M/s. Vijayawada Sri Lakshmi Narishma Ramunaja Kutam Trust., Vijayawada V. The ACIT, Vijayawada

ITA 60/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6626 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S ARAVINDAKSHAM
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 12A; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER ITA NO. 60 / VIZ /201 7 (ASST. YEAR : 20 1 0 - 1 1 ) M/S. VIJAYAWADA SRI LAKSHMI NARASIMHA RAMANUJA KUTAM TRUST, MANAGING TRUSTEE : CH. SITA RAMA CHANDRA MURTHY, D.NO. 11 - 11 - 09, VATTURI VARI ST., VIJAYAWADA. VS. A CIT, CIRCLE - 1(1), VIJAYAWADA. PAN NO. AAATV 1602 P (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI R.S. ARAVINDAKSHAM - SR. DR DATE OF HEARING : 14 / 0 9 /201 7 . DATE OF PRONOUNCEMENT : 06 / 1 0 /201 7 . O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VIJAYAWADA , DATED 28 /0 9 /201 6 FOR THE ASSESSMENT YEAR 2010 - 11 . 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A TRUST GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT ON 04/02/1998. THE ACTIVITY OF THE TRUST IS TO ASSIST AND SERVE THE DEVOTEES VISITING THE RANGANADHA TEMPLE AT SRIRANGAM AND TO CONDUCT SOME RELIGIOUS FESTIV A LS. THE ASSESSEE - TRUST IS CLAIMING ITS INCOME EXEMPT UNDER SECTION 11 & 12 OF THE ACT. THE SOURCE OF INCOME OF THE ASSESSEE - TRUST IS MAINLY FROM RENT RECEIPTS AND 2 ITA NO. 60/VIZ/2017 (M/S. VIJAYAWADA SRI LAKSHMI NARASIMHA RAMANUJA KUTAM TRUST) INTEREST FROM BANK. THE TOTAL RECEIPTS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IS OF 1,17,414/ - AND THE ASSESSEE - TRUST HAS NOT SPENT 85% OF ITS RECEIPTS FOR THE OBJECT OF THE SOCIETY AND THERE WAS SURPLUS OF INCOME OF 71,837/ - AS PER INCOME & EXPENDITURE STATEMENT WHICH IS BROUGHT TO TAX AT MAXIMUM MARGINAL RATE AND ACCORDINGLY ASSESSMENT IS COMPL ETED. 3. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE INCOME BROUGHT TO TAX BY THE ASSESSING OFFICER MAXIMUM MARGINAL RATE IS NOT CORRECT AND THE ENTIRE INCOME IS EXEMPT BEING ASSESSEE HAVING 12A REGISTRATION. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND ALSO BY CONSIDERING ALL THE DETAILS, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 6. I HAVE PERUSED THE SUBMISSION O F THE APPELLANT. THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES IS EXEMPT PROVIDED 85% OF ITS INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST IS APPLIED TO SUCH PURPOSES IN IN DIA (AS PER SEC. 11(1)(A) & 11(1)(B) OF THE IT ACT.) 6.1 THE DETAILS OF APPELLANTS INCOME AND EXPENDITURE ACCOUNT FOR ASSESSMENT YEAR 2010 - 11 ARE AS FOLLOWS: - RENTAL RECEIPT RECEIVED BY APPELLANT 1,15,440 ADD: INTEREST ON BANK S.B. A/C 1,974 TOTAL GROSS RECEIPT OF INCOME 1,17,414 LESS: MUNICIPAL TAXES PAID 14,775 OTHER EXPENDITURE LIKE PUJA/SALARY/ ELECTRICAL CHARGES 30,802 TOTAL EXPENDITURE 45,577 SURPLUS OF INCOME OVER EXPENDITURE 71,837/ - ( 1,17,414 ( - ) 45,577) 6.2 THUS IT IS EVIDENT THAT THE APPELLANT HAD NOT APPLIED 85% OF THE SURPLUS AMO UNT FOR THE PURPOSES OF TRUST, I T HAD ALSO ADMITTED THAT PERMISSION WAS NOT SOUGHT FOR ACCUMULATION OF THE SURPLUS AMOUNT U/ S. 11( 2) OF THE ACT. CONSEQUE NTLY, ASSESSING OFFICER DETERMINED THE TAXABLE INCOME AT RS.71,840/ - ON THE GROUND THAT 8 5% OF THE INCOME 3 ITA NO. 60/VIZ/2017 (M/S. VIJAYAWADA SRI LAKSHMI NARASIMHA RAMANUJA KUTAM TRUST) WAS NOT UTILIZED FOR CHARITABLE PURPOSES DURING THE RELEVANT ASSESSMENT YEAR . 6.3 APPELLANT IN ITS PETITION US 154 OF THE ACT DATED 30/04/2013 CLAIMED THAT IT DID NOT SEEK PERMISSION FOR ACCUMULATION OF INCOME BY FILING AN APPLICATION IN FORM NO.10 ON THE BELIEF THAT ITS GROSS INCOME ITSELF IS BELOW TAXABLE INCOME AND HENCE NOT LIABLE TO TAX. THIS CLAIM OF APPE LLANT IS NOT IN ACCORDANCE WITH THE PROVISIONS OF IT ACT. IN THE CASE OF TRUSTS, ANY SURPLUS OF INCOME OVER EXPENDITURE IS TAXABLE IF 85% OF SUCH SURPLUS WAS NOT UTILIZED FOR THE OBJECTS OF THE TRUST DURING RELEVANT PREVIOUS YEAR AND PERMISSION FOR ACCUMULATION OF THE SURPLUS WAS NOT SOUGHT AS PER PROVISIONS OF SEC.11(2) OF THE ACT 6. 4 AS CONDITIONS STIPULATED IN THE PROVISIONS OF THE ACT ARE NOT COMPLIED WITH BY APPELLANT, I AM IN AGREEMENT WITH THE VIEW OF ASSESSING OFFICER THAT SURPLUS OF INCOME OVER EXPENDITURE (I.E.) RS.71,840 / - IS TO BE BROUGHT TO TAX 6.5 APPELLANT IN HIS RECTIFICATION PETITION DATED 30.04,2013 CLAIMED THAT IT HAD TO BE TAXED AS AN AQP AT NORMAL SLAB RATES OF INCOME TAX. IT CLAIMED THIS AS A MISTAKE APPARENT FROM RECORD. IN MY VIEW, DETERMINATION OF STATUS OF APPELLANT (EITHER AOP OR OTHERWISE) REQUIRES A LONG - DRAWN PROCESS OF REASO NING ON POINTS ON WHICH THERE WILL BE TWO OPINIONS. IT IS NOT A MISTAKE APPARENT ON RECORD . 6.6 HONBLE MADRAS HIGH COURT IN THE CASE OF ANASUY A MUTHANNA VS. CIT (1998) 232 ITR 561 (MAD) HELD THAT WHERE SHARE OF BENEFICIARY IS UNKNOWN AND UNDETERMINATE, THE ASSESSEE TRUST IS SUBJECT TO MAXIMUM MARGINAL RATE, IN MY VIEW, A PPELLANT TRUST IS DISCRETIONARY TRUST. HENCE, IT IS LIABLE TO BE ASSESSED AS PER THE PROVISIONS OF SEC.164(1). ASSESSING OFFICERS ACTION OF CHARGING MAXIMUM MARGINAL RATE, IN MY VIEW, IS IN ORDER . 4 . I HAVE GONE THROUGH THE ASSESSMENT ORDER AND ALSO THE ORDER OF THE LD. CIT(A) . THE LD. CIT(A) HAS CONSIDERED EACH AND EVERY ASPECT OF THE ISSUE RAISED BY THE ASSESSEE AND ACCORDINGLY DECIDED THE APPEAL. I FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 0 6 T H DAY OF OCTOBER, 201 7 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 0 6 T H OCTOBER , 201 7 . 4 ITA NO. 60/VIZ/2017 (M/S. VIJAYAWADA SRI LAKSHMI NARASIMHA RAMANUJA KUTAM TRUST) VR/ - COPY TO: 1. THE ASSESSEE - M/S. VIJAYAWADA SRI LAKSHMI NARASIMHA RAMANUJA KUTAM TRUST, MANAGING TRUSTEE : CH. SITA RAMA CHANDRA MURTHY, D.NO. 11 - 11 - 09, VATTURI VARI ST., VIJAYAWADA. 2. THE REVENUE ACIT, CIRCLE - 1(1), VIJAYAWADA. 3. THE CIT(EXEMPTIONS), HYDERABAD. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R. , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SENIOR PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.