T.N. HEALTH TRUST, SALEM V. ITO, EXEMPTION WARD, SALEM

CO 19/CHNY/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2742 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 23-03-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARV SREEENIVASAN
• Keywords: Charitable institution; Maximum Marginal Rate; Revenue expenditure
• Section: 12; 11; 13(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ ITA NO.152/CHNY/2020 & C.O NO.19/CHNY/2020 /ASSESSMENT YEAR: 2016-17 THE INCOME TAX OFFICER, EXEMPTION WARD, SALEM. VS. M/S. T.N. HEALTH TRUST, NO.195, TAMIL SANGAM ROAD, RAJARAM NAGAR, SALEM, TAMIL NADU-636007. [PAN: AAATT 6714C] ( /APPELLANT) ( &'( /RESPONDENT/ CROSS OBJECTOR ) ( / APPELLANT BY : MR. ARV SREEENIVASAN, ADDL. CIT &'( /RESPONDENT/ CROSS OBJECTOR BY : MR. G. BASKAR, ADVOCATE & MR. I. DINESH, ADVOCATE /DATE OF HEARING : 07.10.2021 / DATE OF PRONOUNCEMENT : 07.10.2021 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), S ALEM IN I.T.A NO.233/2018-19 DATED 29.10.2019 RELEVANT TO THE ASS ESSMENT YEAR 2016-17. THE ASSESSEE ALSO FILED CROSS OBJECTION IN SUPPORT OF APPELLATE ORDER. I.T.A NO.152/CHNY/2020 & C.O NO.19/CHNY/2020 :- 2 -: 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PUBLIC CHARITABLE TRUST REGISTERED U/S. 12A(A) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER AS THE ACT). DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O) HAS NOTICE D THAT THE TRUST HAS PURCHASED A CAR FOR A COST OF RS. 10,72,258/- AND R EGISTERED IN THE NAME OF SHRI S. SANJAY, CHAIRMAN OF THE TRUST. ACC ORDING TO THE A.O, THE PURCHASE OF A CAR IS FOR INDIRECT BENEFIT OF TH E MANAGING TRUSTEE OF THE TRUST WHO IS REFERRED THE PERSONS SPECIFIED U/S . 13(2) OF THE ACT. THE A.O FURTHER HELD THAT AS PER THE INCOME TAX ACT, AN Y INFRACTION OF LAW QUALIFIED U/S. 13(2)(G) OF THE ACT WOULD RESULT IN DENIAL OF EXEMPTION U/S. 11 OF THE ACT AND ENTAIL SUBJECTING TO TAX ANY INCO ME OF THE TRUST AS PER THE PROVISIONS OF S. 13(1)(C)(II) OF THE ACT. ACCO RDINGLY, THE A.O HAS ASSESSED THE INCOME OF THE ASSESSEE AT THE MAXIMUM MARGINAL RATE (MMR) @ 30%. THE A.O ALSO DENIED THE CAPITAL EXPEN DITURE AND ALLOWED ONLY REVENUE EXPENDITURE AND OTHER EXPENSES TOWARDS THE RUNNING OF THE INSTITUTIONS. 3. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE DENIAL OF THE EXEMPTION SHOULD ONLY TO THE EXTENT OF INCOME WHICH WAS IN VIOLATION OF S. 13(1)(D) OF THE ACT AND NOT THE TOTAL DENIAL OF EXEMPTION U/S. 11 OF THE ACT AND HE ALSO RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. WORKING WOMENS FORUM [2014] 365 ITR I.T.A NO.152/CHNY/2020 & C.O NO.19/CHNY/2020 :- 3 -: 0353 (MAD) . BY FOLLOWING THE DECISION OF HONBLE JURISDICTION AL HIGH COURT, HE HAS DIRECTED THE A.O NOT TO DENY THE BENE FIT OF S. 11 & 12 OF THE ACT BUT ONLY DISALLOW AND BRING TO TAX THE AMOU NT WHICH IS HELD BY THE A.O TO BE IN VIOLATION OF THE PROVISIONS OF S. 13(1)(C)(II)/13(2)(G) OF THE ACT. 4. ON BEING AGGRIEVED, THE DEPARTMENT CARRIED THE M ATTER BEFORE THE TRIBUNAL. 5. THE LD. D.R HAS STRONGLY SUPPORTED THE ORDER PAS SED BY THE A.O. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) AND AL SO RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V. WORKING WOMENS FORUM (SUPRA) , AND SUBMITTED THAT AGAINST THE ORDER PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT, TH E DEPARTMENT CARRIED SLP BEFORE THE HONBLE SUPREME COURT AND TH E SAME IS DISMISSED BY THE HONBLE SUPREME COURT AND SUBMITTE D THAT THE ORDER PASSED BY THE LD. CIT(A) MAY BE UPHELD. 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE D ENIAL OF EXEMPTION I.T.A NO.152/CHNY/2020 & C.O NO.19/CHNY/2020 :- 4 -: ONLY TO THE EXTENT OF INCOME WHICH WAS VIOLATIVE OF S. 13(1)(D) OF THE ACT OR TOTAL DENIAL OF EXEMPTION U/S. 11 OF THE ACT. T HIS ISSUE HAS BEEN CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. WORKING WOMENS FORUM (SUPRA) , WHERE THE HONBLE HIGH COURT HAS ALREADY HELD THAT DENIAL OF EXEMPTION SHOULD O NLY TO THE EXTENT OF THE INCOME WHICH WAS VIOLATIVE OF S. 13(1)(D) OF TH E ACT AND NOT THE TOTAL DENIAL OF EXEMPTION U/S. 11 OF THE ACT. AGAINST T HE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT, AN SLP WAS ALSO CARRIED BEFORE THE HONBLE SUPREME COURT AND THE SAME WAS DISMISSED BY THE HONBLE APEX COURT. THE LD. CIT(A) BY FOLLOWING THE DECISI ON OF THE HONBLE JURISDICTION HIGH COURT IN THE CASE OF CIT VS. WORKING WOMENS FORUM (SUPRA) , DIRECTED THE A.O NOT TO DENY THE BENEFIT OF S. 11 & 12 OF THE ACT BUT ONLY TO DISALLOW AND BRING TO TAX THE AMOUNT WH ICH IS HELD BY A.O IN VIOLATION OF THE PROVISIONS OF S. 13(1)(C)(II)/13(2 )(G) OF THE ACT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE OR DER IS EXTRACTED AS UNDER: 9. I HAVE PERUSED THE SUBMISSIONS OF THE APPELLANT AND THE CASE LAWS RELIED UPON BY HIM, THE APPELLANT HAS PUT FORTH DET AILED ARGUMENTS BEFORE ME FOR PURCHASE OF A HIGH END CAR IN REPRESENTATIVE CAPACITY FOR THE TRUST INSTEAD OF TRUST'S NAME. THE APPELLANT CLAIMED THAT ALTERNATELY RS. 10,72,2587- ALONE DIRECTED TO BE ASSESSED AT MAXIMU M MARGINAL RATE AND DENIAL OF EXEMPTION SHOULD ONLY BE TO THE EXTENT OF THE INCOME WHICH WAS VIOLATIVE OF SECTION 13(2)(G) AND NOT THE TOTAL DEN IAL OF EXEMPTION UNDER SECTION 11. IN SUPPORT OF ITS CLAIM THE APPELLANT T RUST CITED MANY CASE LAWS. I HAVE PERUSED THE CASE LAWS RELIED UPON BY T HE APPELLANT. I FIND MERITS IN THE ARGUMENTS OF THE APPELLANT. I RELY ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CJ T VS WORKING WOMEN'S FORUM [2014] 365 ITR 0353. THE HON'BLE HIGH COURT HAS HEL D THAT THE DENIAL OF EXEMPTION SHOULD ONLY BE TO THE EXTENT OF THE INCOME WHICH WAS VIOLATIVE OF SECTION 13(L)(D) AND NOT THE TOTAL DEN IAL OF EXEMPTION UNDER I.T.A NO.152/CHNY/2020 & C.O NO.19/CHNY/2020 :- 5 -: SECTION 11. THE HON'BLE APEX COURT ALSO DISMISSED T HE SLP FILED BY THE DEPARTMENT AGAINST THE HIGH COURT'S RULING. RESPECT FULLY FOLLOWING THE ABOVE DECISIONS, I DIRECT THE A.O. TO RESTRICT THE ADDITIONS TO THE INCOME, IF ANY, WHICH WERE HELD BY AO TO BE VIOLATIVE OF SECTI ON 13(2)(G) OF THE ACT. RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS CITED SUPRA, I DIRECT THE A.O. NOT TO DENY THE BENEFITS OF SECTION 11& 12 OF THE ACT BUT ONLY DISALLOW AND BRING TO TAX THE AMOUNT WHICH IS HELD BY AO TO BE IN VIOLATION OF THE PROVISIONS OF SECTION 13(L)(C)(II)/13(2)(G) OF THE I.T. ACT, HENCE, THE GROUNDS OF APPEAL RELATED TO DENIAL OF EXEMPTION U/ S. 11 & 12 OF THE ACT ARE ALLOWED WITH THE ABOVE CONDITIONS. 8. WE, THEREFORE RESPECTFULLY FOLLOWING THE ABOVE J UDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE FIND NO INFIR MITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THE APPEAL FILED B Y THE REVENUE IS DISMISSED. 9. SO FAR AS THE CROSS OBJECTION FILED BY THE ASSE SSEE IS CONCERNED, THE CO WAS FILED IN SUPPORT OF THE APPELLATE ORDER PASSED BY THE LD. CIT(A). SINCE, WE HAVE DISMISSED THE APPEAL FILED B Y THE REVENUE, THE C.O FILED BY THE ASSESSEE BECOME INFRUCTUOUS AND LI ABLE TO BE DISMISSED. ACCORDINGLY, THE C.O FILED BY THE ASSESS EE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE C.O FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED ON 07 TH OCTOBER, 2021 IN CHENNAI. SD/- SD/- ( ) (G. MANJUNATHA) /ACCOUNTANT MEMBER ( ) (V. DURGA RAO) /JUDICIAL MEMBER /CHENNAI, /DATED: 07 TH OCTOBER, 2021 . EDN/- I.T.A NO.152/CHNY/2020 & C.O NO.19/CHNY/2020 :- 6 -: /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. / ( )/CIT(A) 4. /CIT 5. /DR 6. /GF