Arunodaya Bahuuddashiya Gramin Vikas Sanstha, Ahmednagar V. Income-tax Officer,

ITA 505/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9358 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N HONAWAR
• Section: 143(3); 234B; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO S . 505 & 506 /PUN/20 14 / ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 ARUNODAYA BAHUUDDASHIYA, GRAMIN VIKAS SANSTHA, NAJIK BABHULGAON, TAL. SHEVGAON DIST. - AHMEDNAGAR PIN - 414 502 / APPELLANT PAN : AACTS5354M / V/S. INCOME TAX OFFICER, WARD - 3, AHMEDNAGAR. / RESPONDENT A PPELLANT BY : SHRI M.K KULKARNI REVENUE BY : SHRI A.N HONAWAR / DATE OF HEARING : 22.05.2017 / DATE OF PRONOUNCEMENT : 0 7 .0 6 .2017 / ORDER PER SUSHMA CHOWLA , JM : BOTH THE APPEAL S FILED BY THE ASSES SEE ARE AGAINST CONSOLIDATED ORDER OF CIT(A) - IT/TP , PUNE DATED 03 .0 2 .20 1 4 RELATING TO ASSESSMENT YEAR S 2007 - 08 & 2008 - 09 AGAINST THE RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) R.W.S 147 OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.505 & 506/PUN/2014 3. THE ASSESSEE IN ITA NO.505/PUN/2014 , RELATING TO THE ASSESSMENT YEAR 2007 - 08 HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL : - 1 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE A.O WHO IN TURN HAS BROUGHT INTO THE PURVIEW OF TAXATION THE SURPLUS OF RS.10,26,680/ - WHICH SURPLUS WAS ON ACCOUNT OF CORPUS DONATION REC EIVED FROM GOVT. OF INDIA FOR SPECIFIC PURPOSE. THE TAGGED DONATIONS AND SURPLUS ARISING OUT OF IT WHICH THE TRUST IS ENTITLED TO CARRY FORWARD TO SUBSEQUENT YEARS FOR ITS APPLICATION TOWARDS THE OBJECT OF THE TRUST. IT IS NOT AN INCOME OF THE TRUST TAXABL E UNDER THE ACT IRRESPECTIVE OF THE FACT WHETHER THE TRUST IS REGISTERED OR NOT U/S 12AA OF THE ACT. IT BE HELD ACCORDINGLY. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE RULES, REGULATIONS AND DIRECTIONS OF THE GOVT. OF INDIA WHILE GRANTIN G SUCH GRANT - IN - AIDS TO THE APPELLANT - TRUST IT TRANSPIRES THAT THE INCOME IS ALREADY DIRECTED AT SOURCE BEFORE IT REACHED TRUST. IN VIEW OF THIS LD. CIT(A) OUGHT TO HAVE CONSIDERED THIS ALTERNATIVE LEGAL ASPECT THAT IN SUCH CIRCUMSTANCES INCOME WAS NOT TA XABLE IN THE HANDS OF THE TRUST AS HAS BEEN CONFIRMED BY LD. CIT(A). THE ADDITION CONFIRMED BY LD. CIT(A) BE QUASHED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEVY OF INTEREST U/S 234A, 234B AND 234C IS NOT JUSTIFIED. THE LEVY OF INTER EST BE QUASHED. 4) THE APPELLANT CRAVES/LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD RECEIVED GRANT - IN - AID FROM THE GOVERNMENT OF INDIA FOR SP ECIFIC PURPOSE AND THE SURPLUS , IF ANY, ON ACCOUNT OF CORPUS DONATIONS WAS TO BE UTILIZED FOR SUCH PURPOSE ONLY . FURTHER, THE SURPLUS ARISING THEREFROM WAS TO BE CARRIED FORWARD TO THE SUBSEQUENT YEARS FOR ITS APPLICATION TOWARDS OBJECTS OF THE TRUST AND WAS NOT THE INCOME OF THE ASSESSEE TRUST TAXABLE UNDER THE ACT. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE ASSESSEE TRUST WAS REGISTERED W.E.F. 01.04.2009 AND CONSEQUENTLY, SURPLUS ARISING IN THE ASS ESSMENT YEARS PRIOR TO THAT DATE WERE TAXABLE IN THE HANDS OF ASSESSEE. IN THIS REGARD, RELIANCE WAS PLACED ON THE ORDERS OF ASSESSING OFFICER AND CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. BRIEFLY, IN THE FACTS OF THE CASE , THE ASSESSEE TRUST WAS ENGAGED IN THE ACTIVITIES RELATING TO 3 ITA NOS.505 & 506/PUN/2014 UPLIFTMENT OF WOMEN THROUGH EDUCATION, FINANCIAL SUPPORT AND OTHER PROJECTS FOR THE BENEFIT OF POOR. THE ASSESSEE RECEIVED FUNDS FROM THE GOVERNMENT GRANT. THE REGISTRATION UNDER SECTION 12AA OF THE ACT WAS GRANTED W.E.F. 01.04.2009 BY THE COMMISSIONER, PUNE. THE YEARS UNDER APPEAL ARE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 AND CONSEQUENTLY, THE BENEFITS OF SECTIONS 11 AND 12 OF THE ACT WERE NOT AVAILABLE TO THE ASSESSEE FOR THE SAID YEARS. TH E ASSESSING OFFICER WAS OF THE VIEW THAT THE INCOME OF TRUST I.E. SURPLUS AS PER ACCOUNTS, WAS TAXABLE IN THE HANDS OF ASSESSEE AS THE INCOME OF THE YEAR UNDER CONSIDERATION. CONSEQUENTLY, THE INCOME IN THE HANDS OF ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 WA S ASSESSED AT RS.10,26,680/ - AND FOR ASSESSMENT YEAR 2008 - 09 AT RS.1,72,242/ - . 7. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER HOLDING THAT THE GRANT WAS MADE TOWARDS CORPUS OF THE TRUST. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE TRUST RECEIVED FUNDS FROM THE GOVERNMENT OF INDIA AS PER SANCTION OF THE PRESIDENT OF INDIA UNDER THE SCHEME OF SUPPORT TO TRAINING AND EMPLOYMEN T PROGRAMME FOR WOMEN STEP. THE GRANT WAS MADE TO THE ASSESSEE FOR SPECIFIC PURPOSES WHICH WERE MENTIONED IN THE COMMUNICATION SANCTIONING THE GRANT. IT WAS ALSO MENTIONED IN THE SAID SANCTIONED LETTER THAT THE SURPLUS, IF ANY, WOULD BE CARRIED FORWARD AND WOULD BE UTILIZED FOR THE SAME PURPOSE IN THE STIPULATED PERIOD THEREAFTER. THE ASSESSEE HAS PLACED ON RECORD VARIOUS SANCTIONED LETTERS ISSUED BY THE GOVERNMENT OF INDIA TO THE ASSESSEE FOR UTILIZING THE GRANTS IN SUPPORT TO TRAINING AND EMPLOYMENT PROGRAMME FOR WOMEN STEP. THE ASSESSEE IN THE RESPECTIVE 4 ITA NOS.505 & 506/PUN/2014 YEARS HAD RECEIVED THE GRANT AND AFTER DEBITING EXPENDITURE INCURRED ON THE SPECIFIED PROJECTS HAD SURPLUS AT THE END OF THE YEAR. THE ASSESSEE HAD CLAIMED THE SAID SURPLUS TO BE NOT ITS INCOME A S THE SAME BELONGED TO THE GOVERNMENT OF INDIA. THE PLEA OF ASSESSEE VIS - - VIS GRANT - IN - AID WAS THAT THE SAID GRANT DID NOT BELONG TO THE ASSESSEE AND THEY DO NOT FORM ITS CORPUS. FURTHER, SURPLUS IF ANY, IS NOT TO BE TAXED IN THE HANDS OF ASSESSEE. THE CASE OF REVENUE ON THE OTHER HAND, WAS THAT IN THE ABSENCE OF ANY REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO THE EXEMPTION AS PER SECTIONS 11 AND 12 OF THE ACT. THE ASSESSEE ON THE OTHER HAND, PLEADED THAT THE S URPLUS AT THE END OF YEAR WAS NOT TO BE INCLUDED AS INCOME UNDER SECTIONS 11 AND 12 OF THE ACT. UNDOUBTEDLY, THE SAID GRANTS WERE SHOWN BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. HOWEVER, THE ENTRIES IN THE BOOKS OF ACCOUNT ARE NOT DECISIVE OF THE T AXABILITY OF THE RECEIPTS. THE GRANTS WHICH HAVE BEEN RECEIVED BY THE ASSESSEE ARE FOR SPECIFIC PURPOSES AND THE SAME CANNOT BE UTILIZED FOR ANY OTHER PURPOSE. HENCE, THE GRANT - IN - AID CANNOT BE TREATED AS INCOME OF THE ASSESSEE. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S. STATE URBAN DEVELOPMENT SOCIETY IN ITA NO.210 OF 2011, JUDGMENT DATED 19.10.2011 AND CHANDIGARH BENCH OF TRIBUNAL IN CHIEF ADMINISTRATOR, HARYANA RURAL DEVELOPMENT AUTHORITY VS. DCIT (2014) 162 TTJ 749 (CHD) . 10. APPLYING THE SAID PRINCIPLE, WHERE THE ASSESSEE WAS CONSTITUTED BY THE GOVERNMENT OF INDIA FOR SPECIFIC PURPOSE OF CARRYING THE ACTIVITIES FOR THE EMPOWERMENT OF WOMEN AND THE GRANTS & ADVANCES DISBURSED BY THE GOVERNMENT TO THE ASSESSEE CANNOT BE HELD TO BE THE INCOME OF ASSESSEE SINCE THE SAID GRANTS WERE RELEASED FOR SPECIFIC PURPOSE IN THE FIELD OF EMPOWERMENT OF WOMEN AND THE SURPLUS, IF ANY, IS NOT ASSESSABLE IN THE HANDS OF ASSESSEE AS 5 ITA NOS.505 & 506/PUN/2014 INCOME FOR TH E RESPECTIVE ASSESSMENT YEARS. EVEN WHERE THE ASSESSEE HAD SHOWN THE SAID AMOUNTS IN THE RECEIPTS AND EXPENDITURE ACCOUNT BUT THE SAME CANNOT BE HELD TO BE INCOME OF THE ASSESSEE AS NO PART OF THE SAID GRANTS COULD BE UTILIZED BY THE ASSESSEE FOR ANY OTHE R PURPOSE OTHER THAN SPECIFIC PURPOSE, FOR WHICH THE SAME WAS GRANTED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.10,26,680/ - IN ASSESSMENT YEAR 2007 - 08 AND RS.1,72,242/ - IN ASSESSMENT YEAR 2008 - 09 . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 1 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRO NOUNCED ON THIS 7 TH DAY OF JUNE , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 7 TH JUNE , 2017 . GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - IT/TP, PUNE. 4. THE CIT - I, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // /ASSISTANT REGISTRAR , / ITAT, PUNE .