ITO, Ludhiana V. Shri Durga Mata Mandir Trust, Ludhiana

ITA 1168/CHANDI/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8519 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-08-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 16-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Depreciation; Charitable institution
• Section: 142(1); 133(6); 12A; 12AA; 147; 12; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1168/CHD/2009 ASSESSMENT YEAR: 2001-02 THE ITO, VS. SHRI DURGA MATA MANDIR TRUST, WARD VI(3), LUDHIANA LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY: SHRI ASHWANI KUMAR ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A)-II, LUDHIANA DATED 25.9.2009 RELATING TO ASSESSMENT YEA R 2001-02 AGAINST THE ORDER PASSED UNDER SECTION 144 OF THE I.T. ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A)-II, LUDHIANA HAS ERRED IN DIRECTING TO TAKE TAXABLE INCOME AS NIL IN VIEW OF PROVISIONS OF SECT ION 11, 12 & 13 OF INCOME TAX ACT, AS CONDITION OF UTILIZATION OF 85% OF THE INCOME DURING THE YEAR IS NOT FULFILLED IN THE CASE OF ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A)-II, LUDHIANA HAS ERRED IN DIRECTING TO TAKE THE TAXABLE INCOME AS NIL AS THE ORDER OF ITAT DATED 28.5.2009 ALLOWING REGISTRATION FROM DATE OF ITS CREATION HAS NOT BEEN ACCEPTED BY DEPARTMENT AND APPEAL HAS BEEN FIELD BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT, CHANDIGARH. 2 3. THE LEARNED AR FOR THE ASSESSEE AT THE OUTSET POINT ED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 200 2-03. THE LEARNED DR FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER INITIATED PROCEEDINGS U/S 147 OF THE ACT AS THOUGH THE ASSESS EE TRUST WAS IN EXISTENCE FOR 23 YEARS, IT NEITHER APPLIED FOR REGI STRATION U/S 12A OF THE INCOME TAX ACT TILL 1.4.2007 NOR HAD FURNISHED ITS RETURN OF INCOME, THOUGH IT HAS FURNISHED THE AUDITED ACCOUNTS ALONG WITH APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. THE ASSESSEE FAI LED TO FURNISH ANY RETURN OF INCOME NOR THE NOTICES ISSUED FROM TIME TO TIME WERE COMPLIED WITH. THE ASSESSING OFFICER REQUISITIONED INFORMATION U/S 133(6) OF THE ACT FROM STATE BANK OF INDIA, COMMERCIAL BRANCH, LUDHIA NA AND ORIENTAL BANK OF COMMERCE, OVERLOCK ROAD, LUDHIANA. THE BAN K STATEMENT OF THE ASSESSEE TRUST FOR THE PERIOD 1.4.2000 TO 31.3.2001 AND 1.4.2001 TO 31.3.2002 WERE SUBMITTED. THE ASSESSEE HAD MADE DE POSITS OF RS. 2,32,99,350/- DURING THE FINANCIAL YEAR 2000-01. T HE ASSESSING OFFICER ISSUED THE NOTICE U/S 142(1) OF THE ACT WHICH REMAI NED UNCOMPLIED WITH AND EVEN SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER AS TO WHY THE ASSESSMENT SHOULD NOT BE COMPLETED EX-PARTE U/S 144 OF THE INCOME TAX ACT ALSO REMAINED UNCOMPLIED WITH. THE ASSESSING O FFICER ACCORDINGLY COMPLETED THE ASSESSMENT EX-PARTE U/S 144 OF THE IN COME TAX ACT AT AN INCOME OF RS. 2,32,99,350/-. 5. BEFORE THE CIT(A), THE PLEA OF THE ASSESSEE WAS THAT REGISTRATION U/S 12A OF THE ACT HAD BEEN GRANTED W.E.F. 1.4.1989 . ACCORDINGLY, THERE WERE NO REASONS TO INITIATE THE PROCEEDINGS U/S 147 OF THE ACT. THE SAID 3 PLEA OF THE ASSESSEE WAS REJECTED BY THE CIT(A). T HE RE-ASSESSMENT PROCEEDINGS WERE UPHELD. IN RESPECT OF THE ADDITIO N ON MERITS, THE CIT(A) NOTED THAT PURSUANT TO THE ORDER OF THE TRIBUNAL DA TED 18.5.2009 IN ITA NO. 1026/CHANDI/2007, THE CIT GRANTED REGISTRATION U/S 12A OF THE ACT VIDE ORDER DATED 14.9.2000. THE SAID REGISTRATION WAS GRANTED U/S 12AA (1)(B)(I) W.E.F. DATE OF CREATION OF TRUST I.E. 15. 11.1983. THE CIT(A) IN THE APPEAL FILED BY THE ASSESSEE AGAINST QUANTUM AD DITION, FORWARDED THE SUBMISSIONS OF THE ASSESSEE TO THE ASSESSING OFFICE R. IN THE REMAND REPORT DATED 10.7.2009, THE ASSESSING OFFICER OBSER VED THAT THE EXCESS INCOME ACCUMULATED WORKED OUT TO RS. 1,08,83,405/-. THE ASSESSING OFFICER ALSO RECORDED THAT APPELLANT HAD RECEIVED I NCOME OF RS. 2,24,21,529/- AND HAD ONLY UTILIZED RS. 81,74,895/- TOWARDS CHARITABLE OR RELIGIOUS PURPOSES AND THE ACCUMULATED BALANCE OF R S. 1,08,83,405/- WAS STILL TAXABLE INCOME OF THE ASSESSEE IN SPITE OF TH E REGISTRATION BEING GRANTED U/S 12AA OF THE ACT. THE LEARNED AR FOR TH E ASSESSEE IN REPLY EXPLAINED THE MODE AND METHOD OF UTILIZATION OF 85% OF THE GROSS RECEIPTS WHICH ARE INCORPORATED AT PAGE 5 OF THE APPELLATE O RDER. THE PLEA OF THE LEARNED AR WAS THAT THE GROSS INCOME AS PER THE AUD ITED ACCOUNTS WAS RS. 1,02,16,617/- AND THE BUILDING FUND RECEIVED WAS RS . 23,83,809/-, TOTALING RS. 1,26,00,426/-, WHICH WERE TOTALLY UTILIZED IN F IXED ASSETS AND EXPENSES CLAIMED AS PER RECEIPT AND EXPENDITURE ACCOUNT AND THE CLAIM OF THE DEPRECIATION. THE CIT(A) ON CONSIDERATION OF THE R ELEVANT RECORDS OBSERVED THAT THE ASSESSEE TO HAVE UTILIZED 85% OF THE INCOME TOWARDS OBJECTS OF THE TRUST. 6. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CI T(A) ON TWO ACCOUNTS I.E. NON FULFILLMENT OF CONDITION OF UTILI ZATION OF 85% OF THE INCOME DURING THE YEAR AND THE FILING OF THE APPEAL BEFORE THE HON'BLE 4 PUNJAB & HARYANA HIGH COURT AGAINST THE ORDER OF TH E TRIBUNAL GRANTING REGISTRATION U/S 12AA OF THE ACT FROM THE DATE OF T HE CREATION OF THE TRUST. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT IDENTICAL ISSUE AROSE BEFORE THE TRIBUNAL IN ITA NO. 430/CHD/2010 RELATING TO ASSESSMENT YEAR 2002-03, W HEREIN VIDE ORDER DATED 21.5.2010, THE ISSUE WAS DECIDED AGAINST THE REVENUE BY HOLDING AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. ADMITTEDLY, THE ASSESSEE TRUST HAD BEE N GRANTED REGISTRATION U/S 12AA OF THE ACT BY THE TRIBUNAL AND THE SAME IS EFFECTED DURING THE YEAR UNDER CONSIDERATION. UNDER THE PROVISIONS OF INCOM E TAX ACT, WHERE REGISTRATION HAS BEEN GRANTED TO A PERSON U/S 12AA OF THE ACT, THE EXCESS OF RECEIPTS OVER EXPENDITURE IS NOT CHARGEABLE TO TAX IN VIEW OF TH E PROVISIONS OF SECTION 11 & 12 OF THE ACT. THE ASSESSING OFFICER BROUGHT THE EXCESS RECEIPTS OVER EXPENDITURE FOR THE YEAR AS INCOME CHARGEABLE TO TA X BY COMPLETING THE ASSESSMENT FOR THE YEAR UNDER APPEAL. THE REASONS FOR SUCH CHARGEABILITY TO TAX WAS AND APPEAL FILED BY THE REVENUE BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AGAINST THE ORDER OF TRIBUNAL GRANTING REGISTRATION U/S 12AA OF THE ACT. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. WE A RE IN CONFORMITY WITH THE ORDER OF THE CIT(A) THAT ONC E REGISTRATION U/S 12AA OF THE ACT HAD BEEN GRANTED T O THE ASSESSEE, THE EXCESS OF RECEIPTS OVER EXPENDITU RE TO TAX COULD NOT BE BROUGHT TO TAX MERELY BECAUSE OF FILING OF AN APPEAL BEFORE THE JURISDICTIONAL HIGH COURT. UPHOLDING THE ORDER OF APPEAL, WE DISMISS T HE GROUNDS OF APPEAL RAISED BY THE REVENUE. 8. FURTHER, WE FIND THE CIT(A) HAD CONSIDERED THE R ECEIPTS AND EXPENDITURE OF THE ASSESSEE TRUST AND OBSERVED AS U NDER:- HOWEVER, AS RIGHTLY EXPLAINED IN THE WRITTEN SUBMISSIONS OF THE LD. COUNSELS REPRODUCED ABOVE, I N COMPUTING THE ACCUMULATED BALANCE OF RS. 1,08,83,405/- THE ASSESSING OFFICER HAS CONSIDERED THE ENTIRE CREDITS IN THE BANK ACCOUNTS OF THE APPELLAN T I.E. RS. 2,32,99,350/- TO BE ITS RECEIPTS. THE LD. COUN SELS HAVE RIGHTLY EXPLAINED THAT THE TOTAL DEPOSITS IN T HE 5 BANK ACCOUNTS INCLUDED RS. 23,83,809/- ON ACCOUNT OF BUILDING FUND AS RECEIVED DURING THE YEAR AND DIREC TLY CREDITED TO THE CAPITAL ACCOUNT. FURTHER DEPOSITS OF RS. 1,04,72,772/- OF FDR DATED 17.01.2001 FOR RS. 1,04,72,772/-. THE FDR NUMBER IS SHOWN TO BE 493639 WHICH IS DEPOSITED IN THE STATE BANK OF INDI A, COMMERCIAL BRANCH, LUDHIANA. IN ADDITION TO THE ABOVE, THE LD. COUNSEL HAS ALSO VERY RIGHTLY EXPLA INED THAT IN VIEW OF HOST OF JUDGMENTS DISCUSSED IN THEI R WRITTEN SUBMISSIONS, DEPRECIATION IS DEDUCTIBLE FOR COMPUTING THE INCOME OF THE TRUST FOR CHARITABLE PURPOSES. IF ALL THESE FACTS ARE TAKEN INTO ACCOUN T, THE TOTAL INCOME UTILIZED DURING THE YEAR WOULD COME TO RS. 1,26,00,426/- WHICH IS TOTAL OF BOTH GROSS INC OME OF RS. 1,02,16,617/- AND BUILDING FUND AT RS. 23,83,809/-. THUS, THE APPELLANT HAD UTILIZED MORE THAN 85% OF THE INCOME TOWARDS THE OBJECTIVE OF THE APPELLANT TRUST AND THEREFORE, THERE WAS NO GROUND FOR CONSIDERING THE ALLEGED ACCUMULATED BALANCE OF RS. 1,08,83,405/- TO BE THE TAXABLE INCOME OF THE APPELLANT AS SUBMITTED BY THE ASSESSING OFFICER IN HIS REPORT DATED 10.7.2009. IN VIEW OF THE ABOVE DISCUSSION, THE TAXABLE INCOME OF THE APPELLANT IS DIRECTED TO BE TAKEN AT NIL KEEPIN G IN VIEW THE PROVISIONS OF SECTIONS 11, 12 & 13 OF THE ACT. THESE GROUNDS ARE THEREFORE, ALLOWED. 9. THE LEARNED DR FOR THE REVENUE HAS FAILED TO POI NT OUT ANY DISCREPANCY IN THE FINDINGS OF CIT(A). IN THE ABSE NCE OF THE SAME, WE UPHOLD THE ORDER OF THE CIT(A) IN ADOPTING THE INCO ME OF A TRUST AT NIL IN VIEW OF THE PROVISIONS OF SECTION 11,12 & 13 OF THE ACT. THE GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF AUGUST, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH AUGUST, 2010 RKK 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR