JASUBHAI BOUNDATION, MUMBAI V. DDIT (IT) (E)II(1), MUMBAI

CO 55/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 8042 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 12-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJNISH BURMAN
• Assessee Lawyers: K SHIVARAM; RAHUL K HAKANI
• Section: 12A; 10; 11

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI .. , ! ' # , $ ' , % BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, JM ./ ITA NO.4878/MUM/2011 ( $' ( $' ( $' ( $' ( / / / / ASSESSMENT YEAR : 2007-2008) DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION)-II(1) MUMBAI. M/S.JASUBHAI FOUNDATION 201 D.N.ROAD, TAJ BUILDING FORT, MUMBAI 400 001. PAN : AAATJ0111B. ( )* / // / APPELLANT) ' ' ' ' / VS. ( +,)*/ RESPONDENT) +,% ./ CO NO.55/MUM/2012 ( $' ( $' ( $' ( $' ( / / / / ASSESSMENT YEAR : 2007-2008) M/S.JASUBHAI FOUNDATION 201 D.N.ROAD, TAJ BUILDING FORT, MUMBAI 400 001. DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION)-II(1) MUMBAI. (CROSS OBJECTOR) ' ' ' ' / VS. ( +,)*/ RESPONDENT) ./ ITA NO.4962/MUM/2011 ( $' ( $' ( $' ( $' ( / / / / ASSESSMENT YEAR : 2007-2008) M/S.JASUBHAI FOUNDATION 201 D.N.ROAD, TAJ BUILDING FORT, MUMBAI 400 001. DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION)-II(1) MUMBAI. ( )* / // / APPELLANT) ' ' ' ' / VS. ( +,)*/ RESPONDENT) )* - -- - . . . . / REVENUE BY : SHRI RAJNISH BURMAN +,)* - . - . - . - . / ASSESSEE BY : S/SHRI K.SHIVARAM & RAHUL K.HAKANI ' - /! / / / / DATE OF HEARING : 12.11.2012 01( - /! / DATE OF PRONOUNCEMENT : 14.11.2012 '2 '2 '2 '2 / / / / O R D E R PER R.S.SYAL, AM : THESE TWO CROSS APPEALS AND ONE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER O F INCOME-TAX (APPEALS) ON 14.02.2011 IN RELATION TO THE ASSESSME NT YEAR 2007- 2008. ITA NO.4878/MUM/2011 & ORS. M/S.JASUBHAI FOUNDATION. 2 2. FIRST WE ARE TAKING UP THE REVENUES APPEAL ALON G WITH THE ASSESSEES CROSS OBJECTION. THE ONLY ISSUE RAISED B Y THE REVENUE IS AGAINST THE ALLOWING OF RELIEF OF ` 30 LAKH WHICH WAS ACCUMULATED AND SET ASIDE BUT NOT USED FOR THE SPECIFIED PURPOSE. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED U/S 12A OF THE ACT. ON THE PERUSAL OF THE DETAILS THE ASSESSIN G OFFICER OBSERVED THAT AN AMOUNT OF ` 30 LAKH WAS CLAIMED TO HAVE BEEN ACCUMULATED U/S 11(2) FOR SETTING UP OF DIGITAL MEDIA RESEARCH AND TRAINING CENTRE DURING THE PERIOD RELEVANT TO ASSESSMENT YE AR 2001-2002. IT WAS OBSERVED THAT NO SUCH DIGITAL MEDIA RESEARCH AN D TRAINING CENTRE WAS SET UP BY THE ASSESSEE BUT THE AMOUNT WA S DONATED TO SOME OTHER ENTITY. ON BEING CALLED UPON TO EXPLAIN ITS POSITION, THE ASSESSEE STATED THAT THE SUM OF ` 30 LAKH SET ASIDE AND ACCUMULATED U/S 11(2) FOR ASSESSMENT YEAR 2001-2002 WAS DULY SPENT BY SPENDING A SUM OF ` 48,78,348 FOR CARRYING OUT DIGITAL MEDIA RESEARCH A ND TRAINING CENTRE PURPOSE. THE ASSESSING OFFICER, BY CONSIDERING THE PROVISIONS OF SECTION 11(3)(C), HELD THAT THE DONAT ION MADE BY THE ASSESSEE FOR THE PURPOSE OF SETTING UP OF DIGITAL M EDIA RESEARCH AND TRAINING CENTRE TO ANOTHER TRUST I.E. SYNAPSE CANNO T BE CONSTRUED TO HAVE FULFILLED THE PURPOSE OF THE ACCUMULATION IN S ETTING ASIDE THIS AMOUNT AS DONATION. WHEN THE MATTER CAME UP BEFORE T HE LEARNED CIT(A), HE OBSERVED THAT THE AMOUNTS SET ASIDE AND ACCUMULATED BY THE ASSESSEE FOR ASSESSMENT YEAR 2001-2002 WAS INCU RRED FOR THE OBJECT OF THE TRUST U/S 11(2) IN THE PERIOD RELEVAN T TO ASSESSMENT YEAR 2002-2003. HOWEVER, HE DIRECTED THE A.O. TO VERIFY THE CLAIM OF THE ITA NO.4878/MUM/2011 & ORS. M/S.JASUBHAI FOUNDATION. 3 ASSESSEE THAT THE AMOUNT SO CLAIMED WAS APPLIED TOW ARDS THE OBJECT OF THE TRUST. 3. THE REVENUE IS AGGRIEVED AGAINST THE DIR ECTION OF THE LEARNED CIT(A) TO THE ASSESSING OFFICER FOR VERIFICATION OF THE CLAIM ON THE GROUND THAT THE CIT(A) HAS NO POWER TO RESTORE THE MATTER TO THE FILE OF A.O. AND SECONDLY THE AMOUNT SPENT BY THE ASSESS EE CANNOT BE CONSIDERED AS SPENT FOR THE PURPOSE OF SETTING UP O F DIGITAL MEDIA RESEARCH AND TRAINING CENTRE. THE ASSESSEE IN ITS C ROSS OBJECTION IS AGGRIEVED AGAINST THE DIRECTION OF THE LEARNED CIT( A) IN RESTORING THE MATTER TO THE FILE OF A.O. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. THE ENTIRE ISSUE ROTATES AROUND THE ACCUMULATION MADE BY THE ASSESSEE OF ` 30 LAKH FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2001-2002. THE ASSESSEE CLAIMS THE SAID AMOUNT WAS SPENT IN THE IMMEDIATELY SUCCEEDING YEAR. PAGE 24 O F THE PAPER BOOK IS DETAIL OF EXPENSES INCURRED BY THE ASSESSEE ON D IGITAL MEDIA RESEARCH AND TRAINING CENTRE EXPENSE TOTALING ` 48.78 LAKH SPENT IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2002-200 3. IN THIS DETAIL, THE ASSESSEE HAS MENTIONED THAT THE AMOUNT OF ` 30 LAKH HAS BEEN SPENT OUT OF ACCUMULATED DIGITAL MEDIA RESEARCH AND TRAINING CENTRE FUND. WE ARE UNABLE TO APPRECIATE THE VIEW P OINT OF THE ASSESSING OFFICER IN NOT TREATING THE AMOUNT OF ` 30 LAKH AS HAVING ITA NO.4878/MUM/2011 & ORS. M/S.JASUBHAI FOUNDATION. 4 BEEN UTILIZED OUT OF THE ACCUMULATION MADE BY IT FO R THE IMMEDIATELY PRECEDING YEAR. 5. NOW COMING TO THE DIRECTION GIVEN BY THE LE ARNED CIT(A) TO THE ASSESSING OFFICER FOR VERIFICATION OF THE CLAIM, IT IS FOUND THAT ALL THE DETAILS WERE BEFORE THE ASSESSING OFFICER AS WELL A S LEARNED CIT(A). COPY OF SUCH DETAIL IS AVAILABLE ON PAGE 24 AND 25 OF THE PAPER BOOK. ON SUCH PAGES IT HAS BEEN CLEARLY MENTIONED THAT OU T OF TOTAL EXPENSES OF ` 48.78 LAKH INCURRED DURING THE PERIOD RELEVANT TO T HE ASSESSMENT YEAR 2002-2003, A SUM OF ` 30 LAKH HAS BEEN SPENT OUT OF ACCUMULATED AMOUNT. WHEN THE AMOUNT ACCUMULATED FOR ASSESSMENT YEAR 2001-2002 HAS BEEN FULLY SPENT DURING THE PERI OD RELEVANT TO THE ASSESSMENT YEAR 2002-2003, IN OUR CONSIDERED OPINIO N, THE REQUIREMENT OF SECTION 11 IS FULLY SATISFIED. THERE WAS NO REASON FOR THE LEARNED CIT(A) TO RESTORE THE MATTER TO THE FIL E OF A.O. FOR VERIFICATION OF THE CLAIM, WHICH WAS ALREADY AVAILA BLE ON RECORD. IN FACT, THE LD. CIT(A) HAS NO POWER TO RESTORE THE MA TTER TO THE FILE OF AO FOR VERIFICATION. IT IS HIS DUTY UNDER THE AMEND ED LAW TO CONSIDER AND DECIDE THE ISSUE AT HIS OWN WITHOUT SENDING IT BACK TO THE AO. AS SUCH WE OVERTURN THE IMPUGNED ORDER ON THIS ISSU E TO THE LIMITED EXTENT OF EXAMINATION BY THE A.O. IN PRINCIPLE THE VIEW TAKEN BY THE LEARNED CIT(A) IN ALLOWING EXEMPTION IS UPHELD. 6. THE ONLY ISSUE RAISED IN ASSESSEES APPEAL IS AG AINST THE DENIAL OF EXEMPTION U/S 10(33) ON ACCOUNT OF DIVIDEND OF ` 25,96,287 AND ITA NO.4878/MUM/2011 & ORS. M/S.JASUBHAI FOUNDATION. 5 U/S 10(38) OF ` 3.21 LAKH ON ACCOUNT OF LONG TERM CAPITAL GAIN ON REDEMPTION OF UNITS OF MUTUAL FUND. BY CONSIDERING THESE TWO ITEMS OF INCOME, THE ASSESSEE CLAIMED EXEMPTION FOR THE A BOVE REFERRED SUMS U/S 10(33) AND U/S 10(38). THE ASSESSING OFFIC ER OPINED THAT THE EXEMPTION WAS NOT AVAILABLE U/S 10. IN THE OPIN ION OF THE A.O. SUCH AMOUNT SHOULD HAVE BEEN CONSIDERED FOR EXEMPTI ON U/S 11 ONLY SUBJECT TO THE FULFILLMENT OF THE REQUISITE CONDITI ONS. THE LEARNED CIT(A) ACCEPTED THE VIEW POINT OF THE ASSESSING OFF ICER. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE VIEW CANVASSED BY THE LOWER AUTHORITIES ON THIS ISSUE IS NOT BASED ON CORRECT I NTERPRETATION OF THE RELEVANT PROVISIONS. SECTION 10 STARTS WITH : IN C OMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED . THEREAFTER IT A LIST OF EXEMPTIONS UNDER VARIOUS SUB-SECTIONS. BY V IRTUE OF FALLING OF A PARTICULAR ITEM OF INCOME U/S 10, THE SAME CEASES TO QUALIFY FOR INCLUSION IN THE TOTAL INCOME ITSELF. ON THE OTHER HAND, SECTION 11 GRANTS EXEMPTION IN RESPECT OF INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES. THE ENTIRE FOUNDA TION OF SECTION11 IS BASED ON THE PREMISE THAT THE INCOME IS OTHERWISE C HARGEABLE TO TAX, BUT THE EXEMPTION IS PERMISSIBLE BECAUSE OF THE SAT ISFACTION OF THE CONDITIONS U/S 11 AND 12. IN CONTRADISTINCTION TO T HESE SETS OF PROVISIONS, SECTION 10 GRANTS EXEMPTION AT THE VERY OUTSET ITSELF BY PROHIBITING THE INCOME FROM INCLUSION IN THE TOTAL INCOME OF THE ITA NO.4878/MUM/2011 & ORS. M/S.JASUBHAI FOUNDATION. 6 ASSESSEE. ONCE A PARTICULAR INCOME IS EXEMPT U/S 1 0, THAT CANNOT BE CONSIDERED UNDER SECTION 11 BECAUSE THE BEDROCK FOR EXEMPTION U/S 11 IS THAT THE INCOME IS OTHERWISE CHARGEABLE TO TA X. 8. ADVERTING TO THE FACTS OF THE INSTANT CASE IT IS UNDISPUTED THAT THE AMOUNTS RECEIVED BY THE ASSESSEE TO THE TUNE OF ` 25.96 LAKHS AND ` 3.21 LAKH ARE OTHERWISE EXEMPT U/S 10(33) AND 10(38 ) RESPECTIVELY. IF THAT IS THE POSITION THEN IN OUR CONSIDERED OPIN ION THE ACTION OF THE AUTHORITIES BELOW IN INCLUDING SUCH INCOME IN THE T OTAL INCOME OF THE ASSESSEE FOR CONSIDERING IT U/S 11, IS NOT SUSTAINA BLE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS I SSUE AND DIRECT THE EXCLUSION OF THESE TWO SUMS FROM THE INCOME OF THE ASSESSEE FOR CONSIDERING EXEMPTION U/S 11 AT THE VERY THRESHOLD ITSELF. 9. IN THE RESULT, THE ASSESSEES APPEAL AND CROSS O BJECTION ARE ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 14 TH DAY OF NOVEMBER, 2012. '2 - 01( 3''4 1 - 5 SD/- SD/- (VIJAY PAL RAO) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; 3'' DATED : 14 TH NOVEMBER, 2012. DEVDAS* ITA NO.4878/MUM/2011 & ORS. M/S.JASUBHAI FOUNDATION. 7 '2 - +$/6# 7#(/ '2 - +$/6# 7#(/ '2 - +$/6# 7#(/ '2 - +$/6# 7#(// COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. 8 () / THE CIT(A)-I, MUMBAI. 4. 8 / CIT 5. #;5 +$/$' , , / DR, ITAT, MUMBAI 6. 5< = / GUARD FILE. '2' '2' '2' '2' / BY ORDER, ,#/ +$/ //TRUE COPY// > > > >/ // /? ? ? ? ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI