The DCIT(Exemptions), Circle-1, Ahmedabad V. Friends of WWB,India, Ahmedabad

ITA 1117/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7676 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption; Cancellation of registration
• Section: 143(3); 56; 12; 11

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO. 1117/AHD/2018 WITH CROSS OBJECTION NO. 72/AHD/2019 ( / ASSESSMENT YEAR: 2014-15) THE DCIT (EXEMPTIONS) CIRCLE-1, AHMEDABAD / VS. FRIENDS OF WWB INDIA G-7, SAKAR BUILDING, OPP. GANDHIGRAM RLY STATION, ASHRAM ROAD, AHMEDABAD- 380009 ./ ./ PAN/GIR NO. : AAA TF0 274 B ( APPELLANT / RESPONDENT ) .. ( RESPONDEN T /CROSS OBJECTOR ) / APPELLANT BY : SHRI MUDIT NAGPAL, SR. DR / RESPONDENT BY : WRITTEN SUBMISSION / DATE OF HEARING 18/07/2019 !'# / DATE OF PRONOUNCEMENT 23/07/2019 $%/ O R D E R PER PRADIP KUMAR KEDIA- AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-7, AHMEDABAD (CIT(A) IN SHORT), DATED 2 8.02.2018 ARISING IN THE ASSESSMENT ORDER DATED 26.12.2016 PA SSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOM E TAX ACT, 1961 (THE ACT) IN THE ASSESSMENT YEAR 2014-15. ITA NO.1117/AHD/2018 WITH C.O. NO. 72/AHD/2019 [DCIT VS. FRIENDS OF WWB INDIA] A.Y. 2014-15 - 2 - 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN T HE REVENUES APPEAL AS CAPTIONED ABOVE. 3. THE GROUND OF APPEAL RAISED BY THE REVENUE READ S AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N GRANTING THE BENEFIT OF EXEMPTION U/S. 11 & 12 OF THE ACT TO THE ASSESSEE I GNORING THE FACTS THAT THE ACTIVITY OF THE ASSESSEE WAS IN THE FORM OF ADVANCE MENT OF GENERAL PUBLIC UTILITY AND NOT RELIEF OF POOR AS DEFINED IN SECTIO N 2(15). 2. THE REVENUE CRAVES OVER LEAVE TO ADD, ALTER, A MEND, MODIFY SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE FINAL HEARING, IN NECESSITY SO ARISES. 4. THE ASSESSEE HAS ALSO RAISED THE CROSS OBJECTION WHICH READS AS UNDER:- 1. IN ANY EVENT, IF THE LEARNED AOS ORDER IS UPH ELD, CROSS OBJECTOR SUBMITS THAT 1.1 THE DONATION RECEIVED SHOULD BE CONSIDERED AS CAPIT AL IN NATURE AND SHOULD NOT BE CONSIDERED AS INCOME OF TH E CROSS OBJECTOR AND SHOULD TO BE INCLUDED WHILE CALCULATIN G THE INCOME OF THE TRUST AS PER THE NORMAL PROVISIONS OF THE ACT TREATING IT AS INCOME U/S. 56 OF THE ACT. IT IS SU BMITTED THAT IT BE SO HELD NOW. 1.2 WRITE BACK OF PROVISION FOR DOUBTFUL LOANS AND ADVANCES FOR RS. 31,93,929 SHOULD ALSO BE REDUCED FROM INCOME O F THE CROSS OBJECTOR. 5. WHEN THE MATTER WAS CALLED FOR HEARING THE LD. A R FOR THE ASSESSEE POINTED OUT THAT IDENTICAL ISSUE CAME UP I N ASSESSEES OWN CASE IN ITA NO. 1549/AHD/2014 ALONG WITH CROSS OBJE CTION NO. 48/AHD/2018 IN A.Y. 2010-11 ORDER DATED 29.03.2019. 6. THE LD. DR RELIED UPON THE ORDER OF THE AO BUT F AILED TO CONTROVERT THE AVERMENTS MADE ON BEHALF OF THE ASSE SSEE THAT THE ISSUE IS COVERED. ITA NO.1117/AHD/2018 WITH C.O. NO. 72/AHD/2019 [DCIT VS. FRIENDS OF WWB INDIA] A.Y. 2014-15 - 3 - 7. THE CO-ORDINATE BENCH IN A.Y. 2010-11 IN ITA NO. 1549/AHD/2017 HAS DEALT WITH THE GRIEVANCES OF THE REVENUE AS UNDER:- ITA NO. 1549/AHD/2017 (REVENUES APPEAL):- 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AS U NDER:- 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE PAYMENT OF RS. 5 CRORES MADE TO IFGI HOLDING IT TO BE NOT COVERED BY SECTION 40A(2)(A) OF THE ACT AND TREATI NG IT AS ALLOWABLE EXPENDITURE. 2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GRANTING THE BENEFIT OF EXEMPTION U/S.11 & 12 OF THE ACT TO THE ASSESSEE IGNORING THE FACT THAT THE ACTIVITY OF THE ASSESSE E WAS IN THE FORM OF ADVANCEMENT OF GENERAL PUBLIC UTILITY AND NOT RELIEF OF POOR AS DEFINED IN SECTION 2(15). 4. BRIEFLY STATED, THE ASSESSEE IS A TRUST REGISTER ED UNDER BOMBAY TRUST ACT, 1950 AND A SOCIETY REGISTERED THE SOCIET IES REGISTRATION ACT, 1860. THE ASSESSEE IS STATED TO BE REGISTERED AS CHARITABLE TRUST UNDER S.12A OF THE ACT. DURING YEAR UNDER CONSIDERA TION, THE AO IN THE COURSE OF ASSESSMENT UNDER S. 143(3) R.W.S. 147 OF THE ACT DENIED THE BENEFIT OF EXEMPTION UNDER S. LL & 12 OF THE AC T ON THE GROUND THAT REGISTRATION OF THE TRUST WAS WITHDRAWN FROM A Y 2009-10 ONWARDS. THE INCOME OF THE TRUST WAS ACCORDINGLY CO MPUTED AS PER THE NORMAL PROVISIONS OF THE ACT IN THE YEAR UNDER CONSIDERATION. THE AO INTER ALIA DISALLOWED CORPUS DONATION GIVEN BY T HE ASSESSEE TO INDIAN FOUNDATION FOR INCLUSION GROWTH (IFIG) PEGGE D AT RS.5CRORE. IT WAS OBSERVED BY THE AO THAT THE DONATION WAS GIV EN TO A RELATED PERSON COVERED UNDER S.40A(2)(A) OF THE ACT AND ALS O ALLEGED THAT THIS MONEY WAS SIPHONED OFF FROM THE TRUST. THE AO FINALLY ASSESSED THE TAXABLE INCOME OF THE ASSESSEE AT RS. 9, 35, 24 .850/-. 5. AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL BEF ORE THE CIT(A). 6. ON REAPPRAISAL OF THE SUBMISSIONS AND EVIDENCES PLACED ON RECORD, THE CIT(A) FOUND THAT THE REGISTRATION GRAN TED TO THE ASSESSEE TRUST UNDER S.12A OF THE ACT CANNOT BE DISLODGED. T HE CIT(A) ALSO FOUND MERIT IN THE ELIGIBILITY OF CLAIM OF DEDUCTIO N TOWARDS CORPUS DONATION BY THE ASSESSEE TO IFIG. THE CANCELLATION OF REGISTRATION UNDER S.12AA(3) OF THE ACT WAS ACCORDINGLY MODIFIED AND RESTORED ITA NO.1117/AHD/2018 WITH C.O. NO. 72/AHD/2019 [DCIT VS. FRIENDS OF WWB INDIA] A.Y. 2014-15 - 4 - AND THE BENEFIT OF EXEMPTION UNDER S. 11 & 12 OF TH E ACT WAS GRANTED TO THE ASSESSEE HOLDING THAT THE ACTIVITIES OF THE TRUST ARE CHARITABLE ACTIVITIES FOR THE PURPOSES OF SECTION 2(15) OF THE ACT. THE CORPUS DONATION WAS ALSO CONSIDERED AS APPLICATION OF INCO ME AS BEING GIVEN AS DONATION TO ANOTHER CHARITABLE TRUST. 7. THE REVENUE HAS AGITATED THE AFORESAID RELIEFS G RANTED BY THE CIT(A) BEFORE THE TRIBUNAL. 8. THE LEARNED AR FOR THE ASSESSEE IN THE REVENUE'S APPEAL SUBMITTED THAT THE CHALLENGE OF THE REVENUE ARE TWO FOLD; FIRSTLY, THE CANCELLATION OF REGISTRATION OF THE ASSESSEE AS CHA RITABLE TRUST HAS BEEN WRONGLY REVOKED AND SECONDLY, THE CIT(A) HAS W RONGLY GRANTED RELIEF TO THE ASSESSEE TOWARDS CORPUS DONATION TO I FIG AS APPLICATION OF INCOME FOR THE PURPOSES OF SECTION 11 OF THE ACT . THE LEARNED AR SUBMITTED THAT AS REGARDS FIRST CONTENTION OF THE R EVENUE, THE ISSUE HAS ALREADY BEEN ADJUDICATED IN FAVOUR OF THE ASSES SEE BY THE CO- ORDINATE BENCH OF THE ITAT IN ITA NO.2076/AHD/2014 ORDER DATED 14.08.2015 CONCERNING AY 2009-10. AS PER THE AFORES AID ORDER, THE CO-ORDINATE BENCH HAS RESTORED THE CERTIFICATE GRAN TED UNDER S.12A BY HOLDING THAT ACTIVITIES ARE BEING CARRIED OUT AS PER OBJECTS OF THE TRUST AND THEREFORE, THE REASON TO DENY THE BENEFIT OF EXEMPTION UNDER S. 11 OF THE ACT AS NO LONGER VALID AND DO NO T SURVIVE ANY MORE. ADVERTING TO SECOND ASPECT, THE LEARNED AR CO NTENDED THAT SIMILAR DONATION OF RS.45 CRORES GIVEN TO IFIG WERE TREATED AS APPLICATION OF INCOME AND THE PROVISIONS OF SECTION 11(1)(A) OF THE ACT WAS HELD TO BE MET OUT BY THE DONOR TRUST BY TH E CO-ORDINATE BENCH OF TRIBUNAL IN AY 2011-12 IN ITA NO.L927/AHD/ 2016 ORDER DATED 09.03.2017. SIMILAR VIEW HAS BEEN AGAIN TAKEN IN ASSESSEE'S OWN CASE IN AY 2012-13 IN ITA NO.1608/AHD/2017. THE LEARNED AR THEREFORE SUBMITTED THAT THE SECOND GRIEVANCE OF TH E REVENUE ALSO HAS NO LEGAL FOUNDATION AND THEREFORE APPEAL OF THE REVENUE REQUIRES TO BE DISMISSED ON BOTH COUNTS. 9. THE LEARNED AR THEREAFTER REFERRED TO ITS GROUND S OF CROSS OBJECTION AND FAIRLY SUBMITTED THAT HE DOES NOT SEE K TO PRESS GROUND NOS. 1 & 2 OF ITS CROSS OBJECTION CONCERNING THE VA LIDITY RE- ASSESSMENT UNDER S.147 OF THE ACT. THE LEARNED AR F URTHER POINTED OUT THAT GROUND NO. 3 IS ALSO RENDERED INFRUCTUOUS AS THE DEDUCTION CLAIMED IS AVAILABLE ON MERITS IN VIEW OF THE DECIS ION OF THE CO- ORDINATE BENCH IN OTHER ASSESSMENT YEARS AND CONSEQ UENTLY, THE CROSS OBJECTION OF THE ASSESSEE DOES NOT CALL FOR ANY SUB STANTIVE ADJUDICATION. 10. THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND OFFERED NO COMMENT IN ELABORATION. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. AS NARRATED ON BEHALF OF THE ASSESSEE NOTED ABOVE, THE GRIEVANCES OF THE REVENUE HAVE BEEN ADDRESSED IN NEGATIVE BY THE CO-O RDINATE BENCH OF ITA NO.1117/AHD/2018 WITH C.O. NO. 72/AHD/2019 [DCIT VS. FRIENDS OF WWB INDIA] A.Y. 2014-15 - 5 - TRIBUNAL IN OTHER ASSESSMENT YEARS ON SIMILAR FACTS . THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE CIT(A) WHICH IN CONFORMITY WITH THE SUBSISTING ORDER OF THE ITAT. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. 13. IN VIEW OF THE SUBMISSIONS MADE ON BEHALF OF TH E ASSESSEE, CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. 14. IN THE COMBINED RESULT, APPEAL OF THE REVENUE A S WELL AS CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. 8. IN PARITY, APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. 9. IN THE COMBINED RESULT, APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 23/07/2019 TANMAY TRUE COPY !' #' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. $ / ASSESSEE 3. ) *+ , / CONCERNED CIT 4. ,- / CIT (A) 5. 012 33*+, *+#, 56$)$ / DR, ITAT, AHMEDABAD 6. 289 : / GUARD FILE. BY ORDER / $% , ;/ 5 *+#, 56$)$ < THIS ORDER PRONOUNCED IN OPEN COURT ON 23/ 07/2019