TaxTMI 
TaxTMI 
2014 (3) TMI 174
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....e assessee is an AOP engaged in the activity of development of Aligarh City. Return declaring Nil income was filed on 29.09.2008. During the course of assessment proceedings the AO vide order sheet entry dated 25.11.2010 required the assessee to explain whether the assessee was hit by provisions of section 2(15) of the Act. The AO in the assessment order has reproduced order sheet entry dated 25.11.2010 which is not repeated here for the sake of brevity. In response it was contended by the assessee that betterment charges, development charges, compounding charges, staking fees, lease rent and free hold charges were charged at the time of approving construction plans in the city. All these fee were charges under various GO's of U.P. Gove....
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....nes of U.P. Government. It was argued that merely selling of a flat or receiving any consideration from an allottee or customer did not render any activity as carrying on a business or commercial activity. The assessee also furnished cost of EWS flats as per which cost of structure was at Rs.62,83,429/- including the cost of wood work and electrical work. The cost of land and development of park and road was further added to the cost of the Manyavar Kanshi Ram Avas Yojana. The total selling price was Rs.1,06,50,000/- and the total cost was Rs.95,02,269/-resulting in surplus of Rs.11,47,731/-. The surplus was towards the overhead and establishment expenses which worked out to approximately 10%. Hence as per the assessee there was no profit c....
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....Therefore, on the principle of consistency also, the addition is unjustified. It was submitted that the assessee did not carry out any business activities as is considered by the AO. The ld. CIT(A), considering the submissions of the assessee and the material on record allowed the appeal of the assessee. The findings of ld. CIT(A) in the impugned order are reproduced as under : "The facts of the case as well as submissions made by the appellant have been carefully considered. It is observed that the AO had added surplus at Rs.11,47,730/- on the ground that sale of EWS flats was business activity of the appellant and was rather influenced by the amendment to section 2(15) of the Act brought on the statute by the Finance Act, 2008 with eff....
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...., the ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the nature of activities are same as carried out in earlier years as well as subsequent years. It is submitted that on identical facts, the AO accepted the claim of assessee in preceding assessment years 2003-04, 2004-05 and 2005-06 U/s. 143(3). The copies of assessment orders are placed on record. He has further submitted that even in subsequent assessment year 2010-11, the AO accepted the similar claim of assessee u/s. 143(3) vide order dated 25.03.2013. Copies of the balance sheet of earlier and subsequent assessment year have been placed on record to show that on surplus derived out of similar activities, the AO accepted si....
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.... show that on same set of facts, the AO accepted the claim of assessee granting exemption u/s. 11 of the IT Act u/s. 143(3) of the Act. The AO even in subsequent assessment year 2010-11 accepted the similar claim of assessee u/s. 143(3) vide order dated 25.03.2013, i.e., after passing of the impugned assessment order for the year under consideration. It is, therefore, clear that the Revenue department accepted the claim of assessee for grant of exemption on surplus u/s. 11 of the IT Act. It is well settled law that even if principle of res judicata does not apply to the Income-tax proceedings, but the Income-tax Authorities shall have to follow the rule of consistency. We rely upon the decision of Hon'ble Supreme Court in the case of Ra....
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....plicability of proviso to section 2(15). [Para 27] * There is no material/evidence brought on record by the revenue which may suggest that the assessee was conducting its affairs on commercial lines with motive to earn profit or has deviated from its objects as detailed in the trust deed of the assessee. In these facts and circumstances of the case, the proviso to section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under section 11 for the relevant assessment year. [Para 28] * Moreover, in the instant case, the Assessing Officer has not given any defective in computation of income as per section 11 as submitted in Form-XB, but observed that the activities of t....