DCIT, CHENNAI V. Sivaraja Ramalingam Trust, CHENNAI

ITA 415/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2489 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI IRS
• Assessee Lawyers: T BANUSEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A.NOS. 415 & 416/MDS/2013 ASSESSMENT YEARS : 2006-07 & 2007-08 THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-I(3), CHENNAI 34. VS. M/S. SIVARAJA RAMALINGAM TRUST, NO.29A, GANAPATHY STREET ROYAPETTAH, CHENNAI 600 014. PAN AAFTS0832D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N.BETGERI, IRS, JCI T RESPONDENT BY : SHRI T. BANUSEKAR, FCA DATE OF HEARING : 20 TH JUNE, 2013 DATE OF PRONOUNCEMENT : 20 TH JUNE, 2013 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THESE APPEALS ARE FILED BY THE REVENUE. THE RELEVA NT ASSESSMENT YEARS ARE 2006-07 AND 2007-08. THESE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER OF TH E COMMISSIONER OF INCOME-TAX(APPEALS)-I AT CHENNAI PA SSED ON 28.12.2012. THE APPEALS ARISE OUT OF THE ASSES SMENTS ITA 415 & 416/13 :- 2 -: COMPLETED UNDER SEC. 153C, READ WITH SEC.153A, READ WITH SEC.143(3) OF THE INCOME-TAX ACT, 1961. 2. IN THE APPEAL FILED BY THE REVENUE FOR THE ASSES SMENT YEAR 2006-07, THE FIRST GROUND RAISED BY THE ASSESS EE IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS FAILED TO NOTE THAT M/S. JEPPIAR EDUCATIONAL TRUST IS ASSESSED AS AN AOP AND IT HAS BEEN DENIED EXEMPTION UNDER SEC.11 IN TH E ASSESSMENT YEAR 2006-07 AND HENCE THE STATUS OF M/S . JEPPIAR EDUCATIONAL TRUST IS NOT A TRUST BUT ONLY A N AOP AND THEREFORE, THE PAYMENTS MADE BY THE ASSESSEE TO M/S . JEPPIAR EDUCATIONAL TRUST CANNOT BE EXCLUDED FROM T HE MEANING OF PERSON UNDER SEC.13 AND AS SUCH THE ASSESSING OFFICER HAS RIGHTLY DENIED EXEMPTION UNDE R SEC.11. 3. IN FACT, THIS ISSUE WAS CONSIDERED BY CHENNAI A BENCH OF THE TRIBUNAL IN THE CASE OF M/S. JEPPIAR EDUCATIONAL TRUST THROUGH ITS ORDER DATED 22.9.2006 PASSED IN ITA NO.3387/MDS/2004 FOR THE ASSESSMENT YEAR 200 1-02. ON THE SAME DAY, THE TRIBUNAL HAS PASSED OTHER ORDE RS ALSO IN IT(SS)A NOS. 51, 65/MDS/2005, 117 & 142/MDS/2003 . IN ITA 415 & 416/13 :- 3 -: ALL THESE ORDERS, THE TRIBUNAL HAS HELD THAT M/S. J EPPIAR EDUCATIONAL TRUST IS A TRUST AND THEREFORE, THERE WAS NO JUSTIFICATION IN DENYING EXEMPTION UNDER SEC.11. T HE SAID FINDING OF THE TRIBUNAL IN THOSE CASES DIRECTLY REF LECTS ON THE PRESENT ISSUE RAISED BEFORE US. THESE APPEALS HAVE BEEN FILED BY THE REVENUE ONLY ON THE GROUND THAT THOSE ORDERS OF THE TRIBUNAL HAVE NOT BEEN ACCEPTED BY THE DEPARTME NT AND NOT BECOME FINAL AND THOSE ORDERS OF THE TRIBUNAL A RE TAKEN IN APPEALS BEFORE THE HONBLE HIGH COURT OF MADRAS UNDER SEC.260A. 4. BUT IT IS TO BE SEEN THAT AS OF NOW THE ISSUE IS COVERED BY THE DECISIONS OF THE TRIBUNAL IN FAVOUR OF THE A SSESSEE AND AS SUCH, IT IS NOT POSSIBLE FOR US TO UPHOLD TH E ORDER OF THE ASSESSING OFFICER DENYING THE BENEFIT OF SEC.11 TO THE ASSESSEE. IN THIS CASE, THE COMMISSIONER OF INCOME - TAX(APPEALS) HAS BEEN RIGHTFULLY FOLLOWED THE BINDI NG DECISIONS OF THE JURISDICTIONAL TRIBUNAL. THEREFOR E, THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS POINT IS NECESSARILY TO BE UPHELD. THIS ISSUE IS ACCORDINGL Y DECIDED AGAINST THE REVENUE. ITA 415 & 416/13 :- 4 -: 5. THE SECOND ISSUE RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DELETING THE ADDIT ION MADE BY THE ASSESSING OFFICER AT ` 81,32,336/-, RELATING TO INTER-ENTITY BALANCES. THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS CLEARLY STATED THAT THERE WAS NO S UCH ALLEGED DISALLOWANCE BY THE ASSESSING OFFICER AND T HE CONFUSION AROSE BECAUSE OF GROUPING OF VARIOUS LEDG ER ACCOUNT IN THE FINANCIAL STATEMENTS. 6. THE LEARNED CHARTERED ACCOUNTANT APPEARING FOR T HE ASSESSEE, PRODUCED AT THE TIME OF HEARING, THE DETA ILS OF LEGDER ACCOUNT WHICH WERE PRODUCED BEFORE THE ASSES SING OFFICER HIMSELF. THE LEDGER ACCOUNT OF THE ASSESS EE-TRUST IN THE BOOKS OF ACCOUNT OF JEPPIAR COMPUTERS PVT. LTD. IS REFLECTED IN PAGE 6 OF THE PAPER BOOK. THE TOTAL O F THE DEBITS IN THE SAID LEDGER ACCOUNT COMES TO ` 81,42,336/-, WHICH IS THE AMOUNT POINTED OUT BY THE ASSESSING AU THORITY. IT IS THE TOTAL OF THE PAYMENTS AS WELL AS JOURNAL ENTRIES MADE BY JEPPIAR COMPUTERS PVT. LTD. IN THE LEDGER ACCOUNT OF THE ASSESSEE-TRUST. AGAINST THAT JEPPIAR COMP UTERS PVT. ITA 415 & 416/13 :- 5 -: LTD. HAD RECEIVED A PAYMENT OF ` 50,00,000/-. THE BALANCE IS REMAINING AS CLOSING BALANCE OF ` 31,42,336/-. THIS PAYMENT OF ` 50,00,000/- IS CORRESPONDINGLY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-TRUST AND IN THE L EDGER ACCOUNT OF JEPPIAR COMPUTERS PVT. LTD. THE CURRENT LIABILITY ACCOUNT IN THE BOOKS OF ACCOUNT OF JEPPIAR COMPUTER S PVT. LTD. HAS BEEN BALANCED AFTER TAKING INTO CONSIDERAT ION THE ABOVE SAID CLOSING BALANCE OF ` 31,42,336/-. IN THAT WAY, THE TOTAL CREDITS IN THE CURRENT LIABILITY ACCOUNT MAIN TAINED BY JEPPIAR COMPUTERS PVT. LTD. AMOUNTED TO ` 38,24,398/-. THE DEBIT SIDE TOTAL IS ` 35,15,703/-. THE DIFFERENTIAL CREDIT BALANCE IS ` 3,08,695/-. THIS NET CREDIT BALANCE IS IN TURN REFLECTED IN THE BALANCE-SHEET OF JEPPIAR COMPUTERS PVT. LTD. AS SUNDRY CREDITORS. THEREFORE, IT IS TO BE S EEN THAT THIS AMOUNT OF ` 31,42,336/- IS NOT AN UNEXPLAINED DIFFERENCE BETWEEN INTER-ENTITY BALANCES. BUT ON THE OTHER HA ND, IT IS THE TOTAL AMOUNT REFLECTED IN THE LEDGER ACCOUNT OF THE CONCERNED PARTIES. 7. THEREFORE, AS RIGHTLY POINTED OUT BY THE COMMISS IONER OF INCOME-TAX(APPEALS), THERE IS NO JUSTIFICATION I N ADDING ITA 415 & 416/13 :- 6 -: THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE-TRUST . THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THIS POINT IS CONFIRMED. THE APPEAL FILED BY THE REVENU E FOR THE ASSESSMENT YEAR 2006-07 IS NOT SUCCESSFUL. 8. NEXT, WE WILL CONSIDER THE APPEAL FILED BY THE R EVENUE FOR THE ASSESSMENT YEAR 2007-08. 9. THE FIRST ISSUE IS REGARDING EXEMPTION UNDER SEC .11 AND THE SECOND ISSUE IS ABOUT DELETION OF ADDITION OF ` 33,32,336/- RELATING TO INTER-ENTITY BALANCES. THE SE ISSUES WERE ALREADY RAISED BY THE REVENUE IN RESPECT OF TH E ASSESSMENT YEAR 2006-07. THE APPEAL RELATING TO TH E ASSESSMENT YEAR 2006-07 HAS BEEN DISPOSED OFF IN TH E ABOVE PARAGRAPHS CONFIRMING THE ORDER OF THE COMMIS SIONER OF INCOME-TAX(APPEALS). OUR FINDING WILL EQUALLY A PPLY TO THE GROUNDS RAISED IN THE PRESENT APPEAL AS WELL. THER EFORE, THIS APPEAL IS LIABLE TO BE DISMISSED. 10. IN RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ITA 415 & 416/13 :- 7 -: ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 20 TH OF JUNE, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR.O.K.NARA YANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 20 TH JUNE, 2013 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.