M/s. Modi Charitable Fund Society, Ghaziabad V. Addl.CIT, Ghaziabad

ITA 3365/DEL/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1804 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 09-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 26-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: NEHA SIDANA
• Keywords: Charitable institution
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2 NEW DELHI BEFORE SHRI P.K. BANSAL : ACCOUNTANT MEMBER ITA NO. 3365/DEL/2015 ASSTT. YRS: 2010-11 MODI CHARITABLE FUND SOCIETY, VS. ADDL. CIT, RANGE -1, MODI BHAWAN, MODI NAGAR. GHAZIABAD. PAN: AAATM 0977 G ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI RAJEEV AHUJA CA & MS. NEHA SIDANA CA RESPONDENT BY : SHRI P. DAM KANUNJNA SR. DR DATE OF HEARING : 09/11/2015. DATE OF ORDER : 30/11/2015. O R D E R THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 26/02/2015, PASSED BY THE CIT(A), GHAZIABAD, IN AP PEAL NO. 272/2012-13/GZB, RELATING TO A.Y. 2010-11. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS, WHETH ER ASSESSEE IS ENTITLED FOR THE EXEMPTION CLAIMED U/S 11 AND WHETHER THE ASSESSEE H AD CARRIED OUT CHARITABLE PURPOSE DURING THE YEAR U/S 2(15) OF THE INCOME-TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY HAS DULY BEEN REGISTERED U/S 12A OF THE I.T. ACT VIDE REGISTRATION NO. R. NO . 24(MT)/73-74 DATED 21-01- 1975. DURING THE IMPUGNED ASSESSMENT YEAR THE AO NO TED THAT THE ASSESSEE HAD INCOME FROM RENT AND INTEREST INCOME I.E. INCOME FR OM OTHER SOURCES AND THE ASSESSEE HAD NOT PURSUED THE MAIN OBJECT TO PROVIDE EDUCATION AND EVEN NO 2 EXPENDITURE HAD BEEN INCURRED TOWARDS THE OBJECTS O F THE SOCIETY. THE AO TOOK THE VIEW THAT THE ASSESSEE HAD NOT CARRIED OUT THE CHAR ITABLE PURPOSE. HE, THEREFORE, DID NOT ALLOW THE BENEFIT U/S 11 OF THE IU.T. ACT. 4. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT( A) CONFIRMED THE ORDER OF THE AO. 5. I HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES. I NOTED THAT IN T HE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS DERIVED RENTAL INCOME AS WELL AS THE I NTEREST INCOME. THE RENTAL INCOME, NO DOUBT HAS BEEN DERIVED FROM GIRLS COLLEG E SHOPS, GIRLS COLLEGE -STAFF QUARTERS, INTER COLLEGE-SHOPS, INTER COLLEGE-STAFF QUARTERS, SHOPPING COMPLEX AS WELL AS OTHER RENT RECEIPTS. NOW THE QUESTION ARISE S IS WHETHER THE SAID RENT INCOME, DERIVED BY THE ASSESSEE CAN BE REGARDED TO BE THE C HARITABLE PURPOSE. SECTION 2(15) DEFINED CHARITABLE PURPOSE, AS WAS IN EXISTENCE DU RING THE IMPUGNED ASSESSMENT YEAR AS UNDER: CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, E DUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC UTILITY. ADVANCEMENT OF ANY OTHER GENERAL UTILITY SHALL NOT BE CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NAT URE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS OR A CESS OR FEE OR FOR ANY OTHER CONS IDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME F ROM SUCH ACTIVITY, IF AGGREGATE VALUE OF THE RECEIPT FROM THE SAID ACTIVITIES IS MO RE THAN RS. TEN LACS DURING THE PREVIOUS YEAR. 3 6. IN THE CASE OF THE ASSESSEE I NOTED THAT THE ASS ESSEE IS NOT CARRYING OUT THE EDUCATION BUT HAD GOT PART OF THE RENTAL INCOME FRO M THE EDUCATION INSTITUTION WHICH ARE IMPARTING EDUCATION. IMPARTING OF EDUCAT ION BY THIRD PARTY, CANNOT BE REGARDED AS IMPARTING OF EDUCATION BY THE ASSESSE E. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS RECEIVED THE RENT. HOLDING THE PROPERT Y FOR EARNING RENT, IN MY OPINION, CANNOT BE REGARDED TO BE THE CHARITABLE PU RPOSE. THEREFORE, I REJECT THE PLEA OF THE LD. AR THAT THE ASSESSEE HAS CARRIED OU T CHARITABLE PURPOSE BY GETTING THE INCOME BY WAY OF RENT. SINCE THE ASSESSEE ONLY DERIVED THE RENTAL INCOME, IT CANNOT BE SAID THAT THE PRIMARY OR DOMINANT PURPOSE OF THE ASSESSEE IS CHARITABLE. 7. DEDUCTION U/S 11 IS AVAILABLE TO AN ASSESSEE IN CASE THE PROPERTY IS HELD, UNDER TRUST, WHOLLY FOR CHARITABLE OR RELIGIOUS PUR POSE. IN THE CASE OF THE ASSESSEE IT CANNOT BE SAID THAT THE PROPERTY IS HELD FOR CHARIT ABLE PURPOSE, WHEN THE ASSESSEE IS EARNING RENTAL INCOME AND THAT IS THE MAIN SOURCE O F ITS INCOME. IT IS NOT THE CASE OF THE ASSESSEE THAT HE IS GETTING THE INCOME FROM THE CHARITABLE ACTIVITY AS DEFINED U/S 2(15). IN MY OPINION, WHILE MAKING THE ASSESSMENT, THE AO CAN ALWAYS LOOK INTO WHETHER THE ASSESSEE HAS CARRIED OUT A CHARITABLE A CTIVITY OR NOT. HE CAN VERIFY, WHETHER ASSESSEE CAN GET DEDUCTION U/S 11 OF THE I. T. ACT OR NOT. THE POWER OF VERIFICATION AT THE TIME OF ASSESSMENT CANNOT BE SN ATCHED AWAY MERELY ON THE BASIS THAT THE ASSESSEE HAS DULY BEEN REGISTERED U/S 12A OF THE INCOME-TAX ACT. 8. I HAVE ALSO GONE THROUGH THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF DIRECTOR OF INCOME-TAX VS. BHARAT DIAMOND BOURSE 259 ITR 280 (SC). THIS DECISION, IN MY OPINION, WILL NOT BE OF ANY HE LP TO THE ASSESSEE IF THE PRIMARY OR DOMINANT PURPOSE OF THE ASSESSEE IS NOT CHARITAB LE WITHIN THE DEFINITION GIVEN U/S 4 2(15). THE AO, IN MY OPINION, IS CORRECT IN LAW IN DENYING THE EXEMPTION TO THE ASSESSEE U/S 11 OF THE INCOME-TAX ACT. 9. IN VIEW OF THESE FACTS, IN MY OPINION, NO INTERF ERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). I, ACCORDINGLY, CONFIRM THE OR DER OF LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2015. SD/- (P.K. BANSAL ACCOUNTANT MEMBER DATED: 30/11/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.