M/s. Sahara Utsarga Welfare Society , Kolkata V. DCIT(E), Circle - 1 , Kolkata

ITA 2436/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8372 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 22-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: A K TULSIYAN
• Keywords: Capital asset; Depreciation; Charitable institution
• Section: 143(3); 48; 22; 63; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2436/KOL/2018 ( / ASSESSMENT YEAR: 2012-13) M/S SAHARA UTSARGA WELFARE SOCIETY MICHAEL NAGAR, KALIBARI SARANI, KOLKATA-700133 VS. DCIT(E), CIRCLE-1, KOLKATA ./ ./PAN/GIR NO.: AADTS 6744 E (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI A.K. TULSIYAN, FCA RESPONDENT BY : SMT. RANU BISWAS, ADDL. CIT / DATE OF HEARING : 11/11/2019 /DATE OF PRONOUNCEMENT : 22/01/2020 / O R D E R DR. A.L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PER TAINING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-25, KOLKATA IN APPEAL NO. 37/CIT(A)-25/KOL /2018-19, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 29 /03/2015. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EADS AS FOLLOWS: 1. THAT THE LD. CIT(A) WAS WRONG IN CONFIRMING THE ACTION OF LD. A.O. BY ALLOWING EXEMPTION OF @ 15% ON THE NET RECEIPT (RS. 52,14,148/-) IN PLACE OF GROSS RECEIPT (RS. 2,91,60,237/-) AS PER THE PRO VISIONS OF SECTION 11 OF THE ACT. HENCE CONFIRMING THE IMP A.O. IS UNJUSTIFIED AND NEEDS TO BE DELETED. 2. THAT THE LD. CIT(A) WAS WRONG IN CONFIRMING THE ACTION OF LD. A.O. BY NOT ALLOWING THE DEPRECIATION TO THE ASSESSEE WHILE CA LCULATING THE APPLICATION OF FUNDS. THER EFORE, THE ADDITION MADE BY THE LD. A.O. AND CONFIR MED BY THE LD. CIT(A) IS UNJUSTIFIED AND NEEDS TO BE DELETED. 3. THAT THE ASSESSEE CRAVES TO LEAVE OR ADD, ALTER, AMEND OR WITHDRAW ANY OR ALL OF THE GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. GROUND NO. 1 RAI SED BY THE ASSESSEE RELATES TO RECEIPT (RS. 52,14,148/- ) IN PLACE OF GROSS RECEIPT (RS. 2,91,60,237/ PROVISIONS OF SECTION 11 OF THE ACT. 4. BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSING OFFICER MADE COMPUTATION OF INCOME OF THE ASSESSEE FOLLOWS: THE ASSESSEES GRIEVANCE IS THAT THE ASSESSING OFFICER OUGHT TO HA VE ALLOWED 15% EXEMPTION ON GROSS RECEIPTS OF RS. 2,91,60,237/ 3,47,60,989/- AS PER PROVISIONS OF SECTION 11 OF THE ACT. ISSUE F IRST OF ALL , LET US GO THROUGH THE PROVISIONS OF S ECTION 11 OF THE ACT WHICH IS REPRODUCED BELOW FOR READY REFERENCE: M/S SAHARA UTSARGA WELFARE SOCIETY ITA NO. ASSESSMENT YEAR: ACT. HENCE CONFIRMING THE IMP UGNED ADDITION BASED ON THE ACTION OF LD. A.O. IS UNJUSTIFIED AND NEEDS TO BE DELETED. 2. THAT THE LD. CIT(A) WAS WRONG IN CONFIRMING THE ACTION OF LD. A.O. BY NOT ALLOWING THE DEPRECIATION TO THE ASSESSEE WHILE CA LCULATING THE APPLICATION EFORE, THE ADDITION MADE BY THE LD. A.O. AND CONFIR MED BY THE LD. CIT(A) IS UNJUSTIFIED AND NEEDS TO BE DELETED. 3. THAT THE ASSESSEE CRAVES TO LEAVE OR ADD, ALTER, AMEND OR WITHDRAW ANY OR ALL OF THE GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING. SED BY THE ASSESSEE RELATES TO EXEMPTION OF @ 15% ON THE NET ) IN PLACE OF GROSS RECEIPT (RS. 2,91,60,237/ PROVISIONS OF SECTION 11 OF THE ACT. 4. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE ASSE SSMENT PROCEEDINGS ASSESSING OFFICER MADE COMPUTATION OF INCOME OF THE ASSESSEE GRIEVANCE IS THAT THE ASSESSING OFFICER OUGHT TO HA VE ALLOWED 15% EXEMPTION ON GROSS RECEIPTS OF RS. 2,91,60,237/ - INSTEAD OF NET RE AS PER PROVISIONS OF SECTION 11 OF THE ACT. IN ORDER TO ADJUDICATE THIS IRST OF ALL , LET US GO THROUGH THE PROVISIONS OF S ECTION 11 OF THE ACT WHICH IS REPRODUCED BELOW FOR READY REFERENCE: M/S SAHARA UTSARGA WELFARE SOCIETY ITA NO. 2436/KOL/2018 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 UGNED ADDITION BASED ON THE ACTION OF LD. 2. THAT THE LD. CIT(A) WAS WRONG IN CONFIRMING THE ACTION OF LD. A.O. BY NOT ALLOWING THE DEPRECIATION TO THE ASSESSEE WHILE CA LCULATING THE APPLICATION EFORE, THE ADDITION MADE BY THE LD. A.O. AND CONFIR MED BY THE 3. THAT THE ASSESSEE CRAVES TO LEAVE OR ADD, ALTER, AMEND OR WITHDRAW ANY OR ALL OF THE GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING. EXEMPTION OF @ 15% ON THE NET ) IN PLACE OF GROSS RECEIPT (RS. 2,91,60,237/ -) AS PER THE SSMENT PROCEEDINGS THE ASSESSING OFFICER MADE COMPUTATION OF INCOME OF THE ASSESSEE WHICH IS AS GRIEVANCE IS THAT THE ASSESSING OFFICER OUGHT TO HA VE ALLOWED 15% INSTEAD OF NET RE CEIPT OF RS. IN ORDER TO ADJUDICATE THIS IRST OF ALL , LET US GO THROUGH THE PROVISIONS OF S ECTION 11 OF THE ACT WHICH IS M/S SAHARA UTSARGA WELFARE SOCIETY ITA NO.2436/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 11. (1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 , THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT OF THE INCOME 35 [(A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLL Y FOR CHARITABLE OR RELIGIOUS PURPOSES , TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF [FIFTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY; (B) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST IN PA RT ONLY FOR SUCH PURPOSES, THE TRUST HAVING BEEN CREATED BEFORE THE COMMENCEMENT O F THIS ACT , TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND, WHERE ANY SUCH INCOME IS FINALLY SET APART FOR APPLICATION TO SUCH PURPOS ES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO SET APART IS NOT IN E XCESS OF [FIFTEEN] PER CENT OF THE INCOME FROM SUCH PROPERTY; (C) INCOME [DERIVED] FROM PROPERTY HELD UNDER TRUST (I) CREATED ON OR AFTER THE 1ST DAY OF APRIL, 1952, FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFARE IN WHI CH INDIA IS INTERESTED, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SU CH PURP OSES OUTSIDE INDIA, AND (II) FOR CHARITABLE OR RELIGIOUS PURPOSES, CREATED BEFOR E THE 1ST DAY OF APRIL, 1952, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES OUTSIDE INDIA: PROVIDED THAT THE BOARD, BY GENERAL OR SPECIAL ORDER, HAS DIRECTED IN EITHER CASE THAT IT SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSON IN RECEIPT OF SUCH INCOME; [(D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION.] EXPLANATION.- FOR THE PURPOSES OF CLAUSES (A) AND (B),- (1) IN COMPUTING THE TWENTY- FIVE PER CENT OF THE INCOME WHICH MAY BE ACCUMULATED OR SET APART, ANY SUCH VOLUNTARY CONTRI BUTIONS AS ARE REFERRED TO IN SECTION 12 SHALL BE DEEMED TO BE PART OF THE INCOME ; (2) IF, IN THE PREVIOUS YEAR, THE INCOME APPLIED TO CHA RITABLE OR RELIGIOUS PURPOSES IN INDIA FALLS SHORT OF SEVENTY- FIVE PER CENT OF THE INCOME DERIVED DURING THAT YEAR FROM PROPERTY HELD UNDER TRUST, OR, AS THE CASE MAY BE, HELD UNDER TRUST IN PART, BY ANY AMOUNT- (I) FOR THE REASON THAT THE WHOLE OR ANY PART OF THE I NCOME HAS NOT BEEN RECEIVED DURING THAT YEAR, OR (II) FOR ANY OTHER REASON, THEN- (A) IN THE CASE REFERRED TO IN SUB- CLAUSE (I), SO MUC H OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PREVIOUS YEAR IN WHICH THE INCOME IS RECEIVED OR DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING AS D OES NOT EXCEED THE SAID AMOUNT; AND (B) IN THE CASE REFERRED TO IN SUB- CLA USE (II), SO MUCH OF THE INCOME APPLIED TO SUCH PURPOSES IN INDIA DURING THE PREVIOUS YEAR IMM EDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED AS DO ES NOT EXCEED THE SAID AMOUNT, MAY, AT THE OPTION OF THE PERSON IN RECEIPT OF THE INCOME (SUCH OPTION TO BE EXERCISED IN WRITING BEFORE THE EXPIRY OF THE TI ME ALLOWED UNDER SUB- SECTION (1) ] OF SECTION 139] FOR FURNISHING THE RETURN OF INCO ME) BE DEEMED TO BE INCOME APPLIED TO SUCH PURPOSES DURING THE PREVIOUS YEAR I N WHICH THE INCOME WAS DE RIVED; AND THE INCOME SO DEEMED TO HAVE BEEN APPLIE D SHALL NOT BE TAKEN INTO ACCOUNT IN CALCULATING THE AMOUNT OF INCOME APPLIED TO SUCH PURPOSES, IN THE CASE M/S SAHARA UTSARGA WELFARE SOCIETY ITA NO.2436/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 REFERRED TO IN SUB- CLAUSE (I), DURING THE PREVIOUS YEAR IN WHICH THE I NCOME IS RECEIVED OR DURIN G THE PREVIOUS YEAR IMMEDIATELY FOLLOWING, AS THE C ASE MAY BE, AND, IN 1. INSERTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989, W. E. F. 1- 4- 1989. 2. SUBSTITUTED BY THE TAXATION LAWS (AMENDMENT) ACT , 1975, W. E. F. 1- 4- 1976. THE EXPLANATION WAS ALSO SUBSTITUTED BY THE FINANCE ACT, 1970, W. E. F. 1- 4- 1971 3. THE WORDS' OR SUB- SECTION (2)' OMITTED BY THE DIRECT TAX LAWS (AMENDM ENT) ACT, 1989, W. E. F. 1- 4- 1989. 4. THE WORDS', WHETHER FIXED ORIGINALLY OR ON EXTEN SION', OMITTED, IBID. THE CASE REFERRED TO IN SUB- CLAUSE (II), DURING THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE PREVIOUS YEAR IN WHICH THE INCOME WAS DERIVED.) (1A) FOR THE PURPOSES OF SUB- SECTION (1),- (A) WHERE A CAPITAL ASSET, BEING PROPERTY HELD UNDER TR UST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING ANOTHER CAP ITAL ASSET TO BE SO HELD, THEN, THE CAPITAL GAIN ARISING FROM THE TRANSFER SHALL BE DEE MED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT SPEC IFIED HEREUNDER, NAMELY- (I) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILISED IN ACQUIRING THE NEW CAPITAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN; (II) WHERE ONLY A PART OF THE NET CONSIDERATION IS UTILI SED FOR ACQUIRING THE NEW CAPITAL ASSET, SO MUCH OF SUCH CAPITAL GA IN AS IS EQUAL TO THE AMOUNT, IF ANY, BY WHICH THE AMOUNT SO UTILISED EXCEEDS THE COST OF TH E TRANSFERRED ASSET; (B) WHERE A CAPITAL ASSET, BEING PROPERTY HELD UNDER TR UST IN PART ONLY FOR SUCH PURPOSES, I S TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILISED FOR ACQUIRING ANOTHER CAPITAL ASSET TO BE SO HELD, THEN, THE APPROPRIATE FRACTION OF THE CAPITAL GAIN ARISING FROM THE TRANS FER SHALL BE DEEMED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT SPECIFIED HEREU NDER, NAMELY:- (I) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILISE D IN ACQUIRING THE NEW CAPITAL ASSET, THE WHOLE OF THE APPROPRIATE FRACTION OF SUC H CAPITAL GAIN; (II) IN ANY OTHER CASE, SO MUCH OF THE APPROPRIATE FRACT ION OF THE CAPITAL GAIN AS IS EQUAL TO THE AMOUNT, IF ANY, BY WHICH THE APPROPRIA TE FRACTION OF THE AMOUNT UTILISED FOR ACQUIRING THE NEW ASSET EXCEEDS THE APPROPRIATE FRACTION OF THE C OST OF THE TRANSFERRED ASSET. EXPLANATION.- IN THIS SUB- S ECTION,- (I) ' APPROPRIATE FRACTION' MEANS THE FRACTION WHICH RE PRESENTS THE EXTENT TO WHICH T HE INCOME DERIVED FROM THE CAPITAL ASSET TRANSFERRE D WAS IMMEDIATELY BEFORE SUCH TRANSFER APPLICABLE TO CHARITABLE OR RELIGIOUS PURP OSES; (II) ' COST OF THE TRANSFERRED ASSET' MEANS THE AGGREGA TE OF THE C OST OF ACQUISITION (AS ASCERTAINED FOR THE PURPOSES OF SECTIONS 48 AND 49) OF THE CAPITAL ASSET WHICH IS THE SUBJECT OF THE TRANSFER AND THE COST OF ANY IMPROVEMENT THERETO WITHIN THE MEANING ASSIGNED TO THAT EXPRESSION IN SUB- CLAUSE (B) OF CLAUSE (1) OF SECTION 55; (III) ' NET CONSIDERATION' MEANS THE FULL VALUE OF THE CO NSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER.] WE NOTE THAT IN THE PROVISIONS OF SECTION 11(1) IT HAS BEEN CLEARLY MENTIONED 15% OF THE INCOME, HENCE IT IS GROSS INCOME OF THE ASSESSEE TRUST AND NOT THE NET INCOME. THEREFORE, BASED ON THIS FACTUAL POSITION A S MENTIONED IN SECTION 11(1) AS M/S SAHARA UTSARGA WELFARE SOCIETY ITA NO.2436/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 NOTED ABOVE, WE DIRECT THE ASSESSING OFFICER TO ALL OW 15% EXEMPTION ON GROSS RECEIPTS. 6. IN SECOND GROUND THE SOLITARY ISSUE IS THAT THE ASSESSING OFFICER DID NOT ALLOW THE DEPRECIATION EXPENSES TO THE ASSESSEE WHILE CA LCULATING THE APPLICATION OF FUNDS. WE NOTE THAT HONBLE SUPREME COURT IN THE CA SE OF RAJASTHAN GUJRATI CHARITABLE FOUNDATION (2018) 402 ITR 441 (SC) HELD THAT AMENDMENT IN SECTION 11(1) BROUGHT BY THE FINANCE ACT, 2014 W.E.F A.Y. 2 015-16 WHICH PROHIBITED THE ALLOWANCE OF DEPRECIATION IS PROSPECTIVE IN NATURE. THAT IS AMENDMENT OF THE FINANCE ACT, 2014, IS APPLICABLE FROM A.Y. 2015-16. IN ASSESSEES CASE THE ASSESSMENT YEAR IS 2012-13, THEREFORE AMENDMENT OF FINANCE ACT, 2014 DOES NOT APPLY TO THE ASSESSEE, HENCE, ASSESSEE IS ENTITLED FOR DEPRECIATION ALLOWANCE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 22.12. 2020 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 22/01/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. M/S SAHARA UTSARGA WELFARE SOCIETY 2. DCIT(E), CIRCLE-1, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES M/S SAHARA UTSARGA WELFARE SOCIETY ITA NO.2436/KOL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 6 66 6