The The Income tax Officer, Jammu V. M/s Guru Nanak Education Trust, Jammu

ITA 396/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63611 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Capital expenditure
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.396(ASR)/2012 ASSESSMENT YEAR:2009-2010 PAN :AAETS3478A INCOME TAX OFFICER, VS. M/S. GURU NANAK EDUCATIONA L TRUST, WARD 1(1), JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARSEM LAL, DR RESPONDENT BY:SH. JOGINDER SINGH, CA DATE OF HEARING: 29/11/2012 DATE OF PRONOUNCEMENT:12/12/2012 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F CIT(A), JAMMU, DATED 16.08.2012 FOR THE ASSESSMENT YEAR 2009-2010. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACT AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE PURCHASE/ADDITIONS MADE TO FI XED ASSETS WHICH ARE NOT THE APPLICATION TOWARDS CHARITABLE PU RPOSE. 2. ON THE FACT AND CIRCUMSTANCES WHETHER THE LD. CI T(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT CONSIDERING THE DECISION IN THE CASE OF CIT VS. M/S. QUEEN EDUC ATIONAL ITA NO.396(ASR)/2012 2 SOCIETY 233 CTR 395 WHEREIN THE HONBLE HIGH COURT OF UTTARKHAND HAD HELD THAT THE ASSETS PURCHASED/CONST RUCTED OUT OF INCOME FROM IMPARTING THE EDUCATION WITH A VIEW TO EXPAND THE INSTITUTION AND NOT TO EARN MORE INCOME. 3. THAT THE APPELLANT CRAVES TO AMEND OR ADD ANY ON E MORE OR MORE GROUNDS OF APPEAL. 3. THE BRIEF FACTS IN THE GROUNDS OF THE REVENUE AR E THAT THE ASSESSEE- TRUST HAD CLAIMED TO HAVE BEEN MADE PURCHASES/ADDI TIONS TO THE FIXED ASSET AS APPLICATION OF MONEY AMOUNTING TO RS.24,75,707/- . ON SHOW CAUSE GIVEN BY THE AO, AS TO WHY THE EXPENDITURE SO MADE ON THE PURCHASE/ADDITION OF FIXED ASSETS MAY NOT BE TREATED AS APPLICATION FO R CHARITABLE PURPOSE IN VIEW OF THE RATIO OF THE DECISION OF HONBLE UTTRAK HAND HIGH COURT IN THE CASE OF CIT VS. QUEENS EDUCATIONAL SOCIETY (2009) 319 ITR 160. THE ASSESSEE SUBMITTED THE EXPLANATION VIDE LETTER DATE D 23.12.2011 WHICH FOR THE SAKE OF CLARITY IS REPRODUCED AS UNDER: THIS IS IN CONTINUATION TO THE ASSESSMENT PROCEEDI NG AS BEING CONDUCTED BY YOUR GOODSELF IN THE CASE OF ABOVE MEN TIONED ASSESSEE TRUST. IT IS TO SUBMIT THAT THE ASSESSEE TRUST IS C ARRYING ON NO ACTIVITY OTHER THAN THE RUNNING OF B.ED COLLEGE AND IMPARTIN G EDUCATION TO THE STUDENTS. THE DETAILS OF THE INCOME OF THE TRUST AN D COLLEGE AS PER INCOME & EXPENDITURE ACCOUNT ATTACHED WITH THE RETU RN ARE AS UNDER: PARTICULARS BEFORE APPLICATION OF INCOME TO CHARITABLE PURPOSE RECURRING EXP. CAPITAL EXP. LIKE LAND, BUILDING FURNITURE & OTHER ASSETS NON RECURRING EXPENSES ITA NO.396(ASR)/2012 3 GURU NANAK 12762562 6487352 2475107 271832 IT IS PERTINENT TO MENTION HERE THAT THE SOME SURP LUS OF INCOME OVER EXPENDITURE IN THE YEAR UNDER CONSIDERATION WA S UTILIZED BY THE TRUSTEES IN ACQUIRING LAND, CONSTRUCTION OF BUILDIN G, FURNITURE/FIXTURE COMPUTER LAB, EQUIPMENT, LIBRARY BOOKS, LAND, SCHOO L VEHICLE AND MACHINERY EQUIPMENT ETC. AND SINCE THE ACQUISITION OF THESE ASSETS FOR EDUCATION PURPOSES WAS THE DOMINANT CHARITABLE PURP OSE FOR WHICH THE TRUST WAS CREATED, THE WHOLE OF THE INCOME OF THE TRUST MUST BE HELD TO HAVE BEEN APPLIED TO THE CHARITABLE PURPOS E FOR WHICH THE TRUST PROPERTIES WAS HELD BY THE TRUSTEES AND IT MU ST ACCORDINGLY BE REGARDED AS EXEMPTED FROM TAX U/S 11 SUB.S(1) CLAUS E (A). MORESO, THE ASSESSEE TRUST HAS SPENT/APPLIED ITS INCOME TO CHARITABLE PURPOSE MORE THAN THE STAT UTORY REQUIREMENT, IT IS NO LIABLE TO INCOME TAX FOR THE YEAR UNDER CO NSIDERATION. 3.1 THE ASSESSEE FURTHER RELYING UPON THE PROVISION S OF SECTION 11 OF THE INCOME TAX ACT, 1961 AND DECISIONS OF VARIOUS COURT S OF LAW SUBMITTED THAT THE CAPITAL EXPENDITURE BE TREATED AS APPLICATION O F INCOME. 3.2 THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE VIDE PARA 2.4.2 AND 2.4.3 OBSERVED AS UNDER: 2.4.2. THE OBJECTIONS OF THE LD. COUNSEL FOR THE A SSESSEE ON THIS ISSUE HAVE BEEN CONSIDERED. THE LD. COUNSEL HAS STR ONGLY ADVOCATED THAT THE RATIO OF THE JUDGMENT IN THE CASE OF QUEEN S EDUCATIONAL SOCIETY 223 CTR 395 ARE NOT APPLICABLE IN VIEW OF T HE FACT THAT HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PINEGROOVE INTERNATIONAL CHARITABLE TRUST V. UNION OF INDIA CW P NO. 6031 OF 2009 HAD REFUSED TO ACCEPT THE DECISION OF THE HON BLE UTTARAKHAND HIGH COURT AND HAD HELD THAT ADDITION TO FIXED ASSE TS WAS APPLICATION TOWARDS CHARITABLE PURPOSE. THE LD. COUNSEL FOR THE ASSESSEE HAS FAILED TO APPRECIATE THE FACT THE DECISION OF THE H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PINEGROOVE INTERN ATIONAL CHARITABLE TRUST HAS NOT BEEN ACCEPTED BY THE DEPAR TMENT AND SLP HAS BEEN FILED IN THE HONBLE SUPREME COURT OF INDI A. IN FACT, THE ITA NO.396(ASR)/2012 4 INVESTMENT IN THE FIXED ASSETS LIKE FURNITURE AND B UILDINGS ARE THE PROPERTIES OF THE TRUST AND MAY BE CONNECTED WITH T HE IMPARTING OF EDUCATION BUT THE SAME HAS BEEN CONSTRUCTED AND PUR CHASED OUT OF INCOME FROM IMPARTING THE EDUCATION WITH A VIEW TO EXPAND THE INSTITUTION AND TO EARN MORE INCOME. AS SUCH, THE O BJECTIONS OF THE LD. COUNSEL FOR THE ASSESSEE ARE NOT ACCEPTABLE. 2.4.3. IN VIEW OF THE FACTS DISCUSSED ABOVE, THE EX PENDITURE MADE BY THE ASSESSEE ON PURCHASE/ADDITIONS TO FIXED ASSETS IS NOT CONSIDERED TO BE APPLICATION TOWARDS CHARITABLE PURPOSE AND ACCOR DINGLY EXEMPTION ON THE AMOUNT OF RS.24,76,107/- IS WITHDRAWN AND AD DED TO THE INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE I.T.ACT, 1961 ARE ALSO INITIATED FOR FURNISHING INA CCURATE PARTICULARS OF INCOME. 4. THE LD. CIT(A) WHILE ACCEPTING THE ARGUMENTS OF THE ASSESSEE OBSERVED THAT THERE IS NO ALLEGATION OR THE CASE OF THE A.O. THAT THE APPLICATION OF INCOME WAS MADE FOR PERSONAL OR FOR NON-CHARITABLE PURPOSES. THE LD. CIT(A) FOLLOWING THE DECISION IN THE CASE O F PINEGROOVE INTERNATIONAL CHARITABLE TRUST (2010) 327 ITR 73 (P & H) AND OTHER DECISIONS MENTIONED IN HIS ORDER DELETED THE ADDITI ON SO MADE BY THE AO. 5. THE LD. DR, ON ONE HAND, RELIED UPON THE ORDER O F THE ASSESSING OFFICER AND THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE RE IS NO ALLEGATION BY THE AO THAT THE APPLICATION OF INCOME WAS MADE FOR PERS ONAL OR FOR NON CHARITABLE PURPOSES. IN SUCH CIRCUMSTANCES, THE SUR PLUS BY THE TRUST HAS BEEN ITA NO.396(ASR)/2012 5 INVESTED IN THE FIXED ASSETS OF THE TRUST. THERE IS NOTHING ON RECORD THAT THE FIXED ASSET HAS BEEN PURCHASED FOR PERSONAL PURPOSE S. THEREFORE, IN VIEW OF THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PINEGROOVE INTERNATIONAL CHARITABLE TRUST (SUPRA) AND OTHER DECISIONS RELIED UPON BY THE LD. CIT(A), WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. THUS, ALL THE GROUNDS OF TH E REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.396(ASR)/2010 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH DECEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12TH DECEMBER; 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. GURU NANAK EDUCATIONAL TRUST, JAM MU. 2. THE ITO WARD 1(1), JAMMU. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.