The Income-tax Oficer, Kathua V. M/s. Dogra Educational & Cultural Trust, Kathua

ITA 410/ASR/2012

• Counselvise Citation: 41020914 RSA 2012
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHAVEER SINGH
• Keywords: Capital asset; Charitable institution; Capital expenditure
• Section: 143(3); 142(1); 12AA; 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. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 PAN:AAAAD3776H INCOME TAX OFFICER, VS. M/S DOGRA EDUCATIONAL & WARD NO. 11, KATHUA CULTURAL TRUST, PATEL NAGAR, KATHUA (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. MAHAVEER SINGH, SR. DR ASSESSEE BY: NONE DATE OF HEARING: 24.07.2013 DATE OF PRONOUNCEMENT: 01.08.2013 ORDER PER BENCH 1) THE REVENUE HAS FILED THE PRESENT APPEAL A GAINST THE IMPUGNED ORDER DATED 27.08.2012 PASSED BY LEARNED CIT(A), JA MMU, PERTAINING TO THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUND S: I. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT( A) WAS RIGHT IN DELETING THE INVESTMENT MADE IN CONSTRUCTION ACQUIS ITION OF LAND & BUILDING WHICH ARE NOT THE APPLICATION TOWARDS EDUC ATIONAL PURPOSE. II. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT( A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT CONSIDERI NG THE DECISION IN 2 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 THE CASE OF CIT VS. M/S QUEEN EDUCATIONAL SOCIETY 2 33 CTR 395 WHEREIN THE HON'BLE HIGH COURT OF UTTRAKHAND HAD HE LD THAT THE ASSETS PURCHASES/CONSTRUCTED OUT OF INCOME FROM IMPARTING THE EDUCATION WITH A VIEW TO EXPAND THE INSTITUTION AND TO EARN M ORE INCOME. III. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MOR E GROUNDS OF APPEAL. 2) THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT ASSESSEE BEING AN EDUCATIONAL INSTITUTION FILED RETURN OF IN COME ON 29.11.2008 DECLARING NIL INCOME. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER THE CENTRAL ACTION PLAN. THE ASSESSING OFFICE R ISSUED NOTICES TO THE ASSESSEE UNDER SECTIONS 143(2) AND 142(1) OF TH E INCOME-TAX, 1961 (IN SHORT THE ACT) ALONG WITH DETAILED QUESTIONNA IRE. IN RESPONSE TO THE SAME, THE AUTHORIZED REPRESENTATION OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FILED THE REPLY TO THE QUESTIONNAIRE AND OTHER DETAILS AS CALLED FOR DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. DURING THE YEAR UNDER CONSI DERATION, THE ASSESSEE HAS SHOWN AGGREGATE ANNUAL RECEIPTS AT RS. 92,86,689/- AND HAS CLAIMED EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF T HE ACT OF EXCESS OF INCOME OVER EXPENDITURE OF RS. 46,85,524/- IN THE F IXED ASSETS ACCOUNT, THE ASSESSEE HAS SHOWN AN ADDITION OF RS. 42,77,193 /-. THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE RATIO OF T HE CASE OF M/S. QUEENS EDUCATION SOCIETY 177-TAXMAN-326 SHOULD NOT BE APPL IED IN VIEW OF 3 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 SURPLUS OF RS. 42,77,193/- APPLIED TOWARDS ACCRETIO N OF CAPITAL ASSETS. IN RESPONSE TO THE SAME, THE ASSESSEE HAS FILED ITS WR ITTEN REPLY WHICH WAS DULY CONSIDERED BY THE ASSESSING OFFICER AND AN AMO UNT OF RS. 20 LACS WAS ACCEPTED TO HAVE BEEN INVESTED IN AN FDR AND TH E BALANCE AMOUNT OF RS. 22,77,193/- WAS TAXED, AND THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 30.12 .2010. 3) AGGRIEVED BY THE ASSESSMENT ORDER DATED 30.12.20 10, THE ASSESSEE FILED AN APPEAL BEFORE LEARNED CIT(A), JAM MU, WHO VIDE IMPUGNED ORDER DATED 27.08.2012 ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE REVENUE BEING AGGRIEVED WITH THE ORDER OF LEARNED CIT(A), JAMMU, FILED THE PRESENT APPEAL. 4) NOTICE FOR HEARING WAS ISSUED TO THE ASSESSEE BY RPAD FOR 24.07.2013. IN RESPONSE TO THE SAME, SH. R.K. GUPTA , CA, LEARNED COUNSEL FOR THE ASSESSEE FILED AN APPLICATION FOR A DJOURNMENT ON THE GROUND THAT DUE TO SOME UNAVOIDABLE CIRCUMSTANCES, HE COULD NOT ATTEND THE COURT AND HE REQUESTED FOR ADJOURNMENT. 5) KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE AS WELL AS THE ISSUE INVOLVED IN THE PRESENT APPEAL , WE ARE NOT INCLINED TO ADJOURN THE PRESENT CASE, THEREFORE, THE REQUEST FO R ADJOURNMENT OF THE 4 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 ASSESSEES COUNSEL IS REJECTED AND WE PROCEED TO DE CIDE THE ISSUE IN DISPUTE EX PARTE AFTER HEARING THE LEARNED SR. DR 6) SH. MAHAVEER SINGH, LEARNED SR. DR, RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER DATED 30.12.2010 PA SSED UNDER SECTION 143(3) OF THE ACT. 7) WE HAVE HEARD LEARNED SR. DR AND PERUSED THE REL EVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDER PA SSED BY LEARNED FIRST APPELLATE AUTHORITY WHO HAS DECIDED THE ISSUE IN DI SPUTE IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY FOLLOWING THE VARIOUS JUDG MENTS PASSED BY HON'BLE HIGH COURTS AS WELL AS VARIOUS DECISIONS OF TRIBUNALS, WHICH HE HAS MENTIONED IN THE IMPUGNED ORDER. FOR THE SAKE O F CONVENIENCE, RELEVANT PORTIONS OF THE IMPUGNED ORDER I.E. PARAS NO 4 TO 5 AT PAGES 6 TO 9, PASSED BY LEARNED FIRST APPELLATE AUTHORITY ARE REPRODUCED AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE AND THE REASONING ADVANCED BY A.O. FOR TREATING THE AMOUNT OF RS. 22,77,193/- AS TAXABLE. I HAVE ALSO CAREFULLY GONE THROUGH THE RELEVANT CASE LAWS. THERE IS NO DISPUTE AS TO THE FACTS OF T HE CASE WHICH ARE AS UNDER: (I) THE APPELLANT IS RUNNING AN EDUCATIONAL INSTITUTION (II) THE TRUST IS DULY REGISTERED WITH SUB-REGISTRA R, DULY APPROVED BY J&K STATE BOARD OF SECONDARY EDUCATION AND BY JAMMU UNIVERSITY. (III) THE FEES ARE NOT CHARGED AT THE DISCRETION O F APPELLANT TRUST BY REGULATED BY J&K STATE BOARD AND JAMMU UNIVERSIT Y FOR DIFFERENT COURSES. 5 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 (IV) THE RECEIPT IS RS. 96,86,689/- IS WITHIN PRES CRIBED LIMITS U/S 10(23C)(IIIAD) OF I.T. ACT. 4.1 THE ONLY REASONING OF TAXING THE AMOUNT IS THE SURPLUS OF RS. 46,85,524/- AND OUT OF THE SAME, AN APPLICATION OF RS. 22,77,193/- TOWARDS CAPITAL ASSETS. THE A.O. IN DOING SO RELIED ON THE DECISION OF HON'BLE HIGH COURT OF UTTRAKHAND IN CASE OF M/S QUE ENS EDUCATION SOCIETY 177-TAXMAN 326. AN IDENTICAL ISSUE AROSE IN CASE OF M/S GURU NANAK EDUCATIONAL TRUST IN APPEAL NO. 319/11-1 2 DATED 16.08.2012 WHERE A DECISION IN THE CASE OF M/S. D.N . MEMORIAL TRUST IN I.T.A. NO. 617/ASR/2011 DATED 11.07.2012 DECIDED BY HON'BLE I.T.A.T., AMRITSAR HAS BEEN FOLLOWED. 4.2 THE ONLY LEGAL ISSUE INVOLVED IS WHETHER THE LAYING OUT CAPITAL EXPENDITURE IS TO BE HELD AS APPLICABLE OF INCOME I N TERM OF SECTION 11(1) AND (1A) OF I.T. ACT. FROM THE READING OF THE ASSESSMENT ORDER IT IS CLEAR THAT THE A.O. HAD REJECTED THE EXPLANATION S OF ASSESSEE BASED ON RELIANCE OF VARIOUS JUDICIAL PRONOUNCEMENTS INCL UDING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF M/S. PINEGROVE INTERNATIONAL CHARITABLE SOCIETY 230-CTR-477. THE I SSUE IS TO BE DECIDED ON MERITS IN THE LIGHT OF JUDICIAL PRONOUNC EMENTS AVAILABLE. IN THE DIVISION IN THE CASE OF M/S PINEGROVE INTERNATI ONAL CHARITABLE TRUST IT WAS HELD THAT 8.14. WHEN THE FACTS OF THE LEAD CASE ARE EXAMIN ED IN THE LIGHT OF ABOVE DISCUSSING, IT IS EVIDENT THAT CAPITAL ASS ETS ACQUIRED/CONSTRUCTED BY THE EDUCATIONAL INSTITUTION S HAVE BEEN TREATED AS INCOME IN A BLANKET MANNER WITHOUT RECORDING ANY FINDING WHETHER THE CAPITAL ASSETS HAVE BEEN APPLIED AND UTILISED T O ADVANCE THE PURPOSE OF EDUCATION. IT IS OBLIGATORY ON THE PART OF THE PRESCRIBED AUTHORITY WHILE EXERCISING POWER UNDER UNNUMBERED T HIRTEENTH PROVISO TO CONSIDER WHETHER EXPENDITURE INCURRED AS CAPITAL INVESTMENT IS ON THE OBJECT OF EDUCATION OR NOT. THEREFORE, THE ORDE R IMPUGNED IN THESE PETITIONS PASSED BY THE PRESCRIBED AUTHORITY ARE LI ABLE TO BE QUASHED. IT IS APPROPRIATE TO MENTIONED THAT IN THESE CASES THE IMPUGNED ORDERS PASSED BY THE CHIEF CIT, CHANDIGARH AND THOSE OF BY THE CHIEF CVIT, LUDHIANA, ARE SIMILAR IN SUBSTANCE AND APPEAR TO HA VE BEEN INSPIRED BY THE VIEW TAKEN BY THE UTTRAKHAND HIGH COURT IN T HE CASE OF QUEENS EDUCATIONAL SOCIETY (SUPRA), WHICH WE HAVE NOT ACCE PTED. 6 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 4.3. ALSO IN CASE OF M/S MANAV MANGAL SOCIETY 328 I TR-421. SIMILAR VIEW IS UPHELD. 4.4. IN THE RECENT DECISION OF HON'BLE I.T.A.T., AM RITSAR IN CASE OF M/S D.N. MEMORIAL TRUST, UDHAMPUR WHICH RELATED TO DENIAL OF EXEMPTION U/S 12AA OF I.T. ACT WHERE ALSO THERE WAS A SURPLUS OF INCOME OVER EXPENDITURE WHICH WAS APPLIED IN SHAPE OF FIXED ASSETS AND THE CIT HAD REFUSED REGISTRATION. THE HON'BLE I .T.A.T., AMRITSAR HAS DIRECTED THE CIT TO GRANT THE EXEMPTION BY HOLD ING AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E FACTS OF THE CASE. THERE IS NOTHING ON RECORD BROUGHT OUT BY THE LD. CIT THAT FEES STRUCTURE IS IN GENUINE OR AGAINST THE ACCEPTED NOR MS. NOTHING HAS BEEN BROUGHT ON RECORD BY THE LD. CIT THAT THE ACTI VITIES OF THE TRUST ARE FOR NON-CHARITABLE PURPOSE OR FOR PERSONAL PURP OSES OF THE TRUSTEES ETC. RATHER WHATEVER FUNDS WERE ACQUIRED BY THE TRU ST HAVE BEEN UTILIZED FOR THE PURPOSE OF EDUCATIONAL ACTIVITIES OF THE INSTITUTION AND IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON R ECORD BY THE LD. CIT, THE APPLICATION BY THE ASSESSEE CANNOT BE REJE CTED. THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CITY MONTESSORI SCHOOL (REGD.) VS. UNION OF INDIA AND OTHERS (SUPRA ) AND DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS. MANAV MANGAL SOCIETY (SUPRA), SUPPORT OUR VIEW. 4.5 I FURTHER FIND THAT IN THE CASE OF M/S GAGAN E DUCATIONAL SOCIETY 145-TTJ 230 DECIDED BY THE HON'BLE I.T.A.T., AGRA B ENCH IS QUITE RELEVANT WHEREIN IT WAS HELD: CHARITABLE TRUST-EXEMPTION UNDER SECTION 11 APPLI CATION OF INCOME APPLICATION OF THE INCOME FOR CHARITABLE P URPOSE SHOULD NOT BE DISTINGUISHED ON THE BASIS OF APPLICATION FOR RE VENUE PURPOSES AND APPLICATION FOR CAPITAL PURPOSES- EVEN IF THE EXPEN DITURE HAS BEEN INCURRED FOR ACQUIRING CAPITAL ASSET TO BE USED FOR THE OBJECT OF THE TRUST THE ASSESSEE WILL BE ENTITLED FOR THE EXEMPTION AS THIS WILL TANTAMOUNT TO APPLICATION OF THE INCOME FOR CHARITABLE PURPOSE S 85 PERCENT SHOULD BE OF THE COMMERCIAL INCOME AND NOT OF THE INCOME A S DETERMINED UNDER S. 2(45) MATTER REMANDED. 4.6 LIKEWISE, IN THE CASE OF M/S HANS RAJ SAMARAK SOCIETY 145-TTJ- 250 DECIDED BY THE HON'BLE I.T.A.T., DELHI VIEW IS UPHELD. 7 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 5. IN THE PRESENT CASE THERE IS NO ALLEGATION OR T HE CASE OF THE A.O. THAT THE APPLICATION OF INCOME WAS MADE FOR PE RSONAL OR FOR NON- CHARITABLE PURPOSES AS NOTHING OF THE SORT IS EVEN ALLEGED. IT IS ALSO NOT ALLEGED THAT THE FEE STRUCTURE WAS SUCH THAT IT UND ULY FAVOURED THE ASSESSEE. IN FACT IT IS AN ADMITTED FACT THAT FEES ARE NOT DENIED BY APPELLANT AND ARE GOVERNED BY THE JAMMU BOARD OF SE CONDARY EDUCATION AND JAMMU UNIVERSITY. IN VIEW OF THIS, TH E CASE LAWS DISCUSSED AS RELIED BY ASSESSEE AS ABOVE ARE ALL RE LEVANT. RESPECTFULLY FOLLOWING THE SAME, THE A.O. IS DIRECTED TO TREAT T HE APPLICATION IN FIXED ASSETS AS MADE FOR CHARITABLE PURPOSES IN FUR THERANCE OF OBJECTS AND PURPOSES OF SOCIETY WHOSE SOLE ACTIVITY IS EDUC ATION IN NATURE. 8) AFTER GOING THROUGH IMPUGNED ORDER PASSED BY LEA RNED FIRST APPELLATE AUTHORITY, WE ARE OF THE VIEW THAT THE LE ARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY PASSED THE IMPUGNED ORDER IN THE LIGHT OF THE VARIOUS JUDGMENTS/DECISIONS PASSED BY THE HON'BLE H IGH COURTS AND TRIBUNALS BY HOLDING THAT IN THE PRESENT CASE THERE IS NO ALLEGATION OR THE CASE OF THE ASSESSING OFFICER THAT THE APPLICATION OF INCOME WAS MADE FOR PERSONAL OR FOR NON-CHARITABLE PURPOSES AS NOTHING OF THE SORT IS EVEN ALLEGED. HE FURTHER HELD THAT IT IS ALSO NOT ALLEGE D THAT THE FEE STRUCTURE WAS SUCH THAT IT UNDULY FAVOURED THE ASSESSEE AND I N FACT, IT IS AN ADMITTED FACT THAT FEES ARE NOT DENIED BY APPELLANT AND ARE GOVERNED BY THE JAMMU BOARD OF SECONDARY EDUCATION AND JAMMU UNIVERSITY. 9) KEEPING IN VIEW THE AFORESAID DISCUSSION, WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS PASS ED A WELL REASONED ORDER; THEREFORE, NO INTERFERENCE IS CALLED FOR. AC CORDINGLY, WE UPHOLD THE 8 I.T.A. NO. 410(ASR)/2012 ASSESSMENT YEAR: 2008-09 IMPUGNED ORDER DATED 27.08.2012 PASSED BY LEARNED C IT(A), JAMMU, AND DISMISS THE APPEAL FILED BY THE REVENUE. 10) IN THE RESULT, APPEAL FILED BY THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST AUGUST, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES: M/S DOGRA EDUCATIONAL & CULTURAL TRU ST, PATEL NAGAR, KATHUA 2. INCOME TAX OFFICER, WARD NO. 11, KATHUA 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, I.T.A.T.,AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.