M/s. Paramahamsa Education Society, Bengaluru V. Income Tax Officer (Exemptions), Ward-2 , Bangalore

ITA 2481/BANG/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6853 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 04-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: S KRISHNA SWAMY
• Keywords: Reasonable cause; Corroborative evidences; Condonation of delay; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOU NTANT MEMBER ITA NO. 2481 /BANG/201 9 (ASSESSMENT YEAR: 20 0 8 - 0 9) M/S. PARAMAHAMSA EDUCATION SOCIETY, NO.58/2, CHIKKALASANDRA, SUBRAMANYAPURA, BANGALORE 560 061 .APPELLANT VS. INCOME TAX OFFICER (EXEMPTIONS), WARD 2, BANGALORE. RESPONDENT. ASSESSEE BY: SHRI S. KRISHNASWAMY, C.A. REVENUE BY: SMT. R. PREMI, CIT (D.R) DATE OF HEARING : 13.01. 20 2 1 . DATE OF PRONOUNCEMENT : 28 .01. 20 2 1 . O R D E R PER SHRI CHANDRA POOJARI , A M : TH IS APPEAL FILED B Y THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS) - 14 , BANGALORE DT. 18.09.2019 FOR THE ASSESSMENT YEAR 2013 - 14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 2 ITA NO. 2481/BANG/2019 1. THE LEARNED ITO AND CIT (APPEALS) ER RED IN NOT ALLOWING THE INVESTMENT IN THE ACQUISITION OF THE LAND FOR RS.70,00,000 ON THE GROUND THAT THE LAND IN QUESTION IS IN THE NAME OF A TRUSTEE SRI M. RAKESH. 2. THE LEARNED ITO AND CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE LAND IN QUESTI ON HAS BEEN TREATED AS AN ASSET OF THE TRUST AND DEVELOPED FOR THE PURPOSE OF CARRYING ON ACTIVITIES OF THE TRUSTS EDUCATIONAL INSTITUTIONS. THE TRUSTEES HAVE ACCEPTED THIS AS TRUST PROPERTY. 3. THE LAND WAS ALREADY MEANT FOR THE TRUST ONLY AND FUNDS ARE DRAWN FROM THE TRUST. 3. THERE WAS A DELAY OF 6 DAYS IN FILING BEFORE THE TRIBUNAL. THE ASSESSEE FILED A PETITION FOR CONDONATION OF DELAY AND SUBMITTED THAT THE DELAY WAS DUE TO ILL - HEALTH CONDITION OF ASSESSEE AND PRAYED THAT THE DELAY M AY BE CONDONED AND ADMIT FOR ADJUDICATION. THE LD. DR OBJECTED TO THE CONDONATION OF DELAY. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THERE IS A DELAY OF 6 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. WE FOUND THERE IS A GOOD AND SUFFICIENT REASONABLE CAUSE IN FILING THE APPEAL BELATEDLY AND CONDONE THE DELAY AND APPEAL IS ADMITTED FOR ADJUDICATION. 5. THE FACTS OF THE CASE ARE THAT THE ASSESSEE PURCHASED VACANT LAND FOR A CONSIDERATION OF RS.70 LAKHS AND CLAIMED AS CAPITAL EXPENDITURE. THE SAID LAND WAS PURCHASED IN THE NAME OF TRUSTEE SHRI M. RAKESH MUNIRAJU WHO IS A MEMBER AND SECRETARY OF THE SOCIETY. TH OUGH TH E SAID PROPERTY WAS REGISTERED IN THE SALE DEED 3 ITA NO. 2481/BANG/2019 ON THE NAME OF SHRI M. RAKESH MUNIRAJU AND NOTHING IS MENTIONED IN THE SALE DEED SUPPORTING THE OWNERSHIP OF THE ASSESSEE - TRUST. IT WAS FOUND THAT T HE SAID LAND WAS PURCHASED IN THE NAME OF TH E TRUSTEE DUE TO SOME LEGAL PROBLEM BUT THE FUNDS HAVE FLOWN OUT OF THE TRUST ACCOUNTS. THE ASSESSEE CLAIMED PURCHAS E OF LAND AS APPLICATION OF MONEY BY TRUST. THIS CLAIM OF THE ASSESSEE WAS DENIED BY THE ASSESSING OFFICER. ON APPEAL, THE LEARNED CIT (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED BY THE ASSESSEE, THE ASSESSEE IS IN APPEAL BEFORE U S. 6. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT DUE TO CERTAIN LEGAL PROBLEM, THE SAID LAND WAS PURCHASED BY THE ASSESSEE TRUST IN THE NAME OF SECRETARY FOR WHICH RESOLUTION HAS BEEN PASSED BY THE ASSESSEE - TRUST AND THE SAID LAND WAS REFL ECTED IN THE ASSESSEE'S BOOKS OF ACCOUNTS IN THE RELEVANT PERIOD. THERE WAS ALSO RESOLUTION BY THE TRUST TO PURCHASE THE SAID PROPERTY IN THE NAME OF SHRI M. RAKESH MUNIRAJU AND FUNDS FROM THE TRUST WAS USED TO PURCHASE THE SAID PROPERTY . BEING SO, IT SHOULD BE CONSIDERED AS APPLICATION OF TRUST MONEY AND USED FOR THE PURPOSE OF CARRYING OUT TRUST EDUCATION ACTIVITIES. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE PROPERTY WAS TO BE REGISTERED IN THE NAME OF ASSESSEE - TRUST THOUGH THE ASSESSEE STATE D THAT DUE TO LEGAL PROBLEM THE SAID PROPERTY WAS REGISTERED IN THE NAME OF THE MEMBER OF THE TRUST , IT WAS NOT EXPLAINED BY SUPPORTING EVIDENCE . FURTHER SHE SUBMITTED THAT NO EVIDENCE WAS FURNISHED 4 ITA NO. 2481/BANG/2019 SUPPORTING THAT THE TRUST FUNDS HAVE BEEN UTILIZED FOR P URCHASE OF PROPERTY. BEING SO, IT CANNOT BE CONSIDERED AS APPLICATION OF MONEY FOR THE PURCHASE OF PROPERTY, MERE INCLUSION OF ASSET IN THE BOOKS OF ACCOUNT OF ASSESSEE WILL NOT ENTITLE IT THE LEGAL RIGHT, TITLE OR AUTHORITY OVER THE PROPERTY, WHATSOEVER BE THE MUTUAL UNDERSTANDING BETWEEN THEM. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, IT IS OBSERVED BY THE LOWER AUTHORITIES THAT THE PROPERTY WAS REGISTERED IN THE NAME OF TRUSTEE SHRI M. RAKESH MUNIRAJU. HOWEVER, THE SAID PROPERTY WAS SHOWN IN THE BALANCE SHEET OF ASSESSEE - TRUST. THE CONTENTION OF THE ASSESSEE IS THAT ASSESSEE'S OWN FUND HAS BEEN USED BY THE TRUST FOR ACQUIRING TH E SAID PROPERTY, HOWEVER REGISTRATION WAS MADE IN THE NAME OF SHRI M. RAKES H MUNIRAJU DUE TO CERTAIN LEGAL PROBLEM. THE ASSESSEE HAS NOT PLACED ANY MINUTES OF THE TRUST TO SHOW THAT THE PROPERTY SHALL BE REGISTERED IN THE NAME OF SHRI M. RAKESH MUNIRAJU ON BEH ALF OF THE TRUST. THERE IS NO R ESOLUTION PLACED ON RECORD TO SHOW TH AT THE SAID SHRI M. RAKESH MUNIRAJU SHALL NOT BE TRANSFERRED THE PROPERTY WITHOUT KNOWLEDGE OF THE TRUST. HENCE THESE EVIDENCES REQUIRED TO BE PRODUCED BY THE ASSESSEE SO AS TO EXAMINE BY THE LOWER AUTHORITIES. IT IS ALSO NOT EXPLAINED BEFORE THE LOWER A UTHORITIES HOW THIS PROPERTY HAS BEEN USED BY THE ASSESSEE TRUST. FURTHER IF THE ASSESSEE TRUST USED ITS OWN FUNDS, THEN ONLY IT CAN BE CONSIDERED AS APPLICATION OF MONEY BY THE ASSESSEE TRUST. IF THE ASSESSEE USED THE BORROWED FUNDS 5 ITA NO. 2481/BANG/2019 FOR ACQUISITION OF T HIS IMMOVABLE PROPERTY AND REGISTERING IN THE NAME OF SHRI M. RAKESH MUNIRAJU THEN IT CANNOT BE CONSIDERED AS APPLICATION OF MONEY IN ASSESSEE'S HANDS. IN OTHER WORDS, THE REPAYMENT OF BORROWED FUNDS ONLY BE CONSIDERED AS APPLICATION OF MONEY AND NOT ON T HE ACQUISITION OF SAID PROPERTY BY BORROWED FUND. IT IS TO BE NOTED THAT USAGE OF BORROWED FUND CANNOT BE EQUATED WITH THE USAGE OF INCOME OF THE TRUST AND SAME CANNOT BE ALLOWED AS APPLICATION OF MONEY . THE REPAYMENT OF BORROWED FUND WOULD BE TREATED AS APPLICATION OF INCOME. WITH TH ESE ABOVE OBSERVATIONS, WE REMIT THE ENTIRE DISPUTED ISSUES TO THE FILE OF ASSESSING OFFICER TO EXAMIN E WHETHER THERE IS A RESOLUTION FOR ACQUIRING THE PROPERTY IN THE NAME OF MEMBER SHRI M. RAKESH MUNIRAJU BY THE TRUST AN D WHETHER ANY EVIDENCE TO SHOW THAT OWN FUND HAS BEEN USED TO ACQUIRE THE SAME AND WHETHER THERE IS A RESTRICTION OF ALIENATION OF PROPERTY BY THE TRUST EE ON SHRI M. RAKESH MUNIRAJU. WITH THE ABOVE OBSERVATIONS , THE ASSESSING OFFICER HAS TO RE - EXAMINE THE ENTIRE ISSUE AND DECIDE THE CASE AS PER LAW. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - ( N.V. VASUDEVAN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 28 . 0 1. 20 2 1 . *REDDY GP 6 ITA NO. 2481/BANG/2019 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE