Jogdhian Hari Bhagwan Rastogi Charitable Memorial Trust, New Delhi V. ACIT (E) Circle-1(1), New Delhi

ITA 3696/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8705 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 29-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Revised return; Capital Gains
• Section: 143(3); 12A; 11(1A); 12; 2; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 3696/DEL/2019 [A.Y 2013-14] ITA NO. 5003/DEL/2019 [A.Y 2013-14] JOGDHIAN HARI BHAGWAN RASTOGI VS. THE A.C .I.T. CHARITABLE MEMORIAL TRUST CIRCLE 1 (1) HOUSE NO. 1650/I-13, DWAN HALL ROAD NEW DELHI BHAGIRATH PALACE, CHANDNI CHOWK, DELHI PAN : AAATJ 0294 M ITA NO. 5003/DEL/2019 [A.Y 2013-14] THE A.C.I.T. VS. JOGDHIAN HARI BHAGWAN RASTOGI CIRCLE 1 (1) CHARITABLE MEMORIAL TRUST NEW DELHI HOUSE NO.1650/I-13, DWAN HALL ROAD BHAGIRATH PALACE, CHANDNI CHOWK, DELHI PAN : AAATJ 0294 M [APPELLANT] [RESPONDENT] DATE OF HEARING : 24.03.2021 DATE OF PRONOUNCEMENT : 24.03.2021 ASSESSEE BY : SHRI K. SAMPATH, ADV REVENUE BY : SHRI MAHESH THAKUR, SR DR. 2 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, BOTH THE ABOVE CAPTIONED CROSS APPEALS BY THE ASSES SEE AND REVENUE ARE PREFERRED AGAINST THE VERY SAME ORDER O F THE COMMISSIONER OF INCOME TAX [APPEALS], DELHI DATED 2 0.03.2019 PERTAINING TO ASSESSMENT YEAR 2013-14. SINCE BOTH THESE APPEALS WERE HEARD TOGETHER, THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 3696/DEL/2019 [ASSESSEES APPEAL] 2. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ACTION OF THE LD. CIT(A) IN HOLDING THAT THE AS SESSEE TRUST IS DISENTITLED TO THE EXEMPTION U/S 11(1 A) OF THE INC OME-TAX ACT, 1961 ON THE CAPITAL GAINS MERELY BECAUSE IT WAS POS TED UNDER A WRONG HEAD IN THE RETURN OF INCOME IS ARBITRARY, ER RONEOUS, UNFAIR AND UNJUST AND MUST BE QUASHED WITH DIRECTIONS FOR THE RELIEF; 3 2. THAT THE ACTION OF LD. CIT(A) IN NOT GRANTING THE EXEMPTION FOR THE CAPITAL GAIN DESPITE THE FACT THAT THE SAME STO OD REINVESTED IN CAPITAL ASSETS BEING ERRONEOUS AND UNLAWFUL MUST BE QUASHED WITH DIRECTIONS FOR RELIEF; 3. THAT THE LD. CIT(A) ACTION IN DENYING THE RELIEF B Y RELYING ON GOETZE (INDIA) LTD. WITHOUT APPRECIATING THAT THE E MBARGO UNDER THE CITED DECISION DID NOT COVER ANY ACTION BY THE LD. CIT(A) IS ERRONEOUS AND UNTENABLE WHICH MUST BE QUASHED. 3. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT DUE TO INADVERTENT MISTAKE IN FILING THE RETURN OF INCOME ELECTRONICAL LY, THE CLAIM AS REGARDS INVESTMENT OF SALE PROCEEDS IN ACQUISITION OF NEW CAPITAL ASSET IN MUTUAL FUNDS IN TERMS OF SECTION 11(1A) OF THE A CT COULD NOT BE MADE PROPERLY. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, THE SAID CLAIM WAS MADE BUT WAS DENIED BY THE ASSESSING OFFICER ST ATING THAT SUCH CLAIM WAS NEVER MADE IN THE RETURN OF INCOME NOR BY WAY OF REVISED RETURN OF INCOME. 4. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT( A), THE LD. CIT(A), DRAWING SUPPORT FROM THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD 284 ITR 323, C ONFIRMED THE FINDINGS OF THE ASSESSING OFFICER. 4 5. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE OR DERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE CLAIM WAS NO T MADE IN THE RETURN OF INCOME. IT IS EQUALLY TRUE THAT REVISED RETURN OF INCOME WAS ALSO NOT FILED. IN OUR CONSIDERED VIEW, A LEGAL CLAIM CAN B E MADE AT ANY STAGE AND THE DECISION OF THE HON'BLE SUPREME COURT [SUPR A] RELIED UPON BY THE LD. CIT(A) DOES NOT PUT ANY FETTER ON THE APPEL LATE AUTHORITIES. 6. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE CLAI M REGARDING INVESTMENT IN MUTUAL FUNDS. SINCE NO SUCH VERIFICA TION HAS BEEN DONE, WE DEEM IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO DEMONSTRATE THAT THE SA LE PROCEEDS HAVE BEEN INVESTED IN ACQUISITION OF NEW CAPITAL ASSETS IN NATURE OF MUTUAL FUNDS. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE SAME, AND WHEN SATISFIED, ALLOW THE CLAIM OF THE ASSESSEE. 7. THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3696/DEL/2019 [REVENUES APPEAL] 8. THE GRIEVANCE OF THE REVENUE READS AS UNDER: 5 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ACTION OF THE LD. CIT(A) IN HOLDING THAT THE IN COME OF THE SOCIETY ARE NOT COVERED UNDER AMENDED PROVISO TO SE CTION 2(15). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ACTION OF THE LD. CIT(A) IN HOLDING THAT THE EX EMPTION U/S 11 AND 12 IN LIGHT OF THE FACTS THAT ACTIVITY OF THE A SSESSEE ARE NOT AS PER OBJECTS AND THE ASSESSEE HAS NOT CARRIED OUT AN Y WORTHWHILE CHARITABLE ACTIVITY. 9. BEFORE US, THE LD. DR STRONGLY PLACED RELIANCE O N THE ASSESSMENT ORDER. 10. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE FINDINGS OF THE LD. CIT(A). 11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE I .T. ACT. THE TRUST WAS FORMED ON 27.09.1966 WITH THE PRIMARY AIMS OF C ARRYING OUT PUBLIC CHARITABLE OBJECTS AND PURPOSES INCLUDING RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON ANY ACTIVITY FOR PROFIT. IN ACCORDANCE WITH THE OBJECT OF THE TRUST, IT IS PROV IDING FREE EDUCATION 6 UPTO PREPARATORY KINDERGARTEN TO CHILDREN FROM POOR AND ECONOMICALLY WEAKER SECTION OF SOCIETY. 12. IN FURTHERANCE OF ITS OBJECTS, THE ASSESSEE HAS ALSO GIVEN DONATION OF RS. 2 LAKHS AND CLAIMED THE SAME AS APPLICATION OF INCOME. THERE IS NO DISPUTE THAT THE ASSESSEE TRUST IS CARRYING ON I TS ACTIVITIES SINCE ITS INCEPTION AND HAS NEVER BEEN DENIED THE CLAIM OF EX EMPTION U/S 11 OF THE ACT. WE FIND THAT THE LD. CIT(A) HAS CORRECTLY APPRECIATED THE FACTS OF THE CASE AND ALLOWED THE CLAIM OF EXEMPTIO N. THE RELEVANT FINDINGS OF THE LD. CIT(A) READ AS UNDER: 4.1.3 WHILE DECIDING THE APPEAL IN APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2014-15 (APPEAL NO. 339/2016-17), I T HAD BEEN HELD BY ME AS UNDER: '4.1.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO PERUSED T HE ORDERS UNDER SECTION 143(3) IN THE PAST WHEREIN ON SIMILAR FACTS EXEMPTION HAS BEEN ALLOWED TO THE APPELLANT. THE ONLY REASON WHY EXEMPTION HAS BEEN DENIED TO THE APPELLANT IS THAT THE EXPENDITUR E INCURRED ON SCHOOL IS VERY LOW. NO OTHER FACTS HAVE BEEN BROUGH T ON RECORD IN SUPPORT OF THE CONTENTION THAT NO CHARITABLE ACTIVI TY IN THE FORM OF PROVIDING PREPARATORY/KINDERGARTEN EDUCATION IS PRO VIDED TO CHILDREN OF POOR AND ECONOMICALLY BACKWARD CLASSES. FURTHER, IT HAS BEEN HELD THAT PREDOMINANT MOTIVE OF THE ASSESSEE I S TO EARN 7 RENTAL INCOME. 4.1.3 IN THE CASE OF DIT(EXEMPTION) VS. SAHU ]AIN TRUST [(2011) 243 CTR 131(CAL.)] THE ASSESSING OFFICER BELIEVED T HAT ASSESSEE WAS EARNING RENT FROM THE PROPERTY WHICH WAS OBTAIN ED UNDER THE TENANCY RIGHTS AND THUS INCOME EARNED FROM SAID EXE RCISE WAS NOT INCIDENTAL TO THE OBJECTS OF TRUST AND ACCORDINGLY SUCH INCOME WAS ASSESSED AS BUSINESS INCOME. IT WAS OBSERVED THAT T HE QUESTION, THEREFORE, WHICH REALLY AROSE IS WHETHER SUB-LETTIN G OF THE TENANTED ACCOMMODATION AVAILABLE TO ASSESSEE AMOUNT S TO CARRYING ON ANY BUSINESS, I.E., IS IT CARRYING ON ANY ADVENT URE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANUFACTURE? IT WA S HELD THAT IF IT WAS CARRYING ON ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE BY SUB-LETTING, THEN, SECTION 11 (4A) WOULD BE ATTR ACTED AND THAT THE TRUE TEST IS WHETHER IT IS A SIMPLE LETTING OUT OF THE BUILDING OR SOMETHING MORE THAN LETTING OUT BY BRINING THE CASE WITHIN THE MEANING OF 'CARRYING ON ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE OR COMMERCE'. IT WAS NOTED THAT THERE WAS NO MATERIAL WHICH WAS AVAILABLE ON RECORD TO JUSTIFY THE SIMPLE SUB-L ETTING DONE BY ASSESSEE IN ORDER TO CONTINUE ITS CHARITABLE ACTIVI TY TO BE BRANDED AS A 'BUSINESS ACTIVITY' AND CIT(A) AND THE TRIBUNA L BELOW RIGHTLY DID NOT BRING THE CASE WITHIN THE PURVIEW OF SECTIO N 11 (4A) AND ALSO IN THE PAST, ASSESSEE HAVING RECEIVED THE BENE FIT OF EXEMPTION IN RESPECT OF THE RENTAL INCOME, THERE WAS NO JUST REASON FOR DISALLOWING THE RELIEF CLAIMED FOR THE RELEVANT ASS ESSMENT YEAR WHEN NO FRESH MATERIALS WERE BROUGHT IN THIS YEAR F OR COMING TO A DIFFERENT CONCLUSION. 8 4.1.4 IN THE CASE OF THE ASSES SEE ALSO THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE IS NOT CARRYING OUT AN Y ACTIVITY SINCE THE ASSESSEE IS NOT CHARGING THE STUDENTS FOR CARRY ING OUT EDUCATION ACTIVITY. IT IS ALSO NOTED THAT IN THE PA ST, EXEMPTION HAS BEEN ALLOWED IN RESPECT OF RENTAL INCOME AND THERE APPEARS TO BE REASON FOR DISALLOWING THE EXEMPTION FOR THE ASSESS MENT YEAR UNDER CONSIDERATION WHEREIN NO NEW FACTS HAVE BEEN BROUGHT ON RECORD. IT IS TO BE NOTED THAT EVEN IN THE PAST THE SCHOOL EXPENSES WERE MINIMUM AND NO INCOME WAS RECEIVED FROM EDUCAT ION ACTIVITIES AS IS EVIDENT FROM THE INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDING 31/03/1994, A COPY OF WHICH IS AVAILABLE AT PAGE 33 OF THE PAPER BOOK. 4.1.5 IN VIEW OF THE DISCUSSION ABOVE AND RELYING ON THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OFDI T(E) VS. SAHU JAIN TRUST (SUPRA), THE ASSESSING OFFICER IS DIRECT ED TO ALLOW EXEMPTION UNDER SECTION 11 WITH ALL CONSEQUENTIAL B ENEFITS INCLUDING ALLOWING ACCUMULATION UNDER SECTION 11(2) SUBJECT T O VERIFICATION THAT CONDITIONS SUBJECT TO WHICH SUCH ACCUMULATION IS ALLOWED ARE FULFILLED. GROUNDS OF APPEAL NOS. 1 TO 4 ARE ALLOWE D.' 13. THE LD. DR COULD NOT BRING ANY FALLACY OR ERROR IN THE FINDINGS OF THE LD. CIT(A). IN OUR CONSIDERED VIEW, THE LD. CI T(A) HAS CORRECTLY APPRECIATED THE FACTS OF THE CASE AS DISCUSSED HERE INABOVE. WE, THEREFORE, DO NOT FIND ANY ERROR OR INFIRMITY IN TH E FINDINGS OF THE LD. CIT(A). 9 14. AS A RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 3696/DEL/2019 IS ALLOWED WHEREAS THE APPEAL FILED B Y THE REVENUE IN ITA NO. 5003/DEL/2019 STANDS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24.03. 2021 IN THE PRESENCE OF LD. DR. SD/- SD/- [ SUCHITRA KAMBLE ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 TH MARCH, 2021 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 10 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER