BALMOHAN VIDYAMANDIR TRUST, MUMBAI V. ITO (E) I(1), MUMBAI

ITA 5127/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3783 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D P REDDY
• Assessee Lawyers: ANIL J SATHA
• Keywords: Depreciation; Charitable institution; Benefit of exemption
• Section: 80G; 12A; 10B; 147; 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B ENCH B, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5127/MUM/2013 ASSESSMENT YEAR: 2008-09 BALMOHAN VIDYAMANDIR TRUST, 42, 59-65, SHIVAJI PARK, DADAR, MUMBAI 400028 PAN: AAATB0099C VS. ITO (EXEMPTION)-1 (1), MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.5744/MUM/2013 ASSESSMENT YEAR: 2009-10 BALMOHAN VIDYAMANDIR TRUST, 42, 59-65, SHIVAJI PARK, DADAR, MUMBAI 400028 PAN: AAATB0099C VS. ITO (EXEMPTION)-1 (1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL J. SATHA & MR. K. GOPAL (AR) REVENUE BY : SHRI D.P. REDDY (DR ) DATE OF HEARING : 16.03.2016 DATE OF PRONOUNCEMENT : 11.05.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO APPEALS ARE FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A)-1, MUMBAI DATED 10.04.2013 AND 31.07.2014 FOR AYS 2008-09 & 2 009-10 RESPECTIVELY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH E COMMON ORDER FOR THE SAKE OF CONVENIENCE. WE HAVE NOTICED THAT APPEAL NO. 512 7/MUM/2013 TIME BARRED FOR THREE DAYS. THE APPEAL IS ACCOMPANIED WITH AFFI DAVIT OF SHRI GURUPRASAD 2 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST REGE EXPLAINING THE GROUNDS FOR CONDONATION OF DELA Y. THE CONTENTS OF AFFIDAVIT EXPLAINED THAT DELAY OCCURRED DUE TO AN ERROR IN RE CORDING THE DATE OF RECEIPT OF APPELLATE ORDER WHICH WAS RECEIVED ON 15.05.2013, B UT DUE TO INADVERTENCE, IN COLUMN 9 OF FORM 36 (APPEAL FORM) THE SAME WAS WRIT TEN AS 09.05.2013. KEEPING IN VIEW THE FACTS EXPLAINED IN THE AFFIDAVI T THE DELAY IN FILING OF APPEAL IS CONDONED. 2. IN THE PRESENT APPEAL, ONE MORE APPLICATION FOR INT ERVENER IS FILED BY SHRI GIRISH REGE. IN THE APPLICATION THE APPLICANT CONTENDED TH AT HE IS NOT OPPOSING THE RELIEF PRAYED IN THE APPEAL, AS THE TRUSTEES IN MAJ ORITY HAVE MADE CERTAIN STATEMENT BEFORE AUTHORITIES BELOW TO JUSTIFY THE C LAIM OF RELIEF BY MAKING ALLEGATION AGAINST THE SOME TRUSTEE. THEIR STATEMEN T MAY PREJUDICE HIS INTEREST AS A TRUSTEE, SO HE MAY BE ALLOWED TO PUT CORRECT F ACT ON RECORD. WE HAVE SEEN THAT THE CONTENTS OF APPLICATION ARE VAGUE. THE APP LICANT DOES NOT SPECIFY, IF HIS INTEREST IS ADVERSE AGAINST THE INTEREST OF THE TRU ST (ASSESSEE), OR SOMETHING IS CONCEALED FROM THE AUTHORITIES BELOW. THE APPLICATI ON DOES NOT SPECIFY UNDER WHICH PROVISION OF LAW THE PRESENT APPLICATION IS M OVED. MOREOVER, THE APPLICATION IS TYPED ON THE LETTER PAD OF BALMOHAN VIDYAMANDIR, THE SCHOOL MANAGED BY TRUST/ ASSESSEE. WE HAVE HEARD SH. K.GOP LA AR FOR APPLICANT AND GAVE CAREFUL CONSIDERATION ON THE CONTENTS OF THE A PPLICATION AND THE ORAL SUBMISSION. WE HAVE NOTICED THAT IN INCOME-TAX (APP ELLATE TRIBUNAL RULES, 1963), THERE IS NO PROVISION FOR INTERVENER. 