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31-10-2019, Indore Development Authority, Section 12A(b), 38, Tribunal Indore

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1 week 4 days ago #11295 by amit
Section - 12A(b), 38, 58, 14A, 250, 37(1), 2(15)
Order Date - 31-10.2019
Favouring - Partly
Court - Tribunal Indore
Appellant - Indore Development Authority
Respondent - DCIT
Justice - KUL BHARAT JM & MANISH BORAD AM
Citation - 1119Taxpundit37
Appeal No. - ITA No.847/Ind/2016
Asstt. Year - 2011-12

Order

PER : MANISH BORAD, A.M:

The above captioned cross appeals for A.Y. 2011-12 & Assessees appeal for 2012-13 are directed against the order of Ld. Commissioner of Income Tax(Appeals)-II, Indore, (in short ‘CIT(A)’), dated 31.05.2016 and 16.09.2016 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(hereinafter called as the ‘Act’) framed on 30.03.2014 and 26.03.2015 by DCIT-5(1), Indore & ACIT (Exemption) (Circle) Bhopal respectively.

2. As the issue raised in all these appeals are similar, these were heard together and are being disposed off by this common order for the sake of convenience and brevity.

3. For the purpose of adjudication of the common issue we will take the facts for A.Y. 2011-12 as the basis.

4. Brief facts of the case as culled out from the records are that the assessee is a local authority constituted u/s. 38 of the ‘Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973’. The main object of the assessee Authority [Indore Development Authority or in short, ‘the IDA’] is to prepare and implement schemes for development, improvement and maintenance of land and other real estate in the notified town i.e. ‘Indore’. The assessee Authority furnished its Return of Income for the assessment year 2011-12, u/s. 139 of the Income-Tax Act, 1961, on 13-03-2012 declaring Total Income of Rs. Nil after claiming exemption under sec. 11 & 12 of the Act.

5. The case of the assessee was selected for scrutiny and Notices u/s. 143(2) and 142(1) were served upon the assessee. The assessee made compliance of all such Notices by making written submissions and by producing books of account and other documents. Assessee furnished copy of Audit Report in Form No.
10B obtained by it under section 12A(b) of the Income-Tax Act, 1961 and copy of Audited Financial Statements pertaining to the year under considera ion. The Assessing Officer completed theassessment u/s.143(3) of the Income-Tax Act, 1961, on 30-03- 2014, by determining Total Income of the assessee authority at Rs.36,88,67,656/- as against the returned Income of Rs. Nil thereby resulting into additions of Rs.36,88,67,656/- in the returned income of the assessee Authority on following counts: Against the Order of the AO, the assessee preferred an appeal before the ld. CIT(A)-II, Indore. The ld. CIT(A) disposed off the appeal of the assessee giving partial relief.However, in respect of claim of exemption under ss.11 & 12, the ld. CIT(A), at para 3.2, page no. 6 of his Order, has given a finding that the issue regarding grant of exemption of income shall be re-examined if the Hon'ble MP High Court gives a decision in favour of the appellant authority for grant of exemption under s. 12A/12AA of the Act. Likewise, in respect of the issue of depreciation, the ld. CIT(A) dismissed the ground by giving a finding that the similar issue for earlier years is pending for adjudication before the Hon'ble MP High Court.

6. Now both the revenue and assessee are in cross appeal before us for A.Y.2011-12.

7. We will first take up revenue’s appeal vide ITANo.870/Ind/2016 wherein following grounds are as under:

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting addition of Rs.15,73,65,419/- made by the Assessing Officer on account of disallowance of some expenses being capital in nature.

2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting addition of Rs.21,27,835/- made by the Assessing Officer on account of disallowance of provisional expenses claimed under head Employees Remuneration and Benefits.

3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in deleting addition of Rs.6,461 made by the assessing officer on account of disallowance of expenses u/s 14A.

4. The revenue reserves the right o add, urge or alter all or any other ground/grounds on or before the date of hearing.

8. As regards Ground No.1 of revenue’s appeal for A.Y.2011-12 relating to deletion of addition of Rs.15,73,65,419/- made by the Ld. AO on account of disallowance of sum expenses being capital in nature. Brief facts are that in the profit and loss account an amount of Rs 19,67,06,774/- is debited under the head City Environmental Development and Preservation Expenses. It was contended by the assessee before the Ld. AO that these expenses are done for the development of the City Environmental Development and Preservation on the direction of the State Government and thus these are part of the revenue expenditure. Ld. AO however was not satisfied and treated the expenditure as capital in nature and allowed the expenses to the extent of 1/5th of the

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