ADIT (E) I(1), MUMBAI V. ROYAL HIGHER EDUCATION SOCIETY, MUMBAI

ITA 5282/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71225 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Benefit of exemption
• Section: 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , . ! , ' # BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM ./ I.T.A. NO.5282/MUM/2012 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2009-10 THE ADIT(E), ROOM NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI - 12. $ $ $ $ / VS. ROYAL HIGHER EDUCATION SOCIETY, 390, SIR. J.J.ROAD, MUMBAI 400008 & ' ./ ' ./ PAN/GIR NO. : AAATR5242F ( &( / APPELLANT ) .. ( )*&( / RESPONDENT ) &( + / APPELLANT BY: SHRI SANJEEV JAIN )*&( , + / RESPONDENT BY : SHRI PRAKASH PANDIT. $ , -' / DATE OF HEARING : 10/10/2013 ./% , -' / DATE OF PRONOUNCEMENT : 10/10/2013 0 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS D IRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-1 MUMBAI DATED 27/06/2012 FOR THE ASSESSMENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DIRECTING THE AO TO ALLOW EXEMPTION AS CLAIMED U/S 11 OF THE I. T ACT, WHEN THE ASSESSEE HAS VIOLATED THE PROVISION U/S 13 (3) OF THE I.T ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DIRECTING THE AO TO ALLOW EXEMPTION AS CLAIMED U/S. 11 OF THE I.T ACT INSPITE OF SUBSTANTIAL CHANGE IN THE MEMORANDUM OF ASSOCIATION. ./ I.T.A. NO.5282/MUM/2012 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2009-10 2 2. AT THE OUTSET IT WAS SUBMITTED THAT BOTH THE ISS UES RAISED BY THE REVENUE IN THIS APPEAL ARE COVERED IN FAVOUR OF THE ASSESSE E BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2008-09. REFERENCE WAS MADE TO THE ORDER DATED 14/12/2012 PASSED IN ITA NO.6262/MUM/2011, COPY OF THE SAID ORDER WAS PLACED ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. THE FIRST ISSUE RAISED BY THE REVENUE WAS STATED TO BE COVERED BY PARAS 8 AND 9 . THE SECOND GROUND IS STATED TO BE COVERED BY PARA 6 OF THE TRIBUNALS ORDER. T HE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS REPRODUCED BELOW: 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEA LS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GR OUNDS : 1. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE EXEMPTION AS CLAIMED U/S. 11 OF THE I.T. ACT, WHEN THE ASSESSEE HAS VIOLATED THE PROVISIONS U/S. 13(3) OF THE I.T. ACT. 2. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN THE AO TO ALLOW THE EXEMPTION AS CLAIMED U/S. 11 OF THE I. T. ACT INSPITE OF SUBSTANTIAL CHANGE IN THE MEMORANDUM OF ASSOCIATIO N. 6. AT THE TIME OF HEARING BEFORE US, THE LEARNED DR HAS NOT PRESSED GROUND NO.2 RAISED BY THE REVENUE IN THIS APPEAL THEREBY ACCEPT ING THAT THERE WAS NO SUBSTANTIAL CHANGE IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE TRUST DATED 20-07-1987 ON THE BASIS OF WHICH REGISTRATION U/S 1 2A WAS GRANTED BY THE COMMISSIONER OF INCOME TAX. GROUND NO. 2 OF THE REV ENUES APPEAL IS ACCORDINGLY DISMISSED. 7. AS REGARDS GROUND NO.1, THE LEARNED DR SUBMITTED THAT THE ASSESSEE TRUST HAVING GIVEN ADVANCE OF RS.15 LAKHS TO ROYAL SOCIET Y OF BOMBAY, THE PERSON REFERRED TO IN SECTION 13(3), WITHOUT ADEQUATE SECU RITY OR ADEQUATE INTEREST, IT WAS A CLEAR CASE OF VIOLATION AS SPECIFIED IN SECTION 13( 1) READ WITH SECTION 13(2)(A) MAKING THE ASSESSEE DISENTITLED FOR THE BENEFIT OF SECTIO N 11. HE CONTENDED THAT THE AO, THEREFORE, WAS CORRECT IN DENYING THE EXEMPTION CLA IMED BY THE ASSESSEE U/S 11 AND THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN DI RECTING THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR SUCH EXEMPTION. HE, THERE FORE, ST RONGLY RELIED ON THE ORDER OF THE AO IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, STRONGLY RELIED ON THE ORDER OF THE LEARNED CIT(APPEALS) AS WELL AS THE DE TAILED SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF ITS CASE ON TH IS ISSUE. HE SUBMITTED THAT THE ADVANCE OF RS.15 LAKHS WAS GIVEN BY THE ASSESSEE TO ROYAL SOCIETY OF BOMBAY IN THE YEAR 1999 AND THAT TOO FOR ACQUIRING PROPERTY F OR THE PURPOSE OF CONSTRUCTING SCHOOL BUILDING. HE SUBMITTED THAT THE POSSESSION O F THE SAID PROPERTY WAS ALSO TAKEN BY THE ASSESSEE IN THE YEAR 1999 ITSELF AND E VEN THE RENTAL INCOME EARNED FROM THE SAID PREMISES WAS DULY RECORDED BY THE ASS ESSEE IN ITS BOOKS OF ACCOUNTS. HE CONTENDED THAT THERE WAS THUS NO VIOLATION OF AN Y OF THE PROVISIONS OF SECTION 13 ./ I.T.A. NO.5282/MUM/2012 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2009-10 3 AS RIGHTLY HELD BY THE LEARNED CIT(APPEALS) WHILE D IRECTING THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL ON RECORD. AS PER THE PROVISIONS OF CLAUSE (C) OF S UB-SECTION (1) OF SECTION 13, IF ANY PART OF INCOME OR PROPERTY OF THE TRUST IS USED OR APPLIED DURING THE RELEVANT PREVIOUS YEAR DIRECTLY OR INDIRECTLY FOR THE BENEFI T OF ANY PERSON REFERRED TO IN SUB- SECTION (3) OF SECTION 13, THE BENEFIT OF SECTION 1 1 SHALL NOT BE AVAILABLE. SECTION 13(2) SPECIFIES TRANSACTIONS WHICH ARE DEEMED TO BE FOR THE BENEFIT OF SUCH PERSONS AND AS PER CLAUSE (A) THEREOF, IF ANY PART OF THE INCOME OR PROPERTY OF THE TRUST IS OR CONTINUES TO BE LENT TO ANY PERSON REFERRED TO IN S ECTION 13(3) FOR ANY PERIOD DURING THE PREVIOUS YEAR WITHOUT EITHER ADEQUATE SECURITY OR ADEQUATE INTEREST OR BOTH, THE SAME SHALL BE TREATED AS THE TRANSACTIONS DEEMED T O BE FOR THE BENEFIT OF SUCH PERSON. IN THE PRESENT CASE, THE AMOUNT OF RS.15 LA KHS NO DOUBT WAS ADVANCED BY THE ASSESSEE TRUST TO ROYAL SOCIETY OF BOMBAY, A PE RSON REFERRED TO IN SECTION 13(3). HOWEVER, THE SAID AMOUNT WAS PAID AGAINST ACQUISITI ON OF PROPERTY AS PER THE AGREEMENT DATED 17 TH NOVEMBER, 1999. IN PURSUANCE OF THE SAID AGREEMENT , THE POSSESSION OF THE PROPERTY WAS ALSO RECEIVED BY THE ASSESSEE TRUST AND EVEN THE INCOME FROM THE SAID PROPERTY IN THE FORM OF RENT W AS RECEIVED BY THE ASSESSEE WHICH WAS DULY DISCLOSED IN ITS BOOKS OF ACCOUNT. T HE ASSESSEE WAS ALREADY A TENANT IN THE SAID PROPERTY AND THE PURPOSE OF ACQU IRING THE SAID PROPERTY WAS TO CONSTRUCT A SCHOOL THEREON AS PER OBJECTIVE OF THE ASSESSEE TRUST. HAVING REGARD TO ALL THESE FACTS OF THE CASE, WE AGREE WITH THE VIEW OF THE LEARNED CIT(APPEALS) THAT THE AMOUNT OF RS.15 LAKH ADVANCED BY THE ASSESSEE T RUST TO ROYAL SOCIETY OF BOMBAY CANNOT BE TREATED AS GIVEN WITHOUT ADEQUATE SECURITY OR INTEREST SO AS TO DENY IT THE BENEFIT OF EXEMPTION AVAILABLE U/S 11 B Y INVOKING SECTION 13(1) READ WITH SECTION 13(2)(A). WE, THEREFORE, UPHOLD THE IM PUGNED ORDER OF THE LEARNED CIT(APPEALS) DIRECTING THE AO TO ALLOW EXEMPTION U/ S 11 AS CLAIMED BY THE ASSESSEE AND DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. 3. LD. DR COULD NOT CONTROVERT THE SUBMISSIONS MADE BY LD. AR. 4. AFTER HEARING BOTH THE PARTIES, RESPECTFULLY FO LLOWING THE AFOREMENTIONED ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A .Y 2008-09 WE DECIDE BOTH THE GROUNDS RAISED BY THE REVENUE IN FAVOUR OF ASSESSEE . 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 /10/2013 . 0 , ./% ' 1 2$3 10 /10//2013 / , 4 SD/- SD/- ! (RAJENDRA) . . (I.P.BANSAL) ' /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; 2$ DATED 10/10/2013 ./ I.T.A. NO.5282/MUM/2012 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2009-10 4 . $ . .VM , SR. PS 0 0 0 0 , ,, , )-56 )-56 )-56 )-56 7 6%- 7 6%- 7 6%- 7 6%- / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 694 )-$ , , / DR, ITAT, MUMBAI 6. 4: ; / GUARD FILE. 0$ 0$ 0$ 0$ / BY ORDER, *6- )- //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI