HINDUJA FOUNDATION, MUMBAI V. DDIT EMP II(1), MUMBAI

ITA 5510/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8932 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 30-08-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 26-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHATURBHUJ DAS
• Assessee Lawyers: S K MUTSADDI; KESHAV BHUJLE
• Keywords: Charitable institution; Deemed to accrue or arise in india
• Section: 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI , . . BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 5510/MUM/2011 / ASSESSMENT YEAR 1999-2000 HINDUJA FOUNDATION, HINDUJA HOUSE, 171, DR. ANNIE BESANT ROAD, WORLI, MUMBAI 400 016. PAN: AAATH 0124 L VS. DY. DIRECTOR OF INCOME TAX (EXEM) 11 (1), PIRAMAL CHAMBERS, LALBAUG, MUMBAI. ( / APPELLANT ) ( ! / RESPONDENT ) ' / APPELLANT BY : SHRI KESHAV BHUJLE & SHRI S.K. MUTSADDI ! # ' / RESPONDENT BY : SHRI CHATURBHUJ DAS # $%& / DATE OF HEARING : 30 -08-2012 '( # $%& / DATE OF PRONOUNCEMENT : 05-09-2012 )* / O R D E R PER RAJENDRA, A.M. THE FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY TH E APPELLANT AGAINST THE ORDER DATED 03-02-2011 OF THE CIT(A)-1, MUMBAI : ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE REOPENING OF THE ASSESSMENT. THE REOPENING PROCEEDINGS SHOULD BE ANNULLED ITA NO. 5510/MUM/2011 HINDUJA FOUNDATION 2 ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN U PHOLDING THE TAXING OF A SUM OF RS. 7,50,000/- U/S. 11(3) OF THE INCOME TAX ACT AS THE APPELLANTS DEEMED INCOME FOR THE ASSESSMENT YEAR 1999/2000. THE SUM OF RS. 7,50 ,000/- SHOULD NOT BE TAXED U/S. 11 (3) OF THE INCOME TAX ACT AS THE APPELLANTS DEEMED INCOME FOR ASSESSMENT YEAR 1999/2000, SINCE THE SUM WAS ALREADY SPENT IN EARLI ER YEARS FOR THE PURPOSE FOR WHICH IT WAS ACCUMULATED. THE APPELLANT RESERVES ITS RIGHT TO ADD TO, ALTER, AMEND, MODIFY OR DELETE ANY OF THE GROUNDS TAKEN IN THIS APPEAL. THE GROUNDS TAKEN IN THIS APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE ASSESSEE, A PUBLIC CHARITABLE TRUST, FILED ITS RETURN OF INCOME ON 01-11- 1999 DISCLOSING TOTAL INCOME AT RS. NIL. ASSESSMEN T WAS FINALISED ON 25-01-1993 DETERMINING THE INCOME OF THE ASSESSEE AT RS. NIL. 3. THE ASSESSMENT WAS RE-OPENED U/S. 147 OF THE INCOME TAX ACT, 1961(ACT) BY THE ASSESSING OFFICER (AO) AFTER RECORDING THE REAS ONS THAT INCOME OF THE ASSESSEE TRUST HAD ESCAPED TAXATION. AS PER THE AO, DURING T HE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE HAD ACCUMULATED A SUM OF RS. 15 LAKHS U/S. 11(2) OF THE ACT FOR A PERIOD OF SEVEN YEARS TILL THE PREVIOUS YEAR ENDI NG ON 31-03-1998. HE FURTHER OBSERVED THAT OUT OF THE SAID AMOUNT RS. 7,50,000/- WAS SPENT FOR THE PURPOSE FOR WHICH IT WAS ACCUMULATED AND THE SAME WAS ADJUSTED IN THE BALANCE SHEET FOR THE ASSESSMENT YEAR 1994-95,THAT THE BALANCE AMOUNT OF RS. 7,50,000/- FROM THE ACCUMULATED AMOUNT WAS NOT UTILISED BY THE ASSESSEE WITHIN THE SPECIFIED PERIOD WHICH WAS ENDING ON 31-03-98, THAT THEREFORE, THE P ROVISIONS OF SECTION 11(3) WERE ATTRACTED. HE FURTHER HELD THAT ACCUMULATED AMOUNT REMAINED UNUTILISED, THAT THE SAID AMOUNT CEASED TO BE ACCUMULATED OR SET APART. HE H ELD THAT PROVISION WITH REGARDING TO ACCUMULATION WERE VERY, THAT THE VIOLATION OF TH E SAME TANTAMOUNTED TO INCOME OF THE ASSESSEE. FINALLY, HE HELD THAT THE UNUTILISED AMOUNT OF RS. 7,50,000/- WAS DEEMED TO BE INCOME OF THE ASSESSEE FOR THE A.Y.1999-2000. 4. ASSESSEE TRUST FILED AN APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY (FAA) AFTER CONSIDERING THE SUBMISSIONS OF THE TRUST AND THE ASSESSMENT ORDER, HE UPHELD THE RE-OPENING AS WELL AS THE ADDITION MADE BY THE AO. HE HELD THAT THE ASSESSEE TRUST HAD FAILED TO SPEND THE AMOUNT AS PER THE CON DITIONS LAID DOWN U/S. 11(2) OF THE ACT, THAT RS. 7.5 LAKHS WAS LIABLE TO BE TAXED TO T HE INCOME OF THE TRUST AS PER THE PROVISIONS OF SECTION 11(3)( C ) R.W.S. 11(2) OF TH E ACT, THAT CASE LAWS RELIED UPON BY THE AR SUPPORTED THE ACTION OF THE AO. 5. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT THERE WAS MISTAKE ON THE PART OF THE ASSESSEE TRUST IN PREPARING THE INCOME AND E XPENDITURE ACCOUNT FOR THE YEAR 1990-91,THAT ASSESSEE AS WELL AS AO DID NOT CALCULA TE THE ELIGIBLE AMOUNT OF ACCUMALATION, THAT AS PER THE PROVISIONS OF THE ACT 25% OF THE AMOUNT WAS TO BE EXCLUDED FIRST FOR COMPUTING DIS-ALLOWANCES U/S. 11 OF THE ACT, THAT ASSESSEE TRUST HAD SPENT RS. 15.84 LAKHS WITHIN THE STIPULATED PERIOD , THERE WAS NO VIOLATION OF PROVISIONS OF SECTION 11(2) / 11(3) OF THE ACT. DE PARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE ORDERS OF THE AO AND THE FAA. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE MAT ERIAL BEFORE US, WE ARE OF THE OPINION THAT CALCULATION DONE BY THE ASSESSEE T RUST AND THE AO IN THE FIRST INSTANCE ITA NO. 5510/MUM/2011 HINDUJA FOUNDATION 3 I.E., ASSESSMENT YEAR 1990-91 WAS NOT AS PER THE PR OVISIONS OF SECTION 11 OF THE ACT. AR HAS RIGHTLY POINTED OUT THAT, AS PER THE PROVISI ONS OF SECTION 11(1)(A) OF THE ACT, 25%OF THE GROSS INCOME WAS TO BE EXCLUDED BEFORE AR RIVING AT ELIGIBLE AMOUNT FOR CALCULATION. AS PER THE INCOME AND EXPENDITURE STA TEMENT, GROSS INCOME OF THE ASSESSEE TRUST, FOR THE ASSESSMENT YEAR UNDER CONSI DERATION WAS RS. 46.46 LAKHS. OUT OF WHICH RS. 26.99 LAKHS WERE SPENT ON CHARITABLE P URPOSES. FOR ARRIVING AT ACCUMULATION FIGURE 25% OF 46.46 LAKHS HAS TO BE REDUCED. IT IS FOUND THAT THE TRUST HAD SPENT RS.26.99 FOR CHARITABLE PURPOSES. CONSID ERING THESE FIGURES ASSESSEE-TRUST HAD NOT TO ACCUMULATE 15 LAKHS-RATHER ACCUMULATION OF RS.7.5 LAKHS WOULD HAVE BEEN SUFFICIENT. AS PER THE I & E STATEMENT FOR THE NEXT AY, ASSESSEE-TRUST HAD GROSS INCOME OF RS.30.63 LAKHS AND IT SPENT RS.37.21 LAKH S FOR CHARITABLE PURPOSES. THUS, CONDITION OF SPENDING THE UNADJUSTED BALANCE OF AC CUMULATED FUND WITHIN THE PERIOD OF SEVEN YEARS WAS COMPLIED BY THE ASSESSEE IN AY 1 992-93. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN RE-OPENING THE ASSESSMENT FOR NON-UTILISATION OF RS. 7.5 LAKHS AS PER THE PROVISI ONS OF SECTION 11(2)/11(3). 7. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT RE-OPENING OF THE ASSESSMENT AS WELL AS ADDITION MA DE/UPHELD BY THE AO/FAA WERE NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. GROUND NOS. 1 & 2 ARE DECIDED IN FAVOUR OF THE ASSE SSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH SEPTEMBER, 2012. SD/- SD/- ( /VIJAY PAL RAO ) ( , / RAJENDRA ) )+ / JUDICIAL MEMBER & )+ / ACCOUNTANT MEMBER MUMBAI, ,) DATE: 05 TH SEPTEMBER, 2012 TNMM )* )* )* )* # ## # $ $ $ $ -$ -$ -$ -$ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE !$ $ //TRUE COPY// )* )* )* )* / BY ORDER, . .. . / / / / / DY./ASSTT. REGISTRAR , / ITAT, MUMBAI