M/s Nandana Education Trust, Shimoga V. CIT, Davangere

ITA 1404/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8701 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A R VIVEK SHRI M U ZAFFAR H
• Keywords: Revision of order
• Section: 143(3); 12A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BANGALORE BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1404/BANG/2013 (ASSESSMENT YEAR: 2010 - 11) M/S NANDANA EDUCATION TRUST, BYPASS ROAD, BEHIND SAHA YDRI COLLEGE, SHIMOGGA PAN: AABTN 1659 H VS. APPELLANT THE COMMISSIONER OF INCOME - TAX, DAVANGERE . RESPONDENT APPELLANT BY : SHRI A.R.VIVEK, ADVOCATE. REVENUE BY : SHRI M U ZAFFAR HUSSAIN, CIT(DR). DATE OF HEARING: 0 8 /12/ 2015 DATE OF PRONOUNCEMENT : 13 /01/2016 O R D E R PER INTURI RAMA RAO, AM : THIS APPEAL IS FILED BY THE APPELLANT - TRUST DIRECTED AGAINST THE ORDER OF CIT, DAVANGERE DATED 30 - 07 - 2013 PASSED U/S 263 OF THE IT ACT, 1961 F OR THE ASSESSMENT YEAR 2010 - 11. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE APPELLANT - TRUST WAS DULY REGISTERED UNDER THE TRUST ACT, WITH THE OBJECT OF IMPARTING EDUCATION . T HE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 WAS FILED ON 21/9/2011 CL AIM ING EXEMPTION U/S 10(23C)(IIIAD) OF THE IT ACT, 1961. AGAINST THE SAID RETURN OF INCOME , THE ASSESSMENT WAS COMPLETED BY THE ADDL.CIT, SHIMOGA AT A TOTAL INCOME OF RS.24,36,670/ - , U/S 143(3) AFTER ALLOWING EXEMPTION U/S10(23C)(IIIAD) OF THE IT ACT, 19 61 [HEREINAFTER REFERRED TO AS THE ACT ] VIDE ORDER DATED 28 - 03 - 2012 . ITA NO . 1404/BANG/2013 PAGE 2 OF 4 3. WHILE THE MATTER STOOD THUS, THE CIT , DAVANGERE, ISSUED A SHOW CAUSE NOTICE DATED 16 / 04 / 2013 U/S 263 OF THE ACT PROPOSING TO REVISE THE ASSESSMENT U/S 263 OF THE ACT ON THE GROUND THAT THE DONATION S RECEIVED OF RS.23,73,039/ - AND RS.15,00,000/ - ARE NOT EXEMPT FROM THE TAX, AS THE APPELLANT TRUST WAS NOT GRANTED REGISTRATION U/S 12A OF THE IT ACT, 1961. IN RESPONSE TO THE SHOW CAUSE NOTICE , APPELLANT - TRUST SUBMITTED THAT THE DONATI ON ARE FORMING PART OF CORPUS FUNDS AND THEREFORE, EXEMPT U/S 11(1)(D) OF THE IT ACT, 1961 AND THEREFORE, CANNOT BE BROUGHT TO TAX AND SUBMITTED THAT THE POWER OF REVISION CANNOT BE ASSUMED . THE CIT, AFTER CONSIDERING THE E XPLANATION FILED BY THE APPELLA NT - TRUST HELD THAT SINCE THE ISSUE OF EXEMPTION U/S 11(1)(D) OF THE ACT WAS NOT EXAMINED B Y THE AO , HE SET ASIDE THE ASSESSMENT ORDER FOR RE - DOING THE SAME IN THE LIGHT OF THE OBSERVATIONS MADE BY HIM IN HIS ORDER PASSED U/S 263 OF THE IT ACT. 4. BEING AG GRIEVED , THE A PPELLANT - TRUST IS BEFORE US WITH THE PRESENT APPEAL. 5. THE LEARNED COUNSEL FOR THE APPELLANT - TRUST ARGUED THAT THE DONATIONS WERE RECEIVED AS CORPUS FUND AND THEREFORE, EXEMPT U/S 11(1)(D) OF THE ACT. HE FURTHER SUBMITTED THAT THE CIT WAS N OT JUSTIFIED TO SET ASIDE THE ASSESSMENT ORDER . H E PLACED RELIANCE ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF MALABAR IND USTRIAL . CO. LTD., VS CIT ( 243 ITR 83 ) . ITA NO . 1404/BANG/2013 PAGE 3 OF 4 6. ON THE OTHER HAND, LEARNED SENIOR DR PLACED RELIANCE ON THE ORDER OF REVIS ION PASSED BY THE CIT AND SUBMITTED THAT THE CIT WAS JUSTIFIED IN ASSUMING JURISDICTION U/S 263 OF THE AC T , A S THE AO FAILED TO EXAMINE THE ISSUE OF EXEMPTION OF DONATIONS UNDER THE PROVISIONS OF SEC.11(1)(D) OF THE ACT. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THIS APPEAL TO BE ADJUDICATED UPON IS WHETHER THE LD.CIT WAS JUSTIFIED IN ASSUMING JURISDICTION UNDER THE PROVISIONS OF SEC.263 OF THE IT ACT, 1961. MERE PERUSAL OF THE ORDER PASSED U/S 263 OF THE IT ACT BY THE LEARNED CIT, IT IS CLEAR THAT THE CIT WAS OF THE OPINION THAT THE RECEIPT OF DONATION OF RS.23,73,039/ - AND RS.15.00 LAKHS WAS NOT EXAMINED FROM THE POINT OF TAXABILITY UNDER THE PROVISIONS OF SEC.11(1)(D) OF THE IT ACT, 1961 . NEITHER IS IT DISC ERNABLE FROM THE ASSESSMENT ORDER THAT THE AO HAD EXAMINED THE DONATION FROM THE POINT OF THEIR TAXABILITY U/S 11(1)(D) OF THE A CT. THE AO MERELY EXAMINED THE ISSUE IN THE LIGHT OF THE PROVISIONS OF SEC.115BBC(3) OF THE ACT . IT IS NEEDLESS TO MENTION TH AT THE PROVISION OF SEC.15BBC(3) OF THE IT ACT AND 11(1)(D) OF THE ACT OPERATE IN DIFFERENT FIELDS. THE PROVISIONS OF SEC.11(1)(D) WERE AMENDED BY DIRECT LAWS AMENDMENT ACT, 1989 WITH EFFECT FROM 01 - 04 - 1989 TO THE EFFECT THAT THE VOLUNTARY CONTRIBUTIO N WITH SPECIFIC DIRECTION FORMING PART OF CORPUS OF THE TRUST W OULD CONSTITUTE INCOME WITHIN THE MEANING OF SEC.2(24)(IIA) OF THE IT ACT. ONLY AFTER TREATING THE CORPUS ITA NO . 1404/BANG/2013 PAGE 4 OF 4 DONATION AS INCOME , THE THE EXEMPTION CAN B E CLAIMED UNDER THE PROVISIONS OF SEC.11(1)(D) BY SHOWING THE NECESSARY EVIDENCE TO THE EFFECT THAT THE DONATIONS ARE MADE WITH THE SPECIFIC DIRECTION TO FORM PART OF THE CORPUS OF THE TRUST. THE AO NEVER EXAMINED THIS ASPECT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. IT IS TR I T E LAW , AS HELD BY THE HON BLE APEX COURT IN THE CASE OF MALABAR IND. CO.LTD VS CIT 243 ITR 83 NON - APPLICATION OF MIND BY THE AO ON THE ISSUE, AND ABSENCE OF MATERIAL ON RECORD TO SUPPORT THE CLAIM RENDERS THE ASSESSMENT ORDER E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON BLE APEX COURT IN THE CASE CITED SUPRA, WE UP HOLD THE ACTION OF THE CIT IN ASSUMING JURISDICTION U/S 263 OF THE IT ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE APPELLANT - TRUST IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JANUARY, 2016 S D/ - (V IJAY PAL RAO ) S D/ - (I NTURI RAMA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 13 /01/2016 SRINIVASULU,SPA COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL, BANGALORE