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TMI Blog2019 (10) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... substantially from the business held under trust for the development of minor ports in the state of Gujarat. Further after following the decision of Hon ble Gujarat High Court in the case of AUDA [2017 (5) TMI 1468 - GUJARAT HIGH COURT] and GIDC, [2017 (7) TMI 811 - GUJARAT HIGH COURT] the fees collected by the assessee is incidental to the object and purpose of attainment of the main object for development of mining ports as enumerated in the provision of the Gujarat Maritime Board Act, 1981, therefore, we consider that activity of the assessee is for advancement of any other object of general public utility and not hit by the proviso to section 2(15) of the act, therefore, the assessee is entitled for exemption u/s. 11 - Decided in favour of assessee Understatement of income - assessing officer on the basis of audit report of the controller and auditor general of India stated that assessee has understated its income - CIT(A) has deleted the addition stating that the assessing officer has added the cumulative figure on the basis of audit paras pertaining to different years without any clarification - HELD THAT:- CIT(A) has rightly held that the impugned receipt was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the terms of appointment on respective erstwhile state government employees and in earlier years also the same contribution was allowed constantly by the department. - ITA Nos. 2991/Ahd/2013, 361, 1622/Ahd/2014, 829, & 830/Ahd/2017, ITA Nos. 91, 330, 2283/Ahd/2014, 752, 753 & 2321/Ahd/2017 - - - Dated:- 30-7-2019 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri S.N. Soparkar Shri H.P. Singh, A.Rs. For the Revenue : Shri O.P. Sharma Shri L.P. Jain, Sr. D.Rs. ORDER PER BENCH:- These eleven appeals filed five by assessee and six by revenue for A.Y. 2009-10 to 2014-15, arise from order of the CIT(A), Gandhinagar, Ahmedabad, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee has raised following grounds of appeal:- ITA No. 2991Ahd/2013 1. Learned CIT (A) has erred in law and on facts in confirming the view taken by AC in holding that the activities carried out by the appellant were not in the nature of charit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 The activity of the assessee is related to levying various fees of charges from the users of the ports under various heads like (1) Port Infrastructure facilities (2) Marine Services (3) Clearing, Forwarding and Harboring (4) Storage Area and Land Rental (5) Equipment Harbor Craft Rental (6) License fees (7) Income from other port Services. Similarly, the assessee used to keep payment to various bodies and Govt. of Gujarat by way of fees, charges etc. The description of receipts and expenditure incurred by the assessee shows that the assessee runs its activities in a professional and business like manner from these activities. It is also clear that the assessee derived profit out of various business activities. Thus, there being no free services or utilities to public, the cost of the entire activities being fully recouped, there was no charity meant for public within the meaning of section 2(15) of the Act. As the activities carried out by the assessee i.e. Gujarat Maritime Board were more of commercial nature resulting in commercial income. The Pr. CIT, Gandhinagar has also observed that the assesssee s activities were not carried out in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituted under the provision of Gujarat Maritime Board, 1981 and established u/s. 3 of the act for the purpose of administering, controlling and managing minor ports in the State of Gujarat. As per section 4 of the act, the Board shall constitute of such member of board not being less than 5 and not more than 12 who shall be appointed by the State Government as mentioned in the section 4 of Gujarat Maritime Board Act, 1981. Section 73 for the Gujarat Maritime Act, 1981 state that all money received by it shall be credited to a fund called the general account of the miner ports and section 74 of the act state that amount credited to the general account u/s. 73 shall be applied by the board in payment of charges as specified in section 74 of the act. Under the Gujarat Maritime Board Act, 1981 rules and regulations has been established for the establishment of Gujarat Maritime Board, staff of the board, property and contract works and services to be provided at miner ports by the board, imposition and recovery of rates at ports, borrowing power of board, revenue expenditure, supervision and control of state government, penalties, miscellanous etc. After perusal of the various provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is reproduced as under:- 4. Having heard the submissions of both the sides, the provisions of section 12AA(3) prescribes that once a trust or an institution has been granted registration u/s. 2AA(3) and subsequently if the Commissioner finds that one of the condition, viz. the activity of the trust is not genuine or that the activity of trust not been carried out, then the Commissioner has power to cancel the registration granted u/s. 2AA(l) of IT Act. In the above cited decision of Ahmedabad Urban Development(supra), it was held that when under the Act a specific provision for cancellation of registration is prescribed and the cancellation is possible under specific condition then fulfillment of those conditions are necessary for invoking the jurisdiction u/s. 2AA(3). In the present case the reason for cancellation for registration was that the definition of charitable purpose u/s. 2(15) has been amended therefore the assessee has not carried out the activity as per the definition of charitable purposes . This very issue has already been dealt with by the Respected Benches, therefore respectfully following these decisions we hereby reverse the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it is held as under:- 17. Applying the aforesaid decision to the facts of the case on hand and the objects and purpose for which the assessee-Corporation is established and constituted under the provisions of the Gujarat Industrial Development Act, 1962 and collection of fees or cess is incidental to the object and purpose of the Act, and even the case would not fall under the second part of proviso to Section 2 [15] of the IT Act. As the activities of the assessee is for advancement of any other object of general public utility, the same can be for charitable purpose and therefore, the assessee Corporation shall be entitled to exemption under Section 11 of the Act. No error has been committed by the learned Tribunal in holding so. We are in complete agreement with the view taken by the learned Tribunal. In the light of the above facts and findings, it is clear that the activities carried out by the assessee is for advancement of any other object of general public utility without any intention of the profit motive after considering the provision of the Gujarat Maritime Board Act, 1981 and fact of the case, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income 10. During the course of assessment, the assessing officer on the basis of audit report of the controller and auditor general of India stated that assessee has understated its income of ₹ 144.23 crores and the same was added to the total income of the assessee. 11. The ld. CIT(A) has deleted the addition stating that the assessing officer has added the cumulative figure on the basis of audit paras pertaining to different years without any clarification. The ld. CIT(A) has observed that as on 31st March, 2002 commutative capital receipts was of ₹ 142,76,17,893/- which was accounted under the provision of section 10(20) of the act. The receipt of the assessee was entitled for exemption u/s. 10(20) of the act upto 31-03-2002 therefore he has held that no such receipt can be taxed during the year under consideration. 12. We have heard the rival contentions on this issue and noticed that ld. CIT(A) has rightly held that the impugned receipt was of commutative nature and not received during the year under consideration and the assessee was also entitled for exemption u/s. 10(20) of the Act upto 31-03-2002. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 361/Ahd/2014 filed by assessee 16. The assessee is has raised following grounds of appeal:- 1. Learned CIT (A) has erred in law and on facts in confirming the view taken by AO in holding that the activities carried out by the appellant were in the nature of business and confirmed computation of the excess of income over expenditure of previous year arising out of charitable activity of appellant as Income from business as per the manner prescribed u/s. 11 (4) of the Act. Both the lower authorities have not appreciated the fact that the appellant has been granted registration u/s. 12A of the Act qualifying its income exempt from taxation as total expenditure (capital and revenue) incurred by the appellant is for advancement of the object of general public utility . 2. Learned CIT (A) has erred in law and on facts in upholding the contention of the AO that the activities carried out by the appellant are business in nature and erred further in not granting exemption benefit of 15% of its gross receipts. 3. Learned CIT (A) has erred in law and on facts in upholding the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that assessee has shown profit on sale of assets to the amount of ₹ 1,90,04,722/- and he was of the view that assessee has not included the same in the total income. Therefore, he has included the aforesaid profit on sale of assets to the total income of the assessee. 21. The ld. CIT(A) has deleted the addition stating that assessee has already included the aforesaid income while computing its business income therefore the assessing officer was directed to delete the aforesaid addition after verification of the fact that such income was already included as part of business income computed by him. 22. We have heard the rival contention on this issue and perused the material on record. We do not find any substance in the ground of appeal of Revenue as ld. CIT(A) after considering the material on record has directed the assessing officer to delete the impugned addition after verification of the material fact that said profit on sale of assets has already been included in the computation of business income of the assessee. Therefore, this appeal of the Revenue is also rejected. Ground No. 3 Allowing deduction of ₹ 3,56,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fund not only forms out of annual contribution only but also a lump-sum figure needed for augmentation of corpus of fund necessary to ensure seamless service of its annual pension servicing obligations from year to year and forming its legal liability in terms of conditions of employment of its employees who are governed by the conditions of employment at par with the State Government. Moreover, it is contended by the appellant Rule 88 itself lays down limit vis-a-vis in respect of past services of any employee admitted to the benefits of a fund, which is not, verified by the AO. The appellant has also contended that the AO has pointed out a clause inserted w.e.f. 1/4/2012 adding to his comment that said insertion was to keep check on such issues but overlooked and ignored the provisions of section 36(l)(xii) inserted w.e.f. 1/4/2002 which are applicable in the case of the appellant. In view of above facts and contentions of the appellant, the part disallowance of Contributory Pension Fund of ₹ 35,62,50,000/- by the AO is not justified and is directed to be deleted. This ground of appeal is allowed. The ld. D.R. could not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng substantive grounds of appeal:- 1. The learned CIT(Appeals) has erred in law and on facts in allowing the disallowance of Depreciation amounting to ₹ 23,26,26,496/-. 2. The learned CIT(Appeals) has erred in law and on facts in allowing the disallowance of Profit on sale of assests amounting to ₹ 35,83,305/-. 28. The identical issue on similar facts, the appeal of the Revenue was dismissed vide ITA No. 330/Ahd/2014. Therefore, applying the finding of the same, this ground of appeal of the assessee is dismissed. ITA No. 829/Ahd/2017 filed by assessee 29. The assessee is has raised following grounds of appeal:- 1. Learned CIT (A) has erred in law and on facts in confirming the view taken by AO in holding that the activities carried out by the appellant were in the nature of business and confirmed computation of the excess of income over expenditure of previous year arising out of charitable activity of appellant as Income from business as per the manner prescribed u/s. 11(4) of the Act. Both the lower authorities have not appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue was dismissed vide ITA No. 330/Ahd/2014. Therefore, applying the finding of the same, this ground of appeal of the assessee is dismissed. ITA No. 830/Ahd/2017 34. The assessee is has raised following grounds of appeal:- 1. Learned CIT (A) has erred in law and on facts in confirming the view taken by AO in holding that the activities carried out by the appellant were in the nature of business and confirmed computation of the excess of income over expenditure of previous year arising out of charitable activity of appellant as Income from business as per the manner prescribed u/s. 11(4) of the Act. Both the lower authorities have not appreciated the fact that the appellant has been granted registration u/s. 12A of the Act qualifying its income exempt from taxation as total expenditure (capital and revenue) incurred by the appellant is for advancement of the object of general public utility . 2. Learned CIT(A) has erred in law and on facts in confirming the view taken by AO in holding that the appellant is covered by the first and the second proviso to Section 2(15) of the Act and hence, provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the account of the assessee, in case the financial year is 12-13 then only it would be the income of the assessee for assessment year 2013-14. 37. We have heard rival contentions on this issue and perused the material on record. In the light of the above facts and finding of ld. CIT(A), we direct the assessing officer to decide this issue afresh after verification from the record the date of credit of the refund in the account of the assessee. Accordingly this issue is restored to the file of assessing officer as directed above for deciding afresh. In the result, this ground of appeal of the revenue is allowed for statistical purpose. ITA No. 753/Ahd/2017 filed by revenue 38. The revenue is has raised following substantive grounds of appeal:- I. Whether on the facts and in the circumstances of the case is the Ld. CIT (A) justified in allowing the disallowance of depreciation. II. Whether on the facts and in the circumstances is the Ld. CIT(A) justified in allowing disallowance of profit on sale of assets. 39. The identical issue on similar facts, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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