DCIT, Trichy V. The Society of St.Joseph's College Jesuit Residence, Trichy

ITA 432/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4614 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B. BEDI, J.M. AND SHRI N.S. SAINI, AM .. I.T.A. NO. 432/MDS/2011 [ASSESSMENT YEAR : 2007-08] THE DEPUTY COMMISSIONER OF INCOME TAX COMPANY CIRCLE - II, TRICHY 620 001. VS THE SOCIETY OF ST. JOSEPHS COLLEGE JESUIT RESIDENCE CONVENT ROAD, MELAPUDUR, BISHOP HOUSE, TRICHY 620 001. (PAN NO. AABTS 7837 C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G. BASKAR DEPARTMENT BY : SHRI SHAJI P. JACOB, SR. DR O R D E R PER N.S. SAINI, A.M :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER PASSED BY THE LD. CIT(A), TIRUCHIRAPALLY DATED 28.1 2.2010. PAGE 2 OF 5 I.T.A. NO. 432/MDS/2011 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,39,67,316 /- REPRESENTING RENTAL INCOME RECEIVED BY THE SOCIETY TREATED AS BU SINESS INCOME AND BROUGHT TO TAX BY THE ASSESSING OFFICER. THE L D. CIT(A) HAS FAILED TO NOTICE THAT THE ASSESSEE SOCIETY DID NOT MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR THE RENTAL INCOME AS PER THE T ERMS OF PROVISIONS OF SECTION 11(4) AND 11(4A) OF THE INCOM E-TAX ACT, 1961 [IN SHORT, THE ACT]. THEREFORE, THE LD. CIT(A) OUG HT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. THE LD. CIT(A ) HAS FAILED TO APPRECIATE THAT THE FACTS OF THE CASE ARE DISTINGUI SHABLE FROM THE FACTS OF THE CASE OF THANTHI TRUST, RELIED ON BY TH E LD. CIT(A). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT IN THE INSTANT CASE, THE ASSESSING OF FICER DENIED EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE IN RESP ECT OF RENTAL INCOME EARNED BY IT FROM SHOPPING COMPLEX OF RS. 1 ,39,67,316/- ON THE GROUND THAT LETTING OUT OF SHOPPING COMPLEX WAS NOT A BUSINESS INCIDENTAL TO THE OBJECTS OF THE TRUST AND ALSO THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT OF THIS BUSINESS. PAGE 3 OF 5 I.T.A. NO. 432/MDS/2011 4. ON APPEAL, THE LD. CIT(A) ALLOWED RELIEF TO THE ASSESSEE ON THE GROUND THAT IF INCOME FROM BUSINESS IS UTILIZED FOR THE OBJECTS OF THE TRUST, THEN SUCH BUSINESS IS A BUSINESS WHICH IS IN CIDENTAL TO THE OBJECTS OF THE TRUST, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. D.R. CONTENDS THAT AS THE ASSESSEE HAS N OT MAINTAINED SEPARATE BOOKS OF ACCOUNT FOR ITS BUSINESS OF LETTI NG OUT OF PROPERTIES, THE LD. CIT(A) WAS NOT JUSTIFIED IN ALL OWING RELIEF IN VIEW OF THE PROVISIONS OF SECTIONS 11(4) AND 11(4A) OF T HEN ACT. THE LD. D.R. ALSO SUBMITTED THAT LETTING OUT OF PROPERTY BY THE ASSESSEE CONSTITUTES A BUSINESS IN THE HANDS OF THE ASSESSEE . HOWEVER, THE LD. D.R. COULD NOT GIVE ANY REASON FOR HIS ABOVE CO NTENTION THAT LETTING OUT OF PROPERTY CONSTITUTES BUSINESS. 6. ON THE OTHER HAND, THE LD. A.R. SUBMITTED THAT T O MAKE AN INVESTMENT IN IMMOVABLE PROPERTIES WAS AN ALLOWABLE MODE OF INVESTMENT UNDER THE PROVISIONS OF SECTION 11(5) OF THE ACT AND THE ASSESSEE EARNED RENTAL INCOME BECAUSE OF THE SAID A LLOWABLE PAGE 4 OF 5 I.T.A. NO. 432/MDS/2011 INVESTMENT AND DID NOT CARRY OUT ANY BUSINESS IN RE SPECT OF THE SAME. 7. WE FIND THAT THE PROVISIONS OF SECTIONS 11(4) AN D 11(4A) OF THE ACT ARE APPLICABLE WHEN THE ASSESSEE CARRIED ON ANY BUSINESS. BUSINESS IN COMMON PARLANCE MEANS AN ORGANIZED AN D SYSTEMATIC ACTIVITY CARRIED OUT REGULARLY BY A PERSON WITH THE MOTIVE TO EARN INCOME. IN THE INSTANT CASE, WE FIND THAT THE ASSE SSEE HAS MADE INVESTMENT IN IMMOVABLE PROPERTY AND BECAUSE OF THE SAID INVESTMENT, IT EARNED RENTAL INCOME. NO MATERIAL H AS BEEN BROUGHT BEFORE US BY THE REVENUE TO SHOW THAT THE ASSESSEE CARRIED ON ANY ORGANIZED AND SYSTEMATIC ACTIVITY FOR EARNING RENTA L INCOME. IN OUR CONSIDERED OPINION, MERELY LETTING OUT PROPERTY AS OWNER THEREON, ON MONTHLY RENTAL, DOES NOT CONSTITUTE BUSINESS I N COMMON PARLANCE. THEREFORE, IN OUR CONSIDERED OPINION, PR OVISIONS OF SECTION 11(4) AND 11(4A) OF THE ACT ARE NOT ATTRACT ED IN THIS CASE. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. PAGE 5 OF 5 I.T.A. NO. 432/MDS/2011 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT 05-08-2011. SD/- SD/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 5 TH AUGUST, 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE