The DCIT(Exemptions), Trivandrum V. M/s.Missions India, Thiruvalla

ITA 397/COCH/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8964 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 23-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: K I ABRAHAM
• Keywords: Maximum Marginal Rate
• Section: 143(3); 12A; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM ITA NO. 397 /COCH/201 8 ASSESSMENT YEAR: 2012 - 13 THE DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS), TRIVANDRUM. VS. MISSION INDIA, NAVAJEEVAODAYAM CENTRE, MANJADI, THIRUVALLA, PATHANAMTHITTA-689 105. [PAN:AAATM 2154P] (REVENUE - APPELLANT) (ASSESSEE - RESPONDEN T) REVENUE BY SMT. A.S. BINDHU, DR ASSESSEE BY SHRI K.I. ABRAHAM, CA D ATE OF HEARING 10/10/2018 DATE OF PRONOUNCEMENT 15 / 10 /2018 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A), KOTTAYAM DATED 16/04/2018 AND PERTAINS TO THE ASSESSMENT YEAR 2012-13 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1) THE CIT(A), KOTTAYAM HAS ERRED IN DELETING THE ADDITION OF RS.59,14,791/- ON THE GROUND THAT THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE APPELLANT IS NOT REGISTERED U/S. 12A, IS WITHOUT JURISDICTION. 2) THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.28,79,704/- ON THE GROUND THAT THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE APPELLANT IS NOT REGISTERED U/S. 12A, IS WITHOUT JURISDICTION. I.T.A. NO.397/COCH/2018 2 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED U/S. 12A OF THE INCOME TAX ACT, 1961. FOR THE ASSESSMENT YEAR 2012-13, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING REFUND OF RS.46,360/-. WHILE FRAMING THE ASSESSMENT U/S. 143(3) OF THE ACT, THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AS FOLLOWS: EXCESS OF INCOME OVER EXPENDITURE AS PER THE COMBINED INCOME & EXPENDITURE ACCOUNT : RS.59,14,791/- ADD: 1) ADDITION ON ACCOUNT OF DIFFERENCE IN : RS. 1,76,080/- ASSET VALUE FOUR WHEELERS AS DISCUSSED IN PARA 4 ABOVE 2) SET APART AMOUNT OF ASST. YEAR 2011-12 : RS.89,70,582/- AS DISCUSSED IN PARA 11 ABOVE TOTAL INCOME : RS.89,70,582 3.1 WHILE MAKING THE ADDITION AS ABOVE, THE ASSESSING OFFICER OBSERVED THAT EARLIER REGISTRATION U/S. 12A WAS GRANTED FOR THREE YEARS AND IT WAS LIABLE TO BE RENEWED PERIODICALLY, AFTER EVERY THREE YEARS. ACCORDING TO THE ASSESSING OFFICER, REGISTRATION U/S. 12A/12AA ONCE GRANTED NEED NOT BE RENEWED AND THE ASSESSING OFFICER HAS TO EXAMINE AND SATISFY EVERY YEAR WHETHER THE ASSESSEE-TRUST FULFILLED THE CONDITIONS FOR CONTINUATION OF THE REGISTRATION GRANTED U/S. 12A/12AA AND IF THE TRUST DOES NOT SATISFY THE CONDITIONS, THE TRUST BECOMES INELIGIBLE FOR CONTINUATION OF THE REGISTRATION AND ALSO THE ASSESSMENT IN SUCH CASES HAS TO BE COMPLETED TREATING THE TRUST AS HAVING NO REGISTRATION U/S. 12A/12AA. ACCORDINGLY, THE INCOME OF THE TRUST WAS TAXED AT THE MAXIMUM MARGINAL RATE OF 30% AND NO SET APART INCOME FOR FUTURE UTILIZATION WAS ALLOWED. I.T.A. NO.397/COCH/2018 3 4. AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE, INTER ALIA, CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE ADDITION OF RS.89,70,582/- BY OBSERVING THAT THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT REGISTERED U/S. 12A OF THE ACT, IS WITHOUT JURISDICTION. THE CIT(A) OBSERVED THAT WITHOUT CANCELLING REGISTRATION U/S. 12A OF THE ACT, THE ASSESSING OFFICER CANNOT DENY THE BENEFIT OF SECTION 11 AND 12 OF THE ACT. IT WAS OBSERVED THAT THE ASSESSEE HAD APPLIED 85% OF THE RECEIPT FOR THE OBJECTIVES OF THE TRUST. HENCE, THE CIT(A) DELETED THE ADDITION OF RS.59,14,791/-. SIMILARLY, WHILE DELETING THE ADDITION OF SET APART AMOUNT OF RS.28,79,704/-, THE CIT(A) OBSERVED THAT SINCE THE ASSESSEE-TRUST IS DULY REGISTERED U/S. 12A OF THE ACT, THE ASSESSING OFFICER HAS NO JURISDICTION TO HOLD THAT THE ASSESSEE IS NOT ELIGIBLE FOR CONTINUATION OF REGISTRATION U/S. 11 OF THE ACT AND CANNOT BE TREATED AS AOP SO AS TO TAX THE SET APART AMOUNT IN ASSESSMENT YEAR 2011-12 AND TO BE TAXED AT THE MAXIMUM MARGINAL RATE OF 30%. 5. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN OUR OPINION, THE ASSESSING OFFICER HAS NO JURISDICTION TO QUESTION THE CONTINUATION OF REGISTRATION U/S. 12A OF THE ACT AND THEREBY DENY THE CLAIM OF THE ASSESSEE U/S. 11 OF THE I.T. ACT AND TAX THE AMOUNT SET APART IN EARLIER YEARS ON THE REASON THAT THE ASSESSEE IS NOT ELIGIBLE FOR CONTINUATION OF REGISTRATION U/S. 12A OF THE I.T.A. NO.397/COCH/2018 4 ACT. TO THAT EXTENT, THE CIT(A) IS JUSTIFIED IN HIS FINDING THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO QUESTION THE SAME IN VIEW OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF KUTTUKARAN FOUNDATION (19 TAXMANN.COM 331) WHEREIN IT WAS HELD AS UNDER: 10. WE FURTHER FIND THAT THE ASSESSING OFFICER REJECTED THE REGISTRATION GRANTED U/S. 12A AND COMPLETED THE ASSESSMENT AS AOP. ONCE THE REGISTRATION WAS GRANTED U/S. 12A BY THE COMMISSIONER, THE ASSESSING OFFICER AS A SUBORDINATE OFFICER TO THE COMMISSIONER CANNOT CANCEL THE REGISTRATION. IT IS FOR THE COMMISSIONER TO CANCEL THE REGISTRATION PROVIDED THE CONDITIONS U/S. 12AA(3) ARE SATISFIED. THEREFORE, THE CANCELLATION/REJECTION OF REGISTRATION U/S.12A AND COMPLETION OF ASSESSMENT UNDER AOP BY THE ASSESSING OFFICER IS WITHOUT JURISDICTION. THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFICER HAS EXCEEDED HIS JURISDICTION IN REJECTING THE REGISTRATION AND ASSESSING THE ASSESSEE AS AOP. AS ALREADY OBSERVED, IT IS OPEN TO THE COMMISSIONER TO CONSIDER THE CASE OF THE ASSESSEE AND PASS NECESSARY ORDER U/S. 12AA(3) OF THE ACT. 6.1 HOWEVER, THE CIT(A) COULD HAVE DIRECTED THE ASSESSING OFFICER TO EXAMINE WHETHER THE ACTIVITIES CARRIED ON BY THE ASSESSEE IS IN ACCORDANCE WITH THE OBJECT CLAUSE OF THE TRUST. NEITHER THE CIT(A) NOR THE ASSESSING OFFICER HAVE EXAMINED THIS ISSUE. THE ASSESSING OFFICER IN THIS CASE, AT THE THRESHOLD, REJECTED THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE ACT BY OBSERVING THAT SINCE THE TRUST HAS NOT OBTAINED THE APPROVAL OF THE COMMISSIONER OF INCOME-TAX FOR AMENDMENTS MADE BY IT IN THE MEMORANDUM AND RULES AND REGULATIONS, AND ALSO NOT OBTAINED PRIOR APPROVAL FOR EXPANDING ITS OPERATIONS BEYOND THE LIMITS OF THE COUNTRY, THE TRUST IS NOT ELIGIBLE FOR CONTINUATION OF THE REGISTRATION GRANTED U/S. 12A OF THE ACT. BEING SO, THE ASSESSEE WAS TREATED AS HAVING NO REGISTRATION U/S. 12A OF THE ACT. HENCE, THE ASSESSING OFFICER HAS NOT EXAMINED AND I.T.A. NO.397/COCH/2018 5 SATISFIED HIMSELF WHETHER THE ASESSEE-TRUST HAS CARRIED ON THE OPERATIONS IN ACCORDANCE WITH PROVISIONS OF SECTION 11 OF THE ACT SO AS TO GRANT EXEMPTION U/S. 11 OF THE ACT. IF THE TRUST DOES NOT SATISFY THE CONDITIONS LAID DOWN U/S. 11 OF THE ACT, THE ASSESSEE-TRUST BECOMES INELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT AND IN SUCH CASES, ASSESSMENT HAS TO BE COMPLETED BY DENYING THE EXEMPTION U/S. 11 OF THE ACT. SINCE WE HAVE OBSERVED THAT THE ASSESSEE-TRUST IS ENTITLED FOR CONTINUATION OF REGISTRATION U/S. 12A OF THE ACT AND IT CANNOT BE QUESTIONED BY THE ASSESSING OFFICER UNLESS IT IS CANCELLED BY THE CIT(EXEMPTIONS), THE ASSESSING OFFICER HAS TO EXAMINE WHETHER THE ASSESSEE IS CARRYING ON ITS ACTIVITIES IN ACCORDANCE WITH THE OBJECT CLAUSE OF THE TRUST AND WHETHER THERE IS ANY VIOLATION U/S. 13 OF THE ACT, AND THEREAFTER, HE HAS TO DECIDE GRANTING OF EXEMPTION U/S. 11 OF THE ACT. HENCE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AND FRAME THE ASSESSMENT ACCORDINGLY. THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH OCTOBER, 2018. SD/- SD/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 15 TH OCTOBER, 2018 I.T.A. NO.397/COCH/2018 6 GJ COPY TO: 1. MISSION INDIA, NAVAJEEVAODAYAM CENTRE, MANJADI, THIRUVALLA, PATHANAMTHITTA-689 105. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX (EXEMPTIONS), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOTTAYAM. 4. THE PR. COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN