ADIT (E) I(2), MUMBAI V. SAI SHIVA EDUCATIONAL TRUST, MUMBAI

ITA 5803/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0829 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI RAJENDRA , ACCOUNTATN MEMBER ITA NO . 5803 / MUM./ 2011 ( ASSESSMENT YEAR : 200 8 09 ) ADDL. DIRECTOR OF INCOME TAX (EXEMPTION) CIRCLE 1(2), PIRAMAL CHAMBERS P AREL MUMBAI 400 012 .. APPELLANT V/S SAI SHIVA EDUC ATIONAL TRUST GROUND FLOOR, AMAR MAHAL ANANDRAO DEVI ROAD NEAR CHANDAN CINEMA (JUHU) MUMBAI 400 049 PAN AAATS2744P .... RESPONDENT REVENUE BY : SHRI CHANDRA VIJAY ASSES SEE BY : SHRI SUBHASH S. SHETTY DATE OF HEARING 22 .0 7 .2015 DATE OF ORDER 31.07.2015 O R D E R PER A.D. JAIN , JUDICIAL MEMBER TH E PRESENT APPEAL BY THE R EVENUE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 20 TH MAY 2011 , PASSED BY THE COMMISSIONER ( APPEA LS) I , MUMBAI, FOR THE ASSESSMENT YEAR 200 8 09 . THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. WHETHER ON FACTS OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DIRECTING THE A.O. TO ALLOW THE EXEMPTION U/S 11 OF THE ACT IGNORING THE ELABORATE DI SCUSSION OF THE ISSUES AND FACTS. 2. WHETHER ON THE FACTS OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF ` 1,35,00,000 , MADE BY THE A.O. SAI SHIVA EDUCATIONAL TRUST 2 2. IN GROUND NO.1, THE REVENUE HAS RAISED THE ISSUE OF ALLOWING EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT BY THE LEARNED CIT(A). THE ASSESSEE I S RUNNING AN EDUCATIONAL INSTITUTION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD GIVEN INTEREST FREE ADVANCES TO THE TUNE OF ` 11,26,904, TO ONE OF THE TRUSTEES , SHRI ARUN KUMAR J. MUCHHALA. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT INTEREST FREE ADVANCE OF ` 6,11,25,000, HAD ALSO BEEN GIVEN TO M/S. RITIKA HOTELS PVT. LTD., WHERE THE SAID TRUSTEE , SHRI A R UN KUMAR J. MUCHHALA, AND HIS WIFE SMT. RITIKA, WHO IS ALSO A TRUSTEE OF THE ASSESSEE TRUST, ARE INTERESTED PARTIES. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE TRUST, BY GIVING INTEREST FREE ADVANCES TO A PARTY COVERED UNDER SECTION 13(3) OF THE ACT, HA D CONTRAVENED THE PROVISIONS OF SECTION 13, AND HENCE, THE ASSESSEE WAS NOT ELIGIBLE FOR ANY BENEFIT OF SECTION 11 OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT BY NOT ASKING FOR ANY SURETY AGAINST THE ADVANCE, INDIRECT BENEFIT WAS PROVIDED TO THE RELATED PARTIES. IT WAS FURTH ER OBSERVED BY THE ASSESSING OFFICER THAT S ECTION 13 OF THE ACT SPECIFIES THE CIRCUMSTANCES UNDER WHICH THE BENEFITS UNDER SECTION 11 WOULD NOT BE AVAILABLE TO AN ORGANIZATION. SINCE IN THIS CASE , THE ASSESSEE HAS DIVERTED THE INCOME OF THE TRUST , DIRECTLY , OR INDIRECTLY , FOR THE BENEFIT OF PERSON REFERRED TO IN SECTION 13(3) , NOTHING CONTAINED IN SAI SHIVA EDUCATIONAL TRUST 3 SECTION 11 OR SECTION 12 , SHALL OPERATE AS PER THE PROVISIONS OF SECTION 13 OF THE ACT. THE ASSESSING OFFICER THUS HELD THAT THE ASSESSEE WAS NOT ENTITLED TO BENE FIT OF SECTION 11 OF THE ACT. 3. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER, FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN THE LEARNED CIT(A) REVERSED THE ACTION OF THE ASSESSING OFFICER AND HELD THAT THE ASSES SEE WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THE LEARNED CIT(A) GAVE HIS DECISION ON THE GROUND THAT THE INTEREST FREE ADVANCE GIVEN BY THE ASSESSEE TRUST TO THE RELATED PARTIES / TRUSTEES WAS NOT FOR THE BENEFIT OF ANY TRUST. ACCORDING TO T HE LEARNED CIT(A), THE ADVANCE WAS GIVEN FOR ACQUIRING LAND AND BUILDING AS PER THE AGREEMENT. ON THE BASIS OF THESE OBSERVATIONS MADE BY THE LEARNED CIT(A) IN PARA 3.2 OF HIS ORDER, HE HELD THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 11. AG GRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, CONTENDED THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS NON SPEAKING. THE BASIS OF THE REASONING GIVEN BY THE LEARNED CIT(A) IS NEITHER COMING OUT FROM THE ORDER , NOR IS IT SUPPORTED BY ANY FACTS OR EVIDENCE. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, MANY QUERIES SAI SHIVA EDUCATIONAL TRUST 4 STILL REMAIN UNANSWERED , IN THE ABSENCE OF WHICH , MERELY ON THE BASIS OF THE B ALD ASSERTION OF THE ASSESSEE, THE ACTION OF THE ASSESSING OFFICER IN DENYING THE EXEMPTION UNDER SECTION 11 OF THE ACT SHOULD NOT HAVE BEEN REVERSED. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE ONUS IS ON THE ASSESSEE TO SHOW WITH THE HELP OF REQUISITE EVIDENCE , THAT THE INTEREST FREE ADVA NCE GIVEN WAS NOT FOR THE BENEFIT OF ANY TRUSTEE , BUT FOR THE BENEFIT OF THE ASSESSEE TRUST. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE RESPONDENT ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A) AND SUBMITTED THAT THE ADVANCE WAS GIVEN FOR THE PURP OSE OF PURCHASE OF LAND. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE LEARNED CIT(A) AS WELL AS BY THE LEARNED COUNSEL FOR THE ASSESSEE SEEMS TO BE PLAUSIBLE. BUT ON THESE CONTENTIONS, REASONIN GS HAVE TO BE SUPPORTED WITH THE FACTS AND EVIDENCE S . CERTAIN QUESTIONS STILL REMAIN UNANSWERED AND THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT SHOW ANY MATERIAL TO FIND ANSWERS OF THE SE QUESTION S E.G., WHAT HAPPENED TO THE ADVANCE AND WHETHER ANY SUCH OR ANY OTHER PROPERTY WAS ACTUALLY PURCHASED , OR WHETHER THE ADVANCE WAS RETURNED , OR THE SAME WAS SQUARED OFF , OR IT WAS ADJUSTED AGAINST SOME OTHER PROPERTY AND WHETHER THE PROPERTY PROPOSED TO BE PURCHASED WAS OF ANY USE FOR THE ASSESSEE TRUST , ETC., SAI SHIVA EDUCATIONAL TRUST 5 ET C . ALL THESE FACTS NEED TO BE ANALYSED AND ONLY THEN APPROPRIATE DECISION CAN BE TAKEN TO DECIDE THE ISSUE WHETHER THE INTEREST FREE ADVANCE WAS FOR THE BENEFIT OF TRUST OR WAS FOR THE BENEFIT OF THE TRUSTEE. THE LEARNED CIT(A), WHILE ADJUDICATING THIS ISS UE, HAS NOT PASSED A SPEAKING ORDER AND HAS NOT GIVEN ANY SUCH FACTS OR REFERRED TO ANY SUCH EVIDENCE IN SUPPORT OF THE CONTENTIONS OF THE ASSESSEE. IN OUR OPINION, THIS ISSUE DESERVES TO BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR DENOVO ADJUDICATIO N AFTER EXAMINING ALL THE EVIDENCES WHICH THE ASSESSEE MAY PLACE BEFORE THE LEARNED CIT(A) TO DECIDE THE ISSUE WITH THE HELP OF ACTUAL FACTS AND FIGURES , AS TO WHETHER THE INTEREST FREE ADVANCE WAS GIVEN FOR THE BENEFIT OF THE ASSESSEE TRUST , OR FOR THE BE NEFIT OF THE TRUSTEES. THE QUESTIONS THAT CAME TO OUR MIND SOME OF WHICH HAVE BEEN REFERRED TO HEREIN ABOVE, NEED TO BE ANSWERED WITH THE HELP OF EVIDENCE S AND IN ADDITION TO THAT THE LEARNED CIT(A) IS FREE TO CALL FOR ANY OTHER DETAILS / EVIDENCE TO DECID E THE ISSUE AS PER LAW AND FACTS. WE THUS SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ALLOW GROUND NO.1, RAISED BY THE REVENUE FOR STATISTICAL PURPOSES. 7. IN G ROUND NO.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF ` 1,35,00,000, MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD TRANSFERRED A SUM OF ` 1,35,00,000, TO THE BUILDING FUNDS WHICH HAD NOT BEEN SAI SHIVA EDUCATIONAL TRUST 6 EXPENDED BUT WAS TAKEN TO THE BALANCE SHEET AND CREDITED TO TH E BUI L DING FUNDS. ACCORDING TO THE ASSESSING OFFICER, THIS WAS MERELY A BOOK ENTRY AND NOT ACTUAL EXPENDITURE. 8. THE LEARNED CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE FILED APPLICATION IN FORM NO.10, ALONG WITH A COPY OF RESOLUTION OF THE MEMBERS OF THE TRUSTEES FOR ACCUMULATION OF INCOME AS REQUIRED BY LAW. SINCE WE HAVE RESTORED THE ISSUE OF EXEMPTION TO THE FILE OF THE LEARNED CIT(A), IN OUR CONSIDERED OPINION, THIS ISSUE ALSO NEEDS TO BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FO R DECIDING THE ISSUE AFRESH BY PASSING A SPEAKING ORDER AFTER DECIDING THE ISSUE RAISED IN GROUND NO.1 AS AFORESAID. THUS, GROUND NO.2, IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT O N 31.07.2015 SD/ - R AJENDRA ACCOUNTANT MEMBER SD/ - A.D. JAIN JUDICIAL MEMBER MUMBAI, DATED : 31.07.2015 SAI SHIVA EDUCATIONAL TRUST 7 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI