Lake View Sports Foundation, Ranga Reddy V. Commissioner of Income Tax, (Exemptions), Hyderabad

ITA 1298/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0875 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 05-07-2021
• Assessment Year: 2019-2020
• Appeal Filed On: 19-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARAYANA MURTHY NAIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Opportunity of being heard; Prejudicial to interest; Cancellation of registration
• Section: 80G; 12A; 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 1 2 9 8 /H/20 1 9 ASSESSMENT YEAR: 201 9 - 20 LAKE VIEW SPORTS FOUNDATION, RR DISTRICT. PAN AABTL 6795N VS. COMMISSIONER OF INCOME - TAX (EXEMPTIONS), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: S HRI A.V. RAGHURAM REVENUE BY: S HRI NARAYANAMURTHY NAIK DATE OF HEARING: 0 5 /0 7 /2021 DATE OF PRONOUNCEMENT: 13 /0 7 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT( E ), HYDERABADS ORDER , DATED 2 9 / 0 4 /201 9 FOR AY 201 9 - 20 INVOLVING PROCEEDINGS U/S 80G(5)(VI) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT. ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), HYDERABAD, REJECTING APPLICATION FILED BY THE APPELLANT FOR APPROVAL U / S.80G OF THE INCOME TAX I TA NO. 1298 /HYD /201 9 M/S LAKE VIEW SPORTS FOUNDATION, RR DIST. : - 2 - : ACT, 1961 IS PERVERSE AND UNSUSTAINABLE IN LA W AND ON FACTS. 2. THE FINDING OF CIT(E) THAT THE APPELLANT IS OPERATING FOR THE BENEFIT OF OTHER ENTITIES IN WHICH THE TRUSTEES ARE DIRECTORS J PARTNERS IS INCORRECT. THE CIT(E) GAVE THIS FINDING WITHOUT PROPERLY APPRECIATING THE FACTS IN CORRECT PERSPE CTIVE. 3. THE INFERENCES DRAWN BY THE CIT(E) ON THE ASPECTS OF OFFICE PREMISES OF THE APPELLANT BEING LOCATED AT THE RESIDENTIAL PREMISES OF SRI VASUDEVA REDDY, AND ON THE SAID PERSON BEING A DIRECTOR OF M / S. LAKE VIEW TENNIS ACADEMY PVT. LTD. AND OWNER OF LAND ON WHICH APPELLANT IS CONSTRUCTING TENNIS COURT ARE INCORRECT. THE INFERENCES DRAWN BY CIT(E) ARE WITHOUT APPRECIATING THE FACT THAT CONSTRUCTION OF THE TENNIS COURTS BY THE APPELLANT WERE YET TO BE COMPLETED BY THEN. 4. THE CIT(E) FAILED TO APPR ECIATE THAT THERE IS NO CONFLICT OF INTEREST IN SRI VASUDEVA REDDY BEING DIRECTOR OF M / S. LAKE VIEW TENNIS ACADEMY PVT. LTD., AND IN HE BEING OWNER OF LAND ALONG WITH 3 OTHERS, TAKEN FOR CONSTRUCTION OF TENNIS COURTS BY THE APPELLANT. THE CIT(E) WITHOUT PO INTING OUT ANY INSTANCE OF CONFLICT OF INTEREST HAS DRAWN INCORRECT INFERENCES. 5 ). THE FINDINGS OF THE CIT(E) WITH RESPECT TO TOURNAMENTS ORGANIZED BY LAKE VIEW TENNIS ACADEMY ARE INCORRECT AND ARE GIVEN WITHOUT CONSIDERING THE BASIC FACTS. THE CIT(E) F AILED TO APPRECIATE THAT THE APPELLANT NEVER CLAIMED THAT IT CONDUCTED THE SAID TOURNAMENTS, AND THAT APPELLANT ONLY CLAIMED THAT IT WAS ASSISTING M / S. LAKE VIEW TENNIS ACADEMY IN CONDUCTING TOURNAMENTS AS THE APPELLANT'S TENNIS COURTS WERE STILL UNDER CON STRUCTION BY THEN. I TA NO. 1298 /HYD /201 9 M/S LAKE VIEW SPORTS FOUNDATION, RR DIST. : - 3 - : 6) . THE OBSERVATIONS OF THE CIT(E) ON THE ASPECT OF CONTRACT FOR CONSTRUCTION OF TENNIS COURTS BEING AWARDED TO M / S. LN INFRA PROJECTS PVT. LTD., AND MAINTENANCE OF RECEIPTS ISSUED BY DONORS ARE INCORRECT AND UNSUSTAINABLE . - : 7. TH E OBSERVATIONS OF THE CIT(E) WITH RESPECT TO SALARIES PAID TO THE COACHES EMPLOYED BY LAKE - VIEW TENNIS ACADEMY PVT. LTD., AND WHO WERE ALSO APPOINTED BY THE APPELLANT ON PART - TIME BASIS IS NOT CORRECT AND HAS BEEN MADE WITHOUT PROPERLY APPRECIATING THE FAC TS IN CORRECT PERSPECTIVE. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ALL THE FINDINGS AND OBSERVATIONS OF THE CIT(E) IN HIS ORDER ARE INCORRECT AND ARE MADE ONLY WITH A PURPOSE OF DENYING 80G APPROVAL TO THE APPELLANT AND FOR ISSUING SHOW CAU SE NOTICE FOR CANCELLATION OF REGISTRATION UL S.12A GRAN TED EARLIER. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL. 2 . BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED APPLICATION IN FORM 10G SEEKING APPROVAL U/S 80G OF THE ACT ON 27/10/2018. CIT(E) ISSUED A NOTICE DATED 01/03/2019 TO THE ASSESSEE TO APPEAR AND PRODUCE ITS ORIGINAL MEMORANDUM OF ASSOCIATION/TRUST DEED, NOTE ON ACTIVITIES OF INSTI TUTION SINCE ITS INCEPTION OR DURING THE LAST THREE YEARS, COPIES OF RETURNS OF INCOME FILED BY THE ASSESSEE FOR THE AY 2016 - 17, 2017 - 18 & 2018 - 19 ALONG WITH INCOME & EXPENDITURE STATEMENTS BILLS, VOUCHERS AND OTHER I TA NO. 1298 /HYD /201 9 M/S LAKE VIEW SPORTS FOUNDATION, RR DIST. : - 4 - : INFORMATION. IN RESPONSE, THE AR OF THE ASSESSEE FURNISHED THE REQUIRE INFORMATION. 2.1 THE CIT(E) AFTER EXAMINING THE INFORMATION FURNISHED BY THE ASSESSEE REJECTED THE APPLICATION FILED BY THE ASSESSEE IN FORM - 10G FOR APPROVAL U/S 80G BY HOLDING THAT THE ASSESSEE FAILED TO FILE ANY REPLY TO THE SHOW CAUSE NOTICE, HENCE, THE GENUINENESS OF THE ASSESSEE - TRUST IS DOUBTFUL. 3. AGGRIEVED BY THE ORDER OF THE CI T(E), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 4. BEFORE US, THE LD. AR OF THE ASSESSEE INVITED THE BENCH ATTENTION TO THE PAPER FILED WHEREIN THE COPIES OF THE SHOW CAUSE NOTICE ISSUED BY THE CIT(E) ON 03/05/2019 AT PAGES 1 - 4 AND REPLY TO THE SHOW CAU SE NOTICE BY THE ASSESSEE DATED 01/06/2019 AND SUBMITTED THAT ALL THE FINDINGS AND OBSERVATIONS OF THE CIT(E) IN HIS ORDER ARE INCORRECT AND ARE MADE ONLY WITH A PURPOSE OF DENYING 80G APPROVAL TO THE ASSESSEE AND FOR ISSUING SHOW CAUSE NOTICE FOR CANCELLA TION OF REGISTRATION U/S 12A GRANTED EARLIER. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF CIT(E). I TA NO. 1298 /HYD /201 9 M/S LAKE VIEW SPORTS FOUNDATION, RR DIST. : - 5 - : 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES. THE CIT(E) MENTIONED IN HIS ORDER THAT THE ASSESSEE FAILED TO FILE REPLY TO THE ORDER SHEET ENTRY DATED 24/04/2019 AND AL LEGED ON OTHER ISSUES ALSO. THE AR OF THE ASSESSEE UNDERTOOK THAT IF ONE OPPORTUNITY IS GRANTED TO THE ASSESSEE, HE WILL EXPLAIN THE SAME WITH DOCUMENTARY EVIDENCE. ON CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE REM IT THE ISSUE BACK TO THE FILE OF CIT(E) WITH A DIRECTION TO EXAMINE THE REPLY FILED BY THE ASSESSEE AND IF HE IS SATISFIED, GRANT THE APPROVAL U/S 80G IN ACCORDANCE WITH LAW AND ON MERITS OF THE CASE AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. THE ASSESSEE IS DIRECTED TO COMPLY TO THE NOTICES OR ANY DIRECTIONS FROM THE CIT(E), IF ANY, IN THE PROCEEDINGS BEFORE HIM FOR OBTAINING APPROVAL U/S 80G. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTIC AL PURPOSES. 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. PRONOUNCED IN THE OPEN COURT ON 13 TH JULY , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 13 TH JU LY , 20 2 1 . I TA NO. 1298 /HYD /201 9 M/S LAKE VIEW SPORTS FOUNDATION, RR DIST. : - 6 - : K V C OPY TO : 1 M/S LAKE VIEW SPORTS FOUNDATION, S.NO. 21/AA,. AZIZ NAGAR, MOINABAD MANDAL, RR DIST. 500 075 2 C IT ( E ), 3 RD FLOOR ANNEXE, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 001 3 ADDL. C I T( E ) , HYDERABAD. 4 IT O(E) , HYDERABAD 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.