DCIT (EXEMPTIONS) CHENNAI CIRCLE, CHENNAI V. M/S SIVANANDA SARASWATHI SEVASTHRAMAM, CHENNAI

ITA 1824/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3993 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P RAJASEKHARAN
• Section: 12A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.1823 & 1824/CHNY/2018 & '& / ASSESSMENT YEARS : 2011-12 & 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHENNAI CIRCLE, CHENNAI - 600 034. V. M/S SIVANANDA SARASWATHI SEVASHRAMAM, NO.20, KAMBAR STREET, EAST TAMBARAM, CHENNAI 600 059. PAN : AAATS 0160 K ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT +,)* - . / RESPONDENT BY : SHRI P. RAJASEKHARAN, FCA / - 0# / DATE OF HEARING : 08.01.2019 12' - 0# / DATE OF PRONOUNCEMENT : 06.02.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAI NST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS) - 17, CHENNAI, DATED 16.03.2018 AND PERTAIN TO ASSESS MENT YEARS 2011-12 AND 2012-13. 2 I.T.A. NOS.1823 & 1824/CHNY/18 2. SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REP RESENTATIVE, SUBMITTED THAT THE ASSESSEE IS A REGISTERED CHARITA BLE INSTITUTION UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 (IN SHORT ' THE ACT'). DURING THE ASSESSMENT YEARS UNDER CONSIDERATION, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE ACCUMULATED INCOME FOR THE ASSESSMENT YEAR 2005-06 TO THE EXTENT OF 1,66,12,363/- WAS NOT SPENT EVEN AFTER EXPIRY OF FIVE YEARS, THEREFORE, THE ASSESSING OFFI CER DISALLOWED THE CLAIM OF THE ASSESSEE. REFERRING TO SECTION 11(3) OF THE ACT, THE LD. D.R. SUBMITTED THAT THE ACCUMULATED INCOME HAS TO BE SPE NT WITHIN THE SPECIFIED PERIOD. REFERRING TO SECTION 11(2)(A) OF THE ACT, THE LD. D.R. SUBMITTED THAT THE ASSESSEE IS EXPECTED TO SPEND TH E ACCUMULATED MONEY WITHIN THE PERIOD NOT EXCEEDING FIVE YEARS. SINCE THE FIVE YEARS PERIOD EXPIRED, ACCORDING TO THE LD. D.R., THE CIT( APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. REFERRING T O THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11, THE LD. D.R. SUBMITTED THAT THIS TRIBUNAL REVERSED THE ORDER OF THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2010-11 SINCE THE ACCUMULATED AMOUNT WAS NOT SPENT WITHIN A PERIOD OF FIVE YEARS. THE CIT(APPEALS), HOWEVER, PLACED HIS RELIANCE ON THE ORDER OF THE CI T(APPEALS) FOR THE ASSESSMENT YEAR 2010-11 AFTER IT WAS REVERSED BY TH IS TRIBUNAL. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) IS NOT JUSTIFIED IN 3 I.T.A. NOS.1823 & 1824/CHNY/18 FOLLOWING THE ORDER OF HIS PREDECESSOR WHICH WAS RE VERSED BY THIS TRIBUNAL. 3. ON THE CONTRARY, SHRI P. RAJASEKHARAN, THE LD. R EPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ACCUMULATED FUND C OULD NOT BE SPENT WITHIN THE PERIOD OF FIVE YEARS AS PROVIDED IN SECT ION 11(2)(A) OF THE ACT SINCE THERE WAS A COURT ORDER BY THE MADRAS HIGH CO URT. PLACING RELIANCE ON THE ORDER OF THE MADRAS HIGH COURT IN W .P. NO.666 OF 2011 AND M.P. NO.1 OF 2011, A COPY OF WHICH IS FILED BEF ORE THIS TRIBUNAL, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSEE ACCU MULATED THE FUNDS FROM THE ASSESSMENT YEAR 2005-06 FOR CONSTRUCTION O F A SCHOOL BUILDING. IN FACT, 5.71 ACRES OF LAND WAS TAKEN ON LEASE FOR 30 YEARS FROM CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY FROM 01.04.1989. BEFORE EXPIRY OF LEASE PERIOD, ACCORDING TO THE LD. REPRESENTATIVE, CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY INCREASED THE LEASE RENT ARBI TRARILY. THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY HAS ALSO CLAIMED ARREARS OF 11 LAKHS AND ALSO INITIATED PROCEEDING FOR EVICTION. ACCORDING TO THE LD. REPRESENTATIVE, THIS PROCEEDING WAS CHALLENGED BEFO RE THE HIGH COURT IN WRIT PETITION AND THE HIGH COURT STAYED THE PROCEED ING OF CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY. WHEN THE SAID WRIT PETITION IN W.P.NO.666 OF 2011 WAS PENDING FOR FINAL DISPOSAL, THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY INITIATED PROCEE DING FOR VACATING THE PREMISES. THEREFORE, ACCORDING TO THE LD. REPRESEN TATIVE, THE PROCEEDING 4 I.T.A. NOS.1823 & 1824/CHNY/18 OF CMDA WAS CHALLENGED BEFORE THE HIGH COURT IN W.P . NO.21668 OF 2015. THE MADRAS HIGH COURT RESTRAINED THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY FROM PROCEEDING UNTIL FURTHER ORDERS. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, IN VIEW OF INT ERIM ORDERS PASSED BY THE MADRAS HIGH COURT, THE ASSESSEE COULD NOT PUT U P THE CONSTRUCTION IN THE LAND WHICH WAS TAKEN ON LEASE FROM CHENNAI METR OPOLITAN DEVELOPMENT AUTHORITY. ADMITTEDLY, ACCORDING TO TH E LD. REPRESENTATIVE, THE FUNDS WERE ACCUMULATED ONLY FOR CONSTRUCTION OF SCHOOL BUILDING. BECAUSE OF THE PROCEEDING INITIATED BY THE CMDA AND THE INTERIM ORDER PASSED BY THE MADRAS HIGH COURT, THE ASSESSEE COULD NOT UTILIZE THE FUND FOR CONSTRUCTION OF BUILDING. 4. PLACING RELIANCE IN PROVISO TO SECTION 11(2) OF THE ACT, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT WHIL E COMPUTING THE PERIOD OF FIVE YEARS REFERRED TO IN SUB-CLAUSE (A) OF SECTION 11(2) OF THE ACT, THE PERIOD DURING WHICH THE INCOME COULD NOT B E APPLIED FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED DUE TO AN OR DER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. NOW EVEN THOUGH THE P ROPERTY WAS TAKEN ON LEASE FROM CHENNAI METROPOLITAN DEVELOPMENT AUTHORI TY, ACCORDING TO THE LD. REPRESENTATIVE, DUE TO EXORBITANT HIKE OF THE L EASE RENT BY THE CMDA AND SUBSEQUENT PROCEEDING TO EVICT THE ASSESSEE-TRU ST FROM THE SAID LAND, THE ASSESSEE WAS FORCED TO APPROACH THE HIGH COURT BY WAY OF TWO WRIT PETITIONS. ACCORDING TO THE LD. REPRESENTATIV E, THE MADRAS HIGH 5 I.T.A. NOS.1823 & 1824/CHNY/18 COURT BY WAY OF INTERIM ORDER RESTRAINED THE CHENNA I METROPOLITAN DEVELOPMENT AUTHORITY FROM PROCEEDING FURTHER IN TH E MATTER. IN VIEW OF THESE PROCEEDINGS BY THE CHENNAI METROPOLITAN DEVEL OPMENT AUTHORITY AND WRIT PETITIONS BEFORE THE HIGH COURT, THE ASSES SEE COULD NOT APPLY THE ACCUMULATED FUNDS FOR CONSTRUCTION OF BUILDING FOR WHICH IT WAS ACCUMULATED. THEREFORE, ACCORDING TO THE LD. REPRE SENTATIVE, THE PERIOD OF PROCEEDINGS RIGHT FROM THE PROCEEDING INITIATED BY THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY AND THE WRIT PET ITIONS BEFORE THE MADRAS HIGH COURT HAS TO BE EXCLUDED. ACCORDING TO THE LD. REPRESENTATIVE, THE TWO WRIT PETITIONS ARE STILL PE NDING BEFORE THE HIGH COURT FOR ADJUDICATION. ACCORDING TO THE LD. REPRE SENTATIVE, THE EARLIER BENCH OF THIS TRIBUNAL, WHILE CONSIDERING THE APPEA L OF THE REVENUE FOR ASSESSMENT YEAR 2010-11, HAD NOT TAKEN INTO CONSIDE RATION THE PROVISIONS OF SECTION 11(2) OF THE ACT AND INTERIM ORDERS PASSED BY THE MADRAS HIGH COURT. EVEN THOUGH THE TRIBUNAL REVERS ED THE ORDER OF THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2010-11, ACCOR DING TO THE LD. REPRESENTATIVE, THE FACT REMAINS THAT BECAUSE OF IN TERIM ORDER PASSED BY THE HIGH COURT, CONSEQUENT TO THE PROCEEDING INITIA TED BY CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY, THE ACCUMULATED FUNDS COULD NOT BE APPLIED. THIS FACT WAS NOT CONSIDERED BY THE EARLI ER BENCH OF THIS TRIBUNAL, THEREFORE, THE ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2010- 11 MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. HENCE, ACCORDING TO 6 I.T.A. NOS.1823 & 1824/CHNY/18 THE LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTL Y DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE COULD NOT UTILIZE THE ACCUMULATED FUNDS FOR CONSTRUCTION OF SCHOOL BUILDING FOR WHICH IT WAS ADMITTEDLY ACCUMULATED. THE CLAIM OF THE REVENUE IS THAT THE FIVE YEARS PERIOD AS PROVIDED IN SECTION 11(2)( A) OF THE ACT HAS EXPIRED, THEREFORE, THE ASSESSEE CANNOT CLAIM ANY E XEMPTION UNDER SECTION 11 OF THE ACT. FOR THE ASSESSMENT YEAR 201 0-11, A DIVISION BENCH OF THIS TRIBUNAL FOUND THAT THE ACCUMULATED F UNDS WAS NOT UTILISED WITHIN FIVE YEARS, THEREFORE, A SIMILAR ORDER OF TH E CIT(APPEALS) WAS REVERSED AND THE EXEMPTION CLAIMED BY THE ASSESSEE WAS DENIED. THE ASSESSEE NOW CLAIMS THAT THE PROCEEDING INITIATED B Y THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY AND THE CONSEQUE NTIAL WRIT PETITIONS PENDING BEFORE THE HIGH COURT WERE NOT CONSIDERED B Y THE DIVISION BENCH OF THIS TRIBUNAL WHILE REVERSING THE ORDER OF THE CIT(APPEALS) FOR ASSESSMENT YEAR 2010-11. MOREOVER, THE DIVISION BE NCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2010-11 HAD NOT CONSIDERED THE PROVISO TO SECTION 11(2) OF THE ACT. 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISO TO SE CTION 11(2) OF THE ACT. THIS PROVISO VERY CLEARLY SAYS THAT THE P ERIOD TAKEN BY AN ORDER 7 I.T.A. NOS.1823 & 1824/CHNY/18 OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED WHILE COMPUTING THE PERIOD OF FIVE YEARS FOR THE PURPOSE OF UTILIZATION OF ACCUMU LATED FUNDS. IF WE CONSIDER THE LEASE RENT ENHANCED BY THE CMDA AND TH E CONSEQUENTIAL WRIT PETITIONS FILED IN THE YEAR 2011 AND 2015 AND THE ORDER OF INJUNCTION RESTRAINING THE CMDA FROM PROCEEDING FURTHER WITH R EGARD TO LAND IN QUESTION CLEARLY SHOWS THAT THE ASSESSEE COULD NOT UTILIZE THE FUNDS IN VIEW OF PROCEEDING INITIATED BY CMDA AND SUBSEQUENT ORDERS PASSED BY THE MADRAS HIGH COURT, THEREFORE, THE PROVISO TO SE CTION 11(2) OF THE ACT WOULD COME INTO OPERATION. IN OTHER WORDS, IF WE E XCLUDE THE PERIOD TAKEN WITH REGARD TO THE PROCEEDING INITIATED BY TH E CMDA AND CONSEQUENTIAL WRIT PETITIONS FILED BEFORE THE MADRA S HIGH COURT, THEN THE PERIOD OF FIVE YEARS HAS NOT BEEN EXPIRED. EVEN NO W, ADMITTEDLY, THE WRIT PROCEEDINGS WERE PENDING BEFORE THE MADRAS HIGH COU RT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT(APPEALS). THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, THE SAME IS CONFIRMED FOR THE REAS ONS STATED ABOVE. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE STAND DISMISSED. 8 I.T.A. NOS.1823 & 1824/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 6 TH FEBRUARY, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANE SAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 6 TH FEBRUARY, 2019. KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-17, CHENNAI-34 4. CIT (EXEMPTIONS), CHENNAI 5. 69 +0 /DR 6. :& ; /GF.