TMI Blog2017 (4) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... of the entire exempt income u/s.11 is the subject matter of the appeal and there is complete merger with the order of CIT(A) within the terms and ambit of section 263 read with clause (c) Explanation 1. Tribunal also observed that in so far as tax effect is concerned, there is no difference at all between the income which was assessed in the original assessment order and the income which is now being sought to be assessed in wake of order u/s.263. Under both these assessments surplus amount 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. Respectfully following the order of the Tribunal in case of Slum Rehabilitation Authority [2016 (1) TMI 798 - ITAT MUMBAI] we do not find any merit in the order of CIT(A) u/s.263 - Decided in favour of assessee - ITA No.3690/Mum/2014 - - - Dated:- 6-4-2017 - SHRI R.C.SHARMA, AM AND SHRI RAM LAL NEGI, JM For The Assessee : Shri S.E. Dastur with Shri Madhur Agarwal For The Revenue : Shri Sanjay Bahadur ORDER PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Authority ITA No.2435/Mum/2014 order dated 30/10/2015 wherein under similar facts and circumstances, the Tribunal have annulled the order passed by CIT(A) u/s.263. Precise observation of the Tribunal was as under:- 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 the objects of general public utility and such an activity has been held to be non-charitable, if they are involve in carrying out any activity which are in the nature of trade, commerce or business then, it was incumbent upon the AO to examine the assessee's case from such a statutory and legal angle, which admittedly he has failed to do so. There is no whisper or mention about proviso to section 2(15) in the assessment order or in assessment records. The AO has just picked up the issues and grounds that were coming from the earlier years and has not tried to analyze the things independently or applied his mind on the proviso which he was required to do so. Thus, to this extent, the order of the AO is definitely erroneous. The phras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 no revenue effect. 10. On both counts, we are inclined to agree with the contention of the Ld. Senior Counsel. Because, firstly, when the entire basis of the assessment and the whole of the surplus amount has been challenged before the CIT(A), then the entire assessment order including taxing of the entire exempt income u/s 11 is the subject matter of appeal and there is complete merger with the order of the CIT(A) within the terms and ambit of section 263 read with clause (c) Explanation 1. Thus, if the subject matter of revision u/s 263 is again the denial of exemption u/s 11, though on different footing, then same is beyond the scope of section 263. On these facts, it can be very well held that the issue of exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry declared assessee s claim of exemption u/s.11 after observing as under:- In the case the assessee Exemption u/s. 11 of the LT. Act, was denied to the assessee in A. Y. 2004-05. In the assessment Order dated 21.12.2006 u/s. 143(3) of the IT. Act. elaborate discussion was made. The AO has also referred the relevant case laws i.e. Bombay High Court in the case of Madhav Prasad Nathuran Pandit Vs. Mohilal Ramchand Mahesee 30 Bom LR 186 AIR 1928 Bom 97 : 108 I.c.. 482 and Madras High Court in the case of the case of R. Venugopala Reddian Vs. Krishna Swamy Reddiar AIR1971 Mad 262. During this year relevant to the assessment v ear there is also no change in the fact and circumstances of the case of the assessee. Therefore, the assessee's claim of Exemption u/s. 11 of the IT. Act,1961 is denied on the following grounds: 1) By introducing the MMRDA Act, 1974, the handing over of ownership control, management of the MMRDA belonging to State Government is considered not a lawful Trust within the meaning of term Trust used for the purpose of sec.11, 12,12A, 12AA and 13 of the I.T. Act, 1961. 2) The MMRDA was created as a Local Authority within the meaning of term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, the AO has passed an order which is erroneous. 4.1 The CIT(A) vide its order No..CIT(A)-I/IT-E1(119)/2011-12 dated 30.10.2012 has decided the appeal and by following orders of her predecessor has partly allowed the appeal. It is pertinent to note that even though the CIT(A) has same powers of that of AO there was no invocation of proviso to Section 2( 15) in the appellate order. Therefore, it can be seen that this particular issue regarding the application of newly amended proviso to Section 2(15) and the provision of Section 13(2)(a) of the I.T.Act, 1961 was neither invoked nor considered by the AO or CIT(A). Therefore, these issues are a separate matter and even though the appellate order has been passed for this assessment year, since these issues have not been considered proceedings u/s, 263 have been initiated. There is no doubt that the assessee has been constituted by the Government of Maharashtra and does not have share capital. However, the State government has created adequate resource mobilization sources for the assessee to generate enough revenue to finance the projects undertaken by it. 14. The CIT (A) has granted relief to the assessee followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enhance the assessment which power is not available to even the Hon 'ble ITA T. The powers conferred upon the first appellate authority by the Income-tax Act are much wider than the powers of an ordinary Court of appeal. The first appellate authority is not an ordinary Court of appeal, considering that only one party to the original decision taken is entitled to appeal. It is on account of this peculiar position that the statute has conferred wide powers to the first appellate authority. 17. Once the assessment comes before the CIT(A), his jurisdiction is not restricted to examining only those issues that have been taken up by the appellant in appeal, but ranges over the whole assessment and it is open to him to correct the assessment order not only in regard to the matters taken in appeal, but also with regard to maters which were considered by the Assessing Officer in the assessment proceedings. He can examine every process which results in ultimate computation and assessment of income, even if his decision leads to enhancement of income. 18. However, in the area of powers of enhancement, there are contrary decisions: while one view relying upon the decisions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to any trade, commerce or business. This proviso comes with a rider that states 'irrespective of the nature of use or application, or retention, of the income from such activity'. The issue of profit motive is redundant if the receipts exceeds Twenty five lakhs and the assessee is having activity that can be in nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business. 18.5 Section 13(8) could not have been invoked by the AO as this section was introduced by Finance Act, 2012 with retrospective effect from April 1,2009 while the said assessment was done on December 14, 2011. 9. We had carefully gone through the order passed by the AO u/s.143(3) as well as the order passed by CIT(A) u/s.263, as well as the order of the Tribunal dated 31/10/2015. We found that exactly under similar facts and circumstances, the order passed by CIT(A) u/s.263 was cancelled by observing that in so far as entire assessment order of the whole of the surplus amount has been challenged before the CIT(A), then the entire assessment order including taxing of the entire exempt income u/s.11 is the subject matter of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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