TATWAJNANA VIDYAPEETH, MUMBAI V. ITO (w) WD 2(4), MUMBAI

ITA 185/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6722 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.185/M/2017 ASSESSMENT YEAR: 2012-13 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN, 2 ND DR. BHAJREKAR STREET, MUMBAI 400 004 PAN: AAATT 0261E VS. INCOME TAX OFFICER (E), WARD 2(4), MUMBAI (APPELLANT) (RE SPONDENT) ITA NO.119/M/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER OF INCOME TAX (E)-2(4), ROOM NO.503, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, LOWER PAREL, MUMBAI 400 077 VS. M/S. TATWAJNANA VIDYAPEETH NIRMALA NIKETAN,2, DR. BHAJEKAR STREET, MUMBAI 400 004 PAN: AAATT 0261E (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJESH P. SHAH, A.R. REVENUE BY : SHRI V. JUSTIN, D.R. DATE OF HEARING : 18.06.2018 DATE OF PRONOUNCEMENT : 26.06.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS ONE BY THE ASSESSEE AND T HE OTHER BY THE REVENUE HAVE BEEN PREFERRED AGAINST TH E ORDER DATED 07.10.2016 OF THE COMMISSIONER OF INCOME TAX ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 2 (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2012-13. ITA NO.119/M/2017 (REVENUES APPEAL) 2. THE MAIN SOLE ISSUE RAISED BY THE REVENUE IN VAR IOUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE OF EXEMPT INCOME UNDER SE CTION 10(34) AND 10(1) OF THE ACT BY IGNORING THE FACT T HAT THE ASSESSEE CAN NOT CLAIM THE EXEMPTION UNDER SECTION 10 BECAUSE THIS SECTION DOES NOT DEAL WITH THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST AND ONCE INCOME IS E XEMPT UNDER SECTION 10 IT WILL NOT BE REQUIRED TO BE CLARIFIED UNDER SECTION 11 OF THE ACT AS PER CBDT CIRCULAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE Y EAR THE ASSESSEE HAS DERIVED INCOME BY WAY OF DIVIDEND RS.66,06,853/- AND AGRICULTURAL INCOME RS.1,82,866/- WHICH WERE CLAIMED AS EXEMPT UNDER SECTION 10(34) AND 10( 1) OF THE ACT RESPECTIVELY. HOWEVER, THE AO DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE THAT THE SAID INCOMES A RE EXEMPT UNDER SECTION 10 AND ACCORDINGLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE BY HOLDING THAT THE EXEMPTIO N UNDER SECTION 10 IS NOT AVAILABLE WHERE THE INCOME IS DER IVED FROM PROPERTY HELD UNDER TRUST AND THE INCOME HAS TO BE DEALT WITH AS PER PROVISION OF SECTION 11 OF THE ACT. 4. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE DURING THE APPELLATE PROCEEDING AND AFTER RELYING O N THE DECISION OF ITAT IN THE CASE OF JAMSETJI TATA TRUST VS. JDIT (E) ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 3 148 ITR 388 AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT(E) VS. JASUBHAI FOUNDATION 374 ITR 215 (BOMBAY HC). 5. THE LD. A.R. PRAYED BEFORE THE BENCH THAT THE ISSUE INVOLVED IN THE APPEAL OF THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS. JASUBHAI FOUNDATION (SUPRA) W HEREIN IT HAS BEEN HELD THAT THE INCOME WHICH IS EXEMPT UNDER THE PROVISION OF SECTION 10 CAN NOT BE SUBJECT TO THE PROVISION OF SECTION 11 AND THUS UPHELD THE DECISION OF THE ITAT . THE LD. A.R. ALSO RELIED ON THE DECISION OF JAMSETJI TATA TRU ST VS. JDIT (SUPRA) WHEREIN A SIMILAR QUESTION WAS DECIDED IN F AVOUR OF THE ASSESSEE BY HOLDING THAT A DIVIDEND INCOME ON S HARE, MUTUAL FUND AND LONG TERM CAPITAL GAIN ON SALE OF S HARES IS EXEMPT UNDER SECTION 10(36), 10(34), 10(38) RESPECTI VELY AND CAN NOT BE BROUGHT TO A TAX BY APPLICATION OF SECTI ON 11 AND 13 OF THE ACT. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE GROUN DS OF APPEAL AND THE ORDER OF THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISIONS CITED BY THE LD. A.R. THE UNDISPUTED FACTS ARE THA T THE ASSESSEE RECEIVED INCOME OF RS.66,06,853/- BY WAY OF DIVIDEND AND RS.1,82,866/- BY WAY OF AGRICULTURAL INCO ME WHICH WERE CLAIMED EXEMPT UNDER SECTION 10(34) AND 10(1) OF THE ACT RESPECTIVELY. THE AO DENIED THE SAID EXEMP TION UNDER SECTION 10 AS CLAIMED BY THE ASSESSEE AND INVOKED T HE ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 4 PROVISION OF SECTION 11 TO THE SAID INCOME BY HOLDI NG THAT WHERE THE INCOME IS DERIVED FROM A PROPERTY HELD UN DER TRUST THAT HAS TO BE DEALT WITH IN ACCORDANCE WITH THE PR OVISIONS OF SECTION 11 AND PROVISIONS OF SECTION 10 HAS NO APPL ICATION. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AF TER FOLLOWING THE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT(E) VS. JASUBHAI FOUNDATION (SUPRA) AND JAMSETJI TATA TRUST VS. JDIT (SUPRA). FROM THE PERUSAL OF THE ABOVE DECISIONS, IT IS APPARENT THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED IN ITS FAVOUR BY THE RATIO LAID DOWN BY THE HONBLE BO MBAY HIGH COURT AND CO-ORDINATE BENCH OF THE TRIBUNAL HOLDING THAT WHERE THE TRUST DERIVES INCOME FROM DIVIDEND OR ANY OTHER EXEMPT INCOME WHICH IS CLAIMED EXEMPT UNDER SECTION 10 OF THE ACT, THE SAME COULD NOT BE BROUGHT TO TAX BY INV OKING THE PROVISION OF SECTION 11 OF THE ACT. KEEPING IN VIE W THE FACTS IF THE ASSESSEE IN THE LIGHT OF THE DECISIONS AS DISCU SSED HEREINABOVE , WE DISMISS THE APPEAL OF THE REVENUE BY UPHOLDING THE ORDER OF LD. CIT(A). ITA NO.185/M/2017 8. THE GROUND RAISED BY THE ASSESSEE IS AS UNDER: ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ERRED IN UPHO LDING THE ACTION OF THE ASSESSING OFFICER OF DENYING THE BENEFIT OF SECTION 11 OF THE I.T ACT, IN RESPECT OF ADVANCE PAID OF RS.1,15,00,000/- GIVEN BY THE APPEL LANT FOR CONSTRUCTION OF BUILDING WHICH IS TOWARDS THE OBJECT OF THE TRUST. 9. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.1,15,00,000/- BY LD . CIT(A) AS MADE BY THE AO BY DENYING THE BENEFIT OF SECTION 11 OF THE ACT IN RESPECT OF ADVANCE GIVEN BY THE ASSESSEE FO R THE CONSTRUCTION OF THE BUILDING OF THE TRUST. ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 5 10. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A T RUST WHICH CARRIES ON THE ACTIVITY OF IMPARTING EDUCATION. THE ASSESSEE ACQUIRED LAND AT NASHIK, AURANGABAD AND AHMEDABAD FO R THE CONSTRUCTION OF BUILDING TO BE USED FOR OR IN CONNE CTION WITH THE PURPOSES OF ACHIEVING THE OBJECTS OF THE ASSESS EE. THE ASSESSEE HAS ACCUMULATED UNDER SECTION 11(2) OF THE ACT THE FOLLOWING AMOUNTS TO BE SPENT TILL 31.03.2012: A.Y. RS. 2007-08 2,01,21,212/- 2008-09 18,28,211/- TOTAL 2,19,49,423/- AGAINST THE SAID EXPENDITURE THE ASSESSEE HAS INCU RRED THE FOLLOWING EXPENDITURE: A.Y. RS. LAND PURCHASED AT NASHIK 86,00,000/- ADVANCE GIVEN FOR CONSTRUCTION 1,15,00,000/- OTHER REPAIR WORK CARRIED AT NASHIK, AURANGABAD AND AHMEDABAD 18,49,423/- TOTAL 2,19,49,423/- THE AO DURING THE ASSESSMENT PROCEEDINGS ACCEPTED THE EXPENDITURE INCURRED BY THE ASSESSEE AS APPLICATION OF INCOME TO THE TUNE OF RS.86,00,000/- FOR PURCHASE OF LAND A T NASHIK AND RS.18,49,423/- TOWARDS REPAIRS. HOWEVER, THE AO DISALLOWED RS.1,15,00,000/- WHICH REPRESENTED THE ADV ANCE GIVEN FOR CONSTRUCTION WORK AT NASHIK AND AURANGABA D BY OBSERVING THAT THE PAYMENT WAS MADE AT THE FAG END OF THE ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 6 YEAR TO EXTEND THE TIME LIMIT FOR UTILIZATION OF THIS AMOUNT AS PROVIDED UNDER SECTION 11(2) OF THE ACT. 11. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) UPHE LD THE ASSESSMENT ORDER BY HOLDING THAT AO RIGHTLY MADE TH E ADDITION BY RELYING ON THE JUDGMENT IN CASE OF CIT VS. SHREE P. SUBRAMANIAM RELIGIOUS TRUST (2009) 179 TAXMAN 144. 12. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE AO HAS COMPLETELY IGNORED THE FACT THAT THERE WAS AN O PENING BALANCE OF ADVANCE GIVEN IN EARLIER YEAR FOR CONSTR UCTION PURPOSES AND SIMILAR TYPE OF PAYMENT WAS MADE DURIN G THE YEAR. THE LD COUNSEL FURTHER ARGUED THAT SAID ADVANC E WAS FINALLY CAPITALIZED AND TRANSFERRED TO THE ASSET AC COUNT ON THE COMPLETION OF THE PROJECT. THE ASSESSEE SUBMITTED THAT DURING THE YEAR RS.1,15,00,000/- WAS PAID AS ADVANCE ON VARIO US DATES NAMELY RS.75 LAKHS ON 10.02.2012 AND RS.20 LAK HS ON 29.03.2012 FOR AURANGABAD AND RS.20 LAKH ON 23.02.20 12 FOR NASHIK. THE LD. A.R. ALSO PLACED BEFORE THE BENCH A CE RTIFICATE FROM THE ARCHITECT AND COMPLETION CERTIFICATE FROM THE MUNICIPAL CORPORATION OF AURANGABAD DURING THE YEAR . THUS THE LD. A.R. SUBMITTED THAT THE AO HAS CONFUSED THE F ACTS OF THE CASE BY WRONGLY CONSIDERING THE PAYMENT MADE FO R AURANGABAD UNIT AS PAYMENT MADE FOR NASHIK UNIT. TH E LD. A.R. PRAYED BEFORE THE BENCH THAT THE MATTER SHOULD B E REFERRED BACK TO THE FILE OF THE AO TO VERIFY THE O PENING BALANCE ALONG WITH THE CURRENT ADVANCE OF RS.95 LAKH S SPENT ON AURANGABAD PROJECT WHICH WAS COMPLETED IMMEDIATE LY IN THE NEXT YEAR AND THE BALANCE OF RS.20 LAKHS PAID FO R NASHIK UNIT WAS ALSO USED FOR THE PURPOSE OF CONSTRUCTION. FINALLY, ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 7 THE LD. A.R. PRAYED BEFORE THE BENCH THAT CONSIDERI NG ALL THE FACTS AS PLACED BEFORE THE BENCH THE MATTER MAY BE RESTORED TO THE FILE OF THE AO FOR NECESSARY VERIFICATION OF THESE FACTS AND ALLOW THE CLAIM ACCORDINGLY. 13. THE LD. D.R., ON THE OTHER HAND, STRONGLY OBJECTE D TO THE ARGUMENTS OF THE LD. A.R. BY SUBMITTING THAT ALL THESE DOCUMENTS AS PLACED BEFORE THE TRIBUNAL WERE AFTERT HOUGHT AND WERE NEVER PLACED BEFORE THE AUTHORITIES BELOW. THE LD DR CONTENDED THAT ASSESSEE HAS CREATED ALL THESE EVIDE NCES IN ORDER TO JUSTIFY HIS CLAIM. THE LD. D.R. PRAYED BEFOR E THE BENCH THAT THE ORDER OF LD. CIT(A) SHOULD BE AFFIRM ED BY DISMISSING THE APPEAL OF THE ASSESSEE. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT T HE ASSESSEE HAS PLACED BEFORE THE BENCH SOME ADDITIONA L EVIDENCES WHICH WERE NOT PLACED BEFORE THE AUTHORIT IES BELOW AND IN SUCH AB EVENT/SCENARIO THE MATTER HAS TO GO BACK TO THE FILE OF THE AO SO THAT THE ISSUE COULD BE DECI DED AFTER DUE EXAMINATION AND APPRECIATION OF THESE EVIDENCES WHI CH HAVE BEEN FILED BEFORE THE TRIBUNAL FOR THE FIRST TIME. NEEDLESS TO STATE THAT ADVANCE GIVEN FOR THE CONSTRUCTION OF BU ILDING HAS TO BE ALLOWED AS APPLICATION OF INCOME OF THE TRUST. ACCORDINGLY, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO WI TH THE DIRECTION TO DECIDE THE SAME AS PER THE FACTS AND L AW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. ITA NO.185/M/2017 & ITA NO.119/M/2017 M/S. TATWAJNANA VIDYAPEETH NIRMAL NIKETAN 8 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THAT OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26.06.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26.06.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.