TMI Blog2021 (9) TMI 1174X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression Preservation of environment (including watersheds, forest and wildlife) as inserted in Section 2(15) of the Act w.e.f. 01.04.2009, was reversed. The said order dated 16/01/2009, passed by the Tribunal, was upheld by Allahabad Hon'ble High Court [ 2010 (5) TMI 752 - ALLAHABAD HIGH COURT] and ultimately by Hon'ble Supreme Court [ 2011 (5) TMI 1014 - SC ORDER] as submitted on behalf of the assessee and not rebutted by the Department. It was in keeping with these orders that the CIT(A) has held the activities of the assessee to be falling within the expression Preservation of environment (including watersheds, forest and wildlife) as inserted in Section 2(15) of the Act w.e.f. 01.04.2009. Thus there is no merit found in the grievance of the Department wherein it has been contended that the activities of the assessee do not fall within the expression Preservation of environment (including watersheds, forest and wildlife) as inserted in Section 2(15) of the Act w.e.f. 01.04.2009; and that the activities of the assessee are commercial and in the nature of trade, commerce or business, hit by the provisions of the first proviso to section 2(15) - Decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness and is as such hit by the provisions of the first proviso to section 2(15) of the I.T. Act, 1961; 7. The order of Ld. CIT(A) be cancelled and the order of the A.O. be restored. 2. Learned D. R., at the outset, submitted that Assessing Officer had rightly disallowed the exemption u/s 11 and had rightly made the addition and in this respect relied on the order of the Assessing Officer. 3. Learned counsel for the assessee, on the other hand, submitted that the issue has been settled vide various orders of the Tribunal in favour of the assessee and in this respect our specific attention was invited to the copy of the Tribunal order dated 26/07/2019 at pages 1 to 28 wherein the Tribunal, relying on the earlier year s order, had decided the issue in favour of the assessee. Learned counsel for the assessee submitted that learned CIT(A) has also relied on the orders of the Tribunal and has rightly allowed relief to the assessee. 4. We have heard the rival parties and have gone through the material placed on record. We find that the issue raised by the Revenue are already covered in favour of the assessee by various decisions of the Tribunal. The Tribunal, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has already been held charitable in nature. Learned CIT(A), while allowing relief to the assessee, has held that if the assessee falls into a specific category then specific category will have precedent over the general category. The matter regarding registration has attained finality when Hon'ble Supreme Court dismissed the appeal of the Revenue. The facts regarding grant of registration u/s 12AA has been reproduced by Tribunal in its order dated 13/12/2018for assessment year 02-03 to 08-09, which for the sake of convenience are reproduced below: 5. We have heard the rival parties and have gone through the material placed on record. We find that assessee was initially denied registration u/s 12AA of the Act and later on the application of the assessee for registration u/s 12A was granted as the assessee was held to be doing charitable activity. The matter regarding registration has attained finality when Hon'ble Supreme Court dismissed the appeal of Revenue. These facts have been noted by learned CIT(A) in his order. For the sake of completeness, we reproduce these facts from the order of learned CIT(A) as under: (i) The appellant furnished an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 is to have a registration under Section 12A of the Act and the same being pending for disposal before the Hon'ble Tribunal. The Hon'ble Tribunal was directed to decide the grant of registration against the order passed by the Commissioner rejecting the application filed under section 12A of the Act without being influenced by any of the findings recorded by the Hon'ble High Court in the impugned order. (vi) In pursuance of the directions of the Hon'ble Supreme Court in case reported under citation no 165 TAXMAN 533, the Hon'ble Income-Tax Appellate Tribunal at Lucknow in I.T.A No 512/LUC/2007 vide order dated 16- 01-2009 has proceeded to grant the registration under Section 12A of the Act with its findings that appellant is doing a charitable activity Which encompasses the Object of General Public Utility. It is important to point out here that the subject order / finding of the-Hon'ble ITAT is after taking into account that the Hon'ble Tribunal is not required to be influenced by the findings of the Hon'ble High Court at Allahabad. The order of the Hon'ble ITAT granting registration has attained finality pursuant to dismissal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26-11-2002 cited under citation (129 TAXMAN 527) wherein the Hon'ble Court has held that the exploitation of forest is a commercial activity. (c) In this regard, I have gone through the submission of the appellant and the background in which the Hon'ble Court has pronounced its ruling dated 26/11/2002 cited under citation (129 TAXMAN 527). The subject ruling was pronounced by the Hon'ble Allahabad High Court with respect to the appellant s contention that its income is eligible for exemption under Section 11 of the Act if the benefit of Section 10(20) of the Act is not available to it. In the course of deciding the matter the Hon'ble High Court has stated that the exploitation of forest is to be said considered as a commercial in nature. It is undisputed fact that for the said year in appeal before the Hon'ble High Court the appellant was not having a registration under 12A of the Act. In appeal, the Hon'ble Supreme Court also in the appellant s own case reported under (165 Taxman 533) has that for availing the benefits of section 11 of the Act that the registration under section 12A is the prerequisite. This appeal before the Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble ITAT as duly attained finality would prevail. (e) I find merits in the arguments of the appellant on the basis of the Judgment of the Hon'ble High Court Of Madras in Seshasayee Paper Boards Ltd. v. Inspecting Assistant Commissioner (24 TAXMAN 604) and the decision of the Hon'ble Mumbai High Court in the case of Murlidhar Bhagwandas v. Commissioner of Income-tax (284 ITR 548). The same has been discussed in detail in Ground 3 above. (f) In view of the above discussion and judgments of the Hon'ble Courts as elaborated above, I hold that the AO has erred in not applying the findings of order of Hon'ble Supreme Court (reported in 165 Tax Mann533). The AO has simply proceeded to rely upon the order of Hon'ble High Court dated 26.11.2002 and denied the exemption claimed u/s 11 of the Act. The order of Hon'ble ITAT in appellant s case was passed on 16.01.2009 (i.e. much after the Hon'ble High Courts order dated 26.11.2002). The Hon'ble ITAT vide the said order held that the activities of the appellant are charitable in nature. The said order was passed by Hon'ble ITAT on direction of Hon'ble Apex Court that applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the very primary purpose for its incorporation was to undertake removal and disposal of trees and exploitation of forest resources entrusted to it by the State Government . The modus operandi being adopted for removal trees and the exploitation of produce has been diagrammatically explained by the appellant in his submissions put forth before me. It is also to be seen that the activities of the appellant are being done under a defined working plan of the Central Government and the state Government which is duly monitored. The activities undertaken by the appellant are also in line with the findings of the Hon'ble Supreme Court in the case of Vijay Bahadur (2 SCC 365) decided on 23-03-1982, (as reproduced above) and the same cannot be said to be on commercial lines as the same is banned by the Hon'ble Supreme Court. The activities under taken by the appellant are moreover guided by the Forest Policy and can be said to be for the preservation of the environment. The books of accounts of the appellant are placed before the State Legislature as well as audited by the CAG where in no such qualification has been brought out that the appellant is engaged in any sort of activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintenance of ecological balance. The revision of economical benefit, if any, is only supporting to the principles of the above aim. It is not the prime object and therefore it is difficult to hold that assessee's activities are for commercial exploitation of forest which will disentitle the assessee to obtain registration. Assessee is not treating forest just as a source of revenue. 25. The submission of the assessee to the effect that National Commission on Agriculture bought out its interim report on produce of various tress in August 1972 in which it recommended establishment of Forest Corporation for the purpose of attracting institutional finance for the development schemes of forestry and in pursuance of these recommendations 11 States formed Forest Corporation and in pursuance to the above report, U.P. Forest Corporation was constituted through ordinance on 25.11.1974 cannot be overruled. This Corporation is almost similar to the one established by the Andhra Pradesh Forest Development Corporation Limited. We have already noted hereinabove that the Corporation was established for better preservation, supervision and development of forests and better exploitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rested in realizing revenue but is equally interested in the preservation and development of forests. It cannot knowingly enter into contracts with bidders who must have, at the back of their minds the opportunity or the gamble of illicit felling of trees. In the second place the Corporation is a wholly Government owned Corporation dedicated to the better preservation and development afforests and the better exploitation of forest produce. The profits of the Corporation are in truth the profits of the Slate itself. The Hon'ble Court upheld the Contention of the State for allowing the exploitation of the private contractors to the detriment of national interest in preservation of Forests 28 The extract from the annual report for the period 1.10.1975 to 30.09.1976 relevant for assessment year 1977-78 has been recorded at page 7 of the paper book-l which reads as under: Note: 5. Profit, however, is not the only criterion by which the performance of a public sector undertaking has to be judged. A very important yardstick is the fulfillment of the social obligations cast upon it within the broad perspective of the country's planning policy and objectives. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile dealing with the same issue in a case reported in (2008) 297 ITR 1 U.P. Forest Corporation Vs. Deputy Commissioner of Income-lax, settled that U.P. Forest Corporation is eligible for grant of certificate under Section 12-A of the Income-Tax Act, 1961. In view of the law settled by the Hon'ble Supreme Court there appears to be no justification to admit the appeal on the same issue. So far as condonation of delay is concerned once delay has been condoned there appears to be more justification to admit the appeal on the same issue, Being concluded by finding of fact no substantial question of law involved to entertain the appeal under Section 260 A of the Income Tax Act. Accordingly, appeal is dismissed in limine. Hon'ble Supreme Court in SLP No CC 2590/2011 bearing date 12-05-2011 This petition was called on for hearing today. Upon hearing Counsel, the Court made the following ORDER Delay Condoned. The special leave petition is dismissed f) Further my attention has also been drawn towards the finding of the Hon'ble ITAT, Lucknow in appellants own case reported under ITA No.785/Luc/05 and dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order of learned CIT(A), therefore, ground No. 3 5 are also dismissed. 4.2 The activities of the assessee remained same and there is no change and therefore, following the judicial precedent in the case of the assessee itself, the activities being undertaken by the assessee are held to be charitable in nature. As regards the arguments of Learned D. R. that in earlier years the assessee had claimed exemption under the head objects of general public utility whereas in the years under consideration the assessee had claimed exemption under the head preservation of environment (including watersheds, forest and wildlife) we find that the specific clause would always prevail over the general clause. The amendment to section 2(15) was made with effect from 01/04/2009 whereby preservation of environment was included as a specific object u/s 2(15) of the Act and since the activities of the assessee fell in the specific category therefore, learned CIT(A) has rightly considered the same. The findings of learned CIT(A) in this respect are contained in para K to R, which for the sake of completeness are reproduced below: k) Further the AO s contentions with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The rule has been applied as between different provisions of the same statute in numerous cases some of which only need be mentioned: De Winton v. Brecon (1), Churchill v. Crease (2), United States v. Chase (3) and Carrol v. Greenwich Ins. CO. (4). Applying this rule of construction that in cases of conflict between a specific provision and a general provision the specific provision prevails over the general provision and the genera provision applies only to such cases which are not covered by the special provision, we must hold that case laws. 5(a) has no application in a case where the special provisions of case laws. 23 are applicable m) Even the above contention of appellant that specific clause prevails over the general clause is also supported by the Hon'ble Supreme Court in the case of Commercial Tax Officer vs Binani Cement Ltd. Anr ( CIVIL APPEAL No. 336 of 2003) pronounced on 19 February, 2014 and the same is extracted below: 42. Having noticed the aforesaid, it could be concluded that the rule of statutory construction that the specific governs the general is not an absolute rule but is merely a strong indication of statutory meaning that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .etc. replaced the words in the original Section 2(15) not involving the carrying on of any activity for profit . On a parity of the reasoning in Surat Art Silk case, the words in the proviso that follow the opening words Provided that the advancement of any other object of general public utility equally apply to the object of general public utility and not to the word advancement . The plain language of the proviso does not convey an intention to the contrary. In fact, the legislature could have continued the opening part of the amended section 2(15) with the words not involving instead of the words provided that the advancement of any other object of general public utility shall no be a charitable purpose if it involves in the proviso. Either way the amendment would have been the same. In that event there could have been no doubt whatsoever that the legislature did not seek to set at naught the effect of the judgment of the Supreme Court in this regard in Surat Art silk s case ((supra)). The introduction of the proviso does not indicate such an intention either. 40. If the legislature intended the latter part of the proviso to apply to the word ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the returned income is accepted 1997-1998 29.12.2009 Section 254 read with Section 143(3) Hon'ble I.T.A.T., vide its order dated 16.01.2009 in I.T. Act No 512/LUC/2007, has granted registration to the assessee u/s 12A of the Income-Tax Act, 1961. The assessee vide its written reply dated 29.12.2009 has claimed that in view of the said decision of the Hon'ble I.T.A.T., its entire income is exempt u/s 11 of the Income Tax Act, 1961, After a careful considerations of the material on record and in compliance with the I.T.A.T. s directions, exemption claimed by the assessee u/s 11 is allowed and the returned income is accepted 1998-1999 29.12.2009 Section 254 read with Section 143(3) Hon'ble I.T.A.T., vide its order dated 16.01.2009 in ITA No 512/LUC/2007, has granted registration to the assessee u/s 12A of the Income Tax Act, 1961. The assessee vide its written reply dated 29.12.2009 has claimed that in view of the said decision of the Hon'ble I.T.A.T., its entire income is exempt u/s 11 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid. The AO further stated that the appellant is following mercantile system of accounting, therefore, these expenses were disallowed. (b) In this regard the appellant has submitted that the said amount of ₹ 6,63,812 cannot be considered as a Prior period expenses in light of the fact that such amount is only determinable and crystallized after the close of the Financial Year i.e. the said expenses had not crystallized at the close of the relevant Financial Year. (c) During the course of appellate proceedings it was submitted that the basis -of determining this expense is a certain percentage which is decided In the Committee meeting held after close of the Financial Year. Therefore, the said amount is crystallized in the subsequent F.Y. in which it is determinable. The appellant in his replies has given a thrust on the time period when these expense are crystallized and thereafter only the same can be recorded in the books of accounts. The appellant contended that unless and until these expenses are not known to the appellant the provision of the said expenses cannot be made in the books of accounts. (d)In this regard, the appellant has placed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court Of Delhi in the case of Commissioner of Income-tax v. Triveni Engg. Industries Ltd. (196 TAXMAN 94) (e) The undersigned has gone through the written submissions of the appellant and the above cited judgments and on perusal it is evident that the expenses can only be booked when the same are known to the appellant and for that matter its crystallization and determination of expenses is necessary. The key words are 'determined' and 'crystallized'. The appellant was certain of the expenses to be paid only when it was decided/finalised by the Committee of the Government of Uttar Pradesh after the close of the earlier year. The contention of the appellant is supported by the judgment of the Hon'ble Gujarat High Court in the case of Saurashtra Cement Chemical Industries Ltd. v. CIT (213 ITR 523) where it has been categorically held that merely because an expense related to a transaction of an earlier year does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question. (f)The appellants contention is duly supported by judgments of Hon'ble High Courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange in rate of taxes, the amount incurred under the said head has to be allowed in the AY under consideration as the said expenses were determined and crystallized during the AY under consideration. Accordingly, the disallowance made by the AO under the head Prior Period expenses is hereby deleted. The said expenses are allowed for the reason that these expenses were determined and crystallized only during the AY under consideration. Ground of appeal No. 8 is allowed. Finding no infirmity in the order of learned CIT(A), these grounds of appeal of the Revenue are also dismissed. 5.1 Following the above findings of the Tribunal in the case of the assessee itself, we dismiss ground No. 4 in all appeals. 5. Respectfully following the aforesaid order of the Tribunal in assessee s own case, we do not find any infirmity in the order of learned CIT(A) and dismiss the grounds of appeal taken by the Revenue. 5. It is thus seen that by virtue of the aforesaid Tribunal order dated 26/07/2019, passed in I.T.A. No.649/Lkw/2019, for assessment year 2015-16, in the assessee s own case, the position with regard to the activities of the assessee falling within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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