3. SUB-SECTION (1) OF SECTION 253 OF INCOME-TAX ACT PR OVIDE SPECIFIC CATEGORY OF PERSON I.E. ANY ASSESSEE AGGRIEVED BY THE ORDERS PROVIDED UNDER CLAUSE (A) TO (F) TO FILE APPEAL BEFORE THE APPELLATE TRIBUNAL, T HERE IS NO FURTHER SCOPE FOR ANY OTHER AGGRIEVED PERSON OR PERSON(S) INTERESTED IN T HE OUTCOME OF APPEAL TO APPROACH THE TRIBUNAL AS INTERVENER. NO CONTRARY LA W IS BROUGHT TO OUR NOTICE WHICH MAY ENTITLE THE APPLICANT TO BECOME INTERVENE R BEFORE THIS TRIBUNAL. HENCE, THE APPLICATION OF THE INTERVENER HAS NO FOR CE IN THE EYES OF LAW. HOWEVER LD. AR WHO IS REPRESENTING THE APPLICANT IS ALLOWED TO ASSIST THE LD. AR OF THE ASSESSEE (TRUST). WITH THESE OBSERVATIONS, T HE APPLICATION OF INTERVENER IS DISPOSED OFF. 4. FIRST WE SHALL TAKE UP APPEAL NO. 5127/MUM/2013 WHE REIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 3 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER OF INVO KING EH PROVISIONS OF SECTION 148 OF THE INCOME TAX ACT 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE DENIAL OF EXEMPTION UNDER SECTION 11 TO THE APP ELLANT TRUST. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE AND CONSIDER THE CONTENTION THAT THE PROVISIONS OF SECTION 13(C)(II) OF THE INCOME TAX ACT DO NOT APPLY TO THE CASE OF THE APPE LLANT AND CONSEQUENTLY ERRED IN DENYING EXEMPTION U/S. 11 TO THE APPELLANT TRUST. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN IGNORING THE ALTERNATE CONTENTION OF THE APPELLANT THAT THE PROV ISIONS OF SECTION 10(23C)(IIIAB) ARE APPLICABLE TO THE APPELLANT AND CONSEQUENTLY ERRED IN GRANTING EXEMPTION TO THE APPELLANT UNDER THAT SECT ION. 5. THE APPELLANT CRAVES LEAVES TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL AT ANY TIME OR AT THE TIME OF HEARING. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST ESTABLISHED IN 1940 AND IS GOVERNED BY THE DEED OF TRUST DATED 28.03.1955. THE TRUST IS REGISTERED U/S. 12A OF THE INCOME TAX ACT. CONSEQUENT UPON THE REGISTRA TION U/S. 12A OF THE ACT, CERTIFICATE U/S. 80G WAS GRANTED TO THE TRUST. A NO TICE U/S. 148 DATED 14.01.2010 WAS ISSUED TO THE ASSESSEE/TRUST AFTER RECORDING TH E FOLLOWING REASONS: THE ABOVE TRUST IS ASSESSED IN THE CHARGE OF ITO(E )-1(1) UNDER THE PAN AAATB0099C. WHILE GOING THROUGH THE PAST RECORDS OF THE ASSESSEE IT IS SEEN THAT THE INCOME OF THE ASSESSEE IN THE PAST YEARS, BEFOR E CLAIMING DEDUCTION U/S. 11, WAS MORE THAN THE TAXABLE INCOME AND AS SUCH THE ASSESS EE IS LIABLE TO FILE ITS RETURN OF INCOME EVERY YEAR. HOWEVER, THE ASSESSEE HAS NOT FI LED THE RETURN OF INCOME FOR A.Y. 2008-09 TILL DATE. IN THIS REGARD THE PROVISIONS OF EXPLANATION 2 TO S EC. 147, WHICH ARE REPRODUCED BELOW ARE CLEARLY APPLICABLE