Gurukul Ayurved Pharmacy, Haridwar V. DCIT, Exemption circle, Ghaziabad

ITA 2917/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2983 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 04-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SANKAR NASKAR
• Keywords: Business income; Capital expenditure
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.2917/DEL/2019 ASSESSMENT YEAR: 2014-15 GURUKUL AYURVED PHARMACY P.O. GURUKUL JWALPUR, HARDWAR UTTARAKHAND 249407 PAN NO. AABTG1244R VS DCIT EXEMPTION CIRCLE GHAZIABAD (APPELLANT) (RESPONDENT) RESPONDENT BY NONE APPELLANT BY SH. SANKAR NASKAR, SR. DR. DATE OF HEARING: 12/03/2020 DATE OF PRONOUNCEMENT: 13/03/2020 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A)-15, DEHRADUN DATED 13.02.2019 PERTAINING TO A.Y. 2014-15. 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READ A S UNDER :- 1. THE APPELLANT TRUST IS APPROVED U/S 12A / 12AA O F THE INCOME TAX ACT, 1961 AND THEREFORE, THE DENIAL OF EXEMPTIO N U/S 11 OF THE APPLICATION OF PROFITS, MADE IN BUSINESS OF RS,13,7 0,345/-, IN CHARITABLE ACTIVITIES BY WAY OF REVENUE AND CAPITAL EXPENDITURE IS 2 CONTRARY TO LAW AND THEREFORE, THE EXEMPTION U/S 11 IS LIABLE TO BE PROVIDED TO THE APPELLANT. 2. THAT THE ADDITION OF RS.13,70,345/- AS BUSINESS INCOME OF THE APPELLANT AND CONFIRMATION OF THE SAME BY THE COMMI SSIONER OF INCOME TAX (APPEALS) BY NOT ACCEPTING THE APPLICATI ON OF INCOME BY WAY OF REVENUE AND CAPITAL EXPENDITURE IS CONTRARY TO FACTS AND LAW AND THEREFORE, APPLICATION OF SUCH INCOME IS LIABLE TO BE ALLOWED U/S 11 OF THE INCOME TAX ACT, 1961. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF NOTICE, THEREFORE, I DECIDED TO PROCEED EXPARTE. THE DR WA S HEARD AT LENGTH WHO STRONGLY RELIED UPON THE FINDINGS OF THE CIT(A). 4. HAVING HEARD THE DR, I HAVE CAREFULLY PERUSED TH E ORDERS OF THE AUTHORITIES BELOW. 5. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E APPELLANT IS A REGISTERED SOCIETY UNDER THE SOCIETY REGISTRATION ACT AND IS ALSO REGISTERED U/S. 12A OF THE IT ACT. 6. DURING THE YEAR UNDER CONSIDERATION THE APPELLAN T SOCIETY HAS BEEN ENGAGED INTO THE BUSINESS OF MANUFACTURING OF AYURVEDIC MEDICINES AND ALLIED HERBAL FOOD PRODUCTS . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE A SSESSEE WAS SPECIFICALLY SHOW CAUSED AS TO WHY INCOME OF THE SO CIETY MAY NOT BE TREATED AS BUSINESS INCOME. 3 7. VIDE REPLY DATED 14.11.2016 THE ASSESSEE SUBMITT ED THAT THE BUSINESS OF THE SOCIETY IS NOT CHARITABLE RATHE R SURPLUS ARISING FROM THE ACTIVITIES IS UTILIZED FOR CHARITA BLE ACTIVITIES HENCE, EXEMPTION HAS BEEN CLAIMED. 8. IN THE LIGHT OF THE AFOREMENTIONED REPLY OF THE ASSESSEE THE AO TREATED THE INCOME OF THE ASSESSEE AS BUSINESS I NCOME AND DENIED THE EXEMPTION U/S. 12 A. ACCORDINGLY THE SU RPLUS OF RS.1370345/- WAS TREATED AS BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION. 9. ASSESSEE AGITATED THE MATTER BEFORE THE CIT(A) B UT WITHOUT ANY SUCCESS. 10. THE RELEVANT FINDINGS OF THE CIT(A) READ AS UND ER :- DECISION & REASON THE ID. AR IN HIS SUBMISSION ON PAGE 2 IN PARA 3 HA S HIMSELF MENTIONED,. 'THE BUSINESS ACTIVITIES ARE BEING RUN BY THE SOCIETY AND WHATEVER SURPLUS IS ARISING THROUGH DONATION AND BU SINESS PROFIT IS BEING UTILIZED FOR CHARITABLE ACTIVITIES.' DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS DRAWN MANUFACTURING TRADING & PROFIT & LOSS A/C, THROUGH WHICH A NET PROFIT OF RS. 13,70,345/- HAS BEEN EARNED. FROM THE PERUSAL OF P & L A/C, NONE OF THE EXPENDITURES CLAIMED IS FOR CHARIT ABLE PURPOSE .AND NO AMOUNT HAS BEEN SPENT ON RESEARCH OR ANY OTHER C HARITABLE ACTIVITIES. WHAT THE AR IS CLAIMING, IS PRESUMED .T O BE CORRECT THEN ALSO THERE IS NO APPLICATION FOR CARRYING FORWARD T HE SURPLUS TO BE 4 UTILIZED IN THE SUBSEQUENT YEARS AND THERE IS NO EV IDENCE BROUGHT BEFORE ME TO SHOW THAT THE SURPLUS HAS BEEN PARKED WITH ANY SCHEDULED BANK EITHER IN THE FORM OF FDR OR IN ANY SAVING BANK OR CURRENT A/C. SO THE APPELLANT HAS NOT FULFILLED THE CONDITIONS OF SECTION 11/12A AS IS SEEN FROM THE FACTS ON RECORD. THEREFORE, THE CASE LAWS RELIED UPON BY ID. AR ARE NOT APPLICABLE ON THE FACTS OF THE CASE. THE DISALLOWANCE MADE BY THE AO IS CONFIRMED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. 11. I HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFOREMENTIONED FINDINGS OF THE FIRST APPELLATE AUTH ORITY. I DO NOT FIND ANY ERROR OR INFIRMITY IN THE AFOREMENTIONED F INDINGS HENCE APPEAL BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.03.2 020. SD/- (N. K. BILLAIYA) ACCOUNTANT MEMBER *NEHA* DATE:-13.03.2020 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI 5 DATE OF DICTATION 12.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 13.03.2020 DATE ON WHICH THE APPROVED DRAFT CO MES TO THE SR.PS/PS 13.03.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 13.03.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 13.03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 13.03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.03.2020 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER