DCIT, Circle, Faizabad V. M/s Shree Mani Mandir Sewa Nyas Samiti, Faizabad

ITA 268/LKW/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9066 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K KAPOOR
• Keywords: Depreciation; Revised return; Capital expenditure
• Section: 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.268/LKW/2013 ASSESSMENT YEAR:2007 - 08 M/S SHREE MANI MANDIR SEWA NYAS SAMITI, RAMGHAT, ALYODHYA, FAIZABAD. PAN:AAATM9513A VS DY.C.I.T. CIRCLE - FAIZABAD. (RESPONDENT) (APPELLANT) C.O.NO.24/LKW/2013 (IN ITA NO.268/LKW/2013) ASSESSMENT YEAR:2007 - 08 DY.C.I.T. CIRCLE - FAIZABAD. VS M/S SHREE MANI MANDIR SEWA NYAS SAMITI, RAMGHAT, ALYODHYA, FAIZABAD. PAN:AAATM9513A (RESPONDENT) (APPELLANT) SHRI K. C. MEENA, D. R. REVENUE BY SHRI P. K. KAPOOR, C.A. ASSESSEE BY 18/11/2014 DATE OF HEARING 13 /01/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - I, LUCKNOW DATED 24/01/2013 FOR ASSESSMENT YEAR 2007 - 08. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE I.E. I.T.A. NO. 268/LKW/2013. IN THIS APPEAL , THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2 1. LD. CIT(A) HAS ERRED ON FACTS AND IN LAW ALLOWING CAPITAL EXPENDITURE AS 'APPLICATION OF INCOME' IGNORING THE FACT THAT CLAIM OF THE ASSESSEE SOCIETY REGARDING DEPRECIATION ON FIXED ASSETS HAD ALREADY BEEN ALLOWED AND FURTHER ALLOWING CAPITAL EXPENDITURE AS 'APPLICATION OF INCOME' LEADS TO DOUBLE DEDUCTIONS WHICH IS NOT ALLOWABLE AS PER DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDIA REPORTED IN 199 ITR 43. 2. LD. CIT(A) HAS ERRED ON FACTS AND IN LAW ALLOWING CAPITAL EXPENDITURE AS 'APPLICATION OF INCOME' IGNORING THE FACT THAT THE ASSESSEE MADE ABOVE CLAIM NOWHERE IN THE RETURN AND SUCH DEDUCTION CANNOT BE CLAIMED OTHERWISE THAN FILING A REVISED RETURN AS PE R DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS CIT (284 ITR 323) (2006) WHICH WAS NOT DONE BY THE ASSESSEE. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE AS UNDER: 1. BECAUSE THE 'CIT(A)' HAS ERRED IN HOL DING THAT THE 'APPELLANT'S' CLAIM FOR EXCLUSION OF RS.52,34,30 0 / - FROM THE COMPUTATION OF INCOME BY TREATING THE SAME AS EXEMPT UNDER SECTION 11 ( 1 )(D) IS NOT TENABLE EITHER LEGALLY OR ON FACTS'' AND ON THAT GROUND IN REJECTING THE APPELLANT'S CLAIM FOR EXE MPTION TO THE EFFECT THAT THE SAID SUM REPRESENTED THE RECEIPT TOWARDS CORPUS. 2. BECAUSE ON A DUE CONSIDERATION OF THE MATERIAL AND INFORMATION HAS HAD BEEN PLACED ON RECORD, 'CIT(A)' SHOULD HAVE INTERALIA HELD THAT THE AFORESAID RECEIPTS QUALIFIED FOR OVER ALL EXEMPTION UNDER SECTION 11 ( 1 )(D) READ WITH SECTION 12 OF THE ACT. 3. BECAU SE THE APPEAL FILED BY THE REVENUE VIDE ITA NO. 268/LKW / 2013 IS NOT MAINTAINABLE AS CONTRARY TO THE GROUND TAKEN BY THE 'ACIT', THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT REPORTED IN (2006) 284 ITR 323 SUPPORTS THE AP PELLANT'S CLAIM FOR EXEMPTION. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF CIT VS. KANNIKA PARAMESWARI DEVASTHANAM AND CHARITIES [1982] 133 I TR 779 (MAD). 3 5. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE PLACED RELIANCE ON THE FOLLOWING THREE JUDICIAL PRONOUNCEMENTS AND SUBMITTED THAT AS PER THESE JUDGMENTS OF HON'BLE APEX COURT AND HON'BLE CALCUTTA HIGH COUR T, THE JUDGMENT OF HON'BLE MADRAS HIGH COURT SHOULD NOT BE FOLLOWED: ( I ) HUKUMCHAND MILLS LTD. VS. CIT [1967] 63 ITR 232 (SC) ( II ) MCORP GLOBAL P. LTD. VS. CIT [2009] 309 ITR 434 (SC) ( III ) INCOME TAX OFFICER A WARD, DISTRICT (A), AND OTHERS VS. R. L. RAJGHORIA [1979] 119 ITR 872 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS SHOWN INCOME OF RS.4,07,891/ - AS PER INCOME & EXPENDITURE ACCOUNT AND TO THIS AMOUNT, THE ASSESSIN G OFFICER HAS ADDED THE RECEIPTS OF RS.52,34,300/ - BEING RECEIPTS FROM PATIENTS TREATED AS CORPUS FUND AND THEREAFTER , THE ASSESSING OFFICER HAS ALLOWED EXEMPTION U/S 11 FOR ACCUMULATION TO THE EXTENT OF 15% OF THE TOTAL RECEIPTS AT RS.2,44,21,784/ - QUANTI FIED AT RS.36,63,268/ - AND ASSESSED THE NET TAXABLE INCOME AT RS.19,78,923/ - . THE CLAIM OF THE ASSESSEE IS THAT THE CORPUS DONATION SHOULD ALSO BE TREATED AS EXEMPT U/S 11(1)(D) READ WITH SECTION 12 AND THE SECOND CONTENTION OF THE ASSESSEE IS THIS THAT SINCE THE APPLICATION OF INCOME OF THE ASSESSEE IS TO THE EXTENT OF RS. 191.87 LAC S , THE SAME SHOULD BE CONSIDERED AS APPLICATION OF INCOME AND IF THIS IS DONE, THE APPLICATION OF INCOME IS MORE THAN 85% OF THE TOTAL RECEIPT RESULTING INTO NO INCOME TO BE T AXED. FIRST WE DEAL WITH THE FIRST ASPECT RAISED BY THE ASSESSEE IN THE CROSS OBJECTION AS TO WHETHER THE CORPUS DONATION IS EXEMPT OR NOT BECAUSE IF IT IS FOUND THAT THE CORPUS DONATION IS EXEMPT THEN NOTHING REMAINS. IN THIS REGARD, WE FIND THAT CLAUSE (D) OF SUB SECTION (1) OF SECTION 11 IS RELEVANT, WHICH IS REPRODUCED BELOW: 4 11(1)(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. 6.1 FROM THE ABOVE PROVISIONS, WE FIND THAT IF THE VOLUNTARY CONTRIBUTION IS MADE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE INSTITUTION, THE SAME CANNOT BE INCLUDED IN THE INCOME OF THE ASSESSEE. IN THIS REGARD, WE FIND THAT A CLE AR FINDING IS GIVEN BY CIT(A) IN PARA 9 OF H IS ORDER THAT AS PER MATERIAL AVAILABLE ON RECORD, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE DONATION/CONTRIBUTION OF RS.52,34,300/ - TREATED BY THE ASSESSEE AS EXEMPT U/S 11(1)(D) WAS SUPPORTED BY ANY EVIDE NCE CONTAINING ANY SPECIFIC DIRECTION FROM THE DONORS OR CONTRIBUTORS. NO MATERIAL HAS BEEN PRODUCED BY THE ASSESSEE BEFORE US ALSO TO ESTABLISH THIS CLAIM THAT THERE WAS ANY SPECIFIC DIRECTION FROM THE CONTRIBUTORS/DONORS THAT THE DONATION/ CONTRIBUTION IS FOR CORPUS OF THE ASSESSEE TRUST. UNDER THESE FACTS, WE DO NOT FIND ANY MERIT IN THIS CLAIM OF THE ASSESSEE AS PER THE CROSS OBJECTION AND HENCE, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF THE CLAIM THAT THE DONATION/CONTRIBUTION WAS RECEIVED WITH SPECIFIC DIRECTION FROM THE DONORS/CONTRIBUTORS. 7. REGARDING THE SECOND CLAIM OF CAPITAL EXPENDI TURE, IT IS NOTED BY CIT(A) IN P ARA 10 OF HIS ORDER THAT THE ASSESSEE HAS INCURRED AN AMOUNT OF RS.52,89,106/ - BY WAY OF ADDITION IN FIXED ASSETS . THIS IS ALSO NOTED BY CIT(A) THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE ABOVE MENTIONED AMOUNT OF CAPITAL EXPENDITURE IN THE COMPUTATION OF INCOME. IN THIS REGARD, WE NOW CONSIDER THE APPLICABILITY OF THE JUDGMENT OF HON'BLE MADRAS HIGH COURT CITED BY LEARNED D.R. OF THE REVENUE AND ALSO THE THREE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 8. AS PER THE JUDGMENT OF HON'BLE MADRAS HIGH COURT CITED BY LEARNED D.R. OF THE REVENUE, WE FIND THAT IN THAT CASE , IT WAS HELD BY HON'BLE MADRAS HIGH COURT THAT IF THE TRUST APPLIES ITS INCOME TOWARDS IMPROVEMENT OF THE TRUST PROPERTY, THE INCOME OF THE TRUST WOULD BE EXEMPT IF SUCH EXPENDITURE WOULD 5 PROMOTE THE OBJECTS OF THE TRUST. NOW THE QUESTION IS WHETHER THE ACQUISITI ON OF FIXED ASSETS BY SPENDING AMOUNT OF RS.52,89,106/ - IN THE PRESENT CASE WILL RESULT INTO PROMOTION OF THE OBJECTS OF THE TRUST. THESE EXPENSES WERE INCURRED ON ACCOUNT OF FIXED ASSETS OF AYODHYA EYE HOSPITAL, MANI MANDIR AYODHYA EYE HOSPITAL AND VISI ON CENTRE (BASTI UNIT) . IT IS THE CLAIM OF THE ASSESSEE THAT THE OBJECTS OF THE ASSESSEE TRUST ARE RELATED TO MEDICAL RELIEF. IT HAS BEEN ACCEPTED BY THE ASSESSING OFFICER ALSO THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 BECAUSE AS PER THE ASSESSM ENT ORDER, THE ASSESSING OFFICER HAS HELD THAT 15% OF THE TOTAL RECEIPTS IS EXEMPT U/S 11 ON ACCOUNT OF PERMISSIBLE ACCUMULATION . HAVING ACCEPTED THAT RUNNING HOSPITAL IS ELIGIBLE FOR EXEMPTION U/S 11 IN THE PRESENT YEAR, THE SAME HAS TO BE TAKEN TO LOGICAL CONCLUSION AND THEREFORE, IT HAS TO BE ACCEPTED THAT THE INVESTMENT IN THE FIXED ASSETS OF THE HOSPITAL BUILDING IS ALSO AN E XPENSE TOWARDS FULFILLMENT OF THE OBJECTS OF THE ASSESSEE TRUST AND HENCE, THE SAME SHOULD BE CONSIDERED AS APPLICATION OF INCOME. THE DECISION OF CIT(A) IS ON THIS LINE AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) BECAUSE WE DO NOT FIND ANY INFIRMITY THEREIN IN THE FACTS OF THE PRESENT CASE . THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THE ORDER OF CIT(A) IS CONFIRMED. 9. IN THE RESULT , THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13 /01/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR