The Assistant Commissioner of Income Tax, Jammu V. The Nitco Logistic Pvt., Ltd, Jammu

ITA 424/ASR/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95144 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 07-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K V K SINGH
• Assessee Lawyers: JOGINDER SINGHCA
• Keywords: Charitable institution; Tax effect
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (JAMMU CAMP; JAMMU ) BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S.KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NOS. 415 & 424(ASR)/2015 ASSESSMENT YEARS: 2011-12 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, JAMMU. VS. M/S. NITCO LOGISTIC PVT. LTD., NITCO LANE, TALLAB TILLOO, JAMMU. PAN: AAACN6345A (APPELLANT) (RESPONDENT) APPELLANT BY: SH. K.V.K SINGH (DR .) RESPONDENT BY: SH. JOGINDER SINGH(CA.) DATE OF HEARING: 04.12.2015 DATE OF PRONOUNCEM ENT: 31.12.2015 ORDER PER T.S.KAPOOR (A.M): THESE ARE TWO APPEALS FILED BY THE REVENUE AGAIN ST THE SEPARATE ORDERS OF LEARNED CIT(A), JAMMU DATED 29.05.2015 AND 14.4.201 5. THE ISSUE INVOLVED IN ITA NO. 415 (ASR)/2015 IS REGARDING AN APPLICATI ON MADE BY ASSESSEE FOR RECTIFICATION U/S 154 WHICH WAS REJECTED BY ASSESSI NG OFFICER AND FOR WHICH THE LEARNED CIT(A) HAS ALLOWED THE RELIEF. WHEREAS ISSUE INVOLVED IN ITA 424(ASR)/2015 IS DIFFERENT AND WHICH RELATES TO THE GRIEVANCE OF REVENUE WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD ALLOWE D RELIEF ON ACCOUNT DHARMARTH RECEIPTS. THE REVENUE IN ITA NO.424(ASR)/ 2015 HAS TAKEN FOLLOWING GROUNDS OF APPEAL. 2. ITA NOS.4 15 & 424 (ASR)/2015 ASST. YEA R 2011-12 1. WHETHER THE COMMISSIONER OF INCOME TAX(A) WAS J USTIFIED IN ALLOWING THE RELIEF ON ACCOUNT OF DHARMARTH RECEIPTS AS THE RECEIPTS ARE R ECEIVED NOT BY A TRUST CREATED FOR THE PURPOSE OF CHARITY IN THE NATURE BUT BY A COMPANY D OING BUSINESS AND TRADE. SO THESE RECEIPTS WERE TREATED AS INCOME RECEIVED DURING NORMAL COURS E OF BUSINESS AND HENCE ADDED TO THE RETURNED INCOME OF THE ASSESSEE. 2. WHETHER THE COMMISSIONER OF INCOME TAX(A) WAS JU STIFIED IN ALLOWING THE RELIEF ON ACCOUNT OF DHARMARTH RECEIPTS AS NO EVIDENCE WHATSO EVER HAS BEEN PRODUCED AND BROUGHT ON RECORDS TO PROVE THAT THESE RECEIPTS WERE ACTUALLY SPENT ON CHARITY. IT IS NOT KNOWN FROM RECORDS AS TO FOR WHAT PURPOSE THESE RECEIPTS HAVE BEEN USED. IT DID NOT PROVE THAT THESE RECEIPTS WERE ACTUALLY USED FOR THE PURPOSE MEANT A ND WAS NOT USED FOR THE PURPOSE OF THE COMPANY AND ITS EMPLOYEES. 2. AT THE OUTSET THE LEARNED AR INVITED OUR ATTEN TION TO TAX LIABILITY IN ITA NO. 415(ASR)/2015 AND FILED A CHART SHOWING THAT TH E TAX INVOLVED ON THE ISSUES UNDER DISPUTE WORKS OUT TO BE 395219/- WHICH WAS BELOW THE MONETARY LIMIT OF RS. 4 LACS FIXED BY INSTRUCTION 5 /2014 DATED 10 TH JULY,2014. THE LEARNED AR SUBMITTED THAT THE CBDT VIDE THIS IN STRUCTION HAS INCREASED THE MONETARY LIMIT FOR FILING APPEAL BEFORE THE TRI BUNAL AND LIMIT HAS BEEN RAISED FROM RS.3 LACS TO 4 LACS VIDE INSTRUCTION DA TED 10 TH JULY, 2014. HE SUBMITTED THAT APPEAL BY REVENUE IN THIS CASE WAS F ILED IN THE YEAR 2015 AND THEREFORE, THE REVISED LIMIT IS APPLICABLE. 3. THE LEARNED DR CONCEDED THAT THE TAX EFFECT IN THIS CASE WAS LESS THAN RS. 4 LACS. 4. WE HAVE HEARD THE RIVAL PARTIES & HAVE GONE THRO UGH THE MATERIAL PLACED ON RECORD. WE FIND THAT VIDE INSTRUCTION NO. 21 DAT ED 10 TH DECEMBER, 2015 ISSUED BY CBDT THE MONETARY LIMIT HAS BEEN FURTHER INCREASED FROM RS.4 LACS TO RS. 10 LACS AND THUS THE AMOUNT OF TAX INVOLVED IN THIS APPEAL IS LESS THAN 3. ITA NOS.4 15 & 424 (ASR)/2015 ASST. YEA R 2011-12 RS.10 LACS, THEREFORE, THE REVENUE WAS PRECLUDED FR OM FILING THIS APPEAL. IN VIEW OF THE ABOVE, THE APPEAL IN ITA NO. 415(ASR)/2 015 IS DISMISSED. 5. AS REGARDS ITA NO.424(ASR)/2015, THE LEARNED AR SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY VARIOUS O RDERS OF TRIBUNAL WHEREIN SIMILAR ISSUES HAS BEEN DECIDED IN FAVOUR OF ASSESS EE AND IN THIS RESPECT HE INVITED OUR ATTENTION TO ORDERS OF TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF, FOR ASST. YEAR 2009-10 AND 2010 -11 DECIDED BY TRIBUNAL VIDE ITS ORDER DATED 5.9.2014 AND 16.1.2015. THE LEARNED AR IN THIS RESP ECT INVITED OUR ATTENTION TO ORDER IN ITA NO. 437(ASR)/2012 FOR ASST. YEAR 20 09-10. THE LEARNED DR CONCEDED THAT THE ISSUE WAS COVERED IN FAVOUR OF AS SESSEE. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ONLY ISSUE RAISE D BY REVENUE IS REGARDING ITS GRIEVANCE WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD ALLOWED THE RELIEF ON ACCOUNT OF RECEIPTS OF DHARMARTH. THE REV ENUE IS AGGRIEVED AS BECAUSE OF THE FACT THAT ASSESSEE WAS NOT A TRUST A ND WAS A COMPANY AND MOREOVER THE ASSESSEE HAD ITSELF NOT SPENT THE AMOU NT COLLECTED AS DHARMARTH ON CHARITABLE ACTIVITIES. WE FIND THAT THESE TWO IS SUES HAS ALREADY BEEN CONSIDERED BY THE HONBLE TRIBUNAL IN ITA NO. 437(A SR)/2012 & ITA 344(ASR)/2014 FOR ASST. YEAR 2009-10 & 2010-11. FOR THE SAKE OF CONVENIENCE THE FINDINGS OF TRIBUNAL AS CONTAINED IN PARA 10 TO 13 IN ITA 437(ASR)/2012 ARE REPRODUCED BELOW. 10. THE ONLY DISPUTE BEFORE US IS TO WHETHER THE R ECEIPTS WERE, IN FACT, DHARMARTH RECEIPTS. THE ASSESSEES STAND IN THIS RE GARD IS THAT IT AS COLLECTING 4. ITA NOS.4 15 & 424 (ASR)/2015 ASST. YEA R 2011-12 DHARMARTH IN GRS AND GATE PASSES, AS PART OF CHARIT Y; THAT THIS DHARMARTH COLLECTED EVERY MONTH WAS BEING PASSED ON TO A CHAR ITABLE TRUST; AND THAT THE RECEIPT WAS NEITHER SHOWN AS INCOME, NOR AS EXPENDI TURE. THIS STAND OF THE ASSESSEE IS ENTIRELY IN LINE WITH ITS STAND FOR THE EARLIER YEARS, RIGHT FROM A.Y.2001-02 TO A.Y.2008-09. FOR ALL THESE YEARS, IN SCRUTINY ASSESSMENTS FRAMED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (F OR SHORT THE ACT), BUT FOR A.Y.2002-03, FOR WHICH YEAR, SUCH ASSESSMENT WAS FR AMED UNDER SECTION 143(1) OF THE ACT, THE DEPARTMENT HAS NEVER DISPUTED SUCH COLLECTION IN GRS