ITO (E) (1), MUMBAI V. DAIYA FOUNDATION, MUMBAI

ITA 6765/MUM/2011

• Counselvise Citation: 676519914 RSA 2011
• Duration Of Justice: 2 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: HIRO RAI
• Keywords: Benefit of exemption
• Section: 11

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. , ! .! # .$ .! # .%, BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & DR.S.T.M. PAVALAN,JUDICIAL MEMBER /. ITA NO.6765/MUM/2011, % % % % ' ' ' ' / ASSESSMENT YEAR-2008-09 ITO (E) (1) R.NO.505, PIRAMAL CHAMBERS 5 TH FLOOR, PAREL, MUMBAI-400012 VS DAIYA FOUNDATION, 562, ADENWALLA ROAD, MATUNGA, MUMBAI-400019 PAN:AAATD2984J ( () / APPELLANT) ( *+() / RESPONDENT) , - / REVENUE BY : SHRI SANJEEV JAI N %./ , - / ASSESSEE BY : SHRI HIRO RAI % % % % , ,, , / / / / / DATE OF HEARING : 20-02-2014 01' , / / DATE OF PRONOUNCEMENT : 05-03-2014 % % % % , 1961 , ,, , 254 )1( /2/ /2/ /2/ /2/ 3 3 3 3 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM % % % % : CHALLENGING THE ORDER DT.20.07.2011 OF THE CIT(A)-I ,MUMBAI,ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN D IRECTING TO ALLOW THE DEDUCTION BENEFIT OF EXEMPTION U/S. 11 OF THE I.T.ACT WHILE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SEC.13(1)(C) FOR CLAIMING THE BENEFIT OF EXEMPTION U/S.11. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (APPEALS)-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 A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE-TRUST FILED ITS RETURN OF INCOME ON 02.09. 2009 DECLARING NIL INCOME.AO FINALISED THE ASSESSMENT ORDER U/S.143(3) OF THE ACT,ON 27.12.201 0,DETERMINING THE TOTAL INCOME AT RS.35.02 LAKHS. 2. FIRST/EFFECTIVE GROUND OF APPEAL PERTAINS TO ALLOWI NG THE EXEMPTION U/S.11 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD NOT CONTRAVENED THE PR OVISIONS OF SECTION 13(L)(C).DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE T RUST IS MAINTAINING ONLY ONE ACCOUNT WITH INDIAN BANK,KINGS CIRCLE,MUMBAI, THAT ON A SINGLE D AY OF 7 TH APRIL, 2007, THERE WAS CASH WITHDRAWAL ON THREE OCCASIONS AMOUNTING TO RS.2,00, 000/-, RS.25,500/- AND RS. 3,250/-,THAT THE ASSESSEE-TRUST HAD MADE CASH WITHDRAWALS AND CASH D EPOSITS ON VARIOUS OCCASIONS IRRESPECTIVE OF THE FACT THAT IT HAD MORE THAN SUFFICIENT CASH BALA NCE IN HAND,THAT ALMOST ALL PAYMENTS HAD BEEN MADE INVARIABLY BY CHEQUES.AO RAISED THE QUESTION A S TO WHY THE ASSESSEE HAD WITHDRAWN SUBSTANTIAL CASH FROM BANK.HE SUMMONED ONE OF THE T RUSTEES,DHIREN DAIYA,FOR RECORDING HIS STATEMENT,WHO SUBMITTED THAT THE AMOUNT WAS WITHDRA WN FOR REPAIR LONAVALA PROPERTY WHICH 2 ITA NOS. 6765/MUM/2011 DAIYA FOUNDATION . BELONGED TO THE TRUST.THE AO POINTED OUT THAT THE E XPENDITURE ACCOUNT SHOWED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON REPAIRS AND MAINTENANCE IS JUST RS.38,000/-.HE DID NOT ACCEPT THE SUBMISSIONS OF THE APPELLANT THAT THE EN TIRE AMOUNT WAS WITHDRAWN FOR REPAIRS AND MAINTENANCE OF LONAVALA PROPERTY.FINALLY,AO HELD TH AT THE CASH WITHDRAWAL MADE BY THE ASSESSEE WERE DEFINITELY NOT FOR THE PURPOSE OF REPAIRS AND MAINTENANCE OF THE LONAVALA PROPERTY,THAT THE CASH WITHDRAWAL WAS USED BY THE TRUSTEES FOR THEIR OWN BENEFIT,THAT THERE WAS CONTRAVENTION OF PROVISIONS OF SEC. 13(1)(C). ACCORDINGLY, THE ASSES SEE TRUST WAS DENIED EXEMPTION U/S. 11 OF THE ACT. 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT IN THE STATEMENT RECORDED,THE TRUSTEE HAD ADMITTED THA T THE CASH WAS WITHDRAWN BUT THE WORK COULD NOT BE STARTED DUE TO THE FACT THAT THE TRUSTEES DE CIDED TO DISPOSE THE PROPERTY AT LONAVALA, THAT THE PROPERTY COULD NOT BE DISPOSED AS THE NECESSARY PERMISSION FROM CHARITY COMMISSIONER COULD NOT BE OBTAINED,THAT THE ASSESSEE-TRUST HAD DEPOSITED B ACK THE TOTAL AMOUNT OF RS.10 LAKHS IN INSTALMENT OF RS. 5 LAKHS EACH ON 26.6.2007 AND 27. 6.2007,THAT THE AO HAD NOT POINTED OUT ANY DEVIATION FOR USE OF THE TRUST FUND FOR THE USE OF THE TRUSTEES,THAT THERE WAS NO EVIDENCE OF ANY MISUSE OF THE TRUST FUND BY THE TRUSTEE, THE AO WAS NOT JUSTIFIED IN DENYING EXEMPTION U/S. 11 SIMPLY ON THE GROUND THAT THE ASSESSEE HAS WITHDRAW N CASH BUT ARE DEPOSITED THE SAME IN THE BANK ACCOUNT OF THE ASSESSEE TRUST,THAT PROVISIONS OF SE CTION 13(1)(C) AND 13(2) WOULD APPLY ONLY IF THERE WAS ANY EVIDENCE THAT THE INCOME OF THE TRUST OR ANY PROPERTY OF THE TRUST WAS APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSO N AS REFERRED TO IN SUB SECTION 3 OF SECTION 13, TH AT THERE WAS NO SUCH EVIDENCE,THAT ONLY ON THE SURMISE THAT THE MONEY WITHDRAWN MIGHT HAVE BEEN USED BY THE TRUSTEES FOR THEIR PERSONAL CAUSE THE E XEMPTION GRANTED TO THE TRUST COULD NOT BE DENIED,THAT THE AMOUNT WITHDRAWN FROM THE BANK ACCO UNT OF THE APPELLANT TRUST WAS RE-DEPOSITED. HE DIRECTED THE AO TO ALLOW EXEMPTION U/S. 11 OF TH E APPELLANT TRUST. 2.2. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTE D THE ORDER OF THE FAA.NONE APPEARED ON BEHALF OF THE ASSESSEE.WE HAVE HEARD THE RIVAL S UBMISSIONS AND PERUSED THE MATERIAL BEFORE US. BEFORE US, DR SUPPORTED THE ORDER OF THE AO WHEREAS SUPPORTED THE ORDER OF THE FAA.HE RELIED UPON THE CASES OF KAMLA TOWN TRUST (279 ITR 89 ALL) , SHRI AMOL CHAND VARSHNEY SEWA SANSTHAN (142 ITD 658 AGRA-TRIB), VIRENDRA SINGH ME MORIAL SHIKSHA SAMITI (121 TTJ LUCKNOW- TRIB) AND MANAV RACHNA EDUCATIONAL SOCIETY (32 CCH 468 DEL-TRIB). 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT ASSESSEE T RUST HAD NOT UTILISED THE MONEY IN ANY OBJECT OTHER THAN THE OBJECT OF TRUST,THAT THERE WAS NO EV IDENCE OF MISUSE OF THE TRUST FUND BY THE TRUSTEES, THAT EXEMPTION U/S 11 OF THE ACT WAS DENIED ON THE GROUND THAT ASSESSEE HAD WITHDRAWN THE CASH AND WAS DEPOSITED IN THE BANK ACCOUNT. IN OUR OPINI ON FOR INVOKING THE PROVISIONS OF SECTION 13(1) (C) AND 13(3) OF THE ACT,AO HAS TO ESTABLISH THAT I NCOME/PROPERTY OF THE TRUST WAS APPLIED DIRECTLY /INDIRECTLY FOR THE BENEFIT OF ANY PERSON AS REFERR ED IN SUB-SECTION 3 OF SECTION 13. AS THE AO HAD NOT REFERRED TO ANY EVIDENCE WITH REGARD TO USE OF MONEY/PROPERTY BY THE TRUSTEES OR THE PERSONS REFERRED IN SECTION 13(3) OF THE ACT, SO CONFIRMING THE ORDER OF THE FAA, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO.WE FIND THAT CASES RELIED UPON BY THE AR ALSO SUPPORT THE VIEW TAKEN BY THE FAA. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED. 4/5%./ 6 7 . , / 89. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH,2014 . 3 , 01' : ;% 5 < , 201 4 1 , 2 = 3 ITA NOS. 6765/MUM/2011 DAIYA FOUNDATION . SD/- SD/- ( .! # .$ .! # .% / DR. S.T.M.PAVALAN) ( / RAJENDRA) /J UDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, ;% /DATE: 05.03.2014. SK 3 3 3 3 , ,, , */> */> */> */> ?>'/ ?>'/ ?>'/ ?>'/ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / () 2. RESPONDENT / *+() 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR D BENCH, ITAT, MUMBAI / >B2 */% , . . . 6. GUARD FILE/ 2 4 +>/ +>/ +>/ +>/ */ */*/ */ //TRUE COPY// 3% / BY ORDER, C / 8 DY./ASST. REGISTRAR , /ITAT, MUMBAI