ACIT, UDAIPUR V. Maharana of Mewar Charitable Foundation, UDAIPUR

ITA 383/JODH/2013

• Counselvise Citation: 38323314 RSA 2013
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Assessee Lawyers: CHANDRA RAMJI
• Keywords: Depreciation; Charitable institution; Difference of opinion; Change of opinion

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 383/JODH/2013 (A.Y. 2009-10) ACIT, CIRCLE-1, VS. MAHARANA OF MEWAR UDAIPUR CHARITABLE FOUNDATION, CITY PALACE, UDAIPUR. PAN NO. AAATM 1440 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI CHANDRA RAMJI DEPARTMENT BY : DR. DEEPAK SEHGAL- D.R. DATE OF HEARING : 09/01/2014. DATE OF PRONOUNCEMENT : 17/02/2014. O R D E R PER HARI OM MARATHA, J.M. THIS APPEAL OF THE REVENUE FOR THE A.Y. 2009-10 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) DATED 28/03/2013. 2 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A CHARITABLE TRUST, FILED ITS RETURN ON 29/09/2009 FO R THE A.Y. 2009-10 2 DECLARING TOTAL LOSS OF RS. 20,78,564/-. ON VERIFI CATION, IT WAS NOTICED THAT THE ASSESSEE HAD FILED CONSOLIDATED RETURN IN RESPECT OF 04 TRUSTS BY CLUBBING THEIR INCOMES AND EXPENDITURES AND BY SETT ING OFF THE INCOME/ LOSS OF ONE TRUST AGAINST THE INCOME/LOSS OF THE OT HER. THE ASSESSEE WAS FOLLOWING THE CASH SYSTEM OF ACCOUNTING AS PER THE ACCOUNTING POLICIES AND NOTES TO ACCOUNTS ATTACHED WITH THE AUDIT REPOR T. THE OUTSTANDING EXPENSES TO THE TUNE OF RS. 15,20,505/- APPEARING I N THE BALANCE SHEET AS ON 31/03/2009 WERE NOT FOUND ALLOWABLE AS THE SAME HAD NOT BEEN INCURRED BY THE ASSESSEE-TRUST DURING THE F.Y. 2008 -09. ACCORDINGLY, THE ASSESSING OFFICER MADE DETAILED INVESTIGATIONS INTO THIS MATTER. IT WAS STATED BY THE ASSESSEE THAT THERE ARE FOUR TRUSTS F OR WHICH THE ASSESSEE HAS BEEN FILING A CONSOLIDATED RETURN IN PAST ALSO. THE FOUR TRUSTS STATED ABOVE ARE AS UNDER:- 1. SHRI PUBLICATION TRUST, UDAIPUR, PAN AAATP 0922 G 2. VIDYADAN TRUST, UDAIPUR PAN AAAAV 0518 R 3. MAHARANA OF MEWAR CHARITABLE FOUNDATION, UDAIPU R PAN AAATM 1440 N 4. MAHARANA MEWA RESEARCH INSTITUTION, PAN AAATM 1 564 F IT WAS FURTHER STATED IN RESPONSE TO THE NOTICE DA TED 02/12/2011 VIDE LETTER DATED 05/12/2011 THAT THE SYSTEM OF ACC OUNTING FOR INCOME AND EXPENDITURE DURING THE YEAR IS SIMILAR TO THAT OF THE PAST YEARS AND 3 THERE IS NO CHANGE IN THE ACCOUNTING PRACTICE; THAT THE ASSESSEE-TRUST HAS RIGHTLY CLAIMED VARIOUS AMOUNTS AS APPLICATION OF I NCOME AND OTHER EXPENSES; THAT THE OTHER TRUSTS ARE NOT SEPARATE AN D INDEPENDENT BUT ARE THE UNITS/DIVISIONS/BRANCHES/SECTIONS AND ACTIVITIE S IN FURTHERANCE OF THE MAIN OBJECTS OF THE ASSESSEE-TRUST, WHICH ARE GOVER NED BY THE SAME BOARD OF TRUSTEES THAT HOLDING OF SEPARATE REGISTRA TIONS AND PAN IS OF NO CONSEQUENCE; THAT THE ASSESSEE-TRUST HAS RIGHTLY CL AIMED DEDUCTION UNDER SECTION 11(1)(A) OF THE ACT WHICH HAS BEEN ALLOWED IN ALL THE YEARS IN THE PAST; THAT THERE IS NO CHANGE IN CASE OR LAW; THAT ASSESSMENT CANNOT BE REOPENED ON CHANGE OF OPINION; THAT THE ASSESSEE TR UST IS ALSO ENTITLED FOR DEPRECIATION ON ITS PROPERTIES AND THAT THERE IS NO UNDERSTATEMENT OR ESCAPEMENT OF INCOME. IT WAS FURTHER STATED THAT T HE ASSESSEE TRUST HAS BEEN MAINTAINING SEPARATE BOOKS OF ACCOUNTS OF ALL THESE TRUSTS AND AUDIT REPORTS IN RESPECT OF APPELLANT-TRUST HAS BEEN FILE D ALONG WITH THE RETURN OF INCOME AND THE INCOME/EXPENDITURE ACCOUNTS OF AL L THE 04 TRUSTS HAVE BEEN INCORPORATED IN THE ACCOUNTS OF THE MAHARANA O F MEWAR CHARITABLE FOUNDATION. HOWEVER, THE ASSESSING OFFICER REJECTE D ALL THE CONTENTIONS SO RAISED AND HAS FINALLY HELD THAT THE INCOMES OF FOUR TRUSTS ENUMERATED ABOVE ARE TO BE SEPARATELY ASSESSED FOR EACH ASSESS MENT YEAR AS PER LAW. ACCORDINGLY, HE HAS DISALLOWED THE EXPENSES OUTSTAN DING IN THE BALANCE 4 SHEET OF THE ASSESSEE AS ON 3.1/03/2009 TOTALLING T O RS. 15,89,638/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. HE HAS ALSO CLUBBED THE INCOME/EXPENDITURE OF THE FOUR TRUSTS. AGGRIEV ED, THE ASSESSEE PREFERRED AN APPEAL AND LD. CIT(A) HAS GIVEN THE DE SIRED RELIEF TO THE ASSESSEE-TRUST BY ALLOWING DEDUCTION UNDER SECTION 11(1)(A) OF THE ACT OF RS. 1,27,18,546/- AS AGAINST RS. 8,90,325/- ALLOWED BY THE ASSESSING OFFICER. HE HAS FURTHER ALLOWED A LOSS OF RS. 20,7 8,564/- FURTHER DEPRECIATION ON THE ASSETS/BUILDING HAS BEEN ALLOWE D IN CONSONANCE WITH THE VIEW TAKEN BY THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. NOW THE REVENUE IS AGGRIEVED. 3. THE REVENUE IS RAISED THE FOLLOWING GROUNDS:- 1. (I) ALLOWING THE ASSESSEE TO FILE CONSOLIDATED RETURN OF FOUR TRUSTS BY CLUBBING THE INCOME AND EXPENDITURE OF THE FOUR TRUSTS IGNORING THE FACT THAT FOUR TRUST INCLUDING THIS TR UST ARE SEPARATE LEGAL ENTITIES WITH SEPARATE PAN & SEPARATE REGIST RATION WITH DEVSTHAN DEPARTMENT , THEREFORE, THESE CANNOT BE AS SESSED TO TAX IN THE NAME OF ONE TRUST. (II) IGNORING THE FACT THAT IN INCOME TAX PROCEEDI NGS THE PRINCIPLE RES-JUDICATA DOES NOT APPLY. 2. ALLOWING THE DEDUCTION U/S 11(1)(A) OF RS. 1,27, 18,536/- AS AGAINST RS. 8,90,325/- ALLOWED BY THE AO. 3. DELETING THE ADDITION OF RS. 18,96,638/- MADE ON ACCOUNT OF EXPENSES CLAIMED ON ACCRUAL BASIS AS PER THE FACT T HAT THE ASSESSEE 5 WAS REQUIRED TO FOLLOW EITHER CASH OR MERCANTILE SY STEM AND IT HAD FOLLOWED CASH SYSTEM OF ACCOUNTS IN RESPECT OF OTHE R RECEIPTS/EXPENSES. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFULL Y PERUSED THE ENTIRE RECORD. IT WAS SUBMITTED BY LEARNED A.R. AT THE VERY OUTSET THAT THE ISSUE IN THIS APPEAL STANDS SQUARELY COVERED BY THE ORDER OF THIS VERY BENCH RENDERED, ON THE SAME AND SIMILAR ISSUES IN A SSESSEES OWN CASE. THE ORDER IS DATED 30/08/2012 PASSED IN I.T.A.NOS. 60 & 281/JODH/2013 FOR THE A.YS. 2006-07 & 2007-08. THIS FACT COULD N OT BE DENIED BY LD. D.R. SHRI DEEPAK SEHGAL AND HAS TO CONCUR WITH THE FACT THAT THE TRIBUNAL HAS TAKEN A VIEW FAVOURABLE TO THE ASSESSEE. 5. WE HAVE ALSO GONE THROUGH THE TRIBUNALS ORDER IN QUESTION AND HAVE FOUND THAT THE ISSUES RAISED IN THIS APPEAL ST AND SQUARELY COVERED IN THE FAVOUR OF THE ASSESSEE-TRUST. AS PER THE TRIBU NALS ORDER, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 11( 1)(A) OF THE ACT AS THE FACTS ETC. HAVE REMAINED SAME & SIMILAR IN THIS YEA R AS THEY WERE IN THE EARLIER YEARS. ACCORDINGLY, BY RESPECTFULLY FOLLOW ING THE T.O. WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. AS A RESULT, WE CANNOT ALLOW THIS APPEAL OF THE REVENUE. 6 6 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . (ORDER PRONOUNCED IN THE COURT ON 17 TH FEBRUARY, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 17 TH FEBRUARY, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.