Dy.CIT, Pune V. BHARATI VIDYAPEETH, Pune

ITA 1531/PUN/2013

• Counselvise Citation: 153124514 RSA 2013
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA
• Keywords: Capital receipt; Benefit of exemption; Cancellation of registration
• Section: 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.1531/PN/2013 (ASSESSMENT YEAR 2010-11) DY.CIT, CIRCLE-1(1), PUNE .. APPELLANT VS. BHARATI VIDYAPEETH, BHARATI VIDYAPEETH BHAVAN, L.B.S. ROAD, PUNE 411030 PAN NO.AAATB1836D .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI SANKET JOSHI REVENUE BY : MRS. M.S.VERMA, CIT DATE OF HEARING : 20-08-2014 DATE OF PRONOUNCEMENT : 21-08-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 02-05-2013 OF THE CIT(A)-I, PUNE RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT. I T FILED ITS RETURN OF INCOME ON 31-03-2011 DECLARING NIL INCOME. IT HAS CLAIMED EXEMPTION U/S.11 OF THE I.T. ACT. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT REGIS TRATION OF THIS TRUST WAS CANCELLED BY THE CIT, CENTRAL, PUNE U/S.12AA(3) VIDE ORDER DATED 08-11-2007. SINCE THE REGISTRATION HAS BEEN CANCELLED THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS TO BE T REATED LIKE ANY OTHER ASSESSEE AND THE BENEFITS OF SECTION 11 AND 12 OF T HE I.T. ACT, 1961 2 CANNOT BE GRANTED. HE FURTHER OBSERVED THAT THE A SSESSEE HAS BEEN ASSESSED AS AN AOP FOR A.YRS. 2006-07 TO 2009-10. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSM ENT SHOULD NOT BE COMPLETED AS AOP SINCE THE REGISTRATION U/S.12AA HA S BEEN CANCELLED BY THE CIT. REJECTING THE VARIOUS EXPLAN ATIONS GIVEN BY THE ASSESSEE THE ASSESSING OFFICER DETERMINED THE I NCOME AT RS.48,82,82,199/-. THE CONTENTION OF THE ASSESSEE THAT THE TRIBUNAL HAS ALLOWED REGISTRATION U/S.12A WAS REJECTED BY TH E AO ON THE GROUND THAT THE REVENUE HAS PREFERRED AN APPEAL BEF ORE THE HONBLE HIGH COURT WHICH IS PENDING. IN VIEW OF THIS, THE ASSESSING OFFICER CONSIDERED THE ASSESSEE AS AOP AND DETERMINED THE I NCOME AT RS.48,82,82,199/-. THE EARMARKED FUNDS CREDITED AS CAPITAL RECEIPTS BY THE ASSESSEE AMOUNTING TO RS.31,55,98,451/- WAS TREATED BY THE ASSESSING OFFICER AS REVENUE RECEIPTS. SIMILARLY, THE CORPUS DONATION OF RS.5,50,00,000/- WAS ALSO HELD BY THE A SSESSING OFFICER AS REVENUE RECEIPTS. THE AO FURTHER DISALLOWED THE PROVISION FOR GRATUITY AND DONATION CLAIMED BY THE ASSESSEE AS EX PENDITURE. 3. IN APPEAL THE LD.CIT(A) FOLLOWING THE ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING YEARS HELD THA T THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.11 SINCE THE REGISTRATION HAS BEEN RESTORED AND THERE IS NO VIOLATION OF ANY PROVISION WHICH M AKES THE ASSESSEE INELIGIBLE FOR THIS EXEMPTION. WHILE DOING SO, HE FURTHER HELD THAT THE DEVELOPMENT FEES TO THE EXTENT OF RS.37,00,73,703/- ARE IN THE NATURE OF CAPITAL RECEIPTS AND DEVELOPMENT FEES TO THE EXT ENT OF RS.61,39,148/- ARE IN THE NATURE OF REVENUE RECEIPT S. 3 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A) GROSSLY ERRED IN ALLOWING THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO EXEMPTION UNDER SECTIONS 11 & 12 OF THE INCOME-TAX ACT, 1961 INSTEAD OF CONFIRMING THE ASSESSMEN T. 3. THE LD.CIT(A) GROSSLY ERRED IN HOLDING THAT DEVELO PMENT FEES TO THE EXTENT OF RS.37,00,73,703/- ARE IN THE NATURE OF CAPITAL RECEIPT AND DEVELOPMENT FEES TO THE EXTENT OF RS.61,39,148/- ONLY ARE IN THE NATURE OF REVENUE RECEIPTS, INSTEAD OF CONFIRMING THE STAND TAKEN IN THE ASSESSMENT IN THIS MATTER. 4. THE LD.CIT(A) GROSSLY ERRED IN PORTIONING THE DEVE LOPMENT FEES AS ABOVE IN AN ARBITRARY MANNER AND IN TOTAL DISR EGARD TO THE SCHEME OF TAXATION PROVIDED UNDER SECTIONS 11 & 12 OF THE INCOME- TAX ACT, 1961. 5. THE LD.CIT(A) GROSSLY ERRED IN FAILING TO APPRECIA TE THAT UNDER SECTIONS 11 & 12 ONLY VOLUNTARY CONTRIBUTIONS TO CORPU S CAN BE TREATED AS NON-REVENUE AND ANY OTHER RECEIPT, IRRESPE CTIVE OF PURPOSE, WILL HAVE TO BE TREATED AS REVENUE RECEIPT, HENCE THE INCOME OF THE TRUST OR INSTITUTION. 6. THE LD.CIT(A) GROSSLY ERRED IN FAILING TO APPRECIA TE THAT THERE IS NO CONCEPT OF EARMARKED FUND (OTHER THAN CORPUS) I N THE INCOME- TAX ACT, 1961, AND, THEREFORE, ALL GRANTS AND DONATI ONS OTHER THAN CONTRIBUTIONS TO THE CORPUS ARE LIABLE TO BE TREATED AS THE ASSESSEES INCOME. 7. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LD.CIT(A) MAY BE V ACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 5. AT THE TIME OF HEARING, BOTH THE SIDES FAIRLY CO NCEDED THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2008-09 WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2009-10. WE FIND THE TRIBUNAL IN ASSESSEES OW N CASE VIDE ITA NO.777/PN/2013 ORDER DATED 31-07-2014 FOR A.Y. 2009 -10 HAS DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERV ING AS UNDER : 4 5. AT THE TIME OF HEARING, BOTH THE SIDES FAIRLY CON CEDED THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 AND 2007-08 WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN A SSESSEES OWN CASE FOR A.Y. 2008-09 VIDE ITA NO.537/PN/2012 ORDER DATED 21-03- 2014. FROM THE COPY OF THE ORDER FILED BY THE LD. COUNSEL FOR THE ASSESSEE, WE FIND THE TRIBUNAL WHILE DECIDING THE ISSUE V IDE ITA NO.537/PN/2012 ORDER DATED 21-03-2014 FOR A.Y. 2008 -09, HAS OBSERVED AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IT IS A N UNDISPUTED FACT THAT THE REGISTRATION U/S.12AA CANCELLED BY THE CIT (CENTRAL), PUNE VIDE HIS ORDER DATED 08-11-2007 HAS BEEN RESTORE D BY THE TRIBUNAL VIDE ITA NO.1793/PN/2008 ORDER DATED 19-09 -2008. WE FIND FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2006-07 AND 2007-08 AT PARA 60 OF THE ORDER HAS OBSERVED AS UNDER : 60. WHILE DECIDING THE ASSESSEES APPEAL FOR THE A.Y. 2 006-07, WE HAVE HELD THAT THE ASSESSEE HAS NOT VIOLATED THE PROVI SIONS OF SEC. 11(5) R.W.S. 13(1)(D) OF THE ACT. WE HAVE ALSO HELD T HAT THE REGISTRATION OF THE ASSESSEE U/S. 12A HAS BEEN RESTORED BY THE TRIBUNAL, HENCE, THE ASSESSEE IS ENTITLED FOR BENEFIT OF THE EXEMPTION TO ITS INCOME BY TREATING IT AS A TRUST U/S. 11 OF THE INCOME-TAX ACT. THE ASSESSING OFFICER HAS RELIED ON AND REFERRED TO THE ASSESSMENT ORDER FOR THE A.Y. 2006-07. WE FIND THERE ARE PRECI SELY TWO ISSUES WHICH ARE ARISING FROM THE GROUNDS TAKEN BY THE ASSESSEE. THE FIRST ISSUE IS THE CANCELLATION OF REGISTRATION BY THE LD. CI T, PUNE BY EXERCISING HIS POWERS U/S. 12AA(3) VIDE ORDER DATED 08- 11-2007 BUT THE SAID ORDER HAS BEEN CANCELLED BY THE TRIBUNAL AND THE ASSESSEES REGISTRATION IS RESTORED AND HENCE, THE FIRST DISQUALIF ICATION FOR GETTING THE BENEFIT OF SEC. 11 OF THE ACT HAS BEEN R EMOVED. IN OTHER WORDS, THE ASSESSEE TRUST HAS CROSSED FIRST BARRIER BY GETTIN G THE RESTORATION OF ITS REGISTRATION U/S. 12A OF THE ACT WH ICH IS ONE OF THE CONDITION FOR AVAILING THE BENEFIT OF EXEMPTION AS A TRUST OR INSTITUTION U/S. 11 OF THE ACT. 8.1 SIMILARLY, THE TRIBUNAL IN SUBSEQUENT PARAGRAPHS H AS HELD THAT THE ASSESSEE TRUST HAS NOT VIOLATED ANY OF THE PROVI SIONS OF SECTION 11(5) R.W.S. 13(1)(D) NOR HAS VIOLATED ANY OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND ACCORDINGLY HELD THA T THE ASSESSEE IS ENTITLED FOR BENEFIT OF EXEMPTION AS CLAIMED BY IT U /S.11 AND 12 OF THE ACT IN A.Y. 2006-07 AND 2007-08. THE RELEVANT OBSER VATION OF THE TRIBUNAL IN THE LAST PAGE OF THE ORDER READS AS UNDER : . . . . . . . . . .TO SUM UP WE HOLD THAT A) THE REGISTRATION OF THE ASSESSEE U/S. 12A/12AA HAS BEEN RESTORED BY THE TRIBUNAL AND B) THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SEC. 11 (5) R.W.S. 13(1)(D) NOR HAS VIOLATED ANY OF THE PROVISIONS OF SEC . 13(1)(C) OF THE ACT HENCE, THE ASSESSEE IS ENTITLED FOR BENEFIT OF EXEMP TION AS CLAIMED BY IT U/S. 11 & 12 OF THE ACT IN A.Y. 2006-0 7 & A.Y. 2007- 08. 67. IN THE RESULT, THE ASSESSEES APPEAL FOR THE A.Y. 200 7-08 IS ALLOWED. 5 8.2 SINCE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 20 06-07 AND 2007-08 HAS ALLOWED THE BENEFIT OF EXEMPTION U/S. 11 AND 12 OF THE ACT BY HOLDING THAT THE ASSESSEE TRUST HAS NOT VIOLAT ED ANY OF THE PROVISIONS OF SECTION 11(5) R.W.S. 13(1)(D) OR SECTION 1 3(1)(C) AND SINCE THE REGISTRATION EARLIER CANCELLED BY THE CIT H AS BEEN RESTORED BY THE TRIBUNAL AND NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE REVERSING THE ORDER OF THE TRIBUNAL ON THIS ISSUE, THER EFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE 2 PRECEDING ASSESSMENT YEARS AND IN VIEW OF THE DETAILED REASONING GIVEN BY THE LD.CIT(A), WE FIND NO INFIRMI TY IN HIS ORDER IN HOLDING THAT EXEMPTION U/S.11 IS ALLOWABLE TO THE ASSESSE E. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) ON THIS I SSUE AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5.1 IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE PRECEDING YEARS WHICH HAS BEEN FOLLOWED BY THE LD.CIT(A), WE FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, WE UPHOLD THE SAME AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 5.1 IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSE SSEES OWN CASE FOR THE PRECEDING ASSESSMENT YEARS AND IN ABSENCE O F ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS UPHE LD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21-08-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, 21 ST AUGUST 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE 4. THE CIT-I, PUNE 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENC HES, PUNE