Income Tax Appellate Tribunal - Chennai
Chennai Port Trust, Chennai vs Assessee on 23 August, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER
I.T.A. No. 215/Mds/2012
Assessment Year : 2006-07
Chennai Port Trust,
C/o Sundaram & Narayanan, The Deputy Director of Income
Chartered Accountants, v. Tax (E)-II,
18, Balaiah Avenue, Income Tax Department,
Luz Church Road, Mylapore, Chennai - 600 034 .
Chennai - 600 004.
PAN : AAALC0025B
(Appellant) (Respondent)
Appellant by : Shri K. Meenatchi Sundaram, CA
Respondent by : Dr. S. Moharana, CIT-DR
Date of Hearing : 23.08.2012
Date of Pronouncement : 23.08.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
In this appeal filed by the assessee, its grievance is that claim for exemption under Sections 11 and 12 of Income-tax Act, 1961 (in short 'the Act') was denied by the A.O. and this was confirmed by the CIT(Appeals).
2 I.T.A. No. 215/Mds/12
2. Facts apropos are that assessee had filed return for the impugned assessment year on 31.10.2006, wherein an income of ` 74,63,59,100/- was admitted. Assessee is a body governed by the provisions of Major Port Trusts Act, 1963, which is a Central Act. In the original return filed by the assessee for impugned assessment year, it had not claimed any exemption under Section 11 of the Act. Thereafter, on 31.3.2008, assessee had filed a revised return, but in such return also no such exemption was claimed. Thereafter, on 28.1.2009, assessee filed another revised return, inter alia, claiming exemption under Section 11 of the Act. Assessing Officer was of the opinion that in the original return, assessee having admitted taxable business income, it could not claim privilege under Sections 11 and 12 in revised return. As per the A.O., the return filed on 28.1.2009 was well after the expiry of time allowed under Section 139(5) of the Act. He, therefore, relying on the decision of Hon'ble Apex Court in the case of Goetze (India) Ltd. v. CIT (284 ITR
323), held that assessee could not be granted exemption under Sections 11 and 12 of the Act. Accordingly, he completed the assessment taking into consideration returns filed by the assessee on 31.10.2006 and 31.3.2008, after making some additions for depreciation, disputed claims, separation amount payable to CCTPL, expenditure charged for the succeeding year, etc. 3 I.T.A. No. 215/Mds/12
3. Assessee moved in appeal before CIT(Appeals) and submitted before him that it had received registration under Section 12AA of the Act from DIT (Exemption), Chennai, vide his order dated 16.6.2008 with retrospective effect from 1.4.2002. As per the assessee, it was, therefore, eligible for deduction under Section 11 of the Act. Assessee also pointed out that this Tribunal in assessee's case for assessment year 2003-04, 2004-05 and 2005-06 had allowed its plea for grand of deduction under Section 11 of the Act. However, CIT(Appeals) was not impressed by this argument. According to him, the facts and circumstances, which were prevailing in previous years relevant to assessment years 2003-04, 2004-05 and 2005-06, were entirely different and were not applicable to the previous year relevant to impugned assessment year. As per the CIT(Appeals), an assessee could not claim a deduction other than through a valid revised return. Such a valid revised return having not been filed by the assessee, its claim for exemption under Sections 11 and 12, relying on the order of this Tribunal for assessment years 2003-04, 2004-05 and 2005-06, could not be accepted. He, therefore, confirmed the order of the A.O. rejecting the claim of exemption under Section 11 of the Act.
4. Now before us, learned A.R., strongly assailing the orders of authorities below, submitted that CIT(Appeals) fell in gross error in 4 I.T.A. No. 215/Mds/12 coming to a conclusion that facts which existed in preceding assessment years were different from those in the impugned assessment year. According to him, for assessment year 2005-06 also, no exemption was claimed in the original return, nor in the first revised return. Exemption was claimed only after registration under Section 12AA was received with retrospective effect, through a second revised return. For assessment year 2005-06 also, A.O. had not allowed the claim for exemption, but CIT(Appeals) in his order dated 23.3.2011 had allowed such claim. Learned A.R. pointed out that Revenue had moved in appeal against such order of the CIT(Appeals) and this Tribunal, vide its order dated 7th September, 2011, had upheld the order of CIT(Appeals) granting assessee exemption under Section 11 of the Act. Therefore, according to him, CIT(Appeals) fell in error in not following the order of the Tribunal in I.T.A. Nos. 1152, 1153 & 1154/Mds/2011 on Revenue's appeal for assessment years 2003-04, 2004-05 and 2005-06.
5. Per contra, learned D.R. submitted that the Tribunal had not in its earlier order for assessment years 2003-04, 2004-05 and 2005-06 taken notice that assessee had not filed any revised return for the relevant previous years for claiming exemption under Sections 11 and 12 of the Act. According to him, by virtue of the decision of Hon'ble Apex Court in 5 I.T.A. No. 215/Mds/12 the case of Goetze (India) Ltd. (supra), lower authorities were justified in denying such claim made through an invalid revised return.
6. We have perused the orders and heard the rival submissions. There is no dispute that assessee is a body found by Central Government under Major Port Trusts Act, 1963. Assessee had filed return for the impugned assessment year originally on 31.10.2006. At that point of time it had filed such a return, it was not having registration under Section 12AA of the Act. Such a registration was granted to it only on 16.6.2008, but admittedly, the registration was given with retrospective effect from 1.4.2002. At the point of time, when the assessee was filing the return, in no way it could have claimed exemption under Sections 11 and 12 since registration under Section 12AA of the Act was a primary requirement for making such a claim. Assessee received registration under Section 12AA on 16.6.2008 by the order of DIT(Exemptions) and thereafter filed a revised return claiming exemption under Section 11 of the Act. No doubt, such revised return was filed after the time provided under Section 139(5) of the Act. However, without doubt, the A.O. at the time of the completion of assessment, was very well aware that assessee was having registration under Section 12AA of the Act and such registration was effective for the impugned assessment year also. There is nothing in the order of the 6 I.T.A. No. 215/Mds/12 Assessing Officer which would show that assessee had violated any provisions of Sections 11 and 12 by which it could have been denied such an exemption. The sole reason why the exemption was denied was that it had filed the claim for exemption after the period allowed under Section 139(5) of the Act. If we look at the decision of Hon'ble Apex Court in the case of Goetze (India) Ltd. (supra), it will be clear that there the claim was made by an assessee for a deduction. Claim for deduction and claim for exemption stand on different footing. Exemption provisions exempt an income from the purview of taxation. Such income is not considered taxable at all. Deduction, on the other hand, is on computed income and as held by Hon'ble Apex Court, such deduction could not be claimed other than through a valid revised return. In our opinion, where an assessee has claimed an exemption even if such claim was not there in the original return, it was still eligible for such exemption if it could show that it was by reasonable cause prevented from making such a claim in the original return. Assessee received a right to claim such exemption by virtue of the order of Director of Income Tax (Exemption), who is also a part of the revenue machinery. Therefore, it ought not have been denied such an exemption for a technical reason alone. That apart, the case for impugned assessment year is very similar for that of assessment year 2005-06 where on assessee's appeal, CIT(Appeals) by virtue of his order dated 23.3.2011 7 I.T.A. No. 215/Mds/12 had held it to be eligible for the claim of exemption under Sections 11 and 12 of the Act. On Revenue's appeal, against such order, it was held by this Tribunal on 7th September, 2011 at paras 6 and 7 of I.T.A. Nos. 1152 to 1154/Mds/2011 as under:-
"6. We heard both sides in detail. The assessee has been granted registration under sec. 12AA. The registration confirms declaration of the assessee that it is a charitable institution. It is not necessary that the assessee must be "an Association of Persons" so as to claim the status of a charitable institution. A partnership may not be entitled to be classified as a charitable institution for the reason that it is constituted for the purpose of sharing the profit and loss of a business carried on by the firm. So also in the case of a company as well, it cannot be a case of a charitable institution for the reason that the object of a company is to carry on business for profit. The Companies Act has specifically exempted under sec.25 of that Act the case of a charitable company. A co-operative society also may not be treated as a charitable institution, again for the reason that the object of a co-operative society is to declare dividends out of the profits earned by it. But the above stated inherent classification does not apply not only to an "Association of Persons" but also to a Local Authority. A Local Authority is not treated as an authority constituted for the purpose of carrying on business and dividing the profit among the shareholders. A Municipal Corporation is a Local Authority by status and not supposed to carry on business only for profit. They are performing the duties of a local Government. Likewise, the Port Trust constituted under Indian Major Port Trust Act is a statutory authority treated as a Local Authority under the provisions of General Clauses Act. It is after considering all these organizational features, that the assessee has been granted registration under sec.12AA of the Income-tax Act, 1961.
7. Therefore, the Assessing Officer cannot deny the benefit of sec.11 to the assessee only on the basis of "status" claimed by the assessee. The exemption can be denied for violation of other conditions laid down in sec.11, 12 and 13. The assessing authority has no such case. In the facts and circumstances of the case, we find 8 I.T.A. No. 215/Mds/12 that the Commissioner of Income Tax (Appeals) has rightly directed the Assessing Officer to grant the benefit of sec.11 to the assessee."
We are, therefore, of the opinion that the claim of assessee was unjustly denied. Assessing Officer is directed to allow the exemption claimed by the assessee under Sections 11 and 12 of the Act.
7. In the result, appeal filed by the assessee is allowed. The order was pronounced in the Court on Thursday, the 23rd of August, 2012, at Chennai.
sd/- sd/-
(Challa Nagendra Prasad) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 23rd August, 2012.
Kri.
Copy to: (1) Appellant
(2) Respondent
(3) CIT(A)-XII, Chennai-34
(4) DIT (Exemptions), Chennai
(5) D.R.
(6) Guard file