Nehru Yuva Kendra Snagathan, New Delhi V. DDIT (E), New Delhi

ITA 2287/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97418 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K AGGARWAL
• Assessee Lawyers: P DAM KANUNJNA
• Keywords: Benefit of exemption; Capital expenditure
• Section: 142(1); 12A; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E , NEW DELHI) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 2287/DEL/2012 ASSESSMENT YEAR : 2009-10 NEHRU YUVA KENDRA SANGATHAN, VS. DDIT (E), 2 ND FLOOR, CORE-IV, SCOPE MINAR INV. CIRCLE II, LAXMI NAGAR DISTRICT CENTRE, NEW DELHI VIKAS MINAR, NEW DELHI-110 092 GIR / PAN:AAATN1697G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. DAM KANUNJNA, SR. DR RESPONDENT BY : SHRI V. K. AGGARWAL, AR DATE OF HEARING : 17.09.2015 DATE OF PRONOUNCEMENT : ORDER PER KULDIP SINGH, JM: THE APPELLANT BY FILLING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE ORDER DATED 12.03.2012 PASSED BY LD. CIT(A) XXI, NE W DELHI FOR THE ASSESSMENT YEAR 2006-07 ON THE GROUNDS INTER ALIA T HAT: I) THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WE LL AS IN LAW IN NOT DELETING THE ADDITION OF R.13,66,51,300/- ON AC COUNT OF ALLEGED RECEIPTS IN CORPUS/CAPITAL FUND, EARMARKED ENDOWMEN T FUND (SPL. PRO. MYAS) AND EARMARKED ENDOWMENT FUND (SPONSORED PROG.). NOT PRESSED II) THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS WE LL AS IN LAW IN NOT ALLOWING THE DEDUCTION OF CAPITAL EXPENDITURE O F RS.2,02,91,661/-, WHICH WAS INCURRED FOR THE PURPOSE OF THE INSTITUTI ON REGISTERED U/S 12A/12AA. ITA NO.2287/DEL/2013 2 III) THE LD. CIT(A) HAS GROSSLY ERRED ON FACTS AS W ELL AS IN LAW IN NOT ALLOWING THE DEDUCTION OF RS.3,96,84,758/- ON A CCOUNT OF INTEREST INCOME NOT BELONGING TO THE APPELLANT. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE: DURIN G THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 U/S 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), THE CASE WAS SUBJECTED TO SCRUTINY. PURSUANT TO THE NOTICE ISSUED U/S 142(1) AND 143(2) OF THE ACT. . SHRI SANJEEV KACHCHAL, CA & AR ALONG WITH SHRI SANJ AY MEHRA, SR. ACCOUNTS OFFICER ATTENDED THE PROCEEDINGS FILED THE REQUISITE DOCUMENTS, BOOKS OF ACCOUNTS ETC. THE ASSESSEE SOCIETY GOT REG ISTERED U/S 12A W.E.F. 01.04.2006 VIDE REGISTRATION NO.S-17369 AND AS SUCH WAS NOT REGISTERED FOR THE ASSESSMENT YEAR 2006-07 AND SINCE THEN HAS BEEN OPERATING AS AN AUTONOMOUS BODY OF THE MINISTRY OF YOUTH AFFAIRS AN D SPORTS, NEW DELHI. 3. IT HAS BEEN STATED THAT THE ASSESSEE SOCIETY WAS ESTABLISHED BY THE GOVERNMENT OF INDIA IN 1972 WITH THE OBJECTIVE OF P ROVIDING THE NON STUDENT RURAL YOUTH WITH THE OPPORTUNITY TO GROW AND TO ACH IEVE NATIONAL GOAL. IN 1987, A SUITABLE MECHANISM WAS ENVISAGED TO SUPERVI SE, ADMINISTER AND MONITOR THE PROGRAM OF 247 NEHRU YUVA KENDRA ALL OV ER THE COUNTRY. THEREAFTER, THE ASSESSEE HAS ENLARGED THE FUNCTIONI NG OF NEHRU YUVA KENDRA IN 500 DISTRICTS IN INDIA. ASSESSEE SOCIETY WAS IN EXISTENCE SINCE 1986 BUT FILED THE INCOME TAX RETURN FOR THE FIRST TIME DECL ARING SURPLUS OF INCOME AS PER INCOME AND EXPENDITURE ACCOUNT AT RS.8,35,24,51 3/- AND CLAIMED EXEMPTION U/S 10 OF THE ENTIRE INCOME BUT THE ASSES SEE IS NOT NOTIFIED U/S 10 OF THE I. T. ACT, 1961. 4. FROM THE INCOME AND EXPENDITURE ACCOUNT, IT IS N OTED THAT THE ASSESSEE RECEIVED GRANTS / SUBSIDIES AT RS.54,89,00,000/-, FEE & SUBSCRIPTION AT ITA NO.2287/DEL/2013 3 RS.2,07,999/-, INTEREST INCOME RS.3,96,84,558/- AND OTHER INCOME AT RS.3,28,795/-. THE TOTAL RECEIPT RECEIVED BY THE AS SESSEE IS RS.58,91,21,934/. APART FROM THIS, ASSESSEE RECEIVED FUNDS WHICH ARE DIRECTLY CREDITED TO THE BALANCE SHEET WITHOUT BEING ROUTED THROUGH THE INCO ME & EXPENDITURE ACCOUNT, THE DETAILS OF WHICH IS AS UNDER: I) CORPUS / CAPITAL FUNDS RS.2,02,91,661/- II) EARMARKED ENDOWMENT FUND (SPL. PRO. MY AS) RS.9,98,12,351/- III) EARMARKED ENDOWMENT FUND (SPONSORED PROGRAM) RS.1,65,47,288 RS.13,66,51,300/- 5. SINCE THE ASSESSEE IS NOT REGISTERED U/S 12A OF THE ACT NOR NOTIFIED U/S 10(25C)(IV) THEREFORE, THE ASSESSEE CANNOT AVAIL TH E BENEFIT OF EXEMPTION U/S 11 AND AS SUCH AN AMOUNT OF RS.13,66,51,300/- IS DI RECTLY CREDITED TO THE BALANCE SHEET IS TO BE TAKEN AS REVENUE RECEIPT AND CREDITED TO THE INCOME OF THE SOCIETY. SO, THE INCOME OF THE ASSESSEE IS COM PUTED AS UNDER: TOTAL INCOME OF THE SOCIETY AS DECLARED RS.58,91 ,21,934/- ADD: REVENUE RECEIPTS TAKEN DIRECTLY TO BALANCE SHEET AS DISCUSSED ABOVE RS.13,66,51,300 /- RS.72,57,73,234/- LESS: EXPENDITURE ALLOWED AS DISCUSSED ABOVE (-) 12,00,000/- NET TAXABLE INCOME RS.72,45,73,234/- 6. THE ONLY SOURCE OF RECEIPT OF INCOME OF THE ASSE SSEE IS GRANTS AND SUBSIDIES, FEE AND SUBSCRIPTION, TRUST INCOME AND O THER INCOME AND TO EARN THESE INCOME, ASSESSEE HAS TO INCUR SUBSTANTIAL EXP ENSES. HOWEVER, THE EXPENSES OF RS.1,00,000/- PER MONTH IS ALLOWED AND THE TOTAL TAXABLE INCOME OF THE ASSESSEE HAS BEEN ASSESSED AT RS.72,45,73,23 4/-. 7. THE ASSESSEE HAS CHALLENGED THE ASSESSMENT ORDER BEFORE LD. CIT(A) WHO HAS PARTLY ALLOWED THE SAME. FEELING AGGRIEVED , THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BUY WAY OF FILING THE PRESEN T APPEAL. ITA NO.2287/DEL/2013 4 8. LD. A.R. FOR THE ASSESSEE CONTENDED INTER ALIA T HAT LD. CIT(A) HAS GROSSLY ERRED IN NOT ALLOWING DEDUCTION OF CAPITAL EXPENDITURE OF RS.2,02,91,661/-, INCURRED FOR THE PURPOSE OF INSTI TUTION REGISTERED U/S 12A/12AA; THAT LD. CIT(A) HAS ALSO GROSSLY ERRED IN NOT ALLOWING DEDUCTION OF RS.3,96,84,758/- ON ACCOUNT OF INTEREST INCOME N OT BELONGING TO THE APPELLANT; THAT THE A.O. HAS NOT COMPUTED THE INCOM E AS PER COMMERCIAL PRINCIPLE; THAT WHEN THE FUNDS LYING IN THE CORPUS OF ASSESSEE DO NOT BELONG TO HIM, NO QUESTION ARISES TO MAKE THE ADDITION. 9. ON THE OTHER HAND LD. D.R. CONTENDED THAT THE AM OUNT OF RS.3,96,84,758/- CLAIMED BY THE ASSESSEE IN GROUND NO.3 OF APPEAL DOES NOT FIND MENTION IN THE A.O.S AS WELL AS LD. CIT(A)S ORDER; THAT SINCE LD. CIT(A) HAS NOT AFFIRMED THE ORDER OF A.O., THE ASSE SSEE HAS GOT NO CAUSE OF ACTION TO FILE THE APPEAL AND PRAYED FOR DISMISSAL OF THE SAME. 10. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES AND GONE THROUGH THE DOCUMENTS RELIED UPON IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. LD. CIT(A) WHILE DECIDING GROUND NO.3 AS TO DIS ALLOWING THE EXPENSES OF RS.50,55,97,421/- RELIED UPON THE JUDGE MENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE CITED AS CIT AND ANOTHER KARNATAKA URBAN INFRA STRUCTURE DEVELOPMENT & FINANCE CORPORA TION (2006) 284 ITR 582 (KTK) WHEREIN IT IS CATEGORICALLY HELD THAT LD. CIT(A) W HILE DECIDING GROUND NO.3 OF APPEAL ON THE ISSUE OF DISA LLOWANCE OF RS.50,55,97,421/- CATEGORICALLY HELD IN PARA 6.1 OF THE IMPUGNED ORDER THAT: SO IT IS THE FINDINGS OF THE FACT THAT RECORDS ARE BEING AUDITED REGULARLY AND ASSESSEE HAS BEEN GRANTED 12AA. SO, WITHOUT POINTING OUT ANY DEFECT IN ACCOUNT, MAKING DISALLOWANCE TO T HE EXTENT OF RS.50,55,97,421/- HAS NO LEG TO STAND. SO ACTION O F A.O. IS TOTALLY MISCONCEIVED AND THE EXPENSES CLAIMED OF RS.50,55,9 7,421/- WHICH IS ITA NO.2287/DEL/2013 5 SHOWN IN THE BALANCE SHEET DESERVES TO BE ALLOWED. GROUND NO.3 OF THE APPELLANT IS DECIDED IN FAVOUR OF THE APPELLANT . 12. SIMILARLY, WHILE DECIDING GROUNDS NO.4, 5 AND 6 , LD. CIT(A) PRIMARILY RELIED UPON THE JUDGEMENT OF HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE CITED AS CIT VS HOUSING URBAN DEVELOPMENT CORPORATION LTD. 2010-TIOL-274-HON'BLE HIGH COURT-DEL-IT WHEREIN IT IS HELD BY THE HON'BLE HIGH COURT AS UNDER: INCOME TAX ASSESSEE IS A CANALIZING AGENCY FOR GOV T. OF INDIA WHICH ENTERS INTO AN AGREEMENT WITH A GERMAN AGENCY FOR F UNDING HOUSING SCHEMES FOR WEAKER SECTIONS-ASSESSEE AS PER THE SCH EME LOANS OUT THE FUNDS TO NGOS AND OTHER EARNS INTEREST- REVENUE T REATS THE SAME AS TAXABLE INCOME HELD, SINCE THE ASSESSEE NEVER HAD THE OWNERSHIP OF THE FUNDS AND IT WAS APPOINTED ONLY A CANALIZING AG ENCY, INTEREST INCOME CANNOT BE TAXED IN ITS HANDS REVENUES APP EAL DISMISSED. 12.1 HELD THAT SINCE IN THE CASE OF ASSESSEE, FUNDS BELONG TO EXCHEQUER AND NOT TO THE APPELLANT, THE FUNDS ARE RECEIVED FROM V ARIOUS MINISTRIES OF GOVERNMENT OF INDIA TO BE SPENT ON VARIOUS PROGRAMS ASSIGNED TO THE ASSESSEE AND AS SUCH NEITHER THE FUNDS NOR INTEREST BELONG TO THE APPELLANT AND HENCE, CANNOT BE TAXED IN ITS HANDS. LD. CIT(A ) IN THE CONCLUDING PORTION OF THE IMPUGNED ORDER FURTHER HELD THAT: 7.2 FROM THE REPLY OF THE LD. A.R. OF THE APPELLAN T, IT IS CRYSTAL CLEAR THAT THERE IS FORCE IN THE ARGUMENT OF THE LD . A.R. THAT IF CREDIT SIDE IS TAKEN, THE DEBIT SIDE HAS ALSO TO BE CONSID ERED. THEREFORE, THE NET EFFECT WOULD BE A DEDUCTION OF RS.6,02,11,885/- . A.O. IS DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT AFTER VERIFICAT ION. GROUNDS NOS. 4, 5 & 6 ARE PARTLY ALLOWED. 13. IN THE LIGHT OF UNDISPUTED FACT THAT THE ENTIRE FUNDS IN THE HANDS OF ASSESSEE WERE SUPPLIED BY VARIOUS MINISTRIES OF GOV ERNMENT OF INDIA WHICH WERE SUBJECT TO AUDIT AT TWO STAGES AND THE ASSESS EE ONLY WORKED AS SPECIAL ITA NO.2287/DEL/2013 6 PURPOSE VEHICLE (SPV) OF NATIONAL INTEREST, WHICH H AS BEEN CREATED WITH NO PROFIT MOTIVE AND IS WHOLLY FUNDED BY GOVERNMENT OF INDIA THROUGH MINISTRY OF YOUTH AFFAIRS AND SPORTS AND THE FACT THAT ASSES SEE IS DULY REGISTERED U/S 12A OF THE SOCIETIES REGISTRATION ACT W.E.F. 17.12. 1986 VIDE ORDER DATED 11.07.2011, LD. CIT(A) HAS RETURNED CATEGORICAL FINDINGS IN FAV OUR OF THE ASSESSEE QUA GROUNDS NO.2 & 3. LD. CIT(A) WHILE RETURNING FINDINGS ON GROUNDS NO.4, 5 & 6 DIRECTED THE A.O. T O ALLOW THE CLAIM OF THE APPELLANT / ASSESSEE AFTER VERIFICATION. SO WE ARE OF THE CONSIDERED OPINION THAT THE BENCH NEED NOT TO GO INTO THE MERI TS OF THE CASE AND THE FILING OF APPEAL BY THE ASSESSEE ITSELF IS MISCONCE IVED AS THE RELIEF SOUGHT FOR BY THE ASSESSEE BY FILING APPEAL BEFORE LD. CIT(A) HAS NOT BEEN DECLINED. IN OTHER WORDS, THE ASSESSEE HAS NO CAUSE OF ACTION TO FILE THE PRESENT APPEAL, CONSEQUENTLY, THE SAME IS HEREBY DISMISSED BEING NO T MAINTAINABLE. 14. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEP., 2015. SD./- SD./- ( INTURI RAMA RAO) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 23 RD SEP., 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.2287/DEL/2013 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 21/9 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21,23,23 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER