Case Law Details
Infrastructure Development Fund Vs DCIT (ITAT Chandigarh)
The issue under consideration is whether the CIT(A) is correct in upholding IDC receipts as normal trading receipts ignoring that the money belongs to state government?
In the present case, revenue has argued that the assessee Fund is a separate entity from the State and has, besides relying on the statutory provisions creating it, also relied heavily on the assesses admission of the said fact while seeking registration as a charitable trust u/s 12A of the Act,and complying with the provisions of the Income Tax Act by getting its accounts audited under it and filing income tax returns since A.Y 2009-10 projecting itself as a separate entity. The Revenue has also contended that there was no diversion of income by overriding title vis a vis Infrastructure Development Charges (IDC) receipts as claimed by the assessee and relied on various case laws in support of its contention.
ITAT states that they do not find any merit in the argument of the Revenue that the assessee itself having admitted being a distinct and separate entity from the state ,while applying for grant of registration u/s 12A of the Act and filing income tax returns,it cannot now take a contrary stand. Undoubtedly the aforesaid admission of the assessee related to an interpretation of facts and did not relate to admitting a fact . Merely because the assessee had interpreted the facts relating to its creation and administration as demonstrating itself to be an entity distinct and separate from the state, while seeking registration u/s 12A of the Act, does not estop the assessee from taking a contradictory stand , which is in accordance with law,in any other proceeding. After all the purpose of the entire exercise of assessment proceedings, including appellate proceedings, is to determine the taxable income as per correct interpretation of law applied to the facts of each case. They therefore do not find any merit in the contention of the Revenue that the assessee having itself admitted to being an entity separate and distinct from the state in proceedings u/s 12A of the Act cannot now take a contradictory stand, and dismiss the same. At the same time ITAT hold that considering our findings as above that the assessee Fund was not an artificial juridicial person ,the Revenue is free to take all necessary action as a consequence ,within the framework of law. Also merely because the assessee fund no longer requires approval of the Finance Department of the state while utilizing the funds , does not in our view alter or impinge upon its character as held by us as being money of the state kept aside for specific purpose.The presence of the Revenue Secretary in the high powered committee takes care of the requirement of obtaining approval of the Finance Department for utilization of funds. In view of the above ITAT hold that Upto A.Y 2013-14,the Fund belonged to the State and was not liable to tax.The addition made of the IDC receipts and interest on FDRs in A.Y 2009-10 and A.Y 2013-14 are therefore directed to be deleted.
FULL TEXT OF THE ITAT JUDGEMENT
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