TaxTMI 
TaxTMI 
2019 (1) TMI 1267
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.... so far as it is prejudicial to the interests of the Revenue. The assessee was given opportunity to explain the issue in proceedings under section 263 of the IT Act. The Ld.CIT noted that according to Sec.10(26BBB) of the I. T. Act, the following income is not to be included in total income - "any income of a corporation established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India." The assessee was asked to furnish documentary evidence showing that it had been established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India. The assessee submitted that it had been established under the Companies Act which is a Central Act and that its main objective was welfare and economic upliftment of exservicemen of Uttarakhand. 2.1. The Learned CIT noted that the basic requirement of law is that the corporation should have been "established by a Central, State or Provincial Act". The corporation was not established by any such Act. It was incorporated as any other company under the provisions of the Companies Act, 1956. It was incorporated on 01.03.2....
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....he provisions of the Act and as such allowing the exemption under section 10 (26BBB) is erroneous in so far as it is prejudicial to the interests of the Revenue. The assessee reiterated the submissions before the Learned CIT and the submissions of the assessee have been summarized as under : I. "Proceeding u/s 263 can be validly initiated only if the both the conditions, namely, the order is erroneous and it is prejudicial to the interests of the revenue, are satisfied simultaneously. II. When the finding of the CIT that the AO had arrived at his finding without conducting any enquiry was itself erroneous, the exercise of powers u/s 263 cannot be said to be validly exercised. III. There was due application of mind by the AO while considering its claim of exemption for Rs. 6,18,57,597/ and allowing the same to the extent of Rs. 5,66,34,094/-. That being the case, action u/s. 263 is not justified." 2.3. The Learned CIT after examining the issue in detail found that exemption under section 10(26BBB) is not allowable in the case of the assessee. The AO took the representation of the assessee at face value and, completely failed to comprehend the import of the Section. The A.O....
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....case of CIT vs. Canara Bank (2018) 95 taxmann.com 81 (SC) in which it was held as under : "New Okhla Industrial Development Authority (NOIDA) is a Corporation established by a State Act and is, therefore, entitled to exemption of payment of tax at source under section 194A(1)". 3.1. In this case, NOIDA Authority has been constituted by Notification Dated 17.04.1976 issued under section 3 of the Uttar Pradesh Industrial Area Development Act, 1976. He has also relied upon decision of the Hon'ble Supreme Court in the case of Dalco Engineering Private Limited vs. Satish Prabhakar Padhye and Others (2010) 4 SCC 378 (SC) in which it was held as under : "Where definition of "establishment" uses the term "a corporation established or under an Act", the emphasis should be on the word "established" in addition to the words "by or under". The word "established" refers to coming into existence by virtue of an enactment. It does not refer to a company, which, when it comes into existence, is governed in accordance with the provisions of the Companies Act. There is difference between "established by a Central Act" and "established under a Central Act". When the words "by and under an Act" ....
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....poration established by Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizen of India". The Explanation to this Section provides the definition of "Ex-servicemen". According to the above provisions, when assessee seeks exemption of income under the above Section, the assessee shall have to prove that the Corporation have been established by Central, State or Provincial Act. In the present case, the assessee has been registered under the Companies Act only. No Corporation have been established by any such Act in the case of the assessee. It was incorporated as any other Company under the provisions of Companies Act and its name was later on changed to Uttarakhand Purv Sainik Kalyan Nigam Limited. However, by mere mention of Corporation in the name of the assessee would not serve any purpose unless the assessee is incorporated as a Corporation as is required by Section 10(26BBB) of the I.T. Act. It may be a State Government owned Company but it would not serve the purpose of claiming exemption under section 10(26BBB) of the I.T. Act. Since the assessee has admittedly not been established by Central, State or Provincial Act, it is....