Dy. Commissioner of Income Tax, Chandigarh V. M/s The Society for Permotion of culture & Education Trust, Kashmir

ITA 35/ASR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5578 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 10-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Maximum Marginal Rate
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.35(ASR)/2017 ASSESSMENT YEAR: 2012-13 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(EXEMPTION), CHANDIGARH. VS. THE SOCIETY FOR PROMOTION OF CULTURE & EDUCATION TRUST, HUMHAMA, BUDGAM, KASHMIR. PAN:AAFFT-2485F (APPELLANT) (RESPONDENT) APPELLANT BY: SH. RAHUL DHAWAN (DR) RESPONDENT BY: SH. A. M. ZARGAR (CA) DATE OF HEARING: 06.06.2017 DATE OF PRONOUNCEMENT: 14.07.20 17 ORDER PER T. S. KAPOOR: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT (A), DATED 19.07.2016, FOR ASST. YEAR: 2012-13. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL. (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW WHILE ALLOWING BENEFIT UNDER SECTION 11 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THAT THE RE WAS CLEAR VIOLATION OF SECTION 13 OF THE INCOME TAX ACT. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW WHILE NOT CONSIDERING S ECTION 13(10)(C) OF THE I.T. ACT, 1961, ACCORDING TO WHICH, ANY INCOME OF THE TRUST DIRECTLY OR INDIRECTLY APPLIED FOR THE BENEFIT OF A NY PERSON REFERRED TO IN SECTION 13(3) OF THE ACT SHALL NOT BE EXCLUDE D FROM THE TOTAL INCOME AND PROVISIONS OF SECTION 11 SHALL NOT APPLY TO THE SAME. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE THE LD. CIT(A) IS RIGHT IN LAW AS THE FINDINGS RECORDED ARE PERVERSE AND CONTRARY TO THE EVIDENCE/MATERIAL AVAILABLE ON RECO RD AND DULY CONSIDERED BY THE A.O. (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN IGNORING OBJECT CLAUSE NO.39 WHICH PROVIDES FOR ANNUAL PAYMENT OF 15% OF THE PROCEEDS (IMPLYING THAT IT GROWS AS THE PROCEEDS GROW) TO THE TRUSTEES AND WHI CH WAS A CLEAR VIOLATION OF SECTION 13(1) OF THE I.T. ACT, 1961. ITA NO.35 (ASR)/2017 ASST. YEAR: 2012-13 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CHARITABLE EDUCATIONAL TRUST REGISTERED UNDER SECTION 11 OF I. T. ACT. IN THIS CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE VIDE RECEIPT NO.1394 ON 29.09.2012 DECLARING AT NIL INCOME. A LAND MEASURIN G 4 KANALS AND 1 MARLA WAS PURCHASED BY THE ASSESSEE TRUSTEE FOR RS. 35.60 LACS DURING THE YEAR UNDER CONSIDERATION IN THE NAME OF MEHRAJ- UN-NISA, W/O ABDUL HAMID BHAT, R/O KRALYAR, SRINAGAR, THE FOUNDER TRUS TEE OF THE SOCIETY FOR PROMOTION OF CULTURE AND EDUCATION WHEREAS THE FUND UTILIZED FOR THE PURPOSE OF PURCHASE OF THE SAID PROPERTY BELONGED T O THE ASSESSEE TRUST I.E., THE SOCIETY FOR PROMOTION OF CULTURE AND EDU CATIONAL TRUST. THE AO ALSO FOUND THAT THE SOCIETY FOR PROMOTION OF CU LTURAL AND EDUCATION ARE TWO DIFFERENT ENTITIES HAVING SIMILAR NAMES. TH E AO, AFTER CONSIDERING THE SUBMISSIONS FILED BY THE ASSESSEE TRUST, DENIED THE EXEMPTION CLAIMED U/S 11 OF THE INCOME TAX ACT AND DISALLOWED A SUM OF RS.1,99,32,552/- BEING THE SURPLUS INCOME OVER EXPE NDITURE BY TREATING THE ASSESSEE AS AN AOP (A BUSINESS ENTITY) AND TAXE D AT MAXIMUM MARGINAL RATE ON THE GROUND THAT THE LAND IN QUESTI ON WAS NEITHER OWNED BY THE TRUST NOR WAS IT HELD WITH THE TRUST. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. C IT(A) AND LD. CIT DELETED THE ADDITION MADE BY AO BY RELYING ON THE D ECISION OF HONBLE ITAT, AMRITSAR BENCH, AMRITSAR IN ITA NO.428(ASR)/2 014 FOR ASST. YEAR: 2010-11. ITA NO.35 (ASR)/2017 ASST. YEAR: 2012-13 3 5. AGGRIEVED WITH THE ORDER THE REVENUE IS IN APP EAL BEFORE US. 6. AT THE OUTSET, THE LD. DR HEAVILY PLACED HIS RE LIANCE ON THE ORDER OF ASSESSING OFFICER. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HEAVILY PLACED HIS RELIANCE ON THE IMPUGNED ORDER. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GO NE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE CASE OF THE ASSESSEE IS DULY COVERED IN FAVOUR OF ASSESSEE BY ORDER OF ITAT AMRI TSAR BENCH, IN ASSESSEES OWN CASE FOR ASST. YEAR: 2010-11. THE H ONBLE TRIBUNAL UNDER SIMILAR FACTS AND CIRCUMSTANCES HAS HELD AS UNDER: 7. APROPOS THE LAND, IT IS SEEN THAT IT WAS MUTATE D IN FAVOUR OF THE ASSESSEE TRUST IN THE YEAR 2012, BEFORE PASSING OF THE ASSES SMENT ORDER DATED 13.03.2013. THE REVENUE AUTHORITIES, WHILE MUTATING THE LAND IN FAVOUR OF THE ASSESSEE, HAVE DULY TAKEN INTO COGNIZANCE OF DEED OF RELINQUISHMEN T DATED 12.08.2009 EXECUTED BY THE ORIGINAL OWNER OF THE LAND IN FAVOUR OF THE ASSESSEE-TRUST. THEREFORE, THE LAND HAVING BEEN MUTATED IN THE YEAR 2012, NOTHING OF BENEFIT TO THE DEPARTMENT TURNS ON THE FACTUM OF THE SAID DEED BEING NOTARIZE D THROUGH A NOTARY PUBLIC AND NOT BEING REGISTERED BEFORE THE SUB-REGISTRAR. AS SUC H, GROUND NO. L IS REJECTED. 8. REGARDING THE ISSUE OF THE REGISTRATION OF THE SCHOOL BUSES BEING IN THE NAME OF THE TRUSTEE, SINCE THE BUS FEE COLLECTED STANDS UNDISPUTEDLY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE TRUST, SUCH REGISTRATION OF THE BUSES IN THE NAME OF THE TRUSTEE RATHER THAN IN THE NAME OF THE ASSESSEE TRU ST ALSO DOES NOT FURTHER THE CAUSE OF THE DEPARTMENT. ACCORDINGLY, GROUND NO.2 IS ALSO REJECTED. 9. CONCERNING THE DEPARTMENTS OBJECTOR THAT THE I D. CIT(A) DID NOT CONSIDER CLAUSE 39 OF THE TRUST DEED, AS PER WHICH, THE TRUST WILL BE LIABLE TO PAY RENT OF 15% OF THE PROCEEDS IN THE GIVEN YEAR FOR THE LAND/ PROPERTY T HAT THE FOUNDER TRUSTEE OR OTHER TRUSTEES WILL OFFER TO THE TRUST FOR RUNNING SCHOOL S AND COLLEGES, ETC., THE LD. CIT(A) HAS CATEGORICALLY OBSERVED THAT DURING THE YEAR NEI THER HAVE THE TRUSTEES OFFERED ANY PERSONAL PROPERTY TO THE ON LEASE, NOR HAS THE TRUST PAID ANY LEASE MONEY ITA NO.35 (ASR)/2017 ASST. YEAR: 2012-13 4 PURSUANT TO THE SAID CLAUSE 39 OF THE TRUST DEED. B EFORE US, IT HAS NOT BEEN SHOWN BY THE DEPARTMENT TO BE OTHERWISE. SO, THE MERE EXI TING OF THE CLAUSE IN THE TRUST DEED, SANS ANY ACTION IN PURSUANCE THEREOF, CAN CAU SE NO DETRIMENT TO THE ASSESSEE, TO THE ASSESSEE, PARTICULARLY WHEN IT PAS SED MUSTER AT THE TIME OF GRANT OF REGISTRATION TO THE ASSESSEE. IN VIEW OF THE ABOVE, FINDING NO ERROR WHATSOEVER THEREIN, THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) IS HEREBY C ONFIRMED. IN VIEW OF THE ABOVE PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.07.2017 . SD/- SD/- (N.K.CHOUDHRY ) (T. S. KAPOO R) JUDICIAL MEMBER AC COUNTANT MEMBER DATED:14.07.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER