Deputy Commissioner of Income-tax, V. Bharati Vidyapeeth Medical Foundation, Pune

ITA 15/PUN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1874 (ITAT-PUNE)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K RASTOGI
• Keywords: Charitable institution
• Section: 143(3); 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO S . 14 & 15 /PN/20 16 / ASSESSMENT YEAR S : 20 0 7 - 0 8 & 2008 - 09 THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE . / APPELLANT VS. BHARATI VIDYAPEETH MEDICAL FOUNDATION, BHARATI VIDYAPEETH BHAVA N, L.B.S. ROAD, PUNE 411030 . / RESPONDENT PAN: AAATB1350Q / APPELLANT BY : SHRI S.K. RASTOGI, CIT / APPELLANT BY : SHRI S.K. RASTOGI, CIT / RESPONDENT BY : SHRI SUNIL PATHAK / DATE OF HEARING : 04 . 0 5 .201 6 / DATE OF PRONOUNCEMENT: 05 .0 5 .201 6 / ORDER PER SUSHMA CHOWLA, J M : THE TWO APPEALS FILED BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - 12 , PUNE , DATED 0 1 . 1 0.20 15 RELATING TO ASSESSMENT YEAR S 20 0 7 - 0 8 AND 2008 - 09 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S . 14 & 15 /PN/20 16 BHARATI VIDYAPEETH MEDICAL FOUNDATION 2 2 . BOTH THE APPEALS FILED BY THE REVENUE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF C ONVENIENCE. 3. THE REVENUE IN ITA NO. 14 /PN/20 16 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) DID NOT ERR IN HOLDING THAT THE INVESTMENT MADE BY THE ASSESSEE IN SHARES OF BHARATI SAHAKARI BANK LTD. WAS NOT IN VIOLATION OF THE PROVISIONS OF SEC.11(5) AND THERE OF SEC.13(1)(D) WOULD NOT ATTRACTED? 2 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) DID NOT ERR IN FAILING TO APPRECIATE THAT THE SEC.11(5) IS AN UNAMBIGUOUS PROVISION AND INVESTMENT IN SHARES OF SAHAKARI BANK , FOR WHATEVER REASONS AND OF WHATEVER AMOUNT, IS NOT PERMITTED THEREUNDER? 4. THESE TWO APPEALS BY THE REVENUE ARE AGAINST THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT IN RESPECT OF INVESTMENT MADE BY CHARITABLE INSTITUTION IN THE SHARES OF BHARATI SAHAKARI BANK LTD. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN BOTH THE APPEALS I S IDENTICAL TO THE ISSUE IN ASSESSMENT YEAR 2006 - 07 AND THE CIT(A) HAS ALLOWED THE CLAIM OF ASSESSEE FOLLOWING THE DECISION OF TRIBUNAL. 6. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE TRUST WAS ESTABLISHED THROUGH A TRUST DEED DATED 23.03.1990 . THE ASSESSEE TRUST OBTAINED CERTIFICATE OF REGISTRATION UNDER SECTION 12A(A) OF THE ACT FROM THE COMMISSIONER OF INCOME TAX, PUNE VIDE ORDER DATED 05.11.1990 . THE ITA NO S . 14 & 15 /PN/20 16 BHARATI VIDYAPEETH MEDICAL FOUNDATION 3 ACTIVITIES OF ASSESSEE TRUST WERE RELATING TO EDUCATION, RESEARCH AND RELIEF OF THE POOR. THE ASSESSING OFFICER NOTED THAT EXEMPTION CLAIMED UNDER SECTIONS 11 AND 12 OF THE ACT WAS NOT IN ORDER DUE TO THE INVESTMENT MADE BY THE ASSESSEE IN VIOLATION OF PROVISIONS OF SECTION 11(5) OF THE ACT. THE ASSESSING OFFICER ALSO NOTED THAT SIMILAR EXEM PTION WAS DENIED TO THE ASSESSEE IN ASSESSMENT YEAR 2006 - 07 ALSO. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE INVESTMENT IN SHARES OF BHARATI SAHAKARI BANK LTD. TOTALING RS. 25,250 / - AND FURTHER ADVANCED MONEY TO BHARATI VIDYAPEETH AND OTHER CON CERNS. SINCE THE ASSESSEE CONTINUES TO HOLD THE SHARES OF BHARATI VIDYAPEETH SAHAKARI BANK IN THE YEAR ITSELF APART FROM THE AMOUNTS ADVANCED TO BHARATI VIDYAPEETH AND ITS OTHER ORGANIZATIONS, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AND AFTER CONSIDE RING THE REPLY OF ASSESSEE, THE ASSESSING OFFICER HELD THAT THE INVESTMENT IN SHARES OF CO - OPERATIVE BANK WAS IN VIOLATION OF PROVISIONS OF SECTION 11(5) OF THE ACT AND HENCE, THE ASSESSEE WAS HELD TO BE NOT ELIGIBLE TO CLAIM THE AFORESAID DEDUCTION UNDER SECTION 11 OF THE ACT. 7. THE CIT(A) NOTED THE EXPLANATION OF ASSESSEE THAT THE INVESTMENT IN THE SHARES OF CO - OPERATIVE BANK WERE MADE UNDER COMPULSION FOR OBTAINING LOAN FOR THE PURPOSE OF ACTIVITY OF TRUST AND SHOULD BE TREATED AS APPLICATION FOR MONEY AND NOT INVESTMENT. THE ASSESSEE FURTHER POINTED OUT THAT THE LOAN WAS TAKEN MUCH BEFORE CURRENT YEAR AND THERE WAS NO VIOLATION OF PROVISIONS OF SECTION 11(5) OF THE ACT. THE CIT(A) NOTED THAT SIMILAR ISSUE AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN AS SESSMENT YEAR 2006 - 07 AND THE TRIBUNAL IN ITA NOS.969 AND 970/PN/2010, RELATING TO ASSESSMENT YEAR 2006 - 07 VIDE ITA NO S . 14 & 15 /PN/20 16 BHARATI VIDYAPEETH MEDICAL FOUNDATION 4 ORDER DATED 31.12.2012 ALLOWED THE CLAIM OF ASSESSEE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE REPRODUCED AT PAGES 15 AND 16 OF THE APPELL ATE ORDER AND THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN RESPECT OF INVESTMENT IN SHARES OF CO - OPERATIVE BANK. 8. THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006 - 07 . THE ASSESSEE HAD MADE I NVESTMENTS IN SHARES OF BHARATI SAHAKARI BANK LTD. IN EARLIER YEARS WHICH ARE BEING HELD BY THE ASSESSEE IN THE YEAR S UNDER CONSIDERATION ALSO. THE SAID INVESTMENT WAS MADE BY THE ASSESSEE FOR AVAILING THE LOAN FROM SAID BANK. HOWEVER, SINCE THE LOAN WAS REPAID BY THE ASSESSEE, BUT WAS STILL CONTINU ES TO HOLD THE SHARES IN BHARATI SAHAKARI BANK LTD., THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 13(1)(D) R.W.S. 11(5) OF THE ACT. FURTHER, THE TRIBUNAL NOTED THE CONTENTION OF ASSESSEE AT PARA 18.1 OF ITS ORDER RELATING TO ASSESSMENT YEAR 2006 - 07 AND ALLOWED THE CLAIM OF ASSESSEE AFTER CONSIDERING THE ISSUE AT LENGTH , S INCE THE ASSESSEE WAS STILL ENJOYING THE OVERDRAFT FACILITIES FROM THE BANK . T HE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT FOR THE YEAR UNDER CONSIDERATION ALSO, THE ASSESSEE WAS AVAILING OVERDRAFT FACILITIES FROM THE BANK. IN VIEW THEREOF AND FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSMENT YEAR 2006 - 07 , WE UPHOLD THE ORD ER OF CIT(A) IN ALLOWING THE CLAIM OF ASSESSEE AND HOLDING THAT THERE IS NO VIOLATION OF PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT ON ACCOUNT OF HOLDING SHARES OF COOPERATIVE BANK , FROM WHICH THE ASSESSEE HAD RAISED OVERDRAFT FACILITIES. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED BY THE CIT(A) AT PAGES 15 AND 16 AND FOR THE SAKE OF BREVITY, THE SAME ARE NOT BEING ITA NO S . 14 & 15 /PN/20 16 BHARATI VIDYAPEETH MEDICAL FOUNDATION 5 REPRODUCED. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN BOTH THE APPEALS ARE THUS, DISMISSED. 9 . IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER P RONOUNCED ON THIS THE 5 TH DAY OF MAY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 5 TH MAY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLA NT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 12, PUNE ; ( ) 4. / THE PRL CIT , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE