ITO (E), New Delhi V. M/s Society For Participatory Research In Asia, New Delhi

ITA 4820/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8736 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption; TDS
• Section: 271(1)(c); 143(3); 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 4820/DEL/2016 (A.Y. 2009-10) INCOME TAX OFFICER (E), WARD 1(2), NEW DELHI ROOM NO. 2417, 24 TH FLOOR, E-2 BLOCK, PRATYAKSH KAR BHAWAN, DR. SHYAMA PRASAD MUKHERJEE MARG, CIVIC CENTRE, JAWAHAR LAL NEHRU MARG, NEW DELHI VS. M/S SOCIETY FOR PARTICIPATORY RESEARCH IN ASIA, 42, TUGHLAKABAD, INSTITUTIONAL AREA, NEW DELHI (PAN: AAATS1994H) REVENUE BY SH. S.S. RANA, CIT(DR) ASSESSEE BY MS. SHAILY GUPTA, SH. AKSHAY UPPAL, CA ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 29.6.2016 PASSED BY LD.CIT(A)-26, NEW DELHI ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW DELETING PENAL TY U/S. 271(1)(C) WHEN THE MATTER RELATED TO THE QUANTUM AD DITION IS SUB-JUDICE BEFORE THE HONBLE HIGH COURT ON THE APPEAL OF THE REVENUE BECAUSE NO LEGAL REMEDY WOULD BE 2 AVAILABLE IN THE INTEREST OF REVENUE IF THE HONBLE HIGH COURT DECISION COMES IN FAVOUR OF THE REVENUE. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OR APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED ITS RETURN OF INCOME ON 09.06.2010 DECLARING NIL INCOME AFTER CLA IMING THE BENEFIT OF EXEMPTION U/S. 11 & 12 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). THE CASE WAS ASSESSED U/S. 143(3) OF THE I.T. ACT A T AN INCOME OF RS. 1,09,99,469/-. THE A.O. NOTED THAT ASSESSEE HAS SHOWN RECEIPT AND TRAINING GRANT TO THE TUNE OF RS. 15.91 CR., CONTR IBUTION OF RS. 4.18 CR. AND OTHER INCOME OF RS. 1.36 CR. IN THE ASSESSMENT ORDER, IT WAS HELD THAT THE ASSESSEE DOES NOT FALL WITHIN THE SCOPE OF CHAR ITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE I.T. ACT, AND THUS THE BENEFIT OF SECTION 11/12 WAS DENIED TO THE ASSESSEE. A SHOW CAUSE NOTI CE U/S. 271(1)(C) DATED 31.12.2012 OF THE ACT WAS ALSO ISSUED AND SER VED UPON THE ASSESSEE ALONGWITH COPY OF ASSESSMENT ORDER FOR LEV Y OF PENALTY. THE LD. CIT(A) VIDE HIS ORDER DATED 28.02.2013 FOR QUANTUM ADDITION HAS DISCUSSED THE ISSUE AND DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THAT 'FURTHERMORE, IT IS FOUND THAT THE ACTIVITIES OF TH E APPELLANT ARE NOT FALLING UNDER THE FIRST THREE LIMBS OF SECTION 2(15 ) OF THE IT ACT WHICH ARE RELIEF TO THE POOR, EDUCATION AND MEDICAL RELIEF AN D IT IS VERY CLEAR THAT ACTIVITIES ARE IN THE NATURE OF ADVANCEMENT OF GENE RAL PUBLIC UTILITY WHICH IS THE LAST LIMB. NOW ONLY QUESTION IS TO BE DECIDE D WHETHER ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR NOT . FOR THE SAME, AD 3 HAS VERY CATEGORICALLY DISCUSSED THE INSTANCE IN TH E BODY OF ORDER BY MENTIONING THE NAME IF THE PARTIES WHO HAD DEDUCTED TDS ON VARIOUS SERVICES OFFERED BY THE APPELLANT. FURTHER, THE APP ELLANT HAS GENERATED SURPLUS OF RS. 1.09 CRORE AS WELL AS EARNED INTERES T INCOME ON THE FIXED DEPOSIT WHICH HAS BEEN HELD AS TAXABLE BY THE HON'B LE SUPREME COURT IN THE CASE OF BANGALORE CLUB. SO AFTER CONSIDERING TH E FACTS OF THE CASE IN TOTALITY, IN MY OPINION GROUND NO. 1 TO GROUND NO. 2.8 OF THE APPEAL DESERVE TO BE DISMISSED' . FOR PENALTY, ASSESSEE FILED REPLY THAT THE INFERENCE DRAWN IS UNTENABLE AS IN THE IMMEDIATE PR ECEDING YEARS I.E. AY 1983-84 TO 2008-09. THE DEPARTMENT ITSELF HELD IN T HEIR ASSESSMENT ORDERS U/S. 143(3) YEARS THAT THE ASSESSEE SOCIETY IS A 'CHARITABLE SOCIETY' AND ACCORDINGLY GRANTED EXEMPTION U/S. 11 TO THE EN TIRE INCOME OF THE ASSESSEE SOCIETY. THAT THE ACTIVITIES ARE VERY MUCH IN CONSONANCE WITH AIMS AND OBJECTIVES CONTAINED IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE SOCIETY. THAT MAKING A CLAIM WHICH IS REJE CTED WOULD NOT MAKE THE ASSESSEE SOCIETY LIABLE UNDER SECTION 271(1)(C) OF THE ACT. THE A.O AFTER DISCUSSING CONDITIONS FOR IMPOSING PENALTY WA S SATISFIED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME AND THEREBY CONCEALED PARTICULARS OF INCOME. THE EXPLANATION O F THE ASSESSEE WAS FOUND NEITHER CORRECT NOR BONAFIDE, AS THE SAME WAS NOT SUBSTANTIATED. HENCE, THE PENALTY OF RS. 37,38,718/- WAS IMPOSED V IDE ORDER DATED 25.3.2014 PASSED U/S. 271(1) OF THE ACT. AGGRIEVE D WITH THE PENALTY ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 29.6.2016 HAS DELETED THE PENALTY IN DI SPUTE BY HOLDING THAT 4 THE ADDITION MADE BY THE AO IN THE ORDER U/S. 143(3 ) HAS NOW BEEN DELETED BY THE ITAT, THE PENALTY INITIATED BECOMES UNSUSTAINABLE AND DOES NOT SURVIVE, VIDE HIS IMPUGNED ORDER 29.6.2016 . AGAINST THE IMPUGNED ORDER DATED 29.6.2016, REVENUE IS IN APPEA L BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. DR RELIED UPON THE P ENALTY ORDER PASSED BY THE AO. 4. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE ST ATED THAT SINCE THE ADDITION ON WHICH THE PENALTY HAS BEEN IMPOSED HAS ALREADY BEEN DELETED BY THE ITAT, THE PENALTY IN DISPUTE DOES NOT SURVIV E. IN THIS REGARD, HE DRAW OUR ATTENTION TOWARDS THE FINDING OF THE LD. F IRST APPELLATE AUTHORITY AND REQUESTED THAT THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDER OF THE LD. CIT(A). WE FIND THAT LD. CIT( A) VIDE PARA NO. 6 & 7 AT PAGE NO. 3 OF HIS IMPUGNED ORDER HAS HELD AS UN DER:- 6. I HAVE GONE THROUGH THE PENALTY ORDER, SUBMISSI ONS OF THE ASSESSEE, CIT(A) ORDER AND ITAT ORDER ON QUANTUM ADDITION. THE HON'BLE ITAT HAS IN ITS ORDER INTER-ALIA MENTIONED THAT THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.02. 2013 OF THE CIT(A)-XXI FOR THE A.Y. 2009-10. THE HON'BLE COURT IN THE AFORESAID JUDGEMENT (QUEEN'S SOCIETY 3 72 ITR 699) AFFIRMED THE JUDGMENT OF THE PUNJAB & 5 HARYANA HIGH COURT IN THE CASE OF PINEGROVE INTERNATIONAL CHARITABLE TRUST V. UOI 327 ITR 73 WHEREIN IT WAS HELD THAT MERELY BECAUSE PROFITS HAV E RESULTED FROM THE ACTIVITIES OF IMPARTING EDUCATION , IT WOULD NOT RESULT IN CHANGE OF CHARACTER OF THE EDUC ATION THAT IT WAS SOLELY FOR EDUCATIONAL PURPOSE. THUS, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENTS, WE HOLD THAT THE INVOCATION OF PROVISO OF SECTION 2(15) OF THE ACT TO DENY CLAIM OF EXEMPTION U/S. 11 AND 12 OF THE AC T IS NOT JUSTIFIED. ACCORDINGLY, GROUNDS OF APPEAL ARE ALLOWED.' THOUGH, IN MY OPINION THE ASSESSEE IS NOT ENGAGED I N THE ACTIVITIES OF EDUCATION PERSE, AS ITS DOMINANT OBJECTIVES ARE DIFFERENT AND IT IS PURSUING PROFIT BUT RESPECTFULLY FOLLOWING JUDICIAL DISCIPLINE, THE ORD ER OF ITAT IS BEING FOLLOWED FOR THE PURPOSE OF ORDER U/S . 271(1)(C). 7. AS THE ADDITION IN THE ORDER U/S. 143(3) IS NOW DELETED BY HONBLE ITAT, THE PENALTY INITIATED BECOMES UNSUSTAINABLE AND DOES NOT SURVIVE. THE PENALTY MAY THEREFORE BE DELETED SUBJECT HOWEVER, TO THE OUTCOM E OF APPEAL BY DEPARTMENT IN THE HONBLE HIGH COURT. 6 6. AFTER GOING THROUGH THE AFORESAID FINDING GIVEN BY THE LD. CIT(A IN PARA NO. 6 & 7 AT PAGE NO. 3 OF THE IMPUGNED ORDER DATED 29.6.2016, AS REPRODUCED ABOVE, WE ARE OF THE CONSIDERED VIEW THA T THE ADDITION ON WHICH THE PENALTY HAS BEEN INITIATED BY THE AO HAS ALREADY BEEN DELETED BY THE ITAT AS MENTIONED IN THE AFORESAID PARAGRAPH S. THEREFORE, THE PENALTY IN DISPUTE IS NOT SUSTAINABLE/SURVIVE. HEN CE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. FIRST APPELLATE AUTHOR ITY HAS PASSED A WELL REASONED ORDER ON THE BASIS OF THE ITAT ORDER, WHIC H DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE SAME AND ACCORDINGLY, REJECT THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF JULY, 2019. SD/- SD/- (B.R.R. KUMAR) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 12 TH DAY OF JULY, 2019 SRB COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A), NEW DELHI. 5. CIT(ITAT), NEW DELHI AR, ITAT