Ahinsa Jain Dharmarth Sansthan, Delhi V. ITO, Ward- 58(3), New Delhi

ITA 224/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9925 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 11-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Non compliance; Condonation of delay; Capital expenditure
• Section: 147; 11; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: A, NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 224/DEL/2019 AY: 2015-16 AHINSA JAIN DHARMARTH SANSTHAN R-2, F-1,F-2, MADHU VIHAR I.P. EXTN DELHI 110 092 VS . ITO, WARD 58(3) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJESH JAIN, FCA REVENUE BY : SH. S.N.PANDEY, SR.D.R. DATE OF HEARING : 15/05/19 DATE OF PRONOUNCEMENT : 31/05/2019 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 30/12/18 PASSED BY LD. CIT (A)-23, NEW DELHI FOR ASSESSMENT YEAR 2015-16 ON FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED C1T(A) UPHELD THE ORDER PASSED BY THE ASSESSING OFFICER IN ASSESSING THE INCOME OF THE APPELLANT AT RS. 65,48,151/- AGAINST RETURNED INCOME OF RS. 2,22,295/-, WITHOUT CONSIDERING THE SUBMISSION OF THE APPELLANT JUDICIALLY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS NOT ELIGIBLE TO CLAIM THE BENEFIT ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 2 OF FIRST PROVISO TO SECTION 12A OF THE ACT, WHEREAS THE APPELLANT WAS GRANTED REGISTRATION U/S 12AA OF THE ACT BY CIT(EX) FOR THE ASSESSMENT YEAR 2016-17 ON 12 TH AUGUST 2016 AND ACCORDINGLY IT RELATE BACK TO PREVIOUS PENDING ASSESSMENTS. 2.1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSMENT OF IMPUGNED YEAR UNDER APPEAL WAS NOT PENDING AT THE TIME OF GRANTING REGISTRATION U/S 12AA OF THE ACT BY CIT(EX). 2.2. THAT THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT OTHERWISE ALSO NOT ELIGIBLE TO CLAIM BENEFIT OF FIRST PROVISO OF SECTION 12A OF THE ACT AS APPLICATION DATED 09 TH APRIL 2015 WAS REJECTED BY CIT(EX) VIDE ORDER DATED 12TH OCTOBER 2015. 2.3. THAT THE LEARNED CIT(A) DID NOT APPRECIATE THAT THE APPLICATION WAS NOT REFUSED ON MERIT BUT WAS REJECTED FOR NON COMPLIANCE OF NOTICE. 2.4.THAT THE LEARNED CIT(A) DID NOT APPRECIATE THE OBJECT OF INSERTION OF FIRST PROVISO TO SECTION 12A OF THE ACT, WHICH WAS INTENDED TO GRANT EXEMPTION OF INCOME U/S 11 READ WITH SECTION 12A OF THE ACT FOR THE PREVIOUS YEARS ON THE BASIS OF SUBSEQUENT REGISTRATION U/S 12AA OF THE ACT BY CIT(EX.). 2.5.THAT THE LEARNED CIT(A) DID NOT APPRECIATE THAT THE APPLICATION DATED 09 TH APRIL 2015 REJECTED BY CITFEX.) WAS ALSO FOR THE PERIOD FOR THE ASSESSMENT YEAR 2016-17, FINANCIAL YEAR 2015-16 AND SUBSEQUENTLY ACCEPTED VIDE ORDER 12 TH AUGUST 2016 WAS ALSO FOR THE ASSESSMENT YEAR 2106-17 AND HENCE THIRD PROVISO TO SECTION 12A IS NOT APPLICABLE. 3. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING ADDITION OF CORPUS DONATION OF RS. 4,00,000/- AS UNEXPLAINED INCOME, ON THE FACTS OF THE CASE AND AS PER LAW AS BOTH THE DONORS GAVE DONATION BY CHEQUE AND PROVIDED PAN. 3.1. WITHOUT PREJUDICE TO GROUND NO. 3, OTHERWISE ALSO AMOUNT OF RS. 4,00,000/- SHOULD HAVE TREATED AS VOLUNTARY DONATION AS INCOME OF THE APPELLANT FOR WHICH PROVISIONS OF APPLICATION OF INCOME U/S 11 OF THE ACT SHOULD HAVE BEEN APPLIED. ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 3 4. THAT THE LEARNED CIT(A) WITHOUT PREJUDICE TO ALL ABOVE GROUND ERRED IN REJECTING THE ALTERNATIVE CLAIM OF THE APPELLANT THAT DEPRECIATION ON CAPITAL EXPENDITURE OF RS. 59,25,856/- SHOULD HAVE BEEN ALLOWED TO THE APPELLANT AS ALL DETAILS OF CAPITAL EXPENDITURE AS PURCHASE OF MEDICAL EQUIPMENTS WERE FILED BY THE APPELLANT BEFORE THE ASSESSING OFFICER. 4.1. THAT THE LEARNED ASSESSING OFFICER FAILED TO PROVIDE ADEQUATE OPPORTUNITY TO THE APPELLANT AND ASSESSED THE INCOME OF THE APPELLANT AT RS. 65,48,151/- AGAINST THE RETURNED INCOME OF RS. 2,22,295/- WITHOUT GIVING SHOW CAUSE NOTICE. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234 B OF THE ACT WHICH IS NOT LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND OTHERWISE ALSO THE SAME IS EXCESSIVE. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: IT HAS BEEN SUBMITTED THAT ASSESSEE IS A CHARITABLE SOCIETY ENGAGED IN RENDERING CHARITABLE MEDICAL SERVICES TO POOR PATIENTS HAVING REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 (THE ACT), VIDE ORDER DATED 12/08/16 ISSUED BY LD.CIT(EXEMPTION) WHICH WAS EFFECTIVE FROM ASSESSMENT YEAR 2016-17. IT HAS BEEN SUBMITTED THAT LD. AO DID NOT ALLOW DEDUCTION OF CAPITAL EXPENDITURE INCURRED FOR CHARITABLE PURPOSES ON PLEA THAT LD.CIT(A) GRANTED REGISTRATION TO SOCIETY UNDER SECTION 12 AA FROM ASSESSMENT YEAR 2016-17. 3. AGGRIEVED BY ADDITION MADE BY LD.AO, ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) WHO UPHELD VIEW EXPRESSED BY LD.AO. ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 4 4. AGGRIEVED BY ADDITION MADE BY LD.CIT(A) ASSESSEE IS IN APPEAL BEFORE US NOW. 5. IT HAS BEEN SUBMITTED THAT PROVISO TO SECTION 12 A (2) OF THE ACT INSERTED BY FINANCE (NO. 2) ACT 2014 W.E.F. 01/10/14 PROVIDES THAT SECTION 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST FOR ANY ASSESSMENT YEAR PRECEDING AFORESAID ASSESSMENT YEAR FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE LD.ASSESSING OFFICER (LD.AO) AS ON DATE OF REGISTRATION. LD.AR PLACED RELIANCE UPON EXPLANATION TO THE AMENDMENT WHICH IS REPRODUCED HEREUNDER: APPLICABILITY TO EARLIER YEARS OF THE REGISTRATION GRANTED TO A TRUST OR INSTITUTION. THE EXISTING PROVISIONS OF SECTION 12A OF THE ACT PROVIDE THAT A TRUST OR AN INSTITUTION CAN CLAIM EXEMPTION UNDER SECTIONS 11 AND 12 ONLY AFTER REGISTRATION UNDER SECTION 12AA HAS BEEN GRANTED. IN CASE OF TRUSTS OR INSTITUTIONS WHICH APPLY FOR REGISTRATION AFTER 1ST JUNE, 2007, THE REGISTRATION SHALL BE EFFECTIVE ONLY PROSPECTIVELY. NON- APPLICATION OF REGISTRATION FOR THE PERIOD PRIOR TO THE YEAR OF REGISTRATION CAUSES GENUINE HARDSHIP TO CHARITABLE ORGANIZATIONS. DUE TO ABSENCE OF REGISTRATION, TAX LIABILITY GETS ATTACHED EVEN THOUGH THEY MAY OTHERWISE BE ELIGIBLE FOR EXEMPTION AND FULFILL OTHER SUBSTANTIVE CONDITIONS. THE POWER OF CONDONATION OF DELAY IN SEEKING REGISTRATION IS NOT AVAILABLE UNDER THE SECTION. IN ORDER TO PROVIDE RELIEF TO SUCH TRUSTS AND REMOVE HARDSHIP IN GENUINE CASES, IT IS PROPOSED TO AMEND SECTION 12A OF THE ACT TO PROVIDE THAT IN CASE WHERE A TRUST OR INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT, THE BENEFIT OF SECTIONS 11 AND 12 SHALL BE AVAILABLE IN RESPECT OF ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 5 ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IN ANY ASSESSMENT PROCEEDING FOR AN EARLIER ASSESSMENT YEAR WHICH IS PENDING BEFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGISTRATION, IF THE OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION IN THE RELEVANT EARLIER ASSESSMENT YEAR ARE THE SAME AS THOSE ON THE BASIS OF WHICH SUCH REGISTRATION HAS BEEN GRANTED. FURTHER, IT IS PROPOSED THAT NO ACTION FOR REOPENING OF AN ASSESSMENT UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN THE CASE OF SUCH TRUST OR INSTITUTION FOR ANY ASSESSMENT YEAR PRECEDING THE FIRST ASSESSMENT YEAR FOR WHICH THE REGISTRATION APPLIES, MERELY FOR THE REASON THAT SUCH TRUST OR INSTITUTION HAS NOT OBTAINED THE REGISTRATION UNDER SECTION 12AA FOR THE SAID ASSESSMENT YEAR. HOWEVER, THE ABOVE BENEFITS WOULD NOT BE AVAILABLE IN CASE OF ANY TRUST OR INSTITUTION WHICH AT ANY TIME HAD APPLIED FOR REGISTRATION AND THE SAME WAS REFUSED UNDER SECTION 12AA OR A REGISTRATION ONCE GRANTED WAS CANCELLED. THESE AMENDMENTS WILL TAKE EFFECT FROM 1 ST OCTOBER, 2014. (CLAUSE 81). 5.1. LD.COUNSEL SUBMITTED THAT AUTHORITIES BELOW DID NOT ACCEPT CONTENTIONS OF ASSESSEE SINCE, REGISTRATION WAS GRANTED TO ASSESSEE ON 27/04/16. LD.COUNSEL SUBMITTED THAT PURSUANT TO AMENDMENT TO SECTION 12 A (2) OF THE ACT, ASSESSEE IS ELIGIBLE TO TAKE BENEFIT OF SECTION 11 FROM THE DATE OF APPLICATION FOR REGISTRATION, WHICH WAS ORIGINALLY MADE ON 09/04/15. HE SUBMITTED THAT APPLICATION ORIGINALLY MADE WAS REJECTED BY LD.CIT(A), SINCE ASSESSEE HAD NOT SUBMITTED REQUIRED DETAILS ALONG WITH APPLICATION. HE SUBMITTED THAT SUBSEQUENTLY ASSESSEE WAS GRANTED REGISTRATION ON 12/08/16 ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 6 UPON FULFILMENT OF REQUIREMENTS EXPRESSED BY LD.CIT (A). LD.COUNSEL PLACED RELIANCE UPON DECISIONS OF COORDINATE BENCHES OF THIS TRIBUNAL: SH. SRI RAMAKRISHNA SAMITI VS DCIT REPORTED IN (2016) 156 ITD 646 (CALCUTTA) SNDP YOGAM VS ACIT (E) REPORTED IN (2016) 161 ITD 1 (COACHIN ) 5.2. LD. DR ON THE CONTRARY COULD NOT REBUT SUBMISSIONS ADVANCED BY LD.COUNSEL REGARDING AMENDMENTS BROUGHT IN AND INTENTION OF LEGISLATURE EXPRESSED IN EXPLANATORY NOTE. HE HOWEVER SUPPORTED VIEW EXPRESSED BY AUTHORITIES BELOW. 6. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 6.1. ADMITTEDLY ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12 AA OF THE ACT. IT IS ALSO AN ADMITTED POSITION THAT OBJECTS AND ACTIVITIES OF ASSESSEE AS ON DATE OF REGISTRATION AND OBJECTS AND ACTIVITIES AS ON DATE OF APPLICATION FIRST MADE BY ASSESSEE IS SIMILAR AND IDENTICAL WHICH WAS DURING YEAR ENDING 31/03/15. ASSESSEE IS INTO RENDERING A NOBLE CAUSE OF MEDICAL SERVICES TO POOR PATIENTS AND WE DONT SEE ANY REASON TO REJECT BENEFIT TO ASSESSEE UNDER SECTION 11 AND 12 OF THE ACT PURSUANT TO EXPRESS INTENTION OF LEGISLATURE WHICH IS CLEAR FROM EXPLANATORY NOTE REPRODUCED HEREINABOVE. WE THEREFORE DIRECT LD. AO TO GRANT BENEFIT TO ASSESSEE AS PRAYED FOR AND AS PER LAW UNDER SECTION 11 AND 12 OF THE ACT. ACCORDINGLY GROUND NO. 2 RAISED BY ASSESSEE STANDS ALLOWED. ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 7 7. GROUND NO. 3 RAISED BY ASSESSEE IS IN RESPECT OF CORPUS DONATION AMOUNTING TO RS. 4 LAKHS ADDED BACK TO ASSESSEE AS UNEXPLAINED INCOME. 7.1. LD.AR SUBMITTED THAT ASSESSEE HAS PROVIDED ALL DETAILS REGARDING SAME AND SAME SHOULD BE CONSIDERED AS PER LAW. 7.2. LD. DR ON THE CONTRARY SUBMITTED THAT A SUM OF RS.4 LAKHS HAS BEEN CONTRIBUTED BY 4 PARTIES AND LD.AO HAS ISSUED NOTICE UNDER SECTION 133 (6) TO ALL 4 PARTIES OUT OF WHICH 2 PARTIES HAVE CONFIRMED HAVING PAID THE AMOUNT. IN RESPECT OF OTHER 2, NO DETAILS HAS BEEN RECEIVED AND NO CONFIRMATION HAS BEEN PROVIDED BY SUCH PARTIES. HE THUS SUBMITTED TO CONSIDER ISSUE IN ACCORDANCE WITH LAW. 8. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 8.1. LD. AO IN PARA 4 OF THE ASSESSMENT ORDER CATEGORICALLY NOTES THAT 2 OF THE CORPORATE DONORS BEING KANUNA DEVI AND ELINA PAUL AMOUNTING TO RS. 2 LACS EACH HAS NEITHER BEEN CONFIRMED BY PARTIES, NOR ASSESSEE HAS MADE ANY EFFORTS TO PROVIDE DOCUMENTS AS REQUIRED IN ORDER TO ESTABLISH THE GENUINENESS. 8.2. WE ARE THEREFORE IN TOTAL AGREEMENT WITH ARGUMENT ADVANCED BY LD. DR. WE THEREFORE DIRECT PART RELIEF IN RESPECT OF THE SAME AND CONFIRM ADDITION ONLY TO AN EXTENT OF RS. 2 LACS THAT HAS NOT BEEN CONFIRMED BY PARTIES. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS PARTLY ALLOWED . ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 8 9. GROUND NO. 4 HAS BEEN RAISED BY ASSESSEE WHEREIN CLAIM OF DEPRECIATION ON CAPITAL EXPENDITURE AMOUNTING TO RS.59,25,856/- HAS BEEN REJECTED BY AUTHORITIES BELOW. 9.1. AS WE HAVE ALREADY ALLOWED CLAIM OF ASSESSEE IN GROUND NO. 2 HEREINABOVE, THIS GROUND BECOMES INFRUCTUOUS AS AN ALTERNATE CLAIM RAISED BY ASSESSEE. ACCORDINGLY THIS GROUND STANDS DISMISSED AS INFRUCTUOUS . 10. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED AS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2019. SD/- SD/- (PRASHANT MAHARISHI) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 31 ST MAY, 2019 *GMV COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO.224/DEL/2019 AY:2015-16 AHINSA JAIN DHARMARTH SANSTHAN, DELHI 9 DATE DRAFT DICTATED ON 31/05/2019 DRAFT PLACED BEFORE AUTHOR 31/05/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 31/05/19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.