Income Tax Appellate Tribunal - Mumbai
Mumbai Port Trust, Mumbai vs Assessee
1 I.T.A Nos.6765 & 6791/ Mum/2008
Mumbai Port Trust
IN THE INCOME TAX APPELLATE TRIBUNAL,
"B" BENCH, MUMBAI.
[ Coram: D.Manmohan, V.P. and Pramod Kumar, AM ]
I.T.A Nos.: 6765 & 6791/ Mum/2008
Assessment years: 2004-2005 & 2005-06
Mumbai Port Trust ..... Appellant
Financial Advisor and Chief Accounts Officer,
Mumbai Port Trust, Port Bhavan, Shoorji
Vallabhdas Marg, Ballard Pier,
Mumbai
PAN : AAATM5001 D
Vs
Addl. CIT, Range 12(1) ,.... Respondent
Aayakar Bhavan,M.K. Road,
Mumbai-20.
Appearances:
H.K.Panda, for the appellant
Hari Govind Singh, for the respondent
ORDER
Per Pramod Kumar:
1. By way of these two appeals, the assessee has called into question correctness of CIT(A)'s orders dated, 29.8.2008 and 1.9.2008, in the matter of assessments under section 143(3) of the Income tax Act, 1961, for the assessment years 2004-05 and 2005-06, respectively. As the issues requiring our adjudication in this appeal are common, as these issues arise out of common facts and as these two appeals were heard together, we proceed to dispose of these two appeals by way of this consolidated order.2 I.T.A Nos.6765 & 6791/ Mum/2008
Mumbai Port Trust
2. The assessee has duly obtained permission of the Committee on Disputes (Cabinet Secretariat), vide order dated 18th January, 2011 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). A copy of which is placed on record.
3. Although the assessee has raised several grounds of appeal in the memorandum of appeal, learned counsel urges us to deal with the common additional ground of appeal first. He submits that this is a purely legal issue, which does not require any investigation of facts and that in the event of this ground of appeal being decided in favour of the assessee, all other grounds of appeal will be rendered infructuous and academic - not requiring any adjudication by us. Having heard the rival contentions on admission of additional ground of appeal, and having perused the material on record, we deem it fit and proper to admit the additional ground of appeal, and proceed to take up the same.
4. The additional ground raised in both the appeals is as under:-
"On the facts and circumstances of the case and in law, the ld AO erred in not allowing exemption even though the appellant's income is exempt u/s.11 of the Income tax Act."
5. To adjudicate on this grievance , only a few material facts need to be taken note of. The assessee is a major port trust set up under the Major Port Trust Act, 1963. Till asst. yr. 2002-03, the assessee was eligible for exemption under s. 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 s. 10(20) w.e.f. 1st April, 2003, and the assessee was also hit by the said amendment. Exemption under s. 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 s. 12AA w.e.f. 1st April, 2003. In the meantime, however, the assessee had filed the IT 3 I.T.A Nos.6765 & 6791/ Mum/2008 Mumbai Port Trust returns without claiming the benefit of scheme of taxation under ss. 11 to 13-- to which the assessee is now entitled by the virtue of, inter alia, registration under s. 12AA.
6. Learned counsel for the assessee prays that the matter be restored to the file of the AO so that he can examine the matter afresh in the light of the registration under s. 12AA now available to the assessee. He points out that the requisite audit reports and other documents were not before the AO 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 submits that, on these facts, the matter should be restored to the file of the AO for adjudication de novo as per the legal position now prevailing and after giving the assessee an opportunity to comply with the procedural requirements for granting the relief as a charitable institution. Our attention is also invited to order dated 30th September 2010, passed by a coordinate bench of this Tribunal in the case of Jawahar Lal Nehru Port Trust vs DCIT (133 TTJ
761) wherein, on materially identical facts, the matter was remitted to the file of the Assessing Officer to examine, on merits, claim of tax exemption as a result of registration under section 12AA and in the light of the correct legal position. Learned Departmental Representative fairly accepts that the issue is covered by Tribunal's order in the case of Jawahar Lal Nehru Port Trust (supra), but rather dutifully relied upon the orders of the authorities below.
7. We find that, in Jawhar Lal Nehru Port Trust's case (supra), a coordinate bench of the Tribunal has, inter alia, observed as follows:
"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 1st 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 4 I.T.A Nos.6765 & 6791/ Mum/2008 Mumbai Port Trust 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 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.
5 I.T.A Nos.6765 & 6791/ Mum/2008Mumbai Port Trust
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- 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."
9. We see no reasons to take any other view of the matter than the view so taken by the co-ordinate bench. We, therefore, restore the matter to the file of the Assessing officer, for both the assessment years before us, to decide the matter by way of a speaking order, in the light of the directions given in the case of Jawahar Lal Nehru Port Trust (supra), which will apply mutatis mutandi on these matters as well, and in accordance with law and after giving opportunity of hearing to the assessee.
10. In view of the fact the matter has been remitted to the file of the Assessing Officer for fresh adjudication, other grievances raised by the assessee, which deal 6 I.T.A Nos.6765 & 6791/ Mum/2008 Mumbai Port Trust with the merits of the case, do not call for any adjudication by us at this stage. These grounds of appeal are, therefore, dismissed as infructuous.
11. In the result, appeals are allowed for statistical purposes in the terms indicated above. Pronounced in the open court on 27th January, 2011.
Pronounced in the open court at the time of hearing i.e. on 27th January,
2011
Sd/- Sd/-
(D.Manmohan ) (Pramod Kumar)
(Vice President) (Accountant Member)
Mumbai, Dated 27th January, 2011
Parida
Copy to:
1. The appellant
2. The respondent
3. Commissioner of Income Tax (Appeals)XII,, Mumbai
4. Commissioner of Income Tax, XII , Mumbai
5. Departmental Representative, Bench 'B, Mumbai
//TRUE COPY// BY ORDER
ASSTT. REGISTRAR, ITAT, MUMBAI