The DCITGNR Range,, Gandhinagar v. Gujarat Maritime Board, Gandhinagar

ITA 1406/AHD/2010 | 2007-2008
Pronouncement Date: 27-09-2016 | Result: Allowed

Appeal Details

RSA Number 140620514 RSA 2010
Assessee PAN AABCG6676L
Bench Ahmedabad
Appeal Number ITA 1406/AHD/2010
Duration Of Justice 6 year(s) 4 month(s) 24 day(s)
Appellant The DCITGNR Range,, Gandhinagar
Respondent Gujarat Maritime Board, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2016
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 27-09-2016
Date Of Final Hearing 01-09-2016
Next Hearing Date 01-09-2016
Assessment Year 2007-2008
Appeal Filed On 03-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHR I S. S. GODARA JUDICIAL MEMBER THE D CIT GANDHINAGAR RANGE GANDHINAGAR (APPELLANT) VS GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10A OPP. AIR FORCE STATION GANDHINAGAR - 382010 PAN: AABCG6676L (RESPONDENT) GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10A OPP. AIR FORCE STATION GANDHINAGAR - 382010 PAN: AABCG6676L (APPELLANT) VS THE JCIT GANDHINAGAR RANGE GANDHINAGAR (RESPONDENT) I T A NO . 454 / A HD/20 1 1 A SSESSMENT YEAR 200 4 - 05 ITA NO. 307 /AHD/20 1 0 ASSESSME NT YEAR 200 5 - 06 CROSS APPEAL S ITA NO S . 16 & 466 /AHD/20 10 ASSESSMENT YEAR 200 6 - 07 I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 2 GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10A OPP. AIR FORCE STATION GANDHINAGAR - 382010 PAN: AABCG6676L (APPELLANT /RESPONDENT ) VS THE JCIT/DCIT GANDHINAGAR RANGE GANDHINAGAR (RESPONDENT /APPELLANT ) THE ACIT GANDHINAGAR RANGE GANDHINAGAR (APPELLANT) VS GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10A OPP. AIR FORCE STATION GANDHINAGAR - 382010 PAN: AABCG6676L (RESPONDENT) GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10A OPP. AIR FORCE STATION GANDHINAGAR - 382010 PAN: AABCG6676L (APPELLANT) VS THE JCIT/DCIT GANDHINAGAR RANGE GANDHINAGAR (RESPONDEN T) ITA NO. 2041 /AHD/20 12 ASSESSMENT YEAR 200 6 - 07 CROSS APPEALS ITA N O S . 1336 & 1406 /AHD/20 10 ASSESSMENT YEAR 200 7 - 08 I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 3 GUJARAT MARITIME BOARD GMB BHAVAN SECTOR 10A OPP. AIR FORCE STATION GANDHINAGAR - 382010 PAN: AABCG6676L (APPELLANT) VS THE ACIT GANDHINAGAR RANGE GAN DHINAGAR (RESPONDENT) REVENUE BY : MRS. VIBHA BHALLA CIT - D . R. ASSESSEE BY: S H RI S.N. SOPARKAR WITH H.P. SINGH A.R. DATE OF HEARING : 01 - 09 - 2 016 DATE OF PRONOUNCEMENT : 27 - 09 - 2 016 / ORDER P ER : S. S. GODARA JUDICIAL MEMBER : - THIS IS A BATCH OF NINE CASES. FIRST ASSESSMENT YEAR 2004 - 05 CONTAINS REVENUE S APPEAL ITA 454/AHD/2011 PREFERRED AGAINST O RDER OF THE CIT(A) GANDHINAG AR DATED 30 - 11 - 2010 PASSED IN CASE NO. CIT(A)/GNR/150/2006 - 07. 2. SECO ND ASSESSMENT YEAR 2005 - 06 COMPRISES OF ASSESSEE S APPEAL ITA 307/AHD/2010 ARISING AGAINST ORDER OF THE CIT(A) CROSS APPEAL S ITA NO S . 2250 & 2767 /AHD/20 11 ASSESSMENT YEAR 200 8 - 09 I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 4 GANDHINAGAR DATED 31 - 12 - 2009 PASSED I N C ASE CIT(A)/GNR/292/2008 - 09. 3. NEXT ASSESSMENT YEAR 2006 - 07 CONTAINS THREE APPEALS. THE ASSESSEE AND REVEN UE HAVE CROSS APPEALS ITA 16 & 466/AHD/2010 ASSAILING CORRECTNESS OF THE CIT(A) GANDHIN A GAR S ORDER DAT ED 20 - 11 - 2009 IN CASE NO. CIT(A)/GNR/221/200 8 - 09. LATTER PARTY S SECOND APPEAL ITA 2041/AHD/2012 ARISES FROM CIT(A) GANDHINAG A R S ORDER DATED 15 - 0 6 - 2012 PASSED IN CASE NO. CIT(A)/GNR/142/2011 - 12. 4 . NEXT ASSESSMENT YEAR 2007 - 08 INVOLVES CROSS APPEALS FILED BY ASSESSEE AND THE REVENUE ITA NO. 1336 & 1406/AHD/2010 AGAINST ORDER DATED 26 - 02 - 2010 PASSED BY THE CIT(A) GANDHIN AGAR IN CASE APPEAL NO. CIT(A)/GNR/118/2009 - 10. 5 . LAST ASSESSMENT YEAR 2008 - 09 CONTAINS ASSESSEE S AND REVE NUE S CROSS APPEALS ITA 2250 & 2767/AHD/2011 PREFER RED AGAINST CIT(A ) GANDHINAGAR S ORDER DATED 18 - 08 - 2011 PASSED IN CASE NO. CIT(A)/GNR/78/2010 - 11. 6 . WE NOTICE THAT PROCEEDINGS IN ALL CASES ARE U/S. 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT. THE SOLE EXCEPTION HERE IS REVENUE S APPEAL ITA 2041/AHD/2012 FOR ASSESSME NT YEAR 2006 - 07 WHEREIN THE PROCEEDINGS ARE U/S. 143(3) R.W.S. 147 OF THE ACT. I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 5 WE PROCEED ASSESSMENT YEAR - WISE FOR THE SAKE OF CONVENIENCE AND BREVITY. ASSESSMENT YEAR 2004 - 05 REVENUE S APPEAL ITA 454/AHD/2011 7 . THE REVENUE S SOLE SUBSTANT IVE GRIEVANCE PLEADED IN THE INSTANT APPEAL CHALLENGES THE CIT(A) S ORDER DELEING GROSS ADDITION OF RS. 81 35 885/ - COMPRISING OF DISALLOWANCES OF EXPENSES RELATING TO ASSESSEE S CONTRIBUTIONS MADE TO THE VIBRANT GUJARAT NAVRATRI FESTIVAL OF RS. 30 LACS VISHWA GUJARAT PARIWAR GUJARAT MAHOTSAV OF RS. 20 LACS REPUBLIC DAY FUNCTION CONTRIBUTION OF BHAVNAGAR OF RS. 6 25 885/ - GUJARAT STATE EXPORT CORPORATION OF RS. 10 LACS AND EXECUTIVE ENGINEERING TRAINING CENTRE OF RS. 15 LACS; RESPECTIVELY; AS MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER. 8 . THE CASE FILE REVEALS THAT THIS IS SECOND ROUND OF LITIGATION BETWEEN THE PARTIES BEFORE US. THE ASSESSEE - TRUST ADMINISTERS CONTROLS AND MANAGES MINOR PORTS IN GUJARAT STATE. IT IS A STATUTORY BODY GOVERNE D BY THE GUJARAT MARITIME BOARD ACT 1981. IT ENJOYS SECTION 12AA REGISTRATION AS WELL W.E.F. 01 - 04 - 2002 AS PER THE CIT GANDHINAGAR S ORDER DATED 15 - 06 - 2005 HAVING RETROSPECTIVE EFFECT TREATING IT AS AN ENTITY ENGAGED IN ADVANCEMENT OF GENERAL PUBLIC UTI LITY U/S. 2(15) OF THE ACT. I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 6 9 . THE ASSESSEE FILED ITS RETURN ON 01 - 11 - 2004 STATING NIL INCOME. THE SAME WAS PROCESSED ON 22 - 03 - 2005. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE INTER ALIA NOTICED THE ASSESSEE TO HAVE MADE ABOVE FIVE CONTRIBUTIONS UNDE R VARIOUS HEADS SPECIFIED HEREINABOVE. 10 . THE ASSESSEE S FIRST CONTRIBUTION IS OF RS. 30 LACS MADE TO THE VIBRANT GUJARAT INDEXT B NAVRATRI FESTIVAL. IT INTER ALIA PLEADED THAT THE STATE GOVERNMENT ORGANIZES THE VIBRANT GUJARAT INVESTORS S UMMIT AT AH MEDABAD 28 - 30 SEPTEMBER 2003 IN ASSOCIATION WITH GOVT. OF INDIA AND OTHER TRADE AND COMMERCE ASSOCIATION S LIKE FICCI AND OTHER FORUMS. THE STATE GOVERNMENT ISSUED GRS DATED 17 - 03 - 2003 AND 28 - 03 - 2003 DIRECTING IT TO CONTRIBUTE FOR EVENT ORGANIZATION. IT TOOK INDEXT B AS THE NODAL AGENCY. THIS EVENT S AIM WAS TO INTER ALIA REALISE INVESTMENT POTENTIAL AND BRING FDI AND DOMESTIC INVESTMENT S FACILITATE INCREASE AND CO - ORDINATE TECHNOLOGY TRANSFER AND TO PROVIDE PL ATFORM TO INDUSTRIES AS FOLLOWED BY MATCH MAKING OF FOREIGN /DOMESTIC COMPANIES WITH THOSE BASED IN GUJARAT . THE ASSESSEE FURTHER SUB MITTED THAT THIS SUMMIT WAS NOT ONLY A CULTURAL ONE BUT IT GAVE IMPETUS TO ABOVE INDUSTRIAL OBJECTS IN LINE WITH ITS CLAUSES AND KEEPING IN MIND LONGEST COASTLINE O F THE GUJARAT STATE. 