The ADIT(Exemption), Bhavnagar V. Shri Maruti Rural Development Association, Bhavnagar

ITA 1928/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85672 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Bogus purchase; Charitable institution; Cancellation of registration
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA.NO.1928/AHD/2011 (ASSESSMENT YEAR:2008-09) ADIT(EXEMPTION), BHAVNAGAR APPELLANT VS. SHRI MARUTI RURAL DEVELOPMENT ASSOCIATION, 202, SATYANARAYAN FLATS, ANANTWADI, BHAVNAGAR RESPONDENT PAN: AABTM5288P /BY APPELLANT : SHRI ROOPCHAND, SR.D.R. /BY RESPONDENT : SHRI TUSHAR P. HEMANI, A.R. !' /DATE OF HEARING : 30.01.2015 #$% !' /DATE OF PRONOUNCEMENT : 19.02.2015 I.T.A. NO. 1928/AHD/11 A.Y. 08-09 [ADIT (EXEMP.) VS. SHRI MARUTI RURAL DEVL. ASSOCIATION) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XXI, AHMAD ABAD, DATED 19.05.2011 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE: (I) THE LD. CIT(A) HAS ERRED IN FACTS IN ALLOWING A SSESSEES APPEAL BY DELETING THE ADDITION MADE OF 8% OF GROS RECEIPT OF RS.1,62,92,417/- BY THE A.O. ON THE BASI S OF CONTRACT INCOME, BOGUS PURCHASE BILLS AND INGENUINE PUBLIC CONTRIBUTION. (II) THE LD. CIT(A) HAS ERRED IN FACTS IN DIRECTING TO TREAT THE ACTIVITIES AS CHARITABLE AND GRANTING THE EXEMP TION UNDER THE PROVISIONS OF SECTION 11,12, AND 13 OF TH E I.T. ACT, 1961, NOT CONSIDERING THE PROVISIONS U/S.11(4A), 13 REGARDING CANCELLATION OF REGISTRATI ON IF BENEFIT WAS TAKEN BY THE TRUSTEE. 2. ASSESSEE IS A CHARITABLE TRUST ENGAGED IN THE AC TIVITY OF CONSTRUCTION OF CHECK DAMS UNDER THE SCHEME OF GOVE RNMENT OF GUJARAT FOR THE UTILITY OF GENERAL PUBLIC AT LAR GE. ASSESSING OFFICER TREATED THE SAID ACTIVITY AS BUSINESS ACTIV ITY AND DENIED EXEMPTION U/S. 11 IN VIEW OF SECTION 11(4A). CONSE QUENTLY, ASSESSING OFFICER ESTIMATED ASSESSEES INCOME AT RS.13,03,393/- BEING 8% OF TOTAL RECEIPTS OF RS.1,6 2,92,447/-. STAND OF ASSESSEE HAS BEEN THAT IN ASSESSMENT YEAR 2009-10, EXEMPTION U/S. 11 WAS DENIED BY ASSESSING OFFICER W HICH CAME TO BE ALLOWED BY CIT(A) AGAINST WHICH NO APPEAL HAS BEEN I.T.A. NO. 1928/AHD/11 A.Y. 08-09 [ADIT (EXEMP.) VS. SHRI MARUTI RURAL DEVL. ASSOCIATION) PAGE 3 PREFERRED BY REVENUE. FURHTER EXEMPTION CLAIMED U/ S.11 IN A.Y. 2010-11 HAS BEEN ALLOWED BY ASSESSING OFFICER WHICH HAS ALSO NOT DISPUTED BY REVENUE. THUS, IN SUBSEQUENT TWO ASSESSMENT YEARS, ISSUE AS TO EXEMPTION U/S.11 HAS BEEN DECIDED IN ASSESSEES FAVOUR AND SAME HAS ATTAINED FINALITY. IN THIS BACKGROUND, LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT FOLLOWING PRINCIPLES OF CONSISTENCY, EXEMPTION U/S.11 DESERVES TO BE GRANTED IN THE YEAR UNDER CONSIDERAT ION AS WELL. CONSEQUENTLY, QUESTION OF ESTIMATING ASSESSEES INC OME @10% DOES NOT ARISE. 2.1 WE FIND THAT ASSESSING OFFICER HAS NOT PROPERLY APPRECIATED THE FACTS OF ASSESSEES CASE. IT IS UN DISPUTED THAT ASSESSEE IS ENGAGED IN THE ACTIVITY OF CONSTRUCTION OF CHECK DAMS I.E. CONSTRUCTION OF SMALL DAMS IN VARIOUS CAT CHMENT AREAS TO PRESERVE WATER AND FACILITATE ITS USAGE AT A LATER DATE, AS PER SCHEME OF GOVERNMENT OF GUJARAT. AS PER SAI D SCHEME, ONLY PUBLIC CHARITABLE TRUSTS ARE ENTITLED TO UNDER TAKE THE WORK OF CONSTRUCTION OF CHECK DAMS. AS PER SCHEME OF GO VERNMENT OF GUJARAT, ONLY THOSE CHECK DAMS WHICH ARE REFUSED BY REGULAR CONTRACTORS ARE TO BE ALLOTTED TO SUCH TRUSTS. MOR EOVER, ONLY 80% OF ESTIMATED OR ACTUAL COST, WHICHEVER IS LOWER , IS TO BE PAID TO THE TRUST. REST OF FUNDING IS TO BE RAISED BY TRUST BY DONATION OR LABOUR FROM PUBLIC. TRUST HAS NOT RECE IVED ANY DONATION BUT THROUGH PUBLIC LABOUR, RAISED REMAININ G 20%. ASSESSING OFFICER HAS CONSIDERED THE AMENDED SECTIO N 2(15) WHICH WAS APPLICABLE FOR A.Y. 2009-10 AND NOT FOR T HE YEAR I.T.A. NO. 1928/AHD/11 A.Y. 08-09 [ADIT (EXEMP.) VS. SHRI MARUTI RURAL DEVL. ASSOCIATION) PAGE 4 UNDER CONSIDERATION. THERE IS ALSO REFERENCE OF SE CTION 13 REGARDING CANCELLATION OF REGISTRATION IF BENEFIT W AS TAKEN BY TRUSTEE. IT WAS NOT FOUND PROPER BY CIT(A) SINCE E XEMPTION U/S.11 HAS BEEN DENIED ON COUNT THAT ASSESSEE TRUST HAS PASSED ON UNDUE BENEFITS TO ITS TRUSTEES. THERE IS NO FINDING OF ASSESSING OFFICER IN THIS REGARD. IN THIS BACKGROU ND, IT WAS FOUND THAT ASSESSING OFFICER HAS WRONGLY CONCLUDED THAT ASSESSEE IS NOT ELIGIBLE FOR SECTION 11 AND ESTIMAT ED ASSESSEES INCOME @ 8%. CIT(A) HAS RIGHTLY ALLOWED EXEMPTION U/S.11 AND DELETED IMPUGNED ADDITION. ACCORDINGLY, ORDER OF CIT(A) IS UPHELD. 3. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE19TH DAY O F FEBRUARY, 2015. SD/- SD/- (N. S. SAINI) (SHAILEND RA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA & & & & ' ' ' ' ('% ('% ('% ('% / COPY OF ORDER FORWARDED TO:- 1. +, / REVENUE 2. / ASSESSEE 3. // 0 / CONCERNED CIT 4. 0- / CIT (A) 5. '45 , , / DR, ITAT, AHMEDABAD 6. 589 :; / GUARD FILE. BY ORDER / & ,