The Asstt. Commissioner of Income-tax, Jalandhar V. M/s. C.T.Educational Society, Jalandhar

ITA 100/ASR/2011

• Counselvise Citation: 10020914 RSA 2011
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Charitable institution; Question of law; Revenue expenditure; Capital expenditure
• Section: 260A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 100(ASR)/2011 ASSESSMENT YEAR:2002-03 PAN :AAATC4867F THE ASSTT. COMMR. OF INCOME TAX, VS. M/S. C.T. EDU CATIONAL SOCIETY RANGE-1, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. TARSEM LAL, DR ASSESSEE BY:SH. J.S. BHASIN, ADV. DATE OF HEARING:22.02.2012 DATE OF PRONOUNCEMENT:22.02.2012 ORDER PER BENCH: THE PRESENT APPEAL FILED BY THE DEPARTMENT IS DIRE CTED AGAINST THE ORDER OF THE CIT(A)-II, LUDHIANA, DATED 20.01.2011, RELATING TO ASSESSMENT YEAR 2002-03, WHERE THE DEPARTMENT HAS RAISED FOLLO WING GROUNDS: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING EXEMPTION U/S 11(1)(A) OF THE ACT. 1.1 WHILE HOLDING SO, THE LD. CIT(A) HAS FAILED TO APP RECIATE THE FACTS: I) THAT THE TRUST COULD NOT ESTABLISH THAT IT IS W ORKING WHOLLY FOR CHARITABLE PURPOSES AND APPLYING ITS INCOME TO ACHIEVE THE CHARITABLE PURPOSES OF THE TRUST. 2 II) THAT THE ACTIVITIES OF THE TRUST ARE NOT CHAR ITABLE THOUGH THE TRUST DEED REFERS TO CHARITABLE OBJECTS. FOR EXAMPL E TRUST DEED NO WHERE MENTIONS OF CHARGING FEE OF ANY AMOUNT FO R ANY OF ITS SERVICES (OBJECTS) AND THIS ASPECT HAS NOT BEEN APPROVED BY THE CIT WHILE GRANTING REGISTRATION U/S 12AA(1)(B)( I) OF THE ACT. III) THAT SECTION 11(1)(A) OF THE ACT REFERS TO IN COME DERIVED FROM PROPERTY OF THE TRUST AND IT DOES NOT COVER T HE INCOME EARNED BY EXPLOITATION OF THE OBJECTS LEADING TO SU RPLUS OF INCOME OVER THE EXPENDITURE IN RUNNING THE BUSINESS OF THE TRUST & USING THE TRUST AS A COLOURABLE DEVICE TO DODGE THE REVENUE & AS WELL AS THE PEOPLE OF ANY CHARITY AS THE TRU ST COULD NOT ESTABLISHED THAT IT IS WORKING FOR CHARITABLE PURPO SES. IV) THAT UNDER THE I.T. ACT, THERE IS NO PROVISION FOR ALLOWING THE CAPITAL EXPENDITURE AS REVENUE EXPENDITURE. SEC TION 11(2) OF THE I.T. ACT REFERS APPLICATION OF SURPLUS OF IN COME TO BE APPLIED FOR SPECIFIED PURPOSES AS REFERRED TO IN SE CTION 11(3) OF THE ACT AND IT DOES NOT ANY WAY PERMITS THE EXPENSE S TO BE ALLOWED AS REVENUE EXPENSES OR CAN BE COVERED OR CA N BE CONSIDERED AS APPLICATION OF SURPLUS (REFERENCE IS MADE TO SECTION 11(5)(X) OF THE I.T. ACT). V) THAT THE PROVISIONS OF SECTION 11(1)(A) OF TH E ACT REQUIRE THE FULFILLMENT OF CONDITIONS AS MENTIONED THEREIN DURING ANY PREVIOUS YEAR. IN THE CIRCUMSTANCES, GRANT OF REGIS TRATION U/S 12AA OF THE I.T. ACT DOES NOT OVERRIDE THE PROVISIO N OF SECTION 11(1)(A) OF THE ACT.. THE PROVISIONS OF BOTH THE SE CTIONS 12AA(1)(B)(I)/11(1)(A) OF THE ACT ARE INDEPENDENT S O FAR AS TAXABILITY/EXEMPTION OF INCOME IS CONCERNED. VI) THAT WITH REFERENCE TO SECTION 11(4A) OF THE A CT WHERE THE ASSESSEE IS HELD AS NOT ENGAGED IN ANY CHARITAB LE ACTIVITY, PROVISIONS OF SECTION 11(4A) OF THE ACT, WILL HAVE NO APPLICATION AND MEANING. 2. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AN D DISPOSED OF. 3 2. THE FACTS NARRATED BY THE REVENUE ARE NOT DISPUT ED BY BOTH THE PARTIES. THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. HOWEVER, AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SH. J .S. BHASIN, STATED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BE EN ADJUDICATED BY THIS BENCH VIDE ORDER DATED 30 TH APRIL,2010 IN ASSESSEES OWN CASE IN ITA NO. 537(ASR)/2009 FOR THE ASSESSMENT YEAR 2006-07. HE F URTHER STATED THAT THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF TH E TRIBUNAL DATED 30 TH APRIL, 2010 BEFORE THE HONBLE PUNJAB & HARYANA HIG H COURT AT CHANDIGARH, HAS ALSO BEEN DISMISSED IN I.T.A. NO.74 9 OF 2010 (O&M) DATED 30.11.2011. HE ALSO FILED COPIES OF ORDERS OF THE T RIBUNAL AS WELL AS THE HONBLE HIGH COURT AND REQUESTED THAT THE APPEAL FI LED BY THE DEPARTMENT MAY BE DISMISSED. 3. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ER PASSED BY THE CIT(A). 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT MATERIALS AVAILABLE ON RECORD, ESPECIALLY THE ORDER PASSED BY THIS BENCH IN ASSESSEES OWN CASE IN ITA NO.537(ASR)/2009, DATED 30 TH APRIL, 2010, FOR THE ASSESSMENT YEAR 2006-07 AND ON APPEAL FILED BY THE REVENUE BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH, THE SAME WAS UPHELD BY THE HONBLE HIGH COURT, VIDE ORDER DATED 30.11.2 011 PASSED IN I.T.A.NO.749 OF 2010 (O & M) IN THE CASE OF COMMISS IONER OF INCOME TAX, 4 JALANDHAR-1, JALANDHAR VS. M/S. C.T. EDUCATIONAL SO CIETY, JALANDHAR. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ORDER OF THE HONBLE PUNJAB & HARYANA HIGH COURT (S UPRA), WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE INVOLVED IN THE P RESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE. THE RELEVANT PART OF THE ORDER PASSED BY JURISDICTIONAL HIGH COURT, U PHOLDING THE ORDER OF THE TRIBUNAL, VIDE ORDER DATED 30.11.2011 IN I.T.A. NO. 749 OF 2010 ( O & M) IS REPRODUCED AS UNDER: THE REVENUE IS IN APPEAL UNDER SECTION 260A OF TH E INCOME TAX ACT, 1961 ( FOR SHORT THE ACT) AGAINST AN ORDER P ASSED BY THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR. D ATED 30.04.2011 IN ITA NO.537(ASR)/2009 FOR THE ASSESSMENT YEAR 200 6-07, PROPOSING TO RAISE THE FOLLOWING QUESTION OF LAW: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES, THE ITAT IS RIGHT IN LAW IN ALLOWING THE EXEMPTION UNDER SECTIO N 11 OF THE INCOME TAX ACT, 1961 WHEN THE ASSESSEE SOCIETY WAS NOT WHOLLY CHARITABLE IN NATURE BECAUSE IT WAS ENGAGED IN THE ACTIVITIES WHICH WERE OTHER THAN CHARITABLE AND SINCE THE INCO ME ARISING TO IT WAS NOT BEING APPLIED SOLELY FOR ATTAINMENT OF THE CHARITABLE OBJECTS OF THE TRUST. LEARNED TRIBUNAL HAS DISMISSED THE APPEAL OF REVENU E RELIED UPON JUDGMENT OF THIS COURT IN ITA NO.450 OF 2008 T ITLED COMMISSIONER OF INCOME TAX-1, CHANDIGARH VS. M/S. M ANAV MANGAL SOCIETY, SECTOR 21, CHANDIGARH (DECIDED ON 19.8.2009). LEARNED COUNSEL FOR THE APPELLANT-REVENUE ADMITS T HAT THE ISSUES RAISED IN THE PRESENT APPEAL ARE COVERED BY JUDGMEN T OF THIS COURT IN ITA NO.450 OF 2008 TITLED COMMISSIONER OF INCOME TA X-1, CHANDIGARH VS. MANAV MANGAL SOCIEITY, SECTOR 21, CH ANDIGARH ( DECIDED ON 19.8.2009). IT IS ALSO POINTED OUT THAT SPECIAL LEAVE PETITION AGAINST SAID ORDER STANDS DISMISSED ON 19.7.2010 BY HONBLE SUPREME COURT. 5 IN VIEW OF THE JUDGMENT PASSED BY THIS COURT IN MA NAV MANGAL SOCIETYS CASE (SUPRA), WE DO NOT FIND THAT ANY QUESTION OF LAW ARISES FOR CONSIDERATION BY THIS COURT. DISMISSED. 4.1. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBL E JURISDICTIONAL HIGH COURT DATED 30.11.2011, IN CASE OF COMMISSIONER OF INCOME TAX, JALANDHAR-1, JALANDHAR VS. M/S. C.T. EDUCATIONAL SO CIETY, JALANDHAR, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND FEBRUARY, 2012. SD/- SD/- (B.P.JAIN) (H. S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22ND FEBRUARY, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE: M/S. C.T. EDUCATIONAL SOCIETY, JALAND HAR. 2. THE ACIT, R-1, JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.