Income Tax Appellate Tribunal - Amritsar
Srinagar Development Authority, ... vs The Income Tax Officer, Srinagar on 3 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. T.S.KAPOOR, ACCOUNTANT MEMBER AND
SH. N.K. CHOUDHRY, JUDICIAL MEMBER
S.A. No.01 (ASR)/2017
(Arising out of ITA No.77 (ASR)/2016)
Assessment year: 2011-12
Srinagar Development Vs. Income Tax Officer,
Authority, Ward-3(3),
Srinagar.
PAN: AAALS 2033H
(Appellant) (Respondent)
Appellant by: Sh. Upender Bhat (Ld. CA)
Respondent by:Sh. Rahul Dhawan (Ld.DR)
Date of hearing : 03/03/2017
Date of pronouncement : 03/03/2017
ORDER
PER N.K.CHOUDHRY, JM:
By this order, we shall dispose of the aforementioned Stay Application, by which the assessee had prayed for stay of recovery proceedings initiated against the petitioner/assessee as well as restraining the Assistant Commissioner of Income Tax or CIT(A) or their subordinate from taking any coercive action qua recovery of tax, interest and penalty levied or leviable for the relevant assessment year.
2. The Ld. Counsel for the assessee argued that the petitioner engaged in the development of Srinagar City, building activities for & on behalf of Govt. of J&K etc. The assessee authority filed return of income on 28.09.2011 showing the loss of Rs.2,74,23,704/- for the said Financial Year and the petitioner further submitted that the Assessing Officer made various additions and assessed the income of petitioner to the tune of 2 S.A No.01(Asr)/2017 Arising out of ITA No.77(Asr)/2016 Asst. Year:2011-12 Rs.1,37,17,5,365/-. While rejecting the various contentions of the assessee, and commissioner of Income Tax (Appeals) also dismissed the appeal filed by the assessee on being aggrieved by the assessment order and upheld the additions.
3. Thereafter, feeling aggrieved by the said order passed by the Ld. CIT(Appeals), the assessee filed captioned Appeal which is pending for adjudication.
4. The Ld. Advocate further submitted that the both the authorities below have wrongly made/upheld the additions and assessed the income which is not even otherwise logical because the Nazool land given by the State Govt. free of costs to the Assessee authority for development and after developing into built up property, selling the said units to the public at large and in directly the money goes to the State Government.
Even otherwise the assessee/authority is not a commercial organization and in fact working for the welfare of the State and development of the Nazool land has to be done according to directions and norms of the State Govt. therefore, it cannot be subjected to any tax liability.
Even otherwise, the Ld. AO has already collected Rs.73 lacs by attaching Bank Accounts on 15th Feb.2014. and the petitioner do not have enough bank balance or liquidity to make the payments of tax in dispute and if the department proceed further to recover the tax in dispute then great hardship would be caused to the petitioner and the Assessee is a local authority created by the Act of Jammu & Kashmir State Legislature and the assets of the authority are mostly fixed in nature. Therefore, the petitioner/ assessee is entitled for the Stay of the demand/recovery proceedings initiated by Revenue Department.
5. On the other hand, the Ld. DR submitted that the assessee/authority is working for commercial benefits and cannot be termed as for social purposes. The controversy even otherwise has been settled by the Hon'ble 3 S.A No.01(Asr)/2017 Arising out of ITA No.77(Asr)/2016 Asst. Year:2011-12 Supreme Court in SLPC No.4990/2014 whereby the Apex Court affirmed the views of the High Court to the effect that the assessee/ authority cannot be regarded as an institution or trust which may have been subject to achieve the objects enumerated u/s 2 of the Act particularly in view of the additions of first and second proviso made by the Finance Act. 2008 w.e.f from 1st April, 2009 u/s 12AA of the Act.
The Ld. DR also drawn our attention to the categorically finding of Ld. CIT(A) which is reproduced herein below for the sake of brevity.
"Nowhere in the Section 18 of the J&K Development Act 1970, Cabinet decision 38 of 28th January, 1973 and Rule 18 of the J&K Development Authority and Rules mentions that the income and resources generated from such land are to be paid to the Govt. Rather, it states that if any land is required by the Govt. the Govt. has to pay the cost of development of such land to the Authority and agreed in other terms and conditions of the Authority before such land could be transferred to the Govt."
The assessee authority is working for the commercial benefits as it was clearly held by the Hon'ble jurisdictional High Court as well as affirmed by the Apex Court, therefore, the claim of the assessee does not deserves to be allowed more particularly the assessee failed to show any hardship and in fact, is in capacity to pay the demand under controversy because two authorities have already been passed an order against the Assessee/authority, therefore, the balance of convenience is also not in favour of the assessee and prima facie the assessee case is also does not sound to be good enough to get succeed and the deposit of Rs.73 Lacs does not pertains to the instant assessment year, therefore, the said amount cannot be taken care of while deciding the instant petition.
6. We have gone through the facts and circumstances of the case and also carefully analyzed the documents and argument advanced by the parties. In our considered view, it is utmost duty of the Court/Tribunal while deciding the Stay Application to follow the settled law vis a vis prima facie case, balance of convenience and undue hardship to the parties/ irreparable loss or injury.
4 S.A No.01(Asr)/2017Arising out of ITA No.77(Asr)/2016 Asst. Year:2011-12 It is admitted fact that the assessee/society had been declined registration u/s 12AA of the Act of the I.T. Act by the jurisdictional High Court as well as Apex Court and at this juncture the assessee cannot be treated as non-commercial organization. Even otherwise two authorities below have categorically given a finding that the assessee is developing the Nazool land which is given by State Govt. free of costs to the Assessing Authority and the contention of the Ld. Advocate that after development the entire money goes to the Govt. does not sound to be good because finding of the Ld. CIT(A) as emphasized by the Ld. DR that even if the land is acquired by the Govt. then also the Govt. has to pay the costs of development of such land to the authority and to follow other terms and conditions of the authority before such land could be transferred to the Govt., meaning thereby after the transfer of the land to the authority, the Assessee authority is at the domain qua particular land.
The Ld. AR also failed to demonstrate that how the money after development and sale of the developed units by the authority goes to the State Govt. and the arguments of the Ld. Advocate to the effect that costs of the land has to be determined and is liable to the exempted also does not sound because in the balance sheet no provisions has been mentioned or maintained with regard to the costs of the land and this is not an undisputed fact that the land transfer to the authority free of costs. On the aforesaid anlization, prima facie at this stage, we are not influenced by the arguments of the Ld. Advocate of the assessee that prima facie, the assessee has sound and good case which is likely to be succeed.
In the instant case, two below authorities have already made/confirmed the liability of tax and even otherwise tax collected from the tax payer, whether it is a Govt. or Private tax payer, certainly goes to the development of the nation and at this stage the Revenue Authority is at higher pedestal, therefore, we are of the considered opinion that balance of convenience also lies in favour of the Revenue Department.
5 S.A No.01(Asr)/2017Arising out of ITA No.77(Asr)/2016 Asst. Year:2011-12 With regard to the undue hardship, because the assessee authority is working for the profit basis and no contrary material has been shown by the Ld. Advocate to the effect that the authority having no income or Bank balance or liquidity to make the payment of tax in dispute. As the money recovered has to be used for the development of the nation, therefore, we are not hesitant to conclude that no hardship would caused to the assessee authority.
However, considering the peculiar facts and circumstances of the case and also keeping in mind various decisions of the Apex Court as well as jurisdictional High Court, in order to give proper and fare opportunities of fair play and because the adjudication of appeal of assessee shall take reasonable time, therefore, in our considered view for the ends of justice, the assessee is directed to deposit 50% of the demand amount of the relevant year before the concerned authority within a period of 15 days from the date of the order, failing which the interim directions automatically stands vacated.
For clarification, we intended to adjust the already deposited amount of Rs.73.Lakhs by the Assessee, however after coming to know the real fact that the said amount was deposited qua different Assessment Year as submitted by the Ld. D.R. which is not controverted by the Ld. A R , hence we are not inclined to adjust the same in deposit of 50% of the demand amount.
Any of the observations in the instant order shall not tentamount to the merit of the case.
7. In the result, Stay Application is allowed subject to aforesaid directions/conditions.
Sd/- Sd/-
(T. S. KAPOOR) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 03.03.2017.
/PK/ Ps.
6 S.A No.01(Asr)/2017
Arising out of ITA No.77(Asr)/2016
Asst. Year:2011-12
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By Order