ITO, CHENNAI V. Spartan Educational Trust, CHENNAI

ITA 1068/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96538 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 29-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: J SREE VIDYA
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI , . ! ' , # '$ % [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.970/MDS/2015 / ASSESSMENT YEAR : 2010-11 M/S SPARTAN EDUCATIONAL TRUST NO.31, SPARTAN NAGAR MOGAPPAIR, CHENNAI 600037 VS. THE ADDL. DIRECTOR OF INCOM E - TAX (EXEMPTIONS)-IV CHENNAI [PAN AABTS 1183 P ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NO.1068/MDS/2015 / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER (EXEMPTIONS) WARD 3, CHENNAI VS. M/S SPARTAN EDUCATIONAL TRUST NO.31, SPARTAN NAGAR MOGAPPAIR, CHENNAI 600037 ( &' / APPELLANT) ( ()&' /RESPONDENT) ASSESSEE BY : MS. PUSHYA SITARAMAN, SR. STANDING COUNCIL & MS. J SREE VIDYA, ADVOCATE DEPARTMENT BY : S HRI P RADHAKRISHNAN, JCIT / DATE OF HEARING : 11 - 1 2 - 2015 / DATE OF PRONOUNCEMENT : 18 - 1 2 - 2015 * / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS FILED BY THE ASSESSEE AND THE RE VENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-17, DATED 20.2.2015, FOR ASSESSMENT YEAR 2010-11. ITA NO. 970 & 1068/15 :- 2 -: 2. THE ASSESSEE RAISES A GROUND THAT THE CIT(A) ENHAN CED THE ASSESSMENT WITHOUT ISSUING A SHOW CAUSE NOTICE AN D SUCH ENHANCEMENT IS CONTRARY TO THE PROVISIONS OF SEC. 2 51(2) OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT DURING THE ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE CLAIMED FULL COST OF ADDITION TO FIXED ASSETS AS APPLICATIO N OF INCOME. HOWEVER, THE ASSESSEE CLAIMED DEPRECIATION IN THE ASSESSMEN T YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER DISALLOWED TH E SAME BY OBSERVING THAT THE ENTIRE COST OF ASSETS HAD ALREADY BECOME N IL AND FURTHER DEPRECIATION CANNOT BE GIVEN. THE ASSESSEE CARRIE D THE MATTER IN APPEAL BEFORE THE CIT(A). DURING THE COURSE OF APP ELLATE PROCEEDINGS, ON 21.1.2015 THE CIT(A) ASKED THE LD. REPRESENTATIV E FOR THE ASSESSEE WHY THE TRUST SHOULD NOT BE DENIED EXEMPTION AND SU RPLUS OF ` 2,59,64,105/- SHOULD NOT BE BROUGHT TO TAX AS THE ASSESSEE HAS COLLECTED DONATION FROM THE STUDENTS AND THE ASSES SEE WAS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES WITHIN THE M EANING OF SEC. 2(15) OF THE ACT. THE ASSESSEE VIDE ITS REPLY DATED 9.2 .2015 OBJECTED TO THE ENHANCEMENT. THE CIT(A), ALONGWITH THIS ISSUE, TOO K UP THE ISSUE REGARDING COLLECTION OF DONATION AND ALSO CONSIDE RED THE FOLLOWING OBJECT CLAUSE OF THE ASSESSEE TO ENHANCE THE ASSE SSMENT: (A) TO ESTABLISH, RUN AND MAINTAIN EDUCATIONAL I NSTITUTIONS OF ANY KIND ON CHRISTIAN LINES FOR THE BENEFIT OF C HRISTIAN AND OTHER MEMBERS OF THE PUBLIC WITHOUT DISTINCTION OF CASTE, RACE OR CREED. ITA NO. 970 & 1068/15 :- 3 -: ACCORDING TO THE CIT(A), THE ABOVE OBJECT CLAUSE IS IN VIOLATION OF CLAUSE (B) OF SUB-SEC.(1) OF SEC. 13 OF THE ACT AND THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. ACCORD ING TO THE LD. REPRESENTATIVE FOR THE ASSESSEE, THIS FACT WAS NO T BROUGHT TO THE NOTICE OF THE ASSESSEE AT THE TIME OF APPELLATE PR OCEEDINGS WHICH IS IN VIOLATION OF PROVISIONS OF SEC. 251(2) OF THE ACT. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IN OUR OPINION, THE CIT(A) H AS POWERS TO ENHANCE THE ASSESSMENT, BUT HE HAS TO GIVE PROPER O PPORTUNITY OF HEARING TO THE ASSESSEE THOUGH THERE IS NO PRESCRI BED STATUTORY FORM TO ISSUE NOTICE U/S 251(2) OF THE ACT. IN THIS CA SE, THE CIT(A) BROUGHT TO THE NOTICE OF THE LD. REPRESENTATIVE FOR THE AS SESSEE REGARDING TWO ISSUES (I) APPLICATION OF INCOME AND (II) DEPRECIAT ION. HOWEVER, REGARDING THE OBJECT CLAUSE OF THE ASSESSEE, IN OR DER TO DENY THE EXEMPTION U/S 11 OF THE ACT, HE SHOULD PUT IT TO T HE ASSESSEE. BEING SO, IN OUR OPINION, IT IS PROPER TO BRING ALL THE ISSUES RESULTING IN ENHANCEMENT OF THE ASSESSMENT TO THE NOTICE OF THE ASSESSEE BY THE CIT(A) BEFORE ENHANCING THE ASSESSMENT. ACCORDINGL Y, WE REMIT THE ENTIRE ISSUE TO THE FILE OF THE CIT(A) TO GIVE ADEQ UATE OPPORTUNITY TO THE ASSESSEE BEFORE ENHANCING THE ASSESSMENT. SIN CE WE HAVE REMITTED THE PRIMARY ISSUE BACK TO THE FILE OF THE CIT(A), AT THIS STAGE, ITA NO. 970 & 1068/15 :- 4 -: WE REFRAIN FROM GOING INTO THE OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSE. 6. COMING TO THE REVENUES APPEAL, IN VIEW OF OUR OR DER IN ASSESSEES APPEAL, AS OF NOW THERE IS NO SURVIVING ORDER OF THE CIT(A) HENCE, THE REVENUES APPEAL HAS BECOME INFRUSTUOUS AT THIS STAGE. IF THE REVENUE HAS ANY GRIEVANCE AFTER PASSING FRESH O RDER BY THE CIT(A), THE REVENUE IS AT LIBERTY TO FILE FURTHER A PPEAL BEFORE THIS TRIBUNAL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED AS HAVING BECOME INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ' ) (G. PAVAN KUMAR) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI / DATED: 18 TH DECEMBER, 2015 RD ' #$ %$ / COPY TO: 1 . &' / APPELLANT 4. ( / CIT 2. ')&' / RESPONDENT 5. $*+ ' , / DR 3. ( () / CIT(A) 6. +/ 0 / GF