City Manager Association, C/o. AMC., West Zone Officer, Ahmedabad V. ACIT, CPC, , Banglore

ITA 2337/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5360 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-08-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 24-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Deemed to accrue or arise in india; TDS
• Section: 154; 11; 143(1); 274

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO.2337/AHD/2017 [ASSTT.YEAR: 2015-16] CITY MANAGER ASSOCIATION C/O. AHMEDABAD MUNICIPAL CORPN WEST ZONE OFFICE PAN : AAATC 2293 H VS. ACIT, CPC USMANPURA CROSS ROAD. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SMT.ARTI SHAH, AR REVENUE BY : SHRI VIRENDRA SINGH, SR.DR ! '#$ % &' / DATE OF HEARING : 08/08/2019 ()* % &' / DATE OF PRONOUNCEMENT: 21/08/2019 +, / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-9, AHMEDABAD DATED 18.8.2017 PASSED FOR A SSTT.YEAR 2015-16. 2. THE ASSESSEE HAS TAKEN TWO SUBSTANTIAL GROUNDS O F APPEAL, WHICH READS AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-9, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE DISALLOWANCE OF LEGITIMATE CLAIM OF DEDUCTION OF RS.4,03,4357- U/S.11(L)(A) OF THE I.T. ACT, 1961 AS CLAIMED IN THE RETURN OF INCOME FILED BY THE APPELL ANT. ITA NO.2337/AHD/2017 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 9, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE C ASE BY CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS.29,9 22/- FOR AMOUNT OF TDS FOR WHICH CREDIT HAS BEEN CLAIMED AGA INST TAX PAYABLE ON THE RETURNED INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 DETERMINING THE INCOME AT RS.8,92,931 /- AS AGAINST TOTAL INCOME OF RS.7,61,081/-. AS FAR AS FIRST GRO UND OF APPEAL IS CONCERNED, THE ASSESSEE HAS ACCUMULATED INCOME OUT OF THE INCOME DERIVED FROM THE TRUST, WHICH WAS NOT UTUILI SED FOR THE OBJECTS OF THE TRUST. THIS ACCUMULATED INCOME WAS 85% OF THE ALLEGED SURPLUS. IT WAS KEPT SEPARATELY AND WAS TO BE APPLIED FOR THE CHARITABLE OBJECTS OF THE TRUST IN FUTURE YEARS . HOWEVER, DURING THE YEAR 2015-16 THE ASSESSEE COULD NOT UTIL IZE THAT ACCUMULATED INCOME AND OFFERED IT FOR TAXATION AT R S.8,79,000/-. THE ASSESSEE WAS OF THE VIEW THAT ON THIS UNUTILIZE D INCOME, IT IS ENTITLED FOR FURTHER ACCUMULATION AT THE RATE OF 15 %. IN OTHER WORDS, THE ASSESSEE WAS OF THE VIEW THAT INCOME WHI CH SET APART FOR FUTURE UTILIZATION OF THE OBJECTS OF THE TRUST, AND IF NOT UTILIZED AND OFFERED IN FUTURE, THEN THAT INCOME WOULD BE PA RT OF THE CURRENT INCOME OF THAT FIGURE YEAR, AND THE ASSESSE E WILL BE ENTITLED TO ACCUMULATE 15% FROM THAT INCOME. A PRIMA FACIE ADJUSTMENT WAS MADE VIDE WHICH ITS CLAIM WAS REJECT ED AND ADDITION OF RS.4,03,435/- UNDER SECTION 11(1)(A) OF THE ACT WAS MADE. IN OTHER WORDS, THE AO WAS OF THE VIEW THAT IT IS THE DEEMED INCOME, AND ON THIS DEEMED INCOME NO FURTHER REBATE AT 15% HAS TO BE GRANTED. APPEAL TO THE CIT(A) DID NO T BRING ANY RELIEF TO THE ASSESSEE. ITA NO.2337/AHD/2017 3 4. AS FAR AS SECOND GROUND IS CONCERNED THE ASSESSE E HAS CONTENDED THAT GRANT OF TDS AT RS.22,922/- IS CONCE RNED, THIS IS IN THE FORM OF TDS STATEMENT SHOWN IN FORM NO.26AS AND THERE WAS NO REASON AT ALL FOR NOT GRANTING THE CREDIT FOR TH E SAME. THE LD.CIT(A) HAS NOT RECORDED ANY SPECIFIC FINDING ON THIS ISSUE. 5. BEFORE US, THE ASSESSEE RAISED TWO FOLD SUBMISSIO NS. FIRSTLY, ON THE STRENGTH OF HONBLE KOLKATTA HIGH COURT IN T HE CASE OF CIT VS. NATWARLAL CHOWDHURY CHARITY TRUST, 52 TAXMANN 3 30 (KOL) IT IS ENTITLED FOR DEDUCTION AT 15% OF THE ALLEGED DEEMED INCOME OFFERED FOR TAXATION IN THIS ASSESSMENT YEAR. IN THE SECOND CONTENTIONS, SHE CONTENDED THAT BOTH THE ISSUES ARE DEBATABLE THAT CANNOT BE ADJUDICATED UNDER SECTION 143(1) OF THE ACT. 6. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE REVENUE AUTHORITIES. HE PLACED ON RECORD COPY OF I TATS ORDER IN THE CASE OF THE TRUSTEES, THE B.N. GAMADIA PARSI HUN NARSHALA, 77 TTJ 274 (MUM-TRIB.) WE WOULD LIKE TO REPRODUCE BRIE F ORDER OF THE HONBLE KOLKATTA HIGH COURT IN THE CASE OF CIT VS. NATWARLAL CHOWDHURY CHARITY TRUST (SUPRA), WHICH READS AS UND ER: 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS CORRECT IN LAW IN HOLDING THAT THE ASS ESSEE'S RIGHT TO ACCUMULATE 25% OF THE TOTAL INCOME OF THE PREVIOUS YEAR EXTENDED TO THE DEEMED INCOME UNDER SECTION 11(3) O F THE INCOME-TAX ACT, 1961, ADDED THEREIN IN THE CIRCUMST ANCES MENTIONED ABOVE ?' 2. THE FACTS FOUND BY THE TRIBUNAL AS STATED IN THE STATEMENT OF CASE ARE AS FOLLOWS : THE ASSESSEE-TRUST ACCUMULATED RS.46,184 DURING THE ACCOUNTING YEARS RELEVANT TO THE ASSESSMENT YEARS 1973-74 TO 1 976-77. DURING THE PREVIOUS YEAR RELEVANT TO THE PRESENT AS SESSMENT YEAR, ACCUMULATED INCOME CEASED TO BE INVESTED IN FIXED D EPOSIT WITH THE INDIAN BANK AND IT WAS, THEREFORE, DEEMED TO BE THE INCOME ITA NO.2337/AHD/2017 4 OF THE TRUST IN THE PREVIOUS YEAR IN WHICH IT CEASE D TO REMAIN INVESTED OR DEPOSITED IN TERMS OF CLAUSE (B) OF SUB -SECTION (3) OF SECTION 11 OF THE INCOME-TAX ACT, 1961. THE INCO ME-TAX OFFICER WAS OF THE OPINION THAT THE ASSESSEE WAS NOT ENTITL ED TO ACCUMULATE 25% OF THIS DEEMED INCOME BECAUSE PERMIT TING IT TO DO SO WOULD AMOUNT TO A DOUBLE BENEFIT TO THE ASSES SEE. HE, THEREFORE, ASSESSED THE ENTIRE DEEMED INCOME. 3. THE TRIBUNAL IN AGREEING WITH THE DECISION OF TH E APPELLATE ASSISTANT COMMISSIONER OBSERVED: THE LEGAL FICTION CONTAINED IN SECTION 11(3) OF THE INCOME-TAX ACT, 1961, SHOULD BE ALLOWED TO PLAY TO THE FULLEST EXTE NT AND THERE IS NO WARRANT TO TAKE A RESTRICTED VIEW FOR DENYING TH E EXEMPTION WHICH IS SPECIFICALLY ALLOWED BY THE STATUTE. IN FA CT, AS PER THE LAW AS STOOD FROM APRIL 1, 1976, CHARITABLE TRUSTS ARE PERMITTED TO ACCUMULATE UP TO 25% OF THEIR INCOME WITHOUT COMPLY ING WITH ANY FORMALITIES OR CONDITION AND SUCH ACCUMULATION IS N OT INCLUDED IN THE TOTAL INCOME. THEREFORE, WE UPHOLD THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER AS IT IS QUITE JUSTIFIED IN LAW AND THE ASSESSEE WOULD BE ENTITLED TO ACCUMULATE 25% OF THE TOTAL INCOME OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R 1978-79 INCLUSIVE OF THE DEEMED INCOME UNDER SECTION 11 (3) OF THE INCOME-TAX ACT, 1961. 4. MR. MOITRA, APPEARING ON BEHALF OF THE REVENUE, HAS FAILED TO SHOW ANY INFIRMITY IN THE ORDER OF THE TRIBUNAL. IN FACT, HE HAS PRAYED MERELY FOR REMAND OF THE CASE AS WAS DONE BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. HYDERABAD SECUNDERABAD FOODGRAINS ASSOCIATION LTD. [1989] 175 ITR 574. THE FACTS IN THAT CASE WERE QUITE DIFFERENT AND IT WAS FELT BY THE AN DHRA PRADESH HIGH COURT THAT IT WAS NECESSARY TO REMAND THE CASE . ` BUT, IN THE INSTANT CASE, NO ARGUMENT AT ALL HAS BE EN ADVANCED TO SHOW ANY INFIRMITY IN THE ORDER OF THE TRIBUNAL.' SINCE MR. MOITRA HAS FAILED TO SHOW US ANY INFIRMIT Y IN THE ORDER PASSED BY THE TRIBUNAL, THE QUESTION IS ANSWERED IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. 7. IN THE LIGHT OF THE ABOVE, LET US CONSIDER THE S COPE OF SECTION 154 FOR MAKING PRIMA FACIE ADJUSTMENT WHILE PROCESSING RETURN UNDER SECTION 143(1)(A) OF THE ACT I.E. PROCESS OF DEALING WITH THE RETURN IS AN EX PARTE PROCESS. IT IS PERTINENT TO OBSERVE THAT WHENEVER ANY DEBATABLE ISSUE IS INVOLVED AN EXPLANA TION OF THE ITA NO.2337/AHD/2017 5 ASSESSEE IS REQUIRED, THEN ON SUCH ISSUE, NO PRIMA FACIE ADJUSTMENT IN AN EX PARTE PROCEEDINGS CAN BE MADE. READING OF JUDGMENT OF HONBLE KOLKATTA HIGH COURT (SUPRA), AN D IF FACTS ARE LOOKED INTO, THEN IT WOULD REVEAL THAT BOTH THE ISS UES WERE DEBATABLE ONE, WHERE MORE THAN ONE OPINION WAS POSS IBLE. ADJUSTMENT UNDER SECTION 143(1)(A) IS NOT PERMISSIB LE ON BOTH THESE ASPECTS. THEREFORE, WE ALLOW APPEAL OF THE A SSESSEE, AND DELETE BOTH THE DISALLOWANCES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 21 ST AUGUST, 2019. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER