The Cuttack Roman Catholic Diocesan Corporation, Bhubaneswar V. DCIT (Exemptions), Bhubaneswar

ITA 55/CTK/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4327 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 09-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Assessee Lawyers: S K AGRAWALLA
• Keywords: Charitable institution
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO. 55 /CTK/201 7 ( / ASSESSMENT YEAR : 20 12 - 20 13 ) THE CUTTACK ROMAN CATHOLIC DIOCESAN CORPORATION, ARCH BISHOPE HOUSE, SATYA NAGAR, BHUBANESWAR - 751007 ODISHA VS. DCIT(EXEMPTIONS) , BHUBANESWAR ./ ./ PAN/GIR NO. : A AAAT 0859 R ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHR I S.K.AGRAWALLA, AR /REVENUE BY : SHRI PIYUSH KOLHE , CIT D R / DATE OF HEARING : 2 7 / 0 2 /201 8 / DATE OF PRONOUNCEMENT 28/02 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 3 , BHUBANESWAR, DATED 05.12.2016 . 2. GROUND NOS.1 & 2 READS AS UNDER : - 1. THAT, THE LD. AUTHORITIES BELOW HAS COMMITTED AN ERROR OF LAW IN WRONG INTERPRETING THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT IN VIEW O F THE FACT THAT THE APPELLANT IS CARRYING OUT OF CHARITABLE AND RELIGIOUS ACTIVITIES AND THEREFORE ELIGIBLE FOR GETTING OF BENEFITS SECTION 11 OF THE ACT. 2. THAT, THE LD. FORUMS BELOW ARE WRONG IN HOLDING THAT, THE APPELLANT IS CARRYING OUT THE ACTIVITIE S FOR PARTICULAR RELIGIOUS COMMUNITY WHEREAS THE APPELLANT IS CARRYING OUT OF THE CHARITABLE AND RELIGIOUS ACTIVITIES WITHIN THE AMBIT OF ITS MEMORANDUM OF ASSOCIATION AND RULES AND REGULATIONS. THEREFORE THE BENEFITS OF SECTION 11 ARE TO BE ALLOWED. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT AN ANALYSIS OF THE NATURE OF EXPENDITURE INCURRED BY THE SOCIETY ON ITS MEMBERS AMOUNTING TO RELIGIOUS EDUCATION OF PRIESTS, PERFORMING RELIGIOUS FUNCTIONS, UNDERTAKING REPAIRS AND MAINTENANCE OF CHURCH ES, MAKING DONATIONS TO ITA NO. 55 / CTK/20 1 7 2 ORGANIZATIONS HAVING PREDOMINANTLY RELIGIOUS OBJECTS, WOULD PARTAKE THE CHARACTER OF BENEFIT BEING CONFERRED UPON THE MEMBERS OF A PARTICULAR RELIGIOUS COMMUNITY AS OPPOSED TO THE SOCIETY AT LARGE, AND THIS BRINGS IT SQUARELY WITHIN THE MISCHIEF OF SECTION 13(1)(B) OF THE ACT, 1961, WHEREIN THE LEGISLATURE HAS EXPRESSLY FROWNED UPON SUCH ACTIVITIES PERFORMED BY A CHARITABLE TRUST. ANY VIOLATION OF SECTION 13(1)(B) WILL ONLY RESULT IN THE FORFEITURE OF EXEMPTION AND THE RESULTANT AFFE CT WILL BE THE INCLUSION IN TOTAL INCOME. THEREFORE, THE AO DENIED THE EXEMPTION U/S.11 & 12 OF THE ACT TO THE ASSESSEE AND THE SURPLUS OF INCOME OVER EXPENDITURE AMOUNTING TO RS.4,79,40,970/ - WAS BROUGHT TO TAX. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTI ON OF THE AO. 5. THE AR OF THE ASSESSEE ARGUED BEFORE US THAT IN THE PRECEDING ASSESSMENT YEARS 2006 - 07, 2007 - 08, 2009 - 10, 2010 - 11 AND 2011 - 12 AND SUBSEQUENT ASSESSMENT YEAR S 2014 - 15 & 2015 - 1 6 IN AN ASSESSMENT MADE U/S.143(3) OF THE ACT , THE RETURNED INCOME OF THE ASSES SEE AT NIL, WAS ACCEPTED AND DEDUCTION CLAIMED U/S.11&12 OF THE ACT WAS ALLOWED TO THE ASSESSEE. IN T HIS REGARD, H E HAS FILED COPIES OF THE ORDERS AT PAGES 1 TO 19 OF THE PAPER BOOK VOL - II AND PAGES 64 TO 69 OF THE PAPER BOOK VOL - 1 AND SUBMITTED THAT FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RADH ASOAMI SATSANG VS. CIT [1992] ITR 3 21 (SC) AND IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD [2013] 358 ITR 295 (SC) , WHERE IT HAS BEEN HELD THAT THOUGH RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS BUT CONSISTENCY SHOULD BE MAINTAINED, THE ADDITI ON SHOULD BE DELETED. ITA NO. 55 / CTK/20 1 7 3 6 . ON THE OTHER HAND, THE DR SUPPORTED THE ORDER OF THE CIT(A) AND ARGUED THAT AS THERE WAS VIOLATION OF PROVISIONS OF SECTION 13(1)(B) OF THE ACT, AS THE ASSESSEE IS CARRYING OUT RELIGIOUS ACTIVITIES, THEREFORE, IS NOT ENTITLED TO E XEMPTION U/S.11&12 OF THE INCOME TAX ACT, 1961. 7 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT SECTION 13(1)(B) OF THE ACT READS AS UNDER : - 13 (1) NOTHING CONTAINED IN SECTION 11 [OR SECTION 12] SH ALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF - ( A ) X X X (B) IN THE CASE OF A TRUST - FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THIS ACT, AN Y INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; ON BARE READING OF THE ABOVE PROVISION SHOWS THAT CHARITABLE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BE NEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE, AFTER THE COMMENCEMENT OF T HE ACT, WOULD NOT BE ENTITLED TO EXEMPTION U/S.11 OF THE ACT. FROM THE PAPER BOOK FILED BY THE ASSESSEE IN VOLUME NO.1, WE FIND THAT CERTIFICATE OF INCORPORATION OF THE COMPANY UNDER THE COMPANIES ACT, 1913 IS PLACED WHICH SHOWS THAT THE COMPANY WAS INCORPORATED ON 22 ND DECEMBER, 1945 AS A NON - PROFIT MAKING COMPANY. T HUS, AS IT IS NOT IN DISPUTE THAT THE ASSESSEE - INSTITUTION WAS ESTABLISHED BEFORE THE COM MENCEMENT OF THE INCOME TAX ACT, 1961 , THEREFORE, THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT A RE NOT APPLICABLE TO IT. HENCE, THE AO AS WELL AS CIT(A) WERE NOT JUSTIFIED IN NOT ALLOWING THE EXEMPTION U/S.11 & 12 OF THE ACT TO THE ASSESSEE. WE, ITA NO. 55 / CTK/20 1 7 4 THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DIRECT THE AO TO RECOMPUTE THE INCOME OF THE ASSESSEE AFTER ALLOWING EXEMPTION U/S.11 & 12 OF THE ACT TO THE ASSESSEE. ACCORDINGLY, WE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28/02 /201 8 . SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 28/02 /2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVA TE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - THE CUTTA CK ROMAN CATHOLIC DIOCESAN CORPORATION, ARCH BISHOPE HOUSE, SATYA NAGAR, BHUBANESWAR - 751007 ODISHA 2. / THE RESPONDENT - DCIT(EXEMPTIONS), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//