Appeal Details
Counselvise Citation
[2012] 140 COUNSELVISE.COM (IT) 64661 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-12-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
12-12-2012
Assessment Year
2008-2009
Appeal Filed On
13-02-2012
Judgement Text
IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.306/MDS/2012 ASSESSMENT YEAR: 2008-09 THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS) - IV, AAYAKAR BHAVAN, ANNEXE BUILDING, III FLOOR, 121, M.G. ROAD, NUNGAMBAKKAM, CHENNAI 600 034. VS. M/S. A.M. KANNIAPPA MUDALIAR AND AMK JAMBULINGA MUDALIAR EDUCATION TRUST, 122, GENGU REDDY ROAD, EGMORE, CHENNAI 600 008. [PAN:AAATA0805B] (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI T. VASUDEVAN, ADVOCATE DATE OF HEARING : 12.12.2012 DATE OF PRONOUNCEMENT : 12.12.2012 ORDER PER S.S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL CHALLENGES THE CORRECTNESS O F THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI DATED 28.11.2011 IN ITA NO. 204/2010-11 FOR THE ASSESSMEN T YEAR 2008-09 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A TRUST REGISTERED I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.306 306306 306/M/ /M/ /M/ /M/12 1212 12 2 UNDER SECTION 12A(A) OF THE ACT SINCE 12.05.1983. FOR THE IMPUGNED ASSESSMENT YEAR, IT HAD FILED ITS RETURN DATED 09 .01.2009 AND DECLARED ` .NIL AS INCOME, WHICH WAS PROCESSED UNDER SECTION 1 43(1) ON 23.03.2010. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED REOPENIN G NOTICE UNDER SECTION 148 OF THE ACT DATED 24.03.2010. IN REASSESSMENT PROCEEDINGS IN CONSEQUENCE TO THE NOTICE, THE ASSESSING OFFICER NO TICED FROM THE ASSESSEES LOANS AND ADVANCES (ASSET) SCHEDULE X THAT IT HAD PAID AN AMOUNT OF ` .10 LAKHS TO M/S. K. APOORVAMMAL AND J. BALAGUJAMBA L EDUCATIONAL TRUST. IN HIS OPINION, WHILST DOING SO, THE ASSESSEE HAD VIOLATED SECTION 13(1)(D) R.W.S. 11(5) OF THE ACT. 3. IN ITS EXPLANATION TENDERED BEFORE THE ASSESSIN G OFFICER, THE ASSESSEE PLEADED THAT THE SAID AMOUNT WAS NEITHER AN INVESTM ENT NOR A DEPOSIT. HOWEVER, THE SAME FAILED TO MAKE THE ASSESSING OFFI CER CONCUR; WHO AFTER ANALYZING THE RELEVANT PROVISIONS OF ACT I.E. SECTI ON 11 AND SECTION 13 CAME TO CONCLUSION THAT IT HAD VIOLATED THE ABOVE PROVIS IONS OF THE ACT AS THE PAYEE TRUST (SUPRA) HAD AVAILED MONETARY BENEFIT WI THOUT PAYING ANY INTEREST OR SECURITY. IN ASSESSING OFFICERS OPINION, THE SA ME AMOUNTED TO INVESTMENT OR DEPOSIT OTHERWISE THAN THE FORMS CONTAINED IN SE CTION 11(5) OF THE ACT. THEREFORE, HE ASSESSED THE INCOME UNDER SECTION 11 OF THE ACT AS ` .5,68,97,038/- VIDE ASSESSMENT ORDER DATED 31.12.20 10. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A); WHEREIN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.306 306306 306/M/ /M/ /M/ /M/12 1212 12 3 THE ASSESSEES CASE WAS EXAMINED IN DETAIL IN THE L IGHT OF THE RELEVANT PROVISIONS OF THE ACT AND THE SAME STANDS ACCEPTE D BY OBSERVING THAT THE AMOUNT IN QUESTION GIVEN BY THE ASSESSEE TRUST TO T HE PAYEE TRUST DOES NOT VIOLATE PROVISIONS OF SECTION 11 SUB-SECTION (5) R. W.S. 13(1)(D) OF THE ACT AS BOTH TRUSTS ARE CHARITABLE ORGANIZATIONS. ACCORDING LY, THE ASSESSEES APPEAL HAS BEEN ACCEPTED AND THE CIT(A) HAS UPSET THE FIND INGS OF THE ASSESSING OFFICER. IN THIS BACKDROP, THE REVENUE IS AGGRIEVED. 5. REPRESENTING THE REVENUE, THE DR HAS VEHEMENTLY ARGUED THAT IN THE INSTANT CASE, THE ASSESSING OFFICER HAD DESERVINGLY APPLIED RELEVANT PROVISIONS OF ACT THEREBY TREATING THE AMOUNT PAI D BY THE ASSESSEE TO THE PAYEE AS VIOLATIVE OF THE PROVISIONS OF THE ACT CON TAINED IN SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT. IN THIS MANNER, HE HA S PRAYED FOR ACCEPTANCE OF THE APPEAL REITERATING VARIOUS GROUNDS IN APPEAL. 6. ON THE OTHER HAND, REPRESENTING THE ASSESSEE, T HE AR HAS CHOSEN TO STRONGLY SUPPORT THE ORDER OF THE CIT(A) AND ALSO C ITED CASE LAW OF CHENNAI ITAT IN I.T.A. NO. 963/MDS/2012 TITLED ACIT VS. M/S . SOCIETY OF DAUGHTERS OF MARY IMMACULATE & COLLABORATORS DECIDED ON 13.07.20 12. ACCORDINGLY, HE PRAYED FOR UPHOLDING CIT(A)S ORDER. 7. WE HAVE HEARD BOTH PARTIES AT LENGTH; GONE THRO UGH RELEVANT FINDINGS I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.306 306306 306/M/ /M/ /M/ /M/12 1212 12 4 OF THE ASSESSING OFFICER AS WELL AS CIT(A) AND ALSO PERUSED THE CASE LAW (SUPRA) CITED BY THE ASSESSEE. UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A REGISTERED TRUST. THE PAYEE TRUST IS ALSO A REGISTE RED BODY. THE OBJECTS OF BOTH THE TRUSTS ARE SAME I.E. CHARITABLE ACTIVITIES . THE ASSESSEE HAD PAID AN AMOUNT OF ` .10 LAKHS TO THE PAYEE TRUST FOR PROPAGATING ITS OB JECTS. TO THIS EFFECT, THE CIT(A) HAS ALSO RECORDED THE FINDING OF THE FACT WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE BY PRODUCING ANY C OGENT EVIDENCE. THE ONLY ISSUE BETWEEN THE PARTIES IS THAT PER REVENUE, IT IS VIOLATION OF PROVISIONS OF THE ACT (SUPRA) WHICH HAS BEEN CONT ESTED BY THE ASSESSEE. WE NOTICE THAT IN A CASE INVOLVING SIMILAR ISSUE (S UPRA), THE COORDINATE BENCH WHEREIN ONE OF US [SHRI ABRAHAM P. GEORGE, AC COUNTANT MEMBER PRESIDED OVER THE BENCH] ALSO DEALT WITH THIS ISSUE AND HELD THAT WHEN BOTH THE PARTIES I.E. PAYER AND PAYEE ARE REGISTERED CHA RITABLE TRUSTS UNDER THE PROVISIONS OF THE ACT, THE AFORESAID RELEVANT PROVI SIONS OF THE ACT NAMELY SECTION 13(1)(D) R.W.S. 11(5) DO NOT APPLY. WE DEEM IT APPROPRIATE TO REPRODUCE THE RELEVANT EXTRACT OF THE SAID ORDER HE REIN BELOW: 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE I SSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSEE IS ELIGIBLE FOR EXEM PTION UNDER SECTION 11 OR NOT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE , I.E. M/S. SOCIETY OF DAUGHTERS OF MARY IMMACULATE & COLLABORATORS WAS GR ANTED REGISTRATION UNDER SECTION 12A OF THE ACT DATED 9-1 -1989. THE OTHER SISTER CONCERNS/ TRUSTS NAMELY, M/S. BROTHERHOOD TR UST, M/S. THE DAUGHTERS OF MARY IMMACULATE & COLLABORATORS TRUST AND M/S. SOCIETY FOR EDUCATION FOR LIFE HAVE BEEN GRANTED REGISTRATI ON U/S 12A ON 10-12- 1993, 5-9-1995 AND 20-4-11996 RESPECTIVELY. THE AB OVE FACTS ARE UNDISPUTED. THE ASSESSEE, M/S. SOCIETY OF DAUGHTER S OF MARY I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.306 306306 306/M/ /M/ /M/ /M/12 1212 12 5 IMMACULATE & COLLABORATORS GRANTED INTEREST-FREE LO ANS TO THE THREE OTHER SISTER CONCERNS/TRUSTS WHICH ARE ALSO REGISTE RED U/S 12A. THE SAID SISTER CONCERNS/ORGANIZATIONS ARE ALSO CHARITABLE O RGANIZATIONS CARRYING ON SIMILAR FUNCTIONS AS CARRIED ON BY THE ASSESSEE. ACCORDING TO THE AO THE ASSESSEE HAS VIOLATED SECTION 13(1)(D) READ WIT H SECTION11(5) FOR THE REASON THAT THE ASSESSEE HAS TO INVEST ONLY AS PER LAW WHICH IS PERMITTED UNDER SECTION 11(5) OF THE ACT. THE ASSESSEE ADVAN CED INTEREST-FREE LOANS TO THE SISTER CONCERNS. IN OUR VIEW IT IS NO T HIT BY THE PROVISIONS OF SECTION 11(5) READ WITH SECTION 13(1)(D). SECTION 13(1)(D)(I) DEALS WITH ANY FUNDS OF TRUST OR INSTITUTION ARE INVESTED OR D EPOSITED. SECTION 11(5) DEALS WITH THE FORMS AND MODES OF INVESTING AND DEP OSITING MONEY. IN THE PRESENT CASE THE ASSESSEE HAS ADVANCED LOANS TO THE SISTER CONCERNS. IN OUR CONSIDERED OPINION IT IS NEITHER HIT BY SECTION 13(1)(D) NOR SECTION 11(5). THERE IS NO OTHER MATERIAL WHICH IS PLACED BEFORE US WHICH ATTRACTS SECTION 11(5) OR SECTION 13(1)(D) OF THE A CT NOR ANY JUDISCTIONAL HIGH COURT DECISION WAS PLACED BEFORE US. WE, THER EFORE, FOLLOWING THE DECISION IN THE CASE OF ACME EDUCATIONAL SOCIETY, S UPRA, WHEREIN THE HONBLE DELHI HIGH COURT HAS HELD THAT THE ASSESSEE SOCIETY HAD GIVEN LOAN TO ANOTHER EDUCATIONAL SOCIETY WHOSE PRESIDENT WAS THE BROTHER OF THE ASSESSEE-SOCIETYS PRESIDENT. THE AO INVOKING THE PROVISIONS OF SECTION 13(1)(D) READ WITH SECTION 11(5) DENIED TH E BENEFIT OF EXEMPTION TO THE ASSESSEE SOCIETY. ON THESE FACTS THE HONBL E DELHI HIGH COURT HAS HELD THAT THE INTEREST-FREE LOAN GIVEN BY THE ASSES SEE SOCIETY TO OTHER SOCIETY HAVING SIMILAR OBJECTS AND REGISTERED U/S 1 2A DOES NOT VIOLATE SEC. 13(1)(D) READ WITH SECTION 11(5) AS THE SAID L OAN WAS NEITHER AN INVESTMENT NOR A DEPOSIT. THE ABOVE CASE RELIED ON BY THE ASSESSEE SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. THE AO DENIED THE EXEMPTION U/S 11 BY FOLLOWING THE DECISION OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT V. V.G.P. FOUNDATION, SUPR A. IN THAT CASE THE ASSESSEE TRUST ADVANCED A SUM OF RS 53,950/- TO ITS SISTER CONCERN, A PRIVATE LIMITED COMPANY OF WHICH THE TRUSTEES OF TH E ASSESSEE WERE ALSO DIRECTORS. THIS CASE HAS NO APPLICATION TO THE FAC TS OF THE CASE. IN THE PRESENT CASE THE ASSESSEE AS WELL AS THE SISTER CON CERNS ARE GRANTED SECTION 12A REGISTRATION. THE OTHER DECISIONS RELI ED ON BY THE AO ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE FACTS ARE DIFFERENT. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE O RDER PASSED BY THE LEARNED CIT(A). IN THE CIRCUMSTANCES, THE APPEAL FI LED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. IN VIEW OF THE ADMITTED FACTS OF THE INSTANT CASE A S WELL AS IN THE LIGHT OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.306 306306 306/M/ /M/ /M/ /M/12 1212 12 6 OBSERVATIONS OF THE COORDINATE BENCH (SUPRA), WE AR E OF THE OPINION THAT SINCE THE ASSESSEE IN THIS CASE HAD ONLY ALLOWED OT HER TRUST TO UTILIZE ITS MONEY IN FURTHERANCE TO THE SAME VERY OBJECTS, THE SAME CANNOT BE CALLED AN INSTANCE SO AS TO ATTRACT THE RIGOUR OF SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT. THEREFORE, WE HOLD THAT THE CIT(A) HAS RIGHT LY INTERFERED IN THE ORDER OF ASSESSING OFFICER. HENCE, WE ALSO CONFIRM THE SAME. 8. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D BEING DEVOID OF ANY MERITS. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 12 TH OF DECEMBER, 2012 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 12.12.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.
