Carmel Educational Trust, Pathanamthitta V. DCIT, Kottayam

ITA 331/COCH/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7654 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 24-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHANTOM BOSE
• Assessee Lawyers: VENKITACHALAM
• Keywords: Revision of order; Maximum Marginal Rate; Benefit of exemption
• Section: 153A; 263; 132; 12; 11

Judgement Text

ITA NO S 329 TO 334/C/2013 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO S 329 TO 334/COCH/2013 . (ASST YEAR S 2004 - 05 TO 2009 - 10 ) M/S CARMAL EDUCATIONAL TRUST KOONAMKARA PO PERUNNADU RANNI VS THE DY COMMR OF INCOM E TAX CENTRAL CIRCLE KOTTAYAM ( APPELLANT) (RESPONDENT) PAN NO. AAATC4524B ASSESSEE BY SH M S VENKITACHALAM REVENUE BY SH SHANTOM BOSE, CIT - DR DATE OF HEARING 4 JAN 2016 DATE OF PRONOUNCEMENT 5 TH JAN 2016 OR D ER PER BENCH : THESE SIX AP PEALS, AT THE INSTANCE OF THE ASSESSEE, ARE DIRECTED AGAINST SEPARATE ORDERS OF THE CIT, PASSED U/S 263 OF THE I T ACT (ALL DATED 26 TH MARCH 2013). THE RELEVANT ASSESSMENT YEARS ARE 2004 - 05 TO 2009 - 10. 2 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A TRUST RUNNING AN ENGINEERING COLLEGE AT RANNI, KERALA. THERE WAS A SEARCH U/S 132 OF THE I T ACT IN THE RESIDENTIAL PREMISES OF THE FORMER TRUSTEE S . THE S EIZED DOCUMENTS/ACCOUNTS INDICATED THAT THE TRUSTEES RECEIVED AMOUNTS FROM STUDENTS IN ADDITION TO THE FEES PRESCRIBED BY THE GOVERNMENT ITA NO S 329 TO 334/C/2013 2 AND SHARED AMONG THEM. NOTICE U/S 153C R.W.S 153A OF THE ACT WAS ISSUED TO THE ASSESSEE TRUST FOR THE AYS 2003 - 04 TO 200 8 - 09 . IN RESPONSE TO THE NOTICE S ISSUED, THE ASSESSEE FILED RETURN OF INCOME. THE ASSESSMENT WAS COMPLETED ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE - T RUSTEE DENYING EXEMPTION U/S 11 OF THE ACT. THE AO OBSERVED THAT THE T RUST FUND WAS UTILIZED BY THE TRUSTEES FOR THEIR PERSONAL BENEFITS AND AS PER PROVISIONS OF SEC 13(I)( C) OF THE AC T, THE ASSESSEE TRUST WAS NOT ENTITLED TO THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT. T HE ASSESSMENT W AS COMPLETED ON THE STATUS OF AOP . AGAINST THE ASSESSMENTS COMPLETED FOR AY 2004 - 05 TO 2009 - 10, THE ASSESSEE PREFERRED APPEAL TO THE CIT(A), WHICH IS PENDING. 3 IN THE MEANWHILE, THE CIT PASSED THE ORDER U/S 263 OF THE ACT FOR THE AYS 2004 - 05 TO 2009 - 10 DIRECTING THE AO TO RE - DO THE ASSESSMENTS BY LEVYING THE TAX AT THE MAXIMUM MARGINAL RATE AS PROVIDED U/S 164(1) OF THE ACT. AGAINST THE ORDER S PASSED U/S 263, THE ASSESSEE IS IN APPEAL BEFORE US FOR THE AY 2004 - 05 TO 2009 - 10. 4 THE LD COU NSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE CIT S ORDER U/S 263 IS JUSTIFIED IN VIEW OF PROVISO TO SEC 164( 2 ) OF THE ACT. THE LD DR PRESENT WAS DULY HEARD. ITA NO S 329 TO 334/C/2013 3 5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUED TH AT WAS ARGUED BY THE LD AR IS WHETHER THE CIT IS JUSTIFIED IN DIRECTING THE AO TO LEVY TAX AT THE MAXIMU M MARGINAL RATE . THE LD COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE CIT HAS LEVIED TAX AT THE MAXIMUM MARGINAL RATE AS PROVIDED UNDER THE PROVISO TO SEC. 164( 2 ) OF THE ACT. THE PROVISO TO SECTION 164(2) READ AS UNDER: PROVIDED THAT IN A CASE WHERE THE WHOLE OR ANY PART OF THE RELEVANT INCOME IS NOT EXEMPT U/S 11 OR SEC 12 BY VIRTUE OF THE PROVISIONS CONTAINED IN CLAUSE ( C) O F CLAUSE (D) OF SUB SEC (1) OF SECTION 13, TAX SHALL BE CHARGED ON THE RELEVANT INCOME OR PART OF RELEVANT INCOME AT THE MAX MA RGINAL RATE . 6 IN THE INSTANT CASE, THE EXEMPTION U/S 11 WAS DENIED OR VIOLATION U /S 13(I) ( C) OF THE AT AND ASSESSMENT WAS COMPLETED ON THE ASSESSEE TRUST ON THE STATUS OF AOP . THEREFORE, GOING BY THE PROVISO TO SECTION 164(2), NECESSARILY THE TAX HAS TO BE LEVIED ON THE MAXIMUM MARGINAL RATE. SINCE T HE ASSESSMENT ORDER HAD NOT LEVIED TAX ON THE MAXIMUM MARGINAL TAX , THE SAME IS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE . THEREFORE, THE CIT IS JUSTIFIED IN INVOKING THE REVISIONARY JURISDICTION U/S 263 OF THE ACT FOR THE AYS 2004 - 05 TO 2009 - 10. NO OTHER ISSUE HAS BEEN ARGUED BY THE LD AR IN THE COURSE OF THE HEARING AND HENCE, THESE APPEALS ARE DISMISSED. IT IS ORDERED ACCORDINGLY. ITA NO S 329 TO 334/C/2013 4 7 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JAN 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 5 TH JAN 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN