V/S.assistant Commissioner Of Income Tax,Exemption Circle, Pune And Ors v. Purti Parab

IN THE HIGH COURT OF JUDICATURE AT BOMBAYDigitallysigned byPURTIPURTIPRASAD CIVIL APPELLATE JURISDICTIONPRASADPARABPARABDate:2023.11.1016:36:07+0530WRIT PETITION NO. 2622 OF 2022 Peoples Education Society Thane V/s.Assistant Commissioner of Income Tax,Exemption Circle, Pune and Ors. ….Petitioner …Respondents ---- Mr. V. Sridharan, Senior Advocate a/w Ms. Neha Sharma i/b Mr. TanmayPhadke for Petitioner.Mr. Suresh Kumar for Respondents. ---- CORAM : K.R. SHRIRAM & DR. NEELA GOKHALE, JJ. DATED : 7[th] NOVEMBER 2023 P.C. : 1.Petitioner is a charitable trust registered under the BombayPublic Trust Act, 1950. Petitioner has been undertaking educationalactivities since 1926 in running English and Marathi medium schoolsand colleges. 2.Sometime in 2014 petitioner obtained necessary building plansapproved from the Thane Municipal Corporation (T.M.C.) and commencedconstruction of the new school building within the same premises.Petitioner entered into an agreement on a build, lease and transfer basiswith one Global Edu-Infra Development Private Limited on 6[th] August 2015.As per the agreement petitioner was to grant lease hold rights of certainportion of the newly constructed buildings/premises for a period of 45 years to the developer. The ownership rights of the entire land as well as thesuperstructures was not parted with and same continues to belong topetitioner. The construction of new building/redevelopment of old buildingwas completed during the Financial Year 2017-18 corresponding toAssessment Year 2018-19 at an approximate cost of Rs. 43 Croresto thedeveloper. Occupancy Certificate was also received from T.M.C. 3.In its books of accounts for Financial Year 2017-18corresponding to Assessment Year 2018-19 petitioner had shown an incomeof Rs.43 Crores representing total cost to the developer as arising from thetransfer of lease hold rights. Since the transfer of lease hold right wasnothing but a consideration for construction of new buildings of petitionerthe said sum of Rs.43 Crores was also shown as cost of new school buildingsby petitioner. 4.Petitioner had filed its return of income for the Assessment Year2018-19 on 30[th] October 2018 showing Rs.43 Crores as consideration fortransfer of lease hold rights that was also shown/taken as application ofincome in the form of new school buildings under Section 11 of the IncomeTax Act, 1961 (the Act). The return filed by petitioner for Assessment Year2018-19 was selected for scrutiny. During the course of assessmentproceeding, petitioner placed on record copies of computation of incomeand financials and also explained the nature of agreement etc. Copy of the agreement with the developer was also placed on record. A Show CauseNotice was also issued on the premise that the sum of Rs.43 Crores wasduly considered and offered to tax as income by petitioner and petitionerwas called upon to establish as to why the said amount which was equallyclaimed as a deduction in form of application of income could not bedisallowed due to lack of documentary evidence. Petitioner filed a detailedreply that was accepted by the department and further notice dated 28[th]May 2021 under Section 142(1) of the Act was issued calling uponpetitioner to show cause as to why the said income should not be disallowedon the non-compliance of TDS under Section 40(a)(ia) of the Act.Petitioner responded and subsequently an assessment order dated 27[th]August 2021 under Section 143(3) read with Section 144B of the Act waspassed accepting the returned income of petitioner. 5.Prior to these events petitioner had filed a return of income forAssessment Year 2016-17 which was processed under Section 143(1) of theAct. A notice dated 31[st] March 2021 came to be issued under Section 143 ofthe Act proposing to assess the income of petitioner as having escapedincome. The reasons were made available to petitioner and the reasonsindicates that it was issued on the premise that petitioner had sold animmovable property of Rs. 40 Crores on 6[th] August 2015 and income arisingthere from was not offered to tax under the head “Capital Gains” in thereturn of income. The reasons also mentioned that the sum of Rs.40 Croresdid not appear as part of the receipts/income. 6.Petitioner filed objections and in the objections to reopeningbrought to the notice of the Assessing Officer (A.O.) that the income ofRs.43 Crores pertaining to the transfer of lease hold rights was duly offeredto tax by petitioner on its own in the year of transfer, i.e., Assessment Year2018-19 ruling out any escapement of income for the year underconsideration on the date of issuance of notice and thus taxability did notarise in the Financial Year 2016-17. Petitioner also mentioned that theaforesaid income of Rs.43 Crores as offered to tax for Assessment Year 2018-19 stood accepted by the department after a detailed examination. Ofcourse, petitioner also dealt with the merits of the matter. Notwithstandingthis the objections were rejected by an order dated 13[th] January 2022 whichis also impugned in the petition. 7.Subsequently, notice under Section 142(1) of the Act came tobe issued. Petitioner hence filed this petition. 8.In the affidavit in reply filed through one Mr. P. N. Nair, JointCommissioner of Income Tax (OSD) affirmed on 30[th] May 2022 it isadmitted that the assessment for Assessment Year 2018-19 was completedon 27[th] August 2021 while the notice under Section 148 of the Act wasissued on 31[st] March 2021. 9.Mr. Suresh Kumar agrees to a query posed by the court that ifthe amount has already been considered in the subsequent assessment yearsand assessment order has been passed, the question of escapement ofincome for the same amount in the previous year will not arise. We are also informed that there is no change in the rate of tax. 10.In the circumstances, we allow the petition in terms of prayer clause – (a) which reads as under : (a) That this Hon’ble Court may be pleased to issue under Articles226 and 227 of the Constitution of India, an appropriate direction,order or a writ including a writ in the nature of ‘certioraris’ callingfor the records of the case and after satisfying itself as to the legalitythereof quash the impugned notice dated 31.03.2021 issued by theRespondent No.1 under section 148 of the Act being Exhibit – “F”and the impugned order dated 13.01.2022 being Exhibit “K” as badin law. 11.Petition disposed. No order as to costs. (DR. NEELA GOKHALE, J.) (K.R. SHRIRAM, J.)