Mumbai Metropolitan Region Development Authority vs. DIT(E) (ITAT Mumbai)

DATE: April 10, 2015 (Date of pronouncement)
DATE: April 24, 2015 (Date of publication)
AY: 2009-10
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S.12AA(3): The issue of withdrawal of s. 11 exemption in the light of s. 2(15) amendment is contentious and requires decision by larger Bench of the ITAT

The assessee’s case was that the sole and the only reason for the Revenue in withdrawing its registration u/s. 12A of the Act as a charitable institution, granted on – 22.07.2002, with effect from assessment year (AY) 2009-10, is the invocation of section 2(15), i.e., read with proviso thereto, effective from the said assessment year, contending that the proviso to section 2(15) is applicable to it and, therefore, it is no longer a charitable institution. The assessee appealed there-against, contesting the said withdrawal (u/s.12AA(3)) on both counts. Firstly, the proposition per se that informs the withdrawal under reference, so that an application of proviso section 2(15) would itself operate to be a ground for the withdrawal of registration (per Gd. #1). HELD by the Tribunal:

We may next proceed to decide the assessee’s Ground #1, raising the issue of the legal consequence/s of the applicability of proviso to section 2(15) on the registration of an entity as a charitable institution. The arguments of both the parties stand listed in detail at paras 3.1 to 3.4 of the order dated 31.12.2013, which would continue to hold, and shall therefore form part of this order, as indeed shall the other parts of this order, save as not specifically modified or withdrawn per this order. Both the parties have, as shall be evident there-from (refer paras 3.1 & 3.4) relied on several decisions by the tribunal. No doubt, the assessee has relied on one decision by the hon’ble high court [CIT v. Sarvyodaya Ilakkiya Pannai [2012] 343 ITR 300 (Mad)], but then the said decision stands also considered by the tribunal in the case of Entertainment Society of Goa v. CIT [2013] 23 ITR (Trib) 636 (Panaji), relied upon by the Revenue, holding, with reference to decision by the hon’ble jurisdictional high court in CIT v. Thane Electricity Supply Ltd [1994] 206 ITR 727 (Bom), the decision by the non-jurisdictional high court as not binding. The rule of precedence, in case of conflicting views by the high courts, none of which is jurisdictional, is for the tribunal to follow that which appeals to its conscious. In our considered opinion, therefore, the appropriate course under the circumstances, even as indicated during the hearing in the instant proceedings – to no objection by either party, is that the matter be referred to the hon’ble President of the Tribunal for constituting a larger bench of the tribunal to decide the highly contentious issue raised by the assessee’s Ground No.1, decided differently by different coordinate benches of this tribunal, for uniform application across the tribunal, of course after hearing the parties. The statement of the case for the purpose of the said reference, is in our view as listed per para 3 of the Tribunal’s order dated 31.12.2013, delineating the respective cases of both the sides. The larger bench of the tribunal, in the case the reference made hereby is accepted by the hon’ble President, shall, apart from the other arguments and case law as may be canvassed before it by the parties, consider the same. We support our decision for the reference aforesaid, apart from the clear provision of section 255(4) of the Act, on the settled law on precedence as explained by several celebrated decisions in the higher courts of law, as for example in the case of CIT v. B.R. Constructions [1993] 202 ITR 222 (AP)(FB).

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