ITO (E), New Delhi V. Khetri Trust, New Delhi

ITA 2354/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9941 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 29-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P J KHANNA
• Keywords: Charitable institution; Rule of consistency
• Section: 143(3); 12; 11

Judgement Text

ITA NO. 2354/DEL/2009 A.Y. : 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 2354/DEL/2009 AY 2005-06 INCOME TAX OFFICER (E), VS. M/S KHETRI TRUST , TRUST WARD-IV, LAXMI NAGAR, 14/15-F, SHIVAM HOUSE, AYAKAR BHAVAN, DELHI CONNAUGHT PLACE, NEW DELHI [APPELLANT] (RESPONDENT) APPELLANT BY : SH. AJAY KUMAR, SR. DR RESPONDENT BY : SH. P.J. KHANNA, CA ORDER PER C.L. SETHI, JM THE REVENUE IS AN APPEAL AGAINST THE ORDER DATED 1 3.3.2009 PASSED BY THE LD. CIT(A) IN THE MATTER OF ASSESSMENT MADE UNDER SECTION 143(3) OF THE IT ACT BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005- 06. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS CORRECT IN ALLOWING EXEMPTION UNDER SECTION 11 AND 12 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE, WHEN THERE I S VIOLATION OF SECTION 13(1)(D) OF THE I.T. ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THERE IS NO VIOLATION OF S ECTION 13(1)(D), WHEN ITA NO. 2354/DEL/2009 A.Y. : 2005-06 2 THE ASSESSEE IS HOLDING SHARES IN VIOLATION OF SECT ION 11(5) OF THE IT ACT. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4. IN THE COURSE OF HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT IDENTICAL ISSUE HAD COME FOR CONSI DERATION IN THE ASSESSEES OWN CASE IN ASSESSMENT YEARS 2001-02 AND 2003-04, BEFOR E THE TRIBUNAL WHERE THE TRIBUNAL VIDE ORDER DATED 21.2.2008 IN ITA NO. 3747 /DEL/2004 PERTAINING TO THE ASSESSMENT YEAR 2001-02 AND VIDE ORDER DATED 28.3.2 008 IN ITA NO. 3887/DEL/2007 PERTAINING TO THE ASSESSMENT YEAR 200 3-04 HAS TAKEN A VIEW THAT ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. 5. THE LD. DR FOR THE REVENUE ON THE OTHER HAND S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY PERUSED THE AFORESAID TRIBUNA L ORDERS PLACED ON RECORD. IN ASSESSMENT YEAR 2001-02, THE TRIBUNAL VIDE ORDER DATED 21.2.2008 HAS DISCUSSED AND DECIDED THIS ISSUE BY OBSERVING AND H OLDING AS UNDER:- 4. THE ASSESSEE IS IN FURTHER APPEAL. RELIANCE IS PLACED ON THE RECORDS OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1991-92 TO 199 8-99 AS PER LIST GIVEN IN THE FIRST PAGE OF THE PAPER BOOK. COPIE S OF THESE ORDERS HAVE ALSO BEEN FILED. WE HAVE CAREFULLY PERUSED TH ESE ORDERS. IN THE ORDERS FOR THE ASSESSMENT YEARS 1991-92 AND 1992-93 , THE TRIBUNAL HAS NOT SPECIFICALLY DEALT WITH THE QUESTION OF APP LICATION OF THE INCOME OF THE TRUST FOR CHARITABLE PURPOSES IN IND IA. HOWEVER, IN THE ORDER FOR THE ASSESSMENT YEAR 1993-94 DATED 19.2.20 02 IN ITA NO. 1359/DEL/1997, ONE OF THE GROUNDS RAISED BY THE ASS ESSEE (GROUND ITA NO. 2354/DEL/2009 A.Y. : 2005-06 3 NO. 6) WAS THAT THE PROPERTIES AND ACCUMULATIONS C OULD NOT BE APPLIED TO CHARITABLE OBJECTS AS THE ISSUE OF ADMIN ISTRATION WAS YET TO BE GRANTED BY THE HONBLE HIGH COURT AND, THEREFORE , THE APPELLANT SHOULD HAVE BEEN HELD TO HAVE APPLIED AND THE ACCUM ULATION FOR APPLICATION SHOULD HAVE BEEN PERMITTED. AFTER NO TICING THIS GROUND, THE TRIBUNAL FOLLOWED ITS EARLIER ORDERS FOR THE ASSESSMENT YEAR 1991-92 AND 1992-93 AND ALLOWED THE ASSESSEES APPE AL. IN PARAGRAPH 3 OF THE ORDER OF THE TRIBUNAL, IT WAS FU RTHER OBSERVED THAT ON BEING CONFRONTED WITH THE EARLIER ORDERS OF THE TRIBUNAL, THE DEPARTMENT CONCEDED THAT THE ISSUE OF EXEMPTION U NDER SECTION 11 IS COVERED IN FAVOUR OF THE ASSESSEE. THIS ORDER O F THE TRIBUNAL FOR THE ASSESSMENT YEAR 1993-94 WAS FOLLOWED BY THE TRIBUNA L IN ITS ORDERS FOR THE ASSESSMENT YEARS 1994-95 TO 1996-97 AND 1998-99. IN VIEW OF THESE CONSISTENT ORDERS, IN ONE OF WHICH THE ASS ESSEES GROUND TO THE EFFECT THAT IN VIEW OF THE LITIGATION PENDING B EFORE THE HONBLE HIGH COURT THE INCOME COULD NOT BE APPLIED FOR CH ARITABLE PURPOSES AND IT MUST BE TAKEN TO HAVE BEEN ACCUMULATED HAS A LSO BEEN CONSIDERED, WE HOLD THAT NOTHWITHSTANDING THE REASO N GIVEN BY THE CIT(A) IN THE IMPUGNED ORDER THAT THE ASSESSEE DID NOT APPLY ITS INCOME TO ANY CHARITABLE ACTIVITY IN INDIA DURING THE YEAR, THE ASSESSEE WOULD BE ELIGIBLE FOR THE EXEMPTION UNDER SECTION 11. ADMITTEDLY, THE FACTS FOR THE YEAR UNDER APPEAL AR E THE SAME IN THE EARLIER YEARS WHICH MEANS THAT THE QUESTION OF NON- APPLICATION OF ANY INCOME TO CHARITABLE PURPOSES WAS ALSO PRESENT IN T HE EARLIER YEARS, THOUGH THAT QUESTION MIGHT NOT HAVE BEEN SPECIFICAL LY DEALT WITH IN THE ASSESSMENTS OR IN THE APPELLATE ORDERS. WHEN T HE FACTS ARE THE SAME, THE RULE OF CONSISTENCY REQUIRES THAT THE SAM E VIEW SHOULD BE TAKEN BY THE TRIBUNAL. FURTHER, IT IS REPRESENTED BEFORE US ON BEHALF OF THE ASSESSEE THAT SOME OF THE EARLIER ORDERS OF THE TRIBUNAL ARE PENDING IN APPEAL BEFORE THE HONBLE HIGH COURT. IN ANY CASE, THE LAW DOES NOT OBLIGE A PERSON TO DO SOMETHING WHICH IS IMPOSSIBLE. WHEN THE PROBATE MATTER IS PENDING BEFORE THE HONB LE HIGH COURT IT IS NOT POSSIBLE FOR THE TRUST, WHICH DERIVED ITS P ROPERTIES AND ASSETS UNDER THE WILL OF THE LATE RAJA OF KHETRI, TO APPLY THE INCOME FROM THEM TO CHARITABLE PURPOSES IN INDIA, NOR IS IT PER MISSIBLE FOR THE TRUST TO DISGORGE THE OFFENDING INVESTMENTS IN THE FORM O F SHARES. THE ITA NO. 2354/DEL/2009 A.Y. : 2005-06 4 ASSESSING OFFICER HAS HIMSELF STATED THAT THE INCOM E HAS BEEN DEPOSITED IN THE BANK. IN THESE CIRCUMSTANCES, THE BETTER SOLUTION WOULD BE TO ALSO HOLD THAT THE INCOME OF THE TRUST IS BEING ACCUMULATED FOR BEING APPLIED TOWARDS CHARITABLE PU RPOSES IN INDIA AND THAT THE NECESSARY PERMISSION FOR THE SAME HAS BEEN GIVEN BY THE INCOME-TAX AUTHORITIES. FOR THESE REASONS AND RESP ECTFULLY FOLLOWING THE EARLIER ORDERS OF THE TRIBUNAL, WE HOLD THAT TH E ASSESSEE IS ELIGIBLE FOR THE EXEMPTION UNDER SECTION 11 AND ALLOW THE AP PEAL. 7. T HE AFORESAID TRIBUNALS ORDER FOR THE ASSESSMENT Y EAR 2001-02 HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 20 03-04 VIDE ORDER DATED 28.3.2008 IN ITA NO. 3887/DEL/2007. 8. IN THE LIGHT OF THE EARLIER ORDERS OF THE TRIBUN AL IN THE MATTER AND THERE BEING NO CHANGE IN THE FACTS OF THE CASE IN THE PRE SENT ASSESSMENT YEAR VIS A VIS THE FACTS IN ASSESSMENT YEAR 2001-02 AND 2003-04, WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. 9. IN THE RESULT, THE INSTANT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST, 2009 IMMEDIATELY AFTER CONCLUSION OF THE HEARING. SD/- SD/- [B.C. MEENA] [C.L. SETHI] ACCOUNTANT MEMBER JUDICIAL MEMBER SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITA NO. 2354/DEL/2009 A.Y. : 2005-06 5 ITAT, DELHI BENCHES