The ITO, Ward-1, Ahmedabad V. Gujarat Institute of Chemical Technology, Ahmedabad

ITA 354/AHD/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7892 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 04-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O.P. SHARMA
• Section: 73; 20

Judgement Text

, ‘C’ । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD (Convened through Virtual Court) BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No . 35 4/ Ah d/ 20 19 ( Ass e ss me nt Ye ar : 20 1 5 -16 ) The ITO(E ) Ward-1, 6 t h Floor, Roo m No.602, Aa yakar Bhavan, Anandnagar, 100 ft. Road, Ve jalpur, Ah medabad -380009 / Vs. Gu ja rat I ns ti tu te of Ch e mic al Te ch n ol ogy Su rak sh a Sa nk oo l, Tha lt ej -G an dh ina ga r Hi gh wa y, Th al te j, Ah me da bad 3 80 05 4 यी ल सं./ ीआ आर सं./P A N / G IR N o . : A A A T G 2 4 8 1 M (अपील Appellant) . . ( य / Respondent) अपील र स /Appellant by : Shri O. P. Sharma, CIT.D.R. य क र स /Respondent by : Shri S. N. Soparkar, Sr. Advocate with Shri Parin Shah, A.R. स क र D ate o f He ari ng 16/09/2021 !"# क र /Dat e o f Pro n ou nc e men t 24/11/2021 आद श/O R D E R PER PRADIP KUMAR KEDIA - AM: The c ap ti on ed a pp eal h as b ee n f ile d at the i ns ta nc e o f the Re ven ue a ga in st t he or de r of th e C o mmi ss io ner of I nco me Ta x (Ap pe al s) -9 , Ah m eda ba d ( CI T( A)’ in s ho rt ), d at ed 31. 12 .2 01 8 ari si ng in t he as s ess me nt or de r da t ed 2 1. 12 .2 01 7 p as sed b y th e I T A N o . 3 5 4 / A h d / 1 9 [ I T O ( E ) v s . G u j a r a t I n s t i t u t e O f C h e m i c a l T e c h n o l o g y ] A . Y . 2 0 1 5 - 1 6 - 2 - As ses si ng Of f ic er ( AO ) un der s . 14 3( 3 ) of th e I nc o me Ta x Ac t, 1 96 1 (th e Ac t) co nc er ni n g A Y 2 01 5-1 6. 2. The su bs ta nti ve gr ou nd of ap pe al r ai s ed b y th e Rev en ue rea ds as un de r: - “1) The Ld. CIT(A) has erred in the law and on facts in deleting the addition of Rs.45,92,00,000/- made on account of disallowance of donation given by the assessee and without appreciating that undue benefits being conferred to the manufacturer of product over a period of time and also all the parties (public and private) involved in the said research will enjoy commercial benefits in future.” 3. W h en th e mat te r was c all ed f or he a rin g, th e lea rn ed AR f o r the a sse ss ee i n t he Re ven ue ’s ap pe al r ef err ed to the dec is ion of t he Co -or di na te be nc h of Tr ib un al in A Y 20 14- 15 w he re ide nti ca l i ss ue has b ee n adj ud ic at e d i n f a vo ur of t he a sse ss ee . 4. The l ear ne d DR , o n t he ot he r h an d, r eli ed up on the or d er of the A O. 5. The s ho rt qu es ti o n i n c on tr ov er s y i s w he th er th e T ru st is ent it le d t o tr ea t do nat io n gi ve n b y it t o a no th er tr us t as a ppl ic at io n of in co me in th e lig ht of t he ob se r vat io n of th e A O th at su ch do nat io n t o t he a no the r t ru st wo uld re s ult in su bs ta nti al c o mme rci al ben ef it i n f utu re t o the d on ee t ru st . W e f ind t hat th e id en tic al i ss ue has cr op pe d up in ass es se e’ s ow n c as e in I TA No . 2 73 6 /A hd/ 20 17 con ce rn in g A Y 20 14- 15 or de r d at ed 04 .1 0.2 01 9. T h e re le va nt ope ra ti ve pa ra of t he or de r of th e co - ord in at e ben ch c on cer ni ng A Y 20 14- 15 i s re pro du ced h er eu nde r: “ 5 . T h e s h o r t q u e s t i o n i n c o n t r o v e r s y i s w h e t h e r t he T r u s t i s e n t i t l e d t o t r e a t d o n a t i o n g i v e n b y i t t o a n o t h e r t r u s t a s ap p l i c a t i o n o f i n c o m e i n t h e l i g h t o f t h e o b s e r v a t i o n o f t h e A O t h a t s u c h d o n a t i o n t o t h e a n o t h e r t r u s t w o u l d r e s u l t i n s u b s t a n t i a l c o m m e r c i al b e n e f i t i n f u t u r e t o t h e d o n e e t r u s t . We f i n d t h a t t h e i d e n t i c a l i s s u e ha s c r o p p e d u p i n a s s e s s e e ’ s o w n c a s e i n I T A N o . 2 1 9 / A h d / 2 0 1 8 c o n c e r ni n g A Y 2 0 1 3 - 1 4 I T A N o . 3 5 4 / A h d / 1 9 [ I T O ( E ) v s . G u j a r a t I n s t i t u t e O f C h e m i c a l T e c h n o l o g y ] A . Y . 2 0 1 5 - 1 6 - 3 - o r d e r d a t e d 1 0 . 0 7 . 2 0 1 9 . T h e r e l e v a n t o p e r a t i v e p a ra o f t h e o r d e r o f t h e c o - o r d i n a t e b e n c h c o n c e r n i n g A Y 2 0 1 3 - 1 4 i s r e p ro d u c e d h e r e u n d e r : “ 6 . W e h a v e h e a r d t h e r i v a l c o n t e n t i o n s o f b o t h t h e p a r t i e s a n d p e r u s e d t h e m a t e r i a l s a v a i l a b l e o n r e c o r d . T h e re i s n o d i s p u t e t o t h e f a c t t h a t t h e a s s e s s e e h a s m a d e t h e d o n a t i o n t o t h e i n s t i t u t i o n r e g i s t e r e d u n d e r s e c t i o n 1 2 A A o f t h e A ct . T h e r e f o r e i n o u r c o n s i d e r e d v i e w t h e a s s e s s e e c a n n o t b e d e n i e d th e t r e a t m e n t o f s u c h d o n a t i o n a s a p p l i c a t i o n o f i n c o m e m e r e l y o n t h e g r o u n d t h a t t h e o u t c o m e o f t h e r e s e a r c h w i l l r e s u l t i n c o mm e r c i a l b e n e f i t s i n f u t u r e . T h e r e l e v a n t p o i n t t h a t i s t o be s e e n i n t h e g i v e n c a s e w h e t h e r t h e d o n a t i o n h a s b e e n m a d e b y t he a s s e s s e e t o a n o t h e r i n s t i t u t i o n h a v i n g v a l i d r e g i s t r a t i o n u nd e r s e c t i o n 1 2 A A o f t h e A c t . T h i s f a c t h a s n o t b e e n d i s p u t e d b y t h e A O . I n t h i s r e g a r d w e f i n d s u p p o r t a n d g u i d a n c e f r o m t he j u d g e m e n t o f H o n ’ b l e G u j a r a t H i g h C o u r t i n t h e c a s e o f C I T V s. S a r l a d e v i S a r a b h a i T r u s t r e p o r t e d i n 1 7 2 I T R 6 9 8 w h e r e i n i t wa s h e l d a s u n d e r : “ Wh e n a d o n o r - t r u s t w h i c h i s i t s e l f a c h a r i t a b l e a nd r e l i g i o u s t r u s t d o n a t e s i t s i n c o m e t o a n o t h e r t r u s t, p r o v i s i o n s o f s e c t i o n . 1 1 ( 1 ) ( a ) c a n b e s a i d t o h a ve b e e n m e t o u t b y s u c h d o n o r - t r u s t a n d t h e d o n o r - t r u s t c a n b e s a i d t o h a v e a p p l i e d i t s i n c o m e f o r r e l i g i o u s a n d c h a r i t a b l e p u r p o s e s , n o t w i t h s t a n d i n g t h e f a c t t h a t d o n a t i o n i s s u b j e c t e d t o a n y c o n d i t i o n s t h a t d o n e e -t r u s t w i l l t r e a t t h e d o n a t i o n a s t o i t s c o r p u s a n d c a n o nl y u t i l i s e t h e a c c r u e d i n c o m e f r o m t h e d o n a t e d c o r p u s f o r r e l i g i o u s a n d c h a r i t a b l e p u r p o s e s , a n d t h a t t h e q u es t i o n w h e t h e r g i f t e d i n c o m e i s t o b e u t i l i s e d b y d o n e e - t ru s t f u l l y f o r i t s r e l i g i o u s a n d c h a r i t a b l e p u r p o s e s o r w h e t h er d o n e e - t r u s t h a s t o k e e p i n t a c t t h e c o r p u s o f t h e d on a t i o n a n d h a s t o u t i l i s e o n l y t h e i n c o m e t h e r e f r o m f o r i ts r e l i g i o u s a n d c h a r i t a b l e p u r p o s e s w o u l d n o t m a k e t he s l i g h t e s t d i f f e r e n c e , s o f a r a s e n t i t l e m e n t o f t h e d o n o r - t r u s t f o r e x e m p t i o n u n d e r s e c t i o n 1 1 ( 1 ) g o e s . ” 6 . 1 W e a l s o f i n d s u p p o r t a n d g u i d a n c e f r o m t h e j u d ge m e n t o f H o n ’ b l e B o m b a y H i g h C o u r t i n t h e c a s e o f C I T V s . T ru s t e e s o f J a d i t r u s t r e p o r t e d i n 1 3 3 I T R 4 9 4 w h e r e i n i t w a s he l d a s u n d e r : “ I t h a d n o t b e e n d i s p u t e d t h r o u g h o u t t h e p r o c e e d i n gs t h a t t h e d o n e e t r u s t w a s a t r u s t f o r c h a r i t a b l e p u r p o s e s. T h e r e c i t a l s o f t h e t r u s t d e e d o f a s s e s s e e - t r u s t m a d e it o b l i g a t o r y o n t h e t r u s t e e s t o h a n d o v e r t h e n e t i n co m e o f t h e t r u s t f u n d t o t h e t r u s t e e s o f t h e d o n e e t r u s t . T h e r e w a s a f u r t h e r d i r e c t i o n i n t h e t r u s t d e e d t h a t t h e t r u st e e s o f t h e d o n e e t r u s t w o u l d u t i l i z e t h e n e t i n c o m e o f t h e t r u s t s o g i f t e d o r d o n a t e d t o t h e t r u s t e e s f o r a l l o r a n y o ne o r m o r e o f t h e c h a r i t a b l e p u r p o s e s m e n t i o n e d i n t h e d ee d o f t h e d o n e e t r u s t . T h e r e i s n o t h i n g i n l a w t o p r e v e n t a s e t t l o r f r o m c r e a t i n g a t r u s t w h o l l y f o r c h a r i t a b l e o r r e l i g i o u s p u r p o s e s a n d d i r e c t i n g t h a t t h e i n c o m e o f t h e p r o p e r t y s e t t l e d u p o n t h e t r u s t s h o u l d b e h a n d e d o ve r t o a n o t h e r t r u s t o r i n s t i t u t i o n w h o s e i n c o m e i s u t i l i se d I T A N o . 3 5 4 / A h d / 1 9 [ I T O ( E ) v s . G u j a r a t I n s t i t u t e O f C h e m i c a l T e c h n o l o g y ] A . Y . 2 0 1 5 - 1 6 - 4 - w h o l l y f o r c h a r i t a b l e o r r e l i g i o u s p u r p o s e s . T h e r e i s a i n t r i n s i c e v i d e n c e i n t h e A c t i t s e l f w h i c h i n d i c a t es t h e p e r m i s s i b i l i t y o f t h e t r u s t e e s o f t h e t r u s t f o r a ch a r i t a b l e o r r e l i g i o u s p u r p o s e p a s s i n g o n t h e i n c o m e o f t h e tr u s t t o a n o t h e r t r u s t w h i c h i s c o n d u c t i n g a c h a r i t a b l e o r r e l i g i o u s a c t i v i t y . T h e r e i s a c l e a r i n d i c a t i o n i n s e c t i o n 1 2 t h a t t h e t r u s t t o w h i c h s e c t i o n 1 1 a p p l i e s c a n m a k e a v o l u n t a r y c o n t r i b u t i o n t o a n o t h e r t r u s t t o w h i c h a ls o s e c t i o n 1 1 i s m a d e a p p l i c a b l e s u b j e c t , o f c o u r s e , to t h e s a t i s f a c t i o n o f t h e c o n d i t i o n s i n s e c t i o n 1 1 . I t d oe s n o t , t h e r e f o r e , a p p e a r t h a t i t w a s c o n t e m p l a t e d t h a t t h e a p p l i c a b i l i t y o f s e c t i o n 1 1 s h o u l d b e r e s t r i c t e d o nl y t o a t r u s t w h i c h i t s e l f c a r r i e s o n a c h a r i t a b l e o r r e l i gi o u s a c t i v i t y i n r e s p e c t o f t h e i n c o m e d e r i v e d f r o m t h e p r o p e r t y h e l d u n d e r t r u s t w h o l l y f o r c h a r i t a b l e o r r e l i g i o u s p u r p o s e s . T h e p r o v i s i o n s o f s e c t i o n 1 1 c a n b e e q u a ll y a v a i l e d o f b y a t r u s t o r t h e t r u s t e e s w h o p a s s o n th e i n c o m e o f t h e t r u s t t o a n o t h e r t r u s t o r i n s t i t u t i o n f o r c h a r i t a b l e o r r e l i g i o u s p u r p o s e s . I t a p p e a r s t h a t th e q u e s t i o n w h e t h e r t h e t r u s t , w h i c h g i v e s t h e v o l u n t ar y d o n a t i o n t o a n o t h e r t r u s t f o r c h a r i t a b l e p u r p o s e s , c a n a v a i l o f t h e p r o v i s i o n s o f s e c t i o n 1 1 , d o e s n o t s e em t o d e p e n d o n w h e t h e r u n d e r t h e p r o v i s i o n s c o n t e m p l a t e d b y s e c t i o n 1 2 ( 2 ) t h e d o n e e - t r u s t a p p l i e s t h a t i n c o m e fo r c h a r i t a b l e o r r e l i g i o u s p u r p o s e s . T h i s d o e s n o t , h ow e v e r , m e a n t h a t e v e n i f i n a g i v e n c a s e i t i s f o u n d t h a t t h r o u g h t h e m e d i u m o f d o n a t i o n t o t h e c h a r i t a b l e i n s t i t u t i on f u n d s a r e b e i n g d i v e r t e d t o n o n - c h a r i t a b l e p u r p o s e s , t h e d o n e e - t r u s t w i l l s t i l l b e e n t i t l e d t o c l a i m t h e b e n e f i t of s e c t i o n 1 1 o f t h e A c t . A s r e g a r d s t h e a p p l i c a b i l i t y o f s e c t i o n 1 6 1 ( 1 ) ( c ) , i t c o u l d n o t b e d i s p u t e d t h a t t h e a s s e s se e - t r u s t w a s r e c e i v i n g i n c o m e f o r t h e b e n e f i t o f t h e d o n e e - tr u s t a n d c o n s e q u e n t l y , t h e p r o v i s i o n s o f s e c t i o n 1 6 1 ( 1 ) w o u l d b e a t t r a c t e d f o r t h e p u r p o s e s o f d e t e r m i n i n g w h e t h er t h e a s s e s s e e w a s l i a b l e t o b e a s s e s s e d t o a n y t a x o n t he i n c o m e b y w a y o f d o n a t i o n t o t h e d o n e e T r u s t . ” 6 . 2 W e a l s o f i n d t h a t t h e C B D T i n i t s c i r c u l a r b e a ri n g N o . 1 1 3 2 d a t e d 5 J a n u a r y 1 9 7 8 h a s a l s o c l a r i f i e d a s u n de r : “ A q u e s t i o n h a s b e e n r a i s e d r e g a r d i n g t h e a v a i l a b i li t y o f e x e m p t i o n i n t h e h a n d s o f c h a r i t a b l e t r u s t s o f a m o un t s p a i d a s d o n a t i o n t o o t h e r c h a r i t a b l e t r u s t s . T h e i s s u e h a s b e e n c o n s i d e r e d b y t h e B o a r d a n d i t ha s b e e n d e c i d e d t h a t a s t h e l a w s t a n d s a t p r e s e n t , t h e p a y m e n t o f a s u m b y o n e c h a r i t a b l e t r u s t t o a n o t h e r f o r u t i l i s a t i o n b y t h e d o n e e t r u s t t o w a r d s i t s c h a r i t a bl e o b j e c t s i s p r o p e r a p p l i c a t i o n o f i n c o m e f o r c h a r i t ab l e p u r p o s e i n t h e h a n d s o f t h e d o n e e t r u s t ; a n d t h e d on o r t r u s t w i l l n o t l o s e e x e m p t i o n u n d e r s e c t i o n 1 1 o f th e I n c o m e - t a x A c t , 1 9 6 1 , m e r e l y b e c a u s e t h e d o n e e t r u st d i d n o t s p e n d t h e d o n a t i o n d u r i n g t h e y e a r o f r e c e i p t it s e l f . I T A N o . 3 5 4 / A h d / 1 9 [ I T O ( E ) v s . G u j a r a t I n s t i t u t e O f C h e m i c a l T e c h n o l o g y ] A . Y . 2 0 1 5 - 1 6 - 5 - T h e a b o v e p o s i t i o n m a y k i n d l y b e b r o u g h t t o t h e n o ti c e o f a l l o f f i c e r s w o r k i n g i n y o u r c h a r g e . 6 . 3 I n t h e l i g h t o f t h e a b o v e d i s c u s s i o n , w e a r e o f t h e c o n s i d e r e d v i e w t h a t t h e a s s e s s e e i s e l i g i b l e t o c la i m t h e d o n a t i o n , a s a p p l i c a t i o n o f i n c o m e , g i v e n t o I L S b ei n g a n i n s t i t u t i o n r e g i s t e r e d u n d e r s e c t i o n 1 2 A A o f t h e A ct . T h e L d . D R h a s a l s o n o t b r o u g h t a n y t h i n g o n r e c o r d c o n t r a r y t o t h e f i n d i n g o f t h e L d . C I T ( A ) . H e n c e w e d o n o t f i n d a n y r e a s o n t o i n t e r e f e r e w i t h t h e f i n d i n g o f t h e L d . C I T ( A ) . T h u s t h e g r o u n d o f a p p e a l o f t h e R e v e n u e i s d i s m i s s e d . ” N o v a r i a t i o n i n f a c t s p e r s e w a s b r o u g h t t o o u r n o ti c e . I n p a r i t y w i t h t h e v i e w t a k e n i n t h e p r e c e d i n g A Y 2 0 1 3 - 1 4 , w e d o no t s e e a n y e r r o r i n t h e c o n c l u s i o n d r a w n b y t h e C I T ( A ) . ” No va ri ati on i n f a cts p er se wa s br o ug ht to ou r no tic e. In p ari t y wit h th e vi ew t ak en in th e pre ce di ng A Y 20 14 -1 5, w e do n ot se e a n y err or i n t he c on cl us ion d ra wn b y t he C IT( A) . 6. In th e res ul t, t he ap pea l of th e Re ve nu e is d is mi ss ed . Sd/- Sd/- (MADHUMI TA R OY) (PRADIP KUM AR KEDIA) JUDICI AL MEM BER ACC OUNTANT MEM BER A h m e d a b a d : D a t e d 2 4 / 1 1 / 2 0 2 1 True Copy S. K. SINHA ेश ! " #े" / Copy of Order Forwarded to:- &. र / Revenue 2. आ दक / Assessee (. सं)ं*+ आयकर आय , / Concerned CIT 4. आयकर आय , - अपील / CIT (A) /. 0 1 2ीय 3 3 *+4 आयकर अपील य अ*+कर#4 अ56द ) द / DR, ITAT, Ahmedabad 7. 2 89 : ल / Guard file. By order/आद श स 4 उप/स5 यक पं ीक र आयकर अपील य अ*+कर#4 अ56द ) द । This Order pronounced in Open Court on 24/11/2021