ACIT 23(2), MUMBAI V. MAHARASHTRA STATE BRANCH OF INDIA RADIOLOGICAL & IMAGING ASSOCIATION, MUMBAI

ITA 1076/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9799 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.1076/M/2014 ASSESSMENT YEAR: 2007-08 ACIT-23(2), R.NO.202, C-10, 2 ND FLOOR, B.K.C. BANDRA (E), MUMBAI - 51 VS. M/S. MAHARASHTRA STATE BRANCH OF INDIA RADIOLOGICAL & IMAGING ASSOCIATION, C/O. ARTI SCAN CENTRE, 1/2 MANGAL DAS GANGARAM BLDG., N.S. ROAD MARG, MULUND (W), MUMBAI 400 080 PAN: AAAAM7520J (APPELLANT) (RESPONDENT) CO NO.194/M/2015 (AGAINST ITA NO.1076/M/2014) ASSESSMENT YEAR: 2007-08 M/S. MAHARASHTRA STATE BRANCH OF INDIA RADIOLOGICAL & IMAGING ASSOCIATION, C/O. ARTI SCAN CENTRE, 1 & 2 MANGAL DAS GANGARAM BLDG., N.S. ROAD MARG, MULUND (W), MUMBAI 400 080 PAN: AAAAM7520J VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE-23(2), C-10/202, 2 ND FLOOR, PRATYAKSHAKAR BHAVAN, BKC, MUMBAI 400 080 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI SUMAN KUMAR, D.R. DATE OF HEARING : 20.06.2017 DATE OF PRONOUNCEMENT : 26.07.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL BY THE REVENUE AND THE CROSS AP PEAL BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORDER DATED 04.11.2 013 OF THE COMMISSIONER OF ITA NO.1076/M/2014 CO NO.194/M/2015 M/S. MAHARASHTRA STATE BRANCH OF INDIA RADIOLOGICAL & IMAGING ASSOCIATION 2 INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. ITA NO.1076/M/2014 (REVENUES APPEAL) 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR AS SESSMENT YEAR 2007-08 ON 31.10.2007 DECLARING TAXABLE INCOME OF RS.43,35, 081/-. THE ASSESSMENT WAS COMPLETED ON 21.12.2009 BY MAKING ADDITIONS OF RS.2,29,21,802/- ON VARIOUS GROUNDS. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) IN THE ASSESSMENT ORDER OBSERVED THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.24,35,243/- TOWARDS BUILDING FUND AND A SUM OF R S.6,01,023/- TOWARDS CORPUS FUND. THESE AMOUNTS WERE NOT OFFERED AS INCO ME. WHEN SHOW CAUSED THE ASSESSEE STATED THAT IT COLLECTS BUILDING FUND OF RS.1000/- AT THE TIME OF COLLECTION OF LIFE MEMBERSHIP OF IRIA. THIS FACT W AS DULY DISCLOSED AT POINT NO.6 OF SIGNIFICANT ACCOUNTING POLICIES. IN ADDITIO N, THE 60TH ANNUAL CONFERENCE WAS USED TO AUGMENT BUILDING FUND FROM D ONATIONS FROM MEMBERS. THE ASSESSEE HAD APPEALED AND REQUESTED THE DELEGAT ED TO CONTRIBUTE DOUBLE THE AMOUNT OF DELEGATE FEE ON DONATION TOWARDS BUILDING FUND. THESE RECEIPTS WERE TAKEN UNDER BUILDING FUND ACCOUNT IN THE BALAN CE SHEET OF THE ASSESSEE. THAT DONATION IS A CAPITAL RECEIPT AND BEING AN EAR MARKED DONATION FOR THE CONSTRUCTION/ PURCHASE OF BUILDING, THE SAME WAS TA KEN UNDER BUILDING FUND. THAT THE DELEGATE FEE BEING INCOME WAS TAKEN TO PRO FIT AND LOSS ACCOUNT AND THE VOLUNTARILY DONATIONS BY THE MEMBERS DO NOT FORM PA RT OF THE INCOME. IT SUBMITS THAT THIS FACT WAS DULY DISCLOSED IN THE NO TES FORMING PART OF ACCOUNTS AT NOTE NO.7. THE AO DULY CONSIDERED THE SUBMISSION MADE BEFORE HIM BY THE ASSESSEE. HOWEVER, BEING NOT SATISFIED WITH THE EXP LANATION OF THE ASSESSEE, THE AO BROUGHT TO TAX A SUM OF RS.30,36,266/- AS BUSINE SS INCOME WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD. CIT(A) BY ORDER D ATED 02.11.2010. THEREAFTER, THE AO ISSUED A SHOW CAUSE NOTICE TO TH E ASSESSEE FOR LEVY OF PENALTY. SINCE THE AO WAS NOT SATISFIED WITH THE R EPLY, HE HELD THAT THE ITA NO.1076/M/2014 CO NO.194/M/2015 M/S. MAHARASHTRA STATE BRANCH OF INDIA RADIOLOGICAL & IMAGING ASSOCIATION 3 ASSESSEE WAS NOT ABLE TO FURNISH AN EXPLANATION IN RESPECT OF ADDITIONS CONFIRMED IN APPEAL. ACCORDINGLY, AO LEVIED A PENA LTY OF RS.1,02,200/- UNDER SECTION 271(1)(C) OF THE ACT. 3. MATTER CARRIED TO THE LD. CIT(A). IN THE SECOND ROUND OF LITIGATION BEFORE THE LD. CIT(A), THE ASSESSEE HAS PLACED ITS RELIANCE ON THE DECISION OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. WHEREIN T HE APEX COURT HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. THAT SUCH CLAIM MADE IN THE RETURN CANNO T AMOUNT TO THE INACCURATE PARTICULARS AND THERE WOULD BE NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LD. CIT(A) HAS CONSIDERE D THE SUBMISSIONS OF THE ASSESSEE AND DELETED THE PENALTY. HENCE, THE REVEN UE HAS COME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS.24,35,243/- T OWARDS BUILDING FUND AND A SUM OF RS.6,01,023/- TOWARDS CORPUS FUND. THESE AM OUNTS WERE NOT OFFERED AS INCOME. IT WAS STATED THAT 60 TH ANNUAL CONFERENCE WAS USED TO AUGMENT BUILDING FUND FROM DONATIONS FROM MEMBERS AND ASSES SEE HAD APPEALED AND REQUESTED THE REQUESTED THE DELEGATED TO CONTRIBUTE DOUBLE THE AMOUNT OF DELEGATE FEE ON DONATION TOWARDS BUILDING FUND. TH E ASSESSEE HAS TAKEN THESE RECEIPTS UNDER BUILDING FUND ACCOUNT IN BALANCE SHE ET. THE DONATION BEING AN EARMARKED DONATION FOR THE CONSTRUCTION/PURCHASE OF BUILDING TAKEN UNDER THE BUILDING FUND WAS A CAPITAL RECEIPT, SHOWN IN THE B ALANCE SHEET AS VOLUNTARY DONATION BY MEMBERS AND HENCE DO NOT FORM PART OF I NCOME AND THE SAME WAS DISCLOSED IN THE NOTES FORMING PART OF ACCOUNTS AT NOTE NO.7. THE DELEGATE FEE WAS TAKEN IN PROFIT & LOSS ACCOUNT. THEREFORE, ALL THE FACTS WERE DISCLOSED IN THE RETURN OF INCOME. THEREFORE, WE ARE OF THE VIE W THAT LD. CIT(A) IS JUSTIFIED ITA NO.1076/M/2014 CO NO.194/M/2015 M/S. MAHARASHTRA STATE BRANCH OF INDIA RADIOLOGICAL & IMAGING ASSOCIATION 4 IN DELETING THE PENALTY AND OUR INTERFERENCE IS NOT REQUIRED. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. CO NO.194/M/2015 5. SINCE THE APPEAL OF THE REVENUE IS DISMISSED, TH E CROSS OBJECTION OF THE ASSESSEE BECOMES INFRUCTUOUS AND ACCORDINGLY THE SA ME IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.07.2017. SD/- SD/- ( G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 26.07.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.