ADIT (E) I(2), MUMBAI v. SLUM REHABILITATION AUTHORIY, MUMBAI

ITA 5281/MUM/2012 | 2009-2010
Pronouncement Date: 23-10-2013 | Result: Dismissed

Appeal Details

RSA Number 528119914 RSA 2012
Assessee PAN AAAJS1094A
Bench Mumbai
Appeal Number ITA 5281/MUM/2012
Duration Of Justice 1 year(s) 2 month(s) 1 day(s)
Appellant ADIT (E) I(2), MUMBAI
Respondent SLUM REHABILITATION AUTHORIY, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 23-10-2013
Assessment Year 2009-2010
Appeal Filed On 22-08-2012
Judgment Text
` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI . . ! ' #'' '$ % ! & BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI VIVEK VARMA JUDICIAL MEMBER . : 5281 / / 2012 A.Y. 2009-2010 ITA NO. : 5281/MUM/2012 (ASSESSMENT YEAR: 2009-2010) ADIT (E) I(2) R. NO. 504 PIRAMAL CHAMBERS 5 TH FLOOR PAREL MUMBAI -400 012 VS SLUM REHABILITATION AUTHORITY 5 TH FLOOR GRIHA NIRMAN BHAVAN KALA NAGAR BANDRA (W) MUMBAI -400 051 .: PAN: AAAJS 1094 A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ABANIKANT NAYAK RESPONDENT BY : SHRI M. SUBRAMANIAN /DATE OF HEARING : 10-10-2013 !' / DATE OF PRONOUNCEMENT : 23-10-2013 * O R D E R #'' '$ : PER VIVEK VARMA JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE O RDER OF CIT(A) 1 MUMBAI DATED 25.06.2012 WHEREIN THE FOLLOWING GRO UNDS HAVE BEEN TAKEN: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DIRECTING TH E AO TO ALLOW EXEMPTION U/S 11 OF THE I T ACT 1961 IGNORING THE ELAB ORATE DISCUSSION OF ISSUES AND FACTS AND CIRCUMSTANCES OF THE CASE BY THE AO. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A)I MUM BAI BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED THE FACTS OF THE CASE AS OBSERVED BY THE AO IN THE ASSESSMENT ORDER ARE THAT THE ASSESSEE SLUM REHABILITATION AU THORITY PRIMARILY KNOWN AS SRA IS A LOCAL AUTHORITY CREATED BY TH E GOVERNMENT OF MAHARASHTRA BY ENACTING SRA ACT. BEING TH E LOCAL AUTHORITY IN TERMS OF SRA ACT AS WELL AS WITHIN THE MEANING OF THEN EXISTING SECTION 10(20) AND 10(20A) OF THE INCOME TAX ACT 1 961 (THE ACT) IT ENJOYED THE BLANKET EXEMPTION UNDER THE INCOME TAX ACT UP TO SLUM REHA BILITATION AUTHORITY. ITA 5281/MUM/2012 2 THE ASSESSMENT YEAR 2002-03 AS PER THE PROVISIONS OF S ECTION 10(20) & 10(20A). THE FINANCE ACT 2002 DELETED THE PROVISIONS OF SEC TION 10(20A) AND INTRODUCED A NEW DEFINITION OF LOCAL AUTHORITIES U NDER SECTION 10(20) WHEREIN PANCHAYAT MUNICIPALITY MUNICIPAL COMMITT EE AND DISTRICT BOARDS AND CANTONMENT BOARDS ONLY ARE INC LUDED UNDER SECTION 10(20) OF THE INCOME TAX ACT. IN VIEW OF THE DELETIO N OF SECTION 10(20A) AND INSERTION OF NEW DEFINITION OF LOCAL AUTHORITY UNDER SECTION 10(20) THE SO CALLED AUTHORITY LIKE SRA MMRDA ETC. CAME INT O THE TAX NET. WHILE EFFECTING THESE AMENDMENTS THE PARLIAMENT HAD CLE AR INTENTION OF WIDENING THE TAX BASE AND TO BRING SUCH LOCAL AUTHORITIES INTO THE TAX NET. IN THIS BACK GROUND THE AO OBSERVED THAT THE SRA GOT REGISTERED UNDER SECTION 12AA WITH THE DIT(E) MUMBAI. SUBS EQUENTLY ALTER BEING REGISTERED UNDER SECTION 12AA OF THE INCOME TAX ACT 1961 SRA FILED ITS RETURN OF INCOME FIRST TIME FOR THE RELEVANT AY 2003-04 ALONG WITH AUDITED INCOME & EXPENDITURE ACCOUNT AND BALA NCE SHEET ON 31.10.2003 CLAIMING THE STATUS CODE 10 OF A ARTIFICIAL JURID ICAL PERSON DECLARING A NIL TOTAL INCOME BY CLAIMING EXEMPTION UN DER SECTION 11 OF THE INCOME TAX ACT. THE AO FURTHER OBSERV ED THAT SINCE IN THE ASSESSMENT YEAR 2007-08 THE EXEMPTION UNDER SE CTION 11 OF THE ACT WAS DENIED TO THE ASSESSEE IN THE ASSESSMENT ORDE R PASSED UNDER SECTION 143(3) OF THE ACT THE AO FOR THE SAME REASONS WH ILE OBSERVING THAT THE DEPARTMENT HAS NOT ACCEPTED THE APPELLATE OR DER PASSED IN FAVOUR OF THE ASSESSEE DENIED THE EXEMPTION UNDER SECTIO N 11 OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR AND ACCORDINGLY D ETERMINED THE TAXABLE INCOME AT RS. 83 98 10 894/- VIDE ORDER DATED 22.12 .2011 PASSED UNDER SECTION 143(3). 3. ON APPEAL THE CIT(A) FOLLOWING THE ORDER OF THE COORDINA TE BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2003-04 A ND THE DECISION OF THE HONBLE SUPREME COURT IN CIT VS GUJARAT MARITIME BOARD REPORTED IN 295 ITR 561 (SC) AND IN ACIT VS SURA T CITY GYMKHANA (2008) AS REPORTED IN 300 ITR 214 (SC) DIRECTED THE AO TO SLUM REHA BILITATION AUTHORITY. ITA 5281/MUM/2012 3 ALLOW THE EXEMPTION UNDER SECTION 11A OF THE ACT TO THE ASSESSEE FOR THE ASSESSMENT YEAR IN QUESTION. 4. BEING AGGRIEVED BY THE ORDER OF THE CIT(A) THE DEPART MENT IS IN APPEAL BEFORE THE ITAT. 5. AT THE TIME OF HEARING THE DR SUPPORTS THE ORDER OF THE AO. 6. ON THE OTHER HAND THE AR SUBMITTED THAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE T RIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 5150/MUM/2010 FOR AY 20 07-08 DATED 30.9.2011 WHEREIN THE TRIBUNAL UPHELD THE ORDER OF THE C IT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE. HE ALSO PLACED ON RECO RD A COPY OF THE SAID ORDER OF THE TRIBUNAL. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIV AL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE FA CTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE A O HAS DENIED THE EXEMPTION UNDER SECTION 11 OF THE ACT FOLLOWING THE RE ASONS GIVEN IN THE ASSESSMENT ORDER FOR THE AY 2007-08. WE FURTHER FIND THAT THE CIT(A) FOLLOWING THE TRIBUNAL ORDER FOR THE AY 2003-04 AND FOLLOWING THE DECISIONS OF THE HONBLE SUPREME COURT ( SUPRA ) HOWEVER ALLOWED THE EXEMPTION TO THE ASSESSEE. WE FURTHER FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2007-08 ON THE SIMILAR FACTS AFTER FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN GUJARAT MARITIME BOARD ( SUPRA ) HAS HELD VIDE PARA 6 & 7 APPEARING AT PAGE 5 OF THE TR IBUNAL ORDER AS UNDER: - 6. IN THE PRESENT CASE THE SLUM DEVELOPMENT AUTHORIT IES IS ESTABLISHED FOR PROVIDING RESIDENTIAL SETTLEMENTS TO THE SLUM DWELLERS WIT HOUT ANY PROFIT MOTIVE. MOREOVER PRIMARY PURPOSE AND THE PREDOMINANT OBJECT ARE TO PROMOTE THE WELFARE OF THE GENERAL PUBLIC BY PROVIDING BETTER RESIDEN TIAL ACCOMMODATIONS TO SLUM DWELLERS AND ECONOMICALLY DEPRIVED CLASS OF SOCIETY AN D SAID PURPOSE WOULD BE CHARITABLE IN NATURE ONLY. HENCE IN OUR HUMBLE OPINION ASSESSEES CASE IS SQUARELY COVERED BY THE PRINCIPLES LAID DOWN BY T HE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GUJARAT MARITIME BOARD S (SUPRA). 7. IN OUR OPINION THE ACTIVITIES OF THE SRA PRESEN T ASSESSEE ARE CHARITABLE IN NATURE AND HENCE THE ASSESSEE IS ENTITLED FOR EXEMPT ION UNDER SECTION. 11 OF THE IT ACT. MOREOVER THE ASSESSEE HAS BEEN ALSO GRA NTED THE REGISTRATION UNDER SECTION. 12AA THAT HAS NOT BEEN CANCELLED. THEREFORE IN OUR OPINION IN THE LIGHT OF OUR ABOVE DISCUSSION NO INTERFERENCE IS CALLED IN THE ORDER UNDER CHALLENGED SLUM REHA BILITATION AUTHORITY. ITA 5281/MUM/2012 4 BEFORE US AND WE ACCORDINGLY CONFIRM THE ORDER OF THE LD. CIT (A) AND DISMISS THE GROUND TAKEN BY THE REVENUE. 8. IT WAS ALSO POINTED OUT THAT THE ORDER OF ITAT IN TH E CASE OF THE ASSESSEE WAS APPEALED AGAINST BEFORE THE HONBLE BOMBAY HIGH CO URT WHEREIN IN ITA NO. 655 OF 2012 IT WAS HELD 1. IN ALL THESE APPEALS FILED BY THE REVENUE FOR THE AS SESSMENT YEARS 2005-06 2007-08 AND 2008-09 FOLLOWING COMMON QUESTIONS OF LAW HAVE BEEN RAISED FOR OUR CONSIDERATION : (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE TRIBUNAL WAS JUSTIFIED IN CONFIRMING THE VIEW O F CIT(A) ALLOWING EXEMPTION UNDER SECTION.11 OF THE INCOME TAX ACT 1961 IGNORING THE FACT THAT SRA CONTINUES TO BE LOCAL AUTHORITY IN THE EYES OF LAW AND IT CANNOT BE CONSIDER ED AS A VALID TRUST WITHIN MEANING OF SECTIONS 11 TO 13 OF THE I NCOME TAX ACT IN VIEW OF THE ELABORATE DISCUSSION OF THE ISSUE S MADE. BY THE A.O. AND FACTS AND CIRCUMSTANCES OF THE CASE ? (II) WHETHER IN LAW MERE ABSENCE OF PROFIT MOTIVE IS A D ECISIVE FACTOR TO MAKE THE ASSESSEEE ELIGIBLE FOR EXEMPTION UND ER SECTION 11 AND 12 OF THE ACT? 2. THE RESPONDENT-ASSESSEE WE GRANTED REGISTRATION U NDER SECTION 12AA OF THE INCOME TAX ACT 1961 (THE ACT). SUBSEQUENTLY THE RESPONDENT- ASSESSEE CLAIMED EXEMPTION OF ITS ENTIRE INCOME UNDER SEC TION 11 OF THE ACT. THE ASSESSING OFFICER DENIED THE EXEMPTION UNDER SECTION 11 OF THE ACT AND SOUGHT TO BRING THE ENTIRE INCOME TO TAX. IN AP PEAL CIT(A) FOLLOWING THE DECISION OF THE APEX COURT IN THE MATTER O F CIT V/S GUJARAT MARITIME BOARD REPORTED IN [2007] 295 ITR 56 1 (SC) ALLOWED THE RESPONDENT-ASSESSEES APPEAL. 4. ON FURTHER APPEAL BY THE REVENUE THE TRIBUNAL BY THE IMPUGNED ORDER HELD THAT THE RESPONDENT-ASSESSEE WAS ESTABLISHED FOR PROVIDING RESIDENTIAL SETTLEMENT TO SLUM DEWELLERS WITHOUT ANY PROF IT MOTIVES. THE RESPONDENT-ASSESSEE HAD NO PROFIT MOTIVE AND THE PRIM ARY PURPOSE WAS TO PROMOTE THE WELFARE OF THE GENERAL PUBLIC BY PROVID ING ACCOMMODATION TO THE ECONOMICALLY WEAKER SECTIONS OF TH E SOCIETY. IN THESE CIRCUMSTANCES THE TRIBUNAL HELD THAT THE PURPOSE AND OBJECT OF THE RESPONDENT-ASSESSEE WAS CHARITABLE IN NATURE. THE TRIBUNAL FOLLOWED THE DECISION OF THE APEX COURT IN GUJARAT MARI TIME BOARD (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHEN THE PRIMARY P URPOSE WAS TO PROMOTE THE WELFARE OF THE GENERAL PUBLIC THEN THE PU RPOSE WOULD BE CHARITABLE PURPOSE FOR THE PURPOSE OF THE ACT. IN TH ESE CIRCUMSTANCES WE DO NOT SEE ANY REASON TO ENTERTAIN THE PROPOSED Q UESTION OF LAW 9. THE AR SUBMITTED THAT NOW THE ISSUE HAS BEEN LAID TO REST EVEN BY THE HONBLE BOMBAY HIGH COURT. HE THEREFORE PLEADED T HAT THE APPEAL FILED BY THE DEPARTMENT DESERVES TO BE DISMISSED. 8. IN ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON R ECORD BY THE DEPARTMENT WE RESPECTFULLY FOLLOWING THE ORDERS OF THE ITAT ( SUPRA ) AND ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT AS ALSO DECISION OF HONBLE SUPREME COURT ON THE SIMILAR FACTS IN THE CASE OF GUJARAT MARITIME BOARD ( SUPRA ) WHICH WAS TAKEN INTO CONSIDERATION BOTH BY HONBLE JURISDICTIONAL HIGH COURT AND THE ITAT WHILE COMING SLUM REHA BILITATION AUTHORITY. ITA 5281/MUM/2012 5 CONCLUSIVE DECISION WHEREIN IT HOLD THAT SINCE THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE AND HENCE THE ASSESS EE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND ACCORDING LY WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A) IN DIRECT ING THE AO TO ALLOW EXEMPTION UNDER SECTION 11 OF THE ACT. 9. ACCORDINGLY FOLLOWING THE PRECEDENT OF HONBLE SUPREME COURT COMMONLY AUTHORITATIVELY OBSERVED BY THE VIZ. HONBLE JU RISDICTIONAL HIGH COURT AS WELL AS BY THE TRIBUNAL IN ASSESSEES OWN CASE HENCE WE REJECT THE SOLE EFFECTIVE GROUND TAKEN BY THE DEPARTMENT. 10. IN THE RESULT THE REVENUES APPEAL FOR A.Y. 2009-10 STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER 2013. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER &&' MUMBAI () DATE: 23 RD OCTOBER 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) * * + ( ) -1 MUMBAI / THE CIT (A)-1 MUMBAI. 4) THE DIT (EXEM) / CONCERNED _____ MUMBAI 5) ./0 1 * 1 &' / THE D.R. E BENCH MUMBAI. 6) 02 3 COPY TO GUARD FILE. *)4 / BY ORDER 5 / 6 7 * 1 &' DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI *9:6 . .