Nellai Nadar Mahimai Paripalana Sangam, CHENNAI V. ADIT, CHENNAI

ITA 1271/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9698 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Depreciation
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1271/MDS/2015 ' (' / ASSESSMENT YEAR : 2011-12 M/S NELLAI NADAR MAHIMAI PARIPALANA SANGAM, NO.488, PANATHEON ROAD, EGMORE, CHENNAI - 600 008. PAN : AAATN 2469 F V. THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS) IV, CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE ,-*+ . / / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 0 . 1$ / DATE OF HEARING : 29.03.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 07.04.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 17, CHEN NAI, DATED 26.03.2015 AND PERTAINS TO ASSESSMENT YEAR 2011-12. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE-SANGAM WAS REGISTERED AS CHARITAB LE INSTITUTION 2 I.T.A. NO.1271/MDS/15 UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE C LAIMED DEPRECIATION ON THE CAPITAL ASSET. HOWEVER, THE AS SESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND GRANTED EX EMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. THE ASSESSEE CHALL ENGED THE ORDER OF THE ASSESSING OFFICER BEFORE THE CIT(APPEALS) AS FAR AS IT RELATES TO DISALLOWANCE OF DEPRECIATION ON THE CAPITAL ASSE T. THE CIT(APPEALS) WITHOUT CONSIDERING THE GROUNDS RAISED BEFORE HIM, PROCEEDED ON THE PRESUMPTION THAT THERE WAS VIOLATI ON OF SECTION 13(1)(B) OF THE ACT. THE CIT(APPEALS) FOUND THAT T HE ASSESSEE- SANGAM WAS ESTABLISHED FOR THE BENEFIT OF A PARTICU LAR CASTE AND ACCORDINGLY FOUND THAT THE ASSESSEE-SANGAM IS NOT E LIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. REFERRING T O THE ORDER OF THE CIT(APPEALS), MORE PARTICULARLY PARA 4.1, THE LD.CO UNSEL SUBMITTED THAT THE CIT(APPEALS) IS NOT CORRECT IN SAYING THAT THE AIM OF THE ASSESSEE-SANGAM IS NOT SOLELY FOR EDUCATION. ACCOR DING TO THE LD. COUNSEL, THE OBJECT OF THE SANGAM IS PRIMARILY FOR EDUCATION. THE SANGAM IS ALSO PURSUING INSTITUTIONAL ACTIVITY APAR T FROM THE PRIMARY OBJECT OF EDUCATION. THEREFORE, THE ASSESSEE-SANGA M IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. SINCE THE P RIMARY OBJECT IS 3 I.T.A. NO.1271/MDS/15 FOR EDUCATION, THE ASSESSEE-SANGAM IS ALSO ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT. 3. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE CIT(APPEALS) OBSERVED IN THE IMPUGNED ORDER THAT BY HIS LETTER DATED 17.03.2015, THE ASSESSEE WAS ASKED TO FURNISH OBJECTION, IF ANY, FOR NOT GRANTING EXEMPTION TO THE EXTENT OF ` 1,21,55,545/-. THE CIT(APPEALS) ALSO CLAIMS THAT WORKING WAS PROVIDED TO THE ASSESSEE. IN FACT, ACCORDING TO THE LD. COUNSEL, T HE LETTER DATED 17.03.2015 WAS NOT SERVED ON THE ASSESSEE. THE WOR KING SAID TO BE MADE BY THE CIT(APPEALS) WAS ALSO NOT FURNISHED TO THE ASSESSEE. THEREFORE, THE ASSESSEE COULD NOT FILE A NY OBJECTION BEFORE THE CIT(APPEALS). EVEN ASSUMING FOR ARGUMEN T SAKE THAT SO-CALLED LETTER DATED 17.03.2015 WAS SERVED ON THE ASSESSEE, STILL THE TIME GIVEN TO THE ASSESSEE WAS NOT SUFFICIENT T O GIVE OBJECTION SINCE THE CIT(APPEALS) PASSED THE ORDER ON 26.03.20 15. 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT WHEN THE ISSUE RAISED BY THE ASSESSEE BEFORE THE CIT(APP EALS) IS ONLY DEPRECIATION ON THE CAPITAL ASSET, THE CIT(APPEALS) CANNOT TRAVEL BEYOND THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE HIM. REFERRING TO THE GROUNDS OF APPEAL FILED BEFORE THE CIT(APPEALS), THE 4 I.T.A. NO.1271/MDS/15 LD.COUNSEL SUBMITTED THAT OTHER THAN DISALLOWANCE O F DEPRECIATION IN RESPECT OF CAPITAL ASSET, NO OTHER ISSUE WAS RAISED BEFORE THE CIT(APPEALS). THEREFORE, THE CIT(APPEALS) EXCEEDED HIS JURISDICTION FOR DISALLOWING THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT, SINCE SUCH A POWER WAS NOT CONFERRED ON THE CIT(APPEALS). THE CIT(APPEALS) IS EXPECTED TO ADJU DICATE THE ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. U NFORTUNATELY, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) HAS NOT DISCUSSED ANYTHING ABOUT THE ISSUE OF DEPRECIATION AND DISALL OWED THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. THEREFOR E, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED. 5. ON THE CONTRARY, SH. P. RADHAKRISHNAN, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT NO DOUBT, THE ASSESS EE CLAIMED DEPRECIATION ON CAPITAL ASSET WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. ON APPEAL, THE CIT(APPEALS) FOU ND THAT THERE WAS VIOLATION OF SECTION 13(1)(B) OF THE ACT, HENCE , HE FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTIO N 11 OF THE ACT. THE CIT(APPEALS), BY LETTER DATED 17.03.2015, ASKED THE ASSESSEE TO FURNISH ITS OBJECTION. THE CIT(APPEALS) HAS ALS O FURNISHED WORKING FOR ASSESSING THE INCOME OF ` 1,21,55,545/-. THE ASSESSEE 5 I.T.A. NO.1271/MDS/15 CLAIMED BEFORE THE ASSESSING OFFICER THAT IT WAS EN TITLED TO EXEMPTION UNDER SECTION 11 AND SECTION 10(23C)(VI) OF THE ACT. THIS OBJECTION WAS OVERRULED. ON A QUERY FROM THE BENCH WHETHER THE LETTER DATED 17.03.2015 WAS FURNISHED TO THE AS SESSEE, THE LD. D.R. VERY FAIRLY SUBMITTED THAT HE HAS TO CALL FOR RECORDS FROM THE CIT(APPEALS) TO VERIFY WHETHER THE LETTER WAS IN FA CT SERVED ON THE ASSESSEE OR NOT. THE LD. D.R. FURTHER SUBMITTED TH AT EVEN ASSUMING FOR ARGUMENT SAKE THAT THE LETTER WAS SERV ED ON THE ASSESSEE, THE ASSESSEE CLAIMED BEFORE THE TRIBUNAL THAT THE TIME PROVIDED TO THE ASSESSEE IS NOT SUFFICIENT ENOUGH T O FILE ITS OBJECTION. THEREFORE, HE SUBMITTED THAT HE LEAVES THE MATTER T O THE DISCRETION OF THE TRIBUNAL. 5. REFERRING TO THE CONTENTION OF THE LD.COUNSEL FO R THE ASSESSEE THAT THE CIT(APPEALS) HAS EXCEEDED HIS JUR ISDICTION IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMP TION UNDER SECTION 11 OF THE ACT, THE LD. D.R. SUBMITTED THAT THE POWER OF THE CIT(APPEALS) IS CO-TERMINUS WITH THAT OF THE ASSESS ING OFFICER. THEREFORE, ACCORDING TO THE LD. D.R., WHAT THE ASSE SSING OFFICER OMITTED TO CONSIDER, THE CIT(APPEALS) CAN VERY WELL CONSIDER THE SAME PROVIDED AN OPPORTUNITY GIVEN TO THE ASSESSEE. IN THE CASE 6 I.T.A. NO.1271/MDS/15 BEFORE US, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER HAS NOT CONSIDERED THE VIOLATION OF SECTION 13(1)(B) OF THE ACT. THEREFORE, HE HAD NO OCCASION TO EXAMINE WHETHER THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT OR NOT. THIS OMISSION ON THE PART OF THE ASSESSING OFFICER WAS RECTIFIED BY THE CIT(APPEALS). SUCH AN EXERCISE OF HIS POWER IS PERMISSIBLE UNDER THE SCHEME OF THE ACT. THEREFORE, ACCORDING TO THE LD. D.R., IT IS NOT CORRECT TO SAY THAT THE CIT(APPEALS) HAS EXCEEDED HIS JURISDICTION IN DENYING EXEMPTION UNDER SECTION 11 OF THE ACT, ESPECIALLY, WHEN THE ISSUE BEFORE HIM WAS GRANT OF DEPRECIATION ON THE CAPITAL ASSET. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSING OFFICER ALLOWED EXEMPTION UNDER SECTION 1 0(23C)(VI) OF THE ACT, HOWEVER, DISALLOWED THE CLAIM OF THE ASSES SEE FOR DEPRECIATION ON THE CAPITAL ASSET. IT IS NOT IN DI SPUTE THAT THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS) ONLY IN RESPECT OF THE CLAIM OF DEPRECIATION. THE CIT(APPEALS), WHILE CON SIDERING THE APPEAL OF THE ASSESSEE IN RESPECT OF DEPRECIATION, FOUND THAT THERE WAS VIOLATION OF SECTION 13(1)(B) OF THE ACT SINCE THE INSTITUTION WAS ESTABLISHED FOR THE BENEFIT OF A PARTICULAR COMMUNI TY. THE 7 I.T.A. NO.1271/MDS/15 ASSESSING OFFICER HAS NOT EXAMINED THE PROVISIONS O F SECTION 13(1)(B) OF THE ACT. THE FACT REMAINS THAT THE DIR ECTOR OF INCOME TAX (EXEMPTIONS) GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT AFTER CONSIDERING THE OBJECT OF THE SANGAM AND THE PURPOSE FOR WHICH IT WAS ESTABLISHED. THE CIT(APPEALS) BY LETT ER DATED 17.03.2015 ASKED THE ASSESSEE TO FURNISH ITS OBJECT ION, IF ANY, FOR DISALLOWING THE CLAIM UNDER SECTION 11 OF THE ACT O R SECTION 10(23C) OF THE ACT. THE ASSESSEE NOW CLAIMS BEFORE THIS TR IBUNAL THAT THE LETTER DATED 17.03.2015 WAS NOT SERVED ON IT AND TH E WORKING SAID TO BE PROVIDED TO THE ASSESSEE BY THE CIT(APPEALS) WAS ALSO NOT FURNISHED. ADMITTEDLY, THE CIT(APPEALS) PASSED THE ORDER ON 26.03.2015. THEREFORE, FROM THE DATE OF ISSUE OF L ETTER AND THE DATE OF PASSING THE ORDER, THE TIME LIMIT AVAILABLE WAS ONLY 9 DAYS. IF THE CIT(APPEALS) DISPATCHED THE LETTER DATED 17.03.2015 BY POST, THEN THE SAME WOULD HAVE BEEN RECEIVED AFTER TWO OR THRE E DAYS. THEN, THE AVAILABLE TIME WOULD BE ONLY 5 OR 6 DAYS. IF F OR ANY REASON, THE LETTER COULD NOT BE SERVED ON THE ASSESSEE WITHIN T WO OR THREE DAYS, THEN THE TIME LIMIT AVAILABLE TO THE ASSESSEE FOR F URNISHING OBJECTION WOULD BE REDUCED PROPORTIONATELY. THEREFORE, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT EVEN ASSUMING FOR ARGUMENT SAKE, THE LETTER DATED 17.03.2015 WAS SERVED ON THE ASSESSEE, THE TI ME GIVEN TO 8 I.T.A. NO.1271/MDS/15 THE ASSESSEE FOR FILING OBJECTION IS NOT SUFFICIENT ENOUGH. THEREFORE, THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSIN G OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE OBJECTION RAISED BY THE ASSESSEE AND T HEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASON ABLE OPPORTUNITY TO THE ASSESSEE. IT IS MADE CLEAR THAT THE ASSESSI NG OFFICER SHALL DECIDE THE ISSUE INDEPENDENTLY WITHOUT BEING INFLUE NCED BY THE OBSERVATION MADE BY THE CIT(APPEALS) IN THE IMPUGNE D ORDER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 7 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 7 TH APRIL, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-17, CHENNAI-34 4. DIT (EXEMPTION), CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.