Dy.CIT, Circle-1, Anantapur V. M/s BV Syamala Rathnam Medical Paramedical Educational and Charity Trust, Anantapur

ITA 1082/HYD/2013

• Counselvise Citation: 108222514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 19-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Section: 80G; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B: HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1082/HYD/2013 ASSESSMENT YEAR 2008-2009 DCIT, CIRCLE-1 ANANTAPUR. VS. M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, HINDUPUR 515 201, ANANTAPUR DIST. PAN AAAAB-4378-D (APPELLANT) (RESPONDENT) FOR REVENUE MR. SOLGY JOSE T. KOTTARAM FOR ASSESSEE MR. S. RAMA RAO DATE OF HEARING 02.07.2014 DATE OF PRONOUNCEMENT 28.08.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), GUNTUR DATED 26.03.2013 FOR TH E A.Y. 2008-09 ALLOWING ASSESSEES CLAIM OF EXEMPTION UNDE R SECTION 11 OF THE I.T. ACT, 1961. 2. ASSESSEE SOCIETY IS RUNNING EDUCATIONAL INSTITUTIONS AND FILED ITS RETURN OF INCOME FOR A.Y . 2008-09 ADMITTING NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. IN THE COURSE OF APPLICATION UNDER S ECTION 80G BY ASSESSEE BEFORE THE CIT, TIRUPATI, IT WAS NOTICE D BY THE CIT THAT ASSESSEE HAS ADVANCED AN AMOUNT OF RS.10 LAKHS TO ONE OF THE TRUSTEES. THEREFORE, THE APPROVAL UNDER SECT ION 80G WAS NOT GRANTED. THAT MATTER WAS SUBJECT MATTER OF APPE AL AND 2 ITA.NO.1082/HYD/2013 M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, HINDUPUR, ANANTAPUR DIST., WHEN THE SAME WAS RESTORED TO THE FILE OF CIT FOR F RESH ADJUDICATION BY ITAT, ASSESSEE WITHDREW THE APPLICA TION. ACCORDINGLY, LD. CIT DISMISSED THE APPLICATION AS W ITHDRAWN. BASED ON THE ABOVE FACT THAT ASSESSEE ADVANCED FUN DS TO THE TRUSTEE OF AN AMOUNT OF RS. 10 LAKHS, PROCEEDINGS U NDER SECTION 148 WERE INITIATED FOR A.Y. 2008-09 AND A.O . DENIED BENEFIT OF SECTION 11 AS THERE IS VIOLATION OF PROV ISIONS OF SECTION 13(1)(C). IT WAS THE SUBMISSION BEFORE THE A.O. THAT ASSESSEE ADVANCED AMOUNTS FOR PURCHASE OF LAND AND ONCE THE NEGOTIATIONS FAILED, THE SAID TRUSTEE MR. B.V. PRAS AD HAS RETURNED THE AMOUNT OF RS.7,85,000 AFTER RETAINING AMOUNT OF RS.2,15,000 WHICH WAS AVAILABLE IN HIS CREDIT. SINC E FUNDS TO AN EXTENT OF RS. 6 LAKHS WERE RETURNED IMMEDIATELY IN THE MONTH OF FEBRUARY, 2008 AND ONLY AN AMOUNT OF RS.1, 85,000 WAS RETURNED ON 20.03.2010, AN AMOUNT OF RS.6,675 W AS CHARGED AS INTEREST FROM THE SAID TRUSTEE. THEREFOR E, THE SAME HAS NOT VIOLATED UNDER PROVISIONS OF SECTION 13. A. O. HOWEVER, WAS OF THE OPINION THAT AN AMOUNT OF RS.10 LAKHS GI VEN TO MR. B.V. PRASAD WAS IN TURN, PAID TO M/S. STEEL CITY SE CURITIES THROUGH A CHEQUE ON THE NEXT DAY FOR INVESTMENT OF THE SAID PERSON AS SEEN FROM THE ANDHRA BANK ACCOUNT AND THE REFORE, THERE IS CLEAR VIOLATION OF PROVISIONS OF SECTION 1 3(1)(C). 3. BEFORE THE LD. CIT(A), ASSESSEE FURNISHED FURTH ER DETAILS AND SUBMITTED THAT AMOUNT ADVANCED TO DR. B .V. PRASAD DOES NOT RESULT IN ANY DIRECT OR INDIRECT BE NEFIT TO THE TRUSTEE IN HIS INDIVIDUAL CAPACITY. SINCE THE AMOUN T WAS HELD IN A FIDUCIARY CAPACITY TO BUY THE LAND, THERE IS N O VIOLATION OF PROVISIONS OF SECTION 13(1)(C). LD. CIT(A) AFTER CO NSIDERING THE 3 ITA.NO.1082/HYD/2013 M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, HINDUPUR, ANANTAPUR DIST., DETAILED EXPLANATION OF THE ASSESSEE, ALLOWED ASSES SEES CONTENTIONS AND DELETED THE ADDITION BY STATING AS UNDER : 6. THE APPELLANT HAD CONTENDED THAT DR. BV PRASAD, HAD ADVANCED AN AMOUNT OF RS.2,15,000/- TO THE TRUST IN THE PRECEDING YEARS AND ON 1.4.2007, THE SAID AMOUNT WA S BROUGHT FORWARD IN THE BOOKS OF THE TRUST TO HIS CR EDIT. SUBSEQUENTLY, THE TRUST HAS ADVANCED AN AMOUNT OF R S.10 LAKHS ON 28.01.2008 FOR PURCHASE OF LAND NEAR HINDU PUR TOWN TO COMPLY WITH THE REGULATORY NORMS OF NATIONA L COUNCIL FOR TECHNICAL EDUCATION (NCTE). THE SAID AD VANCE WAS DULY AUTHORIZED BY RESOLUTION OF THE TRUST, DAT ED 17.01.2008. THE RESOLUTION EMPOWERED DR. BV PRASAD TO NEGOTIATE AND DEAL WITH THE PROPOSAL FOR PURCHASE O F LAND ON BEHALF OF THE TRUST. THE APPELLANT FURTHER STATED T HAT DR. BV PRASAD ENTERED INTO AGREEMENT WITH SMT. ZAITUNISHA BEGUM FOR PURCHASE OF 5 ACRES OF LAND AT APPALAKUNTA VIL! AGE, KERIKARA GRAMA POLAM AND SINCE THE OTHER JOINT HOLD ERS OF THE PROPERTY DID NOT COOPERATE IN SELLING THE LAND, THE AGREEMENT WAS CANCELLED, VIDE DOCUMENT DATED 26.2.2008. SUBSEQUENTLY, THE AMOUNTS TO THE EXTENT OF RS.7,85,000/- WAS RETURNED TO THE TRUST BY DR. BV P RASAD AS UNDER :- 15.2.2008 RS.2,00,000/- 22.2.2008 RS.2,00,000/- 26.2.2008 RS.2,00,000/- 20.3.2010 RS.1,85,000/- TOTAL RS.7,85,000/- THE APPELLANT HAS RETAINED RS.2,15,000/- WHICH WAS ADVANCED BY HIM IN PREVIOUS YEARS AND WAS SHOWN AS OPENING BALANCE ON 1.4.2007. THE REMAINING AMOUNT O F RS.7,85,000/- (RS.10 LAKHS, WHICH WAS ADVANCED ON 28.L.2008 (-) RS. 2,15,000/- ADVANCED BY DR. BV PRA SAD), WAS RETURNED TO THE EXTENT OF RS. 6 LAKHS WITHIN ON E MONTH OF THE ADVANCE GIVEN AND THE REMAINING RS. 1,85,000/- WAS RETURNED ONLY ON 20.3.2010. THE TRUS T CHARGED INTEREST ON THE AMOUNT REMAINING WITH DR. B V PRASAD. THE APPELLANT HAS STATED THAT NO PERSONAL BENEFIT WAS DERIVED BY THE TRUSTEE IN THE TRANSACTION. THE APPELLANT RELIED ON THE FOLLOWING DECISIONS /CIRCUL AR :- 4 ITA.NO.1082/HYD/2013 M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, HINDUPUR, ANANTAPUR DIST., 1. CIT VS. LAGAN KALA UPAVAN 259 ITR 489 2. ARR TRUST VS. ACIT 98 TTJ 843 3. CIT VS. SRI BALDEO JI MAHARAJ 84 TAXMAN 448 4. CIT VS. RAIBAHADUR BISEWARLAL MOTILAL HALWASIYA TRUST 252 ITR 84 5. CBDT CIRCULAR NO.4P, DATED 21.7.1966. 7. FROM THE FACTS OF THE CASE, IT IS SEEN THAT THE ADVANCE WAS GIVEN FOR PROCURING LAND, AS EVIDENCED BY THE RESOLUTION OF THE TRUST. FURTHER, THE TRUSTEE DR. B V PRASAD ENTERED INTO AGREEMENT FOR PURCHASE OF LAND ON 29.L .2008, WHICH WAS CANCELLED VIDE AGREEMENT DATED 26.2.2008 DUE TO CERTAIN REASONS. THE AGREEMENT FOR PURCHASE AND CANCELLATION AGREEMENT INDICATE THAT A GENUINE ATTE MPT WAS MADE TO PURCHASE THE LAND. SUBSTANTIAL PART OF THE ADVANCE GIVEN I.E. RS. 6 LAKHS WAS RETURNED WITHIN ONE MONTH OF THE ADVANCE GIVEN. THE TRUSTEE HIMSELF HAS GIVEN ADVANCE OF RS.2,15,000/- IN EARLIER YEARS, WH ICH WAS BROUGHT FORWARD AS ON 1.4.2007. IN RESPECT OF THE REMAINING AMOUNT OF RS.1,85,000/-, WHICH WAS REPAID ON 20.3.2010, THE TRUST HAS CHARGED INTEREST ON THE SAME. KEEPING THIS FACT AND CIRCUMSTANCES IN VIEW, I AM OF THE OPINION THAT THERE WAS NO DELIBERATE ATTEMPT BY THE TRUST TO BENEFIT THE TRUSTEE, EITHER DIRECTLY O R INDIRECTLY TO THE DETRIMENT OF THE TRUST AND THE PR OVISIONS OF SECTION 13(1)(C) ARE NOT ATTRACTED. THEREFORE, T HE ADDITION MADE OF RS.13,54,003/- IS HEREBY DELETED. 4. LD. D.R. HOWEVER, CONTENDED THAT LD. CIT(A) DID NOT ANSWER THE QUESTION THAT THE AMOUNT WAS PAID TO STEEL CITY SECURITIES AND A.O. DID NOT HAVE BENEFIT OF EXAMINA TION OF THE ISSUES, WHEREAS, LD. COUNSEL SUBMITTED THAT LD. CIT (A) HAS CONSIDERED THE FACTS CORRECTLY. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT THE ISSUE REQUIRE RE-EXAMINATION B Y THE A.O. BASICALLY, AS SEEN FROM THE ORDER, EVEN THOUGH IT W AS CONTENDED BEFORE THE A.O. THAT THE AMOUNT WAS GIVEN FOR 5 ITA.NO.1082/HYD/2013 M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, HINDUPUR, ANANTAPUR DIST., PURCHASE OF LAND, THERE SEEMS TO BE NO EXAMINATION WHETHER THE AMOUNT WAS INVESTED/ADVANCED TO MRS. JAITUNNISA BEGUM. MOREOVER, THE COPY OF THE AGREEMENT (WHICH IS IN TELUGU LANGUAGE) INDICATE THAT ON 26 TH FEBRUARY, 2008 AN AGREEMENT FOR PURCHASE OF LAND WAS ENTERED AS ON 29 .01.2008 IT WAS DECIDED TO BUY FOR RS. 9 LAKHS, WHEREAS RS. 6 LAKHS ADVANCE WAS GIVEN ON 28.02.2008. EVEN THOUGH SAID AGREEMENT INDICATES THAT AGREEMENT WAS DECIDED ON 29.01.2008 ORALLY, THE FACT THAT ONLY RS. 6 LAKHS I N CASH HAVE BEEN ADVANCED ON 28.02.2008 WAS ALSO STATED IN THE AGREEMENT. IT IS NOT CLEAR FROM WHICH SOURCE THE AM OUNT OF RS. 6 LAKHS HAS BEEN ADVANCED. AS SEEN FROM THE ASSESSM ENT ORDER ASSESSEE PAID AN AMOUNT OF RS. 10 LAKHS TO THE TRUS TEE ON 29.01.2008 AND WHY AN AMOUNT OF RS. 10 LAKHS WAS PA ID WHEN AGREEMENT WAS ENTERED FOR RS. 9 LAKHS FOR PURCHASE OF PROPERTY WAS NOT EXPLAINED. FURTHER, AS NOTED BY THE A.O. TH E ENTIRE AMOUNT SEEMS TO HAVE BEEN PAID TO M/S STEEL CITY SE CURITIES. THEREFORE, THE SOURCE OF RS. 6 LAKHS STATED TO HAVE BEEN PAID IN CASH ON 29.02.2008 REQUIRES EXAMINATION. AS SEEN FR OM THE DOCUMENT ON RECORD, INTEREST WAS ALSO LEVIED AND CO LLECTED ONLY AFTER THE LD. CIT REJECTED THE APPLICATION UNDER 80 G. PRIMA FACIE, IT INDICATES THAT AO CONTENTION OF FUNDS B EING ADVANCED IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) HAS NOT BEEN EXAMINED BY LD. CIT(A). THEREFORE, WE ARE OF THE OP INION THAT A.O. SHOULD EXAMINE THE SOURCE OF RS. 6 LAKHS PAID TO SMT. JAITUNNISA BEGUM AND IN WHAT CIRCUMSTANCES THE AGR EEMENT WAS CANCELLED AND EXAMINE THE FACTS BEFORE COMING T O CONCLUSION WHETHER THE AMOUNTS WERE ADVANCED IN FID UCIARY CAPACITY TO MR. B.V. PRASAD AS CONTENDED BY ASSESSE E. IN VIEW OF THIS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) A ND RESTORE THE 6 ITA.NO.1082/HYD/2013 M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, HINDUPUR, ANANTAPUR DIST., MATTER TO THE FILE OF THE A.O. FOR FRESH EXAMINATIO N AND DECIDE ACCORDING TO THE FACTS AND LAW. REVENUE GROUND IS A LLOWED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.08.2014. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH AUGUST, 2014 VBP/- COPY TO 1. DCIT, CIRCLE-1, 3 RD ROAD, NEW TOWN, ANANTHAPUR, ANANTHAPUR DIST. 2. M/S. BV SYAMALA RATHNAM MEDICAL PARAMEDICAL EDUCATIONAL & CHARITY TRUST, D.NO.15-4-32, SEENAPPALANE, HINDUPUR 515 201, ANANTAPUR DIST. 3. CIT(A), GUNTUR. 4. CIT, TIRUPATI. 5. D.R. B BENCH, ITAT, HYDERABAD.