MOUNT CARMET MINISTRIES, Ajmer V. ITO, Ajmer

ITA 625/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5218 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Assessee Lawyers: SUBHASH PARWAL
• Keywords: Depreciation; Capital receipt; Capital expenditure
• Section: 12A; 12AA; 12; 154; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 625/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 M/S. MOUNT CARMEL MINISTRIES F-20, GANDHI NAGAR, NAKA MADAR AJMER CUKE VS. THE ITO WARD- 2(1) AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABTM 3759 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI SUBHASH PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI R.A. VERMA, ADDL CIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/08/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05 /08/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A), AJMER DATED 28-05-2015 FOR THE ASSESSMENT Y EAR 2010-11 RAISING THEREIN FOLLOWING GROUNDS:- THAT ON THE FACTS OF THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING:- (I) CONFIRMING THE DISALLOWANCE OF CAPITAL EXPENDITURE OF RS. 28,32,333/- ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 2 (II) CONFIRMING THE CORPUS FUND OF RS. 26,10,056/- AS INCOME WHERE AS SAME IS CAPITAL RECEIPTS. (III) NON-GRANTING OF BENEFIT OF SECTION 10(23C) (IIIAD) OF I.T. ACT, 1961 WHEREAS IT IS AN EDUCATIO NAL INSTITUTION FOR ADVANCEMENT OF KNOWLEDGE. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AD FILED THE RETURN OF INCOME IN ITR-7 DECLARING TAXABLE INCOME AT RS. (-) 3,50,033/-ON 6-10- 2010 FOR THE YEAR UNDER CONSIDERATION. DURING ASSES SMENT, THE AO NOTICED THAT THE ASSESSEE HAD APPLIED FOR REGISTRATION U/S 12AA OF THE BY MOVING AN APPLICATION ON 23-04-2012. THE ASSESSEE WAS ASKE D TO EXPLAIN THAT IN ABSENCE OF REGISTRATION U/S 12A FOR THE YEAR UNDER CONSIDERATION AS TO WHY THE CAPITAL EXPENDITURE OF RS. 28,32,333/- CLAIMED IN THE INCOME & EXPENDITURE ACCOUNT MAY NOT BE ALLOWED TREATING THE SAME AS AOP (TRUST). IN REPLY, NO COGENT CLARIFICATION/ EXPLANA TION HAD BEEN FILED BY THE ASSESSEE BEFORE THE AO AND IT HAD BEEN STATED THAT THE ASSESSEE HAD NOW APPLIED FOR THE REGISTRATION. HENCE, THE AO HEL D THAT THE ASSESSEE WAS NOT ENTITLED TO GET THE EXPENDITURE OF CAPITAL IN N ATURE AND ACCORDINGLY DISALLOWED AN AMOUNT OF RS. 28,32,333/- DEBITED BY THE ASSESSEE TO THE INCOME & EXPENDITURE ACCOUNT UNDER THE HEAD BUILDIN G CONSTRUCTION AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE . ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 3 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL OF THE ASS ESSEE VIDE PARA 3.3 OF HIS ORDER BY OBSERVING AS UNDER:- 3.3 I HAVE CONSIDERED THE CONTENTIONS OF THE APPELL ANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT THE ASSES SEE HAS BEEN GRANTED REGISTRATION U/S 12AA OF THE I.T. ACT W.E.F . 24-07-2012, HENCE THE ASSESSEE WAS NOT ENTITLED TO GET THE BENE FIT OF SECTION 11 AND 12 FOR THE YEAR UNDER CONSIDERATION. ACCORDINGL Y, THE CAPITAL EXPENDITURE OF RS. 28,32,333/- MADE BY THE ASSESSE E UNDER THE HEAD BUILDING CONSTRUCTION WAS NOT ALLOWED BY THE A O BY TREATING THE ASSESSEE AS AOP (TRUST). AFTER ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILE D AN APPLICATION U/S 154 BEFORE THE AO ON 12-07-2013 REQ UESTING THEREIN THAT THE ASSESSEE WAS AN EDUCATIONAL INSTIT UTION AND SHOULD HAVE BEEN GRANTED BENEFIT OF SEC10(23C)(IIIAD) OF T HE I.T. ACT. THE APPLICATION OF THE ASSESSEE WAS REJECTED BY THE AO STATING THAT THE ASSESSEE HAD NOT CLAIMED ANY DEDUCTION U/S 10(23C)( IIIAD) IN RETURN OF INCOME AND ONLY EXEMPTION U/S 11(1) HAD BEEN CL AIMED. FURTHER NO SUCH CLAIM HAD BEEN MADE BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. FURTHER, THE SECTION 10(23C)(IIIAD) PROVIDES AS UN DER:- ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION S OLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE OF PRO FIT OF THE AGGREGATE ANNUAL RECEIPTS OF SUCH UNIVERSITY OR EDU CATIONAL INSTITUTION DO NOT EXCEED THE AMOUNT OF ANNUAL RECE IPTS AS MAY BE PRESCRIBED. DURING APPEAL, THE ASSESSEE HAS CLAIMED THAT ASSESS EE IS RUNNING CHILD DEVELOPMENT PROGRAMME AND ADULT LITER ACY PROGRAMME ALONGWITH THE MEDICAL CAMP AND HEALTH AWA RENESS PROGRAMME AND SEWING CENTRE. ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 4 HOWEVER, IT IS SEEN THAT THE ASSESSEE IS NOT RUNNIN G ANY EDUCATIONAL INSTITUTION AS REQUIRED U/S 10(23C)(III AD) AS PER THE SECTION REPRODUCED ABOVE. THE ACTIVITIES SO CLAIMED TO HAVE BEEN CARRIED OUT ARE GENERAL IN NATURE AND WITHOUT ANY S UPPORTING EVIDENCES. FURTHER, DURING ASSESSMENT PROCEEDINGS, NO SUCH CLAIM OF EXEMPTION ALONGWITH THE EVIDENCES WAS MADE BEFOR E THE AO BY THE APPELLANT. IT HAS NOT BEEN SHOWN BY THE ASSESSEE THAT ANY EDUC ATIONAL ACTIVITIES HAS BEEN CARRIED OUT BY THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION. THE DEED FURNISHED BY THE ASSE SSEE NARRATES THE OBJECTIVES BUT ON PERUSAL OF INCOME & EXPENDITU RE ACCOUNT OF THE ASSESSEE , IT HAS BEEN OBSERVED THAT NO SUCH EX PENSES HAVE BEEN INCURRED TO FULFILL THE OBJECTIVES OF THE ASSESSEE I.E. FOR EDUCATIONAL PURPOSES. MERELY THE OBJECTIVES BEING FOR EDUCATION AL PURPOSES DOES NOT PROVE THAT SUCH AN ACTIVITY HAS BEEN UNDER TAKEN DURING THE YEAR UNDER CONSIDERATION. NO EDUCATIONAL INSTITUTE IS BEING RUN BY THE APPELLANT NOR THE RECEIPTS AND EXPENSES IN ANY MANNER INDICATE THAT SUCH AN ACTIVITY BEING CARRIED OUT DURING THE YEAR UNDER CONSIDERATION. IN FACT AS PER PROFIT AND LOSS ACCOU NT, A CHURCH HAD BEEN TAKEN ON RENT BY THE APPELLANT AND IT IS BEING RUN BY THE SAID TRUST. THEREFORE, THE EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT IS NOT ALLOWABLE TO THE ASSESSEE. FURTHER THE ASSESSEE PLEADED THAT IT HAD RECEIVED V OLUNTARY CONTRIBUTIONS OF RS. 24,90,300/- FROM THE MEMBERS A ND OTHERS CORPUS OF THE TRUST AND SUCH WAS UTILIZED TOWARDS C ONSTRUCTION OF BUILDING. IT HAS FURTHER BEEN CLAIMED THAT THE AO H AD DISALLOWED THE EXPENDITURE OF RS. 28,32,333/- TREATED AS CAPIT AL EXPENDITURE BUT DID NOT EXCLUDE RS. 24,90,300/- TREATING IT AS CAPITAL RECEIPTS. AS PER SECTION 11 AND SECTION 12 OF THE I.T. ACT, T HE VOLUNTARY CONTRIBUTION WITH THE SPECIFIC DIRECTION THAT IT SHALL FORM PART OF THE CORPUS OF THE TRUST IS NOT WARRANTED AS INCOME OF THE ASSESSEE. HOWEVER, THE SECTION 12A SPECIFICALLY MEN TIONS THAT SECTION 11 AND SECTION 12 ARE APPLICABLE ONLY IF SU CH TRUST IS REGISTERED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE TRUST IS NOT REGISTERED AND DOES NOT FULFILL THE CONDITION P ROVIDED IN SECTION ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 5 12A OF THE I.T. ACT. ACCORDINGLY, PROVISIONS OF SEC TION 11 AND SECTION 12 ARE NOT APPLICABLE IN THE CASE OF THE AS SESSEE. FURTHER INCOME IS DEFINED AS PER SECTION 10(24)(I IA) OF THE I.T. ACT AS UNDER:- (IIA) VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUS T CREATED WHOLLY AND EXCLUSIVELY OR PARTLY FOR CHARIT ABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTION ESTABLIS HED WHOLLY OR PARTLY FOR SUCH PURPOSES. AS PER ABOVE DEFINITION, THE ABOVE VOLUNTARY CONTRI BUTION IS LIABLE TO TAX IN THE CASE OF THE ASSESSEE AND THE A SSESSEE'S CLAIM THAT SUM OF RS. 24,90,300/- IS NOT LIABLE TO TAX IS NOT ACCEPTABLE AND IS REJECTED. HOWEVER, THE ASSESSEE IS ELIGIBLE FOR CLA IM FOR DEPRECIATION AS PER THE DEPRECIATION CHART OF RS. 2 ,18,088/- SUBJECT TO VERIFICATION BY THE AO. 2.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED FOR ALLOWING THE GROUND NO. 1 TO 3 OF GROUNDS OF APPE AL RELYING FOLLOWING CASE LAWS AND WRITTEN SUBMISSION:- (A) SREE SREE RAMKRISHNA SAMITY VS. DCIT (2015) 44 ITR 678 (TRIBUNAL-CAL) (B) SHREE BHANUSHALI MITRA MANDAL TRUST VS. ITO (20 16) 47 CCH 197 (AHD. BENCH) AADIWASI MEEN BHAGWAN JAN SEWA SANSTHAN VS. DCIT , CIRCLE- 1, ALWAR (ITA NO. 780 & 781/JP/2015 A.Y. 2009-10 & 2010-11 & ITO(EXEMPTION) ALWAR VS ADDIWASI MEEN BHAGWAN JAN SEWA SANSTHAN ALWAR (ITA NO. 834 & 835/JP?2015 A.Y. 2009-10 & 2010-11) 2.4 THE LD. DR RELIED ON THE ORDER OF LD. CIT(A). ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 6 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTICED FROM THE SUBMISS IONS OF THE LD. AR OF THE ASSESSEE WHEREIN AIMS AND OBJECTS OF THE ASSESS EE TRUST ARE NARRATED AS UNDER:- (A) TO EDUCATE ALL NEEDY CHILDREN OF ALL CAST, CREE D AND SOCIETY FOR CAUSE OF LITERACY AND TRUST TO ALSO TO RUN A SCHOOL FOR FULFILLMENT OF THESE OBJECTS (B) TO HELP THOSE INSTITUTION WHO ARE RUNNING EDUCA TIONAL, MEDICAL FACILITIES FOR POOR AND GENERAL MASSES. TO WORK FOR ADULT LITERACY BY RUNNING SUNDAY SCHOOLS AND RECREATION CENTRES TO DIVERT THE RURA L MASSES TO EDUCATION THOUGH RECREATION (D) TO DO ANY OTHER WORK OF SOCIETY WELFARE WITHOUT OBJECT OF EARNINGS. HOWEVER, IT IS NOTICED THAT THIS ENGLISH VERSION IS NOT AS PER THE AIMS AND OBJECTS OF THE TRUST INCLUDING AMENDED AIMS AND OBJ ECTS. I HAVE CONSIDERED THE HINDI VERSION OF THE AIMS AND OBJECT S OF THE TRUST. IT IS ALSO MENTIONED BY THE LOWER AUTHORITIES THAT IT HAS NOT BEEN SHOWN BY THE ASSESSEE THAT ANY EDUCATIONAL ACTIVITIES HAS BEEN C ARRIED OUT BY THE ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 7 ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ORIGINAL DEED AND AMENDED AIMS AND OBJECTS FURNISHED BY THE ASSESSEE NARRATES ONE OF THE OBJECTS BUT ON PERUSAL OF INCOME & EXPENDITURE ACCO UNT OF THE ASSESSEE, IT HAS BEEN OBSERVED THAT NO SUCH EXPENSES RELATED TO EDUCATION HAVE BEEN INCURRED TO FULFILL THIS OBJECTS OF THE ASSESS EE TRUST I.E. FOR EDUCATIONAL PURPOSES. MERELY THE OBJECTS BEING FOR EDUCATIONAL PURPOSES DOES NOT PROVE THAT SUCH AN ACTIVITY HAS BEEN CARRI ED OUT DURING THE RELEVANT YEAR UNDER CONSIDERATION. THE BENEFIT OF S ECTION 10(23C)(IIIAD) IS AVAILABLE TO THE EDUCATIONAL INSTITUTION EXIST S OLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE OF PROFIT. SINCE ASSES SEE IS NOT RUNNING ANY EDUCATIONAL INSTITUTE, THEREFORE, IT DOES NOT QUALI FY FOR EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. FURTHER THE LD. AR FOR A SSESSEE HAD ALSO PLACED RELIANCE ON THE DECISION OF COORDINATE BENCH OF COO RDINATE BENCH IN THE CASE OF AADIWASI MEEN BHAGWAN JAN SEWA SANSTHAN VS. DCIT (SUPRA). THE AIMS AND OBJECTS OF THE ASSESSEE TRUST AS AMEND ED ON 23-09-2006 WERE THE SAME IN THE YEAR UNDER CONSIDERATION AND O N THE BASIS OF WHICH REGISTRATION TO THE TRUST HAD BEEN GRANTED. THEREFO RE, I HOLD THAT THE ISSUE IS COVERED BY THE DECISION OF COORDINATE BENCH IN T HE CASE OF CASE OF AADIWASI MEEN BHAGWAN JAN SEWA SANSTHAN VS. DCIT (S UPRA). HENCE, ITA NO. 625/JP/2015 MOUNT CARMEL MINISTRIES, AJMER VS. ITO WARD- 2 (1) , AJMER . 8 GROUND NOS. 1 AND 2 OF THE ASSESSEE ARE ALLOWED AND GROUND NO. 3 IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 05 /08/ 2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/08/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- MOUNT CARMEL MINISTRIES,AJMER 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2 (1), AJMER 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 625/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR