Lala Gauri Mal Butail Trust, Paampur V. IT)-Ward-1(Exemption), Solan

ITA 33/CHANDI/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3179 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 08-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Revenue expenditure; Capital expenditure
• Section: 12; 11; 12A; 10B; 143(2)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEFORE SHRI N.K.SAINI, VICE PRESIDENT & SHRI RAJPAL YADAV, VICE PRESIDENT ./ ITA NO. 33/CHD/2020 / ASSESSMENT YEAR :2016-17 LALA GAURI MAL BUTAIL TRUST, C/O BUNDLA TEA ESTATE, P.O. BUNDLA, TEHSIL-PALAMPUR (HP). VS. THE ITO (WARD)-EXEMPTIONS, SOLAN. ./ PAN NO: AAATL3208R / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI Y.K. SUD, CA ! / REVENUE BY : SMT. MEENAKSHI VOHRA ' # $ / DATE OF HEARING : 18.11.2020 %&'( $ / DATE OF PRONOUNCEMENT : 19 .11.2020 / ORDER PER RAJPAL YADAV, VP THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DATED 15.11.2019 PASSED FOR ASSESSMENT YEAR 2016-17 . 2. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF A PPEAL, BUT IN BRIEF, ITS GRIEVANCE REVOLVES AROUND A SINGL E ISSUE NAMELY, LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING T HE SHORTFALL OF RS. 56,947/- IN APPLICATION OF INCOME WORKED OUT BY THE AO. ITA NO. 33/CHD/2020 A.Y. 2016-17 PAGE 2 OF 5 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AS SESSEE SOCIETY IS A CHARITABLE SOCIETY ENJOYING REGISTRATION U/S 1 2AA OF THE INCOME TAX ACT SINCE 30.01.1986. IT IS RUNNING A DH ARAMSHALA AT PALAMPUR. IT HAS FILED ITS RETURN OF INCOME ON 09.10.2016 FOR ASSESSMENT YEAR 2016-17 DECLARING NIL INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND A NOTICE U/S 143(2) WAS ISSUED AND SERVED UPON THE AS SESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT ASSESSEE SOCIETY HAD SURPLUS OVER APPLICATION OF IN COME, HOWEVER, IT WAS CONTENDED BEFORE THE AO THAT ASSESS EE HAS ACCUMULATED A SUM OF RS. 5,14,929/- U/S 11(2). THE COPY OF FORM NO. 10B DATED 07.07.2016 WAS PLACED BEFORE THE AO. THE LD. AO THEREAFTER DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AS UNDER : 5. DURING THE ASSESSMENT PROCEEDINGS IT HAS BEEN NOTIC ED THAT THE ASSESSEE TRUST IS REGISTERED U/S 12A OF THE INCOME TAX ACT. AND CLAIM ING EXEMPTION U/S 11 & 12 OF THE ACT. THE COMPUTATION OF INCOME AND EXPENDITURE AS FILED BY THE ASSESSEE SOCIETY DURING THE YEAR UNDER CONSIDERATION IS AS U NDER:- I. INCOME AS PER INCOME & EXPENDITURE ACCOUNT RS. 53,09,443/- II. REVENUE EXPENDITURE RS. 31,24,604/- III. CAPITAL EXPENDITURE RS. 8,16,547/- IV. ACCUMULATED OR SET APART U/S 11(2) RS. 5,14,929/- V. APPLICATION OF INCOME DURING THE YEAR (II+III+ IV) RS. 44,56,080/- 6. THE ASSESSEE TRUST WAS REQUIRED TO APPLY ITS INCOME TO THE EXTENT OF 85% I.E. AN AMOUNT OF RS. 45,13,027/- IN ORDER TO CLAIM EXEMPTI ON U/S 11 & 12 OF THE ACT., BUT THE IT HAS APPLIED ONLY AN AMOUNT F RS. 44,56,080/- WHI CH IS LESS THAN 85% OF ITS RECEIPTS DURING THE YEAR. AS SUCH THE ASSESSEE TRUST FAILED TO APPLY ITS INCOME TO THE EXTENT OF 85%, THE SHORTFALL IN APPLICATION BY RS. 56,947/- I S CHARGED TO TAXED ACCORDINGLY. ITA NO. 33/CHD/2020 A.Y. 2016-17 PAGE 3 OF 5 THE LD. AO HAS WORKED OUT A SHORTFALL IN APPLICA TION OF INCOME OF RS. 56,947/- WHICH HAS BEEN CHARGED TO TAX. 4. AGGRIEVED WITH THE ABOVE ACTION, ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) BUT THE APPEAL TO THE FIRST A PPELLATE AUTHORITY DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE CONTEND ED THAT BASICALLY LD. AO HAS ERRED IN COMPUTING THE ALLEGED SHORTFALL IN APPLICATION OF INCOME. HE FILED A BRIEF PAPER BOOK RUNNING INTO FIVE PAGES. ON PAGE NO. 1 HE PLACED ON RECORD THE DETAILS EXHIBITING THE WORKING FOR ACCUMULATION OF AMOUNT A T RS. 5,14,929/- AND ON PAGE NOS. 2 AND 3, HE PLACED ON R ECORD COPY OF RECEIPT AND PAYMENT FOR THE YEAR ENDED ON 31.03. 2016 AND COPY OF INCOME & EXPENDITURE FOR THE YEAR 31.03.201 6. TAKING US THROUGH THESE PAGES, LD. COUNSEL FOR THE ASSESSE E APPRISED THAT BASICALLY THE AO TOOK INCOME AS PC INCOME & EX PENDITURE ACCOUNT AT RS. 53,09,443/-. THIS SHORTFALL IN APPL ICATION OF INCOME HAS BEEN WORKED OUT BY TAKING THE DETAILS FR OM INCOME & EXPENDITURE ACCOUNT. THE RIGHT METHOD FOR THE AO WAS TO TAKE THE DETAILS FROM RECEIPT AND PAYMENT AND NOT FROM INCOME AND EXPENDITURE. HAD HE VERIFIED THE DETA ILS WITH THAT ANGLE, THEN THERE WOULD HAVE NOT ANY SHORTFALL IN APPLICATION OF INCOME FOR CHARITABLE PURPOSES AS WO RKED OUT BY THE AO. HE EMPHASIZED THAT THESE DETAILS WERE SUBM ITTED ITA NO. 33/CHD/2020 A.Y. 2016-17 PAGE 4 OF 5 BEFORE THE AO. ON THE OTHER HAND LD. DR SUBMITTED T HAT WHATEVER DETAILS WERE SUBMITTED BEFORE THE AO, THOS E WERE CONSIDERED WHILE WORKING OUT THE SHORTFALL. THUS, SHE RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIO NS AND GONE THROUGH THE RECORD CAREFULLY. THE AREA OF DISPUTE BETWEEN THE PARTIES IS THAT ACCORDING TO THE ASSESSEE, COMPUTIN G FOR THE PURPOSE OF VERIFYING 85% OF APPLICATION OF ITS RECE IPTS OUGHT BE FROM THE RECEIPT AND PAYMENT ACCOUNT, WHEREAS AO HAS COMPUTED THE ALLEGED APPLICATION OF 85% OF ITS RECE IPTS BY TAKING THE FIGURE FROM INCOME & EXPENDITURE ACCOUN T. THIS EXERCISE GOAD THE AO TO REACH AT A CONCLUSION THAT THERE IS A SHORTFALL IN APPLICATION OF INCOME FOR CHARITABLE P URPOSE BY RS. 56,947/-. TAKING INTO CONSIDERATION ALL THESE DETA ILS, WE DEEM IT APPROPRIATE THAT THE ISSUE DESERVES TO BE SET AS IDE TO THE FILE OF THE AO FOR RE-VERIFICATION. THE LD. AO SHALL TA KE INTO ACCOUNT THE DETAILS OF RECEIPT AND PAYMENT AND THER EAFTER, VERIFY WHETHER ANY SHORTFALL IS AVAILABLE WHICH WAS NOT APPLIED BY THE ASSESSEE FOR THE OBJECTS OF THE SOCIETY AND WHICH DESERVES TO BE BROUGHT TO TAX. IN OTHER WORDS, THE ASSESSEE BEING A CHARITABLE INSTITUTION, REQUIRES TO APPLY 8 5% OF ITS RECEIPTS ON ITS OBJECTS. IN THE PRESENT CASE, THE ASSESSEE HAS ALREADY SOUGHT PERMISSION FOR ACCUMULATION OF THE A MOUNT ITA NO. 33/CHD/2020 A.Y. 2016-17 PAGE 5 OF 5 WHICH WAS NOT APPLIED FOR CHARITABLE PURPOSES FOR A PPLICATION IN FUTURE AND THEREAFTER, IT HAS SHOWN NIL INCOME . WE DIRECT THE AO TO GO INTO ALL THESE DETAILS AND RE-WORK OUT , IF ANY SHORTFALL IS THERE WHICH WAS NOT APPLIED FOR THE OB JECTS OF THE SOCIETY. WITH THE ABOVE OBSERVATION, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE AO FOR RE-ADJUDICATION. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 19 TH NOVEMBER,2020. SD/- SD/- ( N.K. SAINI) ( RAJPAL YADAV) / VICE PRESIDENT / VICE PRESIDENT DATED : 19 TH NOVEMBER,2020. POONAM &) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE &) ' / BY ORDER, 6 ! / ASSISTANT REGISTRAR