TMI Blog2014 (5) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... re of ‘general public utility’ since the funding of different projects ultimately are for the benefits of general public - the DIT (E) was not correct in refusing the registration on the aforesaid grounds - the DIT (E) was not justified in not granting registration to the assessee u/s 12AA of the Act – thus, the DIT(E) is directed to grant registration to the assessee trust u/s 12A of the Act. Addition of expenses claimed towards EPF – Held that:- Assessee contended that the amount towards employees contribution to PF was paid to the government account within the due date of filing the return of the AY – Relying upon Commissioner of Income Tax Versus AIMIL Limited and others [2009 (12) TMI 38 - DELHI HIGH COURT] - the expenditure claimed is allowable u/s 43B of the Act – Decided in favour of Assessee. Disallowance of commission payment to agents – Genuineness of payment not proved - Held that:- The assessee cannot be held responsible if the government departments/PSUs failed to provide any information - the AO has taken up an enquiry with the Government departments/PSUs it is the duty of the AO to obtain necessary information from the concerned departments/PSUs by making nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (E) and remitted the matter back to him for considering the matter afresh after providing a reasonable opportunity of being herd to the assessee. In pursuance to the order passed by the ITAT, the DIT (E) took up the proceedings again by issuing a notice to the assessee on 2-8-2008. In course of proceedings, the DIT (E) sought for clarification from the assessee on different issues. He also called upon the assessee to submit a note describing the factual position. The DIT (E) after examining the books of accounts also sought clarification with regard to certain expenditure debited in the account for different financial years and also asked the trust to produce the bank statement for the preceding three financial years i.e., 2004-05 to 2006-07. After examining the books of accounts and verifying other information furnished by the assessee, the DIT (E) noted that the assessee trust was formed pursuant to G.O. No.72 of Municipal Administration and Urban Development Department dated 18-2-2005 of Government of Andhra Pradesh. On going through the object of the trust as mentioned in the trust deed, the DIT (E) noted that the trust was created primarily for the purpose of providing finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust receives monies from Central and State government Urban Infrastructure oriented schemes. In the preceding years, he trust received funds grants from Central Government under Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Urban Infrastructure Development Scheme for small and medium Towns (UIDSSM) and Integrated Housing and Development Program and, from State Govt. under AP Municipal Development Project. It was submitted that these funds were utilized by the Trust to sanction grants and loans with nominal interest, to various Urban Local Bodies (Municipalities and Municipal Corporations) based on the approved urban infrastructure plan. It is submitted that the components to which these grants can be released to Urban Local Bodies is specified in the scheme framed by the Government and the trust has to adhere to the norms fixed by the Government and the eligible items under these schemes generally include sewerage, storm water drainage, solid waste management, improve infrastructure facilities in towns, create durable public assets, to promote planned integrated development of towns and cities. It was submitted that portion of the amount to be released is earmarked a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR, on the other hand, while justifying the order of the DIT (E) contended that as the activities of the assessee trust, does not come within the meaning of charitable purpose as defined u/s 2(15) of the Act, it is not eligible for registration u/s 12AA. The learned DR submitted that the assessee trust does nothing more than providing finance to local bodies, statutory bodies, public sector undertaking and private investors. Therefore, it is purely a financing agency and not carrying out any activity of general public utility. Hence, registration u/s 12AA cannot be granted. 7. We have heard the parties and perused the material on record. We have also carefully applied our mind to the decisions placed before us. On perusal of the order passed by the DIT (E), it is apparent that he has refused to grant registration u/s 12AA of the Act primarily on two reasons: (i) The object of the trust shows that it has been solely made for the purpose of financing infrastructure projects in the state of Andhra Pradesh under taken by different bodies which does not come within the meaning of charitable purpose as defined u/s 2(15) of the Act. ii) The trust has been created by Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solid waste management, street lights, sewerages, sewerage disposal, health services etc. Therefore, by providing funds for development of such infrastructural projects to be implemented through municipal bodies or corporation, the assessee, may be indirectly, is working for achievement of its objects of general public utility . 10. It is not disputed by the DIT (E) that the loan grant/ funds provided by the assessee trust is towards achieving the object of establishing the aforesaid infrastructure projects. Therefore, creating of infrastructure projects as mentioned in clause (j) of 1.1. of Article-1 of the trust deed is certainly towards achieving the objects of general public utility since by development of such infrastructure projects, the public at large will be benefitted. Further, it appears from the submissions of the learned AR that the trust acts as a nodal agency for implementing various infrastructure oriented schemes of the Central Govt. and State Govt. The funds received by the Trust under these schemes are given as grants/loans with nominal interest to Municipalities and Municipal Corporations for developing infrastructure facilities under the schemes. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not liable to income-tax. Applying the ratio of the said judgment in the case of Andhra Pradesh State Road Transport Corporation [1986] 159 ITR 1 (SC), we find that, in the present case, the Gujarat Maritime Board is established for the predominant purpose of development of minor ports within the State of Gujarat, the management and control of the Board is essentially with the State Government and there is no profit motive, as indicated by the provisions of section 73, 74 and 75 of the 1981 Act. The income earned by the Board is deployed for the development of minor ports in the State of Gujarat. In the circumstances, in our view the judgment of this court in Andhra Pradesh State Road Transport Corporation [1986] 159 ITR 1 squarely applies to the facts of the present case. 11. Therefore, considered in the light of the ratio laid down in the aforesaid decisions by the Hon ble Supreme Court, it has to be held that the objects of the assessee trust as mentioned in the trust deed would certainly make it clear that they are in the nature of general public utility since the funding of different projects ultimately are for the benefits of general public. In aforesaid view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result, the appeal filed by the assessee stands allowed. Order pronounced in the open Court on 09 .05.2014. ITA No.1690/Hyd/13 1st para The effective grounds raised by the assessee before us read as under:- // grounds 2 and 3 // 2. In ground No.2, the assessee has challenged the addition of Rs.2,12,896/- on account of expenditure claimed towards employees contribution to the PF. Briefly the fats are, the assessee a company is engaged in the business of advertising agency. For the impugned assessment year 2010-11 on 30-9-2010 the assessee filed its return declaring total income of Rs.65,32,166/-. During scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has paid employees contribution to PF amounting to Rs.2,12,896/- beyond due date as provided u/s 2 (24)(X) OF TH Act. He therefore disallowed the same by invoking the provisions contained u/s 36(1)(va) read with section 2(24)(x) of the Act. The assessee challenged the disallowance made before tame first appellate authority. During the appeal proceedings before the CIT (A) it was contended that since the assessee has paid the amount within the grace period under the relevant statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs.1,15,99,328/- towards payment of commission. On examining the details, the Assessing Officer noted that the majority of the assessee s clients are state government departments or State public undertakings. The Assessing Officer therefore asked the assessee to submit the details of commission agents who liaised with the Government department and supporting evidence towards services rendered by the commission agents in response to the query made by the Assessing Officer, as noted by the Assessing Officer in the assessment order, the assessee submitted names of commission agents in respect of few government clients only. So far as the services rendered by commission agents, the assessee submitted copies of letters written to State Government departments/Public Sector Undertakings and the assessee could not furnish any other evidence with regard to the services received from the said agents. 6. The Assessing Officer noted that mere writing of the letters to the government departments would not constitute a service since the same could be undertaken by the assessee itself. The Assessing Officer also called for the information from the State Government departments/PSUS , exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the CIT (A), it becomes absolutely clear that the expenditure claimed has been disallowed on the reason that the assessee has not adduced the details asked for to prove the genuineness of the payment by substantiating the nature of services rendered by the sub-agents and their connection with the business of the assessee. However, it is the contention of the learned AR that all information have been filed before the Assessing Officer. On a perusal of the assessment order, it is very much clear that the Assessing Officer in fact has called for information from the government departments/ PSUs u/s 133(6) of the Act. However, the Assessing Officer has made the addition by observing that no information has been received from the concerned departments /PSUs u/s 133(6) of the Act. In jour view, the assessee cannot be held responsible if the government departments/PSUs failed to provide any information. Since the Assessing Officer has taken up an enquiry with the Government departments/PSUs it is the duty of the Assessing Officer to obtain necessary information from the concerned departments/PSUs by making necessary enquiry with them. It is also incumbent upon the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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