AND GATE P ASSES AND THE FACT THAT IT WAS BEING PASSED ON TO A CHARITABLE TRUST. THE OBJECTION OF THE AUTHORITIES BELOW IN THIS REGARD, RAISED ONLY FOR T HE FIRST TIME, DURING THE YEAR 2009-10, IS THAT THE RECEIPT IS NOT BY A CHARITABLE TRUST, BUT BY THE AS SESSEE COMPANY, WHICH IS DOING BUSINESS AND TRADING. THIS, ACCORDING TO US, IS NOT AT ALL ACCEP TABLE. ONCE THE RECEIPTS ARE ROUTED AS SUCH TO A CHARITABLE TRUST BY THE ASSESSEE COMPANY AND THE NA TURE OF THAT TRUST HAS NOT BEEN QUESTIONED, WE HOLD THAT THE RECEIPTS ARE DHARMARTH RECEIPTS AND N OTHING ELSE. THE CONSISTENT ACCEPTANCE OF SUCH RECEIPTS BY THE DEPARTMENT ITSELF, FOR AS MANY AS E IGHT EARLIER ASSESSMENT YEARS MANDATES THE ACCEPTANCE OF SUCH RECEIPTS-OF THE ASSESSEE DURING THE UNDER CONSIDERATION ALSO AS 'DHARMARTH RECEIPTS, WHEN NO CHANGE FACTS HAS BEEN POINTED OUT BY THE AUTHORITIES TO HAVE COME ABOUT DURING THE YEAR UNDER CONSIDERATION: 11. THAT DHARMARTH RECEIPTS ARE NOT TAXABLE, HAS B EEN LAID DOWN LAW BY THE HONBLE SUPREME COURT, WAY BACK IN THE YEAR 1979, I N THE CASE OF CIT VS. BIJLI COTTON MILLS (P) LTD. , (1979) 116 ITR 60 (SC). CLAUSE NO. 30 OF TH E MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY READS AS FOLLOWS: 30. TO DONATE ORSUBSCRIBE MONEY FOR ANY NATIONAL, CHARITABLE, BENEVOLENT OR PUBLIC PURCHASE OR TO INSTITUTIONS AND FUNDS FOR PUBLIC BENEFIT OR WHICH HAVE ANY MORAL AND OTHER CLAIM ON COMPANY OR ITS ME MBERS, EMPLOYEES OR CUSTOMERS AND TO PROMOTE SUCH INSTITUTIONS AND F INDS AND TO GIVE CHARITIES AND DONATIONS. 12. THIS CLAUSE OF MEMORANDUM AND ARTICLES OF A SSOCIATION OF THE ASSESSEE COMPANY CLEARLY SHOWS THAT ONE OF THE OBJECTIVES OF THE ASSESSEE COMPANY IS CHARITY. THE LEARNED CIT(A) HAS REMAINED OBLIVIOUS OF THIS SPECIFIC CLAUSE IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE ASSESSEE COMPANY, WHILE HOLDING THAT THE APPELLANT COULD NOT ESTABLISH BEFORE ME THAT THE OB JECTIVES OF THE COMPANY AS PER MEMORANDUM AND ARTICLES OF ASSOCIATION WAS ALSO TO CARRY OUT CHARI TY. 13. THEREFORE, FINDING MERIT IN THIS GRIEVANCE RAI SED BY THE ASSESSEE, THE SAME IS HEREBY ACCEPTED. THE IMPUGNED ORDER IN THIS REGARD IS CANC ELLED AND THE ADDITION MADE IS DELETED. 7. THE FACTS OF THE PRESENT APPEAL ARE PARI-MATERIA TO THE EARLIER YEARS WHEREUPON TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE THEREFORE, WE 5. ITA NOS.4 15 & 424 (ASR)/2015 ASST. YEA R 2011-12 DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED C IT(A) WHO HAD FOLLOWED THE ORDERS OF TRIBUNAL TO ALLOW THE RELIEF TO THE ASSE SSEE. 8. IN VIEW OF THE ABOVE THE APPEAL FILED BY THE ASS ESSEE IN ITA 424(ASR)/2015 IS ALSO DISMISSED. 9. IN NUTSHELL, THE APPEALS FILED BY THE REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2015. SD/- SD/- (A.D.JAIN) (T.S.KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.12.2015 PK/PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 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.