DCIT (E), New Delhi V. M/s Railway Sports Promotion Board, New Delhi

ITA 4833/DEL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1058 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Charitable institution; Audit objection; Assessment record
• Section: 147; 148; 12; 10

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.4833/DEL/2016 (ASSESSMENT YEAR: 2006 - 07 ) DCIT(E), CIRCLE - 2(1), NEW DELHI VS. RAILWAY SPORTS BOARD, ROOM NO. 452, RAIL BHAWAN, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SURENDER PAL, SR. DR ASSESSEE BY: SHRI ABHISHEK JAIN, CA DATE OF HEARING 01/10 / 2018 DATE OF PRONOUNCEMENT 3 0 / 11 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1 . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - 36, NEW DELHI DATED 10.06.2016 FOR THE ASSESSMENT YEAR 2006 - 07. 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT(A) HAS ERRED IN LAW IN ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE FACT THAT THE ASSESSEE HAS NOT OBTAINED APPROVAL U/S 11(1)(C) OF THE ACT FROM THE CBDT TO INCUR THE EXPENDITURE OUTSIDE INDIA FOR A CHARITABLE PURPOSE WHICH TENDS TO PROMOTE INTERNATIONAL WELFARE IN WHICH INDIA IS INTERESTED TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSE OUTSIDE INDIA. 3 . BRIEF FACTS OF THE CASE IS THAT ASSE SSEE IS AN ASSOCIATION OF PERSON WHO FILED ITS RETURN OF INCOME ON 31/10/2006 DECLARING NIL INCOME. IT WAS FOUND BY THE AO THAT ASSESSEE HAS INCURRED AND EXPENDITURE OF INR 12467479/ OUT OF INDIA BUT NO DIRECTION OR APPROVAL OF THE BOARD WAS FOUND AVAILA BLE IN THE ASSESSMENT RECORD OR IN THE AUDIT REPORT UNDER SECTION 12 A OF THE INCOME TAX ACT. THEREFORE THE LEARNED ASSESSING OFFICER DISALLOWED THE ABOVE SUM AS AMOUNT WAS NOT ELIGIBLE FOR EXEMPTION. CONSEQUENTLY , CASE OF THE ASSESSEE WAS REOPENED UNDER PAGE | 2 SECTION 147 OF THE INCOME TAX ACT. NOTICE UNDER SECTION 148 WAS ISSUED ON 31/3/2011 AND SERVED UPON THE ASSESSEE. ASSESSEE SUBMITTED VIDE LETTER DATED 13/9/2011 THAT THE ORIGINAL RETURN FILED ON 31/10/2006 MAY BE TREATED AS RETURN UNDER SECTION 148 OF T HE INCOME TAX ACT. IN RESPONSE TO THE NOTICES ASSESSEE SUBMITTED , VIDE LETTER DATED 14/11/2011 THAT INDIAN RAILWAY PLAYERS REPRESENTING ALMOST ALL NATIONAL TEAMS AND DOMINATES IN ATHLETICS, WOMAN HOCKEY AND WOMEN CRICKET. FURTHER, AS PER THE NOMINATION B Y MINISTRY OF YOUTH AND SPORTS REPRESENT THE COUNTRY IN INTERNATIONAL TOURNAMENTS SUCH AS THE OLYMPICS, ASIAN GAMES, WORLD CHAMPIONSHIP ET CETERA AND ACCORDINGLY, RAILWAY SPORTS PROMOTION BOARD (ASSESSEE) MAKE DIFFERENT TYPE OF PAYMENT TO INDIAN RAILWAY P LAYERS, COACHES AND OFFICIALS. THE ASSESSEE PAYS AN AMOUNT OF US DOLLARS 35 PER DAY PER PERSON AS A POCKET ALLOWANCE TO ALL INDIAN RAILWAY PLAYERS AND OTHER OFFICIALS WHO HAVE BEEN NOMINATED ACCORDINGLY TO PARTICIPATE IN INTERNATIONAL MEET ABROAD. THE P AYMENT IS MADE AFTER RECEIPT OF PARTICIPATION CERTIFICATE OF THE PLAYER AN D OFFICIAL FROM THE CONCERNED FEDERATION AND THEN CHE QUE IN INDIAN RUPEES EQUIVALENT TO US DOLLARS 35 PER DAY IS ISSUED. THE RAILWAY SPORTS AND PROMOTION BOARD BEARS ALL EXPENDITUR E OF THE PARTICIPANTS WHICH HAVE BEEN DEBITED BY THE MINISTRY FOR PARTICIPATION IN THE INTERNATIONAL MEET ABROAD ACCOUNT . IT IS FURTHER STATED THAT THE AMOUNT HAS BEEN PAID IN INDIAN RUPEES AND THE DETAILS WAS ALSO SUBMITTED SHOWING CHEQUE NUMBERS AND A MOUNTS OF THE ABOVE PAYMENT. IT WAS FURTHER STATED THAT THE AMOUNT OF POCKET ALLOWANCE IS ALSO PAID IN INDIAN RUPEES IN INDIA. IT WAS FURTHER STATED THAT PAYMENT OF DAILY ALLOWANCE AND ACCOMMODATION OF RS. 668300/ WAS PAID IN FOREIGN CURRENCY. THE LEA RNED AO O N PERUSAL OF THE SUBMISSION OF THE ASSESSEE HELD THAT ASSESSEE HAS TO SPEND 85% OF THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST DURING THE PREVIOUS YEAR FOR CHARITABLE PURPOSES IN INDIA. AND FURTHER IF ANY SUCH INCOME IS APPLIED OUTSIDE INDI A SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR. FOR THE APPLICATION OF THE INCOME OUTSIDE INDIA , IT IS PROVIDED THAT THE BOARD BY GENERAL OR SPECIAL ORDER HAS DIRECTED IN THE THAT CASE THAT IT SHALL NOT BE INCLUDED IN THE TOTAL INCOME O F THE PERSON IN RECEIPT OF SUCH INCOME. THEREFORE, IT PAGE | 3 WAS NOTED BY THE LEARNED AO THAT ASSESSEE HAS INCURRED AN AMOUNT OF INR 1 2467479 ON INTERNATIONAL MEET AND NO PRIOR APPROVAL OF THE BOARD HAS BEEN TAKEN, WHICH IS IN VIOLATION OF SECTION 11 (1) OF T HE INCOME TAX ACT. ACCORDINGLY, THE LEARNED AO PASSED ORDER UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT ON 20/12/2011, WHERE THE TAXABLE INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 8803681/ , WHEREIN THE ASSESSING OFFICER MADE AN ADD ITION OF INR 1 2464479/ UNDER SECTION 11 (1) OF THE INCOME TAX ACT BEING THE AMOUNT SPENT OUTSIDE INDIA, WITHOUT PRIOR APPROVAL. 4 . ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED AO PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) 36, NEW DELHI. THE LEARNED COMMISSIONER APPEALS PASSED ORDER ON 10/6/2016 DELETING THE ABOVE ADDITION AS UNDER : - 9. I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMISSIONS MADE BY THE ASSESSEE, REMAND REPORT AND THE REJOINDER. THE ISSUE PERTAINS TO EXPENDITURE OF INR 1 2467479 INCURRED ON INTERNATIONAL MEET. THE ASSESSEE HAS EXPLAINED THAT THESE ARE NOT THE EXPENSES OF THE ASSESSEE AS GRANTS ARE RECEIVED FROM THE GOVERNMENT OF INDIA. THE AMOUNT WAS DISALLOWED UNDER SECTION 11 (1) OF THE ACT IS BEING SPENT OUTSIDE INDIA, WITHOUT BOARDS APPROVAL BASED ON AUDIT OBJECTION. HOWEVER, FOLLOWING FACTS ARE RELEVANT TO THE IS SUE THAT ASSESSEE IS AN ARM OF THE MINISTRY OF RAILWAYS. NO MEETING OF CHAMPIONSHIP, EVENTS OR ACTIVITIES WERE ORGANISED OR HELD BY THE ASSESSEE ABROAD OUTSIDE INDIA. THE INCOME WAS SPENT ONLY IN INDIA FOR EXPENDITURE ON PLAYERS OF DIFFERENT GAMES WHO WERE PARTICIPATING IN PRESTIGIOUS COMPETITION INTERNATIONALLY. THUS, IT IS FOR PROMOTING THE INTEREST OF THE COUNTRY INTERNATIONALLY AND PROMOTING SPORTSPERSON, BOTH NATIONALLY AND INTERNATIONALLY. FURTHER, AS ASSUMED BY THE AO, THE AMOUNT IS NOT SPENT O N ANY INTERNATIONAL MEET. RATHER, IT IS JUST AN EXPENDITURE H E AD. THE AO PAGE | 4 HAS NOT BROUGHT ON RECORD ANYTHING TO REFLECT THAT THE AMOUNT WAS SPENT OUTSIDE OR EVEN IN FOREIGN CURRENCY. THE ACTIVITIES AND OBJECTIVES OF THE ASSESSEE IS TO PROMOTE SPORTSPERSO N IN THE MINISTRY OF RAILWAYS. THE PURPOSE IS NOT TO EARN PROFIT. THE PARTICIPATION IN SPORTS EVENTS OUTSIDE INDIA, CANNOT BE COVERED UNDER SECTION 11 (1) IN THIS CASE WHERE THE AMOUNT IS SPENT IN INDIA. OUT OF INR 1 2467479/ , ASSESSEE HAS SUBMITTED THAT ONLY AN AMOUNT OF RS. 668300/ WAS SPENT IN FOREIGN CURRENCY. IT IS ALSO A FACT THAT THE ASSESSEE WAS HAVING EXEMPTION UNDER SECTION 10 (23C) (IV) FOR ALL THE YEARS, EXCEPT FOR ASSESSMENT YEAR 2006 07. THE ACTIVITIES HAVE ALSO REMAINED SAME THROU GHOUT THE YEARS WITHOUT ANY ADVERSE INFERENCE. KEEPING ALL THE ABOVE I N VIEW, IN MY OPINION, IT CANNOT BE HELD TO BE APPLIED TO SUCH PURPOSES OUTSIDE INDIA. THE ADDITION MADE ON THIS ACCOUNT MAY THEREFORE BE DELETED EXCEPT RS. 668300/ ALONG WITH CONSE QUENTIAL BENEFITS, ESPECIALLY SINCE IT IS NOT FOR THE WELFARE OF THE ASSESSEE BUT FOR PARTICIPATION OF INDIAN PLAYERS IN VARIOUS SPORTS. 5 . CONSEQUENTLY, THE LEARNED ASSESSING OFFICER A GGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX APPEALS HAS PREFERRED AN APPEAL BEFORE US. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT AS THE ASSESSEE HAS INCURRED THE EXPENDITURE OUTSIDE INDIA FOR INTERNATIONAL MEET . I N THE BOOKS OF ACCOUNTS OF THE ASSESSEE ALSO SHOWS THAT THE EXPENDITURE IS INCURR ED FOR INTERNATIONAL MEET , THE DISALLOWANCE HAS BEEN CORRECTLY MADE BY THE LEARNED ASSESSING OFFICER AND DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX, WITHOUT LOOKING AT THE PROVISIONS OF SECTION 11 (1) OF THE INCOME TAX ACT. 7 . THE LEARNED AUTHORIS ED REPRESENTATIVE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND SUBMITTED THAT NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE OUTSIDE INDIA BUT PAID IN INDIAN RUPEES TO THE PAGE | 5 PLAYERS IN INDIA. HE EXTENSIVELY READ HIS SUBMISSIONS BEFORE THE LEARNED ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS. 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ON CAREFUL CONSIDERATION OF THE PARAGRAPH NUMBER 9 OF THE OR DER OF THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) IT WAS FOUND THAT ASSESSEE HAS NOT INCURRED THESE EXPENDITURE OUTSIDE INDIA BUT INCURRED IN INDIA IN INDIAN RUPEES. THIS FACT HAS NOT BEEN CONTROVERTED EITHER BY THE LEARNED ASSESSING OFFICER OR BY THE LEARNED DEPARTMENTAL REPRESENTATIVE BEFORE US. THE PROVISIONS OF SECTION 11 (1) (II) APPLIES ONLY IF SUCH INCOME IS APPLIED TO SUCH PURPOSES OUTSIDE INDIA, WITHOUT THE APPROVAL OF THE CENTRAL BOARD OF DIRECT TAXES. IN THE PRESENT CASE, AS NO INCOM E , EXCEPT WHAT HAS BEEN CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX APPEALS, IS APPLIED BY THE ASSESSEE OUTSIDE INDIA BUT IN INDIA. THEREFORE, THOSE PROVISIONS DO NOT APPLY TO THE ASSESSEE. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX APPEALS IN DELETING THE ABOVE ADDITION. IT IS FURTHER TO BE NOTED THAT THE LEARNED COMMISSIONER OF INCOME TAX APPEALS IN HIS ORDER HAS UPHELD THE AMOUNT OF MONEY SPENT BY THE ASSESSEE OF INR 6 68300/ OUTSIDE IN DIA TOWARDS HOTEL AND OTHER EXPENDITURE. IN VIEW OF THIS SOLITARY GROUND OF THE APPEAL OF THE LEARNED ASSESSING OFFICER IS DISMISSED UPHOLDING THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX APPEALS. 9 . ACCORDINGLY, APPEAL OF THE REVENUE IS DISMISSED. OR D ER PRONOUNCED IN THE OPEN COURT ON 3 0 / 11 / 2018 . - SD/ - - SD/ - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 / 11 / 2018 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT PAGE | 6 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI