Kasthuri Sreenivasan Trust, CHENNAI V. ITO, Coimbatore

ITA 1913/CHNY/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2674 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI IRS JCTI
• Assessee Lawyers: R BHAVYA
• Keywords: Charitable institution; Earning of tax free income
• Section: 11A; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1913/MDS/2014 # % &% / ASSESSMENT YEAR : 2010-2011 M/S. KASTHURI SREENIVASAN TRUST CULTURE CENTRE, NO.16, AVINASHI ROAD, CIVIL AERODROME POST, COIMBATORE 641 014. VS. THE INCOME TAX OFFICER, COMPANY WARD I, COIMBATORE 641 018. [PAN AAATK 3583C] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : MS. R. BHAVYA, ADVOCATE +,'( ) * /RESPONDENT BY : SHRI. A.B. KOLI, IRS, JCTI. ! ) - / DATE OF HEARING : 07-01-2016 ./& ) - / DATE OF PRONOUNCEMENT : 13-01-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)- I, COIMBATORE IN ITA NO.1913/MDS/2014 :- 2 -: ITA NO.74/1314 DT. 23.05.2014 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2010-2 011. 2. THE ASSESSEE IS A CHARITABLE INSTITUTION RAISED ONL Y ONE SUBSTANTIVE GROUND IN RESPECT OF INCLUSION OF DIVI DEND INCOME, THOUGH EXEMPTED U/S.10(35) OF THE ACT FOR THE PURPOSE OF C OMPUTATION OF INCOME U/S.11 OF THE ACT BY THE ASSESSING OFFICER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PUBLIC CHARITABLE TRUST REGISTERED U/S.12A OF THE ACT. FO R THE ASSESSMENT YEAR 2010-2011 RETURN OF INCOME WAS FILED ON 12.08. 2010 AND THE CASE WAS SELECTED FOR SCRUTINY FOLLOWED BY NOTICE U/S.14 3(2) OF THE ACT. IN COMPLIANCE TO THE NOTICE, THE LD. AUTHORISED REPRES ENTATIVE FOR ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED DETAILS CALLED FOR, PRODUCED BOOKS OF ACCOUNTS FOR VERIFICATION. THE A SSESSING OFFICER AFTER VERIFYING THE FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE TRUST HAS RECEIVED DIVIDEND INCOME OF ;7,14,285/- AND CLA IMED IT AS EXEMPTED U/S.10(35) OF THE ACT AND ISSUED SHOW CAUS E NOTICE AND INFORMED THAT DIVIDEND INCOME THOUGH EXEMPTED FOR T AXATION PURPOSE BUT IN THE CASE OF TRUST, THE DIVIDEND INCOME SHOUL D BE SHOWN AS INCOME AND APPLIED FOR ATTAINMENT OF OBJECTS OF THE TRUST AND INCLUDED FOR THE PURPOSE OF COMPUTATION OF INCOME U/SEC. 11 OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE FIL ED EXPLANATIONS ON ITA NO.1913/MDS/2014 :- 3 -: THE ISSUE AND SUBMITTED THAT THE AGRICULTURAL INCOM E BEING EXEMPTED UNDER INCOME TAX NOT CONSIDERED FOR WORKING OUT APP LICATION OF INCOME AND THE SAME ANALOGY SHOULD BE APPLIED TO TH E ASSESSEE BASED ON THE DECISION OF CIT VS. NABHINANDAN DIGHAMBAR JAIN 257 ITR 91 (MP) BUT THE ASSESSING OFFICER IS OF THE OPINION THAT D IVIDEND INCOME CONSTITUTE INCOME FROM PROPERTY HELD UNDER THE TRU ST AS PER THE PROVISIONS OF SEC. 11A OF THE ACT AND HAS TO BE DI SCLOSED IN INCOME AND EXPENDITURE ACCOUNT AND APPLIED FOR ATTAINING T HE OBJECTS OF THE TRUST. THE ASSESSING OFFICER MADE ADDITION IN RESPE CT OF DEPRECATION AND DIVIDEND INCOME AND PASSED THE ORDER U/S.143( 3) OF THE ACT DATED 17.01.2013. AGGRIEVED BY THE ORDER OF THE AS SESSING OFFICER, ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS RAIS ED GROUNDS AND ALSO RELIED ON THE DECISION OF CIT VS. NABHINANDAN DIGHAMBAR JAIN (SUPRA) AND ARGUED THAT THE LD.AO HAS ERRED IN DRAWING THE CONCLUSION THAT THE DIVIDEND INCOME SHO ULD BE CONSIDERED FOR THE PURPOSE OF WORKING OUT 85% LIMIT IN COMPUT ATION OF INCOME U/SEC.11 OF THE ACT. THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) AFTER HEARING THE SUBMISSIONS AND CONSIDERING FACT UAL STIPULATIONS CONTAINED IN THE SEC. 11(1) OF THE ACT PARTLY ALLOW ED GROUNDS BY CONFIRMING THE FINDINGS OF THE ASSESSING OFFICER O N THE ISSUE OF ITA NO.1913/MDS/2014 :- 4 -: DIVIDEND INCOME AND OVERLOOKED ANALOGY OF THE JU DICIAL DECISION CITED AND CONCLUDED THAT DIVIDEND INCOME SHOULD ALS O BE CONSIDERED AS PER THE PROVISIONS OF SEC. 11 OF THE ACT AND UPHELD THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE C OMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS FILED AN APP EAL BEFORE THE TRIBUNAL 5. BEFORE THE TRIBUNAL, THE LD. AUTHORISED REPRESENTAT IVE REITERATED HIS SUBMISSIONS MADE BEFORE THE LOWER AU THORITIES AND ARGUED THE GROUNDS RAISED IN THE APPEAL AND RELIED ON THE DECISIONOF BOMBAY TRIBUNAL IN THE CASE OF JAMSETJI TATA TRUST VS. JCIT 161 TTJ 742 AND DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. DIVINE LIGHT MISSION 278 ITR 659. FURTHER, ARGUED THAT THE DIVIDEND INCOME BEING EXEMPTED U/S.10(35) OF THE ACT AND CANNOT BE PART O F THE APPLICATION OF THE INCOME FOR THE PURPOSE OF WORKING OUT COMPUT ATION U/SEC 11 OF THE ACT. EXEMPT INCOME CANNOT BE CONSIDERED FOR THE CALCULATION OF 85% APPLICATION OF FUNDS AS PER PROVISIONS OF THE ACT AND FURTHER LD. AUTHORISED REPRESENTATIVE SUPPORTED SUBMISSIONS WIT H THE DECISION OF BOMBAY HIGH COURT DECISION OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) VS. M/S. JASUBHAI FOUNDATION IN INCOME TAX APP EAL NO. 1310 OF 2013, DATED 1 ST APRIL, 2015 AND PLEADED TO EXCLUDE THE ITA NO.1913/MDS/2014 :- 5 -: DIVIDEND INCOME FOR CALCULATION OF COMPUTATION OF I NCOME FOR SECTION 11 OF THE ACT. 6. CONTRA TO THE SUBMISSIONS, LD. DEPARTMENTAL REPRES ENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND S UBMITTED THAT THERE IS A AMENDMENT TO SEC. 11(7) OF THE ACT AND AS PER THE AMENDMENT NOTHING CONTAIN IN SEC 10 SHALL APPLY TO EXCLUDE AN Y INCOME FOR CALCULATION OF INCOME U/SEC.11 OF THE ACT AND PLEA DED FOR DISMISSAL OF THE APPEAL. 7. WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND JUDICIAL OR DERS CITED. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE DIVIDE ND INCOME IS EXEMPTED U/S.10(35) OF THE ACT AND SHALL NOT BE PA RT OF THE APPLICATION OF INCOME FOR CALCULATION OF 85% LIMIT AS THE PROVISIONS OF SEC.11 OF THE ACT. FURTHER THE ANALOGY OF AGRICULTU RAL INCOME SHALL BE EFFECTIVELY APPLY TO THE CASE AND ARGUED VEHEMENTL Y FOR EXCLUSION OF DIVIDEND INCOME AND RELIED ON THE DECISION OF M/S. JASUBHAI FOUNDATION (SUPRA). WE ARE OF THE OPINION THAT THE DIVIDEND INCOME IS EXEMPTED U/S.10(35) OF THE ACT AND SUCH DIVIDEND INCOME CANNOT BE TAXED OR CONSIDERED FOR TRANSACTIONS OR APPLICATION OF FUNDS FOR ACTIVITIES OF THE TRUST. THE LD. DEPARTMENTAL REPR ESENTATIVE HAS ALLEGED THAT SEC.11(7) OF THE ACT IS AMENDED AND SH ALL APPLY TO THE ITA NO.1913/MDS/2014 :- 6 -: ASSESSEE BUT ON VERIFICATION, WE FOUND THAT THE AME NDMENT HAS COME INTO EFFECT FROM 01.04.2015 AND THE DECISION CITED BY THE LD. AUTHORISED REPRESENTATIVE SUPPORTING THE CASE IS S IMILAR TO THE DISPUTED ISSUE. WE FIND THAT THE PRESENT CASE IS S QUARELY COVERED WITH THE DECISION OF M/S. JASUBHAI FOUNDATION (SUPRA). ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THE DIVIDEN D INCOME FOR THE PURPOSE OF CALCULATION OF COMPUTATION OF INCOME FOR SEC.11 OF THE ACT AND ALLOW THE APPEAL IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1913/MDS/2014 IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 13TH DAY OF JANUARY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 0 / DATED:13.01.2016 KV 1 ) +#-34 54&- / COPY TO: 1 . '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :;% < / GF