DDIT, CHENNAI V. The All India Arya Vysya Samajam, CHENNAI

ITA 1625/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8600 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEBENDRA N KAR
• Keywords: Business income; Reasonable cause
• Section: 143(3); 12AA; 12; 144; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , . , $ % BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NOS.1623 TO 1625/MDS/2014 ( / ASSESSMENT YEARS: 2009-10 TO 2011-12) THE DEPUTY /JOINT DIRECTOR OF INCOME TAX (EXEMPTIONS-IV), AAYAKAR BHAVAN ANNEX BLDG.III FLOOR, CHENNAI-34. VS M/S. THE ALL INDIA ARYA VYSYA SAMAJAM, 230, NSC BOSE ROAD, SOWCARPET, CHENNAI-600 079. PAN: AAATT6166C ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. DEBENDRA N.KAR, CIT /RESPONDENT BY : MR. PHILIP GEORGE, ADVOCATE /DATE OF HEARING : 28 TH JUNE,2016 /DATE OF PRONOUNCEMENT : 7 TH SEPTEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE THREE APPEALS ARE FILED BY THE REVENUE AGGRIEVED BY THE COMMON ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)-VII, CHENNAI DATED 17.02.2 014 IN ITA NOS. 511/11-12, 236/12-13 & 1075/13-14 PASSED U NDER SECTION 144 OF THE ACT FOR THE ASSESSMENT YEAR 2009 -10 & UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT FOR T HE ASSESSMENT YEARS 2010-11 & 2011-12 RESPECTIVELY. 2. THESE APPEALS FILED BY THE REVENUE ARE BARRED BY LIMITATION OF ONE DAY. THE REVENUE FILED AN AFFIDAV IT 2 ITA NO.1623 TO 1625/MDS/2014 EXPLAINING THE REASON FOR THE DELAY IN FILING THE A PPEALS STATING THAT THE RECORDS OF THESE CASES INADVERTENT LY GOT MIXED UP WITH OTHER FILES AND THEREFORE PRAYED FOR CONDONATION OF DELAY. CONSIDERING THE SUBMISSIONS O F THE REVENUE, WE ARE SATISFIED THAT THERE WAS REASONABLE CAUSE FOR THE DELAY IN FILING THE APPEALS. HENCE IN THE I NTEREST OF JUSTICE, WE HEREBY CONDONE THE DELAY IN FILING THE APPEALS AND ADMIT THE SAME FOR ADJUDICATION. 3. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEALS, HOWEVER, THE IDENTICAL CRUX THE ISSUE IS AS FOLLOWS :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 & 12 OF THE ACT FOR THE RELEVANT ASSESSMENT YEARS. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER SECTION 12AA OF THE ACT FILED ITS RETURNS OF INCOME DECLARING NIL FOR THE ASSESSMENT YEARS 2009- 10, 2010-11 & 2011-12 ON 19.08.2009, 11.08.2010 & 20.10 .2011 RESPECTIVELY. THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICES UNDER SECTION 143(2) WERE ISSUED TO THE ASSESSEE. SUBSEQUENTLY, THE ASSESSMENTS WERE COMPLETED UNDER 3 ITA NO.1623 TO 1625/MDS/2014 SECTION 144 OF THE ACT FOR THE ASSESSMENT YEAR 2009 -10 ON 26.12.2011 AND UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 ON 28.01.2013 & 29.11.2013 RESPECTIVELY WHEREIN THE LEARNED ASSESSI NG OFFICER TREATED THE ASSESSEE AS AOP AND INVOKED THE PROVISO TO SECTION 2(15) OF THE ACT AND HELD THAT THE ACTIV ITY OF RUNNING A PETROL BUNK IS AN ACTIVITY IN THE NATURE OF GENE RAL PUBLIC UTILITY AND FURTHER WITHDREW THE BENEFIT OF SECTIO N 11OF THE ACT. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) ALLOWED THE BENEFIT OF SECTION 11 & 12 OF THE ACT TO THE ASSESSEE FOR ALL THESE THREE ASSESSMENT YEARS B Y HOLDING THAT THE ACTIVITIES OF THE ASSESSEE CANNOT BE SAID TO BE IN THE NATURE OF CARRYING OUT ANY BUSINESS, TRADE OR COMME RCE. WITH RESPECT TO RUNNING OF KALAYANA MANDAPAM THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE RECEIPTS ARE BELOW RS.25,00,000/- AND THEREFORE, PROVISO TO SECTION 2(15) OF THE ACT IS INAPPLICABLE. 6. BEFORE US, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD GENERATED ENORMOUS 4 ITA NO.1623 TO 1625/MDS/2014 SURPLUS FROM ITS ACTIVITIES OF RUNNING KALYANA MAND APAM, RENTING ROOMS ETC., AND THEREFORE IT IS AN ACTIVITY IN THE NATURE OF COMMERCE, TRADE OR BUSINESS AND HENCE THE PROVIS O TO SECTION 2(15) WOULD BE ATTRACTED. ACCORDINGLY, THE INCOME EARNED BY THE ASSESSEE WOULD BE TAXABLE, IF THE REV ENUE GENERATED EXCEEDS THE STIPULATED AMOUNT AS PER THE PROVISIONS OF THE ACT. 7. THE LEARNED AUTHORIZED REPRESENTATIVE ON THE OTH ER HAND, ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. THE MOOT QUESTION BEFORE US IS WHETHER RENTING OF MARRIAGE HALLS, RO OMS ETC., WOULD AMOUNT TO TRADE, COMMERCE OR BUSINESS IN ORDE R TO ATTRACT THE PROVISO TO SECTION 2(15) OF THE ACT, EV EN IF THE REVENUE GENERATE FROM SUCH ACTIVITY IS MEAGER COMPA RED WITH OTHER COMMERCIAL ESTABLISHMENTS. SECTION 2(15) OF T HE ACT WAS AMENDED W.E.F. 01.04.2009 BY THE FINANCE ACT, 2 008 AND BY THE FINANCE ACT, 2009 W.E.F. 01.04.2009, WHE REIN 5 ITA NO.1623 TO 1625/MDS/2014 CLEAR DISTINCTION IS BROUGHT WITH RESPECT TO CHARIT ABLE ACTIVITY SUCH AS RELIEF TO POOR, EDUCATION, YOGA / MEDICAL R ELIEF, PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC AND HISTORICAL INTEREST AND ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC UTILITY. NOW FROM THE FACTS OF THE C ASE, IT IS APPARENT THAT THE ASSESSEE IS RUNNING MARRIAGE HALL S AND RENTING OUT ROOMS TO PUBLIC. THIS ACTIVITY OF THE A SSESSEE CAN BE ONLY TERMED AS ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. FURTHER, WHEN A CHARGE/FE E/RENT ETC., IS RECOVERED FROM THE USER OF THE MARRIAGE HALL OR OCC UPANT OF A ROOM, WHEREBY THE ASSESSEE GENERATES SUBSTANTIAL SU RPLUS, THEN IT CAN ONLY BE CONSTRUED AS A COMMERCIAL ACTIV ITY. MOREOVER, WHEN THE ASSESSEE IS CARRYING OUT DIFFERE NT ACTIVITIES OF GENERAL PUBLIC UTILITY BUT OF COMME RCIAL NATURE, THE ACTIVITIES CANNOT BE VIEWED DISTINCTIVELY BUT O NLY AS A WHOLE FOR APPLYING THE PROVISO TO SECTION 2(15) OF THE ACT. FROM THE INCOME & EXPENDITURE STATEMENT SUBMITTED B Y THE ASSESSEE, IT IS EVIDENT THAT THE ASSESSEE HAS GENER ATED SUBSTANTIAL SURPLUSES EVEN THOUGH SUCH SURPLUS MAY BE LESSER THAN THAT OF THE REVENUE GENERATED BY OTHER COMMERCIAL ESTABLISHMENTS. IN THESE CIRCUMSTANCES, WE DO 6 ITA NO.1623 TO 1625/MDS/2014 NOT FIND ANY REASON TO HOLD THAT IN THE CASE OF THE ASSESSEE PROVISO TO SECTION 2(15) OF THE ACT WILL NOT BE APP LICABLE. HENCE, WE HEREBY DIRECT THE LEARNED ASSESSING OFFIC ER TO WORK OUT THE INCOME GENERATED BY THE ASSESSEE FROM RUNNING OF MARRIAGE HALL, RENTING OF ROOMS AND BY INVOKING THE PROVISO TO SECTION 2(15) OF THE ACT TAX ACCORDINGLY. WE ST RONGLY PLACE RELIANCE IN THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE HALAI MEMON ASSOCIATION REPORTED IN (2000) 111 TAXMAN 326 (MAD), WHEREIN IT WAS HELD TH AT INCOME DERIVED FROM LETTING OUT BUILDING ALONG WIT H CHAIRS & MIKES ETC., BY ASSESSEE TO OTHERS FOR PURPOSES OF MARRIAGE AND OTHER FUNCTIONS ON PAYMENT OF SERVICE CHARGE WHILE RETAINING OVERALL C ONTROL OF BUILDING WITH ITSELF CONSTITUTED AS BUSINESS INCOME. THEREFORE, RUNNING AND MAINTENANCE OF A MARRIAGE CHOULTRY IS A BUSINESS AC TIVITY WHICH IS NOT DISPUTED BY BOTH THE PARTIES. HOWEVER, AT THE SAME BREATH WE ALSO MAKE IT CLEAR THAT SINCE THE ASSESSEE IS ENJOY ING THE BENEFIT OF REGISTRATION UNDER SECTION 12A(A) OF THE ACT, THE ASSESSEE WOULD BE ELIGIBLE TO ENJOY THE BENEFIT OF SECTION 12 OF THE ACT TOWARDS THE RECEIPT OF ANY CORPUS DONATI ON WHICH IS NOT IN THE GARB OF RENTAL RECEIPTS OF ROOMS OR REVE NUE RECEIPTS FROM KALYANA MANDAPAM ETC.. IT IS ORDERED ACCORDING LY. 7 ITA NO.1623 TO 1625/MDS/2014 9. IN THE RESULT, THE APPEALS OF THE REVENUE FOR AL L THE THREE ASSESSMENT YEARS ARE ALLOWED AS INDICATED HER EIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 7 TH SEPTEMBER, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 7 TH SEPTEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF