DCIT (Exemption), Ghaziabad V. M/s. Late Shyam Behari Mishra Memorial Charitable Trust, Kanpur

ITA 6687/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3108 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Charitable institution; Benefit of exemption
• Section: 142(1); 80G; 12A; 12AA; 12; 11

Judgement Text

1 ITA NO. 6687/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6687/DEL/201 5 ( A.Y 2012-13) DCIT (EXEMPTION) EXEMPTION CIRCLE, CGO-2, HAPUR ROAD GHAZIABAD (APPELLANT) VS LATE SHYAM BEHARI MISHRA MEMORIAL CHARITABLE TRUST G-14, SHANTI NAGAR KANPUR AAATL2323F (RESPONDENT) APPELLANT BY SH. S. S. RANA, CIT DR RESPONDENT BY SH. KAPIL GOEL, ADV ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 26/05/2015 PASSED BY CIT(A)-II, KANPUR. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN PA RTLY ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE FACT THAT BOTH TRUST AND SOCIETY HAVE DIFFERENT IDENTITY, CONSTITUTION AND OBJECTS. 2. LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN PA RTLY ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE FACT THAT THE E RSTWHILE TRUST HAS TRANSFERRED ITS PROPERTY BY BOOK ENTRY TO THE ASSES SEE SOCIETY WHICH IS NOT PERMITTED AS THE PROPERTY OF THE TRUST CAN ONLY BE TRANSFERRED TO ANOTHER TRUST AND THAT TOO AFTER TAKING THE APPROVAL OF THE COMPETENT COURT OF LAW. DATE OF HEARING 05.03.2018 DATE OF PRONOUNCEMENT 15.03.2018 2 ITA NO. 6687/DEL/2015 3. LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN PA RTLY ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THAT FACT THAT THE ASSESSEE ITSELF HAS SHOWN TO HAVE GIVEN LOAN OF RS. 1 LACS TO SHRI SHAY AM BIHARI MISHRA MEMORIAL CHARITABLE SOCIETY WHICH IS A PERSON SPECI FIED U/S 13(3) OF THE ACT. THE LOAN WAS GIVEN FREE OF INTEREST IN VIOLATI ON OF PROVISIONS OF SECTION 13 (2)(A) WHICH DISENTITLE THE SOCIETY TO CLAIM EXE MPTION U/S 11 OF I.T. ACT. 3. THE ASSESSEE HAS CLAIMED ITS INCOME EXEMPT U/S 1 2A OF THE ACT ON THE BASIS OF EXEMPTION CERTIFICATE GRANTED TO THE ASSES SEE VIDE CERTIFICATE NO. 571/8505 DATED 31.10.1996 ISSUED BY THE COMMISSIONE R OF INCOME TAX, KANPUR. THE ASSESSEE IS RUNNING THE FOLLOWING SCHOO LS DURING THE YEAR UNDER CONSIDERATION:- (I) DELHI PUBLIC SCHOOL, MAINAWATI MARG, AZAD NAGAR , KANPUR (II) DELHI PUBLIC SCHOO, SARVODAYA NAGAR, KANPUR (III) BHAWAN PUBLIC SCHOOL, KIDWAI NAGAR, KANPUR (IV) DELHI PUBLIC SCHOOL, MEHARBAN SINGH KA PURWA, BARA, KANPUR. RETURN DECLARING NIL INCOME WAS FILED ON 28.09.2014 BY THE ASSESSEE. THE CASE WAS SELECTED FOR SCRUTINY STATUTORY NOTICE U/S 143( 2) DATED 19.09.2013 WAS ISSUED TO THE ASSESSEE AND DULY SERVED UPON THE ASS ESSEE THROUGH SPEED POST NO. EU278592933IN DATED 24.09.2013 I.E. WITHIN STIPULATED TIME AS PER LAW. FURTHER NOTICE 142(1) DATED 01.05.2014 ALONG WITH D ETAILED QUESTIONNAIRE WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. ANOTHER N OTICE U/S 142(1) DATED 19.12.2014 AND OTHER QUERY WAS ISSUED TO THE ASSESS EE. IN RESPONSE TO THESE NOTICED THE LD. A.R. OF THE ASSESSEE, ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FILED REQUIRED DETAILS AND DOCUMEN TS. THE ASSESSING OFFICER HELD THAT THE BENEFIT OF EXEMPTION U/S 12A AS CLAIM ED BY THE TRUST CANNOT BE EXTENDED TO THE ASSESSEE SOCIETY. THE ASSESSING OF FICER FURTHER DENIED THE CLAIM OF EXEMPTION U/S 11 AND TREATED THE STATUS OF THE ASSESSEE AS AOP. THE ASSESSING OFFICER TAXED THE SURPLUS AS INCOME OF TH E ASSESSEE SOCIETY. THUS, 3 ITA NO. 6687/DEL/2015 THE ASSESSING OFFICER MADE AN ADDITION OF RS. 1,19, 47,000/- AS RECEIVES FROM ASSESSEES FEES AS THAT OF INCOME OF THE ASSESSEE S OCIETY. 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RELYING ON THE DECISIONS OF THE TRIBUNAL IN EARLIER ASSESSMENT YEARS IN THE ASS ESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 8/1/2015. 5. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN PA RTLY ALLOWING THE APPEAL OF THE ASSESSEE IGNORING THE FACT THAT BOTH TRUST A ND SOCIETY ARE DIFFERENT IN RESPECT OF THEIR IDENTITY CONSTITUTION AND OBJECTS. THE CIT(A) ALSO IGNORED THE ERSTWHILE TRUST AS TRANSFER ITS PROPERTY BY BOOK EN TRY TO THE ASSESSEE SOCIETY WHICH IS NOT PERMITTED AS THE PROPERTY OF THE TRUST CAN ONLY BE TRANSFER TO THE ANOTHER TRUST AND THAT TOO AFTER TAKING THE APPROVA L OF THE ATTEMPT COURT OF LAW. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE ITSE LF HAS SHOWN TO HAVE GIVEN LOAN OF RS.1 LAC TO SHRI SHAM BIHAR MISHRA MEMORIAL CHARITABLE TRUST, A PERSON SPECIFIED U/S 13(3) OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE LOAN WAS GIVEN INTEREST FREE AND THE PROVISIONS OF SECTION 13(2) (A) WHICH ENTITLES THE SOCIETY TO CLAIM EXEMPTION U/S 11 OF T HE INCOME TAX ACT WILL BE APPLICABLE. 6. THE LD. AR SUBMITTED THAT FOR THE ASSESSMENT YEA R 2006-07 THE TRIBUNAL HAS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASS ESSEE AND RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER:- DISCUSSION AND DECISION I HAVE CONSIDERED THE ORDER OF THE ASSESSING OFFICE R (AO), SUBMISSIONS AND THE ARGUMENTS MADE BY THE LEARNED COUNSEL OF TH E ASSESSEE. THE MAIN ISSUE IN THE APPEAL IS REGARDING THE FACT WHET HER THE TRUST IS OWING THE SCHOOLS OR THE SOCIETY IS OWING THE SCHOOLS. TH E TRUST IS REGISTERED 4 ITA NO. 6687/DEL/2015 UNDER SECTION 12A OF THE INCOME TAX ACT, 1961. THE AO HAS PLACED RELIANCE ON THE FACTS THAT THE TRUST AND SOCIETY AR E SEPARATE ENTITIES AND THE SCHOOLS ARE BEING RUN BY THE SOCIETY AND NOT TH E TRUST. THE ABOVE ADDITION IS CONTINUINA FROM THE ASSESSMENT YEAR 200 6-07 AND THE FIRST APPEAL FOR THE ASSESSMENT YEAR 2006-07 ON THIS ISSU E WAS CONFIRMED BY THE CIT- (APPEALS)-II, KANPUR ON THE PRETEXT THAT T HE SCHOOLS ARE BEING RUN BY THE SOCIETY AND THUS HAD PROTECTIVELY CONFIRMED THE ADDITIONS IN THE HANDS OF THE TRUST. THE ISSUE TO BE DECIDED BEFORE ME IS AGAIN THE SAME, HOWEVER THE FOLLOWING ADDITIONAL FACTS HAVE BEEN BR OUGHT ON RECORD BOTH AT THE TIMES OF ASSESSMENT AND ALSO BEFORE ME WHICH ARE GIVEN BELOW: THE LEARNED COUNSEL HAS PLACED ON RECORD THE PAPERS WHEREBY THE ASSESSEE WAS INFORMING THE COMMISSIONER OF INCOME T AX - 1, KANPUR OF THE DEVELOPMENTS THAT THE ASSESSEE VIDE ITS RESO LUTIONS DATED 05.03.2001 IS GETTING THE TRUST REGISTERED UNDER TH E SOCIETY REGISTRATION ACT, 1961. THE COPIES CR COMMUNICATION OF THE SAME HAVE BEEN DULY FILED BEFORE THE AO AND ME. THE LEARNED COUNSEL HAS ALSO PLACED EVIDENCE WHICH HAS BEEN DULY CERTIFIED BY THE OFFICE OF COMMISSIONER OF INC OME TAX - 1, KANPUR WHICH IS REGARDING RENEWAL OF 80G EXEMPTION IN THE TRUST FOR THE PERIOD 01.04.2004 TO 31.03.2007. AT THE TIME OF FIL ING FOR EXEMPTION, THE BYE LAWS OF THE SOCIETY HAVE BEEN FILED WHICH H AVE BEEN EXAMINED ALONGWITH THE BYE LAWS OF THE TRUST. THE COMMISSIONER OF INCOME TAX -1 VIDE ITS LETTER F OLIO NO CIT(A) I/KNP/TECH./2004-05/6673 DATED 23.03.2005 HAS REQUI RED THE FOLLOWING DOCUMENTS FROM THE ASSESSEE AT THE TIME OF GRANTING OF RENEWAL OF 80G. PLEASE FURNISH THE ORIGINAL DEED ALONGWITH A CERTIF IED COPY OF THE SAME. PLEASE FURNISH THE DOCUMENTARY EVIDENCE OF FILING O F RETURN FOR THE LAST THREE YEARS. PLEASE FURNISH THE BANK STATEMENTS OF THE SOCIETY F OR THE PERIOD 1 ST APRIL 2003 TO 31 ST MARCH 2004. ; YOU HAVE FILED FORM NO. 10G IN DUPLICATE. PLEASE FU RNISH ONE COPY OF FORM NO 10G. 5 ITA NO. 6687/DEL/2015 PLEASE FURNISH A CERTIFIED COPY OF REGISTRATION OF SOCIETY. PLEASE FURNISH THE AUDITED ..FINAL ACCOUNTS FOR THE ASSESSMENT YEAR 2001-2002 TO 2004-05. THE LEARNED COUNSEL ARGUED THAT THE ABOVE ISSUE STA NDS DECIDED BY THE COMMISSIONER OF INCOME TAX -1, KANPUR BY CONSIDERIN G THE SAME AT THE TIME OF GRANTING OF EXEMPTION UNDER SECTION 80G OF THE INCOME TAX ACT, 1961 AS 80S CANNOT BE GRANTED UNLESS AND UNTIL THE CHARITABLE INSTITUTION HAS REGISTRATION UNDER SECTION 12 A A OF THE INCOME TAX ACT, 1961. FURTHER THE LEARNED COUNSEL ALSO SUBMITTED THAT THERE WAS N O TRANSFER OF PROPERTY BY BOOK ENTRY AS; THE FEES IS BEING DEPOSITED IN TH E BANK ACCOUNT WHICH WAS OPENED WITH CONSTITUTION AS A TRUST. THE TRANSF ER OF ASSETS BY BOOK ENTRY IS MERE A FICTION CREATED BY THE ASSESSING OF FICER. IN MY VIEW AND AFTER GOING THROUGH THE AFORESAID, I AM CLEAR THAT THE ABOVE ADDITION NEEDS TO BE DELETED IN VIEW OF THE UNDER-M ENTIONED REASONS:- THE MOST IMPORTANT FACT IS THAT ABOVE ASSESSMENT IS THE ASSESSMENT OF THE TRUST AND THE TRUST IS REGISTERED UNDER SECT ION 12AA SO IN NO WAY THE INCOME OF THE TRUST CAN BE TAXED UNLESS THE REG ISTRATION UNDER SECTION 12AA IS CANCELLED WHICH HAS NOT BEEN DONE. THIS FACT IS ALSO CONFIRMED THE HON'BLE ITAT, IN HIS DECISION IN THE ASSESSEE'S OWN CASE FOR A .Y 2006-07 VIDE ORDER DT. 08.01.2015. THE ABOVE ISSUE ALREADY STANDS ANSWERED THAT COMMIS SIONER OF INCOME TAX - 1, GRANTING RENEWAL OF EXEMPTION UNDER SECTION 80G AS ALL THE FACTS WERE TRULY DISCLOSED AND PLACED BEFORE HI M AND ONLY AFTER VERIFYING ALL THE FACTS THE RENEWAL OF EXEMPTION UN DER 80G WAS GRANTED. IT MAY ALSO BE IMPORTANT TO NOTE THAT THE SE FACTS DULY SUPPORTED BY THE EVIDENCES WHICH ARE CERTIFIED BY T HE OFFICE OF COMMISSIONER OF INCOME TAX 1 KANPUR WERE NOT AVAI LABLE AT THE TIME OF ADJUDICATION BY MY PREDECESSOR. THERE HAS BEEN NO TRANSFER OF PROPERTIES BY MEANS O F BOOK ENTRY AS THE BALANCE SHEETS FILED AT THE TIME OF RENEWAL OF EXEMPTION BEFORE THE COMMISSIONER OF INCOME TAX - 1, KANPUR UNDER SECTIO N 80G DO NOT SHOW ANY TRANSFER OF ASSETS BY BOOK ENTRIES. ONCE THE ISSUE HAS BEEN DECIDED BY THE COMMISSIONER OF INCOME TAX - 1, KANPUR THE ASSESSING OFFICER CANNOT STEP I NTO THE SHEETS OF THE 6 ITA NO. 6687/DEL/2015 COMMISSIONER AND OVERRULE SUCH DECISION ALREADY TAK EN UP BY HIM THE ABOVE FACTS HAVE ALREADY BEEN CONSIDERED FOR A. Y. 2008-09 TO 2009-10, AND THE DEPT, HAS ACCEPTED THE SAME BY NOT FILING ONE SECOND APPEAL TO THE HON'BLE ITAT, LUCKNOW. THIS CLEARLY K EEPS THE ISSUE BEYOND DOUBT AND FURTHER DISCUSSION AS THE ISSUES A RE ALREADY SETTLED. THUS IN LIGHT OF THE ABOVE, I STRONGLY BELIEVE THAT THE INCOME SHOWN IS INCOME OF TRUST AS THE ISSUE STANDS ALREADY COVERED BY THE 80G RENEWAL BY COMMISSIONER OF INCOME TAX-1, KANPUR. THUS THE A DDITION MADE BY REJECTING EXEMPTION UNDER SECTION 12AA IS HEREBY DE LETED. IN RESULT, THE APPEAL IS PARTLY ALLOWED. THE TRIBUNAL HAS ALREADY DECIDED THIS ISSUE FOR ASS ESSMENT YEAR 2006- 07. THE TRIBUNAL HELD AS UNDER: 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE INCOME IS NOT ARISING OUT OF EDUCATIONAL ACTIVITIES BEING RUN BY THREE SCHOOLS AND THEREFORE , IF IT IS HELD THAT THE INCOME IS BELONGING TO THIS ASSESSEE THEN EXEMPTION HAS TO BE ALLOWED TO THE PRESENT ASSESSEE U/S 11, 12 & 13 BECAUSE THE AS SESSEE TRUST IS REGISTERED U/S 12A AND THE ACTIVITY FROM WHICH THIS RECEIPT IS GENERATED IS EDUCATIONAL ACTIVITY COVERED BY SECTION 2(15) OF TH E ACT. HENCE, IT CANNOT BE SAID THAT THE INCOME IN THE HANDS OF THE PRESENT AS SESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S11,12 & 13 OF THE ACT. THE ASSESSEE SO CIETY FORMED LATER ON I.E. ON 23/06/2001 IS DISTINCT FROM THE ASSESSEE TR UST AND IF IT IS THE STAND OF THE REVENUE THAT THE INCOME IS BELONGING TO THE ASSESSEE SOCIETY THEN THE SAME INCOME CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE TRUST AND IF IT IS ADDED IN THE HANDS OF THE ASSESSEE TRUST T HEN THE EXEMPTION HAS TO BE ALLOWED TO THE ASSESSEE TRUST U/S 11, 12 & 13 BE CAUSE THE ASSESSEE TRUST IS DULY REGISTERED. HENCE, WE DO NOT FIND ANY MERIT IN THE VARIOUS GROUNDS OF THE REVENUE. IT IS PERTINENT TO NOTE THAT THE TREATMENT GIVEN BY THE REVENUE AUTHORITIES THAT OF TRUST AND SOCIETY ARE SEPARATE ENTITIES WIL L NOT BE A HURDLE AS THIS IS A CASE OF THE TRUST AND NOT THAT OF SOCIETY. THE CIT (A) HAS GIVEN A DETAILED FINDING BY RELYING UPON THE ORDER OF THE TRIBUNAL FOR ASSE SSMENT YEAR 2006-07 IN 7 ITA NO. 6687/DEL/2015 ASSESSEES OWN CASE. THEREFORE, THERE IS NO NEED T O INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, THE APPEAL OF THE REVENUE IS DI SMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2018 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 15/03/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NO. 6687/DEL/2015 DATE 1. DRAFT DICTATED ON 06/03/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 06/03/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 15.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 5 .03.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.