BHARTIYA VICHAR DARSHAN, NAVI MUMBAI V. ITO (E) 1(1), MUMBAI

ITA 6313/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1388 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6313/MUM/2014 ASSESSMENT YEAR 2010-11 BHARTIYA VICAHR DARSHAN PLOT NO 38/39/43/45, SECTOR 30, SANPADA, NAVI MUMBAI- 400 705 VS. ITO - (E) - 1(1), MUMBAI PAN/GIR NO. AAATB 3113 D APPELLANT ) .. RESPONDENT ) DATE OF HEARING: 15.11.2016 DATE OF PRONOUNCEMENT: 28.12 .2016 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 1, MUMBAI AND ARISES OUT O F ORDER U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE 1 ST GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS TH AT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE DEDUCTION U/S 24 OF THE ACT ON RENT INCOME EARNED BY THE TRUST AMOUNTING TO RS. 84,00,000/- WHEREAS AS PER FACTS AND CIRCUMSTANCES IT SHOULD BE ALLOWED. APPELLANT BY: SHRI MIHIR TANNA, AR RESPONDENT BY: SHRI PURUSHOTTAM KUMAR, DR ITA NO. 6313/MUM/2014 2 2.1 IN A NUTSHELL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSING OFFICER (AO) HAS NOT ALLOWED DEDUCTION U/S 24 OF TH E ACT ON RENTAL INCOME OF RS. 84,00,000/- EARNED BY THE ASSESSEE-TR UST. IT IS FOUND THAT IN THE INCOME AND EXPENDITURE STATEMENT FOR TH E YEAR ENDED 31 ST MARCH, 2010, THE ASSESSEE-TRUST HAS CREDITED RENTAL INCOME OF RS. 84,00,000/-. THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE IS THAT STANDARD DEDUCTION U/S 24 AT 30% SHOULD BE ALL OWED ON THE RENTAL INCOME. THE AO HAS DENIED EXEMPTION U/S 11 T O THE ASSESSEE ON THE GROUND THAT IT IS CARRYING ON ACTIVITIES IN THE NATURE OF TRADE, COMMERCE, BUSINESS AND THEREFORE SUCH ACTIVITIES AR E NOT COVERED WITHIN THE DEFINITION OF CHARITABLE PURPOSE AS PER THE PROVISO TO SECTION 2(15) OF THE ACT. IN APPEAL, THE LEARNED CI T(A) HAS MENTIONED THAT SINCE SECTION 11 IS NOT APPLICABLE AND EXEMPTI ON CLAIMED BY THE APPELLANT IS DENIED, THEREFORE, THE INCOME OF THE A SSESSEE DURING THE YEAR IS LIABLE TO BE COMPUTED IN COMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER VARIOUS HEADS AS PER DECISIONS IN THE CASES OF CIT VS. RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES (MAD) 135 ITR 485, DIT VS. GIRDHARILAL SHEWNARAIN TANTIA TRUST (1993) 199 ITR 215 (CAL) AND CIT VS. PROGRAMME FOR COMMUNITY ORGANIZATION (1997) 228 ITR. 2.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PURPOSE OF BRINGING THE AME NDMENT IN SECTION 2(15) RELATING TO TRUST REGISTERED UNDER AD VANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WAS THAT NUM BER OF ENTITIES OPERATING ON COMMERCIAL LINES WERE CLAIMING EXEMPTI ON ON THEIR INCOME U/S 11 OF THE ACT ON THE GROUND THAT THEY AR E CHARITABLE INSTITUTIONS. THIS WAS BASED ON THE ARGUMENT THAT T HEY ARE ENGAGED IN THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTI LITY AS IS INCLUDED IN THE LAST LIMB OF THE CURRENT DEFINITION OF CHAR ITABLE PURPOSE. SUCH A CLAIM, WHEN MADE IN RESPECT OF AN ACTIVITY CARRIE D OUT ON ITA NO. 6313/MUM/2014 3 COMMERCIAL LINES, WAS CONTRARY TO THE INTENTION OF THE PROVISION. HENCE, INCOME OF SUCH TRUSTS WAS MADE TAXABLE W.E.F . ASSESSMENT YEAR 2009-10. 2.3 THE ASSESSEE IN THE INSTANT CASE HAS NOT CONTES TED THE DENIAL OF EXEMPTION U/S 11 OF THE ACT. THE LD. CIT(A) HAS ALS O NOTED THAT THE ASSESSEE IS NOT MAINTAINING SEPARATE BOOKS OF ACCOU NTS AS PER SECTION 11(4A) OF THE ACT. 2.4 IT IS A SETTLED POSITION OF LAW THAT INCOME FRO M THE PROPERTIES HELD UNDER TRUST HAVE TO BE ARRIVED AT THE NORMAL C OMMERCIAL MANNER WITHOUT CLASSIFICATION UNDER THE VARIOUS HEADS SET OUT IN SECTION 14 OF THE ACT. THE COMPUTATION UNDER THE DIFFERENT CATEGO RIES OR HEADS ARISES ONLY FOR THE PURPOSES OF ASCERTAINING THE TO TAL INCOME FOR THE PURPOSES OF THE CHARGE. THOSE PROVISIONS CANNOT BE INTRODUCED TO FIND OUT WHAT THE INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST TO BE EXCLUDED FROM THE TOTAL INCOME. 3. IN VIEW OF THE FORGOING REASONS, THE 1 ST GROUND OF APPEAL IS DISMISSED. 4. THE 2 ND GROUND FILED BY THE ASSESSEE IN THIS APPEAL IS THA T THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE EXEMPTION U/S 11(1A)(B), ON TRUST PROPERTY SOLD AMOUNTING TO RS. 75,00,000/- WH EREAS AS PER FACTS AND CIRCUMSTANCES IT SHOULD BE ALLOWED. 4.1 DURING THE COURSE OF HEARING, THE LEARNED COUNS EL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WOULD NOT LIKE TO PRESS THE 2 ND GROUND OF APPEAL. HE SUBMITTED THE SAME IN WRITING. THEREFORE, THE 2 ND GROUND OF APPEAL IS DISMISSED AS NOT PRESSED. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ITA NO. 6313/MUM/2014 4 ORDER PRONOUNCED IN THE OPEN COURT ON 28/12/2016 SD/- SD/- (JOGINDER SINGH) (N.K. PRA DHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 28/12/2016 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI