M/s Audyogik Shikshan Mandal, Pune V. ITO, Ward 8(1), Akurdi, Pune

ITA 1712/PUN/2007

• Counselvise Citation: 171224514 RSA 2007
• Duration Of Justice: 7 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 20-12-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKULESH CHANDRA DUBE
• Keywords: Difference of opinion
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1712/PN/2007 (ASSESSMENT YEAR: 2004-05) M/S. AUDYOGIK SHIKSHAN MANDAL, C-BLOCK, MIDC, CHINCHWAD, PUNE 411019 PAN NO.AAATA8518P .. APPELLANT VS. ITO-WARD-8(1), PUNE .. RESPONDENT APPELLANT BY : SHRI KISHOR PHADKE RESPONDENT BY : SHRI MUKULESH CHANDRA DUBE DATE OF HEARING : 23-02-2015 DATE OF PRONOUNCEMENT : 25-02-2015 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28-09-2007 OF THE CIT(A)-III, PUNE RELA TING TO ASSESSMENT YEAR 2004-05. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE LD.CIT(A)-III, PUNE ERRED ON LAW AND ON FAC TS IN CONFIRMING THE ACTION OF THE LD. AO IN TAXING THE I NCOME OF RS.5,14,35,801/- IN THE HANDS OF THE ASSESSEE TRUST BY DEN YING BENEFIT U/S.11 OF THE I.T. ACT, 1961. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN JUSTIFY ING THE AOS DECISION REGARDING INVOKING THE PROVISIONS OF SECTI ON 13(3) REGARDING CAR REGISTERED IN THE NAME OF THE TRUSTEE. 3. THE APPELLANT CRAVES LEAVE TO ADD/MODIFY/DELETE/A MEND ALL/ ANY OF THE GROUNDS OF APPEAL. 2 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A TRUST ENGAGED IN THE SOLE ACTIVITY OF RUNNING AN EDUCATIO N INSTITUTION. IT IS REGISTERED U/S.12AA OF THE I.T. ACT. IT FIL ED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29-10-20 04 DECLARING NIL INCOME. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE AO NOTED THAT THE ASSESSEE TRUST H AS PURCHASED ONE SKODA CAR AMOUNTING TO RS.11,38,954/- ON 29-03- 2004 IN THE NAME OF SHRI SANDEEP PACHPANDE, A PERSON SPECIFIED IN SECTION 13(3) OF THE I.T. ACT. HE, THEREFORE, HELD THAT TH E TRUST HAS DIVERTED ITS INCOME/PROPERTY TO THE INTERESTED PERS ON WITHIN THE MEANING OF SECTION 13 OF THE ACT. HE THEREFORE REJ ECTED THE BENEFIT OF EXEMPT U/S.11 FOR THE YEAR UNDER CONSIDE RATION. 4. ON APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. ON FURTHER APPEAL, THERE WAS A DIFFERENCE OF OPINION B ETWEEN THE MEMBERS CONSTITUTING THE THEN DIVISION BENCH FOR WH ICH THE MATTER WAS REFERRED TO THE HONBLE PRESIDENT FOR NO MINATING THE THIRD MEMBER. THE HONBLE PRESIDENT NOMINATED THE ZONAL VICE PRESIDENT AS THIRD MEMBER TO RESOLVE THE FOLLO WING POINTS OF DIFFERENCES : (I) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE PROPERTY OF THE TRUST, I.E. CAR, BE HELD MADE AVAIL ABLE FOR THE USE OF THE TRUSTEE, SPECIFIED PERSON U/S.13(3) OF THE INCOM E TAX ACT, 1961 ? (II) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHE R THE EXPRESSION MADE AVAILABLE FOR THE USE OF TRUSTEE IPSO FACTO BE UNDERSTOOD TO HAVE BEEN DEEMED USED OR APPLIED FOR TH E BENEFIT OF THE SAID TRUSTEE, WITH OR WITHOUT THE ACTUAL USE OR APPLICATION OF THE PROPERTY OF THE TRUST, I.E. CAR FOR PERSONAL B ENEFIT OF THE TRUSTEE IN VIEW OF SECTION 13(2) OF THE INCOME TAX AC T, 1961 ? 3 (III) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETH ER THE ASSESSEE FALLS WITHIN THE AMBIT OF THE PROVISIONS OF CLAUSE (B) OF SECTION 13(2) OF THE INCOME TAX ACT, 1961? (IV) IF THE ANSWERS TO THE ABOVE QUESTIONS AT SL.NO.(I) TO (III) ARE AFFIRMATIVE, WHETHER THE DENIAL OF BENEFITS OF SECTION 11 BE RESTRICTED TO SUCH INCOME OF THE TRUST USED OR APPLIED DIRECTLY OR INDIRECTLY FOR THE BEFITS OF TRUSTEE OR, IN ALTERNATI VE, THE TOTAL INCOME OF THE TRUST IS NOT ENTITLED FOR THE BENEFIT O F SECTION 11 OF THE ACT? 4.1 THE ZONAL HONBLE VICE PRESIDENT CONSTITUTED AS THIRD MEMBER VIDE HIS ORDER DATED 02-02-2015 HAS ANSWERED THE POINTS OF DIFFERENCES AS UNDER : (I) THE CAR CAN BE HELD AS MADE AVAILABLE FOR THE USE OF THE TRUSTEE. (II) MADE AVAILABLE FOR USE INCLUDE DEEMED USE/AP PLIED FOR THE BENEFIT OF THE TRUSTEE, WITH OR WITHOUT ACTUAL USE FOR PERSONAL BENEFIT OF THE TRUSTEE. (III) THE ACT OF THE ASSESSEE FALLS WITHIN THE AMBIT OF SECTION 13(2)(B) OF THE ACT. (IV) DENIAL OF BENEFITS OF SECTION 11 DESERVES TO BE RE STRICTED TO SUCH INCOME OF THE TRUST WHICH IS USED/APPLIED DIREC TLY OR INDIRECT; IN THE INSTANT CASE THE CAR WAS PURCHASED IN THE NAME OF A PROHIBITED PERSON BY APPLYING THE FUNDS OF THE TRUST . 5. IN THIS MANNER AS PER THE MAJORITY VIEW IT IS HE LD THAT DENIAL OF EXEMPTION U/S.11 SHOULD BE LIMITED TO THE AMOUNTS WHICH WAS DIVERTED IN VIOLATION OF SECTION 13(2)(B) OF THE ACT. SINCE IN THE INSTANT CASE SUCH AMOUNT BEING THE PUR CHASE OF CAR IN THE NAME OF THE TRUSTEE IS RS.11,38,954/-, THEREFOR E, THE AMOUNT TO THE EXTENT OF RS.11,38,954/- CAN BE TAXED IN THE HA NDS OF THE TRUST AND NOT THE INCOME OF RS.5,14,35,801/- TAXED BY THE AO AND UPHELD BY THE CIT(A). IN ORDER TO APPRECIATE T HE DETAILED REASONING IN COMING TO SUCH CONCLUSION THE ORDERS O F THE 4 MEMBERS CONSTITUTING THE ORIGINAL DIVISION BENCH AS ALSO THE ORDER OF THE HONBLE VICE PRESIDENT CONSTITUTING TH E THIRD MEMBER DATED 02-02-2015 ARE BEING MADE AS ANNEXURE A1, A2 AND A3 RESPECTIVELY TO THIS ORDER. THE GROUNDS TAK EN BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 25-02-2015. SD/- SD/- (SUSHMA CHOWLA) (R. K.PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 25 TH FEBRUARY, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE