ADIT, CHENNAI V. M/s. MAC Public Charitable Trust, CHENNAI

ITA 1799/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4649 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Charitable institution
• Section: 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1799/MDS/2012 (ASSESSMENT YEAR : 2008-09) THE ASST. DIRECTOR OF INCOME TAX (EXEMPTIONS IV), CHENNAI - 600 034. (APPELLANT) V. M/S MAC PUBLIC CHARITABLE TRUST, MAC/ICH BUILDING, V.H.S. CAMPUS, TTTI POST, TARAMANI, CHENNAI - 600 113. PAN : AAATM 0484 C (RESPONDENT) APPELLANT BY : SH.GURU BASHYAM, JCIT RESPONDENT BY : SH.R. VIJAYARAGHAVAN, A DVOCATE DATE OF HEARING : 21.08.2013 DATE OF PRONOUNCEMENT : 29.08.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT THE CIT(APPEALS) HELD ASSESSEE TO BE ELIGIBLE FOR CLAIM ING THE BENEFIT OF SECTION 11 OF INCOME-TAX ACT, 1961 (IN SHORT 'THE A CT'). I.T.A. NO. 1799/MDS/12 2 2. FACTS APROPOS ARE THAT ASSESSEE, A TRUST REGISTE RED UNDER SECTION 12AA OF THE ACT, HAD FILED ITS RETURN FOR T HE IMPUGNED ASSESSMENT YEAR DECLARING NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE ASSESSING OFFICER THAT ASSESSEE HAD SHOWN UNDER THE HEAD DEPOSITS A SUM OF ` 18,25,000/- IN THE NAME OF M/S SPK MAC CHARITABLE TRUST. ASSESSING OFFICER WAS OF THE OPINION THAT THIS WAS VIOLATION OF THE INVESTMENT M ODES SET OUT UNDER SECTION 11(5) OF THE ACT. THOUGH THE ASSESSEE ARGU ED THAT THE MONEY WAS NOT DEPOSITED, BUT ONLY INTEREST-FREE LOA N WAS GIVEN TO THE SAID TRUST, THIS WAS NOT ACCEPTED BY THE ASSESSING OFFICER. AS PER THE A.O., MONEY WAS LENT BY THE ASSESSEE CONTINUOUS LY TO A PARTY WHO WAS NOT PAYING ANY INTEREST. THE SAID PARTY HA D NOT GIVEN ANY SECURITY ALSO. THEREFORE, ACCORDING TO HER, ASSESS EE HAD MADE INVESTMENTS OTHER THAN IN THE MODES SET OUT IN SECT ION 11(5) OF THE ACT. SHE DENIED EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 11 OF THE ACT AND COMPLETED THE ASSESSMENT. 3. IN ITS APPEAL BEFORE CIT(APPEALS), ARGUMENT OF T HE ASSESSEE WAS THAT M/S SPK MAC CHARITABLE TRUST, TO WHICH LOA N WAS GIVEN, WAS ALSO AN ORGANIZATION HAVING REGISTRATION UNDER SECTION 12AA OF I.T.A. NO. 1799/MDS/12 3 THE ACT. ACCORDING TO ASSESSEE, OBJECTS OF BOTH TH E ORGANIZATIONS WERE SIMILAR. BOTH THE ORGANIZATIONS WERE COMMITTE D TO THE CAUSE OF EDUCATION. EDUCATION WAS THEIR PREDOMINANT OBJECT. ASSESSEE, RELYING ON THE TRUST DEEDS AND ALSO REGISTRATION GR ANTED TO M/S SPK MAC CHARITABLE TRUST, ARGUED THAT LOAN GIVEN TO THE LATTER COULD NOT BE CONSIDERED AS A VIOLATION OF MODES OF INVESTMENT SPECIFIED UNDER SECTION 11(5) OF THE ACT. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DIT (EXEMPT ION) V. ACME EDUCATIONAL SOCIETY (326 ITR 146). 4. CIT(APPEALS) WAS APPRECIATIVE OF THE CONTENTION OF THE ASSESSEE. ACCORDING TO HIM, INTEREST-FREE LOAN GIV EN BY THE ASSESSEE-TRUST TO ANOTHER TRUST, WHICH WAS ALSO A R EGISTERED ONE, WOULD NOT BE HIT BY SECTION 11(5) OR SECTION 13(1)( D) OR SECTION 13(1)(C) OF THE ACT. THUS, HE HELD THAT ASSESSEE W AS ELIGIBLE FOR EXEMPTION CLAIMED BY IT UNDER SECTIONS 11 AND 12 OF THE ACT. 5. NOW BEFORE US, SHRI GURU BASHYAM, APPEARING FOR THE REVENUE, STRONGLY ASSAILING THE ORDER OF CIT(APPEAL S), SUBMITTED THAT M/S SPK MAC CHARITABLE TRUST, THOUGH IT WAS A TRUST REGISTERED UNDER SECTION 12AA OF THE ACT, WOULD STILL FALL WIT HIN THE CONCEPT OF A CONCERN. RELYING ON A DECISION OF HON'BLE BOMBAY HIGH COURT IN I.T.A. NO. 1799/MDS/12 4 THE CASE OF CHAMPA CHARITABLE TRUST V. CIT (214 ITR 764), LEARNED D.R. SUBMITTED THAT A TRUST IS ALSO A PERSON WITHIN THE MEANING OF SECTION 13 OF THE ACT. ACCORDING TO HIM, IN THE SA ID CASE, ONE TRUST HAD DONATED A SUM OF ` 1 LAKH TO ANOTHER TRUST. THEREAFTER THE LATTER TRUST DONATED CERTAIN SUMS BACK TO THE FORMER TRUST . HON'BLE BOMBAY HIGH COURT HAD HELD THAT THE CONTRIBUTOR-TRU ST WOULD COME WITHIN THE MEANING OF SECTION 13(3)(B) OF THE ACT A ND RECIPIENT-TRUST HAVING GIVEN DONATIONS GIVEN BACK TO THE CONTRIBUTO R-TRUST, SECTION 13(1)(C)(II) STOOD ATTRACTED. ACCORDING TO HIM, TH EREFORE, CONTRIBUTIONS OR LOANS OR DEPOSITS, BY WHATEVER NAME CALLED, GIVE N BY THE ASSESSEE TO M/S SPK MAC CHARITABLE TRUST WAS HIT BY SECTION 13(1)(C) OF THE ACT. 6. PER CONTRA, SHRI R. VIJAYARAGHAVAN, LEARNED COUN SEL FOR THE ASSESSEE, STRONGLY RELIED ON THE DECISION OF HON'BL E DELHI HIGH COURT IN THE CASE OF ACME EDUCATIONAL SOCIETY (SUPRA). A CCORDING TO HIM, WHAT WAS GIVEN BY THE ASSESSEE TO M/S SPK MAC CHARI TABLE TRUST WAS NOT A DONATION BUT A LOAN. BOTH THE TRUSTS WER E REGISTERED UNDER SECTION 12AA OF THE ACT AND BOTH WERE HAVING SIMILA R EDUCATIONAL OBJECTIVES. THEREFORE, LD. CIT(APPEALS) WAS JUSTIF IED IN DIRECTING THE I.T.A. NO. 1799/MDS/12 5 A.O. TO GIVE EXEMPTION CLAIMED BY THE ASSESSEE UNDE R SECTION 11 OF THE ACT. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. NO DOUBT, IN THE CASE OF CHAMPA CHARITABLE TRUST (S UPRA), HON'BLE BOMBAY HIGH COURT HAS HELD THAT WHEN A TRUST RECEIV ES DONATION FROM ANOTHER TRUST, AND SUCH DONATIONS WERE IN TURN GIVEN BACK AGAIN AS DONATIONS, THE TRANSACTIONS WERE HIT BY SECTION 13(1)(C) OF THE ACT, WHERE THE ORIGINAL DONOR TRUST WAS A SUBSTANTIAL CO NTRIBUTOR. HOWEVER, FACTS HERE ARE ENTIRELY DIFFERENT. FACTS HERE ARE SIMILAR TO THE CASE OF ACME EDUCATIONAL SOCIETY (SUPRA) DECIDE D BY HON'BLE DELHI HIGH COURT. IN THE SAID CASE, ASSESSEE-SOCIE TY HAD GIVEN A LOAN OF ` 90,50,000/- TO ANOTHER EDUCATIONAL SOCIETY, WHOSE PRESIDENT WAS THE BROTHER OF ASSESSEE-SOCIETYS PRESIDENT. A SSESSING OFFICER HAD INVOKED PROVISIONS OF SECTION 13(1)(D) READ WIT H SECTION 11(5) OF THE ACT AND DENIED THE EXEMPTION UNDER SECTION 11 O F THE ACT. HON'BLE DELHI HIGH COURT HELD THAT INTEREST-FREE LO AN GIVEN BY THE ASSESSEE-SOCIETY TO ANOTHER SOCIETY, HAVING SIMILAR OBJECTS AND REGISTERED UNDER SECTION 12AA OF THE ACT, DID NOT V IOLATE SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE ACT, SINCE SUCH LOANS WERE NEITHER INVESTMENTS NOR DEPOSITS. NO DOUBT, THE A SSESSEE HERE HAD I.T.A. NO. 1799/MDS/12 6 MENTIONED THE AMOUNTS GIVEN TO M/S SPK MAC CHARITAB LE TRUST AS DEPOSITS IN ITS ACCOUNTS. SUBMISSION OF THE ASSE SSEE THAT IT WAS NOTHING BUT A LOAN GIVEN TO THE SAID TRUST, FOR THE PURPOSE OF ITS EDUCATIONAL OBJECTS, HAS NOT BEEN REBUTTED BY THE R EVENUE. WE ARE, THEREFORE, OF THE OPINION THAT THE CIT(APPEALS) WAS JUSTIFIED IN DIRECTING THE A.O. TO EXEMPTION CLAIMED BY THE ASSE SSEE UNDER SECTIONS 11 AND 12 OF THE ACT. WE DO NOT FIND ANY NEED TO INTERFERE WITH THE ORDER OF CIT(APPEALS). 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 29 TH OF AUGUST, 2013, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH AUGUST, 2013. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-XII, CHENNAI-34 (4) DIT (EXEMPTIONS), CHENNAI (5) D.R. (6) GUARD FILE