2018 (6) TMI 685 - AT - Income Tax

Exemption u/s 11 denied - Applicability of amended provisions of section 2(15) - whether activities of the assessee in land development and selling the same constituted Business ? - Held that - Following the judgement in case of Hon ble Jurisdictional High Court in CIT vs. Yamuna Expressway Industrial Development Authority 2017 (4) TMI 1154 - ALLAHABAD HIGH COURT the issue is decided in favor of assessee as held When CIT (E) was required to consider application for registration, in our view, it should have concentrated only to the requirement of Section 12A and 12AA, as the case may be, and not other provisions like Section 10(20) or 10(20A) etc. The factum that IDAs would be covered or not, under Section 10(20), would make no difference for the reason, if these authorities satisfy requirement of Section 12A(1), then are entitled for registration after following procedure laid down under Section 12AA - the assessee was not indulging in trade commerce or business and hence amended provisions of section 2(15) were not applicable - decided in favor of assessee. Disallowance of office expenses - Held that - assessee has claimed double deduction for one sum, it cannot be allowed at the outset, regardless of the fact that application of income, considering such disallowance, will be more than 85% - thus restore the addition made by the AO. Set off and carry forward of deficit of earlier years to the current/next years - Held that - Following the judgement of Hon ble Bombay High Court in CIT vs. Institute of Banking Personnel Selection 2003 (7) TMI 52 - BOMBAY HIGH COURT it is held that Income derived from the trust property has also got to be computed on commercial principles and if commercial principles are applied then adjustment of expenses incurred by the trust for charitable and religious purposes in the earlier years against the income earned by the trust in the subsequent year will have to be regarded as application of income - AO is directed to re-compute the income/loss after allowing necessary set off and carry forward - allowed for statistical purpose. Additions made by AO on account of interest - payment of interest to GDA - Held that - AO has made disallowance of interest by observing that the same was not backed by any evidence - on the contrary, the learned CIT(A) deleted this addition by observing that no such deduction was claimed by the assessee - thus there is a contradiction in the factual position stated by both the authorities below - hence we set aside the impugned order on this score and remit the matter to the file of Assessing Officer for deciding it afresh - allowed for statistical purposes.

Summary

Issues:
1. Applicability of amended provisions of section 2(15) of the Income-tax Act, 1961 for assessment year 2009-10.
2. Deletion of addition of ?2,25,500 for assessment year 2009-10.
3. Direction for allowing set off and carry forward of deficit of earlier years for assessment year 2009-10.
4. Denial of exemption and allowing set off and carry forward of deficit of earlier years for assessment year 2010-11.
5. Allowing exemption under section 11, set off, and carry forward of deficit of earlier years, and deletion of addition of ?3,87,37,804 for assessment year 2011-12.

Analysis:

Assessment Year 2009-10:
1. The first issue revolves around the applicability of amended provisions of section 2(15) of the Income-tax Act. The Assessing Officer considered the assessee's activities as 'Business' post the amendment, leading to tax liability. However, the CIT(A) ruled in favor of the assessee based on relevant judgments. The Tribunal upheld the CIT(A)'s decision citing precedents and similarity in cases, thereby dismissing the Revenue's appeal.

2. The second issue concerns the deletion of an addition of ?2,25,500. The CIT(A) had deleted this addition, emphasizing the compliance with section 11 provisions. However, the Tribunal overturned this decision, stating that double deduction cannot be allowed, and reinstated the addition made by the Assessing Officer.

3. The last issue involves the direction for allowing the set off and carry forward of deficit of earlier years. The CIT(A) directed the Assessing Officer to re-compute income after considering necessary set off and carry forward. The Tribunal upheld this direction, citing relevant judgments, including the Hon'ble Bombay High Court's decision, and dismissed the Revenue's appeal.

Assessment Year 2010-11:
1. The denial of exemption issue for this year mirrored that of the preceding year. The Tribunal upheld the exemption granted to the assessee under section 11, following the same view as the previous year.

2. The second issue for this year, regarding the set off and carry forward of deficit of earlier years, was dismissed by the Tribunal, aligning with its decision for the preceding year.

Assessment Year 2011-12:
1. Grounds relating to exemption under section 11 and the set off and carry forward of deficit of earlier years were similar to the preceding years. The Tribunal dismissed these grounds following the decisions made for the previous years.

2. The only remaining issue was the deletion of an addition of ?3,87,37,804 made by the Assessing Officer on account of interest. Due to a contradiction in the factual positions of the authorities, the Tribunal remitted the matter back to the Assessing Officer for fresh consideration, based on the evidence presented and the computation of income.

In conclusion, the Tribunal's decisions for each assessment year were based on a thorough analysis of the facts, legal provisions, and relevant precedents, ensuring a fair and just outcome in each case.