Suvipra Shiksha Sansthan , Ghaziabad V. ITO, Exemption Ward , Ghaziabad

ITA 2036/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0830 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Capital asset; Charitable institution
• Section: 143(3); 12A; 11(1A); 11

Judgement Text

1 ITA NO. 2036/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-1 NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 2036/DEL/20 18 (A.Y 2014-15) SUVIPRA SHIKSHA SANSTHAN C-32, RDC RAJ NAGAR, GHAZIABAD UTTAR PRADESH AAHTS1409E (APPELLANT) VS ITO EXEMPTION WARD GHAZIABAD, UTTAR PRADESH (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 09/01/2018 PASSED BY CIT(A)- GHAZIABAD, FOR ASSESSMENT YEAR 2 014-15. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS OF THE CASE AND IN LAW, THE C OMMISSIONER OF INCOME TAX (APPEAL), GHAZIABAD ERRED IN CONFIRMING ACTION OF A SSESSING OFFICER TO MAKE ADDITION OF RS. 4(L62L430/- TO THE INCOME OF THE AP PELLANT IN RESPECT OF LONG TERM CAPITAL GAIN ALLEGED TO BE HAVE BEEN DERIVED O N THE SALE OF THE LAND. THE BASIS ADOPTED AND THE FINDING RECORDED IS SIMPLY BA SED ON SURMISES, CONJECTURES AND ON HYPOTHETICAL REASONINGS. 2. THAT ON THE FACTS OF THE CASE AND IN LAW, THE CO MMISSIONER OF INCOME TAX (APPEAL), GHAZIABAD ERRED IN NOT CONSIDERING THE FA CT THAT THE INCOME DERIVED APPELLANT BY SH. ROHIT TIWARI, ADV RESPONDENT BY SH. R. K. GUPTA, SR. DR DATE OF HEARING 03.06.2020 DATE OF PRONOUNCEMENT 09.06.2020 2 ITA NO. 2036/DEL/2018 ON THE SALE OF THE LAND AND DONATED TO THE CORPUS F UNDS OF ANOTHER TRUST ENGAGED IN THE SAME NATURE OF CHARITABLE ACTIVITIES IS APPLICATION OF INCOME IN VIEW OF THE PROVISIONS OF SECTION 11 (1 )(A) OF THE ACT . 3. THAT ON THE FACTS OF THE CASE AND IN LAW, THE C OMMISSIONER OF INCOME TAX (APPEAL), GHAZIABAD ERRED IN CONFIRMING THE ACT ION OF THE ASSESSING OFFICER TO DENY EXEMPTION AS AVAILABLE UNDER SECTION 11 (1) (A) OF THE ACT IN RESPECT OF DONATION MADE TO THE CORPUS FUND OF THE OTHER CHARI TABLE TRUST BEING APPLICATION OF INCOME THEREBY WORKING OUT LONG TERM CAPITAL GAIN IN VIEW OF SECTION 11 (1 A) OF THE ACT. THE ORDER PASSED IS BA D IN LAW. 3. THE RETURN OF INCOME WAS E-FILED BY THE ASSESSEE DECLARING NIL INCOME AGAINST WHICH ASSESSMENT WAS COMPLETED ON A TOTAL I NCOME OF RS. 46,62,430/- VIDE AN ORDER PASSED UNDER SECTION 143(3) ON 12.07. 2016 BY MAKING AN ADDITION OF RS. 46,62,430/- TO THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN. IT IS THE CASE OF THE SOCIETY WHICH IS DULY R EGISTERED WITH THE REGISTRAR OF SOCIETIES. THE SOCIETY HAS BEEN GRANTED REGISTRATI ON UNDER SECTION 12A VIDE ORDER DATED 23.09.2010 BY THE COMMISSIONER OF INCOM E TAX, GHAZIABAD. THE SOCIETY HAD PURCHASED LAND WHICH IS HELD BY THE ASS ESSEE FOR SEVERAL YEARS AND ON ACCOUNT OF FINANCIAL PROBLEMS THE SOCIETY COULD NOT ESTABLISH THE EDUCATIONAL INSTITUTE AS A RESULT OF WHICH A DECISI ON WAS TAKEN TO WIND UP THE SOCIETY. THE LAND WAS SOLD DURING THE YEAR UNDER CO NSIDERATION AND THE INCOME DERIVED ON THE SALE OF THE LAND HAD BEEN DONATED TO THE CORPUS FUND OF THE OTHER TRUST ENGAGED IN RUNNING EDUCATIONAL INSTITUT ES AS A CHARITABLE SOCIETY. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER T HAT THE INCOME DONATED RESULTED INTO APPLICATION OF INCOME LIABLE FOR EXEM PTION UNDER SECTION 11 OF THE ACT. THE ASSESSING OFFICER REJECTED THE SAID CLAIM AND MADE ADDITION UNDER THE HEAD LONG TERM CAPITAL GAIN. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE AS SESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE. 3 ITA NO. 2036/DEL/2018 5. THE LD. AR SUBMITTED THAT THE MAIN OBJECT OF THE ASSESSEE TRUST IS INCORPORATED IN THE CLAUSE 3 OF THE TRUST DEED BEIN G TO ESTABLISH, MAINTAIN AND OR RUN OR ASSIST EDUCATIONAL INSTITUTIONS AND WITHO UT ANY PREJUDICE TO ITS GENERALITY INCLUDES SCHOOLS, COLLEGES, UNIVERSITIES , ENGINEERING AND TECHNICAL COLLEGES, MEDICAL COLLEGES, PRIMARY/HIGHER SECONDAR Y/SECONDARY SCHOOLS, PHARMACY COLLEGES, DENTAL COLLEGES, GRADUATE/POST G RADUATE COLLEGES ETC. FURTHER, THE LD. AR SUBMITTED THAT SUB CLAUSE Z OF PARAGRAPH 3 OF THE TRUST DEED EXPLAINS THE PROCESS OF WINDING UP OF THE TRUS T WHEREIN IT HAS BEEN PROVIDED THAT AT ANY POINT OF TIME, THE WHOLE OF CO RPUS FUND AND OTHER FUNDS OF MOVABLE AND IMMOVABLE PROPERTIES BELONGING TO THE TRUST OR THE INSTITUTION RUN BY THE TRUST SHALL ONLY BE TRANSFERRED TO ANY OTHER PUBLIC CHARITABLE TRUST OR INSTITUTION HAVING THE SAME AIMS AND OBJECT FOR THE PUBLIC CHARITABLE PURPOSES. THE MAIN OBJECT AND AIM OF THE DONE SOCIETY WAS KEP T IN DEPTH AND THE PROPERTY SOLD/ASSET SOLD WERE DONATED TO THE OTHER PUBLIC CHARITABLE TRUST/INSTITUTIONS. THEREFORE, THE DONATIONS GIVEN BY THE ASSESSEE DONOR SATISFIES THE PROVISIONS OF SECTION 11(1) (A) OF TH E INCOME TAX ACT, 1961 AND ADDITION MADE BY THE ASSESSING OFFICER IS UNJUSTIFI ED AND THE SAME DESERVES TO BE DELETED. THE LD. AR SUBMITTED THAT THE COMMISSIO NER OF INCOME TAX (APPEAL), GHAZIABAD BOTH FAILED TO APPRECIATE THE F ACT AND ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER TO APPLY THE PR OVISIONS OF SECTION 11(1A) OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT THE COMM ISSIONER OF INCOME TAX (APPEAL), GHAZIABAD HAS FAILED TO APPLY JUDICIOUS M IND SO TO OBSERVE THAT SALE PROCEEDS SHOULD BE INVESTED IN THE PURCHASE OF ANOT HER LAND AND WRONGLY PROCEEDED TO TAX INCOME AS LONG TERM CAPITAL GAIN. THE LD. AR RELIED UPON THE DECISION OF THE TRIBUNAL IN CASE OF ACIT VS. M/S BH ARTIYA YUG VASHISTA SANGA, ITA NO.211/RAN/2014 ORDER DATED 9/9/2016 AND THE DE CISION OF THE HONBLE DELHI HIGH COURT IN CASE OF DIT VS. BAGRI FOUNDATIO N 377 ITR 193. 6. THE LD. DR SUBMITTED THAT THE ASSESSEE TRUST HAS DONATED THE FUND GENERATED FROM SELLING OF IMMOVABLE PROPERTY INSTEA D OF TRANSFERRING IMMOVABLE PROPERTY TO THE OTHER CHARITABLE TRUST WHICH WAS CL EARLY SET OUT IN CLAUSE Z OF 4 ITA NO. 2036/DEL/2018 PARA 3 OF THE TRUST DEED. THUS, THIS ITSELF SHOWS THAT THE ASSESSEE HAS NOT PROPERLY FULFILLED THE CONDITIONS OF SECTION 11(1)( A) OF THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE TRUST DEED OF THE ASSESSEE CLEARLY EXPLAINED THAT AT THE TIME OF WINDING UP WHAT PROCE DURE HAS TO BE FOLLOWED OF THE CORPUS FUND AND OTHER FUNDS INCLUDING MOVABLE A ND IMMOVABLE PROPERTY. SUB CLAUSE Z OF CLAUSE 3 OF THE TRUST DEED EXPLAI NS THE PROCESS OF WINDING UP OF THE TRUST WHEREIN IT HAS BEEN PROVIDED THAT AT A NY POINT OF TIME, THE WHOLE OF CORPUS FUND AND OTHER FUNDS OF MOVABLE AND IMMOVABL E PROPERTIES BELONGING TO THE TRUST OR THE INSTITUTION RUN BY THE TRUST SHALL ONLY BE TRANSFERRED TO ANY OTHER PUBLIC CHARITABLE TRUST OR INSTITUTION HAVING THE SAME AIMS AND OBJECT FOR THE PUBLIC CHARITABLE PURPOSES. THE ASSESSEE AT NO POINT OF TIME DIVERTED ANY FUNDS BEYOND THE SCOPE OF ITS TRUST DEED. IN FACT, THE IMMOVABLE PROPERTY WAS SOLD AND THE AMOUNT OF THE SALE PROCEEDS WERE DONAT ED TO THE CORPUS OF THE OTHER CHARITABLE SOCIETY/TRUST. SECTION 11(1)(A) CL EARLY SETS OUT THAT THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT AS THE SA LE PROCEEDS OF PROPERTY CANNOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. TH E ASSESSEE HAS DONATED THE SALE PROCEEDS TO THE CORPUS OF ANOTHER CHARITABLE S OCIETY/TRUST. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF BAGRI FOUNDATIONS (SUPRA) WHICH IS ALSO APT IN THE PRESEN T CASE. THE ASSESSING OFFICER AS WELL AS CIT(A) BOTH WRONGLY APPLIED SECT ION 11(1A) AS THERE IS NO ACQUISITION OF ANOTHER CAPITAL ASSETS. IN FACT, THE ASSESSEE SOCIETY INVOKED THE WINDING UP CLAUSE OF THE TRUST DEED. THEREFORE, THE CIT(A) WAS NOT RIGHT IN CONFIRMING THE ADDITIONS MADE UNDER SECTION 11(1A) OF THE ACT BY THE ASSESSING OFFICER. THE APPEAL OF THE ASSESSEE IS AL LOWED. 5 ITA NO. 2036/DEL/2018 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THIS 09 TH DAY OF JUNE, 2020 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 09/06/2020 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 2036/DEL/2018 DATE OF DICTATION 08.06.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08.06.2 020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 10.06.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 10.06.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10.06.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK