Income Tax Appellate Tribunal - Chandigarh
Jcit (Osd), (E), C-I, Chandigarh vs M/S Semi Conductor Laboratory Scl, ... on 27 August, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH 'B', CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA Nos.465 to 467/Chd/2018 (Assessment Years : 2013-14 to 2015-16) The J.C.I.T., Vs. M/s Semi Conductor Laboratory SCL Ciricle-1(Exemptions), Phase-8, Industrial Area, Sector 72, Chandigarh. Mohali.
PAN: AAGTS0959N
(Appellant) (Respondent)
Appellant by : Mrs.Mona Mohanty, CIT DR
Respondent by : Shri A.K.Sood, CA
Date of hearing : 19.07.2018
Date of Pronouncement : 27.08.2018
O RDE R
PER BENCH:
All the a b o ve appeals h a ve be e n p r e f e rr e d by the
R e v e n u e a g a i n st s e p ar a t e o r d er s o f L d . C o m mi s s i o n e r o f
I n co m e Ta x ( A pp e a l s ) - 2 , C h a n di g a r h , all r e l at i n g t o t h e
s a m e a s s e s s ee a n d a l l d a t e d 1 9 .1 . 2 0 1 8 , b u t p e rt a i n i n g to
different a ss e s sm e n t y e a r s i .e . a s s e s s m e nt y e a rs 2 0 1 3 - 1 4,
2 0 1 4 - 1 5 an d 2 0 15 - 1 6 .
I t was common ground that the i ssue i nvol ved i n al l the appeal s was i denti cal , bei ng deni al of e xempt i on u/s 11 of the I ncome Ta x Act,1961, ( herei nafter referred to as Act) . Therefore al l the i mpugned appeal s were heard together and are bei ng di sposed off by thi s consol i dated or der for the sake of conveni ence.
2 ITA No.465 to 467/Chd/2018
A.Y.2013-14 to 2015-16
2. Bri ef facts of the case, as emanati ng from the orders of the authori ti es b el o w, are that th e assessee trust, a soci et y, i s a body worki ng under Department of Space, Government of I ndi a. The mai n objecti ve of the assessee soci ety, as per i ts Memorandum of Associ ati on a nd rul es & regul ati ons was to undertake, ai d, promote, gui de and coordi nate research and devel opment i n the fi el d of semi conductor technol og y, mi cro-el ectro mechani cal s ystems and process tec hnol ogi es, rel ati ng to semiconductor processi ng. The assessee had devel oped CMOS technol ogi es as wel l as speci al i sed technol ogi es through i n-house R&D efforts. Th e assessee soci et y had been granted regi strati on as a chari tabl e soci et y u/s 12A of the Act . For the i mp ugned assessment years the assessee soci et y had fi l ed retur ns decl ari ng 'Ni l ' i ncome. Duri ng assessment proceedi ngs the assessi ng offi cer observed that the assessee was doi ng manufacturi ng of LSI /VLSI devi ces for pri vate part i es and then sel l ing i t for profi t and that it was not doi ng any work rel ated to chari tabl e acti vi ti es. Accordi ngl y, after se eki ng due e xpl anati on from the assessee on the i ssue, wi th whi ch he was not sati sfi ed, he hel d that the objecti ve of the assessee di d not fal l wi t hi n the purvi e w of "General Pu bl i c Uti l i t y"
and that the ass essee was carr yi ng out busi ness/ commerci al acti vi ti es. He further noted th at the assessee had not mai ntai ned separate books of ac counts for grant s/recei pts from properti es of trust. The Assessi ng Offi cer, therefore, hel d that the ass essee was not el i gi bl e for e xemption u/s 11 of the Act.3 ITA No.465 to 467/Chd/2018
A.Y.2013-14 to 2015-16
3. The matter was carri ed in appeal before the Ld.CI T( Appeal s) , who noted that i denti cal i ssue had been deci ded by the I. T.A. T. in assessee's o wn case for assessment years 2010-11 and 2011-12 vi de thei r order i n I TA No.151/Chd/2014 & I TA No.858/Chd/2014 dated 12.5.2016, hol di ng that the asse ssee's case i s no t hi t by the provi so to secti on 2( 15) of the Act and, ther efore, the assessee is el i g i bl e for e xempt i on u/s 11 of the Act. Fol l o wi ng the sai d orders the app eal was deci ded in favour of the assessee.
4. Aggri eved by the same, the Revenue has come up in appeal before us rai si ng the fol l o wi ng grounds:
"1. That on the facts and circumstances of the case, the Ld.CIT(A) has erred in law in holding that the proviso to section 2(15) of the IT. act, 1961 was not applicable in the case of the assessee whereas the activities of the assessee were of commercial/business in nature.
2. That on the facts and circumstances of the case, the Ld.CIT(A) has erred in law in interpreting the provisions of section 2(15) vis-a-vis the facts of assessee's case that the assessee's activities were not for profit motives even as the proviso entails preclusion of all activities, in the nature of trade, business or commerce, from the ambit of charitable purpose in cases professing to pursue advancement of any other object of general public utility.
3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law by relying on the fact that the society is a registered entity and ignoring that the statutory provisions entail first the examination of income that qualifies under section 11 & 12 and then the utilization of the same for charitable purposes.
4. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law deleting the additions when the activities of the trust are non-charitable and the provisions of section 11(4A) of the IT. Act are squarely applicable to the case.4 ITA No.465 to 467/Chd/2018
A.Y.2013-14 to 2015-16
5. That the appellant craves to leave, add or amend the grounds of appeal on or before the appeal heard and disposed off."
5. Before us, the Ld. DR fai rl y agreed that the i ssue was covered by the order of the I . T.A. T. i n the preceding years as poi nted out by the Ld.CI T( Appeal s) i n hi s order. The Ld . counsel for assessee pl aced copy of the order of the I . T.A. T. passed in the precedi ng years referred to by the Ld.CI T( Appeal s) whi l e deci di ng the appeal i n favour of the assessee.
6. We have gon e through the o rder of the I . T. A. T. in the precedi ng years and fi nd that i n the sai d year s al so the assessee soci et y had been deni e d e xempti on u/s 11 of the Act, si nce it was found to be engaged in commerci al acti vi ti es of sal e and purchase. The I . T.A. T. fou nd that the sai d acti vi t y was carri ed out i n consonance wi th i ts object on the basi s of whi ch i t was granted regi strati on u/s 12AA of the Act and was carri ed out wi thout any profi t moti ve whi ch was evi dent from the fact on record that the assessee was maki ng sal es at less than the market pri ce and i ts ul ti mate object was not to gi ve benefi t to some speci fi c person as per i ts memorandum of associ ati on. The I . T.A. T. ther efore hel d that the sai d acti vi ti es were chari tabl e i n nature, not hi t by the provi so to secti on 2( 15) of the Act. The cl a i m of the assessee to e xempti on u/s 11 of the Act was accordingl y al l o wed.
7. Admi ttedl y the facts i n the present case are i denti cal to that i n the pr ecedi ng year wi t h the assessee h avi ng been 5 ITA No.465 to 467/Chd/2018 A.Y.2013-14 to 2015-16 deni ed e xempti on u/s 11 of the Act for havi ng been found to have i ndul ged i n commerci al acti vi ti es of sal e and purchase. No di sti ngui shi ng facts have been brought to our noti ce by the Ld. DR. The i ssue therefore i s squarel y covered by the order of the I . T.A. T. i n the precedi ng years, which we hold has been ri ghtl y fol l o wed by the CI T( Appeal s) , al l owi ng the assessees appeal . We therefore se e no reason to i nterfere i n the order of the CI T( Appeal s) .
8. I n t h e r es u l t , a l l t h e a p p e a l s f i l ed b y t h e R e v e n ue a r e , t h e r e f o r e, d i s mi ss e d .
O r d e r p r on o u n c ed i n t h e O p e n Cou r t .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 27 t h , 2018
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh