KUND KUND KAHAN DIGAMBER JAIN MUMOKSHU ASHRAM, Kota V. INCOME TAX OFFICER (EXEMPTION), Jaipur

ITA 165/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3788 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 12-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAN SINGH
• Keywords: Benefit of exemption; Set aside
• Section: 12AA; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 165, 166, 167 & 168/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14, 2014-15, 2015-16 & 2016-17 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM BAJAJ PALACE, NEAR PALIWAL COMPOUND, KOTA CUKE VS. ITO (E), KOTA CHHAWANI LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABTK9217C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (C.A) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAN SINGH (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/05/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 29/05/2019 VKNS'K@ ORDER PER BENCH: THESE ARE FOUR APPEALS FILED BY THE ASSESSEE TRUST AGAINST THE SEPARATE ORDERS OF LD. CIT(A), KOTA DATED 10.12.201 8 FOR ASSESSMENT YEARS 2013-14 2016-17 UPHOLDING THE ACTION OF AO/ CPC IN DENYING EXEMPTION U/S 11 OF THE IT ACT BY HOLDING THAT ASS ESSEES CASE IS NOT COVERED BY THE PROVISO TO SECTION 12AA(2) AS THE OB JECTS OF THE TRUST WERE NOT SAME IN THE YEAR IN WHICH EXEMPTION WAS CL AIMED AND THE YEAR IN WHICH EXEMPTION U/S 12AA WAS GIVEN IGNORING THE FACT THAT AMENDMENT IN TRUST DEED WAS MADE TO MAKE THE OBJECT S OF THE TRUST MORE CLEAR AND THE AMENDMENT WAS MADE IN THE ORIGIN AL TRUST DEED TO ITA. NO. 165, 166, 167 & 168/JP/2019 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA V. ITO(E), KOTA 2 BE EFFECTIVE FROM THE DATE OF CREATION OF TRUST, TH EREBY ASSESSING THE FOLLOWING RECEIPTS AS INCOME:- 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE TRUST WAS CONSTITUTED ON 14.12.2000 WITH VARIOUS CHARITAB LE OBJECTS AS MENTIONED IN THE TRUST DEED. AN APPLICATION FOR REG ISTRATION U/S 12AA OF THE IT ACT, 1961 WAS FILED ON 25.05.2015. THE SAME WAS REJECTED BY LD. CIT(E) VIDE ORDER DT. 16.12.2015 ON THE GROUND THAT TRUST HAS BEEN CREATED FOR THE BENEFIT OF JAIN SAMAJ ONLY. AGAINST THIS ORDER, ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL WHICH VIDE ITS ORD ER DT. 09.12.2016 SET ASIDE THE MATTER WITH THE DIRECTION THAT WHERE THE LD. CIT(A) FINDS THAT THE BENEFIT IS NOT LIMITED TO PEOPLE BELONGING TO A PARTICULAR COMMUNITY BUT IS AVAILABLE TO PUBLIC AT LARGE, HE WOULD GRANT REGISTRATION AS PER LAW. IN THE SET ASIDE PROCEEDINGS, ASSESSEE BROUGH T ON RECORD EVIDENCES BY WAY OF LIST OF THE PATIENTS WHOSE COST OF MEDICINES/ EXPENSES IS BORNE BY THE ASSESSEE AND LIST OF STUDE NTS WHOSE FEES IS BORNE BY IT WITHOUT ANY DISCRIMINATION AS TO THE CA STE. THE LD. CIT(E), HOWEVER, REQUIRED THE ASSESSEE TO MAKE NECESSARY AM ENDMENT IN THE TRUST DEED STATING THAT IT IS NOT RESTRICTED TO JAI N DHARM ONLY. ACCORDINGLY, ASSESSEE VIDE AMENDMENT DEED DT. 19.09 .2018 INSERTED FOLLOWING PROVISO IN PARA 4 OF THE TRUST DEED:- ASSESSMENT YEAR RECEIPTS ASSESSED 2013-14 RS.3,14,665/- 2014-15 RS.4,34,675/- 2015-16 RS.4,54,710/- 2016-17 RS.1,93,700/- ITA. NO. 165, 166, 167 & 168/JP/2019 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA V. ITO(E), KOTA 3 IT IS HEREBY DECLARED THAT THE ACTIVITIES OF THE T RUST & ITS OBJECTS WOULD HAVE FOR ALL RELIGION AND NOT RESTRICTED TO JAIN DH ARM. IT HAS BEEN UNANIMOUSLY AGREED THAT WHEREVER IN SUB-PARAS OF PA RA 4 OF TRUST DEED, THE WORD JAIN DHARM OR DIGAMBER JAIN DHARM APPEAR S SHALL BE READ AS SARVADHARM. THE LD. CIT(E) THEREAFTER IN PURSUANCE OF THE DIREC TION OF THE TRIBUNAL GRANTED REGISTRATION U/S 12AA OF THE ACT VIDE ORDER DT. 29.11.2018 FROM THE DATE OF THE AMENDED TRUST DEED, I.E. FROM 19.09 .2018. 3. FOR AY 2013-14 & 2014-15, THE AO, AFTER REJECTIO N OF THE ORIGINAL APPLICATION U/S 12AA BY LD. CIT(E) REOPENED THE ASS ESSMENT U/S 148; FOR AY 2015-16, THE CASE WAS SELECTED FOR SCRUTINY; AND FOR AY 2016-17 PROCESSING WAS DONE BY CPC WHERE THE RECEIPT WAS AS SESSED TO TAX WITHOUT DEDUCTION OF EXPENDITURE ON THE GROUND THAT ASSESSEE IS NOT REGISTERED U/S 12AA OF THE ACT/ THE CIT(E) HAS NOT YET PASSED THE ORDER FOR REGISTRATION IN PURSUANCE TO THE DIRECTION OF H ONBLE ITAT. 4. IN THE APPELLATE PROCEEDINGS BEFORE CIT(A), ASSE SSEE FURNISHED THE ORDER U/S 12AA PASSED BY LD. CIT(E) AND CONTEND ED THAT IN VIEW OF PROVISO TO SECTION 12AA(2), THE BENEFIT OF SECTION 11 SHOULD BE ALLOWED TO THE ASSESSEE SINCE THE CREATION OF THE TRUST. TH E LD. CIT(A), HOWEVER, HELD THAT ASSESSEE IS NOT COVERED BY PROVI SO TO SECTION 12AA(2) AS THE OBJECT OF THE TRUST IN THE YEARS UND ER CONSIDERATION IS NOT THE SAME AS IN THE YEAR IN WHICH THE EXEMPTION IS GRANTED IN AS MUCH AS EXEMPTION U/S 12AA IS GIVEN BASED ON ITS MO DIFIED OBJECTS ITA. NO. 165, 166, 167 & 168/JP/2019 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA V. ITO(E), KOTA 4 FROM 19.09.2018. ACCORDINGLY, HE CONFIRMED THE ORDE RS OF AO ASSESSING THE GROSS RECEIPTS AS TOTAL INCOME. 5 IN THE ABOVE FACTUAL MATRIX OF THE CASE, THE LD A R SUBMITTED THAT THE TRIBUNAL HAS NOTED THAT THE ASSESSEE TRUST IS N OT FOR THE BENEFIT OF ANY PARTICULAR COMMUNITY AND THAT THE BENEFIT OF TH E TRUST IS AVAILABLE TO PUBLIC AT LARGE. THEREFORE, THE ISSUE WAS SET ASIDE WITH THE DIRECTION THAT CIT(E) WOULD CONDUCT AN ENQUIRY WITH REGARD TO THE OBJECTIVES OF THE TRUST. THEREAFTER, THE ASSESSEE IN ORDER TO BRI NG MORE CLARITY FILED THE AMENDED DEED BY INSERTING A PROVISO TO PARA 4 O F THE TRUST DEED AS STATED ABOVE AS IF THE SAID CLAUSE IS INSERTED IN T HE ORIGINAL TRUST DEED. THUS, THE OBJECTS & ACTIVITIES OF THE TRUST IN AY 2 013-14 TO 2016-17 REMAINS THE SAME AS IN THE FINANCIAL YEAR 2018-19 W HEN THE REGISTRATION U/S 12AA WAS GRANTED BY LD. CIT(E) IN PURSUANCE OF THE DIRECTION OF TRIBUNAL WITH REFERENCE TO APPLICATION FOR REGISTRA TION FILED ON 25.05.2015. HENCE, THE REGISTRATION SO GRANTED IS ALSO APPLICABLE FOR THE AYS UNDER CONSIDERATION IN VIEW OF PROVISO TO S ECTION 12A(2). THE LD. CIT(A) HAS INCORRECTLY HELD THAT THERE IS CHANG E IN THE OBJECTS OF THE TRUST WHEREAS THERE IS NO SUCH CHANGE. ONLY TO BRIN G MORE CLARITY, CERTAIN WORDS IN THE OBJECT CLAUSE WERE REPLACED AS IF THE SAME WERE IN THE ORIGINAL TRUST DEED. THEREFORE, AO BE DIRECTED TO ALLOW BENEFIT OF EXEMPTION U/S 11 TO THE ASSESSEE IN THE AYS UNDER C ONSIDERATION. 6. WITHOUT PREJUDICE TO ABOVE, IT WAS SUBMITTED BY THE LD AR THAT THE LOWER AUTHORITIES HAVE ASSESSED THE GROSS RECEI PT AS INCOME IGNORING THE EXPENDITURE INCURRED BY THE ASSESSEE. THE GROSS RECEIPTS, ITA. NO. 165, 166, 167 & 168/JP/2019 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA V. ITO(E), KOTA 5 EXPENDITURE INCURRED AND THE SURPLUS/ DEFICIT AS PE R INCOME & EXPENDITURE A/C OF THE AYS UNDER CONSIDERATION IS A S UNDER:- AY GROSS RECEIPTS EXPENDITURE SURPLUS/ DEFICIT 2013-14 RS.3,14,665/- RS.3,25,690/- (RS.11,025/-) 2014-15 RS.4,34,675/- RS.4,22,590/- RS.12,085/- 2015-16 RS.4,54,710/- RS.4,40,290/- RS.14,421/- 2016-17 RS.1,93,700/- RS.1,84,051/- RS.9,649/- THE EXPENDITURE INCURRED IS DIRECTLY CONNECTED WITH THE DONATION RECEIVED IN AS MUCH AS ASSESSEE RECEIVED THE DONATI ON ONLY BECAUSE THE DONORS WERE SATISFIED THAT ASSESSEE IS INCURRING TH E EXPENDITURE AS PER ITS OBJECTIVES. HENCE, THE GROSS RECEIPTS CANNOT BE TAXED AS INCOME. ONLY THE NET SURPLUS CAN BE CHARGED TO TAX. HOWEVER , SINCE THE SURPLUS IS BELOW THE MAXIMUM AMOUNT CHARGEABLE TO TAX, THE ASSESSEE IS NOT LIABLE TO TAX. HENCE, THE LOWER AUTHORITIES BE DIRE CTED TO COMPUTE THE INCOME AFTER ALLOWING THE EXPENDITURE. 7. THE LD DR IS HEARD WHO HAS SUBMITTED THAT BEFORE INVOKING THE PROVISO TO SECTION 12AA(2), WHAT HAS TO BE SEEN IS THAT THE ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE ASSESSING OFFICE R AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSE SSMENT YEAR. IN THE SAID LEGAL BACKGROUND, THE LD CIT(A) HAS RIGHTLY HE LD THAT THE CASE OF THE ASSESSEE CANNOT BE TREATED AS COVERED IN THE PR OVISO TO SECTION 12AA(2) AS THE OBJECTS OF THE TRUST WERE CLEARLY NO T THE SAME IN THE YEAR IN WHICH THE EXEMPTION IS CLAIMED AND THE REGI STRATION UNDER SECTION 12AA IS GIVEN BASED ON MODIFIED OBJECTS WIT H EFFECT FROM 19.09.2018. HE THUS SUPPORTED THE ORDER OF THE LOW ER AUTHORITIES. ITA. NO. 165, 166, 167 & 168/JP/2019 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA V. ITO(E), KOTA 6 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT WHERE THE EXEMPT ION CLAIMED UNDER SECTION 11 AND 12 HAS BEEN DENIED BY THE ASSESSING OFFICER, WHAT CAN BE BROUGHT TO TAX IS THE NET INCOME IN THE HANDS OF THE ASSESSEE TRUST AND NOT THE GROSS RECEIPTS. IN ALL THESE YEARS, WE FIND THAT WHILE DENYING THE EXEMPTION UNDER SECTION 11 AND 12 FOR W ANT OF REGISTRATION UNDER SECTION 12AA, THE ASSESSING OFFICER HAS BROUG HT GROSS RECEIPTS TO TAX WHICH IS AGAINST THE BASIC TENETS OF LAW WHERE ONLY THE REAL INCOME WHICH IS DETERMINED AFTER DEDUCTING EXPENSES FROM G ROSS RECEIPTS CAN BE BROUGHT TO TAX. WE THEREFORE AGREE WITH THE ALT ERNATE CONTENTION SO ADVANCED BY THE LD AR AND WITHOUT GOING INTO MERIT OF THE OTHER CONTENTION WHICH IS LEFT OPEN, THE MATTER IS SET-AS IDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE EXPEN DITURE SO CLAIMED BY THE ASSESSEE TRUST AGAINST THE GROSS RECEIPTS FOR E ACH OF THE RELEVANT YEARS AND WHERE THE ASSESSING OFFICER DETERMINES TH E NET RECEIPTS AS NOT EXCEEDING THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX, ALLOW THE NECESSARY RELIEF TO THE ASSESSEE TRUST. IN THE RESULT, ALL THE APPEALS FILED BY ASSESSEE TR UST ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/05/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA. NO. 165, 166, 167 & 168/JP/2019 KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA V. ITO(E), KOTA 7 FNUKAD@ DATED:- 29/05/2019. *GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- KUND KUND KAHAN DIGAMBER JAIN VERSUS MUMOKSHU ASHRAM, KOTA 2. IZR;FKHZ@ THE RESPONDENT- ITO (E), KOTA, CHHAWANI 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA. NO. 165, 166, 167 & 168/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR