TMI Blog2019 (1) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly found to be erroneous in so far as it is prejudicial to the interests of the Revenue. On this reason itself, the appeal of assessee is liable to be dismissed. We may also note briefly that CIT has noted that even the case of the assessee would not fit within the definition of the term “Ex-servicemen” appearing in Section 10(26BBB) on which, no arguments have been made during the course of hearing of the appeal. Since the assessee failed to satisfy the conditions of Section 10(26BBB) and A.O. did not examine this issue at all, therefore, CIT, Delhi was justified in setting aside the assessment order and to enhance the income of assessee by holding that assessee is not entitled for exemption under the provisions of Section 10(26BBB). No infirmity have been pointed out in the Order of the learned CIT. We, accordingly, do not find any error in the Order for interference. The appeal of assessee have no merit and the same is accordingly dismissed. - Decided against assessee. - I.T.A.No.2622/Del./2015 - - - Dated:- 23-1-2019 - SHRI BHAVNESH SAINI, J.M. AND SHRI O.P. KANT, A.M For The Assessee : Shri Rohit Tiwari And Shri Sanjay Malik, Advocates For The Revenue : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exemption u/s 10(26BBB). It is also noted that if the contention of the assessee to be accepted, it would amount to admission that all companies incorporated under the provisions of the Companies Act have been established by an Act of Parliament and that would be plain absurdity. 2.2. The Learned CIT also noted that the Explanation following the provision makes it clear that the scope of the term ex-serviceman is restricted to a person who has served in any rank in the armed forces of the Union or armed forces of the Indian States before the commencement of the Constitution . Even a corporation established by a Central, State or Provincial Act would be eligible for the exemption only if it was established for the welfare and economic upliftment of such persons. There is nothing In the Memorandum of Association of the assessee to suggest that it is intended to serve such persons. Therefore, the case of the assessee fails on this count also. It is noted that there is no restriction in the memorandum of the assessee. It was also noted that even though its main object is to provide employment/self-employment to the ex-servicemen and their dependencies, the main object itself co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without applying his mind, has partly allowed the wrong claim. The Learned CIT, therefore, held that assessee is not eligible for exemption under section 10(26BBB) of the I.T. Act and that assessment order in question which allowed exemption to the extent of ₹ 5,66,34,094/- is erroneous in so far as it is prejudicial to the interests of the Revenue. The benefit of exemption is clearly not allowable to the assessee. The same was withdrawn and the assessment is enhanced by the impugned amount. The AO is directed to compute the tax and interest payable as per the Order. 3. The Learned Counsel for the Assessee reiterated the submissions made before the Learned CIT and submitted that that assessee has been established under the Companies Act which should be treated as established under Central Act. He has referred to page-4 of the paper book which is a letter dated 28.10.2003 issued by Secretary, Uttaranchal Government to the Director, Uttaranchal Sainik Kalyan Evam Punarvas Nirdeshalay, Dehradun, in which the Government of Uttaranchal has conveyed to their decision to set-up a Retired Sainik Welfare Corporation and it was directed that Corporation be registered under Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has, therefore, submitted that the Order under section 263 of the I.T. Act may be set aside. 4. On the other hand, Ld. D.R. relied upon the impugned Order of the Learned CIT and submitted that as per Section 10(26BBB) of the I.T. Act, the assessee is eligible for exemption if it is a Corporation established by Central, State or Provincial Act. The assessee is a company established under the Companies Act and hence not eligible for this exemption. The Ld. D.R. submitted that a perusal of Memorandum of Association shows that it is for benefit of people even other than ex-servicemen. The main object itself contains the narration that the employment may be provided to other than dependents for the sake of continuity or in the case of non-availability of such exservicemen/ their dependents. As per report, the exservicemen or their dependents constitute only about 65% of the total employees. He has submitted that A.O. did not apply his mind to the facts and Law and passed the Order without making any enquiry and verification. He has relied upon decision of the Hon ble Supreme Court in the case of Deniel Merchants Pvt. Ltd. vs. ITO (Appeal No. 2396/2017) dated 29.11.2017, decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er same statute. On the other hand, a Company is not established under the Companies Act. A registered Company, does not owe its existence to the Companies Act. An incorporated Company is formed by the act of required persons associated for any lawful purposes subscribing their name to the Memorandum of Association and by complying with the requirements of the Companies Act in respect of registration. A Company is incorporated and registered under the Companies Act and not established under the Companies Act. Thus, the A.O. miserably failed to enquire and investigate into the substantive provisions of Law - whether assessee is entitled for exemption under section 10(26BBB) of the I.T. Act. The impugned assessment order shows that A.O. asked for the explanation of assessee and the entire reply of the assessee has been reproduced in the assessment order and the A.O. without examining and without verifying the contents of the reply of the assessee has partly disallowed the exemption under section 10(26BBB) of the I.T. Act in a sum of ₹ 52,23,503/-. The A.O. in the assessment order has nowhere mentioned or concluded that assessee has satisfied the conditions of Section 10(26BBB) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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