DCIT (Exemptions), CHENNAI V. Vysarpadi Vinayaka Mudaliar Charities, CHENNAI

ITA 2881/CHNY/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7577 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALMALSAWMA PACHUAU IRS
• Keywords: Charitable institution; Set aside
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NO.2881/CHNY/2017 ! / ASSESSMENT YEAR : 2011-2012. THE DEPUTY COMMISSIONER OF INCOME TAX, EXEMPTIONS (CHENNAI CIRCLE) CHENNAI VS. M/S. VYSARPADI VINAYAKA MUDALIAR CHARITIES, NO.22, SOUTH MADA STREET, MYLAPORE, CHENNAI 600 004. [PAN AAAAV 0109L] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE &' '# $ % /RESPONDENT BY : SHRI. LALMALSAWMA PACHUAU, IRS, JCIT. ( ) $ * /DATE OF HEARING : 20-06-2019 +,! $ * /DATE OF PRONOUNCEMENT : 23-07-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 7, CHENNAI ITA NO. 2881/2017 :- 2 -: (CIT(A) FOR SHORT) DATED 11.09.2017 FOR THE ASSES SMENT YEAR (AY) 2011-2012. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1 THE ID. CIT (A) ERRED IN HOLDING THAT THE ASSES SEE IS ELIGIBLE FOR ACCUMULATION U/S 11(2) WITHOUT GIVING ANY CONCR ETE AND SPECIFIC REASON. 2.2 THE ID. CIT(A) FAILED TO CONSIDER THE DECISION OF KOLKOTA HIGH COURT IN THE CASE OF DIT(E) V. TRUSTEES OF SIN GHANIA CHARITABLE TRUST(199 ITR 819) WHEREIN IT WAS HELD T HAT THE ASSESSEE MUST SPECIFY IN THE NOTICE THE CONCRETE NA TURE OF THE PURPOSES FOR WHICH ACCUMULATION IS BEING MADE. 2.3 THE ID. CIT (A) FAILED TO OBSERVE THAT THE TERM SPECIFIES IN SECTION 11(2) IMPLIES THAT THE ACCUMULATION SHOULD OBVIOUSLY BE FOR A DEFINITE AND CONCRETE PURPOSE AND NOT FOR THE GENERAL OBJECTS. 2.4 THE LD.CIT(A) FAILED TO APPRECIATE THAT EACH AS SESSMENT YEAR IS A SEPARATE AND INDEPENDENT PROCEEDING UNDER THE INCOME TAX ACT AND THERE IS NO QUESTION OF RES JUD ICATA AS FAR AS INCOME TAX PROCEEDINGS ARE CONCERNED, AS HELD BY HONBLE SUPREME COURT IN THE CASE OF JOINT FAMILY OF UDAYAN CHINUBHAI VS CIT(1967) 63 ITR 416 AND IN THE CASE OF DISTRIBU TORS OF BARODA (P) LIMITED VS UNION OF INDIA (155 ITR 120) WHEREIN IT IS HELD MISTAKE CANNOT BE CONTINUE TO PERPETUATING AN D THE RULE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEE DINGS. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSES SING OFFICER MAY BE RESTORED. ITA NO. 2881/2017 :- 3 -: 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE RESPONDENT-ASSESSEE NAMELY M/S. VYSARPADI VINAY AKA MUDALIAR CHARITIES IS PUBLIC CHARITABLE TRUST REG ISTERED U/S.12A(A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-2012 WAS FILED ON 29.0 9.2011 SHOWING NIL INCOME. AGAINST THE SAID RETURN OF INCOME, TH E ASSESSMENT WAS COMPLETED BY THE DEPUTY DIRECTOR OF INCOME TAX, EXE MPTION I, CHENNAI (HEREINAFTER CALLED AS ASSESSING OFFICER ) VIDE ORDER DATED 20.03.2014 PASSED U/S. 143(3) OF THE INCOME TAX AC T, 1961 (FOR SHORT THE ACT) ASSESSING UNSPENT INCOME ON THE GROUND T HAT FORM NO.10 DOES NOT SPECIFY THE PURPOSE FOR WHICH THE INCOME I S BEING ACCUMULATED. 4. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER HELD THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE APPLICATION FOR ACCUMULATION OF INCO ME. 5. BEING AGGRIEVED BY THE ORDER OF THE CIT(A), THE R EVENUE IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. LD. SR. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT LD. CIT(A) OUGHT NO T HAVE ALLOWED ITA NO. 2881/2017 :- 4 -: ACCUMULATION OF INCOME IN THE ABSENCE OF SPECIFIC I NFORMATION IN FORM NO.10. IN SUPPORT OF THIS, LD. SR. DEPARTMENTAL R EPRESENTATIVE PLACED RELIANCE ON THE DECISION OF HONBLE KOLKOTA HIGH CO URT IN THE CASE OF DIT(E) VS. TRUSTEES OF SINGHANIA CHARITABLE TRUST, 199 ITR 819. 6. ON THE OTHER HAND, LD. AUTHORISED REPRESENTATIVE SU BMITTED THAT TRUSTEES OF THE TRUST HAS DECIDED TO ACCUMULAT E THE INCOME FOR THE FOLLOWING REASONS:- 1. PURCHASING IANDS/BUILDINGS FOR ESTABLISHING HO SPITALS, CLINICS, VOLUNTARY HEALTH CENTERS. 2 CONTRIBUTING TO THE RELIEF FUNDS OF CHIEF MINISTE R OF TAMILNADU AND PRIME MINISTER OF INDIA. 3 SPENDING FOR ANY OTHER SOCIAL ACTIVITY, WHEREIN N EEDY WILL BE BENEFITED. 4 DONATE TO SCHOOLS OR ORPHANAGES, HOSPITALS AND CL INICS FOR BUILDING FUNDS, PROVIDING SCHOOL FEES AND SPEND FOR THE EDUC ATION OF POOR STUDENTS WHO ARE BOARDED INTO BE UTILIZED FOR CONST RUCTION OF BUILDING THUS, HE SUBMITTED THAT IT CANNOT BE SAID THAT IN COME IS BEING ACCUMULATED WITHOUT SPECIFYING PURPOSE. THEREFORE , IT IS SUBMITTED THAT THE ASSESSING OFFICER GROSSLY FELL IN ERROR IN HOLDING THAT PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED IS NOT ME NTIONED. HE FURTHER DREW OUR ATTENTION TO THE PAPER BOOK PAGES 17 TO 19, AND PLACED RELIANCE ON THE DECISION OF JURISDICTIONAL H IGH COURT IN THE CASE ITA NO. 2881/2017 :- 5 -: OF ESTATE OF MALIGAI MERCHANT CHARITIES VS. CIT, IN T.C (APPEAL) NO.1602 OF 2005 DATED 14.12.2009. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD . THE LD. ASSESSING OFFICER HAD DENIED ACCUMULATION O F INCOME SOLELY ON THE GROUND THAT NO SPECIFIC PURPOSE WAS M ENTIONED IN FORM NO.10. THIS APPEARS TO BE CONTRARY TO FACTS FOUN D FROM THE PERUSAL OF FORM NO.10 FILED AT PAPER BOOK PAGES 18 AND 19 , IT IS CLEAR THAT INCOME WAS ACCUMULATED FOR THE PURPOSE OF THE OBJEC TS MENTIONED IN THE TRUST. THE DECISION OF HONBLE KOLKATA HIGH COU RT RELIED UPON BY THE LD. SR. DEPARTMENTAL REPRESENTATIVE IN THE CA SE OF TRUSTEES OF SINGHANIA CHARITABLE TRUST (SUPRA) WAS DISTINGUISHE D BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ESTATE OF MALIGAI MERCHANT CHARITIES (SUPRA), WHEREIN IT WAS HELD AS UNDER:- 3. THE LEARNED COUNSEL APPEARING FOR THE APPELLAN T AS WELL AS THE COUNSEL FOR THE RESPONDENT SUBMITS THAT THE ISS UE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISION OF THIS COUR T IN THE CASE OF ESTATE OF KADAPAKAM CHARITIES VS. THE ASST.DIRECTOR OF INCOME TAX (EXEMPTIONS) II, CHENNAI 34 (T.C.(A) NO.281 OF 2004) DATED 15.12.2008,WHEREIN IT WAS OBSERVED AS FOLLOWS : '.... 8.THE DECISION OF THE CALCUTTA HIGH COURT WIL L NOT STRICTLY APPLY TO THIS CASE, SINCE IN THAT CASE IN FORM 10, ALL THE OBJECTS OF THE TRUST HAD BEEN ENUMERATED AND THEREFORE, REJECT ION OF FORM 10 WAS NOT JUSTIFIED. IN THIS CASE, THE PURPOSE HAS BEEN SPECIFIED VIZ., REPAIR AND RENOVATION OF THE BUILDING, AND TH E DIFFICULTIES IN IMMEDIATELY STARTING THE RENOVATION HAVE ALSO BEEN BROUGHT TO THE NOTICE OF THE AUTHORITIES. BUT AT THE SAME TIME, WE ALSO SEE THAT FORM 10 HAS NOT BEEN DULY FILLED UP. EVEN IN THE MA TTER DECIDED ITA NO. 2881/2017 :- 6 -: BY THE CALCUTTA HIGH COURT, THE ASSESSEE WAS ALLOWE D TO ADDUCE FRESH EVIDENCE TO SHOW THE SPECIFIC PURPOSE FOR WHI CH THE TRUST REQUIRES ACCUMULATION OF THE INCOME. IN THIS CASE T OO, ESPECIALLY IN VIEW OF THE FACT THAT IT IS AG & OT WHO IS ADMIN ISTERING THE TRUST, WE FEEL THAT THE SAME INDULGENCE COULD BE SH OWN. WE ARE NOT ANSWERING THE QUESTIONS OF LAW RAISED, HOWEVER, WE REMAND THE MATTER TO THE ASSESSING OFFICER AND THE ASSESSE E SHALL SPECIFY THE PURPOSE IN ADDITION TO RENOVATION AND REPAIR OF THE BUILDING AND ALSO THE AMOUNT AND THE PERIOD FOR WHICH ACCUMU LATION IS REQUIRED, AND THE ASSESSING OFFICER SHALL CONSIDER THE SAME IN ACCORDANCE WITH LAW....' THUS, IN THE LIGHT OF THE ABOVE DECISION OF THE JUR ISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD . CIT(A). ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 23RD DAY OF JULY, 2019, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED:23RD JULY, 2019. KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF