ADIT (E)-II(2), MUMBAI V. YATEEMKHANA & MADRASSA ANJUMAN KHAIRUL ISLAM, MUMBAI

ITA 5891/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3412 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V JHAVERI; FORUM MEHTA
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH, MUMBAI , BEFORE SHRI R.K.GUPTA, JM & SHRI N.K.BILLAIYA , AM ITA NO. 5 891 / MUM/ 20 1 1 ( ASSESSMENT YEAR : 200 6 - 0 7 ) ADIT (E) - II(2), MUMBAI VS. M/S YATEEMKHANA & MADRASSA ANJUMAN KHAIRUL ISLAM, BAITUL AMAN CO - OP HOUSING SOCIETY LIMITED, NAGPADA, MUMBAI - 400 008 PAN/GIR NO. : A AATY 091 9 J ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. PAVAN VED /ASSESSEE BY : MR. B.V.JHAVERI & MS. FORUM MEHTA DATE OF HEARING : 1 2 TH JUNE, 201 3 DATE OF PRONOUNCEMENT : 19 TH JUNE, 2013 O R D E R PER SHRI R.K.GUPTA, JM : TH IS APPEAL HA S BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 15 - 6 - 2011 PASSED BY THE LEANED CIT(A) - I , MUMBAI RELATING TO THE ASSESSMENT YEAR 200 6 - 0 7 . 2 . THE DEPARTMENT IS OBJECTING IN ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE ACT. 3 . BRIEF FACTS OF THE CASE NOTED BY THE LEARNED CIT( A) IN PARA 4 OF ITS ORDER ARE THAT , THE ASSESSEE IS AGGRIEVED BY ACTION OF THE AO IN DISALLOWING E XEMPTION CLAIMED UNDER SECTION 10(23C)(IIIAB) OF THE ACT . IN THE ASSESSMENT ORDER, THE AO NOTED THAT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE ACT . THE AO HAS NOT ALLOWED THE CLAIM OF THE APPELLANT ON THE GROUND THAT EXEMPTION U/S. ITA NO . 5891 /201 1 2 UNDER SECTION 10(23C)(IIIAB) OF THE ACT IS ALLOWABLE ONLY TO THOSE INSTITUTIONS WHICH ARC WHOLLY AND SUBST A NTIALLY FINANCED BY THE GOVERNMENT. ACCORDING TO THE AO, IF THE ASSESSEE IS WHOLLY FINANCED BY THE G OVERNMENT, THE EXEMPTION CLAIMED UNDER SECTI ON 10(23C)(IIIAB) OF THE ACT IS ALLOWABLE. HOWEVER, THE TERM 'SUBSTANTIALLY FINANCED' HAS NOT BEEN DEFINED. ACCORDINGLY, THE AO HAS TAKEN THE HELP OF SECTION 14 OF COMPTROLLER AND AUDITOR GENERAL'S (DUTIES, POWERS AND CONDITIONS OF SERVICE ) ACT, 1971, ACCO RDING TO WHICH T HE TERM 'SUBSTANTIALLY' MEANS NO T LESS THAN 75% OF THE TOTAL EXPENDITURE. ACCORDING TO THIS PROVISION, THE COMPTROLLER AND AUDITOR GENERALS (DUTIES, POWERS AND CONDITIONS OF SERVICE), WOULD AUDIT THOSE INSTITUTIONS WHI CH ARE WHOLLY OR SUBS TANTIALLY FINANCED BY THE GOVERNMENT. ACCORDINGLY HE HAS NOTED THAT IN THE CASE OF THE ASSESSEE , THE TOTAL EXPENDITURE WAS RS .15,46,57,090/ - AND THE TOTAL GOVERNMENT GRANT WAS RS .10,85,12,563/ - . SINCE THE TOTAL GOVERNMENT GRANT IS LESS THAN 75%, THE REFORE, THE AO DENIED THE BENEFI T OF EXEMPTION U/S. 10(23 C)(IIIAB). 4 . BEFORE CIT(A) DETAILED WRITTEN SUBMISSIONS WERE FILED, WHICH ARE RECORDED IN THE ORDER OF THE CIT(A) AT PAGES 3 TO 7. AFTER CONSIDERING THE DETAILED WRITTEN SUBMISSION AND PERUSING OTHER MATE RIAL ON RECORD, THE CIT(A) FOUND THAT THE AO WAS NOT JUSTIFIED IN DENYING THE EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE ACT . ACCORDINGLY, HE ALLOWED THE CLAIM OF THE ASSESSEE BY RECORDING HIS FINDING AT PAGE 7 OF HIS ORDER. 5 . NOW, THE DEPARTMENT IS I N APPEAL HERE BEFORE THE TRIBUNAL. ITA NO . 5891 /201 1 3 6 . LEARNED DR PLACED RELIANCE ON THE ORDER OF AO. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A) . 7 . AFTER CONSIDERING THE ORDER OF AO AND CIT(A), WE FOUND NO INFIRMITY IN THE F INDING OF LEARNED CIT(A) . THE FINDING S OF LEARNED CIT(A) HA VE BEEN RECORDED AT PAGE 7 OF HIS ORDER, WHICH ARE AS UNDER : - I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT'S AR AND THE FACTS OF THE CASE. I FIND THAT THE AO IS NOT JUSTIFIED IN DISALLO WING EXEMPTION CLAIMED BY THE APPELLANT U/S. 10(23C)(IIIAB). THE TERM 'SUBSTANTIAL' HAS NOT BEEN DEFINED IN THE INCOME T A X ACT. IF ANY SUBSTANTIAL QUESTION OF LAW ARISES, THE APEX COURT HELD IN THE CASE OF SAN TOSH HAZARI V. PURUSHOTTAM TIWARI [2001] 251 IT R 84, THAT THE COURT WOULD INTERPRET THAT. SIMILARLY, IN BANKING REGULATION ACT, 1959, THE TERM SUBSTANTIAL INTEREST HAS BEEN DEFINED BEING BENEFICIAL INTEREST OF MORE THAN 10%. IN SECTION 40A(2), IF A PERSON IS HAVING VOTING POWER OF NOT LESS THAN 2J% THE N, HE SUPPOSE TO HAVE SUBSTANTIAL INTEREST. IN THIS CASE, I FIND THAT THE GOVERNMENT GRANT IS MORE THAN 70%. IN MY CONSIDERED OPINI ON 70% IS SUBSTANTIAL PORTION OF GRANT GIVEN BY THE GOVERNMENT. I ALSO FIND THAT MY PREDECESSOR HAS ALLOWED THE EXEMPTION IN LAST YEAR ON THE SAME SET OF FACTS. I DO NOT HAVE ANY REASON TO DEVIATE FROM HIS DECISION. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO IS DIRECTED TO ALLOW EXEMPTION TO THE APPELLANT. THESE GROUNDS O F APPEAL ARE ALLOWED. THE ABOVE FINDINGS OF LEARNED CIT(A) REMAINED UNCONTROVERTED. THEREFORE, THERE IS NO REASON TO INTERFERE IN THE FINDINGS OF THE LEARNED CIT(A) . WE FURTHER NOTED THAT FOR ASSESSMENT YEAR 1998 - 99 TO 2001 - 02, THE ASSESSMENT OF THE ASSESSEE WERE REOPENED AND SIMILAR ADDITIONS WERE MADE WHICH WERE DELETED BY THE CIT(A) AND NO APPEAL WAS PREFERRED BY THE DEPARTMENT. IT IS FURTHER NOTED THAT IN SIMILAR FACTS IN THE CASE OF TATA INSTITUTE OF SOCIAL SCIENCE , THE EXEMPTION WAS DENIED. ON SECOND APPEAL BY THE DEPARTMENT BEFORE THE TRIBUNAL , THE ORDER OF THE CIT(A) WAS CONFIRMED IN ALLOWING THE EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE ACT . THIS ORDER OF THE TRIBUNAL WAS PASSED ITA NO . 5891 /201 1 4 IN ITA NO. 4394/M/2011 FOR ASSESSMENT YEAR 2007 - 08 VIDE ORDER DATED 26 - 9 - 2012 . COPY OF THE SAME IS PLACED ON REC ORD. FACTS IN THE CASE OF TATA INSTITUTE OF SOCIAL SCIENCE (SUPRA) ARE SIMILAR TO THE FACTS OF THE ASSESSEES CASE. RATHER FACTS OF THE ASSESSEES CASE ARE ON STRONG FOOTING. AS IN THIS CASE, 70% OF EXPENSES WERE REIMBURSED BY THE GOVERNMENT. THEREFORE, CO NDITION FOR ALLOWING EXEMPTION IS SATISFIED. 8 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE REASONING GIVEN BY THE LEARNED CIT(A) , WE CONFIRM THE ORDER OF THE CIT(A) . 9 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19TH D AY OF JUN . 2013 . SD/ - ( ) ( N.K.BILLAIYA ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 19/06 /2013 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/ / / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI