ACIT, Cuttack V. M/s Gram Swaraj, Mayurbhanj

ITA 322/CTK/2012

• Counselvise Citation: 32222114 RSA 2012
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: G NAIKR KAR ARS
• Keywords: Depreciation
• Section: 11; 12A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 322/CTK/2012 / ASSESSMENT YEAR 2008 - 09 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. - - - VERSUS - M/S.GRAM SWARAJ, KAMALA NEHERU GIRLS HIGH SCHOOL ROAD, BARIPA DA, MAYAURBHANJ. PAN: AAAAG 1615 C ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.K.NEB, DR / FOR THE RESPONDENT: / SHRI G.NAIK/R.KAR, ARS / DATE OF HEARING: 29.0 8.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE REVENUE HAVING BEEN AGGRIEVED BY THE ORDER DT.29.2.2012 OF THE COMMISSIONER OF INCOM E - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF THE ASSESSEE. 2. THE REVENUE HAS RAISED THE FOLLOWING ISSUES IN THEIR GROUNDS OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE ASSESSING O FFICER TO TAX THE NET INCOME OF 26,078 INSTEAD OF GROSS RECEIPT OF 18,11,040. AS THE ASSESSEE SOCIETY WAS NOT REGISTERED U/S.12A OF THE I T.ACT,1961, THE PROVISIONS OF SECTION 11 OF THE ACT ARE NOT APPLICABLE FOR WHICH THE A.O. HAS DETERMINED THE STATUS AS AOP AND ALSO TAXED THE GROSS R ECEIPTS OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES AND DUE TO FAILURE ON ITS PART TO PRODUCE THE DETAILS OF BOOKS OF ACCOUNT/BILLS AND VOUCHERS TO SUBSTANTIATE THE GENUINENESS OF EXPENDITURE CLAIMED. I.T.A.NO. 322/CTK/2012 2 2. WHETHER THE LD.CIT(A) IS JUSTIFIED TO H OLD THAT VARIOUS EXPENSES CLAIMED IN RECEIPT AND EXPENDITURE ACCOUNTS HAVE TO BE EXCLUDED FROM GROSS RECEIPT UNDER SITUATION WHERE THE EXPENSES CLAIMED CANNOT BE CONSIDERED AS WHOLLY AND EXCLUSIVELY LAID OUT FOR EARNING THE GROSS RECEIPT WHICH ARE MOSTLY V OLUNTARY CONTRIBUTIONS AND GRANT AS SUCH THE EXPENSES CAN ONLY BE TREATED AS APPLICATION OF INCOME NOT EXPENSES INCURRED TO EARN SUCH INCOME. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE REVENUE AND THEIR LEGAL IMPLICATIONS. 4. ON CAR EFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGI STRATION ACT. THE ASSESSEE FILED APPLICATION O N 30.03.2009 FOR REGISTRATION AS CHARITABLE OR RELIGION TRUST OR INSTITUTION UNDER SECTION 12A OF THE I.T.ACT,1961, WHICH WAS GRANTED W.E.F THE ASSESSMENT YEAR 2009 - 10 ONWARDS. FOR THE ASSESSMENT YEAR UNDER CON SIDERATION I.E., 2008 - 09, THE ASSESSING OFFICER ISSUED NOTICE U/S.148 OF THE I.T.ACT,1961, IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN OF INCOME ON 4.12.2009 IN ITR - 7 SHOWING INCOME FROM BUSINESS AND PROFESSION 19,70,025. THEREAFTER THE ASSESSING OFFICER ISSUED A SHOW - CAUSE NOTICE U/S.142(3) ON 10.8.2010 ASKING THE ASSESSEE TO EXPLAIN WHY 19,70,025 SHALL NOT BE TAKEN AS THE INCOME AND ALSO WHY THE STATUS OF THE ASSESSEE SHALL NOT BE TAKEN AS AOP. THE A/R OF THE ASSESSEE FILED A REPLY BEFORE THE AO ON 23.8.2010 STATING THAT IN THEIR CASE THE TOTAL EXPENDITURE WAS RS,19,42,023.50 AGAINST RECEIPTS OF 19,70,02 4.50. THE ASSESSING OFFICER REFERRED TO SECTION 2(24)(IIA) OF THE ACT AND CAME TO A FINDING THAT THE VOLUN TARY CONTRIBUTION RECEIVED AND REFLECTED IN THE RETURN TO THE TUNE OF 19,70,025 IS THE INC OME OF THE ASSESSEE. THE REAFTER HE ALLOWED 5,087 (BANK CHARGES), 35,020 (ORGANIZATIONAL OVERHEADS), 82,500 (TRAVELLING I.T.A.NO. 322/CTK/2012 3 EXPENSES), 12,381 (DEPRECIATION) AND 24, 000 (SALARY) FROM THE INCOME OF 19,70,025 ARRIVED AT BY HIM AND THUS C OMPLETED THE ASSESSMENT U/S.147 OF THE I.T.ACT,1961 HOLDING THE STATUS OF THE ASSESSEE AS AOP(TRUST) ON A TOTAL INCOME OF 18,11,040. 5. AGGRIEVED BY THIS ORDER, THE ASSESSEE WENT IN AP PEAL BEFORE THE CIT(A) AND THE LEARNED AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD HAS COME TO THE CONCLUSION THAT THE VIEW OF THE ASSESSING OFFICER IN TAXING THE ASSESSEE AS AOP IS CORRECT BUT AT THE SAME TIME HE HAS OBSERV ED THAT THE ENTIRE RECEIPTS OF THE ASSESSEE ARE NOT TAXABLE. THE NET RECEIPTS AFTER DEDUCTING THE EXPENDITURES INCURRED B Y THE ASSESSEE ARE ONLY TAXABLE AND ACCORDINGLY HE DIRECTED THE ASSESSING OFFICER TO BRING TO TAX 26,028 IN PLACE OF 18,11,040 AS DETERMINED BY THE ASSESSING OFFICER. 6. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT(A), THE PRESENT APPEAL IS FILED BY THE DEPARTMENT. 7. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDER PASSED BY THE AUTHORITIES BELOW, IT IS FO UND THAT UNDISPUTEDLY THE ASSESSEE TRUST APPLIED FOR REGISTRATION U/S.12A WHICH WAS GRANTED TO BE EFFECTIVE FROM AY 2009 - 10 ONWARDS AND THERE WAS NO REGISTRATION U/S.12A FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY HELD THE ASSESSMENT IN CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN THE STATUS OF AOP NOT ENTITLED FOR THE RELIEFS SPECIFIED IN THE PROVISIONS OF SECTIONS 11 AND 13 IN RELATION TO THE INCOME. HOWEVER, WE FIND THAT THE LEARNED CIT(A ) WAS OF THE VIEW THAT WHEN THE ASSESSEE HAS BEEN ASSESSED AS AOP AND DEPRIVED OF SECTION 11 BENEFITS, THE ASSESSING OFFICER COULD ASSESS ONLY NET INCOME OF THE ASSESSEE AND NOT GROSS RECEIPTS. FOR THIS PROPOSITION HE HAS RELIED ON VARIOUS DECISIONS AND TH EY ARE - CIT V. GANGA CHARITY TRUST FUND (1986) 162 ITR 612 (GUJ) (IN RESPECT OF A.Y.1971 - 72 AND I.T.A.NO. 322/CTK/2012 4 1972 - 73) AND FOLLOWED IN (1993) 115 CTR (GUI) 325 (IN RESPECT OF A.Y. 1973 - 74 AND 1974 - 75); CIT V. TRU S TEES OF H.E.H. THE NIZANIS SUPPLEMENTAL RELIGIOUS ENDOW MENT TRUST (1981) 127 ITR 378 (AP), FOLLOWED IN CIT V. JANAKIAMMALAYYA NADAR TRUST (1985) 153 ITR 159 (MAD.); CI T Y. RAO BAHADUR CALAVAIA CUNNAN CHETTY CHARITIES (1982) 135 ITR 485 (MAD.) & CIT V. ETHIRAJ (ESTATE OF VL) (1982) 136 ITR 12 (MAD.). HE HAS ALSO RELIED ON THE DECISION OF ITAT,HYDERABAD B BENCH IN CASE OF NIRMAL AGRICULTURAL SOCIETY V. INCOME - TAX OFFICER (71 ITD 152), WHEREIN THE TRIBUNAL HAS HELD THAT EVEN WHEN THE ASSESSEE TRUST HAS BEEN ASSESSED AS AOP AND DEPRIVED OF SECTION 11 BENEFITS, THE ASSESSING OFFICER COULD ASSESS ONLY NET INCOME OF THE ASSESSEE AND NOT GROSS RECEIPTS. A SIMILAR VIEW HAS ALSO BEEN TAKEN BY THIS TRIBUNAL CUTTACK BENCH, RELIED ON BY THE ASSESSEE, IN THE CASE OF ASST.COMMISSIONER OF INCOME - TAX V. BRETHERN - IN - CHRIST CHURCH IN ITA NOS.19,20,21 AND 22/CTK/2012 AND C.O.NOS.3,4,5 AND 6/CTK/2012 DT.11.05.2012 (COPY PLACED ON RECORD). IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN DIRECTING THE ASSESSING O FFICER IN DIRECTING THE ASSESSING OFFICER TO TAX THE NET INCOME OF 26,078 INSTEAD OF GROSS RECEIPTS OF 18,11,040 HOLDING A VIEW THAT THE VARIOUS EXPENSES CLAIMED IN RECEIPT & EXPENDITURE ACCOUNTS HAVE TO BE EXCLUDED FROM GROSS RECEIPTS. WE UPHOLD THE SAM E AND DISMISS THE APPEAL OF THE DEPARTMENT FINDING THE ISSUES RAISED BY THE REVENUE AS DEVOID OF MERIT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 322/CTK/2012 5 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. 2 / THE RESPONDENT: M/S.GRAM SWARAJ, KAMALA NEHERU GIRLS HIGH SCHOOL ROAD, BARIPADA, MAYAURBHANJ. 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 05.09.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S 14.09.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..