2021 (2) TMI 24 - AT - Income Tax

Exemption u/s 11 12 denied - Registration u/s 12AA has been allowed to the appellant by Hon ble Allahabad High Court - Addition of surplus in infrastructure reserve fund by treating it revenue receipts - HELD THAT - We find that the registration under section 12A of the Act has been restored by the Tribunal and till date said order has not been reversed by higher appellate forum, therefore, the assessee is entitled to the benefit of exemption under section 11 to 13 of the Act. Respectfully following the finding of the Tribunal in own case we are reminding matter back to the file of the Assessing Officer to compute the income in accordance with section 11 to 13 of the Act, after examining the records and after providing the opportunity of being heard to the assessee. The ground No.1 of the appeal is accordingly allowed for the statistical purposes. Addition made on account of infrastructure fund - HELD THAT - As decided in own case 2019 (4) TMI 361 - ITAT DELHI there may not be any profit element in receipt of infrastructure fund from state authorities for infrastructure development activities. The Tribunal has held that it is difficult to believe that part amount could be capital receipt and part would be revenue in nature. Respectfully following the finding of the Tribunal (supra), we set aside the order of the authorities below on the issue of the infrastructure fund and restore the matter to the file of the Assessing Officer with the direction to decide the issue in accordance with law after giving adequate and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Exemption u/s 11 & 12 not allowed by Ld. CIT(A)
2. Addition of surplus in infrastructure reserve fund as revenue receipts
3. Charging interest u/s 234B of Income Tax Act, 1961
4. Appeal against Ld. CIT(A) decision

Exemption u/s 11 & 12 not allowed by Ld. CIT(A):
The appellant contested the denial of exemption under section 11 to 13 of the Income-tax Act, 1961 by the Ld. CIT(A). The Assessing Officer had withdrawn the registration granted to the assessee under section 12A of the Act, which was later restored by the Tribunal. The Tribunal's decision allowed the assessee to benefit from the exemption under sections 11 to 13 of the Act. The matter was remanded back to the Assessing Officer to compute the income in accordance with the relevant sections after examining the records and providing the assessee with a hearing. The ground was allowed for statistical purposes.

Addition of surplus in infrastructure reserve fund as revenue receipts:
The appellant challenged the addition of &8377; 2,99,11,347/- on account of surplus in infrastructure reserve funds by the Ld. CIT(A). The Tribunal referred to a similar case involving Khurja Development Authority and held that the issue required reconsideration at the level of the Assessing Officer. The Tribunal emphasized that even if the infrastructure reserve fund could be treated as income, the assessee might still be entitled to exemption under section 11 of the Act. It was noted that the fund received for development activities from State Authorities had to be spent as per approval, indicating no profit element. The Tribunal set aside the order of the authorities below and directed the Assessing Officer to redecide the issue in accordance with the law, providing a reasonable opportunity for the assessee to be heard. The grounds were allowed for statistical purposes.

Charging interest u/s 234B of Income Tax Act, 1961:
The appellant raised an issue regarding the Ld. CIT(A) not reversing the action of the Assessing Officer in charging interest under section 234B of the Income Tax Act, 1961. However, this issue was considered consequential in nature and was dismissed as infructuous along with another related ground.

Appeal against Ld. CIT(A) decision:
The Tribunal ultimately allowed the appeal of the assessee for statistical purposes. The decision was based on the Tribunal's findings regarding the exemption under sections 11 to 13 of the Act and the treatment of surplus in infrastructure reserve funds. The appeal was allowed, and the matter was remanded back to the Assessing Officer for further consideration in accordance with the law and after providing the assessee with a reasonable opportunity to present their case.

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