HEGGADE SEVA SANGH, MUMBAI V. INCOME TAX OFFICER (EXEMP)-1(3), MUMBAI

ITA 450/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6037 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 22-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAVLD
• Assessee Lawyers: HITESH P SHAH LD
• Keywords: Business income; Charitable institution; Opportunity of being heard; Additional evidence
• Section: 143(3); 11

Judgement Text

ITA NOS.450-453/MUM/2018 HEGGADE SEVA SANGH ASSESSMENT YEARS: 2009-10 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.450/MUM/2018 ( / ASSESSMENT YEAR:2009-10) & ./ I.T.A. NO.451/MUM/2018 ( / ASSESSMENT YEAR:2010-11) & ./ I.T.A. NO.452/MUM/2018 ( / ASSESSMENT YEAR:2011-12) & ./ I.T.A. NO.453/MUM/2018 ( / ASSESSMENT YEAR:2012-13) HEGGADE SEVA SANGH 01/RAJESH BHAVAN OPP. IND. COLONY, KANJUR MARG WEST MUMBAI-400 078. / VS. INCOME TAX OFFICER (E ) - 1(3) ROOM NO.511, 5TH FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI-400 012. ./ ./PAN/GIR NO. AAATH-1602-H ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : SHRI HITESH P. SHAH- LD. AR REVENUE BY : SHRI RAJESH KUMAR YADAV - LD.DR DATE OF HEARING : 19/09/2019 DATE OF PRONOUNCEMENT : 03/10/2019 / O R D E R PER BENCH 1. THE GRIEVANCE OF ASSESSEE TRUST, IN ALL THE APPE ALS FOR AYS 2009-10 TO 2012-13 STEM FROM THE FACT THAT THE ASSESSEE, IN THE OPINION OF ITA NOS.450-453/MUM/2018 HEGGADE SEVA SANGH ASSESSMENT YEARS: 2009-10 2012-13 2 LEARNED ASSESSING OFFICER, WAS HIT BY THE PROVISO T O SECTION 2(15) OF THE INCOME TAX ACT,1961 AND THEREFORE, NOT ENTITLED FOR EXEMPTION U/S 11 AS AVAILABLE TO A CHARITABLE TRUST. THE ASSESSMENT FOR ALL THE YEARS WAS FRAMED BY WAY OF SEPARATE ORDERS PASSED ON SAME DAT E I.E. 31/03/2015. 2. DURING ASSESSMENT PROCEEDINGS FOR AY 2009-10, IT TRANSPIRED THAT THE ASSESSEE WAS LETTING OUT PROPERTY FOR MARRIAGES AND OTHER FUNCTIONS. THOUGH THE ASSESSEE SUBMITTED THAT IT WAS NOT DOING ANY BUSINESS ACTIVITY BUT UTILIZING THE PREMISES FOR SOCIAL ACTI VITIES, HOWEVER, THE SAID PLEA WAS REJECTED IN VIEW OF THE FACT THAT TOTAL IN COME FROM HALL BOOKING AMOUNTED TO RS.10.44 LACS DURING THE YEAR AND THE P ERUSAL OF INCOME & EXPENDITURE MADE IT CLEAR THAT THE ASSESSEE WAS DOI NG REGULAR ACTIVITIES IN THE NATURE OF BUSINESS BY WAY OF LETTING OUT ITS HALL FOR MARRIAGES AND OTHER FUNCTIONS. THE ASSESSEE, IN THE OPINION OF LD . AO, WAS SYSTEMATICALLY GENERATING ITS INCOME THOUGH THESE A CTIVITIES IN A BUSINESS-LIKE MANNER. SINCE THE AGGERATE RECEIPTS, ON THIS ACCOUNT, EXCEEDED THE MONETARY LIMIT AS PRESCRIBED IN PROVIS O TO SECTION 2(15), INVOKING THE SAME, THE EXEMPTION U/S 11 WAS DENIED TO THE ASSESSEE AND THE INCOME WAS TREATED AS BUSINESS INCOME. THE DONATIONS RECEIVED IN THE EARMARKED FUNDS WAS ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. ANOTHER ADDITION OF RS.1.78 LACS WAS MADE ON ACCOUN T OF BOGUS GENERATOR EXPENDITURE PAID IN CASH. FINALLY, THE AS SESSEE WAS DENIED EXEMPTION U/S 11 AND THE INCOME WAS DETERMINED AT R S.31.61 LACS WHILE FRAMING ASSESSMENT U/S 143(3) R.W.S. 147 ON 3 1/03/2015. 3. THE LD. CIT(A) NOTED THAT NO MONEY WAS SPENT FOR THE OBJECTS OF THE TRUST DURING THE YEAR AND THE ONLY ACTIVITY BEI NG CARRIED DURING THE YEAR WAS LETTING OUT OF THE HALL. THE ASSESSEE WAS HELD TO BE PRIMARILY ITA NOS.450-453/MUM/2018 HEGGADE SEVA SANGH ASSESSMENT YEARS: 2009-10 2012-13 3 ENGAGED IN THE BUSINESS OF LETTING OUT OF AUDITORIU M AND THEREFORE, CLEARLY HIT BY PROVISO TO SECTION 2(15). RESULTANTLY, THE A SSESSMENT WAS CONFIRMED VIDE ORDER DATED 04/10/2017, WHICH HAS GI VEN RISE TO PRESENT APPEAL BEFORE US. 4. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL ALONG WITH APPEAL FORM NO.36: - BEING AGGRIEVED BY THE ORDER OF T HE INCOME TAX OFFICER (EXEMPTION) DATED 04/10/2017, THE ASSESSEE BEGS TO PREFER THIS APPEAL ON THE FOLLOWING GROUNDS. 1) THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED I N DENYING EXEMPTION UNDER SECTION 11 TO THE ASSESSEE U/S 13(8) OF THE INCOME TAX ACT, 1961; 2) THE LEARNED ASSESSING OFFICER IS ERRED IN ADDING THE COLLECTION OF BUILDING FUND OF RS. 28,08,182/- AND EDUCATION FUND RS.1,41,247/- WHICH WERE EARMARKED FOR CONSTRUCTION OF BUILDING FUND AND EDUCATIONAL PURPOSE. THE SAID EAR MARKED FUNDS HAVE BEEN CAPITALIZED IN THE BALANCE SHEET AND ARE REPRESENTED BY ASSETS. TH E RECEIPTS CANNOT BE TREATED AS REVENUE RECEIPTS; 3) LEARNED ASSESSING OFFICER ERRED IN TREATING THE AMOUNT INCURRED TOWARDS INSTALLATION COST OF GENERATOR OF RS 1,78,000/- AS UNEXPLAINED INVEST MENT. 4)THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN ADDING THE DIFFERENCE OF RS.16500/- IT HAS BEEN STATED THAT THE AMOUNT HAS BEEN ACCOUNTED FOR IN THE A.Y. 2010-11. HOWEVER, LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE (AR) PLEADED FOR ADMISSION OF ADDITIONAL GROUNDS AS WELL AS ADDITION AL EVIDENCES TO SUPPORT THE PLEA THAT THE ACTIVITY OF LETTING OUT B USINESS PREMISES WAS INCIDENTAL TO THE OBJECTS OF THE TRUST. IT HAS BEEN PLEADED THAT REQUIRED DETAILS COULD NOT BE SUBMITTED BY ASSESSEE DURING A SSESSMENT PROCEEDINGS FOR WANT OF PROPER REPRESENTATION IN TH E MATTER. OUR ATTENTION HAS ALSO BEEN DRAWN TO THE FACT THAT AUDI TORIUM WAS GIVEN EITHER FREE OF CHARGE OR AT CONFESSIONAL RATE AND T HEREFORE, THE SAID ACTIVITY WAS CHARITABLE IN NATURE. THE HALL WAS STA TED TO BE LET OUT SO AS TO MEET THE COST OF FURNISHING THE HALL. THE ADDITI ONAL GROUND RAISED BEFORE US READ AS UNDER: - 1) THE HON. CIT(A) AND THE LD.AO FAILED TO APPRECIA TE THE FACT THAT THE APPELLANT WAS REQUIRED TO FIRST PAY OFF THE LIABILITIES INCURRED FOR FURNISHING THE HALL. ITA NOS.450-453/MUM/2018 HEGGADE SEVA SANGH ASSESSMENT YEARS: 2009-10 2012-13 4 2) THE HON. CIT(A) AND THE LD.AO WERE NOT JUSTIFIED IN DENYING THE EXEMPTION BY IGNORING THE FACT THAT THE HALL WAS GIVEN FREE OF C HARGE OR AT A CONCESSIONAL RATE, CLEARLY ESTABLISHED THE BASIC INTENTION OF THE APPE LLANT THAT THEY WERE CARRYING ON CHARITABLE ACTIVITY. IN SUPPORT OF ADDITIONAL GROUNDS, ADDITIONAL EVIDEN CES HAVE ALSO BEEN PLACED ON RECORD. THE LD. DR OPPOSED ADMISSION OF A DDITIONAL GROUND / EVIDENCES, AT THIS STAGE. 5. AFTER CAREFUL CONSIDERATION, IT IS NOTED THAT TH E ASSESSEE TRUST WAS REGISTERED SINCE 1999 AND CLAIMING AS WELL AS ALLOW ED EXEMPTION AS CHARITABLE TRUST SINCE THEN. PRIMA FACIE , THERE IS NO CHANGE IN ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE. THE ONLY REASON TO DENY THE EXEMPTION WAS NEWLY INSERTED PROVISO TO SECTION 2(1 5) WHICH WOULD DENY EXEMPTION BEYOND CERTAIN THRESHOLD MONETARY LI MIT. KEEPING IN VIEW THESE FACTS AND SUBMISSIONS MADE BY LD. AR, WE ARE OF THE CONSIDERED OPINION THAT ADDITIONAL GROUNDS RAISED B EFORE US AND ADDITIONAL EVIDENCS BEING SUBMITTED BY ASSESSEE WOU LD BE VITAL TO ADJUDGE ASSESSEES CLAIM AND SHALL HAVE BEARING NOT ONLY IN THIS YEAR BUT ALSO IN SUBSEQUENT YEARS. IT IS ALSO NOTED THAT EVE N IF THE EXEMPTION WAS TO BE DENIED TO THE ASSESSEE, LD. CIT(A) HAS NOT DE ALT WITH ITEM-WISE ADDITIONS MADE BY LD. AO DURING ASSESSMENT PROCEEDI NGS AND SIMPLY CONFIRMED THE ASSESSMENT BY RESORTING TO PROVISO TO SECTION 2(15). WE ARE OF THE OPINION THAT EVEN IF THE EXEMPTION WAS T O BE DENIED, THE INCOME WAS TO BE COMPUTED IN ACCORDANCE WITH LAW. T HEREFORE, ON THE GIVEN FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO A DMIT THE ADDITIONAL GROUNDS AS WELL AS ADDITIONAL EVIDENCES. HENCE, BY SETTING-ASIDE IMPUGNED ORDER, WE DIRECT LD. AO TO REFRAME ASSESSM ENT DE NOVO. THE ITA NOS.450-453/MUM/2018 HEGGADE SEVA SANGH ASSESSMENT YEARS: 2009-10 2012-13 5 MATTER STAND RESTORED BACK TO THE FILE OF LD. AO FO R RE-ADJUDICATION, KEEPING ALL ISSUES OPEN, WITH A DIRECTION TO THE AS SESSEE TO SUBSTANTIATE HIS CLAIM. NEEDLES TO ADD THAT ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE GRANTED TO THE ASSESSEE. IT IS MADE CLEAR THAT I F THE EXEMPTION WAS TO BE DENIED TO THE ASSESSEE, THE INCOME SHALL BE COMP UTED IN ACCORDANCE WITH THE PROVISIONS OF LAW. RESULTANTLY, THE APPEAL MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. FACTS ARE PARI-MATERIA THE SAME IN AYS 2010-11 T O 2012-13 WHEREIN THE ASSESSEE HAS BEEN DENIED EXEMPTION IN, MORE OR LESS, SIMILAR MANNER AS WELL AS ON SIMILAR REASONING. THE ASSESSEE IS BEFORE US WITH SIMILAR GROUNDS OF APPEAL AS WELL AS ADDITI ONAL GROUNDS OF APPEAL / EVIDENCES. HENCE, THE MATTER OF ASSESSMENT OF ALL THESE 3 YEARS ALSO STAND RESTORED BACK TO THE FILE OF LD.AO FOR ADJUDI CATION DE NOVO ON SIMILAR LINES. 7. ALL THE APPEALS MAY BE TREATED AS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03RD OCTOBER, 2019. SD/- SD/- (PAWAN SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/10/2019 SR.PS, JAISY VARGHESE $%&'(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NOS.450-453/MUM/2018 HEGGADE SEVA SANGH ASSESSMENT YEARS: 2009-10 2012-13 6 2. !' / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 2 3!45 , 5 , / DR, ITAT, MUMBAI 6. 3 789 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.