TMI Blog2016 (1) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... ake of order u/s 263. Under both the assessments the surplus amount of ₹ 83.98 crores will get taxed. Hence, no prejudice is caused to the revenue so far as tax effect is concerned, except for the fact that section 11 is being sought to be examined from a different perspective. Accordingly, we hold that, firstly, the subject matter of revision u/s 263 has been merged with the order of the Tribunal, therefore, Ld. DIT is precluded to revise or set aside such order as it is beyond the second of section 263; and secondly, such an order cannot be held to be ‘prejudicial to the interest of the revenue’, because the income which has been sought to be assessed in pursuance of order u/s 263, is the same which was originally assessed by the AO. - Decided in favour of assessee. - ITA No. : 2435/Mum/2014 - - - Dated:- 30-10-2015 - SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For The Appellant : Shri S E Dastur and Shri Nishant Thakkar For The Respondent : Shri Deepkant Prasad ORDER PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the assessee against impugned order dated 28.03.2014, passed by Director of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of Incometax Act, 1961 and with effect from its exception to 2002. The SRA continues to be the Local Authority in the eyes of law. It cannot be considered as a Public Trust or Charitable Trust or Trust of any other kind. (3) On a proper interpretation of the intention behind the enactment of the provision of sections 11, 12,12A, 12AA and 13 of the I.T. Act, 1961, it appears that the tax incentive-proposed in the scheme of exemption from charge of income tax is more applicable to the cases of private individual and groups and association who create valid Public Trust and dedicate its income for the purpose of general public welfare. The scheme of section 11 to 13, specifically the restrictive provision of section 13 cannot be made applicable to the case of public enterprise / public sector undertakings / public sector utility service provider. The basic incentive provided in the exemption section cannot be intended for utilization of public property and application of income of public property administrated through Government reaching the people as a whole. (4) The absence of profit motive in the functioning of the SRA does not by itself create a situation of tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. The Hon ble High Court too has decided this issue in favour of the assessee. Not only that, the Department too has accepted the said decision of the High Court and no further SLP before the Hon ble Supreme Court had been filed. This fact has also been acknowledged by the Ld. DIT(E) in his impugned order in para 2. 5. Now, when the entire assessment order dated 22.10.2011 wherein the exemption u/s 11 was denied, has attained finality and got merged finally with the second appellate order of the Tribunal, the Ld. DIT has sought to set-aside/revise the said assessment u/s 263 on the ground that, now in wake of insertion of Proviso to section 2(15), the exemption u/s 11 granted to the assessee will not be applicable, because the assessee is carrying out advancement of other object of general public utility and such activity falls within the realm of nature of trade, commerce or business. He observed that the AO during the course of the assessment proceedings had not mentioned or required the assessee to justify its claim in view of proviso to section 2(15), which was inserted by the Finance Act, 2008 w.e.f. AY 2009-10. Even in the course of First Appellate proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter which has not been considered and decided in any appeal. The word such matter used in said explanation in the context of the present case is exemption u/s 11 . The entire matter of exemption u/s 11 was subjudice and subject matter of appeal and, therefore, the entire assessment order and issue of exemption u/s 11 stood merged and such an order could not have been revised within the scope of section 263. Mr. Dastur, further submitted that, the Ld. DIT in his order has tried to find out the fault in the order of the CIT(A) inasmuch as he observes that, the Ld. CIT(A) had power to enhance or consider the newly inserted proviso to section 2(15), but he has not exercised. This shows that he wants to undo the order of CIT(A). In support of his contention that there is a complete merger of the matter, he strongly relied upon a decision of Hon ble Gujarat High Court in the case of CIT vs Nirma Chemicals Pvt Ltd [2009] 309 ITR 67 and in the case of Shashi Theater Pvt Ltd [2000], 248 ITR 126. Referring to these decisions, he submitted that in these cases, the CIT(A) has allowed the assessee s appeal directing the AO to grant relief u/s 80I as claimed by the assessee. Thereafter revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (15). Thus, the AO after considering the entire material has applied his mind and has taken a possible view, therefore, the Ld. DIT has completely erred himself in holding that the AO has not considered the newly inserted proviso to section 2(15). In support of this contention, he relied upon the decision of Hon ble Apex Court in the case of CIT vs. Max India Ltd., reported in [2007] 295 ITR 282. Lastly, he submitted that now there are catena of decisions, wherein the Proviso to section 2(15) has been explained that profit motive is not a sole criteria for denying the exemption. He strongly relied upon the decision of Delhi High Court in the case of India Trading Promotion Organization vs DIT reported in [2015] 371 ITR 333, wherein the entire concept of proviso to section 2(15) have been explained and dealt with. Thus, he submitted that it cannot be held that order of the AO is erroneous in so far as it is prejudicial to the interest of the revenue. 9. On the other hand, Ld. CIT DR submitted that, once there was a specific amendment brought in section 2(15) by enacting a new Proviso, explaining the scope of charitable purposes in the case of institutions / trusts advancing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended provisions of section 2(15), that is, the Proviso inserted by Finance Act, 2008 w.e.f. assessment year 2009-10 has not been considered and examined. If the proviso would be applied then there might be a situation where assessee s activity may not be held to be for charitable purposes and exemption u/s 11 may not be available. In other words exemption u/s 11 is being sought to be denied on the ground of newly inserted Proviso to section 2(15). Even if such an exercise is done, then the result would be same, that is, again the entire assessment would be completed on the same income of ₹ 83,98,10,894/-. There would be no deviation of the income at all what was assessed originally u/s 143(3) and the income which is now being sought to be assessed as per the order of the Ld. DIT. In such a situation, two aspects needs to be seen, firstly, whether the assessment order which has been completely merged with the order of the Tribunal can be set aside by the Ld. DIT u/s 263; and secondly, whether the impugned order can be considered to be erroneous in so far as it is prejudicial to the interest of the revenue, because even after giving effect to the impugned order, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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