Sumangalam Education Charitable Trust, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2 (4) , RAJKOT-GUJARAT

ITA 589/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2382 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: D P MODY
• Keywords: Charitable institution; Retrospective amendment
• Section: 143(3); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: S H RI S. S. GODARA, JUDICIAL MEMBER AND SHR I MANISH BORAD , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - CO URT AT AHMEDABAD] SUMANGALAM CHARITABLE TRUST, 3, JANTA JANARDAN SOCIETY, AERODROME ROAD, RAJKOT PAN: AAHTS0378Q (APPELLANT) VS ITO, WD. 2(4), RAJKOT (RESPONDENT) REVENUE BY : S H RI C.S. ANJARIA, D . R. ASSESSEE BY: S H RI D.P. MODY , A.R. DATE OF HEARING : 07 - 01 - 2 016 DATE OF PRONOUNCEMENT : 11 - 01 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , AR ISES FROM ORDER OF THE CIT(A) - 2, RAJKOT DATED 11 - 09 - 2015 IN APPEAL NO. CIT(A) - 2 / 0156/13 - 14 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 589 / RJT /20 15 A SSESSMENT YEAR 2011 - 12 I .T.A NO. 589/RJT /20 15 A.Y. 2011 - 12 PAGE NO SUMANGALAM EDUCATION C HARITABLE TRUST VS. ITO 2 WE HA VE HEARD RIVAL CONTENTIONS. BOTH PARTIES REITERATE THEIR RESPECTIVE STANDS. 2. THE ASSESSEE S TWIN SUBSTANTIVE GROUNDS CHALLENGE THE LOWER APPELLATE ORDER UPHOLDING ASSESSING OFFICER S ACTION INTER ALIA INVOKING SECTION 40(A)(IA) DISALLOWANCES ON LEASE R ENT PAYMENT OF RS. 9 LACS AND CLINICAL AFFILIATION/TRAINING FEES OF RS. 5,40,000/ - PAID TO PANDIT DINDAYAL HOSPITAL, RAJKOT ON ACCOUNT OF NON - DEDUCTION OF TDS IN ASSESSMENT ORDER DATED 23 - 01 - 2014. 3. WE COME TO FORMER GROUND FIRST. THE ASSESSEE - TRUST RUNS SCHOOLS AND COLLEGES IN RAJKOT. IT HAS GOT TWO NURSING INSTITUTES. IT PAID TOTAL R ENT OF RS. 9 LACS TO FOUR CO - OWN ER S I.E. RS. 4.5 LACS IN CASE OF EACH INSTITUTE . THE ASSESSEE DID NOT DEDUCT ANY TDS ON THE GROUND THAT PAYMENT MADE TO EACH CO - OWNER WAS LESS THAN THE THRESHOLD LIMIT OF RS. 1.2 LACS U/S. 194I OF THE ACT. THE ASSESSING OFFICER INVOKED SECTION 40(A)(IA) QUOTING ITS FAILURE IN DEDUCTING TDS THEREUPON. THIS RESULTED IN THE IMPUGNED DISALLOWANCE. 4. THE ASSESSEE FILED APPEAL. IT INTER ALIA ARGUED THAT ITS FOUR RECIPIEN T S HAD ALREADY GOT THEIR RESPEC TIVE RENT PAY MENT ASSESSED UNDER THE INCOME TAX L AW. THEIR RETURN S ALONG WITH COMPUTATION S AND LE DGER ACCOUNT S WERE PLACED ON RECORD. THE CIT(A) DOES NOT DISPUTE OR SPECIFICALLY RE JECT IT I N HIS FINDING UNDER CHALLENG E. HE HAS PROCEEDED TO UPHOLD THE ASSESSING OFFICER S ACTION. I .T.A NO. 589/RJT /20 15 A.Y. 2011 - 12 PAGE NO SUMANGALAM EDUCATION C HARITABLE TRUST VS. ITO 3 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE ISSUE INVOLVED. THERE IS NO DI S PUTE THAT THE ASSESSEE S RECIPIENTS ALREADY STAND ASSESSED QUA THE RENT PAY MENT IN QUESTION. WE FIND THAT A CO - ORDINATE BENCH DECISION IN ITA 337/AGRA/2013 RAJEEV KUMAR AGRAWAL VS. ACIT HOLDS THAT SECOND PROVISO IN SECTION 40(A)(IA) OF THE ACT IS DECLARATORY A ND CURATIVE IN NATURE T O BE GIVEN RETROSPECTIVE EFFECT FROM 01 - 04 - 2005 . THE SAME PROVIDES THAT WHERE AN ASSESSEE FAILS TO DEDUCT WHOLE OR ANY PART OF THE TAX UNDER CHAPTER XVIIB ON ANY SUCH SUM BUT IS NOT THE ONE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1), THEN, FOR THE PURPOSE OF SAID SUB - CLAUSE, IT SHA LL BE DEEM ED THAT THE ASSESSEE DEDUCTED AND PAID THE TAX ON SUCH SUMS ON THE DATE OF FURNISHING OF RE T URN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. HON BLE DELHI HIGH COURT IN ITA 160/2015 CIT VS. ANSAL LAND TOWNSHIP DECIDED ON 28 - 06 - 2015 UPHOLD S THE TRIBUNAL S DECISION ABOVE SAID. THE REVENUE IS UNABLE TO POINT OUT ANY DISTINCTION ON LAW OR FACTS. WE INVOKE THE ABOVE STA T ED PROVISION TO SECTION 40(A)(IA), DRAW SUPPORT FROM JUDICIAL PRECEDENT AND HOLD THAT THE ASSESSEE CANNOT BE TREATED THE ONE IN DEFAULT U/S. 201(1) OF THE ACT. THE IMPUGNED DISALLOWANCE OF RS. 9 LACS STANDS DELETED. 6. THIS LEAVES US WITH THE SECOND ISSUE OF CORRECTNESS OF SECTION 40(A)(IA) DISALLOWANCE OF RS. 5,40,000/ - ON PAYMENTS UNDER THE HEAD CLINICAL AFFILIATION AND T RAINING FEES PAID TO PANDIT DINDAYAL UPADHAYAY CIVIL HOSPITAL FOR FAILURE IN DEDUCTING TDS. THE ASSESSEE CLAIMED ITS PAYEE HOSPITAL TO BE OWNED AND MANAGED BY THE STATE GOVERNMENT FOR IMPARTING TRAINING TO ITS EDUCATIONAL INSTITUTIONS. THE CIT(A) I .T.A NO. 589/RJT /20 15 A.Y. 2011 - 12 PAGE NO SUMANGALAM EDUCATION C HARITABLE TRUST VS. ITO 4 CONFIRM S ASSESSING OFFICER S FINDING QUOTING ITS FAILURE IN PLACING RELEVANT DOCUMENTARY EVIDENCE TO PROVE THAT THIS PAYEE HOSPITAL IS A GOVT. ENTITY IN THE LIST OF INSTITUTIONS RECOGNIZED/NOTIFIED U/S. 196 COMPRISING OF APPROVED HOSPITALS . WE DEEM IT APPROPRIAT E THAT THIS ONE REQUIRES TO BE ADJUDICATED AFRESH SINCE THE ASSESSEE HAS NOT BEEN ABLE TO FILE ALL NECESSARY DOCUMENTARY EVIDENCE AND OTHER CORROBORATIVE MATERIAL SUPPORTING ITS PLEA. THIS ISSUE IS REMITTED BACK TO THE ASSESSING OFFICER. THE RELEVANT GRO UND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. THIS ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 11 - 01 - 201 6 SD/ - SD/ - ( MANISH BORAD ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 11 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER , ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT