T.S.Thiruvudaiyan Mudaliyar Ninaivu Arakkattalai, Tirunelveli V. ITO, Tirunelveli

ITA 3111/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95932 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 14-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Reopening of assessment; Depreciation; Charitable institution; Benefit of exemption
• Section: 143(3); 12A; 12AA; 148; 6; 12; 11

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL SMC BENCH, CHENNAI . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A.NO S . 31 11 , 3112 AND 3113/MDS/2014 ASSESSMENT YEAR S :200 5 - 0 6, 2006 - 07 AND 2007 - 08 T.S. THIRUVUDAIYAN MUDALIYAR NINAIVU ARAKKATTALAI, NO. 2, DEVIPATTINAM STREET, SANKARANKOIL - 627 756, TIRUNELVELI DISTRICT. [PAN: AA BTT1548H ] VS. THE INCOME TAX OFFICER, WARD I( 1 ), TIRUNELVELI. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI Y. SRIDHAR , C.A. / RESPONDENT BY : SHRI A.V. SREEKANTH , JCIT / DATE OF HEARING : 14 . 0 8 .201 5 / DATE OF P RONOUNCEMENT : 31 . 0 8 .20 1 5 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : TH E S E THREE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I , MADURAI DATED 15 . 1 0.201 4 RELEVANT TO THE ASSESSMENT YEAR S 20 0 5 - 0 6, 2006 - 07 AND 2007 - 08 . I.T.A. NO. 3113/MDS/2014 [A.Y. 2007 - 08] 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE TRUST. IT HAS FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION BY DECLARING NIL I.T.A. NO S . 31 11 - 3113 /M/ 1 4 2 INCOME. THE RETURN FIELD B Y THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT , 1961 ( ACT IN SHORT) . SUBSEQUENTLY, A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED. AFTER DUE PROCESS, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT BY AS SESSING TOTAL INCOME OF . 8,30,20 0/ - FOR THE ASSESSMENT YEAR 200 7 - 0 8 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE TRUST BY NAME T.S. THIRUVUDAIYAN MUDALIYAR NINAIVU ARAKKATTALAI WAS CREATED ON 14.06.200 4 BY REGISTERED TRUST DEED DATED 14.06.2004. THE OBJECTS OF THE TRUST AS SPECIFIED IN THE TRUST DEED ARE CHARITABLE IN NATURE. FOR THE ASSESSMENT YEAR 200 7 - 0 8 , THE ASSESSEE TRUST HAS FILED A NIL RETURN BY CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. IN THE CASE OF THE ASSESSEE, THE LD. CIT HAS GRANTED REGISTRATION UNDER SECTION 12A(A) TO THE TRUST W.E.F. 01.04.2007 RELEVANT TO THE ASSESSMENT YEAR 2008 - 09 AND ONWARDS VIDE HIS ORDER DATED 17.12.2007. ACCORDINGLY, THE ASSESSING OFFICER HAS DENIED THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED TH AT AS PER THE PROVISO TO SECTION 12A(2) OF THE ACT, THE ASSESSEE IS ENTITLED FOR THE BENEFIT UNDER SECTION 11 OF THE ACT EVEN AFTER 12AA WAS GRANTED WITH EFFECT FROM 01.04.2007. I.T.A. NO S . 31 11 - 3113 /M/ 1 4 3 5. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT AS PER CLAUSE 2 TO SECT ION 12A OF THE INCOME TAX ACT , THE ASSESSEE IS ONLY ELIGIBLE FOR EXEMPTION FOR THE ASSESSMENT YEAR 2008 - 09 AND NOT PRIOR TO THAT ASSESSMENT YEAR. 6. BOTH SIDES HAVE BEEN HEARD, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS AUTHORITIES BELO W. THE ASSESSEE IS A CHARITABLE TRUST CREATED ON 14.06.2004. THE ASSESSEE HAS MADE AN APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 12.06.2007. THE REGISTRATION UNDER SECTION 12AA WAS GRANTED TO THE ASSESSEE BY ORDER DATED 17.12.2007 WITH E FFECT FROM 01.04.2007. THE CASE OF THE ASSESSEE IS THAT AS PER THE PROVISO TO SECTION 12A(2) BEFORE PASSING REGISTRATION ORDER UNDER SECTION 12AA, IF THE ASSESSMENT ORDERS ARE PENDING WITH THE ASSESSING OFFICER, THE ASSESSEE IS ELIGIBLE FOR CLAIMING EXEMPT ION UNDER SECTION 11 & 12 OF THE ACT. FOR THE SAKE OF CONVENIENCE, RELEVANT PROVISION OF SECTION IS EXTRACTED AS UNDER: (2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1 ST DAY OF JUNE, 2007 THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATIO N TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICATION IS MADE. PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE P ROVISIONS 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 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: I.T.A. NO S . 31 11 - 3113 /M/ 1 4 4 7. AS PER THE ABOVE SUB - SECTION 2 TO SECTION 12A OF THE ACT, WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER 01.06.2 007, THE PROVISIONS OF SECTION 11 AND 12 SHALL APPLY IN RELATION TO INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH AN APPLICATION IS MADE. IN THE PRESENT CASE, THE ASSESSEE HAS MADE AN AP PLICATION ON 12.06. 2007. THEREFORE, THE IMMEDIATE FOLLOWING FINANCIAL YEAR IS 2007 - 08 AND THE ASSESSMENT YEAR IS 2008 - 09. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR THE BENEFIT OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT FROM THE ASSESSMENT YEAR 2008 - 09 O NWARDS. 8. SO FAR AS INSERTION OF PROVISO (2) TO SECTION 12A OF THE ACT BY THE FINANCE ACT, 2014 WITH EFFECT FROM 01.04.2014 IS CONCERNED, WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISIONS OF SECTIO NS 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 BEFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGIST RATION AND THE OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSESSMENT YEAR . FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE MADE AN APPLICATION ON OR AFTER 01.06.2007 FOR REGISTRATION UNDER SECTION 12A OF THE ACT. IF THE REGISTRATION UNDER SECTION 12A OF THE ACT IS GRANTED, AS PER PROVISO (2) TO SECTION 12A, BEFORE GRANTING SUCH I.T.A. NO S . 31 11 - 3113 /M/ 1 4 5 REGISTRATION, IF ASSESSEE S ASSESSMENT IS PENDING BEFORE THE ASSESSING OFFICER, THE ASSESSEE IS ELIGIBLE TO GRANT OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT SUBJECTED TO FULFILMENT OF OTHER CONDITIONS, SUCH AS THE OBJECTS AND ACTIVITIES OF THE TRUST ARE REMAINING SAME FOR THE PRECEDING ASSESSMENT YEAR. IN THE PRESENT CASE, THE DATE OF APPLICATION FOR REGISTRATION IS 12.06.2007 I.E. AFTER 0 1.06.2007 AND THE REGISTRATION WAS GRANTED UNDER SECTION 12A OF THE ACT ON 17.12.2007 WITH EFFECT FROM 01.04.2007 AND THE ASSESSMENT ORDER WAS PASSED FOR THE ASSESSMENT YEAR 2007 - 08 ON 26.06.2009. THEREFORE, BEFORE GRANTING THE REGISTRATION UNDER SECTION 1 2A OF THE ACT TO THE ASSESSEE, THE ASSESSMENT IN RESPECT OF THE ASSESSMENT YEAR 2007 - 08 WAS PENDING BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR GRANT OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. THE ASSESSING OFFICER AND THE L D. CIT(A), WITHOUT CONSIDERING THE PROVISO (2) TO SECTION 12A OF THE ACT, SIMPLY DENIED THE CLAIM OF THE ASSESSEE. THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE IS SET ASIDE FOR THE ASSESSMENT YEAR 2007 - 08 AND REMITTED THE MATTER BACK TO THE ASSESSING OFFICER TO EXAMINE THE OBJECTS AND ACTIVITIES OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08 ARE SIMILAR TO THE ASSESSMENT YEAR 2008 - 09 AND EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT SHALL BE GRANTED. SO FAR AS OTHER CLAIMS OF THE ASSESSEE, IF ANY, MADE, THE ASSESSING OFFICER IS DIRECTED TO DECIDE IN ACCORDANCE WITH LAW. I.T.A. NO S . 31 11 - 3113 /M/ 1 4 6 9. SO FAR AS ASSESSMENT YEARS 2005 - 06 AND 2006 - 07 ARE CONCERNED, THE PROVISO INSERTED TO SUB CLAUSE (2) TO SECTION 12A OF THE ACT HAS NO APPLICATION. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR GRANT OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. 10. WITH REGARD TO DEPRECIATION CLAIM MADE BY THE ASSESSEE FOR THE ASSESSMENT YEAR S 2005 - 06 AND 2006 - 07 , IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS DENIED THE CLAIM ON TH E GROUND THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM UNDER SECTION 11 OF THE ACT FOR THE REASON THAT THE ASSESSEE IS NOT HAVING 12A REGISTRATION FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 11. ON APPEAL, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE TRU ST WAS EARNING INCOME BY LETTING OUT THE IMMOVABLE PROPERTY TO AN EDUCATIONAL INSTITUTION AND THE ASSESSEE IS ONLY RECEIVING THE INCOME BY WAY OF RENT. THEREFORE, THE LD. CIT(A) HAS HELD THAT SINCE THE ASSESSEE TRUST HAS NOT CARRIED ANY BUSINESS ACTIVITY, THE ASSESSEE IS NOT ENTITLED FOR DEPRECIATION AS CLAIMED BY THE ASSESSEE. 12. BOTH PARTIES HAVE BEEN HEARD. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS LET OUT THE PROPERTY TO RUN AN EDUCATIONAL INSTITUTION WITH FIXTURES AND FI TTINGS. HOWEVER, THE ASSESSEE HAS NOT FILED ANY DETAILS WITH REGARD TO THE FURNITURE AND FIXTURES PROVIDED BY THE ASSESSEE I.T.A. NO S . 31 11 - 3113 /M/ 1 4 7 ALONG WITH BUILDING LETTING OUT TO THE EDUCATIONAL INSTITUTION. IT IS ALSO NOT BORN OUT FR OM THE ORDER OF THE ASSESSING OFFICER OR THE ORDER OF THE LD. CIT(A). THEREFORE, IN THE INTEREST OF JUSTICE, THE ORDER PASSED BY THE LD. CIT(A) IS SET ASIDE AND REMITTED THE MATTER BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH I N ACCORDING WITH LAW BY CONSIDERING THE DETAILS OF FURNITURE AND FITTINGS LET OUT FOR RUNNING THE EDUCATION INSTITUTION FOR THE ASSESSMENT YEARS 2005 - 06 AND 2006 - 07. 13. SO FAR AS THE ISSUE OF REOPENING OF ASSESSMENT RAISED IN THE GROUNDS OF APPEAL FOR THE ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2007 - 08 ARE CONCERNED, AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS NOT PRESS ING THE ISSUE AND ACCORDINGLY, THE GROUND RAISED IN ALL THE APPEALS ARE DISMISSED AS NOT P RESSED. 14 . IN THE RESULT, ALL THE APPEAL S FILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 31 ST OF AUGUST , 2015 AT CHENNAI. SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER CHENNAI, DATED, THE 31 . 0 8 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.