Income Tax Appellate Tribunal - Mumbai
Jawaharlal Nehru Port Trust, Navi ... vs Assessee
ITA No. 2206 /Mum/09 Assessment year 2003- 04 Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH, MUMBAI Bef ore Shri D K Agarwal ( Judicial Member) and Shri Pramod Kumar (Accountant Member) ITA Nos. 2206 to 2208 /Mum/09 Assessment year 2003-04 to 2005-06 Jawahar Lal Nehru Port Trust ...................Appellant Administration Building Complex, Sheva, Tal Uran Navi Mumbai 400 707 Vs. Deputy Commissioner of Income Tax Panvel Circle, Panvel ............. Respondent Appellant by : Shri Deepak Tralshwala, along with Shri H K Panda Respondent by : Smt Kusum Ingle O R D E R Per Pramod Kumar:
1. The short grievance raised by the assessee before us is against CIT(A)'s not directing the Assessing Officer to compute the income, in accordance with Sections 11 to 13 of the Income Tax Act, 1961, despite the fact that the assessee is a charitable institution and registered under section 12AA of the Income Tax Act. The assessment years involved are 2003-04, 2004-05 and 2005-06.ITA No. 2206 /Mum/09
Assessment year 2003- 04 Page 2 of 7
2. The assessee has duly obtained permission of the Committee on Disputes (Cabinet Secretariat), to pursue this litigation before us, in terms of Hon'ble Supreme Court's judgment in the case of ONGC Vs Collector of Central Excise & Customs (104 CTR 31).
3. The issue in appeal lies in a narrow compass of relevant material facts. The assessee is a major port trust set up by the virtue of Gazette Notification No. 159, dated 28 th May 1982, under the Major Port Trust Act, 1963. Till assessment year 2002-03, the assessee was eligible for exemption under section 10(20) of the Act, as it was covered by the definition of ' local authority' for that purpose. However, the definition of 'local authority' was considerably narrowed down by the legislative amendment in Section 10(20) with effect from 1 st April 2003, and the assessee was also hit by the said amendment. Exemption under section 10(20) was no longer available to the assessee. That's where the troubles started for the assessee, but finally, after several round of appeals, the assessee was able to get registration under section 12 AA w.e.f. 1 st April 2003. In the meantime, however, the assessee had filed the income tax returns without claiming the benefit of scheme of taxation under section 11 to 13 - to which the assessee is now entitled by the virtue of, inter alia, registration under section 12 AA. Even as the assessee was granted registration under section 12 AA, the CIT(A) declined to grant the consequential benefits on procedural grounds , such as, that the assessee did not file the income tax return in the status of a charitable institution, that the income tax return did not accompany the requisite audit report and other mandatory details which are sine qua non for exemption of income of charitable trust, and that the Assessing Officer does not have any authority to entertain a claim otherwise than made in the income tax return. In a lengthy order, which contains elaborate extracts from ITA No. 2206 /Mum/09 Assessment year 2003- 04 Page 3 of 7 submissions made by the assessee and the Assessing Officer, the CIT(A) rejected the claim of the assessee.
4. The assessee filed appeals against the stand so taken by the CIT(A), and the assessee also approached the Committee on Disputes (Cabinet Secretariat) for permission to purse these appeals. In the proceedings before the CoD, the above facts were noted and the CoD also made the following observations :
"The representatives of CBDT stated that the CIT(A) has since granted registration to the JNPT w.e.f. 1.4.2002 and JNPT should approach Assessing Officer, under section 154, for rectification of order. The representative of JNPT expressed the apprehension that the Assessing Officer may not still grant them the requisite relief."
5. It is in this backdrop that the CoD permitted the JNPT to pursue appeals before us.
6. Learned counsel for the assessee prays that the matter be restored to the file of the Assessing Officer so as he can examine the matter afresh in the light of the registration under section 12 AA now available to the assessee. He points out that the requisite audit reports and other documents were not before the Assessing Officer at the stage of original proceedings as at that point of time the assessee was not granted the registration and was, accordingly , not eligible for benefit to assessment as a charitable institution. Learned counsel points out that even the CBDT representative before the Committee on Disputes in Cabinet Secretariat had given the assurance that, now that the assessee is granted the registration, he can move to the Assessing Officer for appropriate relief on the basis of such registration.
ITA No. 2206 /Mum/09Assessment year 2003- 04 Page 4 of 7 Learned counsel submits that, on these facts, the matter should be restored to the file of the Assessing Officer for adjudication de novo as per the legal position now prevailing and after giving assessee the assessee an opportunity to comply with the procedural requirements for granting the relief as a charitable institution.
7. Learned Commissioner (Departmental Representative), however, vehemently opposes the prayer of the assessee. She submits that the assessee does not derive any advantage from grant of registration at this stage as the assessee does not have the opportunity to file the revised return, and that unless a claim is made in a valid revised return, the assessee cannot make claim for exemption. She also elaborately addresses us on other procedural issues and technicalities in the light of which assessee's claim cannot be entertained now- which, for the reasons we will now set out, are not really relevant for our purposes.
8. We find that a large number of assesses, who were covered by the wider definition of the expression 'local authority' before the scope of Section 10(22) was narrowed down with effect from 1 st April 2003, have faced the same problem. These were the cases in which registration under section 12A was never sought earlier because the assessees were exempt from tax anyway under section 10(22), and by the time the registration under section 12AA was obtained, due to the necessity caused by this change in law, the assessees had already filed the income tax returns without complying with the procedural requirements necessary to avail benefit of tax exemption under section 11 by the virtue of registration under section 12AA. As to what should be done in such situations, we find guidance from Hon'ble Supreme Court's judgment in the case of CIT Vs UP Forest Corporation (230 ITR 945). On materially similar set of facts, Their Lordships, inter alia, observed that "Inasmuch as the respondent cannot, in our opinion, be regarded as a local authority, interest of justice would demand that the ITA No. 2206 /Mum/09 Assessment year 2003- 04 Page 5 of 7 question as to whether its income is liable to be exempted under section 11(1) of the Act should be investigated and examined by a proper forum under the Act". In our view, therefore, the prayer of the assessee is quite in harmony with the 'interest of justice' as viewed by Hon'ble Supreme Court.
9. The fetters on the powers of the Assessing Officer, as perceived by the learned Departmental Representative, donot restrict the scope of powers of the Tribunal in giving appropriate directions while remitting the matter to the file of the Assessing Officer, nor there is anything in the law which restricts the Assessing Officer from implementing an order passed under section 254(1). The restrictions on the powers of the Assessing Officer, therefore, donot affect our powers to issue appropriate directions to the Assessing Officer in the interest of justice. In view of the foregoing discussions, and respectfully following the guidance of Hon'ble Supreme Court in UP Forest Corporation case (supra), we deem it fit and proper to remit the matter to the file of the Assessing Officer with a direction to examine the matter, on merits, for eligibility to tax exemption as a result of the registration under section 12 AA now available to the assessee and in the light of the requisite audit report and other documents now filed by the assessee. While doing so, the Assessing Officer shall decide the matter by way of a speaking order, in accordance with the law and after giving a fair opportunity of hearing to the assessee.
10. Having held so, we may also mention that we are somewhat surprised by the hyper technical and pedantic stand taken by the learned Departmental Representative, which is in sharp contrast to very fair and reasonable stand of the CBDT representative before the Cabinet Secretariat. While the CBDT is of the view that the relief can perhaps be given even by way of a rectification order, the field authorities are fighting tooth and nail on procedural issues for even examining the claim of the assessee on merits-
ITA No. 2206 /Mum/09Assessment year 2003- 04 Page 6 of 7 that too against a public sector undertaking which is fully owned by the Government of India, and when there is a direct Supreme Court decision holding that interest of justice requires such matters to be examined and investigated by a proper forum under the Income Tax Act. Such an approach of the field authorities is certainly contrary to the spirit in which Committee on Disputes in Cabinet Secretariat was formed under directions of Hon'ble Supreme Court in the case of Oil and Natural Gas Commission (supra). One can not have such a pedantic approach so as to lose sight of the very objective of the constitution of Committee on Disputes. That defeats the very purpose of the Committee and belittles the stand taken before the Committee by senior functionaries of the Government. We hope that field authorities will take note of the backdrop in which CoD functions and make genuine efforts to reduce the unproductive litigation which is so much deprecated by Hon'ble Supreme Court from time to time. We leave it at that.
11. The appeals are allowed for statistical purposes. Pronounced in the open court today on 30 th day of September, 2010.
Sd/- sd/- ( D K Agarwal) (Pramod Kumar) Judicial Member Accountant Member Mumbai; 30 th day of September, 2010. Copy forwarded to : 1. The appellant 2. The respondent 3. The CIT , Mumbai 4. The Commissioner (Appeals) , Mumbai
5. Departmental Representative - ' J' bench, Mumbai
6. Guard File True Copy By Order Assistant Registrar Income Tax Appellate Tribunal Mumbai benches, Mumbai ITA No. 2206 /Mum/09 Assessment year 2003- 04 Page 7 of 7