ITO (E), New Delhi V. M/s. Indian Youth Centre Trust, New Delhi

ITA 234/DEL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3605 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 20-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Keywords: Charitable institution
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.234/DEL/2017 ASSESSMENT YEAR 2012-13 INCOME TAX OFFICER (E), WARD-1(2), NEW DELHI. VS. M/S. INDIAN NATIONAL THEATRE TRUST, 4, SAFDAR HASMI MARG, NEW DELHI. PAN: AAATI 1040E (ASSESSEE) (RESPONDENT) ASSESSEE(S) BY : SHRI ANUNAV KUMAR, ADV. REVENUE BY : MS. BEDOBANI CHAUDHURI, D.R. / DATE OF HEARING : 20/04/2017 / DATE OF PRONOUNCEMENT: 25/04/2017 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LEARNED CIT(A)- 40, DELHI, VIDE ORDER DATED 03.10.2016 FOR THE ASSE SSMENT YEAR 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE WA S PREDOMINANTLY ENGAGED IN THE ACTIVITIES OF HIRING OUT OF AUDITORIUM AND PROV IDING SPACE FOR RENT IN LIEU OF FEE, WHICH WERE COMMERCIAL IN NATURE AND HENCE, 1 ST PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, 1961 IS APPLICABLE IN THIS CASE . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A TRUST WHICH WAS CONSTITUTED BY THE TRUST DEED/MEMORANDUM OF ASSOCIATION DATED 15.02 . 1958 AND IS ALSO REGISTERED UNDER SECTION 12AA(1) O N 09.02.1977. THE MAIN ACTIVITY OF THE ASSESSEE IS TO PROMOTE ARTISTIC AND CULTURAL EXPRESSION THROUGH DANCE AND DRAMA ETC. TH E ASSESSEE OWNS AN AUDITORIUM AT 4, SAFDAR HASHMI MARG, NEW DELHI WHIC H WAS CLAIMED TO HAVE BEEN USED FOR PROMOTING THE OBJECTS OF THE TRU ST . FOR THIS THE AUDITORIUM IS ALSO RENTED OUT TO THE PUBLIC. THE AS SESSEE ALSO SUPPORTS ITA NO.234/DEL/2017 2 ACTIVITIES OF ANOTHER CHARITABLE ORGANIZATION, SRI RAM CENTRE FOR PERFORMING ARTS, WHICH HAS SIMILAR OBJECTS AND THE ASSESSEE ALSO GIVES DONATIONS TO IT . THE MAIN INCOME OF THE ASSESSEE IS FROM RENTAL INCO ME OF THE AUDITORIUM AND INVESTMENTS. THE ASSESSING OF FICER ANALYZED THE ACTIVITIES OF THE TRUST IN VIEW OF THE AMENDMENT IN SECTION 2(15) AND CATEGORIZED ITS ACTIVITIES IN THE CATEGORY OF 'ADVA NCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. FURTHER, TAKING NOTE OF THE FAC T S THAT T H E PRINCIPLE ACTIVITY OF THE ASSESSEE TRUST WAS LETTIN G OUT THE AUDITORIUM WITH CLEAR PROFIT MO T IVE, I T WAS CONCLUDED THAT IN VIEW OF AMENDED PROVISIONS OF SECTION 11 WAS DENIED TO THE ASSESSEE TRUST. 4. LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. THE ISSUE IS COVERED BY THE DECISION OF HONBLE HIG H COURT OF DELHI IN ASSESSEES OWN CASE VIDE JUDGMENT IN ITA NO.499/201 2 DATED 05.11.2012 FOR THE ASSESSMENT YEAR 2008-09 AND THE RELEVANT DE CISION IS REPRODUCED HEREINBELOW: 3. WE HAVE HEARD COUNSEL FOR THE PARTIES. REVENUE CLAIMS TO BE AGGRIEVED BY THE ORDER DA T E D 10 . 10 . 20 I I OF TH E I NCO M E T AX APPELLATE T RIBU N AL ( T RIBUNAL , FO R SHOR T ) IN I T A , N O . 37 9 5 / DEL / 2011 . I T U RG ES THA T T HE IMPUGNED ORDER HOLDIN G THAT ASSE S SEE IS E N TITL ED T O EX E MPTI O N UNDER SE CTIO N 11 I S E RR ON EOUS . THE A S SESSEE TRUST CL A IMED AND WAS G RANTED E XE MPTI O N . ITS M AIN OBJECTS ARE PROM O TI O N OF AR T ISTIC A ND CULTURAL EXPRESSI ON T HROUGH D RAMAS , MU S IC AND E D U C AT ION ETC . IN IT S O WN AUDITORIUM . FOR THE RELEVANT ASSESSM E NT YEAR 20 0 8 - 09 IT R ETU R NED A T O T A L IN C OME O F RS.1,67,83 , 000 / - . IT INCURRED EXPENDITURE OF RS.2 3 LA K H S TOWA R DS REPAIRS A N D MA I N T ENANCE AN D OTHER RUN N I N G EXPE N SES IN TH E MA I N TENANCE OR TH E BUILD I NG. 'NI L IN COME' RETURN WAS FI L ED ON A C C O UNT O F T H E FA C T T HA T RECEIPTS W ERE EXEMPTED . THE ASSESSMENT O R D ER INTER ALIA RULED THAT THE EXPENDIT UR E T O WARDS DO N A T ION (RS.23 LAKHS) MADE T O O T HE R TRU S T WAS INADMISSIBLE AND THAT SINC E THE RESPONDENT- A SSESSEE DID NO T CAR R Y OU T ANY CHA RIT A B LE AC TI V IT Y BUT MEREL Y L E T OU T I TS PRE M I S E S TO OTHE R OR GA NIZATION A S W E LL AUDITOR I UM T O O T HER THEA T RE GROUPS ETC ., IT WAS ENG A G E IN A COMMERC IA L AC T IVITY , 4 . THE A SSES S EE ' S APPEAL WAS A L LOWED BY THE APPELLATE COMMISSIONER WH O RELIED UPON H I S PREVIOUS ORDERS AS WE L L AS THOSE OF T H E T RI B U NAL . THE R EVENUE UNSUCCE SS F ULLY APPEALED T O THE TRIBUNAL LD. COUN SEL F O R TH E AP PELL A NT REV E NU E UR G ED THAT LETTI N G OUT THE A UD I T ORI UM T O OTHE R P A RTI ES A N D PAR T OF THE PREMISES D I D NOT CONSTITUTE CHARITABLE PUR POSE . I T WAS EMPH ASIZ ED T HAT IN TH E ABSE NCE O F AN Y CULTURAL A CTI VI T Y S U C H AS ST A GI NG IN - ITA NO.234/DEL/2017 3 HOUSE PR OD U C T I ON ET C ., THE ASSESSEE COULD NOT C LAIM T O B E C A R RYI N G ON A N Y A CT I V ITY TH A T CAN QUALIFY AS CHARITABLE . I T W A S U R GED IN ADD I TION THAT THE DO NAT ION MADE TO THE TUNE OF RS. 23 LA KHS COULD NOT HAVE BEEN ALLOWE D SINCE THAT DID NOT AMOUNT TO APPLICAT I ON OF IN COME FOR A CHARITABLE PURPOSE . 5 . C O UNSEL FOR T HE ASS ESSEE R E LIED UPON THE PREVIOUS ORDERS OF THE ITAT , P ARTICULARLY CCMMON ORDE R DATED 2 2 ND APRIL , 1999 . RELIA N CE WAS ALSO PLA C ED UPON THE J U DG MENT O F THIS COUR T I N CIT VS. M/S. INDIAN N ATIONAL THEATRE TRUST NE W DELHI ITR 134 / 1986, WHIC H HA D AF F IRMED THAT ORDER ON 13 . 1 1 . 2 00 7. 6. THIS COURT HAS CONS ID ERED THE SUBMIS S I O N S . T H E ASSESSEE H A D IN ITS RETURN BEFORE TH E ASS ESSI N G OFFICER STATED AS FOLLOWS : AS PER THE A F ORE S AID LETTER YOU R GOOD SELF H AVE O BS ERVED T HAT INCOME AND EXPE N DI T URE OF OUR TRUS T ARE MAIN L Y R E L A T E D T O PROPE RT Y HELD BY US AT 4 , SAFDAR HA S HMI MARG, N EW DELHI, EXPENDITURE INCURRED IS NOT RELATED T O CHARITABLE ACT I VITIES EXCEP T DONA TIO N P AID T O CER T AIN PA RTI E S. YOUR G OODSEL F HAD OBSERVED THAT ONE TH E BA S I S OF A B O VE IT APPEA R S T HA T T HERE I S AB S ENCE OF AN Y P HTL A NTHR O PIC & CHAR ITA BL E A CT IVI TI ES O N T H E PART OF T HE T RUST. I N T H IS CO N NECTI ON WE A RE HA V E TO SUBMI T THAT O U R WAS FORMED AS CHARITABLE TR U ST I N 195 8 . IT WA S DULY REGISTE R ED U / S 12A V IDE REGISTRATION N O . DLI(C)(T-422) DT . 9 / 2 / 197 7 . THE T RUST IS THE O W NER OF AN AUDIT O R I UM CONSTRUCTED AT PL O T M E AS URI N G 0 . 603 AC R ES SI T UATED ON BARAK H AMBA R OAD ( OPPOSITE M A NDI H O USE ) I . E . 4, SAFDA R HASHMI MARG , N EW D ELHI . TH E TRU ST IS U S I NG THE AUD I TORIUM FOR CARRYIN G O N CHARI T ABLE P URPOSES . OBJECT OF TH E TR US T IS A PROMO T E A RT I ST I C AN D C ULTUR A L EXP R ESS I ON THRO UGH D R AMA , MUS I C, E DUCAT IO N COGNA T E A CTI V ITIES . ACCORDINGLY THE AUDIT O RIUM IS M ADE AVAILABLE FOR P E RFOR M AN C E I N THE NATURE OF DANCE DRAMA , MUSIC, ED UCATI ON ETC . AUDITORIUM I S M AD E AV A ILABLE FOR NORMALLY TO S CH OOLS , C O LLEGES , THEATRE GR O UP S ET C. OUR TRUST TAKES NOMINAL CHARGES FOR MAKING TH E AUDITORIUM AVAILABLE FO R S U C H ACTIVITY ONLY WITH A VIEW TO MEET PARTL Y RUNNING COST . IT I S EMP H ATIC ALL Y STATED THAT ACTIVITY OF MAK I NG AVAILAB LE A U DI T OR IU M TO OTHE R INSTITUTION FOR T H E PURP O SE OF PR O MOTI NG D AN CE, DRAMA , MUSIC E T C I S IN T HE N ATURE OF CHARITABLE ACTIVITIE S AND SAM E DOES NOT RESU L T IN AN Y EA RN IN G TO T HE T RUST . WITH A VI E W TO EARN INCOME F O R THE PURPOSE O F C ARRY I NG ON THE CHARITABLE AC TIV I T IES, TH E TR U ST HAD PAR TL Y LE T OUT T HE P R EM IS E S SO A S TO EA R N R EGULAR I NCOME . THE DEFICIT OF MAKING AVAILAB L E T HE AUDITORIUM FOR PROMOTING DANCE, D RAMA, M U SIC , ED U CATION ETC . IS ME T OUT OF THE SAID R ENTAL INCOME . FU RTH ER, OUR TRU S T ALSO SUP P O RT S CH AR I TA B L E ACTIVITIES BEIN G CARR I E D B Y OTHER ON CHARITABLE INSTITUT I ON S HA V IN G O BJE C T S C O NSISTENT WI T H O UR OBJEC T BY W A Y OF M AK ING DONA T IONS T O T HEM . THE AFORESAID POSITI O N I S BE I NG THE RE FOR NU MBER OF YE ARS A N D CHARI T ABLE ACTIVITIES OF OUR TRUST H AV E AL W AYS BEEN ACCEPTED IN THE PAST . ' 7. THE ASSESSING OFFICER HOWEVER REJECTED THE CONTE NTION STATING THAT THE A S S ESSEE USED TO CHARGE MARKE T R A T ES W HILE HI R ING OR LE T TING OUT AUDITORIUM. WE DI SC ERN NO MATER I A L TO W ARR A NT THAT CON C LUSIO N . AP AR T FROM HIRING O F THE A UDITORIUM, THE ASS E SSE E RECEIVED RENTS ON ACCOU NT OF L ET T I NG OUT SOME PORTION O F ITS PREMISES TO M/S. B E NETT & C OL E MA N . THA T CANN O T BE TERMED U N REA SO NABL E . IN V IE W OF TH E F A CT T HAT TH E PRE V IOU S O R DER S IN W HIC H T ILE C LAIM OR TH E AS SESSEE T O BE A C HARI T A B LE TRUST WAS UP HELD, WE D O NOT SEE ANY REASON TO IN TE RFER E W ITH THE IMPUGNED ORDER IN THIS ASPECT . AS FAR AS SECO N D QUESTION I . E . DONATION OF RS.23 LAKHS I S CONCERNED, THIS COURT N O TI CE D THAT THE S AM E HAS NOT BEEN URGED ON BEHAL F O F T HE REVEN UE I N ITS AP PE A L . NEVERTH E LES S TH IS A SPECT IS C OVE RED B Y THE PREVIOUS RULING I N ITR 134/1986 DATED 13.11.2007. TH E COURT OB S ERVE D IN THAT ITA NO.234/DEL/2017 4 JUDGMENT AS FOLLOWS : ' 11 . A S FA R A S T HE T HIRD Q U ES T IO N I S CONC E RNE D, O N EXA M INING THE O RD ERS PA SS ED BY T HE AUTHORI T IE S , IN WHICH THE OBJE CTS OF BO T H T HE ASS E SSEE T R UST A S WEL L AS THE SH R IRA M CE NT RE F O R A RT AND CULTURE HA VE BEE N DISCUSS E D , WE ARE OF THE CON S I D ERED VIE W THAT THE TRIBUNAL WAS CORRECT IN ITS CON C LUSI ON T HA T T HE SUM OF R S . 50,000/ - DEPOS ITED WI TH SHR I RAI N C E N TRE FO R A RT AND CUL T U RE S H O U LD BE TREATE D AS AN A P PLICATION OF THE INCOM E OF T H E TRUST . TH E WOR D A P PLICA TION HAS TO BE GI VE N A W ID E R INTERPRETATION KEEP ING I N V I EW TH E P URPOSE F OR WHICH THE P ROVI S IO N H AS BE E N I N TR O DUCED . ' 8. FOR THE ABO VE R E A SO N S T H ERE A RE N O SUB S TANTIAL QUESTIONS OF LAW WHICH ARISE S FOR CONS I DER AT I O N B Y THIS C OUR T IN TH E P RE SENT A PPEAL ; THE SAME IS AC C ORDINGLY DISMIS SED. 6. THE DECISION OF THE HONBLE HIGH COURT HAS BEEN FOLLOWED IN ASSESSEES OWN CASE IN ITA NO.6032/DEL/2012 FOR THE ASSESSMENT YEAR 2009-10 WHERE REVENUE APPEAL HAS ALSO BEEN DISMISSE D ACCORDINGLY. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISIO N OF HONBLE HIGH COURT OF DELHI AND ITAT DELHI BENCHES, THE LEARNED CIT(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND I FIND NO INFIRMITY IN HIS ORDER. ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS DAY 25 TH APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 234/04/2017 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1.ASSESSEE 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSTT. REGISTRAR, ITAT, NEW DELHI