SWAMI SUKHDEVANAND TRUST, DEHRADUN V. DCIT, EXEMPTION CIRCLE, GHAZIABAD

CO 232/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2517 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 18-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Charitable institution; Fair market value; Capital Gains; CHAPTER IV
• Section: 143(3); 50C; 12A; 12AA; 11(1A); 48; 13; 12; 11

Judgement Text

PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH G: NEW DELHI ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA. NO. 5319/DEL/2017 (ASSESSMENT YEAR : 2014-15) D CIT, EXEMPTION CIRCLE, GHAZIABAD. VS. M/S. SWAMI SUKHDEVANAND TRUST, C/O. MOHIT GOEL & CO., C.A. 32 EC ROAD, DEHRADUN. PAN: AADTS4740C AND C. O. NO. 232/DEL/2017 [ IN ITA. NO. 5319/DEL/2017 ] (ASSESSMENT YEAR : 2014-15) M/S. SWAMI SUKHDEVANAND TRUST, C/O. MOHIT GOEL & CO., C.A. 32 EC ROAD, DEHRADUN. PAN: AADTS4740C VS. D CIT, EXEMPTION CIRCLE, GHAZIABAD. (APPELLANT S ) (RESPONDENT S ) ASSESSEE BY : DR. RAKESH GUPTA, ADVOCATE; DEPARTMENT BY : SHRI PRAKASH DUBEY, SR. D. R.; DATE OF HEARING 1 6 /0 9 /2021 DATE OF PRONOUNCEMENT 2 9 / 1 0 /2021 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS FILED BY THE DY. COMMISSIONER OF INCOME TAX, EXEMPTION CIRCLE, GHAZIABAD, FOR ASSESSMENT YEAR 2014-15 AGAINST THE ORDER OF THE CIT (APPEALS), DEHRADUN, DATED 23 RD MAY, 2017. THE REVENUE HAS RAISED THE ONLY GROUND WITH RESPECT TO THE ORDER OF THE CIT (APPEALS) DELETING THE ADDITION OF RS. 2,06,50,000/- ON ACCOUNT OF CAPITAL GAIN. 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION NO. 232/DEL/2017, WHICH IS MERELY SUPPORTING THE ORDER OF THE LD. CIT (APPEALS). 3. THE BRIEF FACTS OF THE CASE SHOWS THAT ASSESSEE IS A TRUST REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 (THE ACT) SINCE 14.05.1974 AND ALSO PAGE | 2 HOLDING RECOGNITION UNDER SECTION 80G(5) FROM 28.07.2012. IT IS ENGAGED IN THE ACTIVITIES OF SPIRITUAL AND CULTURAL HERITAGE OF INDIA BASED ON THE PRINCIPLES OF EQUALITY AND SPIRITUALITY. IT FILED ITS RETURN OF INCOME ON 27.09.2014 AT RS. NIL. THE CASE WAS SELECTED FOR THE SCRUTINY. 4. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT ASSESSEE TRUST HAS SOLD AN IMMOVABLE PROPERTY ON 31.07.2013 FOR A CONSIDERATION OF RS. 80,00,000/-. HOWEVER, THE STAMP DUTY VALUE OF THE ABOVE PROPERTY IS RS. 2,86,50,000/-. THEREFORE, THE LD. ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AND STATED THAT THE SALE CONSIDERATION IS REQUIRED TO BE ADOPTED AT THE STAMP DUTY VALUE. THUS, HE FOUND THAT THERE IS A DIFFERENCE OF RS. 2,06,50,000/- IN THE TRANSACTION VALUE AS WELL AS THE STAMP DUTY VALUE OF THE PROPERTY. THEREFORE, HE MADE THE ADDITION OF THE ABOVE AMOUNT. TOTAL INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 1,91,97,544/- AND ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 29.12.2016. 5. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (APPEALS). HE HELD THAT THE LEGAL FICTION OF SECTION 50C CANNOT BE IMPORTED INTO THE PROVISIONS OF SECTION 11(1A) OF THE ACT. HE FURTHER RELIED UPON THE DECISION OF THE LUCKNOW BENCH WHEREIN IT HAS BEEN HELD THAT SECTION 11(1A) OF THE ACT IS A SEPARATE SPECIFIC SECTION THAT GOVERNS THE OVER-ALL TAXABILITY OF CAPITAL GAINS WITH RESPECT TO TRUST AND SECTION 50C OF THE ACT CANNOT BE APPLIED. THUS, THE ADDITION WAS DELETED. 6. THE LD. ASSESSING OFFICER IS AGGRIEVED WITH THE ORDER OF THE LD. CIT (APPEALS) AND HAS PREFERRED THIS APPEAL BEFORE US. 7. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. IT WAS SUBMITTED THAT THERE IS A HUGE DIFFERENCE BETWEEN THE TRANSACTION VALUE AND THE FAIR MARKET VALUE OF THE PROPERTY. THEREFORE, THE ADDITION IS REQUIRED TO BE CORRECTLY MADE. 8. THE LD. AR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). HE REFERRED TO THE SCHEME OF TAXATION OF CHARITABLE TRUST AND STATED THAT SECTION 11(1A) OF THE ACT DOES NOT SPEAK ABOUT SUBSTITUTE OF THE NET CONSIDERATION BY THE FAIR MARKET VALUE. HE RELIED ON SEVERAL JUDICIAL PRECEDENTS. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERSUED THE ORDERS OF LOWER AUTHORITIES. WE FIND THAT ASSESSEE IS A CHARITABLE TRUST, REGISTERED PAGE | 3 U/S 12AA OF THE ACT AND, THEREFORE, ITS TAXABILITY IS GOVERNED BY THE PROVISIONS OF SECTION 11, 12 AND 13 OF THE ACT. SECTION 11 OF THE INCOME TAX ACT DEALS WITH THE INCOME COMPUTATION FROM PROPERTY HELD FOR CHARITABLE AND RELIGIOUS PURPOSES. THE INCOME UNDER SECTION 11(1A) OF THE ACT IS REQUIRED TO BE COMPUTED IN CASE OF A CAPITAL ASSET BEING TRANSFERRED BY THE TRUST AND NET CONSIDERATION IF UTILIZED FOR ACQUIRING ANOTHER CAPITAL ASSET, IS NOT CHARGEABLE TO TAX IN PROPORTIONATE WAY. THE NET CONSIDERATION MEANS AS PER EXPLANATION (III) OF SECTION 11 (1A) TALKS ABOUT THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING WITH CERTAIN ADJUSTMENTS. THE NET CONSIDERATION IS NOT REQUIRED TO BE SUBSTITUTED BY THE FAIR MARKET VALUE OF THE CAPITAL ASSET TRANSFERRED. THE PROVISIONS OF SECTION 50C OF THE ACT FALLS UNDER CHAPTER IV, SUB CHAPTER E UNDER THE HEAD CAPITAL GAINS FOR THE COMPUTATION OF CAPITAL GAINS. IT TALKS ABOUT THE REPLACEMENT OF FULL VALUE OF THE CONSIDERATION AS STATED UNDER SECTION 48 OF THE ACT. THE INCOME OF THE ASSESSEE IS COMPUTED UNDER SECTION 11(1A) OF THE ACT AND NOT UNDER CHAPTER IV (E) OF THE ACT. HENCE , IN CASE OF CHARITABLE TRUST WHOSE INCOME IS COMPUTED U/S 11,12 AND 13 OF THE ACT, PROVISION OF SECTION 50 C DOES NOT APPLY. THERE IS ONE MORE REASON TO HOLD SO BECAUSE THAT CONSIDERATION, WHICH HAS NOT BEEN ACCRUING TO THE TRUST OR RECEIVED BY THE TRUST BUT ENHANCED BECAUSE OF THE PROVISIONS OF SECTION 50C OF THE ACT, COULD NEVER BE INVESTED IN NEW PROPERTY. FURTHER THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE LUCKNOW BENCH IN THE CASE OF ACIT VS. THE UPPER INDIA CHAMBER OF COMMERCE IN ITA. NO. 601/LKW/2011 DATED 5.11.2014 AND IN THE CASE OF ACIT VS. DWARIKADHISH TEMPLE TRUST, KANPUR, IN ITA. NOS. 256 & 257/LKW/2011 DATED 21.08.2014. IN THE CASE OF ACIT VS. SHRI. DWARIKADHISH TEMPLE TRUST, KANPUR IN I.T.A. NO. 256 & 257/LKW/2011, IN WHICH THE TRIBUNAL HAS HELD THAT IN CASE THE INCOME IS TO BE COMPUTED AS PER SUB- SECTION (1A) OF SECTION 11 OF THE ACT, IF THE NET CONSIDERATION FOR TRANSFER OF CAPITAL ASSET OF A CHARITABLE TRUST IS UTILIZED FOR ACQUIRING NEW CAPITAL ASSET, THEN THE WHOLE OF THE CAPITAL GAIN IS EXEMPT. 10. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE LD. ASSESSING OFFICER AND THE SAME IS DISMISSED. 11. COMING TO THE CROSS OBJECTION FILED BY THE ASSESSEE, WHICH IS MERELY SUPPORTIVE IN NATURE. AS WE HAVE ALREADY DECIDED THE ISSUE AGAINST THE PAGE | 4 REVENUE IN THE ABOVE APPEAL, THE CROSS OBJECTION DOES NOT SURVIVE AND HENCE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON : 29/10/2021. SD/- SD/- (SUCHITRA KAMBLE) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29/10/2021 *MEHTA* COPY FORWARDED TO 1. APPELLANTS; 2. RESPONDENTS 3. CIT 4. CIT (APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI DATE OF DICTATION 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 9 . 1 0 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER