ACIT (E), New Delhi V. DLF Qutab Enclave Complex Educational Charitable Trust, New Delhi

ITA 3260/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1236 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 23-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Charitable institution; Rule of consistency; Benefit of exemption
• Section: 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 3260/DEL/2017 : ASSTT. YEAR : 2010-11 ASSTT. COMMISSIONER OF INCOME TAX(E), CIRCLE-1(1), NEW DELHI-110002 VS M/S DLF QUTAB ENCLAVE COMPLEX EDUCATIONAL CHARITABLE TRUST, 9 TH FLOOR, DLF CENTRE, SANSAD MARG, NEW DELHI-110001 (APPELLANT) (RESPONDENT) PAN NO. AA ATD0852D ASSESSEE BY : SH. R. S. SINGHVI, CA REVENUE BY : MS. ASHIMA NEB, SR. DR DATE OF HEARING: 12.12.2019 DATE OF PRONOUNCEMENT: 13.12.2019 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER DATED 16.02.2017 OF THE LD. CIT (A)-21, N EW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS ERRED IN IGNORING THE FACT THAT THOUGH THE OBJECTS OF THE ASSESSEE MAY SEEM TO BE CHARITAB LE, BUT THE ACTIVITIES CARRIED OUT BY THE SOCIETY WHICH YIELDED INCOME TO THE SOCIETY ARE COMMERCIAL IN NATURE. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS A SOCIETY REGISTERED UNDE R SECTION 12A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AND HAS ALSO BEEN GRANTED CERTIFICATE U/S 80G(5)(VI) OF THE ACT W.E.F. AY 200 9-10. FROM THE FINANCIAL STATEMENT OF THE ASSESSEE, ASSESSING OFFICER NOTICE D THAT THE ASSESSEE ITA NO. 3260/DEL/2017 DLF QUTAB ENCLAVE COMPLEX EDUCATIONAL CHARITABL E TRUST 2 TRUST IS CONSTRUCTING AND LETTING OUT THE PROPERTIE S AND EARNING INCOME OF RENT AND MAKING HUGE PROFITS WHICH IS AGAIN BEING A PPLIED FOR CONSTRUCTING AND LETTING OUT THE PROPERTIES. AO CONCLUDED THAT T HE ASSESSEE HAS CREATED VICIOUS CYCLE TO HIDE ITS TRUE PURPOSE TO EVADE THE TAX FIRSTLY BY CONSTRUCTING THE BUILDING EARMARKED FOR EDUCATION P URPOSE AND LETTING THE PROPERTIES TO THE SOCIETY. THE MAIN OBJECT OF THE T RUST IS TO BUILD, ESTABLISH AND RUN SCHOOLS TO PROVIDE EDUCATION FACILITIES TO THE RESIDENTS OF DLF QUTAB ENCLAVE COMPLEX, GURGAON BUT THE TRUST IS ONL Y CONSTRUCTING AND INVESTING THE AMOUNT IN PROPERTIES WHICH ARE FURTHE R LEASED OUT/RENTED OUT TO SOCIETY AND SHOPPING MALLS, WHICH IS NOT A CHARI TABLE PURPOSE AS DEFINED U/S 2(15) OF THE ACT AND THEREBY ASSESSED THE LONG TERM CAPITAL GAIN IN TERMS OF SECTION 45 READ WITH SECTION 12 OF THE ACT BY ASSESSING THE TOTAL INCOME AT RS.2,83,31,250/-. 4. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS ALLOWED THE SAME. AGGRIEVED, THE RE VENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE IMPUG NED ORDER PASSED BY LD. CIT (A). 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE F ACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, IN AY 2009-10, THE COORDINATE BENC H OF THE TRIBUNAL VIDE AN ORDER DATED 20.08.2014 PASSED IN ASSESSEES OWN CASE REJECTED THE APPEAL FILED BY THE REVENUE DENYING THE BENEFIT OF EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT. 7. WE FIND THAT THIS ISSUE BEFORE US IS NO LONGER R ES-INTEGRA INSPITE OF THE AMENDMENT IN THE SECTION 2(15) . THE CO-ORDINAT E BENCH IN THE CASE ITA NO. 3260/DEL/2017 DLF QUTAB ENCLAVE COMPLEX EDUCATIONAL CHARITABL E TRUST 3 OF THE ASSESSEE, FOR ASSESSMENT YEAR 1994-95 HAS HE LD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 & 12 OF THE ACT. IT WAS HELD THAT LETTING OUT THE SCHOOL BUILDING WAS AIMED AT PROVIDING ASSISTAN CE IN IMPARTING EDUCATION, WHICH IS INDISPUTABLY FOR A CHARITABLE O BJECT. IT WAS HELD THEREIN AS UNDER:- 13. IN VIEW OF THE ABOVE DECISION, THE ASSESSEE TRUST WA S JUSTIFIED IN LETTING OUT THE SCHOOL BUILDING TO THE OTHER EDUCATIONA L TRUST AND, THEREFORE, IT CAN BE SAID THAT THE LEASING ACTIVITY AS WELL AS THE INCOME EARNED THROUGH SUCH ACTIVITY WAS IN FURTHERANCE OF THE OBJECTS AND IDEALS OF THE TRUST. THE LEASING ACTIVITY WAS ALSO AIMED AT PROVIDING ASSISTAN CE IN IMPARTING EDUCATIONAL WHICH WAS UNDISPUTEDLY A CHARITABLE OBJ ECT. THUS, THE FINDS OF THE LD CIT(A) ARE TO BE UPHELD FROM THE THIS VIEW POI NT ALSO. 14. THERE IS ANOTHER ASPECT OF THE MATTER. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE ACCUMULATION WAS ALLOWED UNDER SECTION 11 (2) TO THE ASSESSEE IN EARLIER YEARS AND IN SUBSEQUENT YEARS, WHICH' IS EVIDENT FROM THE CHART FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 1990-91 TO 1998-99. ON THE BASIS OF THIS CHART, THE ARGUMENT OF ASSESSEE S COUNSEL WAS THAT AS PER THE RULE OF CONSISTENCY ALSO, THE CLAIM OF THE ASS ESSEE DESERVES TO BE ALLOWED. IN THE CASE OF DIRECTOR OF INCOME TAX VS. LO VELY BAL SHIKSHA PARISAD REPORTED IN 266 ITR 349, FOLLOWING THE DECIS ION OF APEX COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT 193 ITR 321, IT WA S HELD THAT IF THERE WAS NO CHANGE IN THE NATURE OF ACTIVITIES AND THE ASS ESSEE WAS GRANTED EXEMPTION UNDER SECTION 10(22) OF THE INCOME TAX ACT NOT ONLY IN RESPECT OF EARLIER YEARS BUT SUBSEQUENT YEARS ALSO, THE ASSE SSEE WAS ENTITLED TO CLAIM EXEMPTION IN ASSESSMENT YEAR UNDER CONSIDERATI ON I.E. ASSESSMENT YEAR 1991-92. 8. THE AFORESAID VIEW WAS REITERATED IN THE CASE OF THE ASSESSEE FOR 2002-03 BY AN ORDER DATED 10TH JULY 2009 AND IT WAS HELD AS UNDER:- 11. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT TH IS ISSUE IS COVERED BY THE DECISION OF IT AT IN ASSESSEE'S OWN CASE FOR ASSES SMENT YEAR 1994- 05 IN ITA. NO. 1386/DEL OF 1998 DATED 28TH JULY, 2006 WH EREIN IT HAS BEEN HELD THAT THE ASSESSEE TRUST WAS JUSTIFIED LETTING OUT THE SCHOOL BUILDING TO OTHER EDUCATIONAL TRUST AND, THEREFORE, IT CAN BE SAI D THAT LEASING ACTIVITY AS WELL AS INCOME EARNED THROUGH SUCH ACTIVITY WAS IN FU RTHERANCE OF OBJECTS AND IDEALS OF THE TRUST. THE LEASING ACTIVITY WAS A LSO AIMED AT PROVIDING ASSISTANCE IMPARTING EDUCATION, WHICH UNDISPUTEDLY A CHARITABLE OBJECT. IT WAS ALSO NOTED BY THE BEDI THE ACCUMULATION WAS ALLO WED UNDER SECTION 11 (2) TO THE ASSESSEE IN PAGE NO. 3 EARLIER JI8S AND I N SUBSEQUENT YEARS. THEREFORE THE ASSESSEE WAS ENTITLED FOR BENEFIT OF SEC TION 11 THE ACT. SINCE THE ISSUE IS COVERED BY THE DECISION OF ITA T IN ASSE SSEE'S OWN CASE RESPECTFULLY FOLLOWING THE SAME IT IS HELD THAT THE A SSESSEE IS ENTITLED FOR EXEMPTION U/S 11OF THE ACT. ITA NO. 3260/DEL/2017 DLF QUTAB ENCLAVE COMPLEX EDUCATIONAL CHARITABL E TRUST 4 9. IN THE LIGHT OF THE ABOVE DECISION OF THE CO-ORD INATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, IN THE ABSENCE OF ANY MATERIAL CHANGE IN THE FACTUAL MATRIX, WE HEREBY DECLINE TO INTERFE RE WITH THE ORDER OF LD. CIT (A). 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2019. SD/- SD/- (H. S. SIDHU) (DR . B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 13/12/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR