Janseva Trust, Mahuva V. The ADIT(Exemp), Bhavnagar

ITA 360/AHD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67825 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Principle of natural justice; Earning of tax free income
• Section: 11

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.360/AHD/2013 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2009-10) JANSEVA TRUST DR.JAYESH SHETH SHETH SONOGRAPHY & X- RAY CLINIC,SHETH STREET, KANSARA BAZAR MAHUVA 364 290 / VS. THEADIT(EXEMPTION) BHAVNAGAR ( !./)* !./ PAN/GIR NO. : AADTJ 4866H ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI TUSHAR P.HEMANI, A.R. ,-(+ / . / RESPONDENT BY : SHRI SUBHASH BAINS, CIT-DR ' 0 / $1 / / / / DATE OF HEARING : 15/10/2013 23' / $1 / DATE OF PRONOUNCEMENT : 25/10/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XXI, AHMEDAB AD, (CIT(A) FOR SHORT) DATED 03/12/2012 PERTAINING TO ASSESSME NT YEAR (AY) 2009- 10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD.AO IN HOLDING THAT THE APPELLANT TRUST HAS PROVIDED BENEFITS TO THE HUF OF ONE OF THE TRUS TEES BY PAYING RENT AND DEPOSIT FOR RENTED PREMISES. ITA NO.360/AHD/ 2013 JANSEVA TRUST VS. ADIT(EXEMPTION) ASST.YEAR 2009-10 - 2 - 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS OF THE CASE IN NOT BRINING ON RECORD ANY EVIDENCES TO PROV E THAT THE APPELLANT TRUST HAS PAID EXCESSIVE RENT OR DEPOSITS TO THE HUF OF THE TRUSTEE AND ACCORDINGLY THEY ERRED IN HOLDING T HAT THE APPELLANT TRUST HAS PROVIDED BENEFIT TO THE HUF OF THE TRUSTEE. 3. THE LD.CIT(A) HAS FURTHER ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN HOLDING THAT AS A DIRECT BENEFIT IS GIVEN A S PER S.13(1)(C) OF THE ACT, NO EXEMPTION AS ENVISAGED IN S.11 & 12 COU LD BE GRANTED TO THE APPELLANT, AND ACCORDINGLY, THE LD.CIT(A) HA S FURTHER ERRED IN NOT ADJUDICATING FOLLOWING GROUNDS AS RAISED BY THE APPELLANT IN THE GROUNDS OF APPEAL BEFORE LD.CIT(A): 1. THE LD.ASSESSING OFFICER HAS ERRED IN LAW AND ON TH E FACTS OF THE CASE IN NOT ALLOWING EXEMPTION OF RS.55,000/- CLAIMED U/S.1 1 OF THE ACT. 2. THE LD.ASSESSING OFFICER HAS FURTHER ERRED IN LAW A ND ON THE FACTS OF THE CASE IN NOT ALLOWING EXEMPTION OF RS.2,30,396/- CLA IMED U/S.11(1)(A) OF THE ACT BEING 15% OF THE INCOME RECEIVED DURING THE YEAR UNDER CONSIDERATION. 3. THE LD.ASSESSING OFFICER HAS ERRED IN LAW AND ON TH E FACTS OF THE CASE IN HOLDING THAT THE APPELLANT TRUST HAS CARRIED OUT PR OFITABLE ACTIVITIES AND NOT CHARITABLE ACTIVITIES. 4. THE LD.ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACTS THAT THE APPELLANT TRUST HAS PROVIDED MEDICAL RELIEF TO THE PUBLIC AT LARGE AND ACCORDINGLY HAS PROVIDED CHARITABLE ACTIVITIES AND THEREFORE FIRST PROVISO TO S.2(15) OF THE ACT IS NOT APPLICABLE TO THE APPELLANT. 4. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE, EVEN IF IT IS HELD THAT THE ALLEGED BENEFIT IS PROVIDE TO THE HUF OF TRUSTE E U/S.13(1)(C) OF THE ACT, THEN ALSO, ENTIRE EXEMPTION IS CLAIMED U/S .11 OF THE ACT CANNOT BE DECLINED AND IT CAN BE DECLINED ONLY TO T HE EXTENT OF ALLEGED BENEFITS PROVIDED. 5. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE RAISED GROUNDS, EVEN IF IT IS HELD THAT THE APPELLANT-TRUST IS NOT ELIGI BLE FOR EXEMPTION AS CLAIMED U/S.11 OF THE ACT AND EXEMPT INCOME IS TREA TED AS TAXABLE BUSINESS INCOME, THEN DIRECTION MAY BE GIVEN TO ALL OW THE CORRESPONDING BUSINESS EXPENDITURE INCLUDING RENT I NCURRED TO EARN THE ALLEGED BUSINESS INCOME. 6. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS W ITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION S UBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRI NCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHE D. ITA NO.360/AHD/ 2013 JANSEVA TRUST VS. ADIT(EXEMPTION) ASST.YEAR 2009-10 - 3 - 7. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONF IRMING THE ACTION OF LD.AO IN CHARGING INTEREST U/S.234B/C/D O F THE ACT. 8. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONF IRMING THE ACTION OF LD.AO IN INITIATING PENALTY PROCEEDINGS U /S.271(1)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 30/11/2009 DECLARING GROSS RECEIPTS OF RS .15,35,971/- AND CLAIMED DEDUCTION U/S.11(1) OF RS.55,000/- AND U/S. 11(1)(A) OF RS.2,30,396/-. THE CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT,1961 (H EREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 30/12/ 2011, THEREBY THE ASSESSING OFFICER(AO) DISALLOWED THE CLAIM MADE U/S .11(1) & U/S.11(1)(A) OF THE ACT, TOTALLING TO RS.2,85,396/- . AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) BY RA ISING FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.ASSESSING OFFICER HAS ERRED IN LAW AND ON TH E FACTS OF THE CASE IN NOT ALLOWING EXEMPTION OF RS.55,000/- CLAIMED U/S.1 1 OF THE ACT. 2. THE LD.ASSESSING OFFICER HAS FURTHER ERRED IN LAW A ND ON THE FACTS OF THE CASE IN NOT ALLOWING EXEMPTION OF RS.2,30,396/- CLA IMED U/S.11(1)(A) OF THE ACT BEING 15% OF THE INCOME RECEIVED DURING THE YEAR UNDER CONSIDERATION. 3. THE LD.ASSESSING OFFICER HAS ERRED IN LAW AND ON TH E FACTS OF THE CASE IN HOLDING THAT THE APPELLANT TRUST HAS CARRIED OUT PR OFITABLE ACTIVITIES AND NOT CHARITABLE ACTIVITIES. 4. THE LD.ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACTS THAT THE APPELLANT TRUST HAS PROVIDED MEDICAL RELIEF TO THE PUBLIC AT LARGE AND ACCORDINGLY HAS PROVIDED CHARITABLE ACTIVITIES AND THEREFORE FIRST PROVISO TO S.2(15) OF THE ACT IS NOT APPLICABLE TO THE APPELLANT. 5. THE LD.ASSESSING OFFICER HAS FURTHER ERRED IN LAW A ND ON THE FACTS OF THE CASE IN HOLDING THAT THE APPELLANT HAS PROVIDED BEN EFITS TO THE HUF OF ONE OF THE TRUSTEE BY PAYING RENT FOR RENTED PREMIS ES. 6. THE LD.ASSESSING OFFICER FURTHER ERRED IN LAW AND O N THE FACTS OF THE CASE IN NOT BRINGING ON RECORD ANY EVIDENCES TO PROVE TH AT THE APPELLANT TRUST HAS PAID EXCESSIVE RENT TO THE HUF OF THE TRU STEE AND ACCORDINGLY ITA NO.360/AHD/ 2013 JANSEVA TRUST VS. ADIT(EXEMPTION) ASST.YEAR 2009-10 - 4 - HE ERRED IN HOLDING THAT THE APPELLANT TRUST HAS PR OVIDED BENEFIT BY PAYING RENT TO THE HUF OF THE TRUSTEE. 7. THE LD.ASSESSING OFFICER OUGHT TO HAVE APPRECIATED THE FACTS THAT THE APPELLANT TRUST HAS PAID ONLY CONCESSION RENT TO TH E HUF OF THE ONE OF THE TRUSTEE AND NOT PAID ANY EXCESSIVE RENT AND ACC ORDINGLY NO BENEFIT HAS BEEN PROVIDED. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED A CHAR T DURING THE COURSE OF HEARING. ONE OF THE SUBMISSIONS MADE BY THE ASS ESSEE IS THAT THE LD.CIT(A) HAS NOT ADJUDICATED UPON ALL THE GROUNDS RAISED BEFORE HIM. ON THE CONTRARY, LD.CIT-DR STRONGLY SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE HAS RAISED AF ORESAID GROUNDS OF APPEAL, BUT THE LD.CIT(A) HAS NOT ADJUDICATED UPON ALL THE GROUNDS AS RAISED BY THE ASSESSEE. THE LD.CIT(A) HAS DECIDED THE APPEAL BY OBSERVING AS UNDER:- 4.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE APPELLANT AND ALSO THE PAPER BOOK SUBMITTED IN THIS REGARD. I HAVE ALSO GONE THROUGH THE VARIOUS CITATIONS CITED BY THE APP ELLANT IN SUPPORT OF ITS CONTENTION. I FIND THAT THE AO HAS SPECIALLY P OINTED THAT DEPOSIT AND RENT WAS PAID TO THE HUF OF DR.J.K.SHETH WHILE THE APPELLANT HAS ELABORATED ON THE RATIONALE OF RENT PAID TO THE HUF MAIN TRUSTEE, IT IS CONSPICUOUSLY SILENT ON THE INITIAL DEPOSIT MADE TO THE HUF OF MAIN TRUSTEE FOR THE RENTED PROPERTY. SUCH DEPOSIT AND CONSEQUENT INTEREST ON THIS DEPOSIT IS DIRECT BENEFIT GIVEN TO THE MAIN TR USTEE. ACCORDINGLY, I AM OF THE VIEW THAT A DIRECT BENEFIT IS GIVEN AS HA S BEEN POINTED OUT BY THE AO. SINCE A DIRECT BENEFIT IS GIVEN AS PER SEC TION 13(1)9C), NO EXEMPTION AS ENVISAGED IN SECTION 11 & 12 COULD BE GRANTED TO THE APPELLANT AND HENCE I AM INCLINED TO UPHOLD THE ACT ION OF THE AO. SINCE SECTION 13 IS INVOKED IN THE APPELLANTS CASE, THE OTHER GROUNDS RAISED BY THE APPELLANT ARE NOT SPECIFICALLY ADJUDICATED U PON. THE GROUNDS RAISED BY THE APPELLANT ARE THUS DISMISSED. THE AC TION OF THE AO IN DISALLOWING THE CLAIM U/S.11(1) & (11)(1)(A) IS UPH ELD. ITA NO.360/AHD/ 2013 JANSEVA TRUST VS. ADIT(EXEMPTION) ASST.YEAR 2009-10 - 5 - 4.1. WE FEEL IN THE INTEREST OF JUSTICE, LD.CIT(A) OUGHT TO HAVE ADJUDICATED UPON ALL THE GROUNDS OF APPEAL AS RAISE D BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORE THIS MATTER BACK TO HIS FILE TO DECIDE THE APPEAL AFTER ADJUD ICATING ALL THE GROUNDS AS RAISED BY THE ASSESSEE IN ACCORDANCE WITH LAW. NEE DLESS TO SAY THAT THE LD.CIT(A) WOULD GIVE REASONABLE OPPORTUNITY OF HEAR ING TO BOTH THE SIDES. HENCE, GROUNDS OF ASSESSEES APPEAL ARE AL LOWED FOR STATISTICAL PURPOSES ONLY. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 25/ 10 /2013 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-XXI, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD ITA NO.360/AHD/ 2013 JANSEVA TRUST VS. ADIT(EXEMPTION) ASST.YEAR 2009-10 - 6 - 1. DATE OF DICTATION .. 21.10.13 (DICTATION-PAD 5-P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.10.2013 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.10.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.10.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER