Sri Guru Dattatreya Mattum, Nellore V. The Income Tax Officer(Exemption), Ward, , Guntur

ITA 230/VIZ/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3143 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SATYANARAYANA RAJU
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Charitable institution; Application of stay; Cost of acquisition; Reasonable cause; Fair market value; Onus to prove; Set aside; Capital Gains
• Section: 69C; 50C; 12A; 143(2); 11(1A); 2(A); 13; 10(23C); 148; 12; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 230 /VIZ/201 9 ( / A SSESSMENT Y EAR : 20 10 - 11 ) M/S SRI GURU DATTATREYA MATTUM D.NO.6 - 1 - 319 , STONE HOUSE PET PAPPULA STREET NELLORE [PAN : A AJTS1946E ] VS INCOME TAX OFFICER (EXEMPTIONS) WARD GUNTUR ( / APPELLANT) ( / RESPONDENT) STAY APPLICATION NO.36/VIZ/2020 (ARISING OUT OF I.T. A.NO. 2 3 0 /VIZ/201 9) ( / A SSESSMENT Y EAR : 20 10 - 11 ) M/S SRI GURU DATTATREYA MATTUM D.NO.6 - 1 - 319 , STONE HOUSE PET PAPPULA STREET NELLORE [PAN : A AJTS1946E ] VS INCOME TAX OFFICER (EXEMPTIONS) WARD GUNTUR ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHR I G.V.N.HARI, AR / RESPONDENT BY : S HRI B.SATYANARAYANA RAJU, DR / DATE OF HEARING : 2 4 .02.2020 / DATE OF PRONOUNCEMENT : 11 .0 3 . 20 20 2 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 2, GUNTUR IN APPEAL NO.10547/CIT(A) - 2/GNT/2017 - 18 DATED 20.02.2019 FOR THE ASSESSMENT YEAR (A.Y.)2010 - 11 AND THE STAY APPLICATION ALSO FILED BY THE AS SESSEE REQUESTING STAY OF THE OUTSTANDING DEMAND OF RS.32,16,824/ - FOR A PERIOD OF 6 MONTHS. SINCE THE APPEAL IS TAKEN UP FOR HEARING SIMULTANEOUSLY , THE STAY APPLICATION FILED BY THE ASSESSEE IS DISMISSED IN LIMINE. 2. GROUND NO.1 IS GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND NO.2 IS RELATED TO THE SUSTAINING THE ADDITION OF RS.60,94,067/ - BY THE LD.CIT(A) REPRESENTING LONG TERM CAPITAL GAINS. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HINDU RELIGIOUS CHARITABLE INSTITUTION , F OR THE RELEVANT ASSESSMENT YEAR 2010 - 11, THE ASSESSEE SOLD THE IMMOVABLE PROPERTIES SITUATED IN NELLORE AND HAS NOT FILED ANY RETURN OF INCOME. THEREFORE, THE ASSESSING OFFICER (AO) ISSUED NOTICE U/S 148 ON 28.03.2017 AND IN RESPONSE TO WHICH , THE ASSESSEE FILED A LETTER STATING THAT 3 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE THERE WAS NO TAXABLE INCOME BY WAY OF LONG TERM CAPITAL GAINS. SUBSEQUENTLY, THE ASSESSEE FILED THE NIL RETURN OF INCOME ON 23.08.2017 AND THE AO ISSUED NOTICE U/S 143(2) DATED 04.10.2017, TAKING UP THE CASE FO R SCRUTINY. 3.1. AS DISCUSSED EARLIER, THE ASSESSEE SOLD THE IMMOVABLE PROPERTY CONSISTING OF 3 PLOTS FOR A CONSIDERATION OF RS.40,99,200/ - AND THE MARKET VALUE OF WHICH AS PER THE SRO WA S RS.67,41,740/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSE E SUBMITTED THAT THE ASSESSEE HA D RECEIVED THE PROPERTY BY GIFT FROM PREVIOUS OWNER AND THE COST OF LAND RECEIVED BY WAY OF GIFT WAS UN ASCERTAIN ABLE, HENCE , THERE WAS NO INCIDENCE OF LONG TERM CAPITAL GAINS. THE ASSESSEE HAS TAKEN SUPPORT FROM THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF B.C.SRINIVASA SETTY (1981) 128 ITR 294 (SC) AND ALSO THE DECISION OF HONBLE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF SRI JAGANNADHA SWAMY, SRI ANJANEYA SWAMY AND SRI VENTAKESTAWARA SWAMY TEMPLE, GUNTUR VS. ACIT, G UNTUR. THE ASSESSEE ALSO STATED BEFORE THE AO THAT THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A BY CIT(E) VIDE F.NO.CIT(E)/HYDERABAD / 279(03) / 12A /2016 - 17 DATED 25.09.2017 AND SUBMITTED THAT ONCE THE REGISTRATION IS GRANTED, THE BENEFITS OF EXEMPTION U/S 12A WOULD BE EXTENDED TO THE PENDING ASSESSMENTS OF EARLIER YEARS 4 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE ALSO AS PROVIDED IN THE FIRST PROVISO TO SECTION 12A(2) OF THE ACT. IN THE INSTANT CASE, AS ON THE DATE OF GRANTING THE REGISTRATION, THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR W AS ALSO PENDING BEFORE THE AO, HENCE , ARGUED THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION OF INCOME U/S 12A OF THE A CT AND THUS ARGUED THAT THERE IS NO CASE FOR MAKING THE ADDITION. 3.2. THE ASSESSEE ALSO EXPLAINED TO THE AO THAT THE AMOUNT OF SALE PROCEEDS WERE INVESTED IN FIXED DEPOSITS INITIALLY AND LATER ON, IT WAS UTILIZED FOR CONSTRUCTION OF THE MATTUM BUILDING AT NELLORE FOR THE TRUST. THEREFORE, ARGUED THAT THE CAPITAL GAINS ARE EXEMPT U/S 11(1A) OF THE ACT AS PER BOAR DS INSTRUCTION NO.883[XXI/I/74] DT.24.09.75. 3.3. THE NEXT ISSUE I S THE ASSESSMENT OF CAPITAL GAINS ADOPTING THE MARKET VALUE U/S 50C OF THE ACT . IN THIS REGARD, T HE ASSESSEE SUBMITTED THAT THE COST OF ACQUISITION OF THE PROPERTY WAS NIL, THEREFORE, ARG UED THAT THERE WERE NO CAPITAL GAINS AND HENCE, NO CASE FOR ADOPTION OF SRO VALUE U/S 50C OF THE ACT. THUS, REQUESTED THE AO TO DROP THE PROCEEDINGS. 4. THE AO NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE VIEWED THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF B.C.SRINIVASA SETTY(SUPRA) HAS NO APP LICATION IN THE ASSESSEES CASE SINCE 5 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE THE CASE LAW RELIED UPON BY THE ASSESSEE IS WITH REGARD TO TAXING THE GOOD WILL. 4. 1. SIMILARLY WITH REGARD TO EXTENSION OF EXEMPTION FOR THE PENDING ASSESSMENTS AS PROVIDED U/S 12A(2) OF THE ACT, THE AO VIEWED THAT THE PROVISO IS APPLICABLE W.E.F. 01.10.2014. SINCE THE IMPUGNED ASSESSMENT YEAR IS 2010 - 11, THE PROVISO TO SECTION 12A(2) WHICH WAS INSERTED BY THE FINANCE (NO.2) ACT, 2014 HAS NO APPLICATIO N IN THE ASSESSEES CASE. THE AO FURTHER OBSERVED THAT AS PER PROVISO TO SECTION 12A(2) OF THE ACT, THE ASSESSEE OUGHT TO HAVE CARRIED O N THE OBJECTS AND THE SAME ARE TO BE CONTINUED ON THE DATE OF GRANTING THE REGISTRATION. IN THE INSTANT CASE, THE AO W AS OF THE VIEW THAT THE ASSESSEES TRUST HAS NO SPECIFIC ACTIVITY BEFORE THE TRUSTS OBJECTS ARE REDUCED IN WRITING IN 2016 VIDE TRUST DEED DATED 28.04.2016. THUS VIEWED THAT EVEN IF IT IS CONSIDERED THAT THE PROVISO TO SECTION 12A(2) OF THE ACT IS APPLIC ABLE RETROSPECTIVELY, IN THE ABSENCE OF SPECIFIC OBJECTIVES BEFORE 2016, THE BENEFITS OF PROVISO TO SECTION 12A(2) CANNOT BE EXTENDED TO THE ASSESSEE. 4. 2 . THE THIRD GROUND ON WHICH THE ASSESSEES REQUEST FOR EXEMPTION WAS DENIED UNDER SECTION 11(1A). THE AO OBSERVED THAT THE CONSIDERATION RECEIVED WAS DEPOSITED IN SUBSEQUENT ASSESSMENT YEAR, THEREFORE THE 6 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11(1A) OF THE ACT , AS PER CBDT CIRCULAR NO.883 DATED 24.09.1975. 4. 3. WITH REGARD TO ASSESSMENT OF CAPI TAL GAINS AND THE ADOPTION OF FAIR MARKET VALUE AS PER SECTION 50C, THE AO HELD THAT SINCE , THE DECISION OF B.C.SRINIVASA SETTY (SUPRA) HAS NO APPLICATION, CAPITAL GAINS REQUIRED TO BE COMPUTED ADOPT ING THE SRO VALUE OF RS.67,41,740/ - . ACCORDINGLY THE AO TAKEN THE SRO VALUE OF RS.67,41,740/ - AND REDUCED THE INDEXED COST OF ACQUISITION AMOUNTING TO RS.6,47,673/ - BEING THE MARKET VALUE AS ON 01.04.1981AND ASSESSED THE CAPITAL GAINS AT RS.60,94,067/ - . 5. AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE C IT(A) AND THE LD.CIT(A) UPHELD THE ORDER OF THE AO STATING THAT THERE IS NO APPLICATION OF PROVISO TO SECTION 12A(2) OF THE ACT IN THIS CASE IN THE ABSENCE OF TRUST DEED AND FURTHER VIEWED THAT THE AMENDMENT IS EFFECTIVE W.E.F.01.10.2014, HENCE THE PROVISO TO SECTION 12A(2) WAS ALSO HELD TO BE NOT APPLICABLE TO THE ASSESSEE. 6. WITH REGARD TO APPLICATION OF PROVISIONS OF SECTION 50C OF THE ACT, THE LD.CIT(A) HELD THAT THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. B.C.SRINIVASA SETTY(SUPRA) IS NOT APPLICABLE AND THE COST OF 7 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE ASSET REQUIRED TO BE TAKEN AS O N 01.04.1981 AS PER THE FAIR MARKET VALUE IN THE ABSENCE OF ANY EVIDENCE AND THE LIST OF THE DONORS ACCORDINGLY REJECTED THE ASSESSEES PLEA OF NO CAPITAL GAINS ON SALE OF PROPERTY, SINCE, THE PROPERTY WAS ACQUIRED BY WAY OF GIFT. THE LD.CIT(A) FURTHER VIE WED THAT THE BURDEN OF PROOF LIES ON THE ASSESSEE TO PROVE THAT THE LAND WAS RECEIVED BY WAY OF GIFT. SINCE THE ASSESSEE FAILED TO PROVE THAT THE LAND WAS RECEIVED AS GIFT, UPHELD THE ACTION OF THE AO IN INVOKING SECTION 55(2) OF THE ACT , A CCORDINGLY, UPH ELD THE ASSESSMENT OF CAPITAL GAINS AS PER SRO VALUE. 7. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSEE TRUST IS RELIGIOUS TRUST AND GRANTED REGISTRAT ION U/S 12A OF THE ACT VIDE ORDER DATED 25.09.2017 BY THE LD.CIT(EXEMPTIONS). AS ON THE DATE OF GRANTING THE REGISTRATION, THE ASSESSMENT FOR THE A.Y.2010 - 11 WA S PENDING, THEREFORE, ARGUED THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION OF CAPITAL GAINS U/S 1 1 OF THE ACT AND ALSO ENTITLED FOR THE BENEFITS OF EXEMPTION AS PER PROVISO TO SECTION 12A(2) OF THE ACT AND HENCE SUBMITTED THAT THE INCOME OF THE ASSESSEE IS EXEMPT U/S 11 AND 12A OF THE ACT. THE ASSESSEE RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF GANTA SRI RAM EDUCATIONAL SOCIETY VS. ACIT DATED 30.06.2017, WHEREIN THE COORDINATE BENCH HAS TAKEN 8 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE VIEW THAT THE BENEFITS U/S 12A REQUIRED TO BE EXTENDED TO THE PENDING ASSESSMENTS ALSO. 8. WITH REGARD TO OBJECTS OF THE TRUST, T HE LD.AR SUBMITTED THAT THOUGH THE TRUST DEED WAS EXECUTED ON 28.04.2016 , THE ASSESSEE IS CARRYING ON THE CHARITABLE ACTIVITIES AS PROVIDED IN TRUST DEED DATED 28.04.2016 IN THE EARLIER YEARS ALSO AND THERE WAS NO CHANGES IN THE ACTIVITIES. THEREFORE, ARGUED THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN GIVING A FINDING THAT THERE WERE NO SPECIFIC ACTIVITIES PRIOR TO 28.04.2016, HENCE SUBMITTED THAT REJECTION OF ASSESSEES CLAIM FOR EXEMPTION OF INCOME U/S 11 AND 12 FOR THE ASSESSMENT YEAR IS UNJUSTIFIED MERELY BECAUSE THER E WAS NO WRITTEN DEED THOUGH THE ACTIVITIES WE RE CARRIED OUT BY THE ASSESSEE. 9. WITH REGARD TO EXEMPTION U/S 11(1A), THE ASSESSEE FILED EVIDENCE IN THE FORM OF COPIES OF FIXED DEPOSIT RECEIPTS MADE IN ANDHRA BANK DATED 08.03.2010 FOR DEPOSIT OF RS.25,00, 000/ - AND ALSO CERTIFIED COPY OF DHANALAKSHMI BANK, WHEREIN THE ASSESSEE HAS MADE THE DEPOSIT OF RS.16,04, 4 00/ - ON 09.03.2010 AND ARGUED THAT IT HAS MADE THE DEPOSITS IN THE SAME FINANCIAL YEAR IN WHICH THE PROPERTY WAS SOLD AND ARGUED THAT AO HAS DENIED T HE EXEMPTION ON MISTAKEN IMPRESSION THAT THE DEPOSITS WERE MADE IN THE SUBSEQUENT YEAR, HENCE , REQUESTED TO TREAT THE DEPOSIT AMOUNT 9 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE AS UTILIZATION OF SALE PROCEEDS AS PROVIDED IN BOARD INSTRUCTION NO.883 DT.24.09.1975. 10. WITH REGARD TO COMPUTATION OF C APITAL GAINS AND ADOPTION OF THE PROVISIONS OF SECTION 50C, THE LD.AR ARGUED THAT THE ASSESSEES INCOME REQUIRED TO BE DETERMINED U/S 11 TO 13 OF THE ACT BEING THE TRUST, HENCE THERE IS NO APPLICATION OF SECTION 50C OR COMPUTATION OF CAPITAL GAINS U/S 50C OF THE ACT. ACCORDINGLY, THE LD.AR REQUESTED TO SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 11. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE IS A HINDU RELIGIOUS CHARITABLE INSTITUTION AND CARRYING ON THE CHARITABLE ACTIVITIES FOR WHICH THE LD.CIT(EXEMPTIONS) HAS GRANTED REGISTRATION U/S 12A OF THE ACT. THE AO REJECTED THE APPLICATION OF PROVISO TO SECTION 12A(2) OF THE A CT AND THE REASONS FOR REJECTION WAS THAT THERE WAS NO TRUST DEED PRIOR TO 28.04.2016. THEREFORE, VIEWED THAT THE OBJECTS WRITTEN IN THE TRUST DEED DATED 28.04.2016 W ERE CARRIED OUT FROM THE DATE OF TRUST DEED, HENCE , HELD 10 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION OF INCOME FOR THE PERIOD OF PENDING ASSESSMENTS. WE HAVE GONE THROUGH THE TRUST DEED DATED 28.04.2016 AND FIND THAT THE TRUST WAS ESTABLISHED WAY BACK IN 1900 FOR PROPAGATING THE PHILOSOPHY OF DATTATREYA SWAMY AND LATER ON INSTALLED THE DEITIES OF SOWBAGYA SARASWATHI AMMAVARU, SRI PRASANNANJANEYA SWAMY, SRI DATTATREYA SWAMY AND SRI AADI SANKARAACHARYA AND CONTINUE TO PERFORM POOJAS. FOR PROPER ADMINIS TRATION AND MAINTENANCE OF THE TRUST SRI BRAHMANANDA SWAMY HAS CONSTITUTED THE TRUST WITH TRUSTEES OF LOCAL REPUTE WITH A DIRECTIVE THAT PROPERTIES ACQUIRED BY WAY OF GIFTS FROM VARIOUS DONORS SHALL BE VESTED IN THE NAME OF TRUS T AND INCOME FROM SUCH PROPERTIES SHALL BE APP LI ED FOR THE RELIGIOUS PURPOSE OF THE MUTT ONLY. HOWEVER, N O WRITTEN DOCUMENTS WERE PRESERVED. THE LD.AR SUBMITTED THAT PRESENT TRUST DEED WAS REDUCED IN WRITING FOR STATUTORY COMPLIANCE AND THE FUN D S ARE USE D FOR RELIGIOUS CHARITABLE PURPOSES FROM THE INCEPTION OF THE TRUST. THEREFORE, ARGUED THAT THERE IS NO REASON TO REJECT THE SAME. WE OBSERVE FROM THE TRUST DEED DATED 28.04.2016 THAT THE TRUST DEED WAS REDUCED IN WRITING ONLY FOR STATUTORY COMPLIANCE AN D IT WAS WRITTEN IN THE TRUST DEED THAT ALL THE OBJECTS AND PURPOSES FOR WHICH THE TRUST SHOULD PURSUE WERE TAKEN AS OBJECTS. THUS AS STATED BY THE LD.AR, WE ARE OF THE CONSIDERED OPINION THAT THE TRUST WAS CARRYING ON THE SAME ACTIVITY WHICH 11 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE WAS WRITTEN IN THE TRUST DECLARATION DATED 28.04.2016, HENCE, THERE IS NO CASE FOR REJECTION OF THE ASSESSEES CONTENTION FOR EXTENDING THE BENEFITS OF EXEMPTION U/S 11 AND 12 FOR PENDING ASSESSMENT AS PROVIDED U/S 12A(2) OF THE ACT. THOUGH THE ASSESSMENT YEAR RELATE D IS 2010 - 11, AS ON THE DATE OF GRANTING THE REGISTRATION, THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WA S PENDING. THIS TRIBUNAL HAS TAKEN A VIEW IN THE CASE OF GANTA SRI RAM EDUCATIONAL SOCIETY AND HELD THAT THE ASSESSEE WOULD BE ELIGIBLE FOR EXEMPT ION U/S 11 AND 12 FOR PENDING ASSESSMENTS AS ON THE DATE OF REGISTRATION. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT PARA NO.6 OF THE ORDER CITED SUPRA WHICH READS AS UNDER : 6. IN THE INSTANT CASE, THE ASSESSEE IS CARRYING ON EDUCATIONAL ACTIVI TY AND ENTITLED FOR REGISTRATION U/S 12A. COMMISSIONER OF INCOME TAX HAS GRANTED THE REGISTRATION U/S12A. THE FACT THAT THE ASSESSEE IS CARRYING ON EDUCATIONAL ACTIVITY AND ENTITLED FOR REGISTRATION U/S 12A IS NOT DISPUTED BY THE DEPARTMENT. THE OBJECTS OF THE TRUST ARE FOR THE CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2 OF SUB SECTION 15 OF THE I.T.ACT. THE ASSESSEE HAS APPLIED FOR EXEMPTION U/S 10(23C) BUT THE CHIEF COMMISSIONER OF INCOME TAX HAS REJECTED THE EXEMPTION CLAIMED U/S 10(23C). THE DELAY FOR MAKING APPLICATION FOR GRANTING REGISTRATION WAS DUE TO THE FACT THAT THE ASSESSEE HAS CHOSEN A PATH OF 10(23C). THE REGISTRATION WAS GRANTED W.E.F. 1.4.2011 ON 30.03.2012 AND THE CIT HAS NEVER REJECTED THE REGISTRATION EARLIER. HAD THE SOCIET Y DID NOT PREFER THE PATH OF 10(23C), IT WOULD HAVE APPLIED WELL IN ADVANCE FOR REGISTRATION U/S12A, THUS WE FIND REASONABLE CAUSE FOR DELAY IN APPLYING FOR THE REGISTRATION U/S 12A. AS ON THE DATE OF REGISTRATION, THE IMPUGNED ASSESSMENTS FOR THE ASSESSME NT YEAR 2010 - 11 AND 2011 - 12 ARE PENDING. THE FACTS OF THE CASE ARE SIMILAR TO THAT OF SREESREE RAMAKRISHNA SAMITY VS. DCIT REPORTED (SUPRA). THEREFORE, WE ARE OF THE OPINION THAT THE FACTS OF THE KOLKATA TRIBUNAL ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE AND ACCORDINGLY WE HOLD THAT EXEMPTION U/S 11 AND 12 SHOULD BE GRANTED TO THE ASSESSEE SUBJECT TO SATISFACTORY COMPLIANCE OF THE TERMS AND CONDITIONS LAID DOWN IN THE SECTION 11 AND 12 12 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE FOR THE PENDING ASSESSMENTS I.E. 2010 - 11 AND 2011 - 12. ACCORDINGL Y APPEAL OF THE ASSESSEE IS ALLOWED. IN THE INSTANT CASE, THE TRUST IS VERY OLD TRUST AND AS OBSERVED FROM THE TRUST DEED, IT IS CARRYING ON THE SAME OBJECTS PRIOR TO THE DATE OF TRUST DEED ALSO. THE AO DID NOT MAKE OUT A CASE THAT THE ASSESSEE IS NOT CARRYING ON THE SAME OBJECTS PRIOR TO TRUST DEED DT.28.04.2016. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION OF GANTA SRIRAM EDUCATIONAL SOCIETY (SUPRA), ACCORDINGLY WE HOLD THAT INCOME OF THE ASSESSEE IS ENTI TLED FOR EXEMPTION U/S 11 AND 12 OF THE ACT. HENCE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE ON THIS GROUND. 13. THE NEXT ISSUE IS REJECTION OF ASSESSEES CLAIM U/S 11(1A) OF THE ACT. IN THE INSTANT CASE, THE ASSESSEE SOLD THE PROPERTY FOR A CONSIDERATION OF RS.40,99,200/ - AND INVESTED IN FIXED DEPOSITS OF RS.4 1 , 04 , 4 00/ - AS PER THE COPIES OF EVIDENCES PLACED BEFORE US. THE DEPOSITS WERE MADE IN THE SAME FINANCIAL YEAR, BUT NOT IN THE SUBSEQUENT ASSESSMENT YEAR AS STATED BY THE LD.AO. DEPOSIT OF RS.25,00,000/ - WAS MADE IN ANDHRA BANK ON 03.03.2010 AND RS.16,04,400/ - ON 09.03.2010. THE BOARD HAS CLARIFIED IN INSTRUCTION NO.883 DT.24.09.1975 THAT INVESTMENT OF THE NET CONSIDERATION OF FIXED DEPOSIT WITH A BANK FOR A PERIOD OF SIX MONTHS AND ABOVE WOULD BE 13 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE REGARDED AS UTILIZ ED FOR ACQUIRING ANOTHER CAPITAL ASSET WITHIN THE MEANING OF SECTION 11 (1A) OF THE ACT. SINCE THE ASSESSEE HAS MADE THE INVESTMENT IN FIXED DEPOSITS FOR MORE THAN 6 MONTHS IN THE SAME FINANCIAL YEA R , WE HOLD THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION OF SALE CONSIDERATION U/S 11(1A) OF THE ACT AND THE SAME REQUIRED TO BE CONSIDERED AS FOR ACQUIRING ANOTHER CAPITAL ASSET. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. 14. THE NEXT ISSUE IS RELATED TO APPLICATION OF 50C FOR SALE CONSIDERATION OF THE IMMOVABLE PROPERTY. IN THE INSTANT CASE, THE ASSESSEE HAS SOLD THE PROPERTY CONSISTING OF 3 PLOTS FOR SALE CONSIDERATION OF RS.40 ,99,200/ - AND THE MARKET VALUE OF WHICH WAS RS.67,41,740/ - . IN THE EARLIER PARAGRAPHS, WE HAVE DECIDED THAT THE ASSESSEES INCOME IS ENTITLED FOR EXEMPTION U/S 11 AND 12 OF THE ACT. HAVING DECIDED THAT THE ASSESSEES INCOME IS EXEMPT U/S 11 AND 12 OF THE ACT, THE ASSESSEES INCOME REQUIRED TO BE COMPUTED AS PROVIDED IN SECTION 11 TO 13 OF THE ACT, BUT NOT UNDER OTHER PROVISIONS OF THE ACT. THEREFORE, WE AGREE WITH THE CONTENTION OF THE LD.AR THAT WHEN THE INCOME HAS TO BE COMPUTED U/S 11 TO 13 , APPLICATI ON OF SECTION 50C HAS NO RELEVANCE. SINCE THE ASSESSEE HAS INVESTED THE ENTIRE SALE CONSIDERATION OF RS.40.99 LAKHS IN FIXED DEPOSITS, THE ASSESSEE IS ENTITLED TO CLAIM 14 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE EXEMPTION U/S 11 OF THE ACT, THUS, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO U/S 50C OF THE ACT. THE ASSESSEES APPEAL IN GROUND NOS. 2(A) TO 2(D) IS ALLOWED. 15. GROUND NO.3(A) IS THE ADDITION OF RS.25,000/ - MADE BY THE AO WHICH WAS CONFIRMED BY THE LD.CIT(A). DURING THE ASSESSMENT PROCEEDINGS, TH E AO FOUND THAT THE ASSESSEE HAD RECEIVED THE SUM OF RS.25,000/ - TOWARDS DONATION FROM SRI SIDEHSWARANANDA BHARATHI SWAMY, BUT NOT REFLECTED THE SAME IN INCOME AND EXPENDITURE ACCOUNT. THE ASSESSEE EXPLAINED TO AO THAT THE SAID RECEIPT WAS CORPUS DONATION AND HENCE EXEMPT U/S 11(1)(D) OF THE ACT. SINCE THE AO REJECTED THE ASSESSEES CLAIM OF BENEFIT U/S 11 AND 12, THE AO TREATED THE DONATION AMOUNT AS INCOME FOR THE A.Y.2010 - 11 AND ACCORDINGLY BROUGHT TO TAX. 16. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ORDER OF THE AO. AGAINST WHICH THE ASSESSEE FILED APPEAL BEFORE US. 17. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, BOTH THE LOWER AUTHORITIES HAVE DISALLOWED THE CLAIM OF THE ASSESSEE FOR THE REASON THAT TH E ASSESSEE WA S NOT ENTITLED FOR BENEFIT U/S 11 AND 12 OF THE ACT. IN THIS ORDER IN GROUND NO.2, WE HAVE HELD 15 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE THAT THE ASSESSEES INCOME IS ENTITLED FOR EXEMPTION U/S 11 AND 12 OF THE ACT. THEREFORE, WE HOLD THAT CORPUS DONATION RECEIVED BY THE ASSESSEE I S EXEMPT U/S 11(1 )( D ) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. ACCORDINGLY, THE ASSESSEES APPEAL IN GROUND NO.3 IS ALLOWED. 18. GROUND NO.4 IS RELATED TO THE ADDITION OF RS.9,00,000/ - U/S 69C OF THE ACT. THE AO NOTICED THAT THE ASSESSEE HAS PAID A SUM OF RS.9,00,000/ - TO MR.P.N.ROY. THE ASSESSEE EXPLAINED THAT IT HAS APPOINTED MR.P.N.ROY AS SECRETARY FOR MANAGEMENT OF THE MUTT AFFAIRS AND THIS AMOUNT WAS GIVEN TO HIM AS REIMBURSEMENT OF T HE CONSTRUCTION EXPENSES INCURRED BY SWAMIJI IN THE EARLIER YEARS FOR CONSTRUCTION OF MUTT BUILDINGS. THE AO MADE THE ADDITION SINCE THE ASSESSEE HAS NOT PROVIDED OPPORTUNITY TO CROSS VERIFY THE GENUINENESS OF THE ABOVE TRANSACTION U/S 69C OF THE ACT. 19 . AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A), BUT DID NOT SUCCEED, THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US. 20. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE PROVISO TO SECTION 69C IS INVOKED IN A S ITUATION WHERE THE ASSESSEE INCURS EXPENDITURE AND OFFERS NO EXPLANATION ABOUT THE SOURCE OF 16 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE SUCH EXPENDITURE. IN THE INSTANT CASE, THE AO HAS NOT DOUBTED THE SOURCE OF EXPENDITURE AND HE SIMPLY MADE THE ADDITION , FOR NOT OFFERING THE CROSS VERIFICATION OF THE GENUINENESS OF THE TRANSACTION. FROM THE ORDER OF THE AO, IT IS CLEAR THAT THE AMOUNT WAS PAID BY CHEQUE TO MR.P.N.ROY AND THE EXPENDITURE WAS INCURRED BY SRI SIDHESWARANANDA BHARATHI SWAMY WHICH WAS REIMBURSED BY THE MUTT. THE SOURCE AND THE GENUI NENESS OF EXPENDITURE WAS EXPLAINED BY THE ASSESSEE. THEREFORE, WE FIND NO REASON TO MAKE ADDITION AND HENCE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED AND THE STAY APPLICATION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2020. SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 11 . 0 3 .20 20 L.RAMA, SPS 17 I.T.A. NO. 230/VIZ/2019 AND SA NO.36/VIZ/2020, A.Y.2010 - 11 SRI GURU DATTATREYA MATTUM, NELLORE / COPY OF THE ORDER FORWARDED TO : - 1. / THE ASSESSEE - M/S SRI GURU DATTATREYA MATTUM, D.NO.6 - 1 - 319 STONE HOUSE PET, PAPPULA STREET, NELLORE 2 . / THE REVENUE INCOME TAX OFFICER (EXEMPTIONS) WARD, GUNTUR 3. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) , HYDERABAD 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM