ITO (E) 1(1), MUMBAI V. BRAHMAN SABHA MALAD, MUMBAI

ITA 4693/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2706 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S V MARATHE
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

, , SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, SMC MUMBAI , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.4693/MUM/2015 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER (EXEMPTION) 1(1) ROOM NO. 508, 5 TH FLOOR PIRAMAL CHAMBER, LALBAUG MUMBAI 400012 / VS. M/S. BRAHMAN SABHA MALAD BRAHMAN SABHA MARG OPP. MALAD POLICE STATION MALAD (W), MUMBAI 40064 ( / REVENUE) ( /ASSESSEE) P AN. NO. AAATB0053A ! ' #$ / DATE OF HEARING : 15/07/2016 ' #$ / DATE OF ORDER: 15/07/2016 / REVENUE BY SHRI RAJESH OJHA, JCIT / ASSESSEE BY SHRI S.V. MARATHE ITA NO.4693/MUM/2015 M/S. BRAHMAN SABHA MALAD 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 12/06/2016 OF LD. COMMISSIONER OF INCOME TAX, MUMBAI HOLDING THAT THE ASSESSEE IS NOT DOING ANY T RADE, COMMERCE OR BUSINESS AS PER THE PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AND FURTHER ERRED IN GRANTING EXEMPTION UNDER SECTION 11 OF THE ACT. 2. DURING HEARING SHRI RAJESH OJHA, LEARNED D.R. ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, SHRI S.V. MARATHE, LEARN ED COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION AR RIVED AT IN THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE DECISIONS MENTIONED IN THE IMPUGNED ORDER. THE LEAR NED COUNSEL EXPLAINED THAT THEY CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT AND WAS WRONGLY DISALLOWED BY THE ASSESSING OFFICER AND THE REGISTRATION CANCELLED BY THE LEARNED DIT (E) WAS RESTORED BY THE TRIBUNAL. THE L EARNED COUNSEL EXPLAINED THE NATURE OF THE ACTIVITIES OF T HE ASSESSEE BY CLAIMING THAT THE SAME ARE CHARITABLE I N NATURE. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. IF THE OBSERVATIO N MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO T HE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MAT ERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, I F IND THAT ITA NO.4693/MUM/2015 M/S. BRAHMAN SABHA MALAD 3 THE ASSESSEE DECLARED NIL INCOME IN ITS RETURN FILE D ON 11.09.2009, WHILE CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. IN VIEW OF THE AMENDMENT TO SECTION 2(15) OF THE ACT, WHICH DEFINES CHARITABLE PURPOSE AND ALSO IN VIEW OF THE REGISTRATION UNDER SECTION 12A, HAVING BEEN WIT HDRAWN. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM WITH RESPECT TO EXEMPTION UNDER SECTION 11, MADE BY THE ASSESSEE BY HOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF TRADE, BUSINESS OR COMMERCE. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE DERIVED INCOME FROM VARIOUS ACTIVITIES SUCH AS RENTING OUT OR HALLS, ET C. ACCORDINGLY THE ASSESSING OFFICER TAXED THE EXCESS OF INCOME OVER EXPENDITURE OF RS.12,97,317/- AS WELL A S CORPUS DONATION OF RS.9,58,951/-, CONSEQUENTLY, ASS ESSED THE TOTAL INCOME AT RS.22,56,270/-. 3.1 ON APPEAL BEFORE THE LEARNED CIT(A) THE STAND O F THE LEARNED ASSESSING OFFICER WAS CHALLENGED BY MAKING SUBMISSIONS DATED 12 TH MARCH, 2015. THE LEARNED FIRST APPELLATE AUTHORITY FOUND THAT THE CANCELLATION OF EXEMPTION GRANTED UNDER SECTION 12AA BY THE LEARNED DIRECTOR (EXEMPTION) WAS RESTORED BY THE TRIBUNAL ( ITA NO. 1939/MUM/2012 DATED 04.03.2015) BY PLACING RELIANCE UPON THE DECISION IN THE CASE OF M/S. VANITA SAMAJ (ITA NO. 1034/MUM/2012 DATED 26.02.2014). THE ASSESSEE TRUS T WAS CLAIMED TO BE FUNCTIONAL SINCE 1924. I PERUSED THE OBJECTS OF THE TRUST WHICH HAS BEEN DISCUSSED IN TH E IMPUGNED ORDER AND ALSO INSUFFICIENCY OF FUNDS (PAR A 4 OF THE IMPUGNED ORDER) FOR CARRYING OUT STRUCTURAL REP AIRS OF ITA NO.4693/MUM/2015 M/S. BRAHMAN SABHA MALAD 4 THE BUILDINGS. THE SUBMISSIONS DATED 02.06.2015 (PA GE 6 OF THE ORDER) OF THE ASSESSEE WERE ALSO CONSIDERED BY THE LEARNED CIT)(A). SO FAR AS THE ACTIVITIES PURPORTED BY THE LEARNED ASSESSING OFFICER IN THE NATURE OF BUSINESS / COMMERCE IS CONCERNED THE SURPLUS FUNDS WERE USED B Y THE ASSESSEE IN FURTHERANCE OF THE CHARITABLE OBJECTS O F THE ASSESSEE. THEREFORE, THE ASSESSEE GETS SHELTER FROM THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN GSI INDIA VS. DIT (EXEMPTION) (2013) 38 TAXMANN.COM 364 (DEL.) TO THE EFFECT THAT IF THE PROFIT IS EARNED FOR A LATER GOO D WITHIN THE ECONOMIC, FINANCIAL AND SOCIAL CONTEXT OF ACTIVITY OF AN ORGANIZATION, SUCH AN ORGANIZATION TO BE CONSIDERED TO BE WORKING FOR CHARITABLE PURPOSES. THE ASSESSEE IS AL SO SUPPORTED BY THE DECISION IN MADRAS MOTOR SPORTS CL UB (141 ITD 1) AND BUILDERS ASSOCIATION OF INDIA (ITA NO. 550/MUM/2012 DATED 12.01.2015). IT IS ALSO NOTED TH AT THE TRIBUNAL IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VS. DGIT (E) (2011) 245 CTR (D EL.) 541 HAS ANALYSED THE EFFECT OF PROVISO TO SECTION 2 (15) AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE DEPARTMENT HAS NOT BROUGHT ON RECORD ANY EVIDENCE SUGGESTING THAT THE ASSESSEE WAS CARRYING OUT ACTIV ITIES ON BUSINESS OR COMMERCIAL PRINCIPLE AGAINST THE OBJECT S OF THE SABHA. IT IS ALSO NOTED THAT THE TRIBUNAL HAS RESTO RED THE REGISTRATION UNDER SECTION 12A OF THE ACT, THEREFOR E, IT CANNOT BE PRESUMED THAT THE ASSESSEE WAS INDULGED I N NON-CHARITABLE ACTIVITIES. THEREFORE I FIND NO INFI RMITY IN THE CONCLUSION OF THE LEARNED CIT(A). THE DECISION IN T HE CASE OF ITA NO.4693/MUM/2015 M/S. BRAHMAN SABHA MALAD 5 MADHYA PRADESH MADHYAM 256 ITR 277 FURTHER SUPPORTS THE CASE OF THE ASSESSEE. HONBLE GUJARAT HIGH COUR T IN HIRALAL BHAGAWATI 246 ITR 188 (GUJ.) EXAMINED THE E FFECT OF REGISTRATION UNDER SECTION 12A AND HELD THAT REGIST RATION UNDER SECTION 12A IS NOT AN IDEAL OR EMPTY FORMALIT Y. IT REQUIRES THAT THE CIT HAS TO EXAMINE THE OBJECTS OF THE CREATION OF THE TRUST AND ALSO WHETHER THE ASSESSEE IS CARRYING OUT CHARITABLE ACTIVITY IN ACCORDANCE WITH ITS OBJECT. EVEN OTHERWISE EVEN AFTER GRANTING REGISTRA TION UNDER SECTION 12A OF THE ACT, THE ASSESSING OFFICER HAS NOT BEEN PRECLUDED TO GO INTO FACTUAL MATRIX AND STILL CAN GO INTO THE APPLICABILITY OF FUNDS WHETHER THE SAME AR E APPLIED IN ACCORDANCE WITH LAW. CONSIDERING THE TOTALITY OF FACTS AND THE DETAILED DISCUSSION MADE BY THE LEARNED CIT(A), WHILE ADJUDICATING THE ISSUES, I FIND NO INFIRMITY IN THE SAME. THE STAND OF THE LEARNED CIT(A) IS AFFIRMED. THE APPEAL OF THE REVENUE IS THEREFORE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. D.R. AT THE CONCLUSION OF THE HEARI NG ON 15/07/2016. SD/- (JOGINDER SINGH) ! /JUDICIAL MEMBER ! MUMBAI; & DATED : 15/07/2016 AA? P.S / /. . . ITA NO.4693/MUM/2015 M/S. BRAHMAN SABHA MALAD 6 ' #$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. ()*+, / THE APPELLANT (RESPECTIVE ASSESSEE) 2. -.+, / THE RESPONDENT. 3. / / 0 ( ()* ) / THE CIT (EXEMPTION), MUMBAI. 4. / / 0 / CIT(A)-7, MUMBAI, 5. 23 - , / ()*# (4 , ! / DR, SMC BENCH, ITAT, MUMBAI 6. 5 6!* / GUARD FILE. / BY ORDER, .2) - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI