ARYA SAMAJ TRUST , KAPURTHALA V. DEPUTY COMMISSIONER OF INCOME TAX,CPC, BANGALORE

ITA 443/ASR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7675 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 07-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M.S. PARMAR
• Keywords: Charitable institution; TDS; Set aside
• Section: 12; 11; 12A; 12AA; 143(1); 143(2); 139(4)

Judgement Text

P A G E | 1 ITA NO. 443/ASR./2018 A.Y. 2015-16 ARYA SAMAJ TRUST VS. DCIT, CPC IN THE INCOME TAX APPELLATE TRIBUNAL CAMP BENCH AT JALANDHAR BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 443/ASR./2018 (ASSESSMENT YEAR: 2015-16) ARYA SAMAJ TRUST, RAILWAY ROAD, OUTSIDE GRAIN MARKET, KAPURTHALA. VS. DCIT, CPC, BANGALORE. PAN AADTA9351M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI Y.K. SUD, A.R. RESPONDENT BY: SHRI M.S. PARMAR, D.R DATE OF HEARING: 15.01.2019 DATE OF PRONOUNCEMENT: 05.04.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE TRUST FOR A.Y. 2015-16 IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-2, JALANDHAR, DATED 29.04.2017, WHICH IN TURN ARISES FROM THE INTIMATIO N UNDER SEC. 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT IT A CT), DATED 27.03.2017. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING T HE ORDER PASSED BY AO U/S 143(1) OF INCOME TAX ACT, 1961. P A G E | 2 ITA NO. 443/ASR./2018 A.Y. 2015-16 ARYA SAMAJ TRUST VS. DCIT, CPC 2. THAT THE CIT(A) FAILED TO APPRECIATE THAT THE APPELL ANT HAD MADE AN APPLICATION BEFORE THE CIT(A) FOR REGISTRATION U/S 12A WHICH WAS LYING PEND ING WITH THE CIT(E) AND THEREFORE THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S 11 OF THE IN COME TAX ACT. 3. THAT THE CIT(A) HAS WRONGLY SUSTAINED THE ACTION O F THE AO OF ASSESSING THE GROSS TOTAL INCOME OF RS. 599076/- WITHOUT ALLOWING THE EXPENSES AMOUNTIN G TO RS. 5954491/- CLAIMED BY THE ASSESSEE IN INCOME & EXPENDITURE ACCOUNT. 4. THAT THE ORDERS OF CIT(A) AND AO ARE AGAINST THE L AW AND FACTS OF THE CASE. 2. BRIEFLY STATED, THE ASSESSEE TRUST HAD E-FILED ITS RETURN OF INCOME UNDER SEC. 139(4) ON 31.03.2016 DECLARING NIL INCOM E. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED BY THE C ENTRALIZED PROCESSING CENTRE, BANGALORE (FOR SHORT CPC) UNDE R SEC. 143(1) OF THE IT ACT AND THE ENTIRE RECEIPTS OF THE ASSESSEE TRUS T WERE BROUGHT TO TAX WITHOUT ALLOWING ANY DEDUCTION IN RESPECT OF THE OU TGOINGS AND PLACEMENT OF FUNDS CLAIMED BY THE ASSESSEE IN ITS R ETURN OF INCOME. ON THE BASIS OF THE AFORESAID FACTS THE INCOME OF T HE ASSESSEE TRUST CHARGEABLE TO TAX WAS WORKED OUT BY THE CPC AT RS. 5,99,080/- AND A CONSEQUENTIAL DEMAND OF TAX AND INTEREST OF RS. 2,0 6,398/- (AFTER ADJUSTING THE TDS OF RS. 29,567/-) WAS RAISED IN TH E HANDS OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) NOT FINDING FAVOUR WITH THE CONTENTION ADVANCED BY THE ASSESSEE THAT ITS ENTIRE RECEIPTS W ITHOUT CONSIDERING THE OUTGOINGS HAD WRONGLY BEEN BROUGHT TO TAX BY TH E CPC WHILE SUMMARILY PROCESSING ITS RETURN OF INCOME UNDER SEC . 143(1), DECLINED TO ACCEPT THE SAME. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUT HORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE SU BMITTED THAT EVEN IN THE ABSENCE OF REGISTRATION UNDER SEC. 12AA WHICH W AS APPLIED FOR BY THE ASSESSEE TRUST, IT STOOD ENTITLED TOWARDS CLAIM OF EXPENSES INCURRED FOR UNDERTAKING ITS ACTIVITIES. IT WAS ALS O SUBMITTED BY THE LD. P A G E | 3 ITA NO. 443/ASR./2018 A.Y. 2015-16 ARYA SAMAJ TRUST VS. DCIT, CPC A.R THAT THE DISALLOWANCE OF THE EXPENSES AGGREGATI NG TO RS. 5,95,449/- AS CLAIMED BY THE ASSESSEE IN THE COURSE OF PROCESSING OF ITS RETURN OF INCOME UNDER SEC. 143(1) WAS NOT IN A CCORD WITH THE SETTLED POSITION OF LAW. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDER OF THE CIT(A) AND THE IN TIMATION ISSUED BY THE CPC, BANGALORE UNDER SEC. 143(1) OF THE IT ACT. ADMITTEDLY, THE ASSESSEE TRUST WHICH DURING THE YEAR HAD GROSS RECE IPTS OF RS. 5,99,076.86, HAD AFTER CLAIMING DEDUCTION OF CERTAI N OUTGOINGS AND EXPENSES AGGREGATING TO RS. 5,95,449/- WHICH WERE C LAIMED TO HAVE BEEN APPLIED FOR ITS CHARITABLE PURPOSE REFLECTED I TS BALANCE INCOME AT RS. 3,628/-, WHICH IN ITSELF WAS EXCLUDED FROM ITS TOTAL INCOME UNDER SEC. 11 OF THE IT ACT. THE CPC, BANGALORE WHILE PRO CESSING THE RETURN OF THE ASSESSEE UNDER SEC. 143(1) HAD BROUGHT THE E NTIRE AMOUNT OF RECEIPTS OF RS. 5,99,077/- TO TAX IN THE HANDS OF T HE ASSESSEE. ON A PERUSAL OF THE INTIMATION ISSUED BY THE CPC, IT STA NDS REVEALED THAT THE CLAIM OF THE ASSESSEE WHO HAD SOUGHT EXCLUSION OF THE RECEIPTS TO THE EXTENT OF RS. 5,95,449/- WHICH WERE STATED TO H AVE BEEN UTILIZED FOR THE CHARITABLE AND RELIGIOUS PURPOSES IN INDIA, WAS SUMMARILY REJECTED. FURTHER, THE BALANCE AMOUNT OF RS. 3,628/ - WHICH WAS SOUGHT BY THE ASSESSEE TO BE EXCLUDED FROM ITS TOTA L INCOME UNDER SEC. 11(1)(A) WAS ALSO NOT ACCEPTED IN THE COURSE OF THE PROCESSING OF THE RETURN OF INCOME UNDER SEC. 143(1) OF THE IT ACT. I N THE BACKDROP OF THE AFORESAID FACTS THE CPC, BANGALORE HAD BROUGHT THE ENTIRE RECEIPTS OF RS. 5,99,077/- TO TAX IN THE HANDS OF THE ASSESS EE. P A G E | 4 ITA NO. 443/ASR./2018 A.Y. 2015-16 ARYA SAMAJ TRUST VS. DCIT, CPC 7. WE ARE OF THE CONSIDERED VIEW THAT AS IS DISCERN IBLE FROM THE GROUNDS OF APPEAL, THE ASSESSEE TRUST HAD THOUGH FI LED AN APPLICATION BEFORE THE CIT(EXEMPTION) FOR REGISTRATION UNDER SE C. 12A, HOWEVER, IT WAS NOT GRANTED THE REGISTRATION DURING THE RELEVAN T PERIOD. IN OUR CONSIDERED VIEW AS THE ASSESSEE TRUST IS NOT REGIST ERED UNDER SEC. 12AA, THEREFORE, THE PROVISIONS OF SEC. 11 AND SEC. 12 WOULD NOT BE APPLICABLE IN RELATION TO ITS INCOME FOR THE YEAR U NDER CONSIDERATION. HOWEVER, THE INCOME OF THE ASSESSEE IN THE ABSENCE OF REGISTRATION UNDER SEC. 12AA HAD TO BE WORKED OUT IN A COMMERCIA L MANNER, AND AS SUCH ITS ENTIRE RECEIPTS COULD NOT HAVE BEEN BRO UGHT TO TAX BY WAY OF A SUMMARY PROCESSING OF THE RETURN OF INCOME UND ER SEC. 143(1) OF THE IT ACT. INSOFAR THE SCOPE OF PROCESSING OF A RE TURN OF INCOME UNDER SEC. 143(1)(A) OF THE IT ACT IS CONCERNED, WE FIND THAT THE SAME IS RESTRICTED TO TWO ASPECTS VIZ. (I) MAKING ADJUSTMEN TS AS REGARDS ARITHMETICAL ERRORS IN THE RETURN OF INCOME; OR (II ) MAKING ADJUSTMENTS IN RESPECT OF AN INCORRECT CLAIM WHICH IS APPARENT FROM ANY INFORMATION DISCERNIBLE FROM THE RETURN OF INCOME. WE THOUGH ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF THE ASSE SSEE TRUST BEING REGISTERED UNDER SEC. 12AA OF THE IT ACT THE PROVIS IONS OF SEC. 11 AND SEC. 12 WOULD NOT BE APPLICABLE IN RELATION TO ITS INCOME FOR THE YEAR UNDER CONSIDERATION, HOWEVER, AT THE SAME TIME ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN B Y THE LOWER AUTHORITIES THAT THE ENTIRE RECEIPTS OF RS. 5,99,07 6.86 OF THE ASSESSEE TRUST WAS LIABLE TO BE BROUGHT TO TAX WITHOUT CONSI DERING THE OUTGOINGS/EXPENSES INCURRED BY IT. IN FACT, A PERUS AL OF THE NATURE OF THE EXPENSES INCURRED BY THE ASSESSEE TRUST DURING THE YEAR VIZ. (I) ADVERTISEMENT; (II) BANK CHARGES; (III) GENERAL EXP ENSES; (IV) PRINTING AND STATIONERY; (V) REPAIR AND MAINTENANCE; (VI) ST AFF SALARY; (VII) UNIFORM EXPENSES; (VIII) WATER AND SEWERAGE CHARGES ; AND (IX) WHITE WASHING EXPENSES, REVEALS THAT THE SAME ARE EXPENSE S WHICH CAN P A G E | 5 ITA NO. 443/ASR./2018 A.Y. 2015-16 ARYA SAMAJ TRUST VS. DCIT, CPC SAFELY BE HELD TO HAVE BEEN INCURRED BY THE ASSESSE E FOR ITS VERY EXISTENCE AND IN FURTHERANCE OF ITS OBJECTS. BE THA T AS IT MAY, WE ARE OF THE CONSIDERED VIEW THAT DESPITE NON APPLICABILITY OF THE PROVISIONS OF SEC. 11 AND SEC. 12 THE INCOME OF THE ASSESSEE WAS TO BE WORKED OUT IN A COMMERCIAL MANNER. IN CASE THE REVENUE WAS OF THE VIEW THAT THE EXPENSES CLAIMED BY THE ASSESSEE WERE NOT LIABLE TO BE ALLOWED THEN THE RECOURSE AVAILABLE TO THEM WAS TO HAVE SUBJECTE D THE CASE OF THE ASSESSEE FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE IT ACT. WE THUS NOT BEING ABLE TO ACCEPT THE DECLINING OF THE ASSESSES CLAIM OF EXPENSES BY THE CPC, BANGALORE, VIDE ITS INTIMATION UNDER SEC. 143(1) ON PROCESSING OF THE RETURN OF INCOME OF THE ASSESS EE TRUST FOR THE YEAR UNDER CONSIDERATION, THUS SET ASIDE THE ORDER OF TH E CIT(A) WHO HAD UPHELD THE SAID ADJUSTMENT CARRIED OUT BY THE CPC, BANGALORE AND DELETE THE ADDITION OF RS. 5,95,449/-. 8. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/04/2019 SD/- SD/- ( N.K. SAINI) (RAVISH SOOD) VICE PRESIDENT JUDICIAL ME MBER PLACE : CHANDIGARH; DATED 05.04.2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. DR, ITAT, CAMP BENCH, JALANDHAR 6. / GUARD FILE. //TRUE COPY// P A G E | 6 ITA NO. 443/ASR./2018 A.Y. 2015-16 ARYA SAMAJ TRUST VS. DCIT, CPC / BY ORDER, / (DY./ASSTT. REGISTRAR) & ' /ITAT, CAMP. BENCH, JALANDHAR