IN THE ASSE SSEES CASE. FOR THE PURPOSE OF THIS SECTION, THE FOLLOWING SHAL L ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSME NT, NAMELY: (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER P ERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PR EVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOM E-TAX; THE ASSESSEE HAS NOT FILED ITS RETURN OF INCOME FOR AY. 2008-09, TILL DATE. IN VIEW OF THE ABOVE PROVISION I AM CONVINCED THAT INC OME HAS ESCAPED ASSESSMENT IN THE ASSESSEES CASE AS PER THE PROVIS ION OF SECTION 147 OF THE INCOME TAX ACT, 1961. ISSUE NOTICE U/S 148. 6. IN RESPONSE TO THE NOTICE U/S. 148 IT WAS CONTENDED BEFORE AO THAT THERE WAS SOME DISPUTE AMONG THE TRUSTEE SINCE 2007, DUE TO W HICH RETURN COULD NOT BE FILED FOR FY-2007-08, 2008-09 & 2009-10. ASSESSEE F ILED RETURN OF INCOME ON 03.12.2010 IN RESPECT OF RELEVANT YEAR UNDER CONSID ERATION DECLARING TOTAL DEFICIT OF RS. 88,89,512/- AFTER CLAIMING EXEMPTION U/S. 11 OF THE ACT. DURING THE ASSESSMENT THE STATEMENT OF SHRI GIRISH REGE WAS RE CORDED WHEREIN HE ADMITTED THAT HE IS RESIDING IN THE SCHOOL PREEMIES WITH HIS PARENTS AND FAMILY WITHOUT 4 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST GIVING ANY COMPENSATION TO THE TRUST. HIS WIFE IS A LLOTTED AN OFFICE PREMISES BELONGING TO THE TRUST AND THAT HIS RELATIVE ARE AL SO GETTING BENEFIT FROM THE TRUST IN THE FORM OF REMUNERATION, SALARY WHICH HAS BEEN DISCLOSED IN FORM 10B FILED WITH THE RETURN OF INCOME. AFTER CONSIDERING THE CO NTENTION OF SHRI GIRISH REGE, AO INVOKE THE PROVISION OF SECTION 13(1) (C)(II) AN D CONCLUDED THAT THE PERSON REFERRED IN SECTION 13(3) OBTAINED DIRECT AND INDIR ECT BENEFIT OF THE TRUST. ASSESSEE FAILED TO GET THE ACCOUNT OF TRUST AUDITED AND FILED THE RETURN OF INCOME IN ACCORDANCE WITH THE PROVISION OF THE ACT. THE AO FURTHER CONCLUDED THAT THE ASSESSEE TRUST IS RUNNING SCHOOL, COLLECTING FEES, DISBURSING SALARY OF EMPLOYEE WITHOUT ANY INTERRUPTION AND WHEN IT COME TO FILING OF RETURN OF INCOME THE ASSESSEE MAKES EXCUSES OF DISPUTE AMONG THE TRUSTE E AND THUS DENIED THE EXEMPTION U/S. 11 OF THE ACT, IN ITS ORDER DATED 27 .12.2010. 7. AGGRIEVED BY THE ORDER OF AO, ASSESSEE FILED APPEAL BEFORE CIT(A) BUT WITHOUT ANY SUCCESS, HENCE, THE PRESENT APPEAL IS FILED BEF ORE US. 8. WE HAVE HEARD SHRI ANIL J. SATHE, LD. AR OF ASSESSE E AND SHRI K. GOPAL, LD. AR FOR INTERVENER (SHRI GIRISH REGE) AND SHRI P.D. RED DY, LD. CIT(DR) AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. AR OF THE ASS ESSEE ARGUED THAT THE ASSESSEE-TRUST WAS ESTABLISHED IN 1940, BESIDES OTH ER OBJECTS WITH AN OBJECTIVE OF IMPARTING EDUCATION AND FURTHERING EDUCATION AMONGS T THE CHILDREN. THE TRUST IS RUNNING THREE SCHOOLS AND IS A WELL-KNOWN EDUCATION TRUST. THE FOUNDER OF TRUST LATE SHRI DADASAHEB REGE WAS CONFERRED THE BE ST TEACHER AWARD BY THE THEN PRESIDENT OF INDIA, LATE SHRI RADHAKRISHNAN. T HE GOVERNMENT OF MAHARASHTRA WAS ALSO CONFERRED THE AWARD OF EXCELLE NCE IN THE FIELD OF EDUCATION AND COMMUNITY WELFARE UPON THE SCHOOL DECLARING IT A PREMIER EDUCATIONAL INSTITUTION. THE TRUST IS SUBJECT TO LITIGATION FRO M 2008. WHILE MAKING SUBMISSION LD. AR OF ASSESSEE REFERRED A NUMBER OF DOCUMENTS RELATED WITH LITIGATION, BEFORE CHARITY COMMISSIONER, BOMBAY HIG H COURTS AND THE HONBLE SUPREME COURT. LD. AR OF THE ASSESSEE FURTHER ARGUE D THAT THE NOTICE U/S. 148 DOES NOT SPECIFY ABOUT THE VIOLATION OF SECTION 13( 1) (C)(II) OR ABOUT WITHDRAWAL OF EXEMPTION U/S. 11 OF THE ACT. WHEREAS IN THE ORD ER, AO INVOKE THE PROVISION OF SECTION 13(1)(C)(II) AND DENIED THE EXEMPTIONS U /S. 11 OF THE ACT, WHILE ASSESSING THE INCOME. THE AR OF ASSESSEE FURTHER AR GUED THAT THE TRUST HAS PASSED RESOLUTION TO REMOVE THE PERSONS FROM THE OC CUPATION OF PREMISES AND 5 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST THE PREMISES ARE NOW IN POSSESSION TRUST SINCE JANU ARY 2016. TO BUTTRESS HIS SUBMISSION RELIED UPON THE JUDGMENT OF KARNATAKA HI GH COURT IN CIT VS. FR. MULLERS CHARITABLE INSTITUTION, 363 ITR 230 (KARN.) . LD. DR FOR REVENUE ARGUED THAT ALL ACTIONS TAKEN AGAINST THE PERSON OCCUPYING THE PROPERTY OF TRUST, AND DOCUMENTS FILED AND RELIED BY ASSESSEE ARE SUBSEQUE NT TO THE SERVICE OF NOTICE U/S. 148 OF THE ACT AND ARE NOT HELP FULL TO THE AS SESSEE. THE ASSESSEE HAS NOT DISPUTED THE POSSESSION OF THE TRUST-PROPERTY IN CO NTRAVENTION OF SECTION 13(1)(C)(II) OF THE ACT. THE PROPERTY OF TRUST IS B EING USED FOR COMMERCIAL PURPOSE WHICH IS OTHER THAN THE OBJECT OF THE TRUST . 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND GONE THROUGH THE VOLUMINOUS DOCUMENT PLACED ON RECORD BY AR OF THE A SSESSEE. FIRST WE SHALL TAKE THE GROUND NO.1 RAISED IN THE PRESENT APPEAL. WE HAVE NOTICE THAT ALL THE RECORDS PLACED ON RECORD ARE RELATED WITH THE ACTIO N/EXERCISE UNDERTAKEN BY THE ASSESSEE AFTER SERVICE OF NOTICE DATED U/S 148 DATE D 14.01.2010. ADMITTEDLY, THE RETURN OF INCOME WAS NOT FILED BY THE ASSESSEE IN I TS DUE COURSE FOR THE RELEVANT AY. THE RECORDS OF RETURN FOR THE RELEVANT YEAR UND ER CONSIDERATION WAS NOT BEFORE THE AO WHILE ISSUING NOTICE U/S. 148 WHICH I S CLEARLY RECORDED IN THE REASONS. THE RETURN OF INCOME WAS FILED ONLY ON 13. 12.2010. THE ARGUMENT OF LD. AR IS THAT NOTICE U/S. 148 DOES NOT CONTAIN THE REF ERENCE OF SECTION 11 OR ABOUT INVOKING THE PROVISIONS OF SECTION 13(1)(C)(II) HAS NOT FORCE, AS NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, HENCE, GROUND NO. 1 RAISED IN THE PRESENT APPEAL IS DISMISSED. 10. THE GROUND NOS. 2 & 3 ARE INTERCONNECTED SO BOTH TH E GROUNDS ARE DISCUSSED TOGETHER. SECTION 13 OF THE ACT IS HAVING OVERRIDIN G EFFECT ON SECTION 1. LET US EXAMINE THE SCOPE OF SUB-CLAUSE (II) OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 13 OF THE ACT. THE TITLE OF SECTION 13 STARTS AS ( SECTION 11 NOT TO APPLY IN CERTAIN CASES ). SECTION 13 (1).... (A) ..... (B) ...... (C) IN CASE OF TRUST FOR CHARITABLE OR RELIGIOUS PURPOS ES OR A CHARTABLE OR RELIGIOUS INSTITUTION, ANY INCOME THEREOF- (I) IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED OR ES TABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND UNDER THE TERMS OF THE TRUST OR THE RULES GOVERNING THE INSTITUTION, ANY PART OF SUCH INCOME ENURES, OR (II) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE T RUST OR THE INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DURING THE PRE VIOUS YEAR USED OR APPLIED. 6 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSO N REFERRED TO IN SUB-SECTION (3): PROVIDED THAT IN THE CASE OF A TRUST OR INSTITUTION CREATED OR ESTABLISHED BEFORE THE COMMENCEMENT OF THIS ACT, THE PROVISIONS OF SUB-CLAUSE (II) SHALL NOT APPLY TO ANY USE OR APPLICATION, WHETHER DIRECTLY O R INDIRECTLY, OF AY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION FOR THE BENEFIT OR ANY PERSON REFERRED TO IN SUB-SECTION (3), IF SUCH USE OR APPL ICATION IS BY WAY OF COMPLIANCE WITH A MANDATORY TERM OF THE TRUST OR A MANDATORY RULE GOV ERNING THE INSTITUTION: PROVIDED FURTHER THAT IN THE CASE OF A TRUST FOR RELIGIOUS PURPOSES OR A RELIGIOUS INSTITUTION (WHENEVER CREATED OR ESTABLISHED) OR A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED BEFORE THE COMMENCEMENT OF THIS ACT, THE PROVISIONS OF SUB-CLAUSE (II) SHALL N OT APPLY TO ANY USE OR APPLICATION, WHETHER DIRECTLY OR INDIRECTLY, OF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION FOR THE BENEFI T OF ANY PERSON REFERRED TO IN SUB-SECTION (3) IN SO FAR AS SUCH USE OR APPLICATIO N RELATES TO ANY PERIOD BEFORE THE 1 ST DAY OF JUNE, 1970; 11. SECTION 13 ENUMERATES CERTAIN CONTINGENCY, WHEN SE CTION 11 WILL NOT APPLY. SUB-CLAUSE (II) OF CLAUSE (C) OF SUB-SECTION (1) OF SECTION 13 OF THE ACT PROVIDES THAT NOTHING CONTAINED IN SECTION 11 SHALL OPERATE TO EXEMPT THE INCOME OF TRUST FOR RELIGIOUS OR CHARITABLE PURPOSES, IF ANY PART O F INCOME OR THE PROPERTY OF THE TRUST, DURING THE PREVIOUS USED OR APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED TO SUB-SECTION (3) OF SECTION 1 3. SUB-SECTION (3) OF SECTION 13 REFERS TO VARIOUS PERSONS, THE BENEFIT DERIVED B Y PRECLUDE THE TRUST FROM CLAIMING THE BENEFIT OF EXEMPTION U/S. 11. IN THE P RESENT CASE, ADMITTEDLY SOME PART OF THE TRUST PROPERTY WAS OCCUPIED BY THE PERS ON REFERRED IN SUB-SECTION (3) OF SECTION 13. THERE IS NO DISPUTE THAT RELATIVES O F THE TRUSTEE ARE GETTING SOME REMUNERATION/SALARY FROM THE INCOME OF THE TRUST. T HE TRUST WAS REGISTERED PRIOR TO 1962. 