M/s. Riverdale High School Society, Dehradun V. ACIT, Dehradun

ITA 6770/DEL/2013

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4563 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-05-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV SAPRA FCA MS PALLARI
• Keywords: Principle of natural justice
• Section: 12A; 6; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI G.D.AGRAWAL, HONBLE VICE PRE SIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.6770-72/DEL/2013 A. Y.: 2001-02, 2002-03, 2003- 04 RIVERDALE HIGH SCHOOL SOCIETY SUMMER VALLEY SCHOOL 18-TEG BAHADUR ROAD DEHRADUN PAN : AAAAR3499M VS. ACIT CIRCLE-2 DEHRADUN APPELLANT RESPONDENT REVENUE BY : SHRI PRADEEP SINGH GAUTAM, SR.DR ASSESSEE BY : SHRI SANJIV SAPRA, FCA, MS. PALLARI, FCA DATE OF HEARING : 21.08. 2018 DATE OF PRONOUNCEMENT : 30.10.2018 O R D E R PER BENCH: ALL THESE THREE APPEALS ARE PREFERRED BY THE ASSES SEE. ITA NO. 6770/DEL/2013 IS ASSESSEES APPEAL AGAINST ORDE R DATED 23.10.2013 PASSED BY THE LD. CIT (APPEALS) {CIT (A) } -II, DEHRADUN FOR ASSESSMENT YEAR 2001-02, ITA NO. 6771/ DEL/2013 IS ASSESSEES APPEAL AGAINST ORDER DATED 23.10.2013 PASSED BY THE LD. CIT (A)-II, DEHRADUN FOR ASSESSMENT YEAR 20 02-03, ITA NO. 6772/DEL/2013 IS ASSESSEES APPEAL AGAINST ORDE R DATED 23.01.2013 PASSED BY THE LD. CIT (A)-II, DEHRADUN F OR ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 2 ASSESSMENT YEAR 2003-04. SINCE ALL THE THREE APPEAL S INVOLVED IDENTICAL ISSUES THE SAME WERE HEARD TOGETHER AND T HEY ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE SOCIETY IS RUNNING A SCHOOL AND IS REGISTERED U/S 12A OF THE I NCOME TAX ACT, 1961 (HEREINAFTER CALLED TO AS THE ACT) VID E ORDER DATED 30.08.1995. THE MAIN AIM OF THE SOCIETY IS TO IMPAR T EDUCATION TO STUDENTS. FOR ASSESSMENT YEAR 2001-02 THE RETURN OF INCOME WAS FILED DECLARING INCOME AT NIL AFTER CLAIMING EXEMPT ION U/S 11 OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND DUR ING THE COURSE OF SCRUTINY PROCEEDINGS THE AO OBSERVED THAT THE SO CIETY HAD PAID RENT OF RS. 9,89,912/- DURING THE YEAR UNDER CONSID ERATION. THE AO FURTHER NOTED THAT AS PER THE LEASE AGREEMENT DA TED 27.06.1994, THE RENT OF THE PROPERTY SITUATED AT 18 , TEG BAHADUR ROAD, DEHRADUN WAS TO BE RS. 2500/- PER MONTH PAYAB LE TO SH. ASHOK VASU, MRS. PAWAN WASU AND MRS. PREM OBERAI AN D MRS. NEERU GOEL. THE AO FURTHER NOTED THAT AS PER THE LE ASE DATED 27.06.1994 THE LEASE WAS TO BE IN OPERATION FOR 10 YEARS STARTING FROM 01.04.1994. THE AO ALSO NOTED THAT AS PER CLAU SE 6 OF THE LEASE DEED, AFTER THE EXPIRY OF THE LEASE, ALL THE ADDITIONS AND ALTERNATIONS, INCLUDING THE RENOVATION WERE TO FORM PART OF THE ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 3 LEASED PROPERTY AND WERE REVERT BACK TO THE LESSOR ON EXPIRY OF THE LEASE UNLESS THE SAID LEASE WAS RENEWED. THE AO ALSO NOTED THAT AS PER CLAUSE 10 OF THE LEASE DEED, THE LESSOR AND LESSEE MAY, BY MUTUAL CONSENT, EXTEND THE PERIOD OF THE LE ASE AS MUTUALLY AGREED ON SUCH ENHANCEMENT AS AGREED. THE AO FURTHER NOTED THAT THE PAYMENT OF RENT OF RS. 9,89, 912/- AS AGAINST THE PAYMENT OF RS. 60,000/- MADE IN THE IMM EDIATELY PRECEDING YEAR INDICATED THAT THE ENHANCEMENT HAD B EEN MADE BEFORE THE EXPIRY OF THE LEASE PERIOD AND FURTHER I T WAS ALSO NOTED THAT SAME WAS MADE BY WAY OF BOARD RESOLUTION. THE ASSESSING OFFICER CALLED FOR FURTHER DETAILS FROM THE ASSESSE E AND ALSO NOTED THAT THE LESSORS SMT. PREM OBEROI, SH. ASHOK WASU, SMT. PAWAN WASU WERE THE MEMBERS OF THE GOVERNING BODY OF THE SOCIETY WHEREAS SMT. NEERU GOEL WAS WIFE OF SH. S.K.GOEL WH O WAS AGAIN A MEMBER OF GOVERNING BODY. THE AO WAS OF THE OPIN ION THAT THE ASSESSEE WAS UNABLE TO GIVE ANY JUSTIFICATION FOR E NHANCEMENT OF RENT FROM RS. 60,000/- TO RS. 9,89,912/- AND HE DIS ALLOWED THE DIFFERENTIAL AMOUNT OF RS. 9,29,912/- BEING EXCESSI VE PAYMENT MADE TO THE INTERESTED PERSONS IN TERMS OF SECTION 13(2)(C) OF THE ACT. THE AO ALSO MADE THE ADDITION OF RS. 1,00,000/ - OUT OF SALARY PAID TO DIRECTOR (ADMINISTRATION). THEREAFTE R, THE SURPLUS ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 4 OF RS. 3,96,440/- WAS TAXED BY DENYING EXEMPTION U/ S 11 OF THE ACT. 2.1 SIMILARLY, IN ASSESSMENT YEAR 2002-03, THE AO M ADE A DISALLOWANCE OF RS. 4,20,000/- TOWARDS PAYMENT OF R ENT OF PROPERTY AT 18, TEG BAHADUR ROAD, DEHRADUN AND FURT HER DISALLOWANCE OF RS. 5,47,184/- TOWARDS RENT PAID FO R THE SECOND PROPERTY SITUATED AT 322/2 BALBIR ROAD, DEHRADUN ON THE GROUND THAT THE LEASE DEED DATED 31.03.2000 FOR THE SECOND PROPERTY WAS EXECUTED ONLY FOR A PERIOD OF 11 MONTHS STARTING FR OM 01.04.2000 AND SINCE NO NEW LEASE DEED AGREEMENT HAD BEEN FURN ISHED IN RESPECT OF YEAR UNDER CONSIDERATION THE RENT PAID F OR THIS PROPERTY WAS NOT ALLOWABLE. THE EXEMPTION U/S 11 WAS ALSO DE NIED BY INVOKING PROVISIONS OF SECTION 13 OF THE ACT. 2.2 IN ASSESSMENT YEAR 2003-04, THE ASSESSING OFFIC ER DISALLOWED RENT OF RS. 4,20,000/- IN RESPECT OF PRO PERTY SITUATED AT 18-TEG BAHADUR ROAD, DEHRADUN AND AN AMOUNT OF R S. 4,36,535/- FOR LEASE RENT PAID FOR THE PROPERTY AT 322/2 BALBIR ROAD, DEHRADUN AND ALSO DENIED THE BENEFIT OF EXEMP TION U/S 11 OF THE ACT BY INVOKING PROVISIONS OF SECTION 13 OF THE ACT. ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 5 2.3 THE ASSESSEES APPEALS IN ALL THE THREE YEARS W ERE DISMISSED BY THE LD. CIT (A)-II, DEHRADUN AND NOW AGAINST THE SE THREE FIRST APPELLATE ORDERS, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 3.0 AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIV E SUBMITTED THAT WHILE MAKING THE ADDITION/S WITH RESPECT TO RE NT THE AO NEVER AFFORDED ANY OPPORTUNITY TO THE ASSESSEE TO E XPLAIN THE FACTUAL POSITION IN THIS REGARD AND THUS THE PRINCI PLE OF NATURAL JUSTICE HAD BEEN VIOLATED BY THE ASSESSING OFFICER. IT WAS ALSO SUBMITTED THAT PROVISIONS OF SECTION 13(2)(C) OF TH E ACT WERE INCORRECTLY INVOKED AS THE SAID PROVISIONS WERE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS THE SAME DID