SNR Sons Charitable Trust, CHENNAI V. ITO, Coimbatore

ITA 1850/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8444 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-06-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Business income; Charitable institution
• Section: 12A; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER I T.A. NO. 1 849 & 1850 /MDS/201 6 ASSESSMENT YEAR S :20 11 - 12 & 2012 - 13 M/S. SNR SONS CHARITABLE TRUST, 395, SAROJINI NAIDU ROAD, SIDHAPUDUR, COIMBATORE 641 044. [PAN: AA B TS 0180P ] VS. THE INCOME TAX OFFICER, COMPANY WARD I, COIMB ATORE. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE / RESPONDENT BY : SHRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 0 8 . 0 9 .201 6 / DATE OF P RONOUNCEMENT : 23 . 0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH THE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS ) 2 , C OIMBATORE , BOTH D ATED 3 0 . 0 3 .20 1 6 FOR THE ASSESSMENT YEARS 2011 - 12 AND 2012 - 13. THE COMMON ISSUE RAISED IN BOTH THE APPEALS OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN DENYING THE BENEFIT OF SECTION 11 OF THE INCOME TAX ACT, 1961 [ ACT ] BY HOLDING THAT THE RENTAL I NCOME RECEIVED FROM LETTING OUT OF COMMUNITY HALL IS IN THE NATURE OF BUSINESS INCOME AND I.T.A. NO S . 1 849 & 1850 /M/ 16 2 THEREFORE, SUCH ACTIVITY CANNOT BE SAID TO BE FOR CHARITABLE PURPOSE AS PER THE PROVISO TO SECTION 2(15) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A TRUST REGISTERED UNDER SECTION 12A OF THE ACT AND FILED ITS RETURN ON 26.09.2011 DECLARING TAXABLE INCOME AT .NIL. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER HAS NOTICED THAT THE TRUST HAD INCOME FROM KALYANA MANDAPAM, WHICH IS OUTSIDE THE PURVIEW OF THE DEFINITION OF CHARITABLE PURPOSE AS PROVIDED IN SECTION 2(15) OF THE ACT. SINCE THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NOTICE UNDER SECTION 148 OF THE ACT WAS ISS UED ON 03.03.2014 AND THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT DATED 07.05.2014 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE INCOME FROM THE COMM UNITY HALL IS DIRECTLY HIT BY THE PROVISIONS OF SECTION 11(4A) AND ALSO SECTION 2(15) OF THE ACT AND THEREFORE, HE BROUGHT IT TO TAX. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. I.T.A. NO S . 1 849 & 1850 /M/ 16 3 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE L D. DR HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE OF EARLIER ASSESSMENT YEAR. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THE S AME. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE ASSESSEE HAS EARNED INCOME FROM THE COMMUNITY HALL AND IS DIRECTLY HIT BY THE PROVISIONS OF SECTION 11(4) AND ALSO SECTIO N 2(15) OF THE ACT SINCE THE INCOME IS NOT INCIDENTAL. WE HAVE ALSO PERUSED THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 VIDE ORDER DATED 12.06.2015, WHEREIN, THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: FROM THE ABOVE IT IS APPARENT THAT RUNNING OF THE COMMUNITY HALL BY THE ASSESSEE IS NOT AN ACTIVITY RELATABLE TO EDUCATION, MEDICAL RELIEF, AND RELIEF TO POOR AS PROVIDED UNDER THE ACT. AT THE MOST, IT CAN BE STRETCHED TO BE AN ACTIVITY FOR ADVANC EMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. HOWEVER, THE MATERIALS ON RECORD SHOW THAT THIS ACTIVITY OF THE ASSESSEE OF HIRING OUT THE COMMUNITY HALL EXCLUSIVELY FOR MARRIAGES AND HIGH LEVEL CONSUMER EXHIBITION AT A PRE - DETERMINED FEE IS A COMMER CIAL IN NATURE. IT CANNOT BE CONSIDERED AS AN ACTIVITY RELATED TO OR INCIDENTAL TO EDUCATION, MEDICAL RELIEF, RELIEF TO POOR ETC. MOREOVER IT IS APPARENT THAT THE COMMUNITY HALL IS NOT ATTACHED OR FORMING PART OF THE EDUCATIONAL INSTITUTIONS OR HOSPITALS O WNED BY THE ASSESSEE WHEREBY IT CAN BE SAID THAT DURING THE SPARE TIME WHEN THE ASSET IS NOT USED FOR EDUCATION/MEDICAL RELIEF ETC., IT IS COMMERCIALLY EXPLOITED. IF THE ASSET IS USED FOR EDUCATION/MEDICAL RELIEF ETC., AND DURING THE SPARE TIME THE ASSET I S COMMERCIALLY EXPLOITED, IN SUCH EVENT, PROBABLY IT COULD BE SAID THAT SUCH ACTIVITY TO BE INCIDENTAL TO THE I.T.A. NO S . 1 849 & 1850 /M/ 16 4 OBJECTS OF EDUCATION/MEDICAL RELIEF ETC., OF THE ASSESSEE TRUST. IN THE GIVEN CASE BEFORE US THE KALYANA MANDAPAM IS A DISTINCT AND SEPARATE ASSET SPECIALLY DESIGNED TO CONDUCT SUCH COMMERCIAL ACTIVITY. LOOKING AT THE NATURE OF THIS ACTIVITY CONDUCTED BY THE ASSESSEE TRUST, IT CAN BE CONSIDERED ONLY AS A COMMERCIAL ACTIVITY OF THE ASSESSEE TRUST. FURTHER THE CASE LAWS RELIED BY THE ASSESSEE WOULD NO T BE APPLICABLE TO THE CASE OF THE ASSESSEE, BECAUSE SECTION - 2(15) OF THE ACT WAS SUBSEQUENTLY AMENDED. FURTHER, SECTION - 11 (4) OF THE ACT PROVIDES AS FOLLOWS WHICH HAS BEEN POINTED OUT BY THE LD. ASSESSING OFFICER IN HIS ORDER: - SECTION.11 (4) FOR THE P URPOSES OF THIS SECTION PROPERTY HELD UNDER TRUST' INCLUDES A BUSINESS UNDERTAKING SO HELD, AND WHERE A CLAIM IS MADE THAT THE INCOME OF ANY SUCH UNDERTAKING SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSONS IN RECEIPT THEREOF, THE [ASSESSING] OFFI CER SHALL HAVE POWER TO DETERMINE THE INCOME OF SUCH UNDERTAKING IN ACCORDANCE WITH THE PROVISIONS OF THE ACT RELATING TO ASSESSMENT; AND WHERE ANY INCOME SO DETERMINED IS IN EXCESS OF THE INCOME AS SHOWN IN THE ACCOUNTS OF THE UNDERTAKING, SUCH EXCESS SHA LL BE DEEMED TO BE APPLIED TO PURPOSES OTHER THAN CHARITABLE OR RELIGIOUS PURPOSES . IN THE CASE GUJARAT INDUSTRIAL CORPORATION VS. ACIT IN 129 IT D 73 (2010) AHMADABAD IT HAS HELD THAT THE WORD 'INCLUDES' OCCURRING AT SECTION 11(4) MEANS THAT THERE IS A REFERENCE OF PROPERTY OR BUSINESS OF A TRUST WHICH IS A BUSINESS UNDERTAKING IN ADDITION TO THE OTHER PROPERTIES OF THE TRUST. IN THIS GIVEN CASE BEFORE US, THE COMMUNITY HALL OR MARRIAGE HALL WHATEVER MAY BE CALLED IS THE ASSET OF THE SEPARATE BUSINESS OF THE ASSESSEE WHICH FALLS APART FROM THE OTHER CHARITABLE ACTIVITIES CONDUCTED BY THE ASSESSEE. THEREFORE CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE REVENUE. SIN CE THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE TRIBUNAL AND FAIRLY CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE IN VIEW OF THE ABOVE DECISION, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. I.T.A. NO S . 1 849 & 1850 /M/ 16 5 6. FOR THE ASSE SSMENT YEAR 2012 - 13 IN I.T.A. NO. 1850/MDS/2016 ALSO, THE ASSESSEE HAS RAISED SIMILAR GROUNDS ON IDENTICAL FACTS. IN VIEW OF THE ABOVE DECISION, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2012 - 13 ALSO DISMISSED. 7 . IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 23 RD SEPTEMBER, 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 . 0 9 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.