2014 (9) TMI 1165 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decision on Assessee's Income Recomputation

Dy. C.I.T. -6, Kanpur Versus M/s Artificial Limbs Manufacturing Corporation of India

The Tribunal upheld the CIT(A)'s direction for the Assessing Officer to recompute the assessee's income in accordance with sections 11 to 13 of the Act. ... Eligibility for exemption u/s 11 - whether the assessee is engaged in the business of manufacturing, buying, selling, importing and exporting of Artificial Limbs accessories and constituents thereof and earning profit and is not charitable institution? - Held that:- We find that CIT(A) has given direction to AO that he should recompute the income of the assessee in terms of section 11 to 13 of the Act keeping in view that the CIT(A)-II, Kanpur has already granted registration u/s 12AA of the Act. Section 13(8) of the Act is part of section 13 which has to be considered by the AO while deciding the issue as per the directions of CIT(A). No reason to interfere in the order of CIT(A) but we still observe for the sake of clarity that the Assessing Officer should also consider the provisions of sub section (8) of section 13 of the Act while deciding the issue as per the direction of CIT(A). - Decided against revenue Issues:1. Interpretation of sections 11 to 13 of the Act in relation to the assessee's business activities and eligibility for exemption under section 11.2. Consideration of section 13(8) of the Act in determining the eligibility for exemption under section 11.Analysis:1. The main issue in this case revolves around the interpretation of sections 11 to 13 of the Act concerning the assessee's business activities and eligibility for exemption under section 11. The Revenue contended that the CIT(A) erred in directing the Assessing Officer to recompute the assessee's income without acknowledging that the assessee is engaged in profit-making activities related to manufacturing, buying, selling, importing, and exporting of Artificial Limbs accessories, and is not a charitable institution. The Revenue argued that the provisions of section 13(8) should be considered to determine the assessee's eligibility for exemption under section 11.2. The Tribunal, after considering the submissions from both parties, upheld the direction given by the CIT(A) to the Assessing Officer to recompute the assessee's income in accordance with sections 11 to 13 of the Act. The Tribunal noted that the CIT(A) had already granted registration under section 12AA of the Act to the assessee. Additionally, the Tribunal emphasized that section 13(8) is a part of section 13, which must be taken into account by the Assessing Officer while making a decision based on the CIT(A)'s directions. The Tribunal clarified that the Assessing Officer should consider the provisions of sub-section (8) of section 13 of the Act while addressing the issue as per the CIT(A)'s directive.3. Ultimately, the Tribunal dismissed the appeal of the Revenue, indicating that there was no justification to interfere with the order of the CIT(A). The Tribunal's decision was based on the understanding that the Assessing Officer should reevaluate the assessee's income in light of sections 11 to 13 of the Act, taking into consideration the registration granted under section 12AA and the provisions of section 13(8) as directed by the CIT(A).This comprehensive analysis of the judgment highlights the key issues raised, the arguments presented by both parties, and the Tribunal's decision regarding the interpretation and application of relevant sections of the Act in determining the assessee's eligibility for exemption.