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2018 (12) TMI 834
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.... the Assessment Years 2007-­2008 to 2011­-2012 and 2013­-2014. 2. The substantial question of law sought to be raised in these Appeals is as follows: "Whether on the facts and in the circumstances of the case, the ITAT is right in law in holding that the income of the assessee, which was paid to the Govt. as per the bye laws of the assessee society, is not taxable, inspite of the fact that the assessee had debited such payment to its P&L Account and had claimed it as a revenue expenditure though the assessee is not registered u/s 12AA of the Act and nor its income is exempt under any of the provisions of the Act" 3. Before adverting to the question formulated above, it would be useful to give a brief synopsis of the facts. The Assessee­ Society, hereinafter referred to as 'the respondent­ Assessee', was registered under the Societies Registration Act, 1860 (hereinafter referred to as 'the 1860 Act') on 27.8.2002. The object of the Society as incorporated in its Memorandum of Association, inter alia, includes: "To facilitate the general public dealers carrying goods and crossing the barriers established by the State Govt....
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....oduce the same before the officer in­charge of a check ­post or barrier and to submit in triplicate a 'Declaration' containing particulars of the goods in the prescribed form. Initially, the cost of 'Declaration', as per Rules set­up by the Government of Himachal Pradesh was Rs. 5/­. The respondent ­Assessee, as may be noticed from the object of its formulation, was entrusted with the responsibility of collection of VAT at the above ­stated prescribed rate and upon collection of the same, Re.1/­ was to be deposited immediately in the Government Treasury and thereafter, in terms of Bye­ Law 10.2 of the Society, the remaining amount had to be transferred to the State Government in 'Sales Tax' Head, after meeting out the expenditure incurred by the Society. 5. It would also be relevant to reproduce at this stage the extracts of ST­XXVI­A as prescribed in Clause 8 of the Bye­ Laws of the Society read with Clause 10.2 thereof, which are to the following effect: "8. ACCOUNT OF ST XXVI­A FORM 1. The computer generated STXXVI­A form bearing serial number shall be issued at the Barrier(s) and....
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....nced to Rs. 2/­ after the tax amount was increased from Rs. 5/­ to Rs. 10/­ per 'Declaration'. It is also a matter of record that the respondent­ Assessee applied for registration under Section 12AA of the Income Tax Act 1961 (hereinafter referred to as 'the IT Act 1961') to the Commissioner of Income Tax, Shimla, who rejected the application on 29.11.2013 holding that the activities carried out by the respondent ­Assessee did not benefit the general public rather those were meant to provide the infrastructural facilities to the Excise and Taxation Department of Government of Himachal Pradesh. 8. The respondent ­Assessee has, in its Income Expenditure Statements, been showing the surplus of income over expenditure. The Assessing Officer, therefore, issued notice under Section 148 read with Section 147 of the IT Act,1961 on 8.1.2014 for taxing the excess of the income over expenditure, the amount ranging from Rs. 64,20,238/­ (Assessment Years 2007­2008) to Rs. 1,29,37,365/­ (Assessment Years 2010­2011) and supplied the copy of reasons recorded for the re­opening of the cases. 9. The respondent ­Assessee contested ....
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.... of the society, Receipts & Payment Account of the society, details of the collections on account of tax and amounts paid to Government, relevant provisions of H.P. VAT Act 2005, Establishment of Check Posts of Barrier and inspection of goods in transit, the following points emerged as under: 1. The check post or barriers and inspection of goods in transit were established as per the HP VAT Act 2005. 2. The Assessee Society was floated to look after the affairs and tax collection at the check post and barriers. 3. The governing body of the Assessee Society consists of Chairman and six members along with a member secretary who are all from the excise and taxation department except a Technical Director from NIC and MD of Electronic Development Corporation who mainly aid in providing required information technology inputs. 4. The executive committee of the Assessee Society comprise of 8 members along with one Member Secretary who are all officials of Excise and Taxation Department. 5. The Assessee Society is involved in collection and deposit of receipts from STXXVI­A Forms. 6. Out of the collected amount 20% is paid immediatel....
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....ssee has been formed for manning all the multipurpose barriers to charge the goods which cross the barriers whether coming into or going out of the State of Himachal Pradesh. All such goods have to be declared at the multipurpose barriers in accordance with Section 34 of the VAT Act, 2005 read with VAT Rules, 2005 for which the assessee sells the 'Declaration Form' and derives 'income' therefrom. 19. The respondent ­Assessee applied for exemption under Section 12AA of the IT Act, 1961 but its application was rejected as the activities that it carried out were not of general public utility but were for providing infrastructural facilities to the Excise and Taxation Department of the State of Himachal Pradesh. On this premise, it was urged that the respondent­ Assessee was 'earning income' at the multipurpose barriers by sale of Forms etc., and was preparing the income and expenditure statements in which it has been showing surplus of income over expenditure in its Returns. The respondent­ Assessee was depositing excess of income over expenditure in the Government Treasury for payment to the State Government and was debiting these amounts in the....
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....right and not any other thing. He cited Somiaya Orgeno Chemicals Ltd. versus CIT, 216 ITR, 291 Bombay, where the issue considered was ­whether the cess collected and kept in a separate bank­ account as per the statutory order and to be utilized for a particular purpose, was 'income' in the hands of assessee? It was held that the 'statutory levy' could not be equated as the 'real income' of the assessee Rajkot District Gopalak Co­operative Milk Producers Union ltd. versus CIT 204 ITR, 590 Gujarat, was cited where the question which fell for consideration was­whether income of the project assigned to a Co­operative Society on lease and license basis and profits of which were to be paid to the State Government, could be treated as 'income' of the assessee? It was held that the entire income belonged to the Government and it could not be treated as the income of the assessee and was thus not taxable. Similarly, in Commissioner of Income Tax versus Pepsu Road Transport Corporation, 253 ITR, 303 P&H, the Court considered the question as to whether the amount forfeited by the employer out of the provident fund where it was categorically ....
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....od (P) Ltd., (2008) 9 SCC 622 refers to positive income only. 27. The word 'profit' means the gross proceeds of a business transaction minus the costs of transaction. 'Profits' imply a comparison of the value of an asset when the asset is acquired with the value of the asset when such asset is transferred and the difference between the two values is the amount of 'profit' or 'gain' made by a person [See: Top man Exports versus CIT (2012) 3 SCC 593]. 28. To say it differently, the word 'profit' connotes the idea of pecuniary gain. If there is an actual gain, its quantum or amount would not be material; but such amount would be component of 'income' in terms of Section 2 (24) (i) of the IT Act, 1961. 29. The expression 'gain', on the other hand, is not synonymous with the word 'profit', for it is not restricted to pecuniary or commercial profits only as it includes other considerations of value gained also. For example, any advantage or benefit acquired or value addition made by some activities would amount to gain, even though the activities are not profit motivated. 30. Applying these principles to the fact....