ACTURIAL SOCIETY OF INDIA ( PRESENTLY ACTUARIES OF INDIA), MUMBAI v. ITO (EX)- II(1), MUMBAI

ITA 1466/MUM/2009 | 2005-2006
Pronouncement Date: 29-12-2010 | Result: Allowed

Appeal Details

RSA Number 146619914 RSA 2009
Assessee PAN AAATA0145Q
Bench Mumbai
Appeal Number ITA 1466/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 26 day(s)
Appellant ACTURIAL SOCIETY OF INDIA ( PRESENTLY ACTUARIES OF INDIA), MUMBAI
Respondent ITO (EX)- II(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Assessment Year 2005-2006
Appeal Filed On 04-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ITA. NO. 1466/MUM/2009 ASSESSMENT YEAR 2005-2006 ACTURIAL SOCIETY OF INDIA MUMBAI 1 PAN AAATA0145Q VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.H. DALAL FOR RESPONDENT : SHRI S.B. SINGH ORDER PER D. MANMOHAN V.P. 1. IN THIS APPEAL THE ASSESSEE-SOCIETY CHALLENGES THE ORDER PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTION) UN DER SECTION 263 OF THE INCOME TAX ACT 1963. 2. THE ASSESSEE M/S. ACTUARIAL SOCIETY OF INDIA IS A STATUTORY BODY CONSTITUTED WITH AN OBJECT OF ADVANC EMENT OF ACTUARIAL PROFESSION IN INDIA. IN PAST IT AVAILED EXEMPTION U NDER SECTION 10 (23C) (IIIAD) OF THE INCOME TAX ACT 1961. HOWEVER IN THE YEAR UNDER CONSIDERATION THE GROSS RECEIPTS OF THE TRUST HAVIN G EXCEEDED THE LIMIT SPECIFIED THEREIN IN ORDER TO AVAIL EXEMPTION UNDE R SECTION 10 (23C)(VI) THE ASSESSEE APPLIED FOR APPROVAL BY THE PRESCRIBED AUTHORITY. FORM 56D WAS FILED IN THIS REGARD VIDE APPLICATION DATED 25-3-2006 FILED ON 30-3-2006 WITH THE DIRECTOR OF INCOME TAX (EXEMPTION) PAREL MUMBAI. ACCORDING TO THE ASSESSEE A PLAIN READING OF THE PROVISION STATES THAT SO LONG AS APPLICATION IN THE PRESCRIBE D FORM AND MANNER IS FILED BEFORE THE PRESCRIBED AUTHORITY FOR THE PU RPOSE OF GRANTING OF EXEMPTION THE ASSESSEE SATISFIES THE CONDITION AND IT IS ENTITLED TO EXEMPTION UNLESS OTHERWISE EXPRESSLY REJECTED BY TH E DIRECTOR OF 2 INCOME TAX (EXEMPTION). SECTION 10 (23C) DOES NOT P RESCRIBE ANY TIME LIMIT FOR FILING THE APPLICATION FOR APPROVAL AT TH E RELEVANT POINT OF TIME. 9 TH PROVISO TO SECTION 10(23C) PROVIDES THAT AN ORDER REJECTING AN APPLICATION SHALL BE PASSED WITHIN A PERIOD OF 12 M ONTHS FROM THE END OF THE MONTH IN WHICH APPLICATION FILED BY THE ASSE SSEE WAS RECEIVED. BY VIRTUE OF THE SAID PROVISO THE PRESCRIBED AUTHOR ITY OUGHT TO HAVE EITHER APPROVED OR REJECTED THE APPLICATION ON OR B EFORE 30-3-2007 WHEREAS NO SUCH ACTION APPEARS TO HAVE BEEN TAKEN B Y THE PRESCRIBED AUTHORITY. THEREAFTER 14 TH PROVISO WAS INSERTED BY THE FINANCE ACT 2006 WHICH PRESCRIBES THE TIME FRAME FOR FILING AN APPLICATION AND THE SAID PROVISO APPLIES TO THE APPLICATIONS FILED ON O R AFTER 1 ST DAY OF JUNE 2006 WHEREAS IN THE INSTANT CASE THE ASSESS EE FILED AN APPLICATION ON 30-3-2006. 3. UNDER THE GIVEN CIRCUMSTANCES THE RETURN OF INC OME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-2006 O N 28-3-2006 BY CLAIMING EXEMPTION UNDER SECTION 10(23C)(VI) WAS A CCEPTED BY THE ASSESSING OFFICER BY PROCESSING THE RETURN UNDER SE CTION 143 (1) OF THE ACT AND THEREAFTER IT WAS SELECTED FOR SCRUTINY BU T THE NIL INCOME RETURNED BY THE ASSESSEE WAS ACCEPTED SINCE NO ORDE R WAS PASSED BY THE DIRECTOR OF INCOME TAX BY PASSING A SPECIFIC OR DER REJECTING THE APPLICATION. 4. THE DIRECTOR OF INCOME TAX (EXEMPTION) IN HIS CAPACITY AS A REVISIONAL AUTHORITY UNDER SECTION 263 OF THE ACT PROPOSED TO SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER ON THE GROUND THAT IN THE ABSENCE OF A SPECIFIC APPROVAL ASSESSEE SHOULD NOT HAVE BEEN ALLOWED EXEMPTION AND THUS THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN RES PONSE TO THE SAME THE ASSESSEE FILED A DETAILED REPLY DATED 19-1-2009 EXPLAINING THE PROVISIONS OF THE ACT AND RELIANCE WAS ALSO PLACED UPON THE DECISION OF THE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO . LTD. 243 ITR 83 (SC) IN SUPPORT OF ITS CONTENTION THAT THE ORDER PA SSED BY THE ASSESSING OFFICER IN THE PECULIAR CIRCUMSTANCES OF THE CASE IS NEITHER 3 ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND THEREFORE IT IS NOT A FIT CASE FOR INVOKING THE PR OVISIONS OF SECTION 263 OF THE ACT. 5. LEARNED DIRECTOR OF INCOME TAX (EXEMPTION) HOWE VER REJECTED THE CONTENTION OF THE ASSESSEE AND HELD TH AT IN THE ABSENCE OF APPROVAL BY THE PRESCRIBED AUTHORITY (WHO IS NONE O THER THAN THE REVISIONAL AUTHORITY WHO HAS NOT PERFORMED HIS DUTY OF EITHER ACCEPTING OR REJECTING THE APPLICATION FILED BY THE ASSESSEE TILL 2009) THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTERESTS OF THE REVENUE. 6. AGGRIEVED BY THE ORDER OF THE DIRECTOR OF INCOM E TAX (EXEMPTION) ASSESSEE IS IN APPEAL BEFORE US. LEARNE D COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT NO OPPORTUNITY WAS GIVEN BY THE REVISIONAL AUTHORITY BEFORE COMPLE TING THE REVISIONAL PROCEEDINGS UNDER SECTION 263 OF THE ACT AND THUS T HE ORDER PASSED THEREON IS BAD IN LAW. ON MERITS LEARNED COUNSEL SU BMITTED THAT THERE IS NO TIME LIMIT FOR MAKING AN APPLICATION AT THE R ELEVANT POINT OF TIME AND THE ASSESSEE HAVING BEEN ENTITLED FOR EXEMPTION UP TO 2004-2005 BECAUSE ITS INCOME WAS BELOW STATUTORY PRESCRIBED L IMIT THERE WAS NO NEED FOR IT TO OBTAIN APPROVAL UNDER SECTION 10(23C ) OF THE ACT. HOWEVER IN THE YEAR UNDER CONSIDERATION THE INCOME OF THE ASSESSEE HAS CROSSED THE PRESCRIBED LIMIT AND HENCE THE ASS ESSEE OPTED TO FILE AN APPLICATION IN THE STATUTORY FORM WITHIN THE PR ESCRIBED LIMIT TO THE PRESCRIBED AUTHORITY. IT WAS ALSO CLARIFIED THAT PR IOR TO 1-6-2006 THERE WAS NO TIME LIMIT FOR FILING AN APPLICATION AND THE AMENDMENT IS OPERATIVE FOR APPLICATIONS MADE AFTER 1-6-2006 WHER EAS ASSESSEE HAD FILED APPLICATION ON 30-3-2006. SINCE THE DIRECTOR OF INCOME TAX (EXEMPTIONS) IS DUTY BOUND TO ACT UPON SUCH APPLICA TION EITHER BY APPROVING OR BY REJECTING THE CLAIM IN THE ABSENCE OF TAKING SUCH STEP WITHIN THE TIME FRAME OF ONE YEAR PRESCRIBED UNDER THE ACT THE ASSESSING OFFICER WAS JUSTIFIED IN ASSUMING THAT TH E ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 10 (23C)(VI) OF THE ACT AND THUS 4 EVEN IN SCRUTINY ASSESSMENT PROCEEDINGS NIL INCOME DECLARED BY THE ASSESSEE WAS ACCEPTED AFTER APPLICATION OF MIND AND THUS THE SAID ORDER CANNOT BE SAID TO BE ERRONEOUS OR CONTRARY TO LAW. PLACING RELIANCE UPON THE DECISION OF THE APEX COURT (CITED SUPRA) LEARNED COUNSEL SUBMITTED THAT REVISIONAL AUTHORITY SOUGHT TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT DESPITE HAVIN G KNOWLEDGE ABOUT THE APPLICATION BEING FILED BY THE ASSESSEE BUT NO ACTION WAS TAKEN ON ASSESSEES APPLICATION WHICH CLEARLY SHOWS THAT TH E ACTION OF THE ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS. 7. ON THE OTHER HAND LEARNED DR STRONGLY RELIED U PON THE ORDER PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTI ON). 8. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS COULD BE NOTICED FROM THE PROVISIONS OF THE ACT AS DETAILED IN THE REPLY OF THE ASSESSEE TO THE DIRECTOR OF INCOME TAX (EXEMPTIONS) THERE IS NO TI ME LIMIT FOR FILING AN APPLICATION FOR APPROVAL AT THE RELEVANT POINT OF TIME AND ANY APPLICATION FILED AS PER THE PROCEDURE PRESCRIBED U NDER LAW OUGHT TO HAVE BEEN DISPOSED OF BY THE AUTHORITY CONCERNED WI THIN THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH SUCH A PPLICATION WAS RECEIVED WHEREAS IN THE INSTANT CASE THE LEARNED DR WAS UNABLE TO POINT OUT AS TO WHAT ACTION WAS TAKEN BY THE CONCER NED AUTHORITY AGAINST THE APPLICATION FILED BY THE ASSESSEE ON 30 -3-2006. NO DOUBT 14 TH PROVISO WAS INSERTED BY THE FINANCE ACT 2006 W.E. F. 1-6-2006 WHICH SPEAKS OF FILING OF AN APPLICATION AT ANY TIM E DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR FOR WHICH EXEMPTION IS SOUGHT. HOWEVER THIS PROVISO HAS COME INTO OPERATION W.E.F. 1-6-2006 AND THEREFORE IT HAS TO BE ASSUMED THAT IT COVERS ONLY THOSE APPLICATIONS WHICH ARE INTENDED TO BE FILED O N OR AFTER 1-6-2006. AT ANY RATE IN THE CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER CANNOT BE SAID TO HAVE PASSED AN UNLAWFUL ORDER AND HIS ORDER CANNOT BE SAID TO BE ERRONEOUS IN WHICH EVENT IT IS NOT PE RMISSIBLE FOR THE REVISIONAL AUTHORITY TO INVOKE ITS JURISDICTION UND ER SECTION 263 OF THE 5 ACT. WE THEREFORE SET ASIDE THE ORDER OF THE REVIS IONAL AUTHORITY AND ALLOW THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON THIS THE 29 TH DAY OF DECEMBER 2010. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE PRESIDENT DATED : 29 TH DECEMBER 2010 VBP/- COPY TO : 1. ACTURIAL SOCIETY OF INDIA(PRESENTLY INSTITUTE OF ACTUARIES OF INDIA) 302 INDIAN GLOBE CHAMBERS 142 FORT STREET M UMBAI 1. 2. DIRECTOR OF INCOME TAX (EXEMPTIONS) PIRAMAL CHA MBERS LAL BAUG MUMBAI. 3. ADDL. DIT (E) RANGE-II MUMBAI 4. DR A BENCH 5. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI