Appeal details
Counselvise Citation
[2019] 115 COUNSELVISE.COM (IT) 9492 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-09-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2010-2011
Appeal Filed On
07-03-2019
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , , ' BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.588/CHNY/2019 /ASSESSMENT YEAR: 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHENNAI CIRCLE,AYAKAR BHAVAN, ANNEXE BLDG.,III FLOOR, CHENNAI 600 034. VS. M/S.JEPPIAAR EDUCATIONAL TRUST, NEW NO.29A,OLD NO.12, GAJAPATHY STREET, ROYAPETTAH, CHENNAI 600 014. [ PAN: AAATJ 0562 E ] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.D.DIVAHAR,JCIT,D.R *+) , /RESPONDENT BY : SMT.S.VIDYA,C.A AND SHRI SRIRAJ GOKAVARAPU,C.A , /DATE OF HEARING : 19.09.2019 , /DATE OF PRONOUNCEMENT : 19.09.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNAI, I N ITA NO.TR.321/2016-17 DATED 20.12.2018 FOR THE AY 2010- 11. ITA NO.588/CHNY/2019 :- 2 -: 2. MR.D.DIVAHAR REPRESENTED ON BEHALF OF THE REVENU E AND SMT.S.VIDYA,C.A AND SHRI SRIRAJ GOKAVARAPU REPRESE NTED ON BEHALF OF THE ASSESSEE. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS FO R ADJUDICATION. 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LD.CIT(A) ERRED IN HLDING THAT EXEMPTION U/ S.11 CANNOT BE DENIED WHILE INTEREST BEARING FUNDS ARE DIVERTED TO SPECIF IED PERSONS U/S.13(3) OF THE INCOME TAX ACT, 1961 NAMELY M/S.HOLY SATELLI TE TOWN LTD., AND M/S.JET ASSOCIATES WITHOUT CHARGING ANY INTEREST WH ICH IS IN VIOLATION OF PROVISIONS OF SECTION 13(1)(C) R.W.S.13(2)(A) OF TH E INCOME TAX ACT, 1961. 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD.CIT(A) HAS ERRED IN HOLDING THAT THERE IS NO CASE FOR MAKING A DISAL LOWANCE IN RESPECT OF INTEREST AMOUNTING TO RS.4,82,10,602/- WITHOUT APPR ECIATING THE FACT THAT THE TRANSACTIONS ARE NOT GENUINE BUSINESS TRAN SACTIONS BUT ONLY INTENDED TO BENEFIT THE TRUSTEES/OTHER CONCERNS. 2.2. THE LD.CIT(A) ERRED BY RELYING ON THE I.T.A.T ORDERS PASSED FOR EARLIER ASSESSMENT YEARS WITHOUT NOTING THAT THE OR DERS RELIED UPON HAVE NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL S HAVE BEEN FILED BEFORE THE HONBLE MADRAS HIGH COURT AND THE ISSUE HAS NOT BECOME FINAL. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. AT THE TIME OF HEARING, IT IS FAIRLY AGREED BY BOTH THE SIDES THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.86/MDS./2013 VIDE ORDER DATED ITA NO.588/CHNY/2019 :- 3 -: 22.04.2013, AND FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08 IN ITA NOS.1333, 1334, 1591 TO 1595/MDS./2010 VIDE ORDER D ATED 15.06.2011. FOR THE ASSESSMENT YEAR 2009-10 IN REVENUES APPEAL IN ITA NO.86/MDS./2013 VIDE ORDER DATED 22.04.2014, THE CO -ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE HAS CATEGORICAL LY HELD AT PARA-5, THE RELEVANT PORTION AS FOLLOWS:- IN ITS EARLIER ORDERS, THE TRIBUNAL HAS CONSISTEN TLY HELD THAT THE TRANSACTIONS THE ASSESSEE HAD WITH M/S.HOLY SATELLI TE TOWN LTD., AND M/S.JET ASSOCIATES ARE BUSINESS TRANSACTIONS AN D THE PAYMENTS MADE BY THE ASSESSEE-TRUST ARE AGAINST SUPPLY OF GO ODS AND RENDERING OF SERVICES. WHEN THE CHARACTER OF PAYMEN TS ARE HELD TO BE IN THE NATURE OF BUSINESS TRANSACTIONS AND FOR V ALID CONSIDERATION, IT IS NOT POSSIBLE FOR THE TRIBUNAL TO HOLD A DIFFERENT VIEW THAT THE PAYMENTS MUST BE TREATED AS INDIRECTL Y DIVERTED BY THE ASSESSEE. IT IS ALSO NECESSARY TO TAKE INTO CO NSIDERATION THE ARGUMENT OF THE LEARNED CHARTERED ACCOUNTANT APPEAR ING FOR THE ASSESSEE THAT THE QUANTUM OF SUPPLY OF GOODS AND SE RVICES AVAILED BY THE ASSESSEE-TRUST FROM THOSE CONCERNS HAVE INCR EASED MANIFOLD AND THE INCREASE IN THE PAYMENTS MADE TO THOSE CONC ERNS ARE ONLY THE REFLECTION OF INCREASE IN THE QUANTUM OF SUPPLY OF GOODS AND SERVICES. THEREFORE, WE FIND THAT THIS APPEAL HAS T O BE DECIDED BY FOLLOWING THE BINDING DECISIONS OF THE CO-ORDINATE BENCHES RENDERED FOR THE EARLIER ASSESSMENT YEARS. THIS HAS BEEN FOLLOWED BY THE DECISION OF CO-ORDIN ATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08 IN ITA NOS.1333, 1334, 1591 TO 1595/MDS./20 10 VIDE ORDER DATED 15.06.2011 WHEREIN IT HAS BEEN HELD AS FOLLOW S:- ITA NO.588/CHNY/2019 :- 4 -: 35.2. THE ASSESSEE-TRUST HAD MADE CERTAIN PAYMENTS TO M/S. HOLY SATELLITE TOWN LTD. THE PAYMENTS WERE MADE FOR THE SUPPLY OF READY MIX CONCRETE FOR CONSTRUCTION OF ASSESSEE'S BUILDINGS. M/S. HOLY SATELLITE TOWN LTD. IS AN ASSOCIATE CONCERN COMING WITHIN THE PURV IEW OF SEC.13(3). THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TA X (APPEALS) HELD THAT THE PAYMENTS WERE MADE BY THE ASSESSEE-TRUST T O THE SAID COMPANY, :- 45 -: ITA 1333, 1334 ETC & CO 116 TO 120/10 EVEN WHEN BALANCE OF AMOUNTS ARE STILL RECOVERABLE FROM THAT COMPANY. IT IS THE CASE OF THE LOWER AUTHORITIES THAT WHEN HUGE BALANCES ARE OUTST ANDING FROM M/S. HOLY SATELLITE TOWN LTD., THERE WAS NO JUSTIFICATIO N FOR THE ASSESSEE TO MAKE FURTHER PAYMENTS IN FAVOUR OF THAT COMPANY. IT IS ALSO THE FINDING OF THE LOWER AUTHORITIES THAT M/S. HOLY SATELLITE TOWN LTD. HAS SUPPLIED READY MIX CONCRETE NOT ONLY TO THE ASSESSEE-TRUST B UT ALSO TO OUTSIDERS. IT IS, IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, T HAT THE LOWER AUTHORITIES HAVE HELD THAT THE ADVANCES MADE BY THE ASSESSEE TO M/S. HOLY SATELLITE TOWN LTD. WERE IN THE NATURE OF DEPOSITS MADE IN CO NTRAVENTION OF SEC.13(1)(D). 35.3. WE CONSIDERED THE ISSUE IN A DETAILED MANNER. IT IS A FACT ON RECORD AS WELL AS REINFORCED BY THE OBSERVATIONS OF THE LO WER AUTHORITIES THAT M/S. HOLY SATELLITE TOWN LTD. IS ENGAGED IN THE BUS INESS OF READY MIX CONCRETE AND THE SAID COMPANY IS SUPPLYING THE ENTI RE QUANTITY OF READY MIX CONCRETE REQUIRED BY THE ASSESSEE-TRUST FOR CON STRUCTING ITS BUILDINGS. THE CASE OF THE LOWER AUTHORITIES IS THAT M/S. HOLY SATELLITE TOWN LTD. IS SUPPLYING READY MIX CONCRETE TO OUTSIDE PARTIES ALS O. BUT THE MOST IMPORTANT QUESTION TO BE LOOKED INTO, IS WHETHER TH E ASSESSEE-TRUST HAS PURCHASED READY MIX CONCRETE FROM ANY PARTY OTHER T HAN M/S. HOLY SATELLITE TOWN LTD.. THE ANSWER IS NO. THE ASSESSEE IS PURCHASING READY MIX CONCRETE ONLY FROM M/S. HOLY SATELLITE TOWN LTD . IT MAY BE SELLING OUTSIDERS WHEN SURPLUS READY MIX CONCRETE IS AVAILA BLE OCCASIONALLY. THAT FACT DOES NOT DILUTE THE BUSINESS RELATIONSHIP BETW EEN THE ASSESSEE-TRUST AND M/S. HOLY SATELLITE TOWN LTD. 35.4. THE CONTENTION OF THE ASSESSEE-TRUST IS THAT AS THE ASSESSEE IS CONSTRUCTING BUILDINGS AND CAMPUSES FOR HOUSING ITS EDUCATIONAL ITA NO.588/CHNY/2019 :- 5 -: INSTITUTIONS AT A LARGE SCALE AND THEREFORE NECESSA RY TO ENSURE UNINTERRUPTED SUPPLY OF READY MIX CONCRETE. IT IS F OR THAT PURPOSE ACCORDING TO THE ASSESSEE, ADVANCES ARE GIVEN TO M/ S. HOLY SATELLITE TOWN LTD.. 35.5. IT IS ALSO TO BE SEEN THAT M/S. HOLY SATELLIT E TOWN LTD. IS SUPPLYING READY MIX CONCRETE TO THE ASSESSEE-TRUST, BY AND LA RGE AT THE RATE LOWER THAN THE OPEN MARKET RATE. 35.6. WHEN THESE CRUCIAL FACTS ARE CONSIDERED TOGET HER, AND THE NORMAL CONCLUSION ARRIVED AT IS THAT THE RELATION BETWEEN THE ASSESSEE-TRUST AND M/S. HOLY SATELLITE TOWN LTD. IS BUSINESS :- 47 -: ITA 1333, 1334 ETC & CO 116 TO 120/10 RELATION. THE COROLLARY OF THIS FI NDING IS THAT THE ACCOUNT OF M/S. HOLY SATELLITE TOWN LTD. MAINTAINED IN THE ACCOUNTS OF THE ASSESSEE-TRUST IS A RUNNING BUSINESS ACCOUNT. THESE BASIC CHARACTERISTICS ARE NOT CHANGED ONLY FOR THE REASON THAT M/S. HOLY SATELLITE TOWN LTD. IS AN ENTITY COMING UNDER SEC.13(3). 5. IT WAS SUBMITTED BY LD.DR THAT THE ORDER OF T RIBUNAL HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. FURTHER, THE LD.DR SUBM ITTED THAT THE APPEAL HAS BEEN FILED BEFORE THE HONBLE MADRAS HIGH COURT AND THE ISSUE HAS NOT BECOME FINAL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS IT IS NOTICED THAT THE ISSU E IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF CO-ORDINATE BEN CH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR S, AND AS IT IS NOTICED THAT THE LD.CIT(A) HAS FOLLOWED THE JUDICIAL DISCIP LINE BY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN A SSESSEES OWN CASE REFERRED TO SUPRA, WE FIND NO ERROR IN THE ORDER OF THE LD. CIT(A), WHICH ITA NO.588/CHNY/2019 :- 6 -: CALLS FOR ANY INTERFERENCE. CONSEQUENTLY, THE APPEA L FILED BY THE REVENUE STANDS DISMISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSIO N OF HEARING ON THE 19 TH SEPTEMBER, 2019 IN CHENNAI. SD/- SD/- ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 19 TH SEPTEMBER, 2019. K S SUNDARAM , *45 65 /COPY TO: 1. ) /APPELLANT 4. 7 /CIT 2. *+) /RESPONDENT 5. 5 * /DR 3. 7 ( ) /CIT(A) 6. /GF
