Sri Aurobindo Ashram Harpagon Workshop Trust, Pondicherry V. ACIT, Pondicherry

ITA 531/CHNY/1993

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73701 (ITAT-CHENNAI)
• Duration Of Justice: 20 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 1989-1990
• Appeal Filed On: 23-02-1993
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM IRS
• Assessee Lawyers: NIKITA RADHAKRISHNAN
• Section: 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! '# , $ !%' !& BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ! ./ ITA NO. 2422(MDS)/91 ! ./ ITA NO. 531(MDS)/93 $ ' (' / ASSESSMENT YEARS : 1988-89 & 1989-90 M/S SRI AUROBINDO ASHRAM HARPAGON WORKSHOP TRUST, 3 & 5, RUE DUPUY, PONDICHERRY 605 001. G.I. NO./PAN : 610-A V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I(1), PONDICHERRY. (#*/ APPELLANT) (,-#*/ RESPONDENT) AND ! ./ ITA NO. 742(MDS)/93 $ ' (' / ASSESSMENT YEAR : 1989-90 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I(1), PONDICHERRY. V. M/S SRI AUROBINDO ASHRAM HARPAGON WORKSHOP TRUST, 3 & 5, RUE DUPUY, PONDICHERRY 605 001. (#*/ APPELLANT) (,-#*/ RESPONDENT) $ './ 0 ! / ASSESSEE BY : MS. NIKITA RADHAKRISHNAN, CA 1' 0 ! / REVENUE BY : SHRI GURU BHASHYAM, IRS, JCIT ! 2 0 /3 / DATE OF HEARING : 11 TH FEBRUARY, 2014 45( 0 /3 / DATE OF PRONOUNCEMENT : 11 TH FEBRUARY, 2014 2 I.T.A. NO. 2422/MDS/91, ETC. / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS IS A BUNCH OF THREE APPEALS. THE APPEALS I N ITA NO.2422(MDS)/91 AND ITA NO.531(MDS)/93 ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 1988-89 AND 1989- 90. THE APPEAL IN ITA NO.742(MDS)/93 IS FILED BY THE REVENU E FOR THE ASSESSMENT YEAR 1989-90. THE HONBLE HIGH COURT OF MADRAS HAS REMITTED BACK THE APPEALS TO THE TRIBUNAL TO DECIDE THE FOLLOWING ISSUES:- (1) WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80HHC ON THE ELIGIBLE UNITS ON STAND ALONE BASIS? (2) WHETHER THE COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN ALLOCATING THE DONATIONS BETWEEN THE DIFFERENT UNITS OF THE ASSESSEE, ALLOWABLE AS DEDUCTION UNDER SECTION 35(1)(II)? 2. THERE IS NO DISPUTE REGARDING THE FACT THAT THE ASSESSEE HAS MAINTAINED SEPARATE SET OF ACCOUNTS IN RESPECT OF ITS EVERY INDEPENDENT UNIT. THE ASSESSEE HAS KEPT THE IDENTITY OF DIFFERENT UNITS INDEPENDENTLY. EVEN THOUGH THE ASS ESSEE IS 3 I.T.A. NO. 2422/MDS/91, ETC. ULTIMATELY CONSOLIDATING THE ACCOUNTS OF ALL THE UN ITS OWNED AND RUN BY IT, FOR OPERATIONAL PURPOSES AS WELL AS FOR ACCO UNTING PURPOSES, EVERY UNIT IS TREATED AS SEPARATE AND INDEPENDENT. WHEN THAT IS THE SITUATION, THE ASSESSING OFFICER IS NOT JUSTIFIED I N COMPUTING THE BENEFITS AVAILABLE TO THE ASSESSEE UNDER SECTION 80 HHC ON THE BASIS OF THE CONSOLIDATED TURNOVER OF ALL THE UNITS OWNED AND OPERATED BY THE ASSESSEE. WHEN THE ASSESSING OFFIC ER CONSOLIDATES TURNOVER OF ALL THE UNITS AND WORKS OU T THE DEDUCTION AVAILABLE TO THE ASSESSEE UNDER SECTION 80HHC IN A LUMP SUM MANNER, THE COMPUTATION RESULTS IN PREJUDICE TO THE ASSESSEE, WHICH IS NOT PERMISSIBLE IN LAW. IF EVERY OPERATIONAL UN IT HAS MAINTAINED ITS SEPARATE IDENTITY, THE PROFIT & LOSS ACCOUNT OF THO SE INDEPENDENT UNITS HAVE TO BE WORKED OUT SEPARATELY AND DEDUCTIO NS AVAILABLE TO THE ASSESSEE SHOULD ALSO BE COMPUTED INDEPENDENTLY, UNIT-WISE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE QUANTUM OF BENEFITS AVAILABLE TO THE INDIVIDUAL UNIT-WISE. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 3. REGARDING THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE UNDER SECTION 35(1)(II), IT IS TO BE SEEN THAT THE DONATIONS WERE NOT MADE BY THE ASSESSEE UNIT-WISE. THE DONAT IONS HAD BEEN MADE BY THE ASSESSEE AS A WHOLE IN ITS ENTIRE BUSIN ESS AS A SINGLE 4 I.T.A. NO. 2422/MDS/91, ETC. UNIT. THE DEDUCTION HAS BEEN CLAIMED OUT OF THE GR OSS TOTAL INCOME OF THE ASSESSEE, WHICH IS MADE AFTER CONSOLIDATING THE PROFITS FROM EVERY INDIVIDUAL UNITS. THEREFORE, IT IS NOT POSSI BLE TO IDENTIFY THE CONTRIBUTION WITH ANY PARTICULAR UNIT AS SUCH. THE REFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS TAKEN A VI EW IN FAVOUR OF ASSESSEE BY ALLOCATING THE DEDUCTION AVAILABLE T O THE DONATIONS AMONG DIFFERENT UNITS OWNED AND OPERATED BY THE ASS ESSEE. WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND NEITHER TH E ASSESSEE HAS ANY BETTER OPTION TO SUGGEST. THEREFORE, THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS) REGARDING SECT ION 35(1)(II) IS UPHELD. 4. REGARDING THE APPEAL FILED BY THE REVENUE, THER E IS NO DIRECTION BY THE HONBLE HIGH COURT AS THERE WAS NO APPEAL FILED BY THE REVENUE BEFORE THE HONBLE HIGH COURT. THEREFO RE, THE ORDER OF THE TRIBUNAL AS FAR AS THE APPEAL FILED BY THE REVE NUE FOR THE ASSESSMENT YEAR 1989-90 IS CONCERNED, STANDS GOOD A S PARTLY ALLOWED. 5. IN RESULT, THE TWO APPEALS FILED BY THE ASSESSE E AS WELL AS THE APPEAL FILED BY THE REVENUE STAND PARTLY ALL OWED. 5 I.T.A. NO. 2422/MDS/91, ETC. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON TUESDAY, THE 11 TH OF FEBRUARY, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 11 TH FEBRUARY, 2014. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.