Late Smt. Vidyawanti Labhu Ram Foundation, SRIGANGANAGAR V. ITO, SRIGANGANAGAR

CO 41/JODH/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9187 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 20-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Competent authority
• Section: 40A(3); 12A

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. C.O. NO. 41,51 & 52/JODH/2009 (IN ITA NO. 395 TO 397/JODH/2009) (A.YS. 2004-05 TO 2006-07) LATE SMT. VIDHYAWANTI LABURAM VS. THE I.T.O. FOUNDATION FOR SCIENCE RESEARCH WARD-2, & SOCIAL WELFARE, SRIGANGANAGAR. SRIGANGANAGAR PAN NO. AAATV2769B (OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI SURESH OJHA DEPARTMENT BY : SHRI N.A. JOSHI, D.R. DATE OF HEARING : 03/12/2013. DATE OF PRONOUNCEMENT : 04/12/2013. O R D E R PER:BENCH THESE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE D IRECTED AGAINST THE SEPARATE ORDER EACH DATED 24/3/2009 FOR THE ASSESSM ENT YEARS 2004-05, 2005-06 AND 2006-07 AND ARE ARISING OUT OF I.T.A. N OS. 395 TO 397/JODH/2009 FOR THE ASSESSMENT YEARS 2004-05 TO 2 006-07 FILED BY THE DEPARTMENT. 2 2. THESE CROSS OBJECTIONS ALONGWITH APPEALS OF THE DE PARTMENT WERE EARLIER DECIDED VIDE ORDER DATED 27/4/2012. LATER O N, THE ASSESSEE MOVED MISC. APPLICATION IN M.A. NO. 91 TO 93/JODH/2 012 STATING THEREIN THAT GROUNDS NO. 2,4, AND 5 RAISED IN THE CROSS OBJ ECTIONS NOS. 41,51 AND 52/JODH/2009 WERE NOT DECIDED/DISPOSED OFF. THEREFO RE, ORDER DATED 27/4/2012 IN RESPECT OF THESE CROSS OBJECTIONS WAS RECALLED TO DISPOSE OF THE GROUNDS RAISED BY THE ASSESSEE. 3. GROUNDS RAISED BY THE ASSESSEE IN C.O. NO. 41/JO DH/2009 READS AS UNDER:- 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) RIGHTLY DELETED THE ADDITIONS. 2. THE EXPENSES IN QUESTION EXCLUSIVELY UNCURED FO R ACHIEVING THE OBJECTION OF TRUST AND ARE ALSO AS PER THE NORM S LAID DOWN BY THE DENTAL COUNCIL OF INDIA IN RESPECT OF SALARY. 3. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) H AS ERRED IN CONFIRMING THE ADDITION OF RS. 10,156/- MADE BY APP LYING THE PROVISIONS OF SECTION 40A(3) WHICH ARE NOT APPLICAB LE IN THE CASE OF ASSESSEE TRUST. 4. THAT THE ADVERTISEMENT EXPENSES RIGHTLY DELETED BECAUSE THE ADVERTISEMENT WAS ONLY FROM CALLING THE STUDENTS AS WELL AS FACULTIES FROM OUTSIDE THE STATE. 5. THAT ALL THE EXPENSES DISALLOWED BY THE INCOME- TAX OFFICER ARE WITHOUT POINTING OUT THAT THE EXPENSES ARE NOT RELATED TO THE WORKING OF THE ASSESSEE OR UNVOUCHED. 3 3. IN C.O. NO. 51/JODH/2009 GROUNDS RAISED ARE READ A S UNDER:- 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) RIGHTLY DELETED THE ADDITIONS UNDER THE HEAD SALARY RS. 15. 00 LAKHS, TELEPHONE RS. 9,810/-, AIR TRAVELLING RS. 24,230/-, AND HOSTEL AND MESS RS. 2.00 LAKHS. 2. THE GROUND TAKEN BY THE DEPARTMENT IS NOT JUSTI FIED BECAUSE IN CASE OF THE TRUST ALL THE EXPENDITURE OF THE TRU ST HAS TO BE CONSIDERED IN APPLICATION OF INCOME AND NO SEPARATE ADDITION CAN BE MADE. 3. THAT EXPENSES WHICH WERE DISALLOWED BY THE INCO ME TAX OFFICER AMOUNTING TO RS. 15.00 LAKHS OUT OF SALARY, RS. 9,810/- OUT OF TELEPHONE, RS. 24,230/- OUT OF AIR TRAVELING, RS. 2 .00 LAKHS OUT OF HOSTEL AND MESS EXPENSES ALLOWED BY THE COMMISSIONE R OF INCOME TAX (APPEALS) IS FULLY JUSTIFIED BECAUSE EXPENSES I N QUESTION HAS BEEN INCURRED FOR FULFILLING THE OBJECT OF THE TRUS T. 4. IN C.O. NO. 52/JODH/2009 FOLLOWING GROUNDS HAVE B EEN RAISED: 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) RIGHTLY DELETED THE ADDITIONS OF RS. 2,09,49,153/- BECAUSE THE DONATION IN QUESTION WAS RECEIVED BY THE TRUST IN ACCORDANCE WI TH THE LAW. 2. THAT THE DONATION RECEIVED BY THE TRUST IS FULL Y EXPLAINABLE WHICH TOO WAS ALSO EXPLAINED IN COURSE OF HEARING B EFORE THE INCOME TAX OFFICER, THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) RIGHTLY DELETED THE ADDITION. 3. THAT THE EXPENSES ACCEPTED BY THE COMMISSIONER OF INCOME- TAX (APPEALS) OUT OF INTEREST RS. 12,000/-, TRAVELI NG RS. 6,55,931/-, SALARY RS. 15.00 LAKHS, HOSTEL AND MESS EXPENSES RS . 5.00 LAKHS, TELEPHONE EXPENSES RS. 26,895/- AND OTHER EXPENSES RS. 28,385/- ARE EXCLUSIVELY RELATED TO THE OBJECT OF THE TRUST. 4 4. THAT THE ADDITION MADE BY THE INCOME TAX OFFICE R ON CONJECTURE AND SURMISES, THEREFORE, THE COMMISSIONE R OF INCOME TAX (APPEALS) RIGHTLY DELETED THE ADDITION. 5. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ISSUES RAISED IN THESE CROSS OBJECTIONS ARE SQUARELY COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN I.T.A. NO. 99/JODH/2011 FOR THE ASSESSMENT YEAR 200 7-08 VIDE ORDER DATED 23/07/2013, COPY OF THE SAID ORDER WAS FURNIS HED, WHICH IS PLACED ON RECORD. THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS NOT CONTROVERTED BY THE LEARNED D.R. 6. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT ISSUES RAISE D BY THE ASSESSEE HAVING SIMILAR FACTS HAVE ALREADY BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL VIDE ORDER DATED 23/7/2013 PASSED IN I.T.A. NO. 99/ JODH/2011 FOR THE ASSESSMENT YEAR 2007-08 AND THE RELEVANT FINDINGS H AVE BEEN GIVEN IN PARAS 8 AND 9 AT PAGES NO. 10 TO 13 OF THE SAID OR DER, WHICH READ AS UNDER:- 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAV E ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED BY THE LEARNED AUTHORIZED REPRESENTATIVE AS WELL AS DECISIONS RELI ED UPON BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS, IN TH E CONTEXT OF FACTUAL MATRIX OF THE CASE. 5 9. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION BY THE COMPETENT AUTHORITIES U/S 12A. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ALONGWITH AUDITED ACCOUN TS CLAIMING EXEMPTION ON ITS INCOME U/S 12A. ASSESSMENT WAS REQ UIRED TO BE MADE IN CHAPTER III OF THE INCOME TAX ACT, 1961. HO WEVER, THE ASSESSING OFFICER HAS WRONGLY APPLIED PROVISIONS OF CHAPTER VS. WHILE FRAMING ASSESSMENT OF ASSESSEE TRUST. WITHOUT POINTING OUT AND FINDING ANY DEFECTS IN THE BOOKS OF ACCOUNT AND WITHOUT APPLYING OF SECTION 145, THE ASSESSING OFFICER HAS ARBITRARILY DISALLOWED THE EXPENDITURE INCURRED FOR THE PURPOSE OF TRUST, WHICH WERE PROPERLY SUPPORTED BY VOUCHERS. THE CIT( A) HAS ALSO CONFIRMED THE DISALLOWANCES. ORDERS PASSED BY BOTH THE LOWER AUTHORITIES ARE DEVOID OF ANY MERITS. NOWHERE THE A SSESSING OFFICER HAS DISPUTED THAT EXPENDITURE WERE NOT INCURRED FOR ACHIEVING THE OBJECT OF THE TRUST, WHICH WAS PRIMARILY HIGHER EDU CATION. IT IS ALSO NOT THE CASE OF ASSESSING OFFICER THAT ANY OF THE T RUSTEES HAVE UTILIZED THE PROPERTY OF TRUST FOR THEIR PERSONAL B ENEFITS NOR IT IS A CASE OF ASSESSING OFFICER THAT EXPENDITURE WERE IN CURRED FOR THE PERSONAL BENEFIT OF TRUSTEE SO AS TO ATTRACT PROVIS IONS OF SECTION 13(1)(D). IT IS ALSO NOT THE CASE OF ASSESSING OFFI CER THAT ANY PART OF INCOME FROM THE PROPERTY HELD UNDER TRUST FOR PRIVA TE RELIGIOUS PURPOSES, WHICH DOES NOT ENSURE THE BENEFIT OF THE PUBLIC. THE ASSESSEE HAS UTILIZED MORE THAN 85% OF ITS RECEIPTS FOR THE PURPOSE OF TRUST. THE DISALLOWANCE OF EXPENDITURE WERE ARBI TRARILY MADE BY THE ASSESSING OFFICER WHEN IT WAS CATEGORICALLY BRO UGHT ON RECORD THAT THE EXPENDITURE WERE INCURRED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF TRUST. THE EXPENDITURE INCURRED ON FORE IGN TRAVELLING BY THE DOCTORS WERE AS PER THE TERMS OF EMPLOYMENT AN D THE VISITS WERE UNDERTAKEN RELATING TO WORK OF THE TRUST. DOCT ORS HAVE ALSO UNDERTAKEN FOREIGN TRAVELLING FOR UNDERTAKING ADVAN CE COURSES AND DOCUMENTARY EVIDENCES WERE DULY FILED BEFORE THE LO WER AUTHORITIES. DISALLOWANCE OF TELEPHONE EXPENSES OF RS. 7306/- WAS NOT WARRANTED IN SO FAR AS TELEPHONES WERE EXCLUSIV ELY USED FOR THE PURPOSE OF TRUST AND THERE WAS NO PERSONAL USE OF T ELEPHONE BY THE TRUSTEES. IT IS ALSO NOT THE CASE OF THE LOWER AUTH ORITIES THAT ANY 6 PART OF INCOME OR ANY PART OF PROPERTY OF THE TRUST WAS USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SUB-SECTION (3) OF SECTION 13. THE M ESS EXPENDITURE WAS INCURRED AS PER THE NORMS OF DENTAL COUNCIL. TH E RUNNING OF HOSTEL FOR DENTAL COLLEGE WAS MANDATORY WHERE THE A SSESSEE WAS REQUIRED TO PROVIDE HOSTEL FACILITY AND MESS FACILI TY. THE MESS WAS RUN ON COOPERATIVE BASIS AS PER THE NORMS. WE FOUND THAT AVERAGE MESS EXPENSES WORKED OUT TO BE RS. 41/- PER HEAD, W HICH WAS VERY REASONABLE, ACCORDINGLY, THERE WAS NO JUSTIFICATION FOR DISALLOWANCE OF 20% OF HOSTEL EXPENDITURE. BAD DEBTS OF RS. 24,0 00/- WAS ON ACCOUNT OF NON RECOVERY OF ADVANCE GIVEN TO DOCTORS , WHICH WAS IN THE NORMAL COURSE OF ASSESSEES TRUST ACTIVITY. DIS ALLOWANCE OF PART SALARY OF TECHNICAL STAFF ON THE PLEA OF SAME BEING EXCESSIVE WAS ALSO NOT CALLED FOR. OBSERVATION OF THE ASSESSING O FFICER THAT NON- TEACHING STAFF WAS EXCESSIVE IS NOT BASED ON ANY EV IDENCE BROUGHT ON RECORD BY ASSESSING OFFICER, ACCORDINGLY, SUCH O BSERVATION WAS NOT WARRANTED. THE ASSESSEE WAS SUPPORTED TO HAVE T EACHING AND NON-TEACHING STAFF AS PER NORMS OF THE DENTAL COUNC IL OF INDIA. WE FOUND THAT THE EXPENSES WERE SUPPORTED BY VOUCHERS PRODUCED BEFORE THE ASSESSING OFFICER, WHEREIN NO DEFECT WAS POINTED OUT AND THE DISALLOWANCE WAS MADE ARBITRARILY ON LUMP S UM BASIS. THE SALARY SO PAID WAS IN THE INTEREST OF THE TRUST AS WELL AS FOR THE FULFILLMENT OF AIMS AND OBJECTS OF THE TRUST, WHICH IS DIRECTLY RELATED TO ACHIEVEMENT OF ITS MAIN OBJECT. THUS, TH ERE WAS NO JUSTIFICATION ON THE PART OF LOWER AUTHORITIES TO A PPLY MAXIMUM MARGINAL TAX RATE, WHILE ASSESSING A TRUST WHICH HA S BEEN GRATED REGISTRATION U/S 12A BY COMPETENT AUTHORITY. 7. SINCE THE FACTS RELATING TO THE ISSUES INVOLVED IN THESE CROSS OBJECTIONS ARE SIMILAR TO THE FACTS INVOLVED IN I.T .A. NO. 99/JODH/2011 FOR THE ASSESSMENT YEAR 2007-08, SO RESPECTFULLY FOLLOW ING THE SAID ORDER DATED 23/7/2013, THE CROSS OBJECTIONS OF THE ASSESS EE ARE ALLOWED. 7 8. IN THE RESULT, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 04.12.2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04.12.2013 RANJAN* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.