Agastyar Trust, CHENNAI V. DCIT (Exemptions) i, CHENNAI

ITA 1180/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9038 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 06-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANATH KUMAR RAHA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Set aside
• Section: 12AA; 10; 11

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL B SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER !./ ITA NOS.1180 & 1181/CHNY/2018 # $%# / ASSESSMENT YEARS : 2006-07 & 2007-08 M/S AGASTYAR TRUST, TNK HOUSE, 48, ANNA SALAI, CHENNAI - 600 002. PAN : AAATS 0968 F V. THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS)-I, CHENNAI - 600 034. ('(/ APPELLANT) ()*'(/ RESPONDENT) '( + , / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE )*'( + , / RESPONDENT BY : SHRI SANATH KUMAR RAHA, JCIT - $ + ./ / DATE OF HEARING :04.07.2019 01% + ./ / DATE OF PRONOUNCEMENT : 09.07.2019 / O R D E R BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNAI, DATED 16.01.2018 AND PERTAIN TO ASSESSMENT YEARS 2006- 07 AND 2007-08. SINCE COMMON ISSUE ARISES FOR CONS IDERATION IN BOTH THE APPEALS, I HEARD BOTH THE APPEALS TOGETHER AND DISPOSING THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.1180 & 1181/CHNY/18 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE COMMON ISSUE ARISES FOR CONSIDER ATION IN BOTH THESE APPEALS IS WITH REGARD TO INCLUSION OF DIVIDE ND INCOME FROM MUTUAL FUNDS WHICH WAS CLAIMED AS EXEMPTION UNDER S ECTION 10(35) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). REFERRING TO SECTION 11(5) OF THE ACT, MORE PARTICULARLY CLAUSE (XII) OF SUB-SECTION (5) OF SECTION 11, THE LD.COUNSEL SUBMITTED THAT THE CBDT IN RULE 17C OF INCOME-TAX RULES, 1962 SPECIFIED THAT INVESTMENT IN THE MUTUAL FUNDS IS ALSO ONE OF THE MODE OF INVESTMENT FOR THE TRUST. REFERRING TO CLAUSE (VII) OF SUB-SECTION (5) OF SECTION 11, T HE LD.COUNSEL SUBMITTED THAT WITH EFFECT FROM 01.04.2015, THE INC OME REFERRED IN SECTION 10 SHALL NOT BE EXCLUDED WHILE COMPUTING IN COME OF THE TRUST. THE YEARS UNDER CONSIDERATION ARE 2006-07 A ND 2007-08. THEREFORE, ACCORDING TO THE LD. COUNSEL, CLAUSE (VI I) OF SUB-SECTION (5) OF SECTION 11 MAY NOT BE APPLICABLE FOR BOTH TH E ASSESSMENT YEARS UNDER CONSIDERATION. REFERRING TO THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2008-0 9 AND 2009- 10 IN I.T.A. NO.1776 & 1777/MDS/2015 DATED 20.11.20 15, THE LD.COUNSEL SUBMITTED THAT ON IDENTICAL CIRCUMSTANCE S, THIS TRIBUNAL BY PLACING ITS RELIANCE ON THE JUDGMENT OF BOMBAY H IGH COURT IN DIT(E) V. M/S JASUBHAI FOUNDATION IN INCOME TAX APP EAL NO.1310 3 I.T.A. NOS.1180 & 1181/CHNY/18 OF 2013 DATED 01.04.2015, REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER. ON A QUERY FROM THE BENCH, THE LD.COUNSEL CLARIFIED THAT THE ASSESSING OFFICER HAS NOT PASSED ANY ORDER CONSEQUENT TO THE ORDER OF THIS TRIBUNAL DATED 20.1 1.2015 FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10. THE LD.COUNS EL HAS SUBMITTED THAT THE ISSUE ARISES FOR CONSIDERATION I N BOTH THE YEARS UNDER CONSIDERATION CAN ALSO BE REMITTED BACK TO TH E FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTION. 3. I HEARD SHRI SANATH KUMAR RAHA, THE LD. DEPARTME NTAL REPRESENTATIVE ALSO. ADMITTEDLY, THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 IN THE ASSESSEE'S OWN CAS E, AFTER PLACING RELIANCE ON THE JUDGMENT OF BOMBAY HIGH COU RT IN JASUBHAI FOUNDATION (SUPRA), REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION. SINCE IDENT ICAL SITUATION ARISE FOR THE YEARS UNDER CONSIDERATION ALSO, ORDERS OF B OTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE OF INCLUSION OF D IVIDEND INCOME FROM MUTUAL FUNDS IN THE TOTAL INCOME IS REMITTED B ACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHAL L RE-EXAMINE THE MATTER AND THEREAFTER DECIDE THE ISSUE AFRESH IN AC CORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE A SSESSEE. 4 I.T.A. NOS.1180 & 1181/CHNY/18 4. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HA S RAISED ONE MORE ISSUE WITH REGARD TO STANDARD DEDUCTION UN DER SECTION 24 OF THE ACT IN RESPECT OF INCOME FROM HOUSE PROPERTY . THE LD.COUNSEL FOR THE ASSESSEE VERY FAIRLY SUBMITTED T HAT HE IS NOT PRESSING THIS ISSUE. THE LD.COUNSEL HAS ALSO MADE AN ENDORSEMENT TO THAT EFFECT ON THE APPEAL FOLDER. HENCE, THIS G ROUND OF THE APPEAL IS DISMISSED AS NOT PRESSED. 5. I HAVE ALSO GONE THROUGH THE PROVISIONS OF SECTI ON 11 OF THE ACT. IN RESPECT OF THE TRUST, WHICH IS REGISTERED UNDER SECTION 12AA OF THE ACT, THE INCOME DERIVED FROM PROPERTY HELD U NDER TRUST DO NOT FORM PART OF TOTAL INCOME PROVIDED THE SAME IS APPL IED FOR THE OBJECT OF THE TRUST. THEREFORE, THE ENTIRE RENTAL INCOME WOULD FORM PART OF TOTAL INCOME. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. REPRESENTATIVE F OR THE ASSESSEE. ACCORDINGLY, ORDER OF THE CIT(APPEALS) DESERVES TO BE CONFIRMED ON MERIT ALSO. 6. THE ASSESSEE HAS ALSO RAISED ONE MORE GROUND FOR THE ASSESSMENT YEAR 2006-07 WITH REGARD TO ADMINISTRATI VE EXPENSES, TAXES AND INSURANCE TO THE EXTENT OF 3,82,134/-. 5 I.T.A. NOS.1180 & 1181/CHNY/18 7. AFTER HEARING THE LD.COUNSEL FOR THE ASSESSEE AN D THE LD. D.R., THIS TRIBUNAL FINDS THAT THE BREAK UP OF DETA ILS WITH REGARD TO ADMINISTRATIVE EXPENSES, TAXES AND INSURANCE ARE NO T AVAILABLE ON RECORD. IT IS NOT KNOWN WHAT IS THE NATURE OF PAYM ENT, WHETHER THE INSURANCE PREMIUM WAS PAID FOR INSURING THE PROPERT Y HELD UNDER TRUST OR ANY OTHER PROPERTY. THEREFORE, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ISSUE WITH REGARD TO ADMINISTRATIVE EXPENSES, T AXES AND INSURANCE PREMIUM IS REMITTED BACK TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE TH E MATTER AND BRING ON RECORD THE NATURE OF ADMINISTRATIVE EXPENS ES, TAXES AND INSURANCE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE A SSESSEE. 8. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE HA S TAKEN ONE MORE GROUND WITH REGARD TO PROFIT ON SALE OF IN VESTMENT. 9. THE ASSESSEE CLAIMS THAT ON SALE OF MUTUAL FUND UNITS, IT EARNED PROFIT OF 11,75,555/-. SINCE THE ISSUE OF DIVIDEND INCOME FROM MUTUAL FUND IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ISSUE OF 6 I.T.A. NOS.1180 & 1181/CHNY/18 PROFIT ON SALE OF MUTUAL FUND UNITS ALSO NEEDS TO B E RECONSIDERED. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ISSUE OF PROFIT ON SALE OF MUTUAL FUND UNITS IS ALSO REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDER ATION AS REMITTED BACK FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER IN TH E LIGHT OF THE MATERIAL THAT MAY BE AVAILABLE ON RECORD AND THEREA FTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 10. THE ASSESSEE HAS RAISED ONE MORE GROUND FOR THE ASSESSMENT YEAR 2007-08 WITH REGARD TO PROVISION FO R DOUBTFUL ADVANCES TO THE EXTENT OF 9,03,192/-. 11. I HEARD THE LD.COUNSEL FOR THE ASSESSEE AND THE LD. D.R. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT THERE WAS NO ACTUAL PAYMENT INVOLVED DU RING THE YEAR UNDER CONSIDERATION. IT IS ONLY A PROVISION AND NO N-FUNDED LIABILITY. THE DETAILS OF THE ADVANCES ARE NOT AVAILABLE ON RE CORD. UNLESS THE NATURE OF ADVANCES IS BROUGHT ON RECORD, IT CANNOT BE SAID THAT IT WOULD AMOUNT TO APPLICATION OF INCOME. MOREOVER, THE ASSESSING OFFICER OBSERVED THAT THERE WAS NO ACTUAL OUTFLOW O F FUNDS. IN VIEW 7 I.T.A. NOS.1180 & 1181/CHNY/18 OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OF FICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE ISSUE OF PROVISION FOR DOUBTFUL ADVANCES IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING O FFICER SHALL RE- EXAMINE THE MATTER IN THE LIGHT OF THE MATERIAL AVA ILABLE ON RECORD AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANC E WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 9 TH JULY, 2019 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 3! /DATED, THE 9 TH JULY, 2019 KRI. 8 I.T.A. NOS.1180 & 1181/CHNY/18 + ).45 65%. /COPY TO: 1. '( /APPELLANT 2. )*'( /RESPONDENT 3. - 7. () /CIT(A)-17, CHENNAI 4. CIT(EXEMPTIONS), CHENNAI 5. 5$8 ). /DR 6. 9# : /GF.