Sri Ramanujam Educational and Charitable Trust, Salem V. ITO, Salem

ITA 129/CHNY/2014

• Counselvise Citation: 12921714 RSA 2014
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMOD NANGIA
• Assessee Lawyers: T S LAKSHMIVENKATARAMAN
• Keywords: Charitable institution
• Section: 143(3); 12AA; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! '# $% , & #'$ #( BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER # ./ ITA NOS. 129 & 130/MDS/2014 & ) *) / ASSESSMENT YEARS : 2008-09 & 2009-10 M/S SRI RAMANUJAM EDUCATIONAL AND CHARITABLE TRUST, NO.1, V.O.C. NAGAR, FIRST CROSS STREET, RASIPURAM 637 408. NAMAKKAL DISTRICT. PAN : AAHTS 9098 P V. THE INCOME TAX OFFICER, WARD II(2), NO.3, GANDHI ROAD, SALEM M 636 007. (%,/ APPELLANT) (./%,/ RESPONDENT) %, 0 # / APPELLANT BY : SHRI T.S. LAKSHMIVENKATARAMAN, FCA ./%, 0 # / RESPONDENT BY : SHRI PRAMOD NANGIA, CIT # 1 0 23 / DATE OF HEARING : 20 TH MAY, 2014 45* 0 23 / DATE OF PRONOUNCEMENT : 20 TH MAY, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THESE TWO APPEALS ARE FILED BY THE ASSESSEE. TH E RELEVANT ASSESSMENT YEARS ARE 2008-09 AND 2009-10. THESE AP PEALS ARE DIRECTED AGAINST THE APPELLATE ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AT SALEM, ON 29.11.2013. T HESE APPEALS 2 I.T.A. NOS. 129 & 130/MDS/14 ARISE OUT OF INCOME ESCAPING ASSESSMENTS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A SOCIETY RE GISTERED UNDER SOCIETIES REGISTRATION ACT WITH THE PROCLAIME D OBJECT OF RUNNING EDUCATIONAL INSTITUTIONS FOR THE BENEFIT OF PUBLIC AT LARGE. BUT, AS FAR AS THE IMPUGNED ASSESSMENT YEARS ARE CO NCERNED, THE APPLICATIONS FILED BY THE ASSESSEE FOR REGISTRATION UNDER SECTION 12AA WERE REJECTED BY THE COMMISSIONER OF INCOME TA X AT SALEM. THE LEARNED CHARTERED ACCOUNTANT APPEARING BEFORE U S ON BEHALF OF THE ASSESSEE SUBMITTED THAT SUBSEQUENTLY THE COMMIS SIONER OF INCOME TAX HAS GRANTED REGISTRATION TO THE ASSESSEE -TRUST UNDER SECTION 12AA AND THE ASSESSEE-TRUST CONTINUES TO EN JOY THE REGISTRATION. 3. IN THESE TWO ASSESSMENTS, THE ASSESSEE CLAIMED E XEMPTION UNDER SECTION 10(23C) OF ITS INCOME ON THE GROUND T HAT THE ASSESSEE IS RUNNING EDUCATIONAL INSTITUTIONS AND TH E SOLE ACTIVITY CARRIED ON BY THE ASSESSEE-TRUST DURING THE RELEVAN T PERIOD WAS ONLY EDUCATIONAL ACTIVITY. BUT, THE ASSESSING OFFI CER REJECTED THE CONTENTION OF THE ASSESSEE STATING THAT THE APPLICA TIONS PUT IN BY THE ASSESSEE-TRUST FOR OBTAINING REGISTRATION UNDER SEC TION 12AA HAD ALREADY BEEN DISMISSED BY THE COMMISSIONER OF INCOM E TAX FOR 3 I.T.A. NOS. 129 & 130/MDS/14 THESE TWO IMPUGNED ASSESSMENT YEARS. THEREFORE, TH E ASSESSEE CANNOT BE CONSIDERED AS A CHARITABLE TRUST AND PART ICULARLY A TRUST EXISTING SOLELY FOR EDUCATIONAL ACTIVITIES. HE BRO UGHT THE BOOK INCOME TO TAX FOR BOTH THESE ASSESSMENT YEARS. 4. IN FIRST APPEAL, THE ORDERS OF THE ASSESSING AUT HORITY HAD BEEN CONFIRMED BY THE COMMISSIONER OF INCOME TAX (A PPEALS) STATING THAT IN THE ABSENCE OF REGISTRATION UNDER S ECTION 12AA, THE CORPUS DONATIONS RECEIVED BY THE ASSESSEE-TRUST WOU LD BE CONSIDERED AS INCOME AS IN THE NATURE OF VOLUNTARY CONTRIBUTIONS. 5. WE HEARD BOTH SIDES IN DETAIL. THERE IS NO DISP UTE REGARDING THE FACT THAT THE ASSESSEE WAS RUNNING AN EDUCATION AL INSTITUTION DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEARS UNDER APPEAL AND ALSO THE ASSESSEE-TRUST HAD NOT CARRIED ON ANY OTHER ACTIVITIES. THEREFORE, IT IS TO BE HELD THAT THE ASSESSEE IS A TRUST EXISTED SOLELY FOR EDUCATIONAL ACTIVITIES AS FAR AS THESE TWO ASSE SSMENT YEARS ARE CONCERNED. WHEN THAT IS THE CASE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C) PROVIDED ITS TOTAL RECEIPT DID NOT EXCEED ` 1 CRORE. IN CONSIDERING THE TOTAL AMOUNT OF RECEI PTS, IT IS TO BE SEEN THAT THERE IS NO DISTINCTION BETWEEN VOLUNT ARY CONTRIBUTION AND CORPUS DONATION OR ANY OTHER SUCH RECEIPTS. IF ALL THE RECEIPTS PUT TOGETHER AND STILL THE TOTAL DOES NOT EXCEED ` 1 CRORE, THE 4 I.T.A. NOS. 129 & 130/MDS/14 ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 10 (23C). THIS IS THE MANDATE OF THE STATUTE. 6. THE ASSESSING OFFICER HAS RELIED ON A SLIPPERY G ROUND THAT AS THE ASSESSEE WAS NOT GRANTED REGISTRATION UNDER SEC TION 12AA FOR THE IMPUGNED ASSESSMENT YEARS, IT CANNOT BE PRESUME D THAT THE ASSESSEE WAS INDULGED IN EDUCATIONAL ACTIVITIES ALO NE. THE REASON POINTED OUT BY THE ASSESSING OFFICER IS PERVERSE. HE DID NOT BOTHER TO CONSIDER THAT SECTION 10(23C) IS AN INDEPENDENT PROVISION OF EXEMPTION NOT TO BE CONFUSED WITH THE RESTRICTIVE C LAUSES EMBEDDED IN SECTIONS 11, 12, 13, ETC. THE COMMISSIONER OF I NCOME TAX (APPEALS) ALSO PROCEEDED TO DECIDE THE ISSUE ON AN ILLUSORY TANGENT. HE ALSO DID NOT CONSIDER THE CORE ISSUE. 7. AS FAR AS THESE TWO ASSESSMENT YEARS ARE CONCERN ED, WE FIND THAT THE TOTAL RECEIPTS OF THE TRUST IS NOT MO RE THAN ` 1 CRORE PER YEAR AND THE ASSESSEE IS STRAIGHTAWAY ELIGIBLE FOR EXEMPTION PROVIDED UNDER SECTION 10(23C). THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO REVISE THE ASSESSMENTS FOR THESE TWO ASSESSMENT YEARS AFTER EX EMPTING THE INCOME OF THE ASSESSEE UNDER SECTION 10(23C). 8. IN RESULT, THESE TWO APPEALS FILED BY THE ASSESS EE ARE ALLOWED. 5 I.T.A. NOS. 129 & 130/MDS/14 ORDERS PRONOUNCED IN THE OPEN COURT ON TUESDAY, T HE 20 TH OF MAY, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) ( '# $% ) ( ... ) & #'$ /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI, 8' /DATED, THE 20 TH MAY, 2014. KRI. '9 0 .&2:' ;'*2 /COPY TO: 1. %, /APPELLANT 2. ./%, /RESPONDENT 3. 1 <2 () /CIT(A), SALEM 4. 1 <2 /CIT, SALEM 5. '=> .&2& /DR 6. >) ? /GF.