Hemalatha Rajan, CHENNAI V. DCIT Corporate Circle 4(1), CHENNAI

ITA 668/CHNY/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6603 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: VIKRAM VIJAYARAGHAVAN ADV
• Keywords: Charitable institution; Share purchase agreement; Tangible material; Difference of opinion; Capital receipt; Change of opinion; Reassessment proceedings
• Section: 264; 64; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 667/CHNY/2019 ! ' / ASSESSMENT YEAR : 2009-2010 SHRI. KARUPPUSAMY PANDIARAJAN, FLAT NO.C3, 3 RD FLOOR, GOLDEN KINGS COURT, NO.61, TAS ENCLAVE, 10 TH MAIN ROAD, ANNA NAGAR, CHENNAI 600 040. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(1) CHENNAI. [PAN AADPP 4895M] ./I.T.A. NO. 668/CHNY/2019 ! ' / ASSESSMENT YEAR : 2009-2010 SMT. HEMALATHA RAJAN, FLAT NO.C3, 3 RD FLOOR, GOLDEN KINGS COURT, NO.61, TAS ENCLAVE, 10 TH MAIN ROAD, ANNA NAGAR, CHENNAI 600 040 VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(1) CHENNAI. [PAN AATPH 2012G] ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. VIKRAM VIJAYARAGHAVAN, ADV &' # $ % /RESPONDENT BY : SHRI. R. CLEMENT RAMESH KUMAR, ADDL. CIT. ( ) $ * /DATE OF HEARING : 23-07-2019 +,'! $ * /DATE OF PRONOUNCEMENT : 17-10-2019 ITA NOS.667 &668/19 :- 2 -: / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE ASSESSEES DIRECTE D AGAINST DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI (HEREINAFTER CALLED AS CIT(A)) DATED 28.0 1.2019 FOR THE ASSESSMENT YEAR 2009-2010. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS R ELEVANT TO THE APPEAL IN ITA NO.667/CHNY/2019 FOR ASSESSMENT YEAR 2009-10 OF SHRI. KARUPPUSAMY PANDIARAJAN ARE STATED HEREIN. 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRMING THE REOPENING OF THE ASSESSMENT U/S 147 AS THE APPE LLANT HAS FURNISHED ALL THE MATERIALS AND PARTICULARS FULLY A ND TRULY WHILE COMPLETING THE ASSESSMENT U/S 143(3). 2.1. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT ADDITION MADE IN THE REASSESSMENT HAS ARISEN ONLY DUE TO CHANGE OF OPINION AND NOT ON ACCOUNT OF CONC EALMENT OF ANY PARTICULARS BY THE APPELLANT; HENCE THE ORDER IS TO BE QUASHED AS BEING WITHOUT JURISDICTION. CIT VS. KELVINATOR OF I NDIA LTD- 320 ITR 561 (SC). 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N HOLDING/CONFIRMING THAT THE AMOUNT RECEIVED BY MI S . SORNAMMAL EDUCATION TRUST WAS NOTHING BUT THE AMOUNT RECEIVED BY APPELLANT ITA NOS.667 &668/19 :- 3 -: AND HIS WIFE FOR SETTLING THE DISPUTE WITH RESPECT TO THE SALE OF SHARES AND COMPENSATION RECEIVED. 3.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE PAYMENT WAS NOT PART OF THE CO NSIDERATION PAID BY RANDSTAD TO THE PROMOTERS BUT A VOLUNTARY PAYMEN T MADE TO M/S. SORNAMMAL EDUCATION TRUST AS THE WORD USED IN THE GOODWILL PARAGRAPH IS A ONETIME DONATION TO THE DISHA. 3.2 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT IN THE LETTER FROM RANDSTAD CONSID ERATION PAYABLE FOR PURCHASE OF SHARES, SETTLEMENT OF DISPUTE AND G OODWILL PAYMENT HAVE BEEN SEPARATELY MENTIONED AND THE VOLUNTARY DO NATION BY RANDSTAD TO M/S. SORNAMMAT EDUCATION TRUST HAS BEEN SEPARATELY INDICATED. 3.3 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THERE IS NO BASIS FOR HOLDING THAT DONATION GIVEN BY RANDSTAD TO M/S. SORNAMMAL EDUCATION TRUST WAS PAYA BLE TO THE APPELLANT. APPELLANT HAS NO RIGHT TO RECEIVE THIS A MOUNT AND HAVE CAN NOT BE ADDED AS APPELLANTS INCOME. THE ADDITIO N MADE PURELY ON SUSPICIOUS AND SURMISES REQUIRED TO BE DELETED. 3.4 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT M/S. SORNAMMAL EDUCATION TRUST HAS . DISCLOSED THIS AS A FOREIGN CONTRIBUTION IN FORM FC-3 SUBMITTED TO THE CENTRAL GOVERNMENT AND INCLUDED ITS RETURN OF INCOME. AND T HE SAID SUM DOES NOT CONFER ANY MONETARY OR OTHER BENEFIT TO TH E APPELLANT OR HIS SPOUSE. 4. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GR OUNDS OF APPEAL AT THE TIME OF HEARING. 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL AND DIRECTOR OF MAFO I MANAGEMENT CONSULTANTS LTD DRAWING INCOME UNDER THE HEAD SAL ARIES. THE ORIGINAL RETURN OF INCOME FOR THE ASST. YEAR 2009-1 0 WAS FILED ON 31.03.2010 DISCLOSING TOTAL INCOME OF F2,70,85,708 /-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY T HE ASSISTANT ITA NOS.667 &668/19 :- 4 -: COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI VIDE ORDER DATED 27.12.2011 PASSED U/S. 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT TOTA L INCOME OF F6,53,25,710/-. WHILE DOING SO, THE ASSESSING OFFI CER BROUGHT TO TAX SUM OF F3,82,40,000/- BEING COMPENSATION RECEIVED IN TERMS OF CLAUSE 7 OF THE SHARE PURCHASE AGREEMENT ENTERED WITH NE THERLANDS COMPANY NAMELY M/S. VEDIOR NV (VEDIOR), TRIPOLIS BUILDING ZOO, BURGERWEESHULSPAD 201, 1076, GR, AMSTERDAM. THIS C OMPENSATION STATED TO HAVE BEEN RECEIVED FOR FORGOING RIGHT OF SUE FOR BREACH OF CONTRACT AND CLAIMED THE COMPENSATION TO BE CAPITAL RECEIPT PLACING RELIANCE ON THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF OBEROI HOTEL P. LTD VS. CIT, 236 ITR 903 AND HONBL E DELHI HIGH COURT IN THE CASE OF SHYAM TELELINK LTD VS. ITO, 99 ITD 5 76 . THE ADDITION WAS CONTESTED BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 31.07.2012 CONFIRMED THE ACTION OF THE ASSESSING OFFICER. EVE N ON FURTHER APPEAL BEFORE THE TRIBUNAL CAME TO BE DISMISSED VIDE ORDER DATED 20.12.2012 IN ITA NO. 1776/MDS/2012 FOR ASSESSMENT YEAR 2009-2 010. 6. WHILE MATTER STOOD THUS, THE ASSESSING OFFICER HAD COME TO KNOW THAT M/S. RANSTAND HOLDINGS, NV, NETHERLANDS H AD PAID A SUM OF F6,40,09,975/- ON 1 ST SEPTEMBER, 2008 TO SORNAMMAL EDUCATIONAL TRUST, CHENNAI IN WHICH ASSESSEE IS A TRUSTEE. A CCORDING TO THE ITA NOS.667 &668/19 :- 5 -: ASSESSING OFFICER, THIS PAYMENT IS ACTUALLY DUE TO THE ASSESSEE AND HIS WIFE MS. HEMALATHA RAJAN AND FORMED AN OPINION THAT INCOME ESCAPED ASSESSMENT AND ISSUED NOTICE U/S.148 OF THE ACT ON 04.04.2013 AND IT APPEARS THAT ASSESSEE HAD NOT RESPONDED TO THE SAID NOTICE AND ACCORDINGLY, THE ASSESSING OFFICER HAD PROCEEDED TO FRAME ASSESSMENT AFTER FURNISHING REASONS RECORDED FOR ISSUANCE OF REASSESSMENT NOTICE. ON RECEIPT OF THE REASONS RECORDED, ASSESSEE HAD FI LED OBJECTIONS THAT REASSESSMENT PROCEEDINGS ARE PROMPTED BY MERE CHAN GE OF OPINION AND THEREFORE VERY INITIATION OF REASSESSMENT PROCE EDINGS IS INVALID IN LAW. THE ASSESSING OFFICER REJECTING THE SAID ARGU MENT HAD PROCEEDED WITH FRAMING OF ASSESSMENT ORDER U/S.143(3) R.W.S. 148 OF THE ACT VIDE ORDER DATED 20.06.2014, BROUGHT TO TAX THE CONTRIBU TION PAID TO TRUST AS INCOME OF APPELLANT AND HIS WIFE. 7. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL CONT ESTING INTER ALIA THAT THE VERY VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS AND PAYMENTS MADE BY M/S. RANSTAND HOL DINGS, NV, NETHERLANDS TO THE ASSESSEE AND HIS WIFE MS. HEMALA THA RAJAN WAS NOT PART OF CONSIDERATION BUT IT IS VOLUNTARILY PAYMEN T MADE TO THE TRUST WHICH IS DULY REGISTERED AS CHARITABLE INSTITUTION AS A GESTURE OF GOODWILL. IT IS FURTHER CONTENDED THAT DONATION MA DE BY M/S. RANSTAND HOLDINGS, NV, NETHERLANDS TO THE SAID TRUST WAS DUL Y APPROVED BY THE ITA NOS.667 &668/19 :- 6 -: GOVERNMENT OF INDIA. HOWEVER, THE LD. CIT(A) CONSI DERING THE SUBMISSIONS MADE HELD THAT TRUST HAD DIRECT RELATI ONSHIP WITH THE TRANSACTION OF THE SALE OF SHARES AND THE AMOUNT AR E LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE AND HIS WIFE AND ACCOR DINGLY DISMISSED THE APPEAL. 8. BEING AGGRIEVED BY THE ORDER OF THE CIT(A), THE AP PELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. THE LD. AUTHORISED REPRESENTATIVE CONTENDED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY F OR THE PURPOSE OF MAKING ASSESSMENT AND REASSESSMENT PROCEEDINGS WERE INITIATED ON MERE CHANGE OF OPINION ON THE SAME SET OF FACTS. T HEREFORE, THE REASSESSMENT PROCEEDINGS ARE NOT VALID IN LAW. IN SUPPORT OF THIS, HE RELIED ON THE FOLLOWING PLETHORA OF CASE LAWS. 01. CIT VS. PREMIER MILLS, 296 ITR 157 (MAD) 02. MERCURY TRAVELS LTD VS. CIT, 258 ITR 533 (CAL) 03. CIT VS. INDIAN OVERSEAS BANK LTD, 252 ITR 640 (MAD) 04. CIT VS. SIVA TRADERS, 255 ITR 77 (KER) 05. CIT VS. FENNER INDIA LTD, 241 ITR 672 (MAD) 06. CIT VS. FROAMER FRANCE, 264 ITR 566 (SC) 07. CIT VS. T.N. TRANSPORT DEVELOP FINANCE CORP LTD, 3 06 ITR 136 (MAD) AND HE FURTHER RELIED ON THE FOLLOWINGS JUDGMENTS. 01. CIT VS. KELVINATOR OF INDIA LTD, 320 ITR 561 (SC) 02. TANMAC INDIA VS. DCIT, (2019) 97 CCH 189 (MAD) 03. PRINCIPAL CIT VS. CENTURY TEXTILES & INDUSTRIES LTD , (2018) 99 TAXMANN. COM 206 (SC). ITA NOS.667 &668/19 :- 7 -: 9. ON THE MERITS, IT IS SUBMITTED THAT THE DONATION MA DE BY M/S. RANSTAND HOLDINGS, NV, NETHERLANDS IS A VOLUNT ARY PAYMENT TO THE TRUST AS A GOODWILL GESTURE AND THE CONTRIBUTION WAS APPROVED BY THE GOVERNMENT OF INDIA AND THERE IS NO INCOME ACCRUED IN THE HANDS OF THE ASSESSEE. 10. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 11. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. 12. GROUNDS NO.1 & 4 ARE GENERAL IN NATURE THEREFORE, DOES NOT REQUIRE ANY ADJUDICATION. 13. GROUND OF APPEAL NO.2 CHALLENGES THE VERY VALIDALI TY OF REASSESSMENT PROCEEDINGS. ONE OF THE CONTENTION AD VANCED ON THE VALIDALITY INITIATION OF THE REASSESSMENT PROCEEDIN GS IS THAT ASSESSMENT WAS REOPENED BY MERE CHANGE OF OPINION AND NO NEW TANGIBLE MATERIAL WERE BROUGHT ON RECORD BY THE ASSESSING OF FICER SUGGESTING ESCAPEMENT OF INCOME TO TAX. THIS ISSUE IS TO BE A DJUDICATED WITH REFERENCE TO THE REASONS RECORDED BY THE ASSESSING OFFICER BY ISSUANCE OF REASSESSMENT NOTICE U/S.148 OF THE ACT. THE ASS ESSING OFFICER HAD EXTRACTED REASONS RECORDED FOR ISSUE OF NOTICE U/S. 148 OF THE ACT AT ITA NOS.667 &668/19 :- 8 -: PARA 1 OF THE ASSESSMENT ORDER. FROM THE REASONS S O RECORDED IT IS CLEAR THAT SUBSEQUENT TO THE COMPLETION OF THE ASS ESSMENT U/S.143(3) OF THE ACT VIDE ORDER DATED 27.12.2011, THE ASSESSI NG OFFICER HAD COME TO KNOW DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF MS. HEMALATHA RAJAN FOR THE ASSESSME NT YEAR 2010- 2011 THAT M/S. RANSTAND HOLDINGS, NV, NETHERLANDS H AD PAID A SUM OF F6,40,09,975/- ON 1 ST SEPTEMBER, 2008 TO SORNAMMAL EDUCATIONAL TRUST, CHENNAI. DONATION WAS CONTRIBUTED BY THE S AID COMPANY IN TERMS OF CLAUSE GOODWILL OF THE MOU AGREEMENT ENTERED BY THE ASSESSEE COMPANY WITH M/S. VEDIOR NV (VEDIOR) IN TE RMS OF GOODWILL CLAUSE OF MOU DATED 20.08.2008 AND ALSO BASED ON T HE LETTER ADDRESSED TO THE MA FOI DATED 20.8.2008. THE ASSESS ING OFFICER BASED ON THIS INFORMATION HAD CONCLUDED CONTRIBUTION OF DONATION MADE BY M/S. RANSTAND HOLDINGS, NV, NETHERLANDS IS PART AND PARCEL OF THE TOTAL CONTRIBUTION AGREED AND ACCORDINGLY ISSUED NOTICE U /S.148 OF THE ACT. ADMITTEDLY, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT VIDE ORDER 27.12.2011. DURING THE COURSE OF OR IGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD OCCASION T O EXAMINE THE MOU ENTERED BETWEEN ASSESSEE AND THE M/S. RANSTAND HOL DINGS, NV, NETHERLANDS, WHEREIN IT WAS AGREED TO COMPENSATE T HE ASSESSEE FOR BREACH OF AGREEMENT ENTERED INTO BETWEEN ASSESSEE A ND M/S. VEDIOR NV (VEDIOR), AMSTERDAM AND ALSO THE BACKGROUND OF R ECEIPT OF ITA NOS.667 &668/19 :- 9 -: COMPENSATION OF F3,82,40,000/- WHICH IS RECEIVED FO R FORGOING THE RIGHT TO SUE FOR BREACH OF THE AGREEMENT. THE MOU DATED 30.04.2004 ENTERED BETWEEN ASSESSEE AND THE M/S. VEDIOR NV (VE DIOR), WAS VERY MUCH PART OF THE RECORD. THE MOU IN TERMS OF WHICH GESTURE OF GOODWILL, PAYMENT OF DONATION WAS MADE BY M/S. RAN STAND HOLDINGS, NV, NETHERLAND TO SORNAMMAL EDUCATIONAL TRUST, CH ENNAI. IT IS EVIDENT FROM THE OBSERVATION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, IN RESPONSE TO THE LEGAL NOTICE ISSUED BY THE INDIAN PROMOTERS, M/S. RANSTAND CAME UP WITH A SETT LEMENT AGREEMENT BY WHICH M/S. RANSTAND OFFERED TO COMPENS ATE THE INDIAN PROMOTERS AND AGREED TO PAY INTERALIA 1 MILLION EUR O TO THE INDIAN PROMOTERS UPON SIGNING OF A SETTLEMENT AGREEMENT AN D WITHDRAWAL OF LEGAL NOTICE ISSUED TO VEDIAR. THE INDIAN PROMOTER S ACCEPTED THE SETTLEMENT PROPOSAL AND CHOOSE TO RESTRAIN FROM INI TIATING ANY FURTHER LEGAL PROCEEDINGS BY SIGNING A SETTLEMENT AGREEMENT DATED 20.08.2008. WHEN THE ASSESSEE WAS QUESTIONED AS TO WHY THE AMOUNT RECEIVED BY MR. PANDIARAJAN SHOULD NOT BE CONSIDERE D AS INCOME FOR THE PURPOSE OF INCOME TAX AND TAX ACCORDINGLY, ASSE SSEE REPLIED VIDE LETTER DATED 19.12.2011. FURTHERMORE, THE ASSESSING OFFICER HAD CHOSEN TO MAKE ADDITION ON ACCOUNT OF PAYMENT REC EIVED BY THE ASSESSEE TOWARDS COMPENSATION FOR FORGING THE RIGHT TO SUE. THESE TWO FACTS WOULD SUGGEST THAT MOU WAS VERY MUCH PART OF RECORD OF THE ITA NOS.667 &668/19 :- 10 -: ORIGINAL ASSESSMENT PROCEEDINGS. HOWEVER, THERE WA S NO DISCUSSION IN THE ASSESSMENT ORDER AS REGARDS TO THE CONTRIBUTIO N OF DONATION BY THE M/S. RANSTAND HOLDINGS, NV, NETHERLANDS TO SORN AMMAL EDUCATIONAL TRUST, CHENNAI, IN TERMS OF GOODWILL C LAUSE OF THE MOU. EVEN THOUGH MOU WAS REFERRED TO BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER, THERE IS NOTHING ON RECORD TO SHO W THAT THE ISSUE OF TAXABILITY OF CONTRIBUTION OF DONATION WAS RAISED A ND DECIDED IN FAVOUR OF THE ASSESSEE COMPANY. IT IS SETTLED PROPOSITION OF LAW AS HELD BY HON'BLE SUPREME COURT IN THE CASES OF KALYANJI MAVJI & CO VS. CIT, 102 ITR 287 AND CIT VS. A. RAMAN AND CO, 67 ITR 11 THAT TO INFORM MEANS TO TO IMPART KNOWLEDGE AND THE DETAIL AVAILABLE TO THE ITO IN THE PAPERS FILED BEFORE HIM DOES NOT BY ITS MERE AVAILABILITY BECOME AN ITEM OF INFORMATION. IT IS TRANSMUTED INTO AN I TEM OF INFORMATION IN HIS POSSESSION ONLY IF, AND ONLY WHEN, ITS EXISTENC E IS REALIZED AND ITS IMPLICATIONS ARE RECOGNIZED. WHERE THE ITO HAD NOT IN THE ORIGINAL ASSESSMENT PROCEEDINGS APPLIED HIS MIND, THE REASSE SSMENT PROCEEDINGS ARE VALID. IT GETS TRANSMUTED INTO AN ITEM OF INFORMATION ONLY WHEN ITS EXISTENCE IS REALIZED AND ITS IMPLICA TIONS ARE RECOGNIZED. RELIANCE CAN BE PLACED ON THE DECISIONS OF HONBLE KERALA AND MADRAS HIGH COURTS IN THE CASES OF UNITED MERCANTILE CO. LTD VS. CIT, (1967) 64 ITR 218 (KER), MUTHUKRISHNA REDDIAR VS. CIT, ( 1973) 90 ITR 503 (KER) AND A.L.A. FIRM VS. CIT (1976) 102 ITR 622 (M AD ). ADMITTEDLY ITA NOS.667 &668/19 :- 11 -: IN THE PRESENT CASE, MOU DATED 20.08.2008 WAS ON RE CORD BUT THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSING OFFICE R HAD EXAMINED CLAUSES OF THE MOU GOVERNING THE CONTRIBUTION OF D ONATION BY M/S. RANSTAND HOLDINGS, NV, NETHERLANDS TO SORNAMMAL EDU CATIONAL TRUST, CHENNAI AS A GESTURE OF GOODWILL. IT IS ONLY DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS IN THE HANDS OF MS. HEMALAT HA RAJAN FOR THE ASSESSMENT YEAR 2010-2011, THE ASSESSING OFFICER HA D COME TO KNOW THAT M/S. RANSTAND HOLDINGS, NV, NETHERLANDS HAD PA ID CONTRIBUTION OF ADDITION TO SORNAMMAL EDUCATIONAL TRUST HAS A GESTU RE OF GOODWILL. THIS WOULD UNDISPUTEDLY CONSTITUTE A FRESH TANGIBL E MATERIAL ENABLING THE ASSESSING OFFICER TO FORM AN OPINION THAT INCO ME ESCAPED ASSESSMENT. FURTHERMORE, THERE IS NOTHING ON RECOR D TO SHOW THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS RAISED THIS ISSUE OF TAXABILITY OF THIS ITEM AND FORMED AN OPINION IN FOVOUR OF THE ASSESSEE. THEREFORE, IT CANNOT BE SAID THAT IT IS CASE OF MERE CHANGE OF OPINION AS NO SUCH OPINION WAS FORMED IN ORIGINAL ASSESSMENT PROCEEDINGS. THE PROPOSITION OF LAW LA ID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD, 320 ITR 561 HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THUS, THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE STAND S DISMISSED. 14. GROUND NO.3 CHALLENGES THE DECISION OF LOWER AUTHOR ITIES IN BRINGING INTO TAX CONTRIBUTION OF DONATION MADE BY RANSTAND ITA NOS.667 &668/19 :- 12 -: HOLDINGS, NV, NETHERLANDS TO SORNAMMAL EDUCATIONAL TRUST, CHENNAI AS PART OF COMPENSATION PAID TO THE ASSESSEE FOR B REACH OF SHARE PURCHASE AGREEMENT. APPARENTLY, THE DONATION WAS CONTRIBUTED BY RANSTAND HOLDINGS, NV, NETHERLANDS AS GESTURE OF G OODWILL. UNDISPUTEDLY, ASSESSEE AND HIS WIFE ARE INTERESTED IN THE SAID TRUST AS A TRUSTEES. THE DONATION WAS PAID TO THE TRUST IN ORDER TO CREATE GOODWILL AND CHANGE RELATIONSHIP IN A POSITIVE LIG HTS, RANDSTAND IS PREPARED TO MAKE A ONE-TIME DONATION OF ONE MILLIO N TO DISHA IN THE EVENT THAT IT CAN REACH QUICK AGREEMENT ABOUT THE ABOVE. THE PUBLICITY AND THE LINK TO RANDSTADS CSR POLICY WIL L BE LIMITED AND MUST BE AGREED WITH FRANS CORNELIS, MANAGING DIRECT OR GROUP MARKETING & COMMUNICATIONS. 15. FROM THE READING OF THE ABOVE CLAUSE, IT IS CLEA R THAT GOODWILL IS NOT PART AND PARCEL OF COMPENSATION P AID TO THE ASSESSEE AND HIS WIFE BY RANSTAND HOLDINGS, NV, NETHERLANDS AND IT IS SEPARATE AND DISTINCT TRANSACTION AND VOLUNTARY PAYMENT. TH E FACT THAT CONTRIBUTION WAS APPROVED BY THE GOVERNMENT OF IND IA UNDER FOREIGN CONTRIBUTION ACT CONFIRMING THE POSITION. IT PRIMA FACIE PROVES THAT IT IS A VOLUNTARY CONTRIBUTION. FURTHE R, THE MERE FACT THAT ASSESSEE AND HIS WIFE ARE TRUSTEES IN THE TRUST DOE S NOT IPSO FACTO PROVE THAT THEY ARE BENEFICIARIES OF THIS FUND NOR THERE IS NO MATERIAL ON RECORD BROUGHT BY THE ASSESSING OFFIC ER TO SAY THAT THE ITA NOS.667 &668/19 :- 13 -: MONEY WAS DIVERTED TO THE TRUST BY THE ASSESSEE AN D HIS WIFE. THERE WAS NO TANGIBLE MATERIAL BROUGHT ON RECORD BY THE A SSESSING OFFICER TO ESTABLISH COLLUSION IN THE TRANSACTION. THEREFOR E WHAT IS APPARENT SHOULD BE BELIEVED UNLESS AND UNTIL THE CONTRARY I S PROVED IN THE LIGHT OF THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CAS E OF SUMATHI DAYAL VS. CIT (1995) 214 ITR 801. THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE CONTRIBUTION PAI D TO THE TRUST AS A PART OF COMPENSATION AND BRINGING TO TAX IN THE HAN DS OF THE ASSESSEE AND HIS WIFE. THUS, GROUND OF APPEAL NO.3 FILED BY THE ASSESSEE STANDS ALLOWED. 16. IN THE RESULT, THE ITA NO.667/CHNY/2019 FOR ASSESSM ENT YEAR 2009-2010 OF SHRI. KARUPPUSAMY PANDIARAJAN IS PART LY ALLOWED. ITA NO.668/CHNY/2019, FOR A.Y 2009-10 OF SMT. HEMALATHA RAJAN, 17. SINCE, THE FACTS IN THE PRESENT APPEAL IS IDENTICAL TO THE FACTS IN ITA NO.667/CHNY/2019, FOR THE REASONS MENTIONED THEREIN, WE PARTLY ALLOW THE APPEAL ON THE ABOVE LINES INDICAT ED IN APPEAL ITA NO.667/CHNY/2019 SUPRA. HENCE, THE ABOVE CAPTIONED APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 18. TO SUMMARIZE THE RESULT, THE APPEALS FILED BY THE ASSESSEES ARE PARTLY ALLOWED. ITA NOS.667 &668/19 :- 14 -: ORDER PRONOUNCED ON 17TH DAY OF OCTOBER, 2019, A T CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER -) / CHENNAI . / DATED: 17TH OCTOBER, 2019. KV /0 $0& *12032'* / COPY TO: 0 1 . # / APPELLANT 3. 0 ( 4*056 / CIT(A) 5. 278 0& * 9 / DR 2. &' # / RESPONDENT 4. 0 ( 4* / CIT 6. 8:0;) / GF