D.D.I.T (E) - I,kolkata, Kolkata V. Shree Shree Mohanananda Brahmachari Medical Welfare Trust, Kolkata

ITA 1042/KOL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1217 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-04-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BISWASACIT
• Keywords: Charitable institution; Opportunity of being heard; Question of law
• Section: 143(3); 10B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI N. V. VASUDEVAN, JM &DR. A.L.SAINI, AM ./ ITA NO.1042/KOL/2013 ( / ASSESSMENT YEAR: 2003-04 DDTE(E)-I, KOLKATA 5 TH FLOOR, 10B MIDDLETON ROW, KOLKATA-700071 VS. SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST AE-467, SALT LAKE CITY, KOLKATA 700 064. ./ ./PAN/GIR NO. : AADTS 0083 J (APPELLANT) .. (RESPONDENT) APPELLANTBY :SHRI M. K. BISWAS,ACIT DR RESPONDENT BY :SHRI VIGYANESHWARNATHDATTA, ADVOCATE / DATE OF HEARING : 17/08/2017 /DATE OF PRONOUNCEMENT : 18/10/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINING TO ASSESSMENT YEAR 2003-04, IS DIRECTED AGAINST AN ORDER PASSED BY THE CIT(APPEALS), JALPAIGURI, IN APPEAL NO.763/CIT(A)-XIV/11-12, DATED 06.03.2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S 254/143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) DATED 14.11.2011. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST ITA NO.1042/KOL/2013 ASSESSMENT YEAR: 2003-04 PAGE | 2 1.THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)/JALPAIGURI ERRED IN ALLOWING ACCUMULATION U/S 11(2) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT THE PURPOSE OF ACCUMULATION WAS NOT SPECIFIC WHICH IS MANDATORY FOR ACCUMULATION U/S 11(2) OF THE I T ACT AS OBSERVED BY THE CALCUTTA HIGH COURT IN THE CASE OF DIT(EXEMPTION) VS. TRUSTEE OF SINGHANIA CHARITABLE TRUST [1993] 199 ITR 819 (CAL). 2.THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND ALSO IN THE QUESTION OF LAW, THE LD. CIT(A)/JALPAIGURI ERRED IN ALLOWING THE EXEMPTION U/S 11 DISREGARDING THE STATED CASE OF CHAMPA CHARITABLE TRUST VS. CIT [214 ITR 764(BOMBAY)] AND CIT VS. RATTAN TRUST [227 ITR 356 (SC)]. 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSEES ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) ON 31.03.2006 WHEREIN THE ASSESSEES CLAIM OF EXEMPTION U/S 11 WAS PARTLY DISALLOWED. IN THAT ORDER, AN EXPENSE OF RS.23,27,356/- WAS CONSIDERED TO BE APPLICATION OF INCOME FOR CHARITABLE PURPOSES AFTER REDUCING A DONATION OF RS.9,69,846/- GIVEN TO SRI SRIMOHANANDASAMAJSEVASAMITI. THE STATUTORY ACCUMULATION OF RS.20,54,035/- (@15%) WAS ALSO ALLOWED. AGAINST THE ORIGINAL ASSESSMENT U/S 143 (3), THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A). THE CIT(A), VIDE ORDER DATED 25..11.2009 DELETED ALL THESE ADDITIONS AND DIRECTED ASSESSING OFFICER TO ALLOW EXEMPTION U/S 11. THEN, THE REVENUE FILED AN APPEAL AGAINST THE ORDER OF CIT(A),DATED 25..11.2009 BEFORE THE HONBLE ITAT, KOLKATA. THE HON. ITAT VIDE ORDER DATED 10.12.2010 SET ASIDE THE ORDER OF CIT(A) AND RESTORED THE MATTER TO ASSESSING OFFICER FOR FRESH CONSIDERATION AFTER GIVING THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER MADE THE ASSESSMENT AS PER THE DIRECTION GIVEN BY THE HONBLE ITAT, KOLKATA. THE ASSESSING OFFICER, MADE THE ASSESSMENT AS PER THE DIRECTION GIVEN BY THE HONBLE ITAT, KOLKATA AND IN HIS FRESH ASSESSMENT ORDER DATED 14.11.2011, HE HAD DISALLOWED THE ENTIRE EXEMPTION U/S 11 BY REPEATING THE SAME FACT OF HAVING TRANSACTIONS WITH OTHER SISTER-TRUSTS THEREBY ATTRACTING THE PROVISIONS OF SECTION 13. THE ADDITIONAL ISSUE RAISED BY THE ASSESSING OFFICER IN THE FRESH ASSESSMENT WAS THAT THE ASSESSEE HAD FAILED TO GIVE ANY EVIDENCE SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST ITA NO.1042/KOL/2013 ASSESSMENT YEAR: 2003-04 PAGE | 3 REGARDING THE UTILIZATION OF FUND TO THE TUNE OF RS.54,83,854/- SET APART IN ASSESSMENT YEAR 2001-02, IN THE ASSESSMENT YEAR 2002-03. THE ASSESSING OFFICER HAS OBSERVED THAT RECEIVING DONATION FROM GROUP TRUSTS, SETTING APART SUCH MONEY FOR NON-SPECIFIED PURPOSES TO AVAIL BENEFIT U/S 11(2) AND FAILURE TO SHOW AND PROVE UTILIZATION OF SUCH FUND, GIVING DONATION TO GROUP TRUSTS ETC. ARE ALL FORMING PART OF TAX EVASION DEVICE ONLY. IN VIEW OF THIS THE ASSESSING OFFICER DISALLOWED THE EXEMPTION U/S 11. THE ASSESSING OFFICER HAD TAXED THE ENTIRE RECEIPTS OF THE YEAR WITHOUT ALLOWING FOR THE EXPENDITURE WHICH WAS PARTLY ALLOWED IN THE ORIGINAL ASSESSMENT. THE ASSESSING OFFICER HAD ALLOWED THE STATUTORY ACCUMULATION OF RS.20,54,035/- (@15%) IN THE ORIGINAL ASSESSMENT. AGGRIEVED BY THE FRESH ASSESSMENT ( MADE BY AO U/S 254/143(3) OF THE I.T.), THE ASSESSEE HAD FILED AGAIN APPEAL BEFORE THE CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE DETAILS OF FDS WITH SBI, CHOWINGHEE BRANCH WERE FILED DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO PRODUCED THE DETAILS OF ALL EXPENDITURE FOR CHARITABLE PURPOSES FROM F.Y 2003-04 TO 2007-08. THESE DETAILS WERE ALREADY FILED IN THE RESPECTIVE RETURNS FOR THESE YEARS WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT AND EXEMPTION U/S 11 IS ALLOWED. 4. NOT BEING SATISFIED WITH THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. IT IS SECOND INNINGS BEFORE THE ITAT.THE LD. DR FOR THE REVENUE POINTED OUT THAT THE LD. CIT(A) WAS WRONG IN ALLOWING ACCUMULATION U/S 11(2) OF I.T ACT WITHOUT APPRECIATING THE FACT THAT THE PURPOSE OF ACCUMULATION WAS NOT SPECIFIC, WHICH IS MANDATORY FOR ACCUMULATION U/S 11(2) OF THE I.T ACT.THE LD. DR FOR THE REVENUE RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN CIT VS. RATTAN TRUST (1997) 227 ITR 356(SC) WHEREIN IT WAS HELD THAT T HE MANDATE REGARDING INVESTMENT OF INCOME OF TRUST WITH THE PERSONS PROHIBITED BY SECTION. 13(3) HAVING BEEN INTRODUCED SUBSEQUENT TO 1ST APRIL, 1962 BY AMENDMENT OF TRUST BY THE TRUSTEES IN EXERCISE OF POWER CONFERRED ON THEM, THE FIRST PROVISO TO SECTION 13(1)(C)(II), LIFTING THE BAR OF S. 13 WOULD NOT APPLY. THE LD DR FOR THE REVENUE ALSO RELIED ON THE JUDGMENT OF TRUSTEES OF SINGHANIA CHARITABLE SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST ITA NO.1042/KOL/2013 ASSESSMENT YEAR: 2003-04 PAGE | 4 TRUST, 199 ITR 819 ( CAL), WHEREIN IT WAS HELD THAT FOR PURPOSES OF ACCUMULATION OF INCOME UNDER SECTION 11(2), ASSESSEE MUST SPECIFY IN THE NOTICE IN FORM 10 THE CONCRETE NATURE OF THE PURPOSE(S) FOR WHICH ACCUMULATION IS BEING MADE. THE LD DR FURTHER RELIED ON THE JUDGMENT OF CHAMPA CHARITABLE TRUST VS. CIT [214 ITR 764(BOMBAY), WHEREIN IT WAS HELD THAT BAR OF S. 13(1)(II) APPLIED WHERE THE ASSESSEE APPLIED ITS INCOME FOR THE BENEFIT OF A TRUST WHICH WAS A SUBSTANTIAL CONTRIBUTOR TO THE ASSESSEE ITSELF. IN ADDITION TO THIS,THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 5. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT, THE TRUST HAD EXPENDEDSUBSTANTIAL PART OF THE INCOMEFOR CHARITABLE PURPOSES. THEREFORE, WHEN SUBSTANTIAL PART OF THE INCOME WAS FOUND TO BE EXPENDED FOR CHARITABLE PURPOSES AND EXEMPTION U/S 11 ALLOWED PARTIALLY IN THE ORIGINAL ASSESSMENT, HOW THE SAME EXPENDITURE IS FOUND TO BE SPENT FOR NON-CHARITABLE PURPOSES IN THE RE-ASSESSMENT PROCEEDINGS? WHEN THE ASSESSING OFFICER FINDS THAT THE INCOME WHICH WAS SET APART IN ANY ASSESSMENT YEAR FOR FUTURE EXPENDITURE FOR CHARITABLE PURPOSES, HAS NOT BEEN UTILIZED FOR THE CHARITABLE PURPOSE, THEN HE HAS TO BRING SUCH NON- CHARITABLE EXPENDITURE TO TAX IN THE YEAR OF ITS EXPENDITURE AS PER THE PROVISIONS OF SECTION 11(3). THE LD COUNSEL ALSO POINTED OUT THAT SUCH EXPENDITURE FOR NON-CHARITABLE PURPOSE CANNOT BE THE BASIS FOR DENIAL OF EXEMPTION U/S.11 FOR ANY SUBSEQUENT YEAR. THE ASSESSEE HAS BEEN FILING THE RETURNS OF INCOME FOR ALL SUBSEQUENT ASSESSMENT YEARS AND THE DETAILS OF EXPENDITURE OF INCOMES SET APART IN EARLIER YEARS ARE MENTIONED IN THESE RETURNS AND ON THE BASIS OF WHICH, THE ASSESSEE IS ALLOWED EXEMPTION UNDER SECTION 11 OF THE ACT. THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT EXPENDING THE SET APART INCOMES OF THE EARLIER YEARS IN SUBSEQUENT YEARS FOR CHARITABLE PURPOSES, IS NOT BORNE OUT OF FACTS. APART FROM THIS, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE JUDGMENT OF HONBLE ITAT IN ASSESSEES OWN CASE, IN ITA NO.1822/KOL/1996, SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST ITA NO.1042/KOL/2013 ASSESSMENT YEAR: 2003-04 PAGE | 5 A.Y.1995-96, DATED 28.02.2002 WHEREIN IT WAS HELD THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST EXISTING SINCE LONG BACK AND IN THE EARLIER YEARS AND IN SUBSEQUENT YEARS ALSO, IT WAS ALLOWED THE BENEFITS OF EXEMPTION. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAS FILED FORM NO.10 ON 27 TH OCTOBER, 1995 AS PER WHICH FUND HAS BEEN ACCUMULATED FOR THE PURPOSE OF PUBLIC CHARITABLE PURPOSE LIKE HOSPITAL, EDUCATIONAL INSTITUTION AND TIRTHASHRAM. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PURPOSES MENTIONED IN FORM NO.10 WAS VAGUE IN NATURE AND HELD THAT IN THE SCHEME OF THE ACT, WHICH IS APPLICABLE FOR PUBLIC CHARITABLE TRUST U/S.11(2) HAS TO BE FOR SPECIFIC PURPOSES FOR WHICH THE ASSESSEE WANTS TO APPLY ITS FUNDS. THE ASSESSING OFFICER RELIED ON THE JUDGMENT REPORTED IN D.I.(EXEMPTION) VS.- TRUST OF SINGHANIA CHARITABLE TRUST (199 ITR 819). THE JUDGMENT RELIED ON BY THE ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN SO FAR AS IN THE ABOVEMENTIONED CASE, THE RESOLUTION PASSED BY THE BOARD OF TRUSTEES OF THE TRUST WAS AS FOLLOWS:- THAT CONSENT BE AND IS HEREBY ACCORDED THAT, OUT OF THE BALANCE OF UNAPPLIED INCOME OF RS.94,125/- FOR THE YEARS, THE SUM OF RS.68,814/- BE ACCUMULATED AND/OR NOT APART FOR THE PURPOSE OF APPLICATION TO ANY ONE OF THE OBJECTS OF THE TRUST, AS SET OUT IN ITEMS NO.(I) TO (XVI) UNDER PARAGRAPH-1 OF THE DEED OF TRUST TILL THE PREVIOUS YEAR ENDING ON MARCH 31, 1994. IT WAS APPARENT FROM THE ABOVE THAT THE PURPOSES FOR WHICH THE FUND WAS ACTUALLY VAGUE AND NOT SPECIFIED. IN SO FAR, IT IS FIXED FOR ANYONE OR MORE OF THE OBJECTS OF THE TRUST SET OUT IN THE TRUST DEED, WHEREAS IN THE PRESENT CASE, OUT OF THE OTHER OBJECTS, THE FUND WAS CLEARLY EARMARKED FOR PUBLIC CHARITABLE PURPOSES LIKE HOSPITAL, EDUCATION INSTITUTIONS AND TRITHASHRAM IN THE FORM 10 FILED BY THE ASSESSEE ON 27.10.1995.HOWEVER, THE HONBLE SUPREME COURT IN THE CASE OF CIT, A.P.-VS- ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION (159 ITR 1) HELD THAT THE TEST IS WHAT IS THE PREDOMINANT OBJECT OF THE SOCIETY WHETHER IT IS TO CARRY OUT A CHARITABLE PURPOSE OR TO EARN PROFIT? IF THE PREDOMINANT OBJECT IS TO CARRY OUT A CHARITABLE PURPOSE AND NOT TO EARN PROFIT, THE PURPOSE WOULD NOT LOSE ITS CHARITABLE CHARACTER MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY. SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST ITA NO.1042/KOL/2013 ASSESSMENT YEAR: 2003-04 PAGE | 6 6. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT ASSESSEE HAS EXPENDED FOR CHARITABLE PURPOSES AND EXEMPTION U/S 11 ALLOWED PARTIALLY IN THE ORIGINAL ASSESSMENT, THEREFORE, THESE EXPENSES CANNOT BECOME NON-CHARITABLE PURPOSES IN THE RE-ASSESSMENT PROCEEDINGS. WHEN THE ASSESSING OFFICER FINDS THAT THE INCOME WHICH WAS SET APART IN ANY ASSESSMENT YEAR FOR FUTURE EXPENDITURE FOR CHARITABLE PURPOSES HAS NOT BEEN UTILIZED FOR THE CHARITABLE PURPOSE, THEN HE HAS TO BRING SUCH NON-CHARITABLE EXPENDITURE TO TAX IN THE YEAR OF ITS EXPENDITURE AS PER THE PROVISIONS OF SECTION 11(3). BUT SUCH EXPENDITURE FOR NON-CHARITABLE PURPOSE CANNOT BE THE BASIS FOR DENIAL OF EXEMPTION U/S.11. THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT EXPENDING THE SET APART INCOMES OF THE EARLIER YEARS IN SUBSEQUENT YEARS FOR CHARITABLE PURPOSES IS NOT BORNE OUT OF FACTS. THE LD DR FOR THE REVENUE RELIED ON THE JUDGMENT OF TRUSTEES OF SINGHANIA CHARITABLE TRUST, 199 ITR 819 ( CAL), WHEREIN IT WAS HELD THAT FOR PURPOSES OF ACCUMULATION OF INCOME UNDER SECTION 11(2), ASSESSEE MUST SPECIFY IN THE NOTICE IN FORM 10 THE CONCRETE NATURE OF THE PURPOSE(S) FOR WHICH ACCUMULATION IS BEING MADE. IN THE ASSESSEE`S CASE UNDER CONSIDERATION, THE ASSESSEE TRUST FILED THE FORM NO.10 AND MADE THE COMPLIANCE AND THERE IS NO ANY MISTAKE ON THE PART OF THE ASSESSEE. THEREFORE, THE FACTS OF THE SAID JUDGMENT DO NOT APPLY TO THE FACTS OF THE ASSESSEE UNDER CONSIDERATION. APART FROM THIS, OTHER TWO JUDGMENTS CITED BY LD DR VIZ: CIT VS. RATTAN TRUST (1997) 227 ITR 356(SC)AND CHAMPA CHARITABLE TRUST VS. CIT [214 ITR 764(BOMBAY) (SUPRA), DO NOT APPLY TO THE ASSESSEE`S FACTS UNDER CONSIDERATION. IN ADDITION TO THIS, THE ASSESSEE`S ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF KOLKATA ITAT IN ASSESSEES OWN CASE, IN ITA NO.1822/KOL/1996, A.Y.1995-96,(SUPRA), AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE AFORESAID FINDINGS, AND THE LD CIT(A) HAS ALLOWED THE APPEAL OF THE SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST ITA NO.1042/KOL/2013 ASSESSMENT YEAR: 2003-04 PAGE | 7 ASSESSEE BY FOLLOWING THE PROVISIONS OF THE ACT, THEREFORE, WE FIND NO REASON TO INTERFERE IN THE SAID ORDER OF THE LD CIT(A) AND THE SAME IS HEREBY UPHELD. THEREFORE, THE GROUNDS OF APPEAL OF REVENUE, ARE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE, IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18/10/2017. SD/ - (N. V. VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 18/10/2017 RS, SPS. / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT DDTE(E)-I, KOLKATA 2. / THE RESPONDENT-SHREE MOHANANANDABRAHMACHARI MEDICAL WELFARE TRUST 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.