ADIT (E) II(1), MUMBAI V. KARM, MUMBAI

ITA 6317/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92685 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASGHAR ZAIN
• Keywords: Charitable institution
• Section: 143(3); 11

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI A BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL ME MBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 6317 /MUM/201 1 , / ASSESSMENT YEAR - 200 8 - 09 ADIT(E) - II(1) ROOM NO.507, PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI - 2. VS M/S. KARM 17, FAIRFIELD, 4 TH ROAD CHURCHGATE , MUMBAI - 20. PAN: A AA TK 3909 N ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI ASGHAR ZAIN / REVENUE BY : SHRI NITESH JOSHI / DATE OF HEARING : 01 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 01 - 0 6 - 2015 , 1961 254 ( 1 ) O RDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 14/6/2011 OF CIT (A) - I, MUMBAI , T HE ASSESSING OFFICER (AO) HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1.WHETHER ON THE FACTS OF T HE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX(APPEALS), MUMBAI, ERRED IN ALLOWING ACCUMULATION OF INCOME OF RS.75,91,920/ - U/S. 1192) OF THE I.T. ACT WHEN THERE WAS NO SPECIFIC PURPOSE MENTIONED FOR THE ACCUMULATION IN FORM NO.12AA. 2. THE APPELLAN T PRAYS THAT THE ORDER OF THE CIT (A) - I, MUMBAI, BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE - TRUST, FILED ITS RETURN OF INCOME ON 26/9/2009. IT MADE AN APPLICATION IN FORM NO.10 ALONGWITH RETURN OF INCOME SEEKING ACCUMULATION OF INCOME UNDER SECTION 11(2) OF THE ACT AMOUNTING TO RS.76.00 LACS. VIDE HIS LETTER,DT. 8/9/09, THE AO ISSUED A SHOW CAUSE NOTICE REGARDING ACCUMULATION OF INCOM E U/S. 11 (2) OF THE ACT. THE ASSESSEE , VIDE ITS LETTERS DT.22.9.09; 10.11. 2010; 18.11.2010 , FILED DETAILS OF ACTUAL AM OUN T SPENT ON THE OBJECTS IN THE Y EARS ENDED ON 31.3. 20 05, 20 06, 2007 AND 2009. THE AO HELD THAT THE ASSESSEE WAS NOT ENTITLED TO ACCUMUL ATION OF FUNDS. HE REFERRED TO THE DECISION OF THE H ONBLE CALCUTTA H IGH C OURT DELIVERED IN THE CASE OF TRUSTEES OF TRUSTEES OF S INGHANIA C HARITABLE TRUST (199 ITR 819) AND HELD THAT THE CLAIM MADE BY THE ASSESSEE COULD NOT BE ALLOWED. FINALLY, HE COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT AND DETERMINED THE INCOME AT RS. 75.91 LACS. 2 . AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) . BEFORE HIM, THE ASSESSEE STATED THAT THE ASSESSEE HAD ACCUMULATED THE FUND FOR VARIOUS OBJECTS THAT WERE PART OF THE MEMORANDUM OF ASSOCIATION, THAT IT WAS CARRYING ON THE ACTIVITIES YEAR ON YEAR BASIS, THAT THE OBJECTS FOLLOWED BY IT WERE MENTIONED IN THE RESOLUTION ITA/ 6317 /MUM/201 1 ,AY. 08 - 09 - KARM 2 PASSED FOR ACCUMULATION OF INCOME FOR UTILIZATION OF T HE SAME FOR CHARITABLE PURPOSES IN A SPECIFIED PERIOD, THAT THE OBJECTS OF ACCUMULATION WERE NOT GENERAL BUT WERE ACTUAL ITEMISED OBJECTS. THE ASSESSEE RELIED UPON THE CASES OF HOTE L & RESTAURA N T ASSOC IATION ( 261 ITR 190 ) ; DAULAT RAM EDUCATION SOCIETY ( 278 ITR 260 ) ; BHARAT KRISHAK SAMAJ (306 ITR 153); MURLIDHAR S OHANLAL F OUNDATION ( 92 TTJ 1054 ) AND SHRI SOBHA S ING H PUBLIC CHARITABLE T RUST ( 79 ITD 1 ) . AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE FAA HELD THAT THE ASSESSEE HAD SOUGHT ACCUMULATION OF I NCOME TOWARDS THE OBJECT OF THE TRUST, THAT IT HAD DULY FILLED FORM - NO.10 AND HAD SPECIFIED THE OBJECTS FOR WHICH ACCUMULATION WAS SOUGHT, THAT THE ASSESSEE WANTED TO ACCUMULATE THE INCOME ON ACCOUNT OF NINE OBJECTS AS PER MEMORANDUM OF ASSOCIATION, THAT N ONE OF THE OBJECTS WERE OUTSIDE OF THE PURVIEW OF MEMORANDUM OF ASSOCIATION, THAT ALL THE OBJECTS WERE FOR CHARITABLE, CULTURAL, EDUCATIONAL, MEDICAL AND OTHER ACTIVITIES FOR THE RELIEF AND EDUCATION OF THE POOR, THAT THE ASSESSEE WAS ELIGIBLE FOR PERMISSI ON TO ACCUMULATE THE INCOME TO BE USED FOR THE PURPOSE SPECIFIED IN FORM NO.10. H E REFERRED TO THE DECISIONS RELIED UPON BY THE ASSESSEE AND FINALLY, HE DIRECTED THE AO TO ALLOW ACCUMULATION OF INCOME U/S. 11(2) OF THE ACT. 3. DURING THE COURSE OF HEARIN G B EFORE US DR SUPPORTED THE ORDER OF AO.AR RELIED UPON THE ORDER OF FAA AND REFERRED TO THE JUDGMENT OF H ONBLE DEL HI H IGH C OURT DELIVERED IN THE CASE OF DAULAT RAM EDUCATION SOCIETY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD .W E FIND THAT THE ISSUE OF ACCUMULATION OF FUNDS FOR SPECIFIED PURPOSE HAS BEEN DEALT WITH IN VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE . T HE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT THE ASSESSEE HAD SOUGHT ACCUMULATION FOR SPECIFIC PURPOSES THA T WERE PART OF THE MEMORANDUM OF ASSOCIATION . THEREFORE, IN OUR OPINION HIS ORDER DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. HERE WE WOULD LIKE TO REPRODUCE RELEVANT PORTION OF THE JUDGMENT BHARAT KRISHAK SAMAJ (SUPRA) WHICH READS AS UNDER : IT IS NOT NECESSARY FOR A CHARITABLE TRUST TO PARTICULARISE EACH AND EVERY OBJECT FOR WHICH ACCUMULATION IS SOUGHT. IT IS ENOUGH IF THE ASSESSEE SEEKS ACCUMULATION FOR THE OBJECTS OF THE TRUST. SIMILARLY,IN THE MATTER OF DAULAT RAM EDUCATION SOCIETY (SUPR A)THE HONBLE DELHI HIGH COURT HAS LAID DOWN THE PRINCIPLE WITH REGARD TO ACCUMULATION IN FOLLOWING WORDS: .IT IS TRUE THAT SPECIFICATION OF A CERTAIN PURPOSE OR PURPOSES WAS NEEDED FOR ACCUMULATION OF THE TRUST'S INCOME UNDER SECTION 11(2) OF THE ACT. AT THE SAME TIME THE PURPOSE OR PURPOSES TO BE SPECIFIED CANNOT BE BEYOND THE OBJECTS OF THE TRUST. PLURALITY OF THE PURPOSES OF ACCUMULATION IS NOT PRECLUDED BUT IT DEPENDS ON THE PRECISE PURPOSE FOR WHICH THE ACCUMULATION IS INTENDED... RESPECTFULLY FOL LOWING THE ABOVE JUDGMENT S AND CONFIRMING THE ORDER OF FAA, WE DECIDED THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO . AS A RESULT,APPEAL FILED BY THE ASSESSING OFFICER STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 1ST , JUNE ,2015. 1 , 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA/ 6317 /MUM/201 1 ,AY. 08 - 09 - KARM 3 / MUMBAI, /DATE: 01 . 06. 2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, M UMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.