12. THE HONBLE APEX COURT IN CASE OF CIT VS. RATAN TRUST REPORTED VIDE 227 ITR 356 (SC) WHILE DEALING WITH ALMOST IDENTICAL ISSUES HELD AS UNDER: SECTION 13 OF THE INCOME-TAX ACT, 1961, PROVIDES F OR EXIGENCIES WHEN THE PROVISIONS OF SECTION 11 WOULD NOT BE APPLICABLE. S ECTION 13 WAS AMENDED BY THE FINANCE ACT, 1970, WITH EFFECT FROM APRIL 1, 19 71. SECTION 13 OF THE INCOME-TAX ACT WAS SUBSTITUTED BY A NEW SECTION BY THE FINANCE ACT, 1970, WITH EFFECT FROM APRIL 1, 1971. IT WAS STATED THAT UNDER ONE OF THE PROPOSED AMENDMENTS, ALL CHARITABLE OR RELIGIOUS-TRUSTS OR I NSTITUTIONS CREATED OR ESTABLISHED AFTER MARCH 31, 1962, WILL BE DENIED TH E BENEFIT OF EXEMPTION FROM INCOME-TAX IF ANY PART OF THEIR INCOME OR PROPERTY ENURES OR IS DURING THE PREVIOUS YEAR, APPLIED, DIRECTLY OR INDIRECTLY, FOR THE BENEFIT OF THE AUTHOR, FOUNDER, SUBSTANTIAL CONTRIBUTOR OR RELATIVE AFORES AID OR FOR THE BENEFIT OF ANY CONCERN IN WHICH ANY SUCH AUTHOR, FOUNDER, SUBSTANT IAL CONTRIBUTOR OR RELATIVE 7 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST HAS SUBSTANTIAL INTEREST. IN THE CASE OF TRUSTS OR INSTITUTIONS CREATED OR ESTABLISHED BEFORE APRIL 1, 1962 THE EXEMPTION FROM TAX WILL BE DENIED ONLY IF THEIR INCOME IS APPLIED FOR THE BENEFIT OF THE AUTH OR, FOUNDER, ETC., OTHERWISE THAN IN COMPLIANCE WITH A MANDATORY TERM OF THE TRU ST OR A MANDATORY RULE GOVERNING THE INSTITUTION. 13. NOW COMING TO THE FACTS OF THE CASE IN HAND, THE AS SESSEE TRUST WAS CREATED IN 1940 AND IS GOVERNED BY TRUST DEED DATED 28.03.1955 I.E. THE TRUST WAS CREATED MUCH PRIOR TO THE ENACTMENT OF THE INCOME-TAX ACT, 1962. THUS, THE CASE OF ASSESSEE FALLS UNDER THE PROVISO ATTACHED WITH SECT ION 13(1)(C)(II) OF THE ACT. THE PROVISO ATTACHED WITH SECTION 13(1)(C)(II) PROVIDES , IF ANY, PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST IS USED BY ANY PERSON REFERRED TO IN SUB-SECTION (3), IF SUCH USE OR APPLICATION IS BY WAY OF COMPLIANCE WITH THE TERM OF THE TRUST OR A MANDATORY RULE GOVERNING THE TRUST, DIRECTLY OR IND IRECTLY, SECTION 11 SHALL NOT APPLY. WE HAVE NOTICED THAT NEITHER AO NOR THE CIT( A) REFERRED THE SCOPE OF PROVISO WHILE CONSIDERING THE CASE OF ASSESSEE. THE RE IS NO REFERENCE IN THE ORDER OF AO OR BY LD CIT(A) THAT MANDATORY TERM OR RULES GOVERNING THE TRUST WAS EXAMINED BY THEM. THE COPY OF TRUST-DEED AND ITS RU LES IS NOT PLACED BY ANY OF THE PARTIES BEFORE US. THE JUDGMENT CITED BY THE LD . AR IN CIT VS. FR. MULLERS CHARITABLE INSTITUTION IS IN DIFFERENCE ON THE FACT S OF THE PRESENT CASE. IN FR. MULLERS CHARITABLE INSTITUTION WAS BASED ON THE SEC TION 13(1)(D), HOWEVER, IN PRESENT CASE THE CONTROVERSY IS WITH REGARD TO SECT ION 13(1)(C)(II) OF THE ACT. 14. IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE DEEM IT APPROPRIATE TO RESTORE THE CASE TO THE FILE OF AO TO EXAMINE THE T ERMS AND CONDITIONS OF TRUST- DEED AND THE RULES GOVERNING IT VISA-A-VIS IN RELATION TO THE PERSONS MENTIONED IN SUB-SECTION (3) OF SECTION 13 OF THE ACT. THE AS SESSEE IS DIRECTED TO FILE THE COPY OF TRUST-DEED ALONG WITH ITS RULES AND REGULAT IONS AND TO SHOW THE ORIGINAL, IF REQUIRED BY AO. AND AFTER EXAMINING THE TERMS AN D CONDITIONS OF THE TRUST- DEED, THE AO MAY PASS APPROPRIATE KEEPING IN VIEW, THE JUDGMENT OF APEX COURT IN CASE OF CIT VS. RATAN TRUST REPORTED VIDE 227 ITR 356 (SC) AND IN ACCORDANCE WITH LAW. 15. WITH THESE OBSERVATIONS, THE GROUND NO. 2 & 3 RAISE D IN THE PRESENT APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. 16. NOW THE GROUND NO.4 WAS RAISED IN ALTERNATIVE THAT SECTION 10(23C)(IIIAB) ARE APPLICABLE TO THE ASSESSEE. AS WE HAVE ALREADY REST ORED THE GROUND NO. 2 & 3 TO THE FILE OF AO, WHICH ARE THE BASIC ISSUES AND GOES TO THE ROOT OF THE CASE, HENCE, 8 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST THE DISCUSSION ON THIS GROUND HAS BECOME ACADEMIC. GROUND NO. 5 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. 18. NOW WE SHALL TAKE UP THE APPEAL NO. 5744/MUM/13 . IN THIS APPEAL, THE ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS OF APPEA L. GROUND NO.1 RAISED IN THE PRESENT APPEAL IS IDENTICAL TO GROUND NO. 2 OF APPE AL NO. 5127/MUM/2013, AND THE SAME IS ALREADY DECIDED IN FAVOUR OF ASSESSEE, SO KEEPING IN VIEW THE PRINCIPAL OF CONSISTENCY THIS ISSUE IS DECIDED IN F AVOUR OF ASSESSEE. 19. GROUND NO. 2 RAISED IN THE PRESENT APPEAL IS IDENTI CAL TO GROUND NO. 3 OF APPEAL NO. 5127MUM/2013 AND THE SAME IS ALREADY DECIDED IN FAVOUR OF ASSESSEE, SO KEEPING IN VIEW THE PRINCIPAL OF CONSISTENCY THIS I SSUE IS DECIDED IN FAVOUR OF ASSESSEE. 20. GROUND NO. 3 RAISED IN THE PRESENT APPEAL IS AN OUT COME OF DENIAL OF EXEMPTION U/S. 11 OF THE ACT. AS GROUND NO. 1 & 2 RAISED IN T HE PRESENT APPEAL IS RESTORED TO THE FILE OF AO, HENCE, THIS GROUND IS ALSO RESTORED TO THE FILE OF AO TO DECIDE THE SAME IN ACCORDANCE WITH LAW. 21. GROUND NO. 4 RAISED IN THE PRESENT APPEAL IS IN RES PECT OF CONFIRMING THE ADDITION OF RS. 3,99,323/- ON ACCOUNT OF DEPRECIATION. AR OF THE ASSESSEE HAS ARGUED THAT ASSESSEE HAS NOT CLAIMED SUCH DEDUCTION IN THE RETU RN OF INCOME, DESPITE THAT IT WAS DISALLOWED AND CONFIRMED BY THE CIT(A) WITHOUT ANY SPEAKING ORDER. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, THIS GROUND OF APPEAL IS ALSO RESTORED TO THE FILE OF AO TO LOOK INTO, AS TO WHY SUCH DEPRECIATION WAS DISALLOWED WITHOUT CLAIMING BY ASSESSEE AND PASS TH E ORDER IN ACCORDANCE WITH LAW. 22. GROUND NO. 5 RAISED IN THE PRESENT APPEAL IS IDENTI CAL TO GROUND NO. 4 OF APPEAL NO. 5127MUM/2013 WHICH IS HELD TO BE ACADEMIC IN VI EW OF THE FINDING OF GROUND NO. 2 & 3 IN THE SAID APPEAL. 23. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DAY OF MAY 2016. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER 9 ITA NOS. 5127 & 5744/M/2013 - BALMOHAN VIDYAMANDIR TRUST MUMBAI; DATED 11/05/2016 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. //TRUE COPY/