FELLOWSHIP OF PHYSICALLY HANDICAPPED, MUMBAI V. DDIT (E) I(2), MUMBAI

ITA 4923/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0003 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Benefit of exemption
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS.4923/ & 4924M/2015 ASSESSMENT YEARS: 2010-11 & 2011-12 M/S. FELLOWSHIP OF PHYSICALLY HANDICAPPED, FPH BUILDING, LALA LAJPAT RAI MARG, HAJI ALI, MUMBAI 400 034 PAN: AAATF 0551D VS. DY. DIT(E)-I(2) PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI YOGENDRA TRIVEDI, A.R. MS. US HA DALAL, A.R. REVENUE BY : MS. POOJA SWAROOP, D.R. DATE OF HEARING : 14.06.2017 DATE OF PRONOUNCEMENT : 30.06.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST TWO SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX ( APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 14.07.2015& 16.07. 2015 RELEVANT TO ASSESSMENT YEARS 2010-11 & 2011-12 RESPECTIVELY. S INCE THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL IN NATUR E, HENCE THE SAME ARE TAKEN TOGETHER FOR DISPOSAL BY THIS COMMON ORDER. 2. THE COMMON GROUND IN BOTH THE APPEALS WHICH READ S AS UNDER: THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 1, MUMBAI ['LD. CIT (A)'], ERRED IN CONFIRMING THE ACTION OF THE DEPUTY DIRECT OR OF INCOME TAX (EXEMPTION) - I (2), MUMBAI ['THE A.O.'] IN MAKING ADDITION OF RS. 25,05,600/- [TRANSFER TO CORPUS DONATION] AND RS. 14,55,501/- [TRANSFER TO BUILDING FUND] TO THE INCOME OF THE APPELLANT. ITA NOS.4923/ & 4924M/2015 M/S. FELLOWSHIP OF PHYSICALLY HANDICAPPED 2 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAS HELD THAT ASSESSEE HAS RECEIVED CORPUS DONATION OF RS.25,05,6 00/- AND DONATION TOWARDS BUILDING FUND OF RS.14,55,501/- WHICH WAS DIRECTLY TAKEN TO BALANCE SHEET AND SAME HAS BEEN CLAIMED EXEMPT. HOWEVER, ASSESSEE IS NOT ELIGIBLE TO GET BENEFIT UNDER SECTION 11 FOR FAILURE TO GET ITS ACC OUNT AUDITED UNDER SECTION 12(A)(1), THE BENEFIT OF EXEMPTION UNDER SECTION 11 (1)(D) IS NOT AVAILABLE TO THE ASSESSEE. THEREFORE, DONATION AMOUNTING TO RS. 39,61,101/- WERE TREATED AS CAPITAL DONATION BY THE ASSESSEE. ACCORDINGLY, IT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DISMISSED THE APPEALS OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND TH AT THE ASSESSEE TRUST IS RECEIVING GRANTS FROM THE STATE THROUGH DIRECTOR OF SOCIAL WELFARE, MUMBAI AND THE MAHARASHTRA STATE FOR IMPARTING EDUCATIONAL TRAINING AT WORK SHOP AND RECOGNIZED AS WELFARE AND REHABILITATION INSTITUTE FOR THE HANDICAPPED. THE ASSESSEE TRUST IS CARRYING OUT CHARITABLE ACTIVITIE S TO ACHIEVE THE OBJECT OF THE TRUST TO PROVIDE MEDICAL, EDUCATION AND RELIEF TO P OOR HANDICAPPED PERSONS. TRUST IS RECEIVING DONATION AND INCOME FROM PROPERT Y OF TRUST BY MEANS OF RENT. THE TRUST IS LETTING OUT THE PROPERTY OF TRUST FOR THE PURPOSE OF CHARITABLE ACTIVITIES CARRIED OUT BY THE TRUST. THEREFORE, RE NT AND COMPENSATION RECEIVED BY THE TRUST IS INCOME FROM PROPERTY OF THE TRUST. WE FIND THAT THE ORDER ISSUED BY LD. CIT(A) IN ASSESSMENT YEAR 2008-09 AND ASSESS MENT YEAR 2006-07, AND THE ORDER BY ITAT FOR A.Y. 2008-09 AND THE HONBLE BOMBAY HIGH COURT IN ITS ORDER DATED 10.03.15 HAVE HELD THAT ASSESSEES INCOME BY WAY OF RENT FROM THE PROPERTY OF THE TRUST IS NOT TO BE TAXED AS BUS INESS INCOME BUT IT IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. ITA NOS.4923/ & 4924M/2015 M/S. FELLOWSHIP OF PHYSICALLY HANDICAPPED 3 6. IN VIEW OF THIS, WE ARE OF THE VIEW THAT ASSESSE ES INCOME IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. THE AO AND THE LD. CIT(A) HAVE DISALLOWED THE CLAIM OF THE ASSESSEE ONLY ON THE GROUND THAT A SSESSEE IS NOT ELIGIBLE FOR BENEFIT OF SECTION 11 FOR FAILURE TO GET ITS ACCOUN T AUDITED UNDER SECTION 12(A)(1), THEREFORE BENEFIT WAS NOT AVAILABLE TO TH E ASSESSEE. THE ASSESSEE HAS SUBMITTED THE AUDIT REPORT AS REQUIRED UNDER SECTIO N 12(A)(1) IN FORM NO.10-B ALONG WITH THE RETURN OF INCOME. THE ABOVE CORPUS DONATION WAS IN THE BALANCE SHEET AND THIS AMOUNT WAS TRANSFERRED FROM INCOME AND EXPENDITURE ACCOUNT TO BALANCE SHEET ONLY AND SAID AMOUNT WAS T AKEN INTO COMPUTATION OF INCOME. THE ASSESSEE HAS EXERCISED THIS OPTION BY GIVING LETTER TO THE AO WHICH IS ON PAGE 39 OF THE PAPER BOOK. WE ARE OF T HE VIEW THAT AO AND THE LD. CIT(A), WITHOUT VERIFYING THE RECORD, HAVE DISA LLOWED THE CLAIM. WE ALSO HELD THAT ASSESSEE HAS NOT CLAIMED DEDUCTION UNDER SECTION 11(1)(D) OF THE SAID AMOUNT. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER E XPLANATION 2 TO SECTION 11(1) OF THE ACT BEFORE DUE DATE OF FILING THE RETU RN OF INCOME. THEREFORE, WE ALLOW THE CLAIM OF THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.06.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH ITA NOS.4923/ & 4924M/2015 M/S. FELLOWSHIP OF PHYSICALLY HANDICAPPED 4 //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.