IDARA AUQAF ASLAMIA TRUST, JAMMU & KASAHMIR V. INCOME TAX OFFICER WARD ANANTNAG, JAMMU AND KASHMIR

ITA 261/ASR/2018

AI Insights

The case involves Idara Aquaf Islamia Trust, which appealed against the order of the Commissioner of Income Tax (Appeals)-2, Amritsar, confirming the addition of Rs. 818,140 to the trust's income for the assessment year 2009-10. The trust argued that the surplus income was spent on charitable purposes and should be exempt under sections 11 and 10(23C)(iiiad) of the Income Tax Act, 1961. The primary contention was whether the trust, not being registered under section 12A during the relevant financial year, could still claim deductions for the surplus income used for charitable activities. The Tribunal noted that the issue of the trust's registration and its implications on the taxability of the surplus income required further examination and thus remanded the matter back to the CIT(A).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114590 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-11-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2018
• Other Referred Cases: Dera Baba Bhai Gurdas Ji Udasin Trust v. ITO, St. Jude's Convent School v. ACIT, Circle-III, Jalandhar, Punjab Educational Society v. ITO-IT, Moga, SNDP Yogam v. Asstt. Director of Income Tax (Exemption)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 11; 139; 143(3); 234B; 12A; 12AA; 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 261/Asr/2018 Assessment Year: 2009-10 Idara Aquaf Islamia Trust, Pampore, Kashmir (J & K) [PAN: AAATI 7697H] Vs. Income Tax Officer, Ward Anantnag, Kashmir (J & K) (Appellant) (Respondent) Appellant by : Sh. P. N. Arora, Adv. Respondent by: Mrs. Kanchan Garg, Sr. DR Date of Hearing: 15.11.2022 Date of Pronouncement: 31.01.2023 ORDER Per Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Amritsar (Camp at Jammu) [in brevity the CIT(A)], bearing Appeal No. 434/2011-12 dated 02.02.2018 u/s 250(6) of the Income Tax Act, 1961 [in brevity the Act], in respect of Assessment Year 2009-10. The said order is originated from the order of the ld. Income Tax Officer, ITA No. 261/Asr/2018 Idara Aquaf Islamia Trust v. ITO 2 Ward, Anantnag, Kashmir [in brevity the A.O.] passed u/s 143(3) of the Act, dated 27.12.2011. 2. The assessee has taken the following grounds of appeal: “1. That the assessment order as well as the order of Learned CIT(A), Jammu, both are against the facts of the case and are untenable under the law. 2. That no reasonable opportunity of being heard was allowed by the A.O. before passing the order. As such, the assessment order is bad in law and is liable to be cancelled. Again, the worthy CIT(A) has grossly erred in confirming the order of the AO. 3. That the Ld. CIT(A) was not justified in confirming the addition of Rs.818140/- made by the AO. The addition made is unjustified, unwarranted and the addition made is liable to be deleted. 4. That the authorities below did not appreciate that a sum of Rs.818139/- is not at all taxable inasmuch as the whole amount was spent for charitable purpose and there was no reason or occasion for the Ld. CIT(A) to confirm the addition. As such the addition confirmed by the worthy CIT(A) is not at all called for and the addition made at Rs.818140/-may be deleted. 5. That the Ld. CIT(A) did not appreciate that the registration was granted by the CIT vide order dated 30/04/2012 u/s 12AA(1)(b)(i) of the IT Act, 1961 and it has got retrospective effect in view of amendment to section 12AA by Finance Act, 2014. Thus these provisions clearly have retrospective effect and the worthy CIT(A) was not justified in confirming the addition made by the AO. 6. That this is an admitted fact that the aims and objectives of the trust are charitable which includes education also and the authorities below have never been able to establish that the surplus amount of Rs.818139/- was used for the purpose other than charitable and education purpose. As such the addition is unjustified and uncalled for and the addition confirmed by the Ld. CIT(A) may be deleted. Alternatively the addition made is very high & excessive. 7. That interest charged u/s 234A at Rs. 12810/- and Rs. 52840/- u/s 234B of the IT Act, 1961, is not at all called for and the same is liable to be cancelled. Alternatively, the interest charged is very high & excessive. ITA No. 261/Asr/2018 Idara Aquaf Islamia Trust v. ITO 3 8. Any other ground of appeal which may be urged at the time of hearing of the appeal. 3. Brief fact of the case is that the assessee is a trust. During the financial year 2008-09 related assessment year 2009-10, the assessee filed return dated 14.10.2011. The trust was created on 28.10.1999. The assessee was granted registration u/s 12AA(1) dated 30.04.2012 w.e.f. assessment year 2012-13. During the assessment year 2009-10, the assessee had declared the surplus income over expenditure amount of Rs.8,18,139/-. The assessee claimed the deduction u/s 11/10(23C)(iiiad) of the Act out of the net profit at Rs. 8,18,139. The assessee claimed that the expenditure for construction of gallery at the religious Khanqah (Building for Spiritual Retreat) amount of Rs.7,83,374/- and the balance amount of Rs.34,766/- is claimed u/s 11(1)(a) of the Act which is not exceeding 15% of the income. So, the entire amount of surplus was claimed as exempt income. During the financial year, the assessee was not registered u/s 12A. The Assessing Officer treated the assessee as an AOP, took the surplus as taxable profit and calculated tax accordingly. The entire amount of net profit was added back to the total income of the assessee. 4. Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The CIT(A) upheld the order of the ld. AO. 5. Aggrieved, the assessee filed an appeal before us. ITA No. 261/Asr/2018 Idara Aquaf Islamia Trust v. ITO 4 6. During the hearing, the ld. counsel for the assessee had filed a written submission which is kept in record. The counsel of the assessee filed the following chart for claim of deduction u/s 12A during the assessment year 2009-10. Sr. No. Description Date 1. The trust formed 28.10.1999 2. Return filed u/s 139 for assessment year 2009-10. 27.12.2011 3. Application for registration u/s 12AA 14.10.2021 4. Registration granted u/s 12AA by the CIT(A) 30.04.2012 5. Date of order of assessment for assessment year 2009-10 27.12.2011 7. The ld. counsel for the assessee prayed that the assessee is covered as per the first proviso to section 12A(2) of the Act. The assessment was pending during the time of granting registration. In this respect, the assessee referred the order of the ITAT, Amritsar Bench in the case of Dera Baba Bhai Gurdas Ji Udasin Trust v. ITO in ITA Nos. 228 & 229/Asr/2019 dated 22.06.2022. 8. The ld. Sr. DR vehemently argued and mentioned that the provision is applicable w.e.f. 01.10.2014. The assessee is not eligible for this provision related to assessment year 2009-10. Further the assessment for AY 09-10 was not pending during the time of registration U/s 12AA of the Act. 9. We heard the rival submissions and relied on the documents available on the record. The ld. counsel in his submission already mentioned that for the assessment ITA No. 261/Asr/2018 Idara Aquaf Islamia Trust v. ITO 5 year 2009-10, the issue of assessment was pending before the Revenue during the time of registration of trust. The proviso itself and curative in nature and allowed the assessee to enjoy the benefit of section 11 even any preceding year, if there is no change of the main object. Related to the application of provision before 01.10.2014, the counsel for the assessee is relied on the order of the coordinate bench in the case of (i) St. Jude’s Convent School v. ACIT, Circle-III, Jalandhar [2017] 77 taxmann.com 173 (Amritsar. Trib.) (ii) Punjab Educational Society v. ITO-IT, Moga [2017] 88 taxmann.com 113 (Amritsar Trib.) (iii) SNDP Yogam v. Asstt. Director of Income Tax (Exemption) [2016] 68 taxmann.com 152 (Cochin-Trib.). So, the entire provision is applicable retrospectively for assessment year 2009-10. For adjudicating the issue the here we quick look on the proviso to section 12A(2) of the Act which is reproduced as below:- “Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB], then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending 63 before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year:” ITA No. 261/Asr/2018 Idara Aquaf Islamia Trust v. ITO 6 In factual matrix the assessment of assessee was completed on 27/12/2011. The registration U/s 12AA(i) was granted by the ld. CIT(E) on 30/04/2012 as religious charitable Trust, copy of registration is annexed in APB, page-20. The assessment was not pending during the time of registration. In factual matrix, in the referred case of the ld. Counsel in the case of Dera Baba Bhai Gurdas Ji Udasin Trust v. ITO in ITA Nos. 228 & 229/Asr/2019 is not similar with the impugned appeal. In argument the ld. counsel is claiming that the assessee-trust is eligible for deduction u/s 10(23C)(iiiad) of the Act, APB pg. 4. The issue was not taken care any of the Revenue Authorities in their orders. We remand back the issue to ld. CIT(A) for further adjudication denavo on light of application section 10(23C)(iiiad) of the Act on assessee trust. The assessee should get reasonable opportunity during the hearing. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31.01.2023 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), ITA No. 261/Asr/2018 Idara Aquaf Islamia Trust v. ITO 7 (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order