Dy DIT (Exemptions) II, CHENNAI V. M/s Ebenezer Educational Trust, CHENNAI

ITA 2343/CHNY/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9855 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: T VASUDEVAN
• Section: 142(1); 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2343/MDS/2012 ' (' / ASSESSMENT YEAR : 2009-10 THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS)-II, CHENNAI. V. M/S EBENEZER EDUCATIONAL TRUST, 7 TH STREET, HOUSING BOARD ROAD, KORATTUR, CHENNAI - 600 001. PAN : AAATE 1781 G (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. P. RADHAKRISHNAN, JCIT ,-*+ . / / RESPONDENT BY : SH. T. VASUDEVAN, ADVOCATE 0 . 1$ / DATE OF HEARING : 23.04.2015 2!( . 1$ / DATE OF PRONOUNCEMENT : 08.05.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)XII, CHENN AI, DATED 03.09.2012 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.2343/MDS/12 2. SHRI P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE-EDUCATI ONAL TRUST, HAS ESTABLISHED TWO EDUCATIONAL INSTITUTIONS, ONE AT KO RATTUR AND ANOTHER AT YELAGIRI. THE ASSESSING OFFICER ISSUED NOTICE U NDER SECTION 142(1) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE A CT) ASKING THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNTS AND OTHER DOC UMENTS FOR CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. HO WEVER, THE ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOUNTS OR ANY OTHER DOCUMENTS FOR EXAMINATION BY THE ASSESSING OFFICER. THE ASSESSING OFFICER EXAMINED THE MATTER BY MAKING ENQ UIRIES THROUGH INSPECTOR AND FOUND THAT THERE WAS A LARGE SCALE VI OLATION OF SECTION 13(1)(C) OF THE ACT. ACCORDING TO THE LD. D.R., TH E TRUSTEES OF THE ASSESSEE UTILIZED TRUST FUND FOR THEIR OWN PERSONAL PURPOSE. THE LD. D.R. SUBMITTED THAT TWO OF THE TRUSTEES ARE STAYING WITHIN THE CAMPUS OF THE EDUCATIONAL INSTITUTIONS AND TAKING F REE FOOD AND CHILDREN OF THE TRUSTEES WERE ALSO GIVEN EDUCATION AT FREE OF COST. ACCORDING TO THE LD. D.R., EVEN FOOD WAS PROVIDED T O THE CHILDREN OF THE TRUSTEES AT FREE OF COST IN THE HOSTEL RUN BY T HE ASSESSEE-TRUST. THE LD. D.R. FURTHER POINTED OUT THAT THE ASSESSEE- TRUST HAS TWO CARS, WHICH WERE USED FOR THE PERSONAL PURPOSE OF THE TRUSTEES. TWO OF THE TRUSTEES TRAVELLED ABROAD AT THE COST OF THE TRUST FOR 3 I.T.A. NO.2343/MDS/12 PERSONAL PURPOSE. THEREFORE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTIO N 11 OF THE ACT. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS ) ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESS EE-TRUSTEES TRAVELLED ABROAD FOR RELIGIOUS PURPOSE AND THE EXPE NDITURES WERE MET BY THE CHURCH. THE CIT(APPEALS) ALSO FOUND THA T THE TRUSTEES OFFERED THEIR PERSONAL PROPERTY AS SECURITY FOR THE LOAN AVAILED BY THE TRUST, THEREFORE, NO BENEFITS WERE AVAILED BY THE T RUSTEES. THE CIT(APPEALS) HAS ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE SCHOOL IS A SELF-FINANCING INSTITUTION AND IT IS DE PENDING UPON THE FEES COLLECTED FROM THE STUDENTS. WITHOUT REFERRIN G TO THE BOOKS OF ACCOUNTS, THE CIT(APPEALS) ACCEPTED THE CLAIM OF TH E ASSESSEE THAT THE FEES COLLECTED BY THE STUDENTS ARE USED FOR RUN NING THE EDUCATIONAL INSTITUTIONS. ACCORDING TO THE LD. D.R ., SINCE THERE WAS CLEAR VIOLATION OF SECTION 13(1)(C) OF THE ACT BY U SING THE FUNDS OF THE TRUST FOR PERSONAL PURPOSE, THE ASSESSING OFFIC ER HAD RIGHTLY DENIED EXEMPTION AND FOUND TO BE NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT FOR THE ASSESSMENT YEARS 2005 -06 TO 2008-09 ON THE GROUND THAT THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE NOT AVAILABLE WITH THE ASSESSEE. THEREFORE, F OR THE YEAR UNDER CONSIDERATION ALSO, ACCORDING TO THE LD. D.R., THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION. 4 I.T.A. NO.2343/MDS/12 3. ON THE CONTRARY, SHRI T.VASUDEVAN, THE LD. COUNS EL FOR THE ASSESSEE, SUBMITTED THAT THE FIRST OBJECTION OF THE DEPARTMENT IS THAT THE TRUSTEES CHILDREN WERE PROVIDED FREE FOOD FROM THE HOSTEL AND FREE EDUCATION FROM THE SCHOOL RUN BY THE ASSESSEE- TRUST. REFERRING TO SECTION 13 OF THE ACT, THE LD. COUNSEL SUBMITTED THAT THE PROVIDING EDUCATION TO TRUSTEES AND EMPLOYEES CHILDREN CANNOT BE CONSIDERED AS VIOLATION OF SECTION 13(1)(C) OF T HE ACT. THE TRUSTEES ARE STAYING IN THE CAMPUS OF THE EDUCATION AL INSTITUTION ONLY TO ADMINISTER THE EDUCATIONAL INSTITUTION AND NOT F OR THEIR PERSONAL PURPOSE. THE CAR PURCHASED ON THE ACCOUNT OF THE T RUST FUND USED FOR THE PURPOSE OF TRUST ARE NOT FOR PERSONAL PURPO SE. REFERRING TO THE FOREIGN TRAVEL UNDERTOOK BY TWO OF THE TRUSTEES , THE LD. COUNSEL SUBMITTED THAT THEY TRAVELLED ABROAD FOR RELIGIOUS PURPOSE AND THE EXPENDITURES WERE MET BY THE CHURCH AND NOT FROM TH E TRUST-FUND. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THERE WAS NO VIOLATION OF SECTION 13(1)(C) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. FOR THE P URPOSE OF CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT, THE ASSESSEE HAS TO PRODUCE BOOKS OF ACCOUNTS TO ESTABLISH THE SOURC E OF INCOME AND THE EXPENDITURE INCURRED FOR CARRYING OUT THE CHARI TABLE OBJECT FOR 5 I.T.A. NO.2343/MDS/12 WHICH THE TRUST WAS ESTABLISHED. IN THIS CASE, INS PITE OF SEVERAL OPPORTUNITIES, THE ASSESSEE AVOIDED TO PRODUCE THE BOOKS OF ACCOUNTS. THOUGH THE REVENUE CLAIMS THAT FOR NON-A VAILABILITY OF BOOKS OF ACCOUNTS, THE CLAIM OF EXEMPTION UNDER SEC TION 11 WAS DENIED FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09, IT IS NOT KNOWN WHETHER THE ASSESSMENT ORDERS REACHED FINALIT Y. THE FACT REMAINS THAT THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER AND THE CIT(APPEALS) A LSO HAS NOT EXAMINED THE BOOKS OF ACCOUNTS. THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT FOR THE PURPOSE OF ALLOWING THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT, THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE TO BE NECESSARILY EXAMINED TO FIND OUT THE SOU RCE OF INCOME AND HOW THE INCOME OF THE TRUST WAS UTILIZED FOR CA RRYING OUT THE CHARITABLE OBJECT. SINCE THE CIT(APPEALS) HAS NOT EXAMINED THE SAME, THE MATTER HAS TO BE RECONSIDERED BY THE ASSE SSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ENTIRE ISSUE OF EXEMPTION UNDER SECTION 11 OF THE A CT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL ALSO RE-EXAMINE THE ISSUE AFRESH AFTER EXAMIN ING THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE, THE SOURCE OF IN COME AND EXPENDITURE INCURRED BY THE ASSESSEE AND SURPLUS, I F ANY, AVAILABLE HOW IT WAS UTILIZED AND THEREAFTER DECIDE THE SAME IN ACCORDANCE 6 I.T.A. NO.2343/MDS/12 WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE BOOKS OF ACCOU NTS FOR EXAMINATION BEFORE THE ASSESSING OFFICER. 5. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE RE VENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 8 TH MAY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !' ) ( . . . ) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 8 TH MAY, 2015. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-XII, CHENNAI-34 4. 0 81 /DIT (EXEMPTIONS), CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.