES SMENT YEAR. IN REPLY THERETO THE ASSESSEE GAVE REASONING AND SUBMISSION S SIMILAR TO THOSE AS GIVEN IN THE LAST ASSESSMENT YEAR. AFTER CONSIDERI NG THE ASSESSEES SUBMISSIONS THE AO BROUGHT THE SAID AMOUNT OF RS.2 0 49 239/- TO TAX AS INCOME OF THE ASSESSEE AS IT WAS DONE BY HIM IN THE LAST ASSESSMENT YEAR 2004-05 WHICH WAS UPHELD BY THE LEARNED CIT(A) VID E HIS ORDER DATED 23.10.2007. 5 10. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPE AL BEFORE THE CIT(A). 11. FOLLOWING THE REASONING GIVEN IN DETAIL BY CIT( A) IN HIS ORDER DATED 23.10.2007 PERTAINING TO THE ASSTT. YEAR 2004-05 T HE LEARNED CIT(A) DECIDED THE ISSUE AGAINST THE ASSESSEE IN THE ASSTT . YEAR 2005-06 AS WAS SO DONE IN ASSTT. YEAR 2004-05. 12. STILL AGGRIEVED THE ASSESSEE IS IN APPEAL BEFO RE US. 13. IN THE COURSE OF HEARING OF THIS APPEAL THE LE ARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE AOS ORDER AS WELL AS THE ORDER OF THE CIT(A) DATED 23.10.2007 PASSED IN THE ASSTT. YEAR 2 004-05 HAS BEEN REVERSED BY THE TRIBUNAL VIDE ORDER DATED 23.12.200 8 IN ITA NO.02/DEL/08 A COPY OF WHICH HAS BEEN PLACED ON RECORD. HE THE REFORE SUBMITTED THAT ISSUE INVOLVED IN THIS APPEAL MAY ALSO BE DECIDED A CCORDINGLY. 14. THE LEARNED DR ON THE OTHER HAND SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 15. AFTER HEARING BOTH THE PARTIES AND FINDING THAT THIS IDENTICAL ISSUE HAS BEEN DECIDED BY THIS TRIBUNAL IN ASSESSEES FAVOUR BY HOLDING THAT THE INTEREST AMOUNT EARNED ON THE INFRASTRUCTURE DEVELO PMENT FUND IS NOT AN INCOME OF THE ASSESSEE BUT IT BELONGS TO DELHI ADMI NISTRATION AND IT IS NOT TO BE INCLUDED AS INCOME IN THE ASSESSEES HAND WE DE LETE THE ADDITION BY 6 REVERSING THE ORDERS OF THE AUTHORITIES BELOW AND D ECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. AT THIS STAGE WE FIND IT FIT TO REPRODUCE THE ORDER OF THE TRIBUNAL PASSED IN THE IMMEDIATELY PRECEDING YEAR 2 004-05 WHICH RUNS AS UNDER: 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORDS CAREFULLY. AS POINTED OUT IN THE LETTER DATED 15 TH JANUARY 1998 ASSESSEE HAS NO CONTROL OVER INFRASTRUCTURE DEVELOPMENT FUND. IT IS MAINTAINING THIS ACCOUNT AS A TRUSTEE. THE AMOUNT HAS TO BE USED ON THE DIRECTION OF A HIGH POWERED COMMITTED UNDER THE CHAIRMAN OF COMMISSIONER MEERUT. THE ASSESSEE HAS SHOWN OPENING BALANCE OF RS.29378467.24 IN THIS ACCOUNT AT THE BEGINNING OF THE YEAR. THERE IS AN ADDITION OF RS.17117597.60. INTEREST INCOME IS OF RS.18 05 515/-. THE CLOSING BALANCE IS OF RS.3 72 99 676.84. NOW THE AO IS TREATING THE INTEREST COMPONENT AS INCOME OF THE ASSESSEE. HE HAS NOT TAKEN COGNIZANCE OF THE PRINCIPAL AMOUNT. IN OTHER WORDS IF PRINCIPAL AMOUNT DOES NOT BELONG TO THE ASSESSEE BECAUSE OF OVERRIDING TITLE OF THE GOVERNMENT THEN HOW INTEREST INCOME ON PRINCIPAL AMOUNT WOULD BELONG TO THE ASSESSEE. THE FACTS BEFORE HONBLE DELHI HIGH COURT IN THE CASE OF CIT(A) VS DELHI INDUSTRIAL DEVELOPMENT ARE IDENTICAL. IN THAT A SCHEME WAS FORMULATED BY DELH I ADMINISTRATION FOR DEVELOPMENT OF NARELA INDUSTRIAL COMPLEX. THE ASSESSEE WAS TO BE IN CHARGE OF DEVELOPMENT OF THE COMPLEX. FOR MANAGEMENT OF THE FINANCIAL RESOURCES NARELA REVOLVING FUND WAS CREATED AND SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED RELATING TO THE TRANSACTION WITH WHICH T HE NARELA REVOLVING FUND WAS CONCERNED. THE DELHI STATE INDUSTRIAL DEVELOPMENT HAS DEVELOPMENT SOME PLOTS AND WERE ALLOTTED IN ACCORDANCE WITH THE 7 SCHEME. THE SURPLUS FUNDS GENERATED WERE DEPOSITED IN THE NARELA REVOLVING FUND. THE DELHI DEVELOPMENT STATE INDUSTRIAL DEVELOPMENT APPEARS TO HAVE UTILIZED THE FUNDS BY INVESTING THEM IN BAN K AND EARNED INTEREST. THE COMPTROLLER AND AUDITOR GENERAL OF INDIA AUDITED THE ACCOUNTS OF THE ASSESS EE AND POINTED OUT THE MISTAKE AND ADVISED THE ASSESSE E THAT THE FUNDS IN A NARELA REVOLVING FUND DID NOT BELONG TO THE ASSESSEE AND THEREFORE THE INTEREST EARNED BY INVESTING THE SURPLUS FUNDS IN BANKS ALSO DID NOT BELONG TO THE ASSESSEE. ON THIS OBJECTION THE ASSESSEE REVERSED THE ENTRIES IN THE SUBSEQUENT YEARS AND DEPOSITED THE AMOUNTS WITH THE DELHI ADMINISTRATION. THE AO HAS ASSESSED THE INTEREST INCOME AS BELONGING TO DELHI STATE INDUSTRIAL DEVELOPMENT. THE TRIBUNAL HAS HELD THAT INTEREST INCOME DOES NOT BELONG TO DELHI STATE INDUSTRIAL DEVELOPMENT RATHER IT BELONGS TO DELHI ADMINISTRATION. THE HONBLE HIGH COURT RECORDED IN PARA 6 ARE WORTH TO NOTE:- 6. IT IS QUITE CLEAR FROM THE ABOVE THAT THE AMOUN TS LYING IN THE NARELA REVOLVING FUND AND THE INTEREST EARNED BY INVESTING SURPLUS FUNDS IN BANKS WAS NOT THE PROPERTY OF THE ASSESSEE AND THEREFORE WAS NO T EVEN THE INCOME OF THE INCOME SIC-ASSESSEE. THE NARELA REVOLVING FUND AND THE INTEREST EARNED ON SURPLUS FUNDS BELONGED TO THE DELHI ADMINISTRATION. THEREFORE THERE IS NO QUESTION OF ADDING THE AMOUN T TO THE INCOME OF THE ASSESSEE WHO WAS ONLY A DEVELOPMENT AGENCY. 7. SIMILARLY ITAT IN THE CASE OF KARNATAKA URBAN INFRASTRUCTURE DEVELOPMENT AND FINANCE CORPORATION FOUND THE ASSESSEE AS A NODAL AGENCY FOR IMPLEMENTATION OF THE MEGA CITY SCHEME WORKED OUT BY THE PLANNING COMMISSION AND MINISTRY OF URBAN AND EMPLOYMENT FOR DEVELOPMENT OF URBAN INFRASTRUCTURE TO BANGALORE CITY. THE TRIBUNAL FOUN D THAT THE FUNDS DEPOSITED BY THE FINANCE CORPORATION RELATES TO THE STATE GOVERNMENT AND IT WAS HOLDING 8 SUCH FUNDS AS A TRUSTEE ON BEHALF OF THE GOVT. AGAINST THIS DECISION THE DEPARTMENT WENT IN APPEAL BEFORE THE HONBLE HIGH COURT AND HONBLE HIGH COURT HAS ALSO UPHELD THE ORDER OF THE TRIBUNAL THE JUDGMENT IS REPORTED IN 284 ITR 582. THE CASE LAW RELIED UPON BY THE ASSESSEE ARE SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE ASSESSEE HAD RECEIVED THE FUNDS UNDER THE ORDERS OF THE GOVT. OF UTTAR PRADESH AND IT WAS REQUIRED TO USE SUCH FUNDS AS PER THE DIRECTION OF HIGH POWER COMMITTEE. IT H AS NO CONTROL OVER THE FUNDS. MORE SO AO HAS NOT BROUGHT TO TAX THE PRINCIPAL AMOUNT HE IS ONLY TREATING THE INTEREST INCOME ON SUCH PRINCIPAL AMOUNT AS INCOME OF THE ASSESSEE. IF HIS LOGIC IS TO BE ACCEPTED THEN ALL THE FEES ETC OVER AND ABOVE TH E EXPENDITURE OUGHT TO HAVE BEEN EXAMINED AS INCOME OF THE ASSESSEE. 8. IN VIEW OF THE ABOVE DISCUSSION WE ALLOW THE PRESENT APPEAL OF THE ASSESSEE AND DELETE THE ADDIT ION OF RS.18 05 515/-. 16. IN THE RESULT ITA NO.131/DEL/2009 FILED BY THE ASSESSEE IS DISMISSED AND ITA NO.132/DEL/2009 FILED BY THE ASSESSEE IS AL LOWED. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON THE 8 TH APRIL 2010 IMMEDIATELY AFTER THE HEARING WAS OVER. (SHAMIM YAHYA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: APRIL 2010 VIJAY 9 COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A) MUZAFFARNAGAR NEW DELHI 5. DR ASSISTANT REGISTRAR