CHIDAMBARAM PILLAI CHARITABLE AND EDICATIONAL TRUST, TRICHY V. ITO, EXEMPTIONS WARD, TRICHY

ITA 3430/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9803 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 17-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 143(3); 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , ! ' , # '$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3430/CHNY/2018 % &% /ASSESSMENT YEAR: 2012-13 M/S. CHIDAMBARAM PILLAI CHARITABLE AND EDUCATIONAL TRUST, C/O. CHIDAMBARAM PILLAI COLLEGE FOR WOMEN MELA KAVAL KARA STREET, MANNACHANNALUR TRICHY DISTRICT 641 005. VS. INCOME TAX OFFICER, EXEMPTIONS WARD, 44 WILLIAMS ROAD, TRICHY 620 001. [PAN: AAATC 1945N ] ( '( /APPELLANT) ( )*'( /RESPONDENT) '( + , / APPELLANT BY : NONE )*'( + , /RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL. CIT - + .# /DATE OF HEARING : 16.04.2019 /0& + .# / DATE OF PRONOUNCEMENT : 23.04.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -1, TRICHY (HEREINAFTER CALLED AS CIT(A)) DATED 11.10.2018 F OR THE ASSESSMENT YEAR 2012-13. ITA NO.3430/CHNY/2018 :- 2 -: 2. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) TO THE EXTENT DISPUTED, IS CONTRARY TO LAW, WEIGHT OF EVID ENCE AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N NOT ADJUDICATING THE SPECIFIC GROUNDS RAISED BY THE APP ELLANT QUESTIONING THE DENIAL OF EXEMPTION U/S 11. 2.1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAD O VERLOOKED THE GROUNDS 5 & 6 RAISED BEFORE CONTESTING THE DENIAL O F EXEMPTION U/S 11 WHEN THE APPELLANT IS REGISTERED U/S 12A. 2.2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAD E RRED IN NOT APPRECIATING THAT THE EXEMPTION CLAIMED CAN BE DENI ED ONLY IN RESPECT OF THE ALLEGED VIOLATION S.13(1)(C) AND NOT TOTALLY. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE BUILDING WAS CONSTRUCTED BY THE TRUST FOR RUNNING ITS COLLEGE. 3.1. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILE D TO APPRECIATE THAT THE TRUST WAS SOLE BENEFICIARY OF THE EXPENDIT URE TO THE EXCLUSION OF ALL INCLUDING THE TRUSTEES WHO HAD LEASED THE LA ND. 3.2. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILE D TO APPRECIATE THAT NO BENEFIT OR AMENITY HAD ACCRUED TO THE TRUST EES DURING THE RELEVANT YEAR. 3.3. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE HYPOTHESISED THAT ON EXPIRY OF THE PERIOD OF LEASE THE BUILDING WILL DEVOLVE ON THE TRUSTEES. 3.4. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILE D TO APPRECIATE IT IS A CONTINGENT BENEFIT AND ITS OCCURRENCE CANNO T BE PREDICTED WITH ANY REASONABLE ACCURACY. 3.5. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILE D TO APPRECIATE THAT THE CONTINGENT BENEFIT HAD NOT CRYSTALLISED DU RING THE YEAR. 4. IN ANY EVENT THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS) IS HIGHLY ARBITRARY, UNJUST AND ACTS AS A GREAT HARDSHIP ON THE APPELLANT. 5. THE APPELLANT CRAVES LEAVE TO RAISE FURTHER GROU NDS AT THE TIME OF HEARING. ITA NO.3430/CHNY/2018 :- 3 -: 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS A CHARITABLE TRUST AND IT WAS DUL Y REGISTERED UNDER THE PROVISIONS OF S. 12AA OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-1 3 WAS FILED ON 17.01.2013 DISCLOSING NIL INCOME AFTER CLAIMING EXE MPTION U/S. 11 OF THE ACT. AGAINST THE SAID RETURN OF INCOME, THE ASSESSM ENT WAS COMPLETED BY THE ITO, EXEMPTIONS WARD, TRICHY (HEREINAFTER CA LLED AO) VIDE ORDER DATED 23.03.2015 PASSED U/S. 143(3) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) AT TOTAL INCOME OF RS. 77,54,690/- . WHILE DOING SO, THE AO ALLEGED THAT THE APPELLANT TRUST HAD INFRINGED O R VIOLATED THE PROVISIONS OF S. 13(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS PAID THE INTEREST ON LOANS BORROWED FROM THE RELATI VES OF THE TRUST AT UNREASONABLE RATES OF 21% AND THE APPELLANT TRUST H AD CONSTRUCTED BUILDING ON LAND TAKEN LEASE FROM THE OWNER OF THE TRUSTEES ETC. ACCORDINGLY, HE BROUGHT TO TAX THE EXCESS RATE OF I NTEREST AND THE COST OF THE CONSTRUCTION OF THE BUILDING ON THE LEASED PREM ISES. 4. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEA L WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER CONFIRME D THE ADDITION. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. ITA NO.3430/CHNY/2018 :- 4 -: 5. WHEN THE MATTER WAS CALLED FOR HEARING, NOBODY A PPEARED ON BEHALF OF THE APPELLANT TRUST. ON APPEAL BEFORE LD . CIT(A), THE ADDITIONS ON ACCOUNT OF EXCESS INTEREST WAS DELETED. HOWEVER, THE ADDITION ON ACCOUNT OF CONSTRUCTION OF BUILDING IN THE LEASED P REMISES WAS SUSTAINED BY THE LD. CIT(A). HENCE, BEING AGGRIEVED, THE APP ELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. ON THE DATE OF HE ARING NOBODY APPEARED ON BEHALF OF THE ASSESSEE TRUST. ON THE O THER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 6. WE HEARD THE LD. SR. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE INVOLVED IN THE PRESENT APPEAL IS WHETHER THE CONSTRUCTION OF BUILDING ON THE LAND LE ASED OUT BY ONE OF THE TRUSTEES OF THE APPELLANT AMOUNTS TO VIOLATION OF P ROVISIONS OF S. 13(1)(C) OF THE ACT OR NOT. INDISPUTEDLY, THE BUILDING WAS CONSTRUCTED ON THE LAND TAKEN ON LEASE FROM ONE OF THE TRUSTEES OF THE APPE LLANT SOCIETY. THEREFORE, THE ISSUE THAT COMES FOR CONSIDERATION I S WHETHER IT AMOUNTS TO BENEFIT TO THE TRUSTEES SO AS TO FALL WITHIN THE MISCHIEF PROVISIONS OF S. 13(1)(C) OF THE ACT. THIS ISSUE REQUIRES TO BE EXA MINED WITH REFERENCE TO THE TERMS OF LEASE DEED. HOWEVER, THE APPELLANT TR UST HAD FAILED TO PROVE BEFORE THE AO THAT NO BENEFIT HAD ACCRUED TO THE TR USTEES OF THE APPELLANT TRUST AND THEREFORE, THE PROVISIONS OF S. 13(1)(C) OF THE ACT ARE DIRECTLY ITA NO.3430/CHNY/2018 :- 5 -: APPLICABLE. HENCE, WE UPHOLD THE ORDERS OF THE LOW ER AUTHORITIES INVOKING THE PROVISIONS OF S. 13(1)(C) OF THE ACT. HENCE, TH E APPEAL FILED BY THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 23 RD DAY OF APRIL, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' ) (INTURI RAMA RAO) # /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 23 RD APRIL, 2019. EDN, SR. P.S + ).23 43&. /COPY TO: 1. '( /APPELLANT 2. )*'( /RESPONDENT 3. - 5. ( )/CIT(A) 4. - 5. /CIT 5. 36 ). /DR 6. 7% 8 /GF