MUNIWAR ABAD CHARITABLE TRUST, MUMBAI V. DDIT (E) I(1), MUMBAI

ITA 1722/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7501 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: B V JHAVERI
• Keywords: Charitable institution
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1722/MUM/2016 ASSESSMENT YEAR: 2010 - 11 M/S MUNIWAR ABAD CHARITABLE TRUST 405A/407, JOLLY BHAVAN NO. 1, 10, NEW MARINE LINES, MUMBAI - 400020. VS. DY. DIRECTOR OF INCOME - TAX (EXEMPTION) - I - (1), 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012. PAN NO. AAATM0140K APPELLANT RESPONDENT ASSESSEE BY : MR. B.V. JHAVERI , AR REVENUE BY : MR. RAM TIWARI , DR DATE OF HEARING : 06 /02/2018 DATE OF PRONOUNCEMENT : 11/04/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 1 , MUMBAI [ IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GR OUND S FILED BY THE ASSESSEE IN THIS APPEAL READ AS UNDER: 1. THE COMMISSIONER (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE AO WHEREBY THE BENEFIT OF ACCUMULATION OF INCOME U/S. 11(2) OF THE ACT OF M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 2 RS.6,88,00,000/ - IS DENIED TO THE ASSESSEE TRUST ON THE GROUND THAT THE PURPOSE OF ACCUMULATION MENTIONED IN FORM NO. 10, CLAUSE (D) REFERS TO CONSTRUCTION OF MULTI - PURPOSE HALL AT THE HOUSING COMPLEX DEVELOPED OR TO BE DEVELOPED' W HICH IS TOTALLY ALIEN T O THE OBJECTS OF THE TRUST AND HENCE INVALID. 2. THE COMMISSIONER ( APPEALS) ERRED IN HOLDING THAT THE ORDER OF THE AO WHEREBY THE BENEF IT OF ACCUMULATION OF INCOME U/ S 1 1(2) OF THE ACT ON THE GROUND THAT THE CLAIM OF THE ASSESSEE TRUST IS F AILING FOR BEING SP ECIFIC IN TERMS OF QUANTUM, PURPOSE AND TIME PERIOD, 3. THE COMMISSIONER (APPEALS) ER RED IN HOLDING THAT THE QUANTUM OF ACCUMULATION U/S. 11(2) OF THE ACT IS NOT GIVEN IN FORM NO. 10. 4. THE COMMISSIONER (APPEALS) ERRED IN HOLDING THAT THE DECISION IN THE CASE O F DIT(E) VS. TRUSTEES OF SINGHANI A CHARITABLE TRUST (199 ITR 81 9) IS FULLY APPLICABLE TO THE ASSESSE E TRUST. 5. THE COMMISSIONER (APPEALS) ERRED IN NOT FOLLOWING THE DECISION OF THE HON. APPELLATE TRIBUNAL IN THE CASE OF THE ASSESSES TRUST FOR A.Y. 2009 - 10 DA TED 22 ND MARCH. 20 13 WHICH IS BINDING ON HIM. 6. THE ORDER OF THE COMMISSIONER (APPEALS) DENYING THE BENEFITS OF SEC. 11 OF T HE ACT AND DISALLOWING THE ACCUMULATION OF INCOME U/ S 11(2) OF THE ACT IS BAD IN LAW AND WITHOUT JURISDICTION. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS REGISTER ED AS A CHARITABLE ORGANIZATION WITH DIRECTOR OF INCOME TAX (EXEMPTION), MUMBAI AND ALSO WITH CHARITY COMMISSIONER, MUMBAI. THE ASSESSEE - TRUST CLAIMS TO BE ENGAGED IN CHARITABLE ACTIVITIES IN THE FIELD OF PROVIDING HOUSING FACILITIES TO THE FAMILIES OF WEAKER SECTION OF THE SOCIETY. ACCORDINGLY, IT HAS CLAIMED EXEMPTION U/S 11 OF THE ACT. THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE HAD CLAIMED ACCUMULATION U/S 11(2) I.E ACCUMULATION IN EXCESS OF 15 % OF THE INCOME. AS PER HIM, THE RESOLUTION AND FORM NO. 10 REQUIRED TO BE FILED FOR THIS M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 3 PURPOSE REVEALED THAT THE ACCUMULATION SO CLAIMED WAS NOT QUALIFYING FOR ALLOWANCE U/S 11(2) OF THE ACT. THE AO ISSUED NOTICE TO THE ASSESSEE BRINGING OUT THE ABOVE F ACTS AND REFERRING TO LEGAL PROVISIONS POINTING OUT THAT THE NOTICE FOR ACCUMULATION OF INCOME U/S 11(2) FILED BY THE ASSESSEE IS NOT FOR THE SPECIFIC PURPOSE AS REQUIRED UNDER THE LEGAL PROVISIONS. THE ASSESSEE FILED A REPLY DATED 19.02.2013 BEFORE THE AO . HOWEVER, THE AO WAS NOT CONVINCED THE SAID REPLY AND RELYING ON THE DECISION IN THE CASE OF DIT(E) V. TRUSTEES OF SINGHANIA CHARITABLE TRUST 199 ITR 819 (CAL), HELD THAT THE ACCUMULATION IS PERMISSIBLE ONLY IF DEFINITE AND CONCRETE PURPOSE OR PURPOSES IS SPECIFIED BY THE ASSESSEE. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED TO HAVE ACCUMULATED THE FUNDS FOR THE FOLLOWING PURPOSES: A) TO PURCHASE SUITABLE PLOTS OF LANDS/HOUSING STIES AT ANY PLACE IN INDIA FOR CONSTRUCTION OF HOUSING FOR THE FAMILIES ECONOMICALLY WEAKER SECTION OF THE SOCIETY AND FAMILIES OF MIDDLE INCOME GROUP. B) TO CONSTRUCT OR ACQUIRE SUITABLE RESIDENTIAL UNITS, FLATS AND TENEMENTS FOR PROVIDING SHELTER AND OR OTHERWISE ACCOMMODATING THE HOMELESS, LOW INCOME/MIDDLE CLASS INDIVIDUAL AND OR FAMILIES EITHER AT CONCESSIONAL RATE OR WITHOUT CONSIDERATIONS. C) TO UNDERTAKE OR CARRY OUT MAJOR REPAIRS AND RENOVATION OF THE HOUSES/BUILDINGS (INCLUDING STRUCTURAL REPAIRS AND REINFORCEMENT THEREOF) RENDERED INTO DILAPIDATE/VULNERABLE CONDITIONS DU E TO NATURAL CALAMITIES OR OTHERWISE WHICH ARE IN THE OCCUPATION OF THE FAMILIES OF INDIVIDUALS OF ECONOMICALLY WEAKER SECTION OF SOCIETY, WHO ARE NOT IN A POSITION T O BEAR THE COST INVOLVED WITH A VIEW TO MAKE SUCH HOUSES/BUILDINGS SAFE, SECURE AND SUSTAI NABLE FOR THEIR HABITATION. D) TO CONSTRUCT MULTIPURPOSE HALL AT HOUSING COMPLEX DEVELOPED/TO BE DEVELOPED. M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 4 E) TO PURCHASE OFFICE PREMISES FOR THE TRUST. F) TO SET UP PRIMARY/SECONDARY SCHOOL, EDUCATIONAL AND OTHER INSTITUTIONS, RESEARCH CENTRES , LABORATORIES, VOC ATIONAL TRAINING CENTRES AND E QUIP THE SAME. G) TO SET UP HEALTH CENTRES , CLINICS, DISPENSARIES, MATERNITY HOMES, DIAGNOSTIC CENTRES , NURSING HOMES AND E QUIP THE SAME. THE AO CONCLUDED THAT THE ABOVE PURPOSES ARE GENERAL IN NATURE AND CANNOT BE CONSTRUED BY ANY STRETCH OF IMAGINATION TO BE DEFINITE AND CONCRETE PURPOSE OR PURPOSES. THE ASSESSEE ALSO COULD NOT SUBSTANTIATE BEFORE HIM ITS ABOVE PURPOSE OF ACCUMULATION WITH ANY CONCRETE PLAN OF ACTION SUPPORTED BY DOCUMENTARY EVIDENCE. RELYING ON THE DECISION I N THE CASE OF TRUSTEES OF SINGHANIA CHARITABLE TRUST (SUPRA), THE AO MADE A N ADDITION OF RS.6,88,00,000/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT (I) THE ASSESSEE HAD NOT SPEN T ANY AMOUNT UNDER THE HEAD RELIEF OF POVERTY OR OTHER CHARITABLE OBJECTS EXCEPT RS.62.28 LACS AS AGAINST SURPLUS OF RS.821.79 LACS IN THE FINANCIAL YEAR 2009 - 10, (II) AS ON RECORD, THERE IS NO ACTIVITY OF CHARITY IN TERMS OF THE MAIN OBJECT OF THE TRUST, S INCE 2001/1996 TILL DATE OF THE ASSESSMENT ORDER, (III) THE AMOUNT OF ACCUMULATION OF INCOME WITHOUT QUANTIFYING THE AMOUNT IS PRIMARILY BECAUSE OF LACK OF SPECIFICITY OF THE AMOUNTS AND PURPOSES BOTH, FOR WHICH THE AMOUNTS WERE ALLEGED TO BE FURTHER ACCUM ULATED U/S 11(2), (IV) NO SPECIFIC PROJECT WAS CONCEIVED FOR WHICH FURTHER ACCUMULATION WAS REQUIRED AND ALSO THAT AFTER YEAR TO YEAR THERE WAS NO DEFINITE AND CONSCIOUS DELIBERATION ON THE PURPOSES OF FURTHER ACCUMULATION, THEREBY RESULTING IN FILING OF F ORM NO. 10 IN A M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 5 ROUTINE MANNER IN SAME AND SIMILAR WAY BEING VAGUE, GENERAL AND ALSO DELINKED WITH THE OBJECTS OF THE TRUST, (V) FROM THE RECONCILIATION OF UTILIZATION OF AMOUNTS, THE ASSESSEE HAD SHOWN ADJUSTMENT OF RS.33.35 LACS RELATING TO AY 2006 - 07 BU T ADJUSTED AGAINST AY 2007 - 08 AND SIMILARLY OTHER SUCH AMOUNTS OVERLAPPING TO OTHER YEARS, (VI) WHEREAS, THE AMOUNT APPLIED DURING THE YEAR IN RESPECT OF SECTION 11(2) FOR AY 2008 - 09, 2009 - 10, 2010 - 11 AND 2011 - 12 IS REPORTED AT NIL IN THE SAID ENCLOSURES O F THE COMPUTATION, THE ASSESSEE HAD FURNISHED UTILIZATION OF RS.4,07,39,908/ - , RS.28,61,250/ - PLUS RS.5,93,38,750/ - FOR AY 2010 - 11 AND 2009 - 10 RESPECTIVELY AS CONTAINED IN THE CHART OF THE SUBMISSION DATED 17.12.2014. THE LD. CIT(A) THUS HELD THAT THE VAGUE, GENERAL AND UN - RECONCILED ACCUMULATIONS OF AMOUNT IS NOT PERMISSIBLE UNDER LAW FOR THE REASON THAT FURTHER ACCUMULATION IS SPECIFIC TO THE PURPOSE, QUANTUM AND PERIOD AS PER RULE 17 OF THE INCOME TAX RULES, 1962. RELYING ON THE DECISION IN TRUSTEES OF SINGHANIA CHARITABLE TRUST (SUPRA), THE LD. CIT(A) UPHELD THE ORDER OF THE AO AND DISMISS ED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE PRESENT APPEAL IS COVERED B Y THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE - TRUST FOR THE AY 2009 - 10 WHEREIN FOR IDENTICAL REASONS, THE AO AND LD. CIT(A) DENIED THE BENEFITS OF SECTION 11(2) TO THE ASSESSEE. IT IS STATED THAT THE OBJECTS FOR WHICH THE ASSESSEE - TRUST ACCUMULAT ED ITS INCOME IN AY 2009 - 10 WHICH WAS APPROVED BY THE TRIBUNAL, ARE IDENTICAL WITH THE OBJECTS FOR WHICH THE ASSESSEE ASKED FOR ACCUMULATION M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 6 IN AY 2010 - 11. IT IS ALSO SUBMITTED THAT THE ASSESSEE HAD NOT REPRODUCED OBJECT CLAUSES IN PURPOSES COLUMN OF FORM 10 IN A BLANKET FORMAT AND THE OBJECTS FOR WHICH THE FUNDS ARE ACCUMULATED ARE NOT GENERAL BUT SPECIFIC IN NATURE AND ARE IN LINE WITH THE PRIMARY OBJECT FOR WHICH IT WAS FORMED. IT IS ALSO STATED THAT WHAT IS NOT SPECIFIED IN THE RESOLUTION IS THE AREA AN D LOCALITY IN WHICH THESE ACTIVITIES ARE TO BE UNDERTAKEN AS THAT IS DEPENDENT ON VARIOUS FACTORS WHICH ARE NOT IN CONTROL OF THE ASSESSEE - TRUST LIKE FUNDS ACCUMULATED, PRICE OF LAND, CONSTRUCTION COST, DEVELOPMENT R ULES OF THE LOCAL AUTHORITIES ETC. THE LD. COUNSEL SUBMITS THAT THE ASSESSEE - TRUST HAS ACCUMULATED ITS INCOME IN THE AYS 2006 - 07 TO 2009 - 10 FOR THE AFORESAID OBJECTS OF CONSTRUCTING HOUSING ACCOMMODATION FOR THE WEAKER SECTION OF THE SOCIETY AND IT HAS UTILIZED THE SAID ACCUMULATED INCOME FOR THE PURPOSE OF LAND AT VASAI AND HYDERABAD IN THE SUBSEQUENT AYS 2011 - 12 TO 2014 - 15. IT INTENDS TO DEVELOP THE SAID LAND FOR CONSTRUCTING HOUSES FOR ECONOMICALLY WEAKER SECTION FAMILIES AND ALLOT THE HOUSES AT SUBSIDISED RATE (BELOW COST) AND ALSO FOR MIDD LE INCOME GROUP FAMILIES. RELIANCE IS PLACED BY HIM ON THE DECISION IN DIT(E) V. DAULAT RAM EDUCATION SOCIETY 278 ITR 260, BHARAT KRISHAK SAMAJ V. DDIT(E) 306 ITR 153 ( DEL . ), BHARAT KALYAN PRATISTHAN V. DIT(E) 299 ITR 406 ( DEL . ), CIT(E) V. GOKULA EDUCATION FOUNDATION (KARN . ) & DIT(E) V. ENVISIONS 378 ITR 483 (KAR N .) 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER OF THE LD. CIT(A) AND SUBMITS THAT THE VAGUE, GENERAL AND UN RECONCILED ACCUMULATIONS OF AMOUNT IN THE INSTANT CASE IS NOT PERMISSIBLE UNDER THE INCOME TAX ACT FOR THE REASON THAT FURTHER ACCUMULATION IS SPECIFIC TO THE PURPOSE, M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 7 QUANTUM AND PERIOD UNDER RULE 17 OF THE INCOME TAX RULES, 1962. THE LD. DR MAKES A SPECI FIC REFERENCE TO PARA 7.5 AND 7.8 OF THE ORDER DATED 31.12.2014 PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE SAME ISSUE AROSE BEFORE THE ITAT B BENCH, MUMBAI IN THE CASE OF THE ASSESSEE FOR THE AY 2009 - 10 (ITA NO. 171/MUM/2013). IT IS SEEN THAT THE OBJECTS FOR WHICH THE ASSESSEE - TRUST ACCUMULATED ITS INCOME IN AY 2009 - 10, WHICH WERE APPROVED BY THE TRIBUNAL, ARE IDENTICAL WITH THE OBJECTS FOR WHICH THE ASSESSEE - TRUST ASKED FOR ACCUMULATION IN AY 2010 - 11. THE TRIBUNAL FOR AY 2009 - 10 HELD : 8.4 THERE IS ONE MORE ASPECT UPON WHICH THE STAND TAKEN BY THE REVENUE IN THIS YEAR CANNOT BE ACCEPTED. IT HAS ALREADY BEEN POINTED OUT THAT IN A.Y 2008 - 09 FOR ALMOST SIMILAR OBJECTS , THE ACCUMULATION WAS PERMITTED BY WAY OF AN ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE ADDITIONAL OBJECT TAKEN DURING THE YEAR IS REGARDING CARRYING OUT MAJOR REPAIR AND RENOVATION ETC. IN THE BUILDINGS WHICH REQUIRE SUCH REPAIR. IN THE NOTE ON AC TIVITIES SUBMITTED BY THE ASSESSEE BEFORE AO AS REPRODUCED IN PARA 5.1 OF THIS ORDER, IT WAS CLEARLY MENTIONED THAT ASSESSEE TRUST WAS ESTABLISHED IN 1972 AND IT HAS PROVIDED HOUSING COLONY TO 338 FAMILIES AT SUBSIDIZED RATE IN 1983. SIMILARLY, 93 FLATS WE RE PROVIDED TO DESERVING PERSONS ON SUBSIDIZED RATE IN 1992 AND 1996. APART FROM THESE ACTIVITIES, THE ASSESSEE HAS PROVIDED 684 UNITS OF HOUSE HOLD BATH ROOMS UNDER SEVERAL RURAL DEVELOPMENT PROGRAMMES AND SANITARY UNITS ALSO. THEREFORE, TO MAKE REPAIR ET C. OF THOSE BUILDINGS AND OTHER OLD BUILDINGS SUCH OBJECT CAN BE M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 8 INCLUDED WHICH IS IN THE LINE OF OBJECT OF THE ASSESSEE TRUST FOR PROVIDING HOUSING ACCOMMODATION TO THE WEAKER SECTIONS OF THE SOCIETY. THEREFORE, THE OBJECT OF ACCUMULATION SOUGHT ARE NO MO RE DIFFERENT FROM THE OBJECTS FOR WHICH THE ACCUMULATION HAS BEEN PERMITTED IN THE EARLIER YEARS. EARLIER YEAR ORDERS HAVE NOT BEEN SHOWN TO BE SUBJECT OF EITHER REVISION OR REASSESSMENT. THEREFORE, REVENUE CANNOT TAKE A DIFFERENT STAND IN THE YEAR UNDER C ONSIDERATION AS THERE IS NO MATERIAL CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS IS AGAINST THE DOCTRINE OF CONSISTENCY AND IS AGAINST THE DECISION, OF HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG 193 ITR 321 (SC), WHEREIN THEIR LORD SHIP HAVE OBSERVED THAT STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS AS EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECID ED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFE RENT ASSESSMENT YEARS HAS BEEN FOUND AS THE FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT AT APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR IN THE ABSENCE O F ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER. MOREOVER, THE ASSESSEE HAS STARTED SPENDING THE ACCUMULATED INCOME TOWARDS OBJECTS AND EVIDENCE IN THIS REGARD WAS SUBMITTED. A PERIOD OF TEN YEARS HAS BEEN PRESCRIBED UND ER THE ACT FOR THE USE OF ACCUMULATED UNSPENT INCOME. THE ASSESSEE HAS STARTED THE UTILIZATION OF ACCUMULATED UNSPENT INCOME FOR THE OBJECTS OF THE TRUST. M/S MUNIWAR ABAD CHARITABLE TRUST ITA NO. 1722/MUM/2016 9 7.1 FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND DIRECT THE AO TO GRANT THE BENEFIT TO THE ASSESSEE FOR ACCUMULATION OF UN - SPENT INCOME AND CONSEQUENTLY ALLOW THE BENEFIT OF SECTION 11. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/04/2018. SD/ - SD/ - ( C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/04/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI