2013 (4) TMI 936 - AT - Income Tax

Summary

Issues involved:
The judgment involves issues related to the eligibility of the appellant for exemption u/s 12AA of the Income Tax Act, 1961, diversion of funds to the infrastructure Development Fund, and the pending application for condonation of delay u/s 119(2) of the Act.

Issue 1: Eligibility for exemption u/s 12AA:
The appellant contended that the appellant authority was created for general public utility, which falls under the charitable object as per Section 2(15) of the Income Tax Act, 1961. The appellant had been granted exemption u/s 12AA by CIT Dehradun. The Tribunal noted that in previous assessment years, the issue of exemption was remitted to the AO for fresh adjudication based on the pending application for condonation of delay before the C.B.D.T. The Tribunal decided to set aside the matter to the file of the AO for re-examination and fresh decision on the issue of granting exemption from taxation of income, considering the outcome of the pending application for condonation of delay u/s 119(2) of the Act.

Issue 2: Characterization of the Appellant Authority:
The appellant argued that the Appellant Authority should be considered a charitable entity, while the CIT(A) held that it was a business entity earning profits and gains. The Tribunal, based on similar facts and circumstances in previous assessment years, decided to remit the case to the AO for fresh consideration. The Tribunal emphasized the importance of the pending application for condonation of delay before the C.B.D.T in determining the eligibility of the appellant for exemption from taxation.

Issue 3: Diversion of Funds to Infrastructure Development Fund:
The appellant contested the computation of income by the AO, arguing that the funds were diverted to the infrastructure Development Fund under an overriding title as per the express order of the State Government. The Tribunal, following the decision in previous assessment years, set aside the matter to the file of the AO for re-examination. The Tribunal directed the AO to decide the issue afresh, taking into account the outcome of the pending application for condonation of delay u/s 119(2) of the Act before the C.B.D.T.

In conclusion, the Tribunal allowed the grounds raised by the appellant for statistical purposes and directed that the appeals be allowed accordingly. The judgment highlighted the significance of the pending application for condonation of delay before the C.B.D.T in determining the eligibility of the appellant for exemption from taxation.