ITO, New Delhi V. M/s H.C. Gupta Educational Society, New Delhi

ITA 5864/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5118 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Charitable institution; Notional interest; Condonation of delay
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5864/DEL/2015 ASSESSMENT YEAR: 2007-08 ITO(E), VS. M/S HC GUPTA EDUCATIONAL SOCIETY, WARD 1(2), 6/842, MAIN BAZAR MEHRAULI ROOM NO. 2417, 24 TH FLOOR, NEW DELHI 30 E-2 BLOCK, PRATYAKSH KAR BHAWAN, DR. SHYAMA PRASADMUKHERJEE, CIVIC CENTRE, J.L. NEHRU MARG, NEW DELHI 11 0002 (APPELLANT) (RESPONDENT) REVENUE BY : SH. T. VASANTHAN, SR. DR. ASSESSEE BY : MR. RAJ KUMAR GUPTA, CA ORDER THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER DATED 27.8.2015 OF THE LD. CIT(A)-40, (EXEMPTIONS), NEW D ELHI PERTAINING TO ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THA T THERE IS NO VIOLATION OF PROVISIONS OF SECTION 13(1)(D) OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING TH E APPEAL OF THE ASSESSEE AS THE SAME IS FILED BEYOND TIME ALLOWED U/S. 249(2) OF THE I.T. ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING TH E 2 APPEAL OF THE ASSESSEE WITHOUT CONDONING THE DELAY IN FILING APPEAL AS PER PROVISIONS OF SECTION 249(3 ) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 1.11.2007 AND THE CASE WAS TAKEN UP FOR SCRUTINY. THE ASSESSMENT U/S. 143 (3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED THE ACT) OF THIS CASE WAS COMPLETED. AGAIN THE AO REOPENED THE CASE FOR REAS SESSMENT AND THE ORDER PASSED ON 25.3.2013. IN THE REASSESSMENT ORDER U/S. 147/143(3) OF THE ACT, THE AO HAS MADE THE ADDITION OF RS. 2,70,278/- ONLY. LATER AO RECTIFIED HIS ORDER AND M ADE THE ADDITION FO RS. 37,30,000/- MAINLY ON THE GROUND THAT THE AS SESSEE HAS GIVEN THE UNSECURED LOAN AND VIOLATED THE SECTION 11(1)(D ) OF THE ACT VIDE ASSESSMENT ORDER AND COMPLETED THE AT RS. 2,70,278/ - VIDE ORDER DATED 25.3.2013 PASSED U/S. 147/143(3) OF THE I.T. ACT, 1961. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE APPEALE D BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 27.8.2015 HAS ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED WITH IMPUGNED ORDER DATED 27.8.2015, T HE REVENUE FILED APPEAL BEFORE THE TRIBUNAL. 4. LD. SR. DR STATED THAT LD. CIT(A) HAS DECIDED T HE ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE WITHOUT CONDONING THE DELAY IN FILING THE APPEAL BY THE ASSESSEE BEFORE HIM. HE FURTHER STATED THAT LD. CIT(A) HAS ALSO WRONGLY HELD THAT THERE IS ANY VIOLATION OF PROVISIONS OF SECTION 13(1)(D) OF THE I.T. ACT, 196 1 WHEREAS THE ASSESSEE HAS GIVEN INTEREST FREE UNSECURED LOAN TO ANOTHER CHARITABLE TRUST WHICH IS CONTRARY TO THE PROVISIONS OF SECTIO N 13(1)(D) OF THE I.T. ACT, 1961. 5. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE HA S RELIED UPON THE ORDER OF THE LD. CIT(A) AND ALSO STATED THAT TH ERE IS NO DELAY IN FILING THE APPEAL BEFORE THE LD. CIT(A). THEREFOR E, THE LD. CIT(A) HAS NOT DISCUSSED ABOUT THE CONDONATION OF DELAY. HE FURTHER 3 STATED THAT THE ASSESSEE HAS FILED THE APPEAL BEFO RE THE LD. CIT(A) AGAINST THE ORDER PASSED BY THE AO U/S. 154 OF THE ACT READ WITH SECTION 147/143(3) OF THE I.T. ACT, 1961 DATED 31.3 .2014 AS MENTIONED BY THE ASSESSEE IN THE FORM NO. 35 AND TH E ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT(A) ON 24.4.2014 AS ME NTIONED BY THE LD. CIT(A) ON THE 1 ST PAGE OF THE IMPUGNED ORDER. THEREFORE, THE APPEAL IS NOT BARRED BY LIMITATION AND IS WELL WITH IN THE TIME, THEREFORE, THE QUESTION OF DECIDING THE ISSUE OF CO NDONATION OF DELAY DOES NOT ARISE BY THE LD. CIT(A), HENCE, THE APPEAL OF THE REVENUE MAY BE DISMISSED. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, I FIND THAT CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE THAT THERE IS NO DELAY IN FILING THE APPE AL BEFORE THE LD. CIT(A). HENCE, THE LD. CIT(A) HAS NOT DISCUSSED ABO UT THE CONDONATION OF DELAY. I FIND THAT ASSESSEE HAS F ILED THE APPEAL BEFORE THE LD. CIT(A) AGAINST THE ORDER PASSED BY T HE AO U/S. 154 OF THE ACT READ WITH SECTION 147/143(3) OF THE I.T. AC T, 1961 DATED 31.3.2014 AS MENTIONED BY THE ASSESSEE IN THE FORM NO. 35 AND THE ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT(A) ON 24.4.2014 AS MENTIONED BY THE LD. CIT(A) ON THE 1 ST PAGE OF THE IMPUGNED ORDER. THEREFORE, THE APPEAL IS NOT BARRED BY LIMITATION A ND WAS WELL WITHIN THE TIME, THEREFORE, THE QUESTION OF DECIDING THE I SSUE OF CONDONATION OF DELAY DOES NOT ARISE BY THE LD. CIT(A), HENCE, T HE GROUND NO. 2 & 3 RAISED BY THE REVENUE ARE REJECTED. 6.1 AS REGARDS THE GROUND NO. 1 IS CONCERNED RELATI NG TO VIOLATION OF PROVISIONS OF SECTION 13(1)(D) OF THE ACT, I FIN D THAT LD. CIT(A) HAS ELABORATELY DISCUSSED AND ADJUDICATED THE ISSUE VID E PARA NO. 3.3. AT PAGE NO. 3 TO 4 OF THE IMPUGNED ORDER. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER:- 3.3 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND 4 CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE ASSESSEE HAS GIVEN THE INTEREST FREE UNSECURED LOAN TO THE ANOTHER CHARITABLE TRUST FOR THE SAME PURPOSE DOES NOT VIOLATE THE SECTION 13(1)(D) OF THE I.T. ACT, 1961. THE ASSESSEE ALSO RELIED ON THE CASE OF DIT VS. ACME EDUCATION SOCIETY, 326 ITR 146 (2010) OF DELHI HIGH COURT ON THE SAME GROUND AND ACCORDINGLY THE AI IS NOT JUSTIFIED TO MAKE THE ADDITION OF INTEREST FREE UNSECURED LOAN AND TO CALCULATE THE NOTIONAL INTEREST @12% AND ACCORDINGLY THE ADDITION MADE BY THE AO IS DELETED. 6.2 AFTER PERUSING THE AFORESAID FINDING OF THE LD. CIT(A), I FIND THAT ASSESSEE HAS GIVEN THE INTEREST FREE UNSECURED LOAN TO THE ANOTHER CHARITABLE TRUST FOR THE SAME PURPOSE DOES NOT VIOLATE THE SECTION 13(1)(D) OF THE I.T. ACT, 1961. I FURTHER FIND THAT IN VIEW OF THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF DIT VS. ACME EDUCATION SOCIETY, 326 ITR 146 (2010), AO IS NOT JU STIFIED TO MAKE THE ADDITION OF INTEREST FREE UNSECURED LOAN AND T O CALCULATE THE NOTIONAL INTEREST @12% AND ACCORDINGLY THE ADDITION MADE BY THE AO WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES N OT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUND NO. 1 RAISED BY THE REVENUE. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 08-08-2017. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED :08-08-2017 SR BHATANGAR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT 5 NEW DELHI.