The Income Tax Officer, (Exemtions), Ward-1, Panaji., Panaji V. M/s International Centre, Goa, Goa

ITA 184/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1204 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 23-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Keywords: Business income; Depreciation; Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER & SHRI RAMIT KOCHAR HONBLE ACCOUNTANT MEMBER ITA NO. 184 /P A N/201 6 (ASST. YEAR : 20 05 - 06 ) ITO (EXEMPTIONS), WARD - 1, PANAJI GOA. VS. M/S. INTERNATIONAL CENTRE, GOA UNIVERSITY ROAD, NIO POST OFFICE, DONAPAULA, GOA. PAN NO. AAATT 1802 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAMOD Y. VAIDYA ADV. DEPARTMENT BY : SHRI RAVIRAJ Y.V. - DR DATE OF HEARING : 2 4 / 11 /201 6 . DATE OF PRONOUNCEMENT : 24 / 11 /201 6 . O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI - 1 , IN APPEAL NO. 275/PNJ/07 - 08, DATED 23 /0 6 /201 6 FOR THE ASSESSMENT YEAR 2005 - 06 . 2. SHRI RAVIRAJ Y.V., DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI PRAMOD Y. VAIDYA, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3 . IT WAS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE IS A AOP ( TRUST ) , WHICH IS REGISTERED UN DER SECTION 12A OF THE ACT W. E.F. 01/04/1992 AND WHICH IS AN INSTITUTION FOR PROMOTING EDUCATION, SCIENTIFIC AND CULTURAL VALUES ETC. IT WAS THE SUBMISSION THAT 2 ITA NO. 184/PAN/2016 THE ASSESSEE WAS RECEIVING GRANTS FROM THE STATE AND CENTRAL GOVERNMENT S . THE ASSESSEE OWNS 8 6 ROOMS AND CONFERENCE HALLS WITHIN ITS PREMISES AND THE ROOMS AND HALLS ARE RENTED OUT TO THE MEMBER S AS WELL AS THE NON - MEMBERS. THE T A RIFF CHARGED TO THE MEMBER S AND THE NON - MEMBER S IS DIFFERENT AND ALSO VARIABLE ACCORDING TO SEASON. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD HELD THAT THE RENTING OUT OF THE FACILITIES HAD BEEN HELD TO BE A BUSINESS ACTIVITIES OF THE ASSESSEE AND THE RENTAL INCOME OF THE ASSESSEE HAS BEEN TREATED AS BUSINESS INCOME OF THE ASSESSEE DENYING TH E BENEFIT OF SECTION 11 OF THE ACT. IT WAS THE SUBMISSION THAT , FURTHER AS THE GRANTS HAD BEEN USED FOR THE PURPOSE OF CONSTRUCTION OF THE ROOMS AND HALLS , F OR THE PURPOSE OF DEPRECIATION, THE COST HAD BEEN TAKEN AT NIL IN RESPECT OF ASSETS AND DEPRECIATI ON HAD BEEN DENIED. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD HELD THAT THE ACTIVITIES OF THE TRUST OF RUNNING COMMERCIAL ESTABLISHMENT WAS NOT TO BE TREATED AS CHARI T ABLE PURPOSE AND ACCORDINGLY HELD THAT THE ENTIRE SURPLUS OF THE YEAR AFTER ALLOWING EXPENSES WAS TREATED AS A BUSINESS INCOME OF THE ASSESSEE AND BROUGHT TO TAX. IT WAS THE SUBMISSION THAT ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) HAD HELD THAT ONCE REGISTRATION UNDER SECTION 12A IS GRANTED , IT IS A PRESUMPTION THAT THE OB JECTS OF THE ENTITY IS CHARITABLE IN NATURE AND THAT THE ROOMS RENT WAS QUITE SUBSIDIZED AND SURPLUS WAS ALSO MEAGRE. IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD HELD THAT INCOME FROM LETTING OUT ROOMS FOR ATTAINING THE OBJECTS WAS ONLY INCIDENTAL TO THE OBJECTS OF THE TRUST AND COULD NOT BE HELD AS BUSINESS INCOME. IT WAS THE SUBMISSION THAT IN RESPECT OF ISSUE OF DEPRECIATION ALSO, THE ISSUE HAD BEEN HELD IN FAVOUR OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE REVERSED . 4 . IN REPLY, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VEHEMENTLY SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IT WAS THE SUBMISSION THAT THE ROOMS AND HALLS WERE LET OUT FOR ORGANIZING 3 ITA NO. 184/PAN/2016 AND FACILITATING SEMINARS WHICH WERE INCIDENTAL TO THE OBJECTS OF THE TRUST. IT WAS FURTHER SUBMISSION THAT THE GOVERNMENT OF INDIA AND GOVERNMENT OF GOA HAD GIVEN GRANT - IN - AID FOR ITS BUILDINGS AND INFRASTRUCTURE OF 2.5 CRORES OVER THE YEARS . T HE TRUST IS NOT ENGAGED IN THE BUSINESS ACTIVITIES. IT WAS THE FURTHER SUBMISSION THAT THE REGISTRATION UNDER SECTION 12A OF THE ASSESSEE TRUST STILL CONTINUES AND IT CONTINUES TO BE HELD TO BE A CHARITABLE TRUST. IT WA S THE SUBMISSION THAT NO VIOLATION OF THE PROVISIONS OF SECTION 11 OR 13 HAS BEEN POINTED OUT. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO THE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CLEARLY SHOWS TH A T THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONSIDERED THE FACT THAT THE ASSESSEE IS NON - PROFIT CHARITABLE ORGANIZATION AND IT ALLOWS ITS FACILITIES TO BE USED BY MEMBERS AND NON - MEMBERS AT PAYMENT OF NOMINAL CHARGES . THIS HAS RESULTED INTO SURPLUS OF 5,59,210/ - AND AFTER REWORKING DEPRECIATION HAS CREATED A LOSS OF 27,64,595/ - . J UST BECAUSE THE ASSESSEE HAS RENTED OUT ITS PREMISES FOR MEMBERS AND NON - MEMBERS IN THE COURSE OF CHARITABLE ACTIVITIES WOULD NOT MAKE THE ACTIVITY OF RENTING AS BUSINESS OF THE ASSESSEE. IT WAS FURTHER NOTICED THAT THERE IS NO ALLEGATION OF ANY VIOLATION OF THE PROVISIONS OF SECTION 11(1) (D) OR SECTION 13(5) BY THE TRUST. IT IS ONLY ON THE PRESUM PTION THAT RENTING IS A BUSINESS ACTIVITY THAT THE ASSESSING OFFICER HAS ATTEMPT TO DENY THE EXEMPTION PROVIDED TO THE ASSESSEE UNDER SECTION 11 OF THE ACT. T HE FACT THAT THE ASSESSEE CONTINUES TO ENJOY REGISTRATION UNDER SECTION 12A EVEN TODAY ONLY SHOWS THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE EVEN TODAY CONSIDERED TO BE CHARITABLE IN NATURE. FURTHER, IN RESPECT OF ISSUE OF DEPRECIATION , IT IS NOTICED THAT THE COORDIN A TE BENCH OF THIS TRIBUNAL IN THE CASE OF DATTA SANTHAN VS. DCIT IN ITA NO. 288/PN J/2015 DATED 14/09/2015 FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF INSTITUTE OF BANKING 4 ITA NO. 184/PAN/2016 REPORTED IN 264 ITR 110 HAS HELD THAT A CHARITABLE TRUST IS ENTITLED TO CLAIM DEPRECIATION. THIS BEING SO, AS ALSO AS THE REVENUE WAS UNABLE TO POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THESE ISSUES STAND CONFIRMED. 6 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISS ED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON THURSDAY , THE 2 4 TH DAY OF NOVEMBER , 201 6 AT GOA . S D / - S D / - ( RAMIT KOCHAR ) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 4 TH NOVEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE. M/S. INTERNATIONAL CENTRE, GOA UNIVERSITY ROAD, NIO POST OFFICE, DONAPAULA, GOA. 2 . THE REVENUE. ITO (EXEMPTIONS), WARD - 1, PANAJI GOA. 3 . THE PR. CIT, PANAJI. 4 . THE CIT(A) , PANAJI - 1, GOA. 5 . THE D.R . 6 . GUARD FILE. BY ORDER S R . P R I V A T E S E C R E T A R Y I.T.A.T., PANAJI