SWAMINARAYAN SEVA TRUST, VAPI V. ITO (E)-2(3), MUMBAI

ITA 3741/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4305 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANS
• Keywords: Depreciation; Charitable institution; Earning of tax free income; Capital expenditure
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI M. BALAGANESH , AM & SHRI RAVISH SOOD , JM ITA NO. 3741 / MUM/20 1 8 ( ASSESSMENT YEAR : 2011 - 12 ) SWAMINARAYAN SEVA TRUST C/O. SWAMINARAYAN GURUKUL CHALA, VAPI VS. INCOME TAX OFFICER (C ) - 2(3) 5 TH FLOOR, PIRAMAL CHAMBERS PAREL, LALBAUG, MUMBAI 400 012 PAN/GIR NO. AACTS0346K ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI SATISH MODY REVENUE BY SHRI ASHUTOSH RAJHANS DATE OF HEARING 11 / 03 / 201 9 DATE OF PRONOUNCEMENT 13 03 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX ( APPEALS) - 1 [HEREINAFTER REFERRED TO AS THE LD CITA] , MUMBAI DATED 26/03/2018 FOR A.Y.2011 - 12 IN THE MAT TER OF ORDER PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAD RAISED FOLLOWING GROUNDS OF APPEAL BEFORE US. 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN NOT ADJUDICATING THE ISSUE OF SETOFF OF CARRY FORWARD DEFICIT OF RS. 51,69,900/ - AGAINST INCOME OF THE CURRENT YEAR BEING APPLICATION OF INCOME, THOUGH THE ISSUE WAS ITA NO.3741/MUM/2018 SWAMINARAYAN SEVA TRUST 2 SPECIFICALLY ARGUED BY THE APPELLANT IN THE WRITTEN SUBMISSION FILED DURING THE COURSE OF HEARING. WITHOUT PREJUDICE 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED THE SETOFF OF CARRY FORWARD OF DEFICIT OF RS. 51,69,900/ - AGAINST THE INCOME OF THE CURRENT YEAR BEING APPLICATION OF INCOME AS CLAIMED BY THE APPELLANT IN THE COMP UTATION OF INCOME. II 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN NOT ADJUDICATING THE CLAIM OF APPELLANT REGARDING THE DIVIDEND INCOME OF RS. 11,73,820/ - BEING EXEMPT INCOME HENCE COULD NOT BE INCLUDED IN THE GROSS TOTAL INCOME. WITHOUT PREJUDICE 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICE OUGHT TO HAVE NOT INCLUDED THE DIVIDEND INCOME OF RS. 11,73,820/ - WHILE CALCULATING THE GROSS TOTAL INCOME AS CLAIMED BY THE APPELLANT IN THE COMPUTATION OF INCOME AS THE SAID INCOME WAS EXEMPT INCOME. III 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DISMISSING THE ADDITIONAL GROUND RAISED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS RE GARDING THE ISSUE OF ASSESSING OFFICER TAKING THE GROSS RECEIPTS HIGHER BY RS. 1,12,821 / - BY INCLUDING THE LOSS OF RS. 1,12,821/ - WHILE CALCULATING THE GROSS RECEIPTS. WITHOUT PREJUDICE 2. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICER OUGHT TO HAVE REDUCED THE GROSS RECEIPTS BY AN AMOUNT OF RS. 1,12,821/ - BEING THE LOSS CLAIMED IN THE INCOME AND EXPENDITURE ACCOUNT OF SHREE SWAMI SEVA TRUST. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS A TRUST RUNNING AN EDUCATIOAL INSTITUTION IN THE RURAL AREA OF VAPI, GUJARAT. THE ASSESSEE IS ITA NO.3741/MUM/2018 SWAMINARAYAN SEVA TRUST 3 REGISTERED AS A CHARITABLE ORGANIZATION WITH DIT(E), MUMBAI U/S.12A OF THE ACT VIDE REGISTRATION NO.TR/29169 AND WITH CHARITY COMMISSIONER, MUMBAI VIDE REGISTRATION NO. E - 13819 (MU MBAI). THE ASSESSEE TRUST FILED ITS RETURN OF INCOME FOR THE A.Y.2011 - 12 ON 23/09/2011 DECLAR ING TOTAL INCOME OF RS.NIL. THIS RETURN OF INCOME WAS ACCOMPANIED BY INCOME AND EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN F ORM NO.10B. IN THE ASSESSME NT, THE LD. AO DISALLOWED THE CLAIM OF DEPRECIATION OF THE ASSESSEE ON FIXED ASSETS OF THE ASSESSEE TO THE TUNE OF RS.37,50,024/ - HOLDING THAT THE SAME CANNOT BE ALLOWED AS AN APPLICATION OF INCOME FROM PROPERTY HELD UNDER TRUST UNDER THE PROVISIONS OF SEC TION 11 OF THE ACT. ACCORDINGLY, THE INCOME OF THE ASSESSEE WAS COMPUTED BY THE LD. AO AS UNDER: - GROSS RECEIPT 3,74,61,068 LESS : AMOUNT APPLIED FOR CHARITABLE PURPOSES AS PER SECTION 11 ( 1 )(2) INCLUDING CAPITAL EXPENDITURE. 3,13,95 ,482 ADD: DEPRECIATION AS DISCUSSED IN PARA NO. 3.1 37,50,024 - 2,76,45,458 98,15,610 LESS: 15% 56,19,160 TAXABLE INCOME 41,96,450 ITA NO.3741/MUM/2018 SWAMINARAYAN SEVA TRUST 4 3.1. THE ASSESSEE BEFORE THE LD. CIT(A) RAISED ONLY ONE GR OUND WITH REGARD TO DISALLOWANCE OF DEPRECIATION O N FIXED ASSETS OF THE ASSESSEE. HOWEVER, THE ASSESSEE FILED A WRITTEN SUBM ISSION ON THE FOLLOWING ASPECTS: - I) ISSUE OF ALLOWABILITY OF DEPRECIATION ON FIXED ASSETS II) EXCESS OF EXPENDITURE OVER INCOME OF RS.51,69,900/ - OF EARLIER YEAR TO BE SET OFF AGAINST INCOME OF THE YEAR UNDER CONSIDERATION. III) DIVIDEND INCOME WHICH IS EXEMPT U/S.10 TO THE TUNE OF RS.11,73,820/ - SHOULD NOT FORM PART OF GROSS TOTAL INCOME. 3.2. THE WRITTEN SUBMISSION FILED BY THE ASS ESSEE WAS DULY REPRODUCED IN THE ORDER OF THE LD. CIT(A). 3.3. THE ASSESSEE ALSO RAISED AN ADDITIONAL GROUND BEFORE THE LD. CITA() STATING THAT THE LD. AO HAD CONSIDERED THE GROSS RECEIPTS HIGHER BY RS.1,12,821/ - WHICH IS NOTHING BUT THE ACCUMULATED LOSS F IGURE REFLECTED IN THE ASSET SIDE OF THE BALANCE SHEET. 3.4. THE LD. CIT(A) HELD THAT ASSESSEE IS ENTITLED FOR DEPRECIATION O N FIXED ASSETS TO BE CLAIMED AS AN APPLICATION OF INCOME FROM PROPERTY HELD UNDER TRUST AND GRANTED RELIEF TO THE ASSESSEE. WITH RE GARD TO OTHER SUBMISSIONS MADE BY THE ASSESSE E IN RESPECT OF CLAIM OF SET OFF OF EXPENDITURE OVER INCOME OF EARLIER YEARS, DIVIDEND INCOME NOT BE INCLUDED IN GROSS TOTAL INCOME AND ERRONEOUS CONSIDERATION OF ACCUMULATED LOSS FIGURE REFLECTED IN THE BALANCE SHEET BEING CONSIDERED BY THE LD. AO IN THE ITA NO.3741/MUM/2018 SWAMINARAYAN SEVA TRUST 5 GROSS RECEIPTS, THE L D. CIT(A) OBSERVED THAT ASSESSEE HAD NOT RAISED ANY GROUND BEFORE HIM AND THAT THE ASSESSEE HAD ALSO FILED RECTIFICATION APPLICATION U/S.154 OF THE ACT IN RESPECT OF THE VERY SAME ISSUES, WH ICH ARE PENDING TO BE DISPOSED OFF BY THE L D. AO. 4. IN OTHER WORDS, THE L D. CIT(A) OBSERVED THAT SINCE THESE THREE ISSUES WERE THE SUBJECT MATTER OF RECTIFICATION PROCEEDINGS U/S.154 OF THE ACT BEFOR E THE L D. AO, THE SAME CANNOT BE ADDRESSED BY H IM AT TH E APPELLATE STAGE. THE L D. CIT(A) ALSO DIRECTED THE AO TO DISPOSE OFF THE PENDING RECTIFICATION APPLICATION U/S.154 OF THE ACT. SINCE THE L D. AO DID NOT ADHE RE TO THE DIRECTION OF THE L D. CIT(A) BY DISPOSING O F F THE RECTIFICATION APPLICATION U/S.154 OF THE ACT, THE ASSESSEE BEING AGGRIEVED , PREFERRED AN APPEAL BEFORE US ON THE GROUNDS REPRODUCED HEREINABOVE. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSEE HAD NOT RAISED ANY SPECIFIC GROUND WITH REGARD TO THE AFORESAID THREE ISSUE S. IT IS NOT IN DISPUTE THAT ASSESSEE HAD INDEED FILED A RECTIFICATION APPLICATION U/S.154 OF THE ACT TO ADDRESS T HE AFORESAID ISSUES BEFORE THE L D. AO HIMSELF. WE FIND THAT THE L D. CIT(A) HAD DIRECTED THE LD. AO TO DISPOSE OFF THE PENDING RECTIFICATION AP PLICATION U/S.154 OF THE ACT, WHICH WAS NOT DONE BY THE L D. AO AS INFORMED BY THE L D. AR BEFORE US. 5.1. THE L D. DR ON THE OTHER HAND FAIRLY STATED THAT THIS ISSUE REQUIRES FACTUAL EXAMINATION AND ACCORDINGLY PRAYED FOR SET TING ASIDE OF ALL THE ISSUES RAIS ED IN THE GROUNDS OF APPEAL BEFORE US TO THE FILE OF THE L D. AO. IN THESE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO REMAND THE ISSUES ITA NO.3741/MUM/2018 SWAMINARAYAN SEVA TRUST 6 RAISE D BEFORE US TO THE FILE OF THE L D. AO FOR DENOVO ADJUDICATION IN ACCORDANCE WITH LAW. IF THE L D. AO HAD ALREADY DI SPOSED OFF THE PENDING 154 APPLICATION BEFORE HIM AND HAD DULY SERVED THE SAID ORDER ON THE ASSESSEE, THEN NO REMEDIAL ACTION NEED TO BE TAKEN BY THE L D. AO PURSUANT TO THIS TRIBUNAL ORDER. IF THE SAID 154 APPLICATION HAD NOT BEEN DI SPOSED OFF BY THE LD. A O, THEN THE L D. AO SHOULD ADDRESS THE ISSUES RAISED IN THE GROUNDS OF APPEAL BEFORE US AFRESH , IN ACCORDANCE WITH LAW. THIS DIRECTION , IN OUR CONSIDERED OPINION , WOULD MEET THE NEEDS OF JUSTICE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR S TATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 03 /201 9 SD/ - ( RAVISH SOOD ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 13 / 03 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR ) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// ITA NO.3741/MUM/2018 SWAMINARAYAN SEVA TRUST 7