The Tamizhvel P.T.Rajan Commemoration Trust, CHENNAI V. DDIT, CHENNAI

ITA 1080/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7728 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-05-2015
• Court: TRIBUNAL
• Department Lawyers: D N KAR
• Assessee Lawyers: PERCY PARDIWALA SR
• Keywords: Charitable institution; Opportunity of being heard; Prejudicial to interest
• Section: 143(3); 12AA; 131; 263; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] S.P.NO.336/MDS/2015 & ./ I.T.A.NO.1080/MDS/2015 / ASSESSMENT YEAR : 2010-11 THE TAMIZHVEL P.T RAJAN COMMEMORATION TRUST NO.26, SECOND STREET EAST ABHIRAMAPURAM CHENNAI 600 004 VS. THE DY. DIRECTOR OF INCOME - TAX(EXEMPTIONS)-1 CHENNAI [PAN AAATT 0664 R] ( PETITIONER/ APPELLANT) ( &'() /RESPONDENT) / APPELLANT BY : SHRI PERCY PA R DIWALA, SR. COUNSEL & SHRI SANDEEP BAGMAR, ADVOCATE /RESPONDENT BY : SHRI D.N KAR, CIT / DATE OF HEARING : 06 - 01 - 2016 ! / DATE OF PRONOUNCEMENT : 18 - 0 3 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(EXEMPTIONS), CHENNAI , DATED 27.3.2015, IN EXERCISING HIS JURISDICTION U/S 263 OF THE ACT. 2. SHRI PERCY PARDIWALA, LD. SENIOR COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT GRANTING EXEMPTION U/S 11 OF THE ACT. THE S.P 336/15 ITA NO. 1080/15 :- 2 -: ASSESSING OFFICER AFTER CALLING FOR ALL THE RECORDS RELATING TO LETTING OUT OF THE COMMUNITY HALL, FOUND THAT THE RECEIPTS FROM LETTING OUT OF THE COMMUNITY HALL ARE INCIDENTAL TO CARRYING OUT THE O BJECT OF THE ASSESSEE-TRUST. ACCORDINGLY, THE ASSESSING OFFICER GRANTED EXEMPTION U/S 11 OF THE ACT. 3. REFERRING TO THE TRUST DEED, THE COPY OF WHICH IS A VAILABLE AT PAGE 1 OF THE PAPER BOOK, THE LD. SR. COUNSEL SUBMI TTED THAT THE TRUST WAS ESTABLISHED BY A DEED OF TRUST DATED 27.3.1991 EXECUTED BY JUSTICE S. NATARAJAN, A RETIRED JUDGE OF THE SUPREM E COURT. THE OBJECTS OF THE TRUST ARE TO ESTABLISH EDUCATIONAL, MEDICAL AND CHARITABLE ORGANIZATIONS FOR GENERAL PUBLIC, TO INSTITUTE SCHO LARSHIPS FOR THE DESERVING STUDENTS, AND TO PROVIDE GENERAL MEDICAL RELIEF TO THE PUBLIC. IN FURTHERANCE OF ITS OBJECTS, THE ASSESSEE REQUES TED THE COSMOPOLITAN CLUB, MADURAI, TO ALLOT A PIECE OF LAND. ACCORDING TO THE LD. SR. COUNSEL, THE COSMOPOLITAN CLUB, MADURAI, OWNS VACAN T LAND TO THE EXTENT OF 64 GROUNDS AND 1484 SQ FT IN MADURAI CITY . THE VACANT SITE WAS FOUND TO BE EXCESS OF ITS HOLDING UNDER TAMILNA DU URBAN LAND CEILING AND REGULATION ACT. ON THE APPLICATION MAD E BY THE ASSESSEE, 2 ACRES OF LAND WAS ALLOTTED TO THE ASSESSEE ON LE ASE SUBJECT TO CERTAIN CONDITIONS PRESCRIBED IN G.O.(MS)NO. 1118 D ATED 25.10.1996. AS PER THE CONDITIONS IMPOSED BY GOVERNMENT OF TAMI LNADU, THE ASSESSEE-TRUST CONSTRUCTED A COMMUNITY HALL. THE RENTAL INCOME S.P 336/15 ITA NO. 1080/15 :- 3 -: RECEIVED FROM THE COMMUNITY HALL WAS UTILIZED FOR C ARRYING OUT THE OBJECTS OF THE TRUST. THE LD. SR. COUNSEL CLARIFIE D THAT THE ASSESSEE- TRUST WAS ALSO GRANTED REGISTRATION U/S 12AA OF TH E ACT AND THE ASSESSING OFFICER CONTINUOUSLY ALLOWED EXEMPTION ON THE RENTAL INCOME RECEIVED FROM COMMUNITY HALL ON THE BASIS OF ITS UT ILIZATION FOR THE OBJECTS OF THE TRUST. 4. THE CIT(E) IN THE GUISE OF EXERCISING HIS POWER U/ S 263 OF THE ACT, FOUND THAT WHILE LETTING OUT THE COMMUNITY HALL, THE TRUST USED TO COLLECT MAJOR PORTION OF THE RENT AS CORPUS DONA TION AND USED TO COLLECT A MINIMUM AMOUNT AS RENT. REFERRING TO THE PROVISO TO SEC. 2(15) OF THE ACT, THE CIT(E) FOUND THAT THE LEGISLA TURE TOOK AWAY CERTAIN ACTIVITIES OF GENERAL PUBLIC UTILITY OUTSID E THE PURVIEW OF CHARITY U/S 2(15) OF THE ACT BY INSERTING TWO PROVISOS TO S EC. 2(15) OF THE ACT. AFTER CONSIDERING THE EFFECT OF THE TWO PROVISOS TO SEC. 2(15), THE CIT(E) FOUND THAT THE PROVISO TO SEC. 2(15) WOULD B E APPLICABLE TO THE ASSESSEE, THEREFORE, THE EXEMPTION GRANTED BY THE A SSESSING OFFICER U/S 11 OF THE ACT WAS NOT BASED UPON THE CORRECT IN TERPRETATION OF LAW. THE CIT(E) HAS ALSO FOUND THAT RENTAL RECEIPT FROM KALYANA MANDAPAM WAS UNDERSTATED IN THE RETURN OF INCOME AND IT WAS FALSELY CLASSIFIED AS CORPUS DONATION FOR THE PURPOSE OF CLAIMING EXEMPTI ON U/S 11 OF THE ACT. ACCORDING TO THE LD. SR. COUNSEL, THE ASSESS EE HAS UTILIZED THE ENTIRE MONEY RECEIVED ON LETTING OUT OF COMMUNITY H ALL FOR CHARITABLE S.P 336/15 ITA NO. 1080/15 :- 4 -: ACTIVITY, THEREFORE, THE ASSESSING OFFICER HAS RIGH TLY ALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER HAS MADE P ROPER ENQUIRY, THEREFORE, THE CIT(E) IS NOT JUSTIFIED IN REVISING THE ORDER OF THE ASSESSING OFFICER U/S 263 OF THE ACT. 5. ON THE CONTRARY, SHRI D.N. KAR, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE-TRUST W AS REGISTERED U/S 12AA OF THE ACT AS A CHARITABLE INSTITUTION. THE A SSESSING OFFICER ALSO GRANTED EXEMPTION AFTER OBSERVING THAT RENTAL INCOM E FROM COMMUNITY HALL IS INCIDENTAL TO THE CHARITABLE ACTIVITY OF TH E ASSESSEE. THEREAFTER, CIT(E) HAS RECEIVED VARIOUS TAX EVASION PETITIONS M AKING ALLEGATIONS THAT THE FUNDS OF THE TRUST WAS MISUSED. THEREFORE , TO EXAMINE THE PETITIONS RECEIVED BY THE CIT(E), HE CALLED FOR THE RECORDS AND FOUND THAT THE ASSESSEE WAS RECEIVING RENT FOR LETTING O UT THE COMMUNITY HALL UNDER THE GUISE OF CORPUS DONATION. THE ASSESSEE WAS DISCLOSING ONLY A NOMINAL AMOUNT AS RENT FROM COMMUNITY HALL. THE CIT(E) FURTHER FOUND THAT LETTING OUT OF THE COMMUNITY HALL IS A C OMMERCIAL ACTIVITY WHICH CANNOT BE ALLOWED AFTER INTRODUCTION OF PROVI SO TO SEC. 2(15) OF THE ACT. AFTER AMENDMENT OF SEC. 2(15) BY INTRODUC ING TWO PROVISOS, THE LEGISLATURE TOOK AWAY THE ACTIVITY OF GENERAL P UBLIC UTILITY OUTSIDE THE SCOPE OF CHARITY U/S 2(15) OF THE ACT. ACCORD ING TO THE LD. DR, THE OBJECT OF THE TRUST IS A GENERAL PUBLIC UTILITY, BU T WHEN THE ASSESSEE IS RECEIVING RENTAL INCOME FROM LETTING OUT OF THE COM MUNITY HALL OR S.P 336/15 ITA NO. 1080/15 :- 5 -: KALYANA MANDAPAM, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. REFERRING TO THE ORDER OF THE STATE GO VERNMENT, THE LD. DR POINTED OUT THAT THE LAND WAS ALLOTTED TO THE ASSE SSEE ON THE GROUND THAT 50% CONCESSION ON THE RENT SHALL BE GIVEN TO T HE POOR CITIZENS. HOWEVER, THE ASSESSEE NEVER GAVE ANY CONCESSION TO THE POOR CITIZENS. THE ASSESSEE HAS VIOLATED THE CONDITIONS IMPOSED BY THE STATE GOVERNMENT WHILE LETTING OUT THE COMMUNITY HALL. W HILE LETTING OUT THE COMMUNITY HALL, THE ASSESSEE HAS COLLECTED ENORMOU S AMOUNT AS CORPUS DONATION AND A MARGINAL AMOUNT WAS DISCLOSED AS RENTAL INCOME. IN FACT, THE ASSESSEE HAS COLLECTED MORE THAN ` 52 LAKHS AS CORPUS DONATION DURING THE YEAR UNDER CONSIDERATION . IF THE CORPUS DONATION WAS TAKEN AS REGULAR RENTAL INCOME, THEN T HE PROFIT OF THE ASSESSEE WOULD BE EXORBITANT FROM RUNNING THE COMMU NITY HALL, THEREFORE, AT ANY STRETCH OF IMAGINATION THE ACTIVI TY OF THE ASSESSEE CANNOT BE CONSIDERED TO BE A CHARITY. WHEN THIS W AS BROUGHT TO THE NOTICE OF THE ASSESSEE, THE ASSESSEE WAS WILLING TO FILE FORM 10 FOR ACCUMULATION OF INCOME. 6. THE LD. DR FURTHER POINTED OUT THAT WHILE FILING TH E RETURN UNDER THE SERVICE TAX ACT, THE ASSESSEE HAS DISCLO SED THE SO CALLED CORPUS DONATION AS RENTAL INCOME ON LETTING OUT OF THE COMMUNITY HALL. THE ASSESSEE HAS ALSO DISCLOSED THE RECEIPT OF COR PUS DONATION AS IF IT WAS FROM REGULAR COMMERCIAL ACTIVITY. THEREFORE, T HE ANNUAL RECEIPT OF S.P 336/15 ITA NO. 1080/15 :- 6 -: THE ASSESSEE EXCEEDED THE THRESHOLD LIMIT OF ` 10 LAKHS FOR ASSESSMENT YEAR 2010-11 AND UNDER THE SECOND PROVIS O TO SEC. 2(15) OF THE ACT, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMP TION U/S 11 OF THE ACT. THEREFORE, THE CIT(E) FOUND THAT THERE WAS AN ERROR IN THE ASSESSMENT ORDER WHICH IS PREJUDICIAL INTEREST OF T HE REVENUE. ACCORDINGLY, THE CIT(E) DIRECTED THE ASSESSING OFFI CER TO APPLY SECOND PROVISO TO SEC. 2(15) OF THE ACT. THE CIT(E) HAS A LSO DIRECTED THE ASSESSING OFFICER TO TREAT THE SO CALLED CORPUS DON ATION AS PART OF THE NORMAL RENTAL RECEIPT FROM LETTING OUT OF COMMUNITY HALL AND DENY THE ASSESSEES CLAIM FOR DEDUCTION U/S 11 OF THE ACT. 7. THE LD. DR PLACED HIS RELIANCE ON THE JUDGMENT OF T HE APEX COURT IN THE CASE OF TOYOTA MOTOR CORPORATION VS CI T, 306 ITR 52, AND SUBMITTED THAT WHEN THE ASSESSING OFFICER HAS NOT P ASSED A REASONED ORDER FOR ALLOWING THE CLAIM OF THE ASSESSEE U/S 11, THE ORDER OF THE ASSESSING OFFICER IS NOT ONLY ERRONEOUS BUT ALSO PR EJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDING TO THE LD. DR, THE ASSESSING OFFICER IS EXPECTED TO PASS A REASONED ORDER. THE LD. DR H AS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE C ASE OF CIT VS RALSON INDUSTRIES LTD., 288 ITR 322, AND SUBMITTED THAT WHEN THE CIT WAS EMPOWERED TO REVISE THE ORDER, HE CAN EXERCISE HIS POWER ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE REC ORD INCLUDES THE PETITION RECEIVED BY THE CIT FOR TAX EVASION BY TH E ASSESSEE. THE LD. S.P 336/15 ITA NO. 1080/15 :- 7 -: DR HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD VS CIT, 243 ITR 83, AND DECISION OF THIS TRIBUNAL IN RAJALAKSHMI MILLS LTD VS ITO, 313 ITR(AT) 182. 8. TWO OF THE TRUSTEES FILED PETITIONS BEFORE THIS TRI BUNAL PRAYING FOR AN OPPORTUNITY OF HEARING. ONE SMT. I NDRA SUBRAMANIAM, BY HER LETTER DATED 29.5.2015 CLAIMED HERSELF THAT SHE IS ONE OF THE TRUSTEES OF THE ASSESSEE-TRUST. SHE HAS ALSO MADE AN ALLEGATION IN THE PETITION THAT THE ASSESSEE-TRUST WRONGLY CLASSIFIE D THE RENTAL INCOME AS VOLUNTARY DONATION WITH AN INTENTION OF NOT SPENDIN G THE INCOME FOR CHARITY AS REQUIRED BY LAW. 9. SHRI K. RAVI, THE LD. COUNSEL FOR SMT. INDRA SUBRAM ANIAM, APPEARED BEFORE THIS TRIBUNAL DURING THE COURSE OF THE HEARING OF APPEAL. THE LD. COUNSEL SUBMITTED THAT HE REPRESEN TS SMT. INDRA SUBRAMANIAM, ONE OF THE TRUSTEES OF THE ASSESSEE-T RUST AND HE SHOULD BE GIVEN AN OPPORTUNITY TO ARGUE THE APPEAL. ON A QUERY FROM THE BENCH UNDER WHAT PROVISION OF THE INCOME-TAX ACT, 1 961, SMT. INDRA SUBRAMANIAM IS PRAYING FOR AN OPPORTUNITY OF BEING HEARD ESPECIALLY WHEN SHE IS NOT RESPONSIBLE FOR FILING RETURN OF IN COME ON BEHALF OF THE ASSESSEE-TRUST, THE LD. COUNSEL COULD NOT POINT OU T ANY PROVISION IN THE INCOME-TAX ACT, 1961. SHRI K. RAVI, LD. COUNSEL SU BMITTED THAT THE CODE OF CIVIL PROCEDURE PRESCRIBES A PROCEDURE TO F ILE AN APPLICATION FOR IMPLEADING. THEREFORE, BY TAKING CLUE FROM THE COD E OF CIVIL S.P 336/15 ITA NO. 1080/15 :- 8 -: PROCEDURE, SMT. INDRA SUBRAMANIAM SHALL BE IMPLEADE D AS ONE OF THE PARTY IN THE PROCEEDINGS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CODE OF CIVIL PROCEDURE IS NOT APPLICABLE TO THE INCOME-TAX PROCEEDINGS. WHAT IS APPLICABLE IN INCOME-TAX PROC EEDINGS IS CLEARLY STATED IN SEC. 131 OF THE ACT. THE INCOME-TAX AUTH ORITIES HAVE THE POWERS OF CIVIL COURT UNDER THE CODE OF CIVIL PROCE DURE IN RESPECT OF THE MATTERS WHICH RELATES TO (A) DISCOVERY AND INSP ECTION (B) ENFORCING THE ATTENDANCE OF ANY PERSON, INCLUDING ANY OFFICER OF A BANKING COMPANY AND EXAMINING HIM ON OATH, (C) COMPELLING T HE PRODUCTION OF BOOKS OF ACCOUNT; AND (D) ISSUING COMMISSIONS. OTH ER THAN THESE FOUR PURPOSES, THE CODE OF CIVIL PROCEDURE IS NOT APPLIC ABLE TO THE INCOME- TAX PROCEEDINGS. IT IS TO BE KEPT IN MIND THAT THE PROCEEDINGS BEFORE THIS TRIBUNAL ARE CONTINUATION OF INCOME-TAX PROCEE DINGS UNDER THE INCOME-TAX ACT, 1961. IN OTHER WORDS, THE PROCEEDI NGS ARE SUMMARY IN NATURE. THE LEGISLATURE ESTABLISHED THIS TRIBUN AL AND OTHER AUTHORITIES UNDER THE INCOME-TAX ACT WITH A SOLE OB JECT OF COMPLETING THE PROCEEDINGS WITHIN A TIME FRAME SO AS TO ENABLE THE GOVERNMENT TO COLLECT THE TAX ON THE ASSESSED INCOME. THEREFO RE, THE CONTENTION OF SHRI K. RAVI, LD. COUNSEL FOR SMT. INDRA SUBRAMA NIAM THAT THE CODE OF CIVIL PROCEDURE WOULD BE APPLICABLE FOR IMPLEADI NG THE PERSON OTHER THAN ONE WHO FILED THE RETURN OF INCOME IN THE INCO ME-TAX PROCEEDINGS HAS NO MERIT AT ALL. BY ALLOWING SUCH RECOURSE, TH E PROCEDURE BEFORE THIS TRIBUNAL WOULD NOT ONLY BE DELAYED BUT ALSO DR AGGED UP FOR AN S.P 336/15 ITA NO. 1080/15 :- 9 -: UNLIMITED PERIOD AND THAT CANNOT BE THE INTENTION O F THE LEGISLATURE WHILE ENACTING THE INCOME-TAX ACT, 1961. THEREFORE , THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT NO PERSON CAN BE IMP LEADED AS A PARTY IN THE INCOME-TAX PROCEEDINGS OTHER THAN THE PERSON WHO FILED THE RETURN OF INCOME. OF-COURSE, IN THE CASE OF INDIVI DUALS IF THE ASSESSEE EXPIRED DURING THE PENDENCY OF THE PROCEEDINGS, THE LEGAL HEIR REPRESENTING THE INDIVIDUAL ASSESSEE CAN BE SUBSTI TUTED SO THAT THE PROCEEDINGS CAN BE CONTINUED TO ITS LOGICAL CONCLUS ION. OTHER THAN SUBSTITUTION OF LEGAL HEIR, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THERE IS NO PROVISION IN THE INCOME-TAX ACT FO R IMPLEADING SMT. INDRA SUBRAMANIAM AS PARTY TO THE PROCEEDINGS. 10. HOWEVER, WITH AN INTENTION TO DO JUSTICE, THIS TRIB UNAL REQUESTED SHRI RAVI, THE LD. COUNSEL FOR SMT. INDRA SUBRAMANIAM, TO EXPLAIN THE ACTUAL GRIEVANCE OF SMT. INDRA SUBRAMAN IAM. SHRI K. RAVI, LD. COUNSEL FOR SMT.INDRA SUBRAMANIAM VERY FAIRLY S UBMITTED THAT HE IS SUPPORTING THE CASE OF THE REVENUE. IT IS UNFORTUN ATE THAT A TRUSTEE OF THE ASSESSEE-TRUST IS SUPPORTING THE CASE OF THE R EVENUE. THEREFORE, IT IS OBVIOUS THAT THERE IS A CONFLICT OF INTEREST BETWEEN SMT. INDRA SUBRAMANIAM AND THE ASSESSEE-TRUST. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT CONFLICT OF INTEREST BETWEE N THE ASSESSEE- TRUST AND A TRUSTEE CANNOT BE DECIDED BY THIS TRIBU NAL. IT IS FOR THE RESPECTIVE PERSONS INCLUDING SMT. INDRA SUBRAMANIAM TO APPROACH THE S.P 336/15 ITA NO. 1080/15 :- 10 -: COMPETENT CIVIL COURT FOR REDRESSAL OF THEIR GRIEVA NCE IF THEY ARE SO ADVISED. THIS TRIBUNAL CANNOT BE MADE AS A PLATFOR M FOR RESOLVING THEIR PERSONAL GRIEVANCES. AS OBSERVED EARLIER, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE OBJECT OF THE INCOME-TA X ACT IS ONLY TO ASSESS THE TAXABLE INCOME, LEVY TAX AND COLLECT THE SAME. OTHER THAN THAT, THE INCOME-TAX ACT DOES NOT EMPOWER ANY OF TH E AUTHORITIES INCLUDING THIS TRIBUNAL TO REDRESS THE PERSONAL GRI EVANCES OF THE THIRD PARTIES TO THE PROCEEDINGS. THEREFORE, THE APPLICA TION FILED BY SMT. INDRA SUBRAMANIAM HAS NO MERIT AT ALL. 11. APART FROM SMT. INDRA SUBRAMANIAM, ONE MORE TRUSTEE , DR.P. THIAGARAJAN HAS ALSO FILED A PETITION DATED 1 2.10.2015 PRAYING FOR THE DISMISSAL OF THIS APPEAL. AS OBSERVED EARLIER, THE OBJECT OF THE INCOME-TAX ACT IS ONLY TO ASSESS THE INCOME, LEVY T AX THEREON AND COLLECTION OF THE TAX. THE PERSON WHO FILED THE RE TURN OF INCOME HAS TO FILE THE APPEAL AND THAT PERSON ALONE HAS THE RIGHT TO ARGUE BEFORE THIS TRIBUNAL. THE OTHER TRUSTEES IF AT ALL WANT TO SUP PORT THE CASE OF THE ASSESSEE, THEY CAN DO SO, THROUGH THE TRUSTEE WHO FILED THE RETURN OF INCOME. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE PERSON WHO FILED THE RETURN OF INCOME WOULD HAVE KNOWLEDGE ABOUT THE BOOKS OF ACCOUNT, INCOME AND EXPENDITURE ETC. A PERSON W HO HAS KNOWLEDGE ABOUT THE INCOME AND EXPENDITURE AND ACTIVITY OF TH E ASSESSEE HAS TO FILE THE RETURN OF INCOME. BY FILING THE RETURN OF INCOME THE PERSON S.P 336/15 ITA NO. 1080/15 :- 11 -: WHO IS SIGNING THE DECLARATION IN THE RETURN IS TAK ING A RISK OF FACING PROSECUTION IN CASE THE PARTICULARS DISCLOSED IN TH E RETURN OF INCOME IS FOUND TO BE FALSE. THE OTHER TRUSTEES NAMELY, SMT. INDRA SUBRAMANIAM AND DR.P.THIAGARAJAN HAVE NO KNOWLEDGE ABOUT THE INCOME AND EXPENDITURE AND THE ACTIVITY OF THE TRUS T. THEREFORE, THEY MAY NOT BE ABLE TO ASSIST THIS TRIBUNAL IN ANY WAY. EVEN OTHERWISE, THE INCOME-TAX ACT DOES NOT ENABLE THIS TRIBUNAL TO IMPLEAD THEM AS PARTIES TO THE PROCEEDINGS. THE INTEREST OF DR.P.T HIAGARAJAN IS ONLY TO GET THE ASSESSEES APPEAL DISMISSED WHICH IS OBVIO US FROM THE PRAYER MADE IN HIS PETITION DATED 12.10.2015. THEREFORE, THE INTEREST OF DR.P. THIAGARAJAN ALSO IS CONFLICTING AS THAT OF THE ASS ESSEE-TRUST. SUCH A CONFLICTING INTEREST CANNOT BE DECIDED BY THIS TRIB UNAL. DR.P.THIAGARAJAN AND SMT. INDRA SUBRAMANIAM ARE TRY ING TO MAKE THIS TRIBUNAL AS A PLATFORM FOR RESOLVING THEIR PERSONAL DISPUTE. UNFORTUNATELY, THIS TRIBUNAL IS NOT EMPOWERED TO AD JUDICATE THEIR PERSONAL DISPUTE OTHER THAN ADJUDICATING THE LITIGA TION ARISING OUT OF THE ASSESSMENT OF INCOME. THEREFORE, THE APPLICATION F ILED BY DR.P. THIAGARAJAN HAS NO MERIT AT ALL. 12. NOW COMING TO THE MERIT OF THE APPEAL FILED BY THE ASSESSEE, NOW DOUBT, THE ASSESSEE-TRUST CONSTRUCTE D A COMMUNITY HALL ON THE PIECE OF LAND ALLOTTED BY GOVERNMENT OF TAMI LNADU. THE LAND ORIGINALLY BELONGS TO COSMOPOLITAN CLUB, MADURAI. THE MAIN OBJECTS OF S.P 336/15 ITA NO. 1080/15 :- 12 -: THE TRUST ARE ESTABLISHING EDUCATIONAL INSTITUTION AND PROVIDING SCHOLARSHIPS TO THE STUDENTS. RUNNING OF COMMUNITY HALL/KALYANA MANDAPAM IS NOT THE OBJECT OF THE ASSESSEE-TRUST A S PER THE TRUST DEED. SEC. 11(4) OF THE ACT ENABLES THE CHARITABLE INSTITUTION TO HOLD A BUSINESS UNDERTAKING AS A PROPERTY HELD UNDER A TRU ST. SEC. 11(4A) OF THE ACT PROVIDES THAT WHEN THE BUSINESS OF THE TRUS T IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST AND THE T RUST IS MAINTAINING SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINE SS, THE PROVISIONS OF SEC. 11 WOULD BE APPLICABLE AND THE ASSESSEE IS ENTITLED FOR EXEMPTION. THE ASSESSING OFFICER, IN FACT, FOUND T HAT RUNNING OF COMMUNITY HALL IS INCIDENTAL TO THE ATTAINMENT OF T HE OBJECTS OF THE TRUST, THEREFORE, ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE MAIN OBJECT OF THE ASSESSEE IS EDUCATION AND PROVIDING SCHOLARSHIP TO THE NEEDY PEOPLE, THE ASSESSEE NATURALLY NEEDS MONEY TO FEED THE CHA RITABLE ACTIVITY AND PERFORMING THE OBJECTS OF THE TRUST. THEREFORE, T HE BUSINESS CAN BE HELD AS PROPERTY UNDER THE TRUST. HOWEVER, THE AS SESSEE IS EXPECTED TO MAINTAIN A SEPARATE BOOKS OF ACCOUNT AND THE BUS INESS OF THE ASSESSEE-TRUST SHALL BE INCIDENTAL TO THE MAIN ACTI VITY. 13. IN THE CASE BEFORE US, THE CIT(E) HAS RECEIVED PETI TIONS REGARDING TAX EVASION BY THE ASSESSEE.THE ASSESSE E WAS RECEIVING CORPUS DONATION IN THE GUISE OF LETTING OUT THE COM MUNITY HALL TO THE S.P 336/15 ITA NO. 1080/15 :- 13 -: POOR PEOPLE. THIS FACT WAS DISCLOSED IN THE RETURN FILED BY THE ASSESSEE ITSELF UNDER THE SERVICE TAX ACT. THEREF ORE, THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE I S CARRYING OUT THE CHARITABLE ACTIVITY IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR NOT? IT IS ALSO NEEDS TO BE EXAMINED WHETHER THE ASSESSEE- TRUST, IN FACT, UTILIZED THE INCOME FROM COMMUNITY HALL FOR CHARITA BLE ACTIVITY OR NOT. THE ASSESSING OFFICER SIMPLY FOUND THAT RECEIPTS OF RENT FROM COMMUNITY HALL ARE INCIDENTAL TO THE CARRYING OUT O F THE OBJECTS OF THE TRUST. WHEN THE ASSESSING OFFICER HAS NOT EXAMINE D THE UTILIZATION OF RENT FOR CHARITABLE ACTIVITY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT UTILIZATION OF THE INCOME OF THE ASSESSEE-T RUST FOR CHARITABLE ACTIVITY NEEDS TO BE EXAMINED YEAR BY YEAR FOR ALLO WING THE CLAIM OF THE ASSESSEE U/S 11 OF THE ACT. THE CIT(E) ALSO HAS NOT EXAMINED THE UTILIZATION OF THE FUND FOR CHARITABLE PURPOSES . THE CIT(E) PROCEEDED AS IF THE PROVISO TO SEC. 2(15) OF THE AC T WOULD MAKE THE ASSESSEE-TRUST NOT ELIGIBLE FOR EXEMPTION U/S 11 O F THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT PROVISO TO SEC. 2(15) IS APPLICABLE IN RESPECT OF THE TRUST WHOSE OBJECT IS ADVANCEMENT OF ANY OTHER GENERAL PUBLIC UTILITY. IN THE CASE BEFORE U S, IT IS NOT THE OBJECT OF THE TRUST TO ADVANCE ANY PUBLIC UTILITY SERVICE. THE MAIN OBJECT AS PER THE TRUST DEED IS TO ESTABLISH EDUCATIONAL AND MEDICAL INSTITUTION AND ALSO PROVIDING SCHOLARSHIP TO THE NEEDY PEOPLE. THEREFORE, PROVISO TO SEC. 2(15) MAY NOT BE APPLICABLE AT ALL. HOWEVE R, THIS TRIBUNAL IS OF S.P 336/15 ITA NO. 1080/15 :- 14 -: THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE REEXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF THE MATERIAL AVAI LABLE ON RECORD WITH REGARD TO UTILIZATION OF THE INCOME FOR CHARITABLE ACTIVITY. ACCORDINGLY, WHILE CONFIRMING THE EXERCISE OF JURISDICTION BY TH E CIT(E), THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE UTILI ZATION OF THE INCOME OF THE ASSESSEE-TRUST IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD INCLUDING THE TAX EVASION PETITIONS SAID TO BE RECE IVED AND THEREAFTER DECIDE THE CLAIM OF EXEMPTION U/S 11, IN ACCORDANC E WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 14. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE AS SESSEE IS PARTLY ALLOWED. CONSEQUENTLY, THE STAY PETITION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 18 TH MARCH, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF