The ITO, Ward-1(1), RAJKOT-GUJARAT V. Agriculture Produce Market Committee, Jetpur

ITA 361/RJT/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0106 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: D M THAKKAR
• Keywords: Charitable institution; Non compliance; Benefit of exemption; Revised return
• Section: 12A; 139(5); 11; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI A. K.GARODIA, AM ITA NO.361/RJT/2011. / ASSESSMENT YEAR 2006-07 INCOME TAX OFFICER WARD 1(1), AAYAKAR BHAVAN 5 TH FLOOR, ROOM NO.513, RACE COURSE, RING ROAD RAJKOT -360001 ( / APPELLANT) VS. AGRICULTURE PRODUCE MARKET COMMITTEE, SHRI JAMNADAS VEKARIA MARKETING YARD, NEAR RAILWAY CROSSING, JUNAGADH ROAD, JETPUR-360370 PAN: AAALA0095R / RESPONDENT / REVENUE BY SHRI AVINASH KUMAR ' / ASSESSEE BY SHRI D M THAKKAR & / DATE OF HEARING 30.7.2012 & / DATE OF PRONOUNCEMENT 03.8.2012 / / / / ORDER PER A. K.GARODIA, AM IT IS A REVENUES APPEAL DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, RAJKOT DATED 29.6.2011 FOR THE ASSESSMENT YEAR 2006-07 . 2. GROUNDS TAKEN BY THE REVENUE ARE AS UNDER : 1. THE COMMISSIONER OF INCOME TAX(A)-I RAJKOT HAS ERRE D IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,17, 303/- ON ACCOUNT OF HOUSE PROPERTY INCOME AND ALSO DELETED DISALL OWANCE OF CLAIM OF RS.29,35,484/- AS THE ASSESSEE HAD NOT FILED TH E INTIMATION FOR ACCUMULATION IN DUE TIME. 2. ON LEGAL AND FACTUAL STATUS OF THE CASE LD. CIT(A)- 1 OUGHT TO HAVE UPHELD THE ORDER OF THE AO 3. IT IS THEREFORE, PRAYED THAT FINDINGS GIVEN IN THE ORDER OF THE CIT(A) MAY BE DISMISSED/DELETED AND THAT OF THE AO BE RESTORED. ITA NO.361/RJT/2011. 2 3. BRIEF FACTS EMERGED FROM THE ASSESSMENT ORDER DA TED 16.12.2010 AS NOTED BY THE CIT(A) IN PARAGRAPH 3 O F HIS ORDER ARE REPRODUCED BELOW: 3.. THE APPELLANT HAS TAKEN 7 GROUNDS OF APPEAL. T HE GROUND OF APPEAL NOS. 1, 2, 3 & 4 ARE INTER-RELATED, AND THEREFORE, THEY ARE TAKEN UP TOGETHER FOR ADJUDICATION. IN THESE GR OUNDS OF APPEAL THE APPELLANT HAS CHALLENGED THE ASSESSING O FFICERS ACTION IN NOT ALLOWING BENEFIT OF EXEMPTION U/S 11 OF THE ACT AS THE ASSESSEE TRUST HAS FAILED TO APPLY 85% OF ITS I NCOME TOWARDS ITS OBJECTS AND ALSO CONCLUDING THAT THE IN COME FROM HOUSE PROPERTY OF RS.4,17,305/- CANNOT BE CONSIDERE D TO BE INCOME FROM PROPERTY HELD UNDER TRUST AND THEREBY N OT ALLOWING 15% OF THE SAID INCOME TO BE ACCUMULATED U/S.11(1) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ISSUED SHOW CAUSE NOTICE DATE D 3-12- 2010 STATING THAT THE ASSESSEE TRUST HAS NOT FULFIL LED THE CONDITIONS AS PROVIDED UNDER CLAUSE (2) OF EXPLANA TION TO SECTION 11 (1) OF THE ACT AND IT IS NOT ELIGIBLE TO GET THE BENEFIT OF EXEMPTION U/S 11(1) OF THE ACT. THE ASSESSEE TR UST HAS FAILED TO APPLY 85% OF ITS INCOME TOWARDS ITS OBJEC TS AND THEREFORE, THE ASSESSING OFFICER SHOW CAUSE AS TO W HY THE SHORT FALL SHOULD NOT BE TAXED AT THE ORDINARY RATE IN THE STATUS OF AOP. IN RESPONSE, THE ASSESSEE HAS SUBMITTED REP LY VIDE LETTER DATED 13-12-2010 THE ASSESSING OFFICER OBSER VED THAT THE AOP TRUST HAS NOT APPLIED THE REQUISITE 85% OF ITS INCOME TOWARDS THE OBJECTS OF THE TRUST DURING THE YEAR UN DER CONSIDERATION. THE ASSESSEE HAS ATTACHED A LETTER D ATED 28-3- 2007 ALONG WITH THE REVISED RETURN OF INCOME FILED ON 30-03- 2007 VIDE ACK NO.7467 EXERCISING OPTION UNDER CLAUS E (2) OF EXPLANATION TO SECTION 11(1) OF THE ACT. ASSESSING OFFICER ON PERUSAL OF AFORESAID LETTER DATED 28-3-2007 OBSERVE D THAT THE ASSESSEE TRUST HAS NOT FULFILLED THE CONDITIONS AS LAID DOWN UNDER CLAUSE(2) OF EXPLANATION TO SECTION 11 (1 ) OF THE ACT TO AVAIL THE BENEFIT OF EXERCISING OPTION FOR NOT INCURRING THE REQUISITE 85% OF ITS INCOME TOWARDS THE OBJECT OF THE TRUST. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE TRUST HAS NOT FURNISHED THE INTIMATION FOR OPTION TO BE EXERCISED UNDER CLAUSE (2) OF EXPLANATION TO SECTION 11(1) OF THE ACT ALONG WITH THE RETURN OF INCOME AS PROVIDED U/S 139(1) OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE TRUST AOP HAS FAILED TO APPLY 85% OF ITS INCOME TOWARDS ITS OBJECTS, THE SHORTFALL THEREOF REQUIRES TO BE TAXED AT THE ORDINARY RATE IN THE STATUS OF AOP. SIMILARLY IN RESPECT OF INCOME FROM HOUSE PROPERTY OF RS.41,730/- (AFTER DEDUCTION U/S 24) SHOWN BY THE ASSESSEE TRUST AS EXE MPT U/S 11, THE ASSESSING OFFICER OBSERVED THAT THE HOUSE PROPERTY ITA NO.361/RJT/2011. 3 CANNOT BE DEEMED TO BE PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE PURPOSES U/S 11, AS THESE PROPERTIES ARE TREATED SEPARATELY U/S 22 TO 27. ACCORDINGLY, THE AO THE A DDED THE INCOME FROM HOUSE PROPERTY OF RS.417305/-, AND ACCORDINGLY ASSESSED INCOME AT RS.29,96,080/- 4. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5. THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND NOW THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR SUPPORTS THE ORDER OF THE AO WHEREAS TH E LD. AR SUPPORTS THE ORDER OF THE CIT(A). THE LD. AR FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION RENDERED BY THE HONBLE BOM BAY HIGH COURT IN THE CASE OF TRUSTEES OF TULSIDAS GOPALJI CHARITABLE AN D CHALESHWAR TEMPLE TRUST V/S CIT (1994) 207 ITR 368(BOM). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE RECORD AVAILABLE BEFORE US, GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW AND ALSO THE JUDGMENT CITED BY THE LD. AR. WE FIND THAT IN THE PRESENT CASE, THE AO HAS REJECTED THE CLAIM OF THE ASSESSEE FOR EXEMPT ION U/S 11 ON THIS BASIS THAT THE INTIMATION FOR ACCUMULATION U/S 1 1(2) OF THE ACT WAS GIVEN BY THE ASSESSEE AFTER THE EXPIRY OF TIME ALLOWE D UNDER SUB-SECTION (1) OF SECTION 139 FOR FURNISHING THE RETURN OF INCO ME. IN THE PRESENT CASE, THE ASSESSEE FILED RETURN OF INCOME DECLARING NIL I NCOME ON 1.5.2006 WHICH WAS WITHIN TIME LIMIT ALLOWED U/S 139( 1) OF THE ACT SUBSEQUENTLY, THE ASSESSEE FILED ITS REVISED RETURN OF I NCOME ON 30.3.2007 DECLARING TOTAL INCOME AT NIL AND ALONG WIT H THAT RETURN, THE INTIMATION DATED 28.3.2007 WAS ALSO ENCLOSED FOR OP TION TO BE EXERCISED UNDER CLAUSE (2) OF EXPLANATION TO SECTION 11 (1) OF THE ACT. WHEN THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON T HIS SUBJECT ITA NO.361/RJT/2011. 4 ON 3.12.2010, THE ASSESSEE FURNISHED A REPLY TO THE AO AS PER LETTER DATED 13.12.2010 CONTENTS OF WHICH ARE REPRODUCED BY T HE AO AT PAGE 8 OF THE ASSESSMENT ORDER. AS PER THE SUBMISSIONS OF THE ASSE SSEE, THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE UNDER SECTION 139(5) HAS TO BE DEEMED TO BE A RETURN FILED U/S 139 (1) OF THE ACT AND THEREFORE, THE QUESTION OF NON COMPLIANCE WITH THE PROVISIONS OF SECTIO N 11(1) DOES NOT ARISE AT ALL. THE AO WAS NOT SATISFIED WITH THE EXPL ANATION GIVEN BY THE ASSESSEE AND HENCE, REJECTED THE CLAIM OF THE ASSESSEE REGAR DING THE ACCUMULATION OF INCOME AS PER THE INTIMATION FURNISHED ALONG WITH THE REVISED RETURN OF INCOME. THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AT PARAGRAPH 3.2 OF HIS ORDER WHICH IS REPRODUCED BELOW: 3.2 I HAVE CAREFULLY CONSIDERED THE FINDING GIVEN B Y THE AO AND THE SUBMISSION OF THE AR OF THE APPELLANT. IT IS FOUND THAT THE ORIGINAL RETURN OF INCOME WAS FILED VOLUNTARILY O N 1.5.2006 U/S 139(1) OF THE ACT DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT. SUBSEQUENTLY FILED REVISED INCOME OF INCOME ON 31.2007 U/S.139(5) OF THE ACT ALONG WITH INTIMATION LETTER EXERCISING OPTION UNDER EXPLANATION (2) TO SECTION 11(1) OF THE ACT IN RESPECT OF SHORT FALL IN APPLICATION OF INCOME FOR CHARITABLE PURPOSE AMENDMENT OR REVISION OF RETURN OF INCOME U/S 139(5) IS PART AND PARCEL OF RETURN OF INCOME FLIED U/S 139( 1) OF THE ACT. OTHERWISE, THE APPELLANT AOP TRUST HAS ALSO FULFILLED ALL THE CONDITIONS FOR EXERCISING OPTION UNDER EXPLANATION (2) TO SECTION 11(1) ) OF THE ACT IN RESPECT OF SHORTFALL IN APPLICATION OF INCOME FOR CHARITABLE PURPOSE. IT IS ALSO FOUND THAT THE APPELLANT, AOP TRUST IS REGISTERED U/S 12A OF THE ACT. IN VIEW OF THE ABOVE FACTS, THE AO IS DIRECTED TO ALLOW THE APPELLANTS CLAIM OF EXERCISING OP TION EXPLANATION (2) TO SECTION 11(1) OF THE ACT IN RESPECT OF SHORTFALL IN APPLICATION OF INCOME OF CHARITABLE PURPOSE, AND HE IN COME OF THE AOP TRUST IS TREATED AS EXEMPT U/S 11 OF THE ACT. ACCOR DINGLY, THE AO IS DIRECTED TO DETERMINE THE INCOME AS PER SECTION 11 OF THE ACT. 8. FROM THE ABOVE PARAGRAPH, WE FIND THAT IT IS CLEAR FROM THE FINDING GIVEN BY THE LD. CIT(A) THAT THE AOP TRUST HAS FULFI LLED ALL THE CONDITIONS FOR ITA NO.361/RJT/2011. 5 EXERCISING OPTION UNDER EXPLANATION (2) TO SECTION 11 (1) OF THE ACT IN RESPECT OF SHORTFALL IN APPLICATION OF INCOME FOR CHARITA BLE PURPOSES. 9. THE LD. DR COULD NOT CONTROVERT THE ABOVE FINDING OF THE LD. CIT(A). MOREOVER AS PER THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT CITED BY THE ASSESSEE, WE FIND THAT IN THAT CASE, IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT THAT THE OPTION EXERCISED BY THE ASSESSEE UNDER THE EXPLANATION (2) TO SECTION 11(1) OF THE ACT BEFORE TI ME ALLOWED UNDER SUB- SECTION 4 OF SECTION 139 HAS TO BE HELD TO HAVE BEEN E XERCISED BEFORE THE TIME ALLOWED UNDER SUB-SECTION (1) OR SUB-SECTION (2) O F SECTION 139 OF THE ACT AND IN THAT EVENT, THE ASSESSEE WOULD BE ENTIT LED TO THE BENEFIT OF DEDUCTION U/S 11 OF THE ACT. NO CONTRARY DECISION OF T HE HONBLE JURISDICTIONAL HIGH COURT OR ANY OTHER HIGH COURT OR THE HONBLE APEX COURT WAS BROUGHT TO OUR NOTICE BY THE LD. DR. A S PER THIS DECISION OF HONBLE BOMBAY HIGH COURT, THE ISSUE IN DISPUTE BEF ORE US IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVEN UE. IN THE PRESENT CASE, THE OPTION WAS EXERCISED UNDER EXPLANATIO N (2) TO SECTION 11(1) OF THE ACT. THE REQUIREMENT OF THIS EXPLANA TION IS THIS THAT SUCH OPTION SHOULD BE IN WRITING BEFORE THE EXPIRY OF TI ME ALLOWED U/S SUB- SECTION (1) OF SECTION 139 FOR FURNISHING THE RETURN OF INCOME. AS PER THE JUDGMENT OF THE HONBLE HIGH COURT, IF ANY OPTION WAS EXERCISED BY THE ASSESSEE BEFORE EXPIRY OF TIME ALLOWED FOR FILING THE RETURN U/S 139(4) I.E. WITHIN ONE YEAR OF THE END OF THE ASSESSMENT YEAR THEN ALSO, IT SHOULD BE CONSIDERED AS EXERCISE OF THE OPTION BEFORE THE TIME ALLOWED UNDER SECTION 11(1) OF THE ACT. IN THE PRESENT CASE, THIS PER IOD OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR ENDS ON 31.3.20 08 BUT THE ASSESSEE HAS EXERCISED ITS OPTION ON 30.3.2007 AND THEREF ORE, THE SAME ITA NO.361/RJT/2011. 6 IS BEFORE EXPIRY OF TIME LIMIT AVAILABLE TO THE ASSE SSEE U/S 139(4) OF THE ACT AND HENCE, AS PER THE JUDGMENT OF THE HONBLE BO MBAY HIGH COURT, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 (1). IN T HE FACTS OF THE PRESENT CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). 10. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD/- SD/- ( T. K. SHARMA) ( A. K.GARODIA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ ORDER DATE 03-08-2012. /RAJKOT SRL - - - - .- .- .- .- / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-, 2. / RESPONDENT- 3. 4 / CONCERNED CIT. 4. 4- / CIT (A). 5. - , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.