DDIT, CHENNAI V. Nagrathu Vaisiyargal Sangam, Vellore

ITA 1162/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81129 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: M KARUNAKARAN
• Section: 12A; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1162/MDS/2014 ( / ASSESSMENT YEAR: 2009-10) DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS) AAYAKAR BHAVAN ANNEX, 3 RD FLOOR, CHENNAI-600 034. VS M/S.NAGARATHU VAISIYARGAL SANGAM, 36 & 37, CUTCHERRY STREET TIRUPATTUR, VELLORE DIST. PAN: AAA5N0304J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.DAS GUPTA, JCIT /RESPONDENT BY : MR. M.KARUNAKARAN, ADVOCATE / DATE OF HEARING : 23 RD JULY, 2014 /DATE OF PRONOUNCEMENT : 13 TH AUGUST, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VII, CHENN AI DATED 29.01.2014 FOR THE ASSESSMENT YEAR 2009-10. T HE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT COMM ISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ASSES SEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THAT BENEFIT HAS BEEN EXTENDED TO INTERESTED PERSON S AS 2 ITA NO.1162/MDS/2014 DEFINED UNDER SECTION 13(3) OF THE ACT AS TRANSACT IONS WERE HELD TO BE IN VIOLATION OF SECTION 13(1)(C) OF THE ACT AND EXEMPTION UNDER SECTION 11 WAS DENIED. 2. THE ASSESSEE IS A SOCIETY REGISTERED UNDER SECTI ON 12A OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME C LAIMING EXEMPTION UNDER SECTION 11 OF THE ACT FOR THE ASSES SMENT YEAR 2009-10. IN THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER CAME TO KNOW THAT SOME OF THE TRU ST PROPERTY WAS OCCUPIED BY THE EXECUTIVE MEMBERS AS W ELL AS THEIR RELATIVES FOR RENT. THE ASSESSING OFFICER ALS O CAME TO KNOW THAT ASSESSEE PASSED RESOLUTION TO GRANT PREFE RENTIAL BENEFITS TO SOCIETY MEMBERS INSTEAD OF PUBLIC AT L ARGE. THE ASSESSING OFFICER WAS ALSO OF THE VIEW THAT MOST OF THE BENEFITS LIKE MEDICAL AID, MARRIAGE AID, OLD AGE PE NSION, LET OUT PROPERTY ETC. ARE ENJOYED BY THE SOCIETY MEMBER S. THEREFORE, ASSESSING OFFICER CONCLUDED THAT BENEFIT HAD ENSURED TO THE INTERESTED PERSONS AS DEFINED UNDER SECTION 13(3), THE TRANSACTIONS HELD TO BE IN VIOLATION OF SECTION 13(1)(C) OF THE ACT AND EXEMPTION UNDER SECTION 11 WAS DENIED. ON APPEAL, COMMISSIONER OF INCOME TAX (APP EALS) 3 ITA NO.1162/MDS/2014 HELD THAT ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND THE ASSESSING OFFICER DID NOT PROVE THAT APPELLANT VIOLATED SECTIONS 11 TO 13 OF THE ACT WIT H CORROBORATIVE EVIDENCE. 3. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT EXECUT IVE MEMBERS AS WELL AS THEIR RELATIVES OF THE ASSESSEE SOCIETY HAVE OCCUPIED SOCIETYS PROPERTY AND THIS ACTION IS CLEARLY IN VIOLATION OF SECTION 13(1)(C) OF THE ACT AS THEY AR E USING THE TRUST PROPERTY FOR THEIR BENEFITS. DEPARTMENTAL REP RESENTATIVE FURTHER SUBMITS THAT IN ASSESSEES OWN CASE (246 IT R 164) THE JURISDICTIONAL HIGH COURT HELD THAT ASSESSING O FFICER WAS CORRECT IN INVOKING THE PROVISIONS OF SECTION 13(1) (C) OF THE ACT AND DENIED EXEMPTION TO THE ASSESSEE UNDER SECT ION 11 OF THE ACT AS THE ASSESSEE GRANTED BENEFITS TO THE INTERESTED PERSONS AS DEFINED UNDER SECTION 13(3) OF THE ACT. 4. COUNSEL FOR THE ASSESSEE REITERATING THE SUBMIS SIONS MADE BEFORE THE LOWER AUTHORITIES SUBMITS THAT ASSE SSEE IS A SOCIETY REGISTERED UNDER SOCIETIES REGISTRATION AC T. COUNSEL SUBMITS THAT RESOLUTION WHICH THE ASSESSING OFFICER IS 4 ITA NO.1162/MDS/2014 REFERRING TO GRANTING PREFERENTIAL BENEFITS TO SOC IETY MEMBERS INSTEAD OF PUBLIC AT LARGE IS ONLY BY MISTAKE OF S TAFF WHO MENTIONED THAT SOCIETY MEMBERS ARE BENEFICIARIES. THIS MISTAKE WAS LATER RECTIFIED BY PASSING ANOTHER RES OLUTION. COUNSEL FURTHER SUBMITS THAT RESOLUTION DID NOT DEA L WITH LETTING OF PROPERTIES OF THE ASSESSEE SOCIETY BUT O NLY ABOUT ENHANCEMENT OF EXISTING LIMIT FOR MARRIAGE AID FRO M ` 15,000/- TO ` 20,000/-. COUNSEL FURTHER SUBMITS THAT BY AND LARGE THE BENEFITS OF THE SOCIETY ARE ALL UTILIZED FOR GENERA L PUBLIC AND VERY FEW RELATIVES OF EXECUTIVE MEMBERS ARE TENANTS OF SOCIETIES PROPERTY WHO ARE ALL PAYING MARKET RENT AND THERE IS NO VIOLATION UNDER SECTION 13(2)(B) OF THE ACT AS THEY ARE PAYING ADEQUATE RENT. COUNSEL FOR THE ASSESSEE SU PPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IN ALLOWING EXEMPTION UNDER SECTION 11 OF THE ACT. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT ASSESSEE SOCIETY HAS GIVE N BENEFITS TO THE EXECUTIVE MEMBERS AND THEIR RELATIV ES BY WAY OF GRANTING MEDICAL AID, MARRIAGE AID, OLD AGE PENS ION, LETTING 5 ITA NO.1162/MDS/2014 OUT PROPERTY ETC. THE ASSESSING OFFICER DID NOT GI VE ANY DETAILS I.E. WHO ARE THE BENEFICIARIES RELATING T O THE EXECUTIVE MEMBERS AND WHO ARE THE EXECUTIVE MEMBERS GETTING BENEFITS FROM THE ASSESSEE SOCIETY. NO OTHER DETAIL S HAVE BEEN FURNISHED BY THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER EXCEPT STATING THAT ASSESSEE SOCIETY IS GIVIN G BENEFIT TO THE EXECUTIVE MEMBERS OF THE SOCIETY WHICH IS A BA LD STATEMENT WITHOUT ANY DETAILS. THE ASSESSEE ALSO SUBMITS THAT RELATIVES OF EXECUTIVE MEMBERS ARE PAYING MAR KET RENT TO THE ASSESSEE SOCIETY FOR THE USE OF LET OUT PROP ERTY. TAKING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE INTO CONSIDERATION, WE ARE OF THE CONSIDERED VIEW THAT T HIS ISSUE HAS TO BE EXAMINED AFRESH IN DETAIL BY THE ASSESSIN G OFFICER BEFORE DENYING DEDUCTION UNDER SECTION 11 OF THE AC T. THUS, WE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE WHOLE ISSUE IN DETAIL AN D DECIDE IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORT UNITY TO THE ASSESSEE. 6 ITA NO.1162/MDS/2014 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY TH E 13 TH DAY OF AUGUST, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) . ( ' )* ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 13 TH AUGUST, 2014 SOMU /0 10 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .