M/s. The Rander Sunny Vohra Panchayat, Surat V. The ACIT, Circle-3, Surat

ITA 2315/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0894 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADITYA SHUKLA SR D R
• Assessee Lawyers: RASESH SHAH
• Section: 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , ITA. NO.2315/AHD/2013 (ASSESSMENT YEAR:2010-11) M/S. THE RANDER SUNNY VOHRA PANCHAYAT, BOTAWALA MARG, RANDER, SURAT APPEL LANT VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3, SURAT RESPONDE NT PAN: AAATT2654F /BY APPELLANT : SHRI RASESH SHAH, A.R. /BY RESPONDENT :SHRI ADITYA SHUKLA, SR. D.R. ! '# /DATE OF HEARING : 14.07.2016 ! '# /DATE OF PRONOUNCEMENT : 19.07.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, SURAT, DATED 25.06.2013 FOR A.Y. 2010-11 ON FOLLOWING GROUND. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS )- ITA NO.2315/AHD/13 A.Y.10-11[M/S. THE RANDER SUNNY VOHRA PANCHAYAT VS. ACIT] PAGE 2 IV, SURAT HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.5,71,314/- ON ACCOUNT OF SHORT FALL IN APPLYING 85% OF INCOME OF TRUST WHEN INCOME OF TRUST IS EXEMPTED U/S.10(34)(35). 2. THE ISSUE BEFORE US IS WHETHER DIVIDEND INCOME OF RS.6,88,547/- SHOULD BE INCLUDED IN GROSS RECEIPTS OF THE TRUST FOR THE PURPOSE OF COMPUTING INCOME OF THE TR UST. ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE AMOUNT OF RS.5,71,314/ SHOULD NOT BE TREATED AS INCOME OF TRU ST. THIS AMOUNT OF RS.5,71,314/- WAS DETERMINED AFTER INCLUD ING DIVIDEND OF RS.6,88,547/- IN THE GROSS RECEIPTS OF TRUST. ACCORDING TO REVENUE AUTHORITIES, FOR COMPUTING THE INCOME OF THE TRUST ENGAGED IN RELIGIOUS ACTIVITIES, REAL INCOME OF TRUST HAS TO BE COMPUTED IN ACCORDANCE WITH NORMAL RULE OF ACCOUNTANCY. THE ACCUMULATION OR APPLICATION IN SE CTION 11(1)(A) OF THE ACT MUST BE OF A REAL INCOME. ACCO RDING TO REVENUE AUTHORITIES, AS A DIVIDEND OF RS.6,88,547/- WAS THE REAL INCOME OF ASSESSEE. ASSESSING OFFICER HAS RIG HTLY INCLUDED THE SAME IN THE INCOME OF ASSESSEE FOR WOR KING OUT THE EXEMPTED INCOME OF ASSESSEE U/S.11 OF THE ACT. ACCORDINGLY, ADDITION MADE BY ASSESSING OFFICER OF RS.5,71,314/- MADE TO THE TOTAL INCOME OF TRUST BY ASSESSING OFFICER WAS JUSTIFIED BY CIT(A). 2.1 BEFORE ME, LD. AUTHORIZED REPRESENTATIVE SUBMIT TED THAT CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.5,71,314/- ON ACCOUNT OF SHOR T FALL IN APPLYING 85% OF INCOME OF TRUST WHEN INCOME OF TRUS T IS ITA NO.2315/AHD/13 A.Y.10-11[M/S. THE RANDER SUNNY VOHRA PANCHAYAT VS. ACIT] PAGE 3 EXEMPTED U/S.10(34)(35) OF THE ACT. IN THIS REGARD , LD. AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION TO THE ORDER OF COMMISSIONER OF INCOME TAX VS. NABHINANDAN DIGAMBER JAIN (2002) 257 ITR 0091 (MP), WHEREIN ON THE POINT OF EXEMPTION U/S.11, IT WAS HELD THAT AGRICULTURAL INC OME WOULD NOT FORM PART OF TOTAL INCOME FOR THE PURPOSE OF COMPUTING THE ACCUMULATION OF INCOME IN EXCESS OF 2 5 % OF THE TOTAL INCOME AS LAID DOWN U/S.11 OF THE ACT AT RELEVANT POINT OF TIME. FURTHER, LD. AUTHORIZED REPRESENTAT IVE POINT OUT THAT SIMILAR ISSUE HAS BEEN AROSE BEFORE ITAT, MUMBAI J BENCH IN CASE OF ACIT (EXEMPTION)-I(1) VS. JAMSHETJ EE TATA TRUST IN ITA NO. 3807/MUM/2015, WHEREIN FOLLOWING T HE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. DIVINE LIGHT MISSION (2005) 278 ITR 659 (DEL) HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 9.6 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WE LL AS RELEVANT PROVISIONS OF LAW. THE EXEMPTION U/S 10 IS INCOME SPECIFIC IRRESPECTIVE OF THE STATUS/CLASS OF PERSON. WHEREAS THE EXEMPTION UNDER SECTION 11 IS PERSON SPECIFIC THOUGH ON THE INCOME DERIVED FROM THE PROP ERTY HELD UNDER THE TRUST. FURTHER THE EXEMPTION U/S 11 IS SUBJECT TO THE APPLICATION OF INCOME AND MODES OR F ORM OF DEPOSIT AND INVESTMENT. THE HON'BLE HIGH COURT IN T HE CASE OF CIT VS. DIVINE LIGHT MISSION (SUPRA) WHILE DEALING WITH AN IDENTICAL ISSUE HAS HELD IN PARA 9 AS UNDER : 'SO FAR AS QUESTION NO.4 OF PARAGRAPH NO. 3 WITH REGARD TO AGRICULTURAL INCOME IS CONCERNED, SECTION 10(5) OF THE ACT SPECIFICALLY POINTS OUT THAT AGRICULTURAL INCOME SHALL NOT BE INCLUDED IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR AND HENCE THE QUESTION IS REQUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THI S ITA NO.2315/AHD/13 A.Y.10-11[M/S. THE RANDER SUNNY VOHRA PANCHAYAT VS. ACIT] PAGE 4 INCOME IS NOT REQUIRED TO BE CONSIDERED AT ALL EVEN FOR THE PURPOSE OF SECTION 11 OF THE ACT.' 9.7 WHILE DECIDING THE QUESTION THAT THE AGRICULTUR AL INCOME WAS INCOME FROM THE PROPERTY HELD UNDER THE TRUST CAN BE DENIED EXEMPTION U/S 11 OF THE INCOME TAX ACT. THE HON'BLE HIGH COURT HAS HELD THAT THE AGRIC ULTURAL INCOME SHALL NOT BE INCLUDED IN THE COMPUTATION OF TOTAL INCOME OF PREVIOUS YEAR IN VIEW OF SECTION 10(5) OF THE ACT. THEREFORE, THIS INCOME IS NOT REQUIRED TO BE CONSID ERED FOR THE PURPOSE OF SECTION 11 OF THE ACT. IN THE CASE O F HIS HOLINESS SILASARI KASIVASI MUTHUKUMARASWAMI THAMBIRAN AVL & ORS. VS. AGRICULTURAL INCOME TAX OFFICER & ORS. (113 ITR 889) THE HON'BLE HIGH COURT OF MADRA HAS HELD THAT THE AGRICULTURAL INCOME DERIVED BY CHARITABLE OR RELIGIOUS TRUST IS EXEMPT U/S 10 COUL D NOT BE SAID TO BE BROUGHT TO TAX U/S 11 TO 13. SIMILAR VIE W HAS BEEN TAKEN IN THE SERIES OF DECISIONS AS RELIED UPO N BY THE LD. SENIOR COUNSEL WHEN THE QUESTION INVOLVED WAS T HE ALLOWABILITY OF EXEMPTION U/S 10, (22), (23) VS. SE CTION 11 AND 13. IN OUR VIEW THE EXEMPTION U/S 11 IS AVAILAB LE ON THE INCOME OF THE PUBLIC CHARITABLE /RELIGIOUS TRUS T OR INSTITUTION WHICH IS OTHERWISE TAXABLE IN THE HANDS OF OTHER PERSONS. THUS THE INCOME WHICH IS EXEMPT U/S 10 CANNOT BE BROUGHT TO TAX BY VIRTUE OF SECTION 11 AN D 13 OF THE ACT BECAUSE NO SUCH PRE CONDITION IS PROVIDED E ITHER U/S 10 OR 11 TO 13 OF INCOME TAX ACT. THEREFORE, SE CTION 11 TO 13 WOULD NOT OPERATE AS OVERRIDING AFFECT TO THE SECTION 10 OF THE ACT. THE LANGUAGE OF THESE PROVIS IONS DOES NOT SUGGEST THAT EITHER SECTION 10 IS SUBJECTE D TO THE PROVISIONS OF SECTION 11 TO 13 OR SECTION 11 TO 13 HAS ANY OVERRIDING AFFECT OVER SECTION 10. THEREFORE, THE B ENEFIT OF SECTION 10 CANNOT BE DENIED BY INVOKING THE PROVISI ONS OF SECTION 11 TO 13 OF THE ACT. ONCE THE CONDITIONS OF SECTION 10 ARE SATISFIED THEN NO OTHER CONDITION CAN BE FAS TENED FOR DENYING THE CLAIM UNDER SECTION 10 OF THE ACT. 9.8 IN VIEW OF THE ABOVE DISCUSSION AND FOLLOWING T HE VARIOUS DECISIONS (SUPRA) WE HOLD THAT THE DIVIDEND INCOME ON SHARES AND MUTUAL FUNDS AND LONG TERM CAP ITAL GAIN ON SALE OF SHARES AN EXEMPT U/S 10(34),10(35) AND ITA NO.2315/AHD/13 A.Y.10-11[M/S. THE RANDER SUNNY VOHRA PANCHAYAT VS. ACIT] PAGE 5 10(38) RESPECTIVELY AND CANNOT BE BROUGHT TO TAX BY APPLYING SECTION 11 AND 13 OF THE ACT. 2.2 FACTS BEING SIMILAR, SO FOLLOWING SAME REASONIN G, I AM NOT INCLINED TO CONCUR THAT THE INCOME OF TRUST U/S .10(34)(35) OF THE ACT CANNOT BE BROUGHT TO TAX BY APPLYING SEC TION 11 OF THE ACT. 3. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH DAY OF JULY, 2016. SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER AHMEDABAD: DATED 19/07/2016 TRUE COPY S.K.SINHA ! / COPY OF ORDER FORWARDED TO:- () * / REVENUE 2) / ASSESSEE -)./.01! 2! / CONCERNED CIT 4) 2!- / CIT (A) 5)67 8!019 '019: / / DR, ITAT, AHMEDABAD ;)8 <=> ? / GUARD FILE. BY ORDER / 9 /: .* '019: /