11 . THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 29 - 12 - 2006 DID NOT AGREE TO ALL THESE PLEAS. HIS VIEW INTER ALIA WAS THAT ASSESSEE S OBJECTIVES WERE NOWHERE MET DIRECTLY OR INDIRECTLY OR EVEN REMOTELY CONNECTED OR RELATED TO VI BRANT GUJARAT SUMMIT MINUTES OF THE MEETING DATED 17 - 03 - 2003 DID NOT INDICATE ASSESSEE S ROLE I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 7 THEREIN IT HAD NOT OCCUPIED ANY SPACE OR STALL AS IT HAD TO PAY RATHER A SUM OF RS. 5.21 LACS TO THE FICCI. THE ASSESSING OFFICER FURTHER OBSERVED THAT ALL TH ESE ACTIVITIES DID NOT KEEP IN MIND ANY ATTENTION PAID TO ASSESSEE S PORT RELATED ACTIVITIES. HE HELD THAT THIS AMOUNT WAS SPENT ON EXTRANEOUS CONSIDERATION S RATHER THAN ASSESSEE S PRIME OBJECTS/OBLIGATIONS. AND ALSO THAT ASSESSEE S PARTICIPATION EXPENSE S THEREIN HAD ALREADY BEEN ACCEPTED. THE ASSESSING OFFICER THUS INVOKED SECTION 11(1) OF THE ACT FOR MAKING THE IMPUGNED DISALLOWANCE. 12 . THE ASSESSING AUTHORITY THEN DEALT WITH ASSESSEE S CONTRIBUTION MADE TO VISHWA GUJARAT PARIWAR MAHOTSAV OF RS. 20 LACS AND ITS EXPENSE OF RS. 6 25 885/ - INCURRED ON A R EPUBLIC DAY FUNCTION IN CASH AND PAYMENTS FOR TENTS ELECTRICITY AND HOTEL BILLS. THE ASSESSING OFFICER PROC EEDED ON THE SAME REASONING HEREINABOVE TO HOLD THAT BOTH THESE EXPENSE S DID NOT FALL IN ASSE SSEE S PRIMARY OBJECTS OR DUTIES. HE APPLIED SECTION 11(1) OF THE ACT FOR EXPENSES AS WELL. 13 . NEXT CAME ASSESSEE S CONTRIBUTIONS TO GUJARAT STATE EXPORT CORPORATION AND EXECUTIVE ENGINEERING TRAINING CENTRE OF RS. 10 LACS AND RS. 15 LACS ; RESPECTIVELY . THE ASSESSING OFFICER CONCLUDED THAT ALL THESE FIVE HEADS INCLUDING THESE TWO DID NOT HAVE ANY DIRECT OR INDIRECT NEXUS WITH ASSESSEE S OBJECTS OR ACTIV IT IES. THIS RESULTED IN THE IMPUGNED FIVE DISALLOWANCES/ADDITIONS BEING MADE IN ASSESSEE S HANDS. I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 8 1 4 . THE ASSESSEE FILED APPEAL. THE CIT(A) IN HIS ORDER DATED 26 - 03 - 2007 DELETED ALL FIVE DISALLOWANCES/ADDITIONS AS UNDER: - 3.3. THE FACTS OF THE CASE AND THE SUBMISSIONS HAVE BEEN CONSIDERED. THE APPELLANT HAD INCURRED VARIOUS EXPENSES DURING THE CONDUCT OF ITS ACTIVITIES AND FOR PROMOTING ITS OBJECTS. SUCH EXPENSES HAVE BEEN VERIFIED BY THE ASSESSING OFF ICER AND ITEMS LISTED TOTALING RS.81.35 LAKHS HAVE BEEN HELD TO BE NOT ELIGIBLE FOR DEDUCTION AS PER PROVISIONS OF SECTION 11(1) OF THE IT. ACT. IN TH IS CONTEXT THE APPELLANT HAD FURNISHED DETAILED JUSTIFICATION FOR THE INCURRING OF EXPENSES. THE ASSESSING OFFICER HAD MAINLY CONSIDERED THE FACT THAT SUCH EXPENSES WERE INCURRED EITHER COMMONLY OR BY A DESIGNATED THIRD PERSON UNDER THE OVERALL SUPERVISIO N AND DIRECTIONS OF THE GOVERNMENT OF GUJARAT. HE ALSO POINTED OUT THAT THE EXPENSES WERE NOT HAVING ANY DIRECT NEXUS WITH THE ACTIVITIES OF THE APPELLANT IF AT ALL ANY BENEFIT WAS ACCRUING ON ACCOUNT OF SUCH EXPENDITURE THE SAME KIND OF BENEFIT COULD H AVE BEEN A CHIEVED BY LESSER EXPENDITURE. THE ABOVE OBSERVATIONS OF THE ASSESSING OFFICER CANNOT BE CONSIDERED AS CORRECT. THE APPELLANT IS THE BEST JUDGE TO ANALYZE AND WEIGH THE VARIOUS OPTIONS FOR ACHIEVING ITS OBJECTIVES AND THE EXPENDITURE INCURRED AS PER SUCH JUDGEMENT CANNOT BE FAULTED BY THE ASSESSING OFFICER AS PER HIS UNDERSTANDING OR WISDOM. THE FACT THAT GOVERNMENT OF GUJARAT HAD INFLUENCED THE APPELLANT IN MAKING THE EXPENDITURE CANNOT BE THE SOLE REASON FOR HOLDING THAT THE EXPENSES WERE INCURR ED ON EXTRANEOUS FACTORS OTHER THAN THE OBJECTS AND ACTIVITIES OF THE TRUST. ONCE IT IS SHOWN THAT THE EXPEN S ES WERE RELEVANT TO THE OBJECTS AND ACTIVITIES IT IS NOT NECESSARY TO ESTABLISH ONE TO ONE NEXUS BETWEEN THE EXPENDITURE AND THE OBJECTS. IN THE ABOVE CONTEXT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF EXPENDITURE. THE ADDITION MADE IS DIRECTED TO BE DELETED. 15 . THE REVENUE PREFERRED ITA 2842/AHD/2007 BEFORE THIS TRIBUNAL. A CO - ORDINATE BENCH IN ITS ORDER DATED 16 - 1 0 - 2009 REMITTED BACK TO THE CIT(A) WITH THE FOLLOWING DIRECTIONS: - 10. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE ID. CIT(A). NEITHER THE ID. DR NOR THE ID. AR MADE ANY SPECIFIC SUBMISSIONS ON THE ISSUE RAISED IN THIS GRO UND AS TO HOW THE AFORESAID CONTRIBUTIONS WERE RELATED TO THE VARIOUS OBJECTS AND ACTIVITIES OF THE ASSESSEE BOARD OR AS TO \ WHETHER OR NOT THESE I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 9 FELL WITH IN THE PROVISIONS OF SECTIONS 73 TO 75 OF THE GUJRAT MARITIME BOARD ACT 1981. AS ALREADY OBSERVED AND .AS CAN BE SEEN FROM THE PREAMBLE OF THE 1981 ACT THE BOARD HAS BEEN CONSTITUTED INTER ALIA FOR PURPOSES OF DEVELOPMENT AND MAINTENANCE OF MINOR PORTS. UNDER THE SAID ACT THE MARITIME BOARD ALSO RENDERS SERVICES LIKE STEVEDORING TRANSPORT OF GOODS STORAGE SHIPPING ETC. IT IS ALSO IN - CHARGE OF UPKEEPMENT OF JETTIES WHARFS ROADS LIGHTS ETC. HOWEVER THE MAIN OBJECT OF THE SAID ACT IS DEVELOPMENT OF MINOR PORTS IN THE STATE OF GUJARAT. THE INCOME ACCRUING TO THE MARITIME BOARD INCLUDING RESERV ES AND SURPLUS ARE ALSO REQUIRED TO BE DEPLOYED AND CREDITED TO A SEPARATE FUND TO BE UTILIZED FOR DEVELOPMENT OF MINOR PORTS WITHIN THE STATE. IN THE LIGHT OF THESE OBJECTS A ND PURPOSES WE FIND THAT THOUGH THE ID. CIT(A)OBSERVED THAT' IT IS S HOWN THAT THE EXPENSES WERE RELEVANT TO THE OBJECTS AND ACTIVITIES' THE ID. CIT(A) HAVE NOT IN EXPLICIT TERMS RECORDED HIS FINDINGS AS TO HOW THE AFORESAID CONTRIBUTIONS WER E RELATED TO OBJECTS AND ACTIVITIES OF THE TRUST OR WERE INCURRED IN FURTHERANCE O F PURPOSES OF THE GUJRAT MARITIME BOARD ACT 1981. IN FACT THE IMPUGNED ORDER OF THE ID. CIT(A) IS NOT A SPEAKING ORDER ON THE ISSUE UNDER CONSIDERATION. IN THESE CIRCUMSTANCES WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE ISSUE TO HIS FILE WITH THE DIRECTIONS TO EXAMINE THE MATTER IN THE LIGHT OF VARIOUS OBJECTS AND PURPOSES OF THE GUJRAT MARITIME BOARD ACT 1981 IDENTIFYING CLEARLY AS TO HOW THE AFORESAID CONTRIBUTIONS ARE RELATED TO THE SAID OBJECTS AND PURPOSE. NEEDLESS TO SAY THAT WHILE RE - DECIDING THE ISSUE THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER KEEPING IN MIND INTER ALIA THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT. WITH THESE DIRECTIONS GROUND NO. 2 IN THIS APPEAL IS DISPOSED OF . 16 . THE CIT(A) THEREAFTER TOOK UP CONSEQUENTIAL LOWER APPELLATE PROCEEDINGS. HE DISCUSSES FIRST OF ALL ABOUT ASSESSEE S AIM S AND OBJECTS AND HOLDS A LL THE IMPUGNED FIVE EXPENSES ALLOWABLE AS FOLLOWS: - 5.0 I HAVE GONE THROUGH THE DIRECTIONS OF THE HON OURABLE TRIBUNAL OBSERVATION AND REASONING OF THE ASSESSING OFFICER AND CONTENTIONS OF THE ASSESSEE THE QUESTI ON HAS TO BE DECIDED IN TWO LIM BS: I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 10 A) WHAT EXACTLY ARE THE OBJECTS AND ACTIVITIES OF THE TRUST AND WHAT CAN BE TREATED AS AS FURTHERANCE OF PUR POSES OF THE GUJARAT MARITIME BOARD ACT 1981. B) EXAMINING WHETHER EACH OF THE EXPENSES HAD BEEN INCURRED IN FURTHERANCE OF THE OBJECTS OF THE TRUST OR PURPOSES OF THE GUJARAT MARITIME BOARD ACT 1981 A. WHAT EXACTLY ARE THE OBJECTS AND ACTIVITIES OF T HE TRUST AND WHAT CAN BE TREATED AS AS FURTHERANCE OF PURPOSES OF THE GUIARAT> MARITIME BOARD ACT 1981. GMB AS A STATUTORY BOARD CONSTITUTED UNDER THE GUJARAT STATE LEGISLATIVE ACT VIZ. 'THE GUJARAT MARITIME BOARD ACT 1981' WAS 'VESTED WITH THE ADMINIST RATION CONTROL AND MANAGEMENT OF MINOR PORTS IN THE STATE OF GUJARAT AND FOR MATTERS CONNECTED THEREWITH.' INTER ALIA IN ORDER TO DISCHARGE ITS AVOWED OBJECTIVES GMB IS ENABLED BY SECTION 74 OF THE GMB ACT 1981 PAYMENT OF CHARGES ENUMERATED THEREIN WI TH SPECIF IC SUB - SECTIONS 74(1)(J) AND 74(1)(K ) AS FOLLOWS: '74(1 ) (J) ANY OTHER EXPENDITURE WHICH MAY BE INCURRED BY THE BOARD GENERALLY FOR THE PURPOSES OF THIS ACT;' AND 74(1)(K) ANY OTHER CHARGE WHICH MAY ON THE APPLICATION OF THE BOARD OR OTHERW ISE BE SPECIFICALLY SANCTIONED BY THE STATE GOVERNMENT OR FOR WHICH THE BOARD MAY BE LEGALLY LIABLE. FURT HER IN TERMS OF SECTION 95 REPRODU CED HEREINAFTER THE BOARD IS BOUND BY DIRECTIONS OF STATE GOV ERNMENT AS LAID DOWN THEREIN. GUJARAT STATE L EGIS LATIVE ACT VIZ. 'THE GUJARA T MARITIME BOARD ACT 198 5 VE STED WITH THE ADMINISTRATION CONTROL AND MANAGEMENT OF MINOR PORTS IN THE STATE OF GUJARAT AND FOR MATTERS CONNECTED THEREWITH.' THE IMPORTANT QUESTION HERE IS WHETHER THE ENTITY IS ENTRUSTED WITH O PERATIONS AND MAINTENANCE OF PORTS ONLY OR IS GIVEN THE MANDATE TO BUILD DEVELOP OWN AND RUN THE PORTS. WHILE THE I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 11 WORDS CONTROL AND MANAGEMENT MAY GIVE AN IMPRESSION THAT IT IS ONLY MAINTAINING AND RUNNING THE PORTS BUT WHEN THE MANDATE TO ADMINISTER I S THERE AND IT'S ACTIVITIES SINCE INCEPTION APPROVED BY THE GOVERNMENT OF GUJARAT ARE SEEN; IT BECOMES OBVIOUS THAT IT IS MANDATED WITH THE WORK OF BUILDING DEVELOPING OWNING THE ASSETS AND RUNNING THE MINOR PORTS IN THE STATE OF GUJARAT. IN THE LAST TW O DECADES THE ACTIVITIES HAVE INCREASED A LOT AND A NUMBER OF MINOR PORTS HAD BEEN BUILT BY THEM WHICH ARE BEING OWNED AND RUN BY THEM. .NEW TECHNOLOGIES HAVE BEEN INTRODUCED AND THE ASSETS UNDER THE OWNERSHIP AND MANAGEMENT; AS SHOWN IN . THEIR BALANCE SHEET HAVE .INCREASED MANIFOLD. THEREFORE LOOKING TO THE ENTIRETY OF FACTS AND CIRCUMSTANCES; THE OBJECTIVE OF THE BOARD WHEN IT IS SAID 'VESTED WITH THE ADMINISTRATION CONTROL AND MANAGEMENT OF MINOR PORTS IN THE STATE OF GUJARAT AND FOR MATTER S CONNECTED THEREWITH.' IT MEANS THAT IT IS MANDATED WITH THE WORK OF BUILDING DEVELOPING OWNING THE ASSETS AND RUNNING THE MINOR PORTS IN THE STATE OF GUIARAT. SO ALL THE ABOVE ACTIVITIES CAN BE SAID TO BE IN FURTHERANCE OF THE OBJECTIVES OF THE ACT . THIS LEAVES THE REVENUE AGGRIEVED. 17 . WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAD INVOKED THE IMPUGNED FIVE DISALLOWANCES BY QUOTING SECTION 11(1) OF THE ACT ON TWO COUNTS I.E. THE ASSESSEE WAS INFLUENCED BY EXTERNAL FACTORS (STATE GOV ERNMENT DIRECTIONS) AND ALL THESE HEADS OF EXPENDITURE HEREINABOVE DID NOT HAVE ANY DIRECT OR INDIR ECT NEXUS WITH ITS OBJECTS. LEARNED CO - ORDINATE BENCH IN FIRST ROUND HAS R ESTRICTED SCOPE OF THE INSTANT LIS TO THE LATTER ISSUE ONLY. THE CASE FILE DEMONSTRATES THAT THIS ASSESSEE IS A STATUTORY BODY CONSTITUTED UNDER AN ACT OF THE STATE LEGISLATURE VESTING WITH IT ALL MATTERS OF ADMINISTRATION CONTROL AND MANAGEMENT OF MINOR PORTS IN GUJARAT I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 12 STATE AS WELL AS ALL CONNECTED MATTERS THERETO. SECTION 74(1)(J &K) ENVISAGE S PAYMENT OF CHARGES QUA ANY EXPENDITURE WHICH MAY BE INCURRED BY THIS BOARD GENERAL LY FOR THE PROVISIONS OF THIS ACT FOLLOWED BY ANY OTHER CHARGES WHICH MAY ON THE APPLICATION OF THE BOARD OR OTHERWISE BE SPECIFICALLY SANCTIONED BY THE STATE GOVERNMENT OR FOR WHICH THE BOARD MAY BE LEGALLY LIABLE. SECTION 95 OF THIS VERY ACT POSTULATES THAT THE ASSESSEE IS BOUND BY THE STATE GOVERNMENT S DIRECTIONS IN THIS REGA RD. WE NOTICE THAT ASSESSEE IS NOT ONLY VESTED WITH ADMINISTRATION CONTROL AND MANAGEMENT OF MINOR PORTS BUT FOR ALL OTHER ANCILLARY MATTERS AS WELL. 18 . THE REVENUE S FIRST ARGUMENT SEEKS TO NARROWLY INTERPRET THE ABO VE CLAUSES SO AS TO GET THE CIT(A) S VIEW REVERSE D HOLDING THE ASSESSEE TO HAVE BEEN SET UP IN ORDER TO BUILD DEVELOP OWN AND RUN THE STATE S PORTS. THIS PLEA FAILS TO IMPRESS UPON US IN VIEW OF LATTER CRUCIAL EXPRESSION FOR MATTERS CONNECTED THERETO . WE OBSERVE THAT THESE WORDS INC ORPORATED IN THE GUJARAT MARITIME BOARD ACT 1981 HAVE TO BE USED IN A WIDER SENSE SINCE CONTAINING GENERAL EXPRESSIONS IN ORDER TO SUPPL EMENT THE FORMER LIMB OF THE LEGIS LATION. WE ACCORDINGLY HOLD THAT THE LD. CIT(A) HAS NOT COMMITTED ANY ERROR IN INTER PRETING THE CLAUSE OR IN COMING TO CONCLUSION THA T TH E ASSESSEE IS MANDATED WITH THE WORK OF BUILDING DEVELOPING OWN THE PORTS APART FROM ADMINISTRATION CONTROL AND MANAGEMENT THEREOF. THE REVENUE S FIRST ARGUMENT THUS FAILS. I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 13 19 . THE REVENUE S SECOND ARGUMENT IS THAT THE ASSESSING OFFICER HAD RIGHTLY DISALLOWED ASSESSEE S FIVE CONTRIBUTIONS (SUPRA) SINCE THEY WERE FOUND TO HAVE NOT BEEN INDICATED ANY DIRECT OR INDIRECT NEXUS WITH ITS OBJECTS. THERE IS NO QUARREL BETWEEN THE PARTIES THAT THE ASSESSEE H AS FOLLOWED ALL DUE PROCEDURES INVOLVING SAN CTION OF THE STATE GOVERNMENT FUNCTIONARIES CONCERNED. TAKE FOR INSTANCE ITS MEETING DATED 17 - 03 - 2003 BEING CHAIRED UP ON BY THE PRINCIPLE SECRETARY (INDUSTRY AND M INES) AS FOLLOWED BY A GR DATED 28 - 03 - 2008 DIRE CTING IT TO CONTRIBUTE RS. 30 LACS FOR THE VIBRANT GUJARAT NAVRATRI FESTIVAL. WE ARE THUS OF THE VIEW THAT THERE IS NO IRREGULARITY IN ALL FIVE CONTRIBUTIONS HELD. WE FURTHER OBSERVE THAT THE MERE FA CT THAT THE ASSESSEE HAS ACTED AS PER GOVERNMENT DIRECT IONS AS STIPULATED IN THE MARITIME ACT DOES NOT DISENTITLE IT FROM CLAIM ING THE IMPUGNED EXEMPTION. THE REVENUE S SECOND ARGUMENT IS ACCORDINGLY DECLINED. 20 . THIS LEAVES US REVENUE S LAST ARGUMENT THAT THE ASSESSEE S EXPENSES DO NOT HAVE ANY DIRECT OR INDIRECT NEXUS OF ITS OBJECTS HEREINA BOV E OF BUILDING DEVELOPING ADMIN ISTRA TION RUNNING OF THE STATE S PORTS WITH ALL ANCILLARY MATTERS THERETO. WE FIND NO FORCE IN THIS PLEA AS WELL. WE DEEM IT APPROPRIATE TO OBSERVE THAT ONCE THE ASSESSEE HAS BEEN SP ECIFICALLY SET UP BY WAY OF AN A CT (SUPRA) IT IS SUPPOSED TO ACT IN FURTHERANCE TO ITS OBJECTS AND TO MAKE IT SUR E THAT THE SAME ARE DULY SERVED . WE FIND THAT ITS IMPUGNED FIVE CONTRIBUTIONS MADE TO VIBRAN T GUJARAT NAVRATRI FESTIVAL VISHWA GUJARAT PA RIWAR MAHOT SAV REPUBLIC DAY FUNCTION EXPENSES GUJARAT I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 14 STATE EXPORT CORPORATION AND EXECUTIVE ENGINEERING TRAINING CENTERS INVOLVING SUMS OF RS. 30 LACS RS. 20 LACS RS. 6.25 LACS RS. 10 LACS AND RS. 15 LACS RESPECTIVELY CLEARLY HAVE A NEXUS WITH ALL IT S PORT REL ATED ACTIVITIES. W E COME TO ASSESSEE S CONTRIBUTION OF EXECUTIVE ENGINEERING TRAINING CENTRE ON RANDOM BASIS . THE REVENUE DOES NOT LEAD ANY EVIDENCE IN THE CASE FILE TO REPEL ASSESSEE S CONTENTION THAT THE SAME WAS MEANT FOR A DEVELOPMENT PROJEC T INTER ALIA ENVISAGING A LINK BETWEEN GHOGHA SUB - PORT TO DAHEJ PORT IN ORDER TO REDUCE THE TRAVE LLING DISTANCE. A SSESSEE S CONTRIBUTION TO THE GUJARAT EXPORT CORPORATION L IMITED APPEARS TO BE FOR THE PURPOSE OF ORGANIZING A TRADE FAIR IN ORDER TO GIVE IMP ETUS TO INDUSTRY TRADE AND COMMERCE FOR ENHANCING ITS PORT RELATED TURNOVER. WE KEEP IN MIND ALL THESE FACTS AND ASSESSEE S ACTIVITIES TO CONCLUDE ALL THE FIVE IMPUGNED CONTRIBUTIONS IN QUESTION DO HAVE A NEXUS WITH ITS OB JECTS. THE REVENUE S ARGUMENT S SU PPORTING ITS SOLE SUBSTANTIVE ARE REJECTED. ITS APPEAL ITA 454/AHD/2009 F AILS . 21 . WE NOW COME TO ASSESSMENT YEARS 2005 - 06 2006 - 07 2007 - 08 AND 2008 - 09 INVOLVING TOTAL 8 APPEALS/CROSS APPEALS EXCEPT ITA 2041/AHD/2012 . BOTH PARTIES INFORM US THAT T HE ASSESSEE HAS FILED MODIFIED GROUNDS IN ALL OF ITS FOUR APPEALS IN THE SAID A.YS. THAT BOTH THE LOWER AUTHORITIES HAVE WRONGLY A SSESSED IT U/S. 11(1) AS WELL AS U/S. 11(4) OF THE ACT . LEARNED REPRESENTATIVES HIGHLIGHT THE FACT THAT A CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE ITA 2933/AHD/2009 FOR ASSESSMENT YEAR 2003 - 07 HAS ADJUDICATED THE VERY ISSUE ON 27/04/2016 IN IT S FAVOUR AS UNDER: - I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 15 SECTION 11(4) OF THE ACT WE ARE ABLE TO UNDERSTAND THAT SECTION 11(4) OF THE ACT IS APPLICABLE W HEN THE 'PROPERTY HELD UNDER TRUST' INCLUDES A BUSINESS UNDERTAKING SO HELD AND THE ASSESSING OFFICER HAVE POWER TO DETERMINE THE INCOME OF SUCH BUSINESS UNDERTAKING IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND WHERE ANY SUCH INCOME SO DETERMINED IS IN EXCESS OF INCOME AS SHOWN IN THE ACCOUNTS OF THE UNDERTAKING THEN SUCH EXCESS INCOME SHALL BE DEEMED TO HAVE BEEN NOT APPLIED FOR CHARITABLE PURPOSES. HOWEVER IN THE CASE OF THE ASSESSEE WE HAVE ALREADY DECIDED THAT THE ASSESSEE IS CARRYING ON CHARITAB LE ACTIVITIES WITHOUT PROFIT MOTIVE AND THE INCOME IS TO BE CALCULATED AS PER THE PROVISIONS OF SECTION 11(1) OF THE ACT AND THEREFORE ID. CIT(A) HAS ERRED IN CALCULATING THE INCOME U/S 11(1) AND 11(4) OF THE ACT AND THEREFORE IN OUR VIEW SUBJECT TO OUR ADJUDICATION OF OTHER GROUNDS OF THIS APPEAL THE INCOME OF THE ASSESSEE IS TO BE ASSESSED AS PER THE PROVISIONS OF SECTION 11(1) OF THE ACT. ACCORDINGLY THIS GROUND OF THE ASSESSEE IS ALSO ALLOWED. 22 . LEARNED REPRESENTATIVE POINTS OUT AT THIS STAGE THAT THE ASSESSING AUTHORITY HAS TO RE - FRAME THE ASS ESSMENT U/S. 11(1) OF THE ACT DUE TO THIS FUNDAMENTAL ISSUE. THEIR FURTHER CA S E IS THAT THE CIT(A) S FINDINGS ON MERITS FORMING SUBJECT MATTER OF THE EIGHT CORRESPONDING CROSS APPEALS EXCEPT REVENUE S A PPEAL ITA 2041/AHD/2012 DESERVE S TO BE REMITTED BACK TO THE ASSESSING AUTHORITY FOR FRESH ADJUDICATION. WE ACCORDIN GLY RESTORE THE ISS UE FOR AFRESH DECISION FOR ASSESSEE S ASSESSMENT U/S. 11(1) OF THE ACT. IT SHALL BE AFFORDED ADEQUAT E OPPORTUNITY OF HE ARING. L EARNED ASSESSING OFFICER SHALL ENSURE THAT JUDICIAL CONSISTENCY IS FOLLOWED AS PER LAW ON VARIOUS ISSUES ON MERITS . ALL THESE EIGHT CROSS APPEALS I.E. ASSESSEE S APPEAL ITA 307 16 1336/AHD/2009 AND ITA 225 2/AHD/2011 ALONG WITH REVENUE S APPEAL S ITA 466 AND 1406/AHD/2010 AND ITA 2767/AHD/2011 SHALL BE TREATED AS ACCEPTED FOR STATISTICAL PURPOSES. I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 16 23 . THIS LEAVES US REVENUE S REMAINING APPEAL ITA 2041/AHD/2012 FOR ASSESSMENT YEAR 2006 - 07 SEEKING TO RESTORE DISALLOWANCE OF EXCESS DEPRECIATIO N OF RS. 20 32 087/ - MADE BY THE ASSESSING OFFICER AND DELETED IN THE LOWER APPELLATE PROCEEDINGS. THERE IS NO DISPUTE IN THAT THE TAX EFFECT IN THIS APPEAL COMES TO BE LESS THAN RS. 10 LACS. WE FIND THAT THE CENTRAL BOARD OF DIRECT TAXES; HEREAFTER THE BOARD HAS ISSUED THE CIRCULAR NO. 21/2015 DATED 10 - 12 - 2015 CLEARLY ENVISAGING THEREIN THAT DEPARTMENT S PENDING APPEALS BEFORE THE TRIBUNAL/HIGH COURTS ARE TO BE WITHDRAWN/NOT PRESSED AS PER THE ABOVE STATED CIRCULAR. THE SAME HAS BEEN DECLARED TO BE HA VING RETROSPECTIVE EFFECT IN OTHER WORDS. WE TAKE INTO CONSIDERATION THE ABOVE STATED BOARD S CIRCULAR AND DISMISS THE INSTANT APPEAL ACCORDINGLY FOR INVOKING LOW TAX EFFECT . 24 . TO SUM UP ASSESSEE S APPEALS ITA NOS. 16 307 AND 1336/AHD/2010 ALONG WITH ITA 2250/AHD/2011 ARE ACCEPTED FOR STATISTICAL PURPOSES. REVENUE S APPEAL ITA 454/ AHD/2011 IS DISMISSED. ITS APPEALS ITA NOS. 466 1406/AHD/2010 AND 2767/AHD/2011 ARE ALLOWED FOR STATISTICAL PURPOSES. ITS APPEAL ITA 2041/AHD/2012 IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 09 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 27 /09 /2016 I.T.A NO S. 454 307 16 466 2041 1336 1406 2250 & 27 67 PAGE NO DCIT VS. GUJARAT MARITIME BOARD 17 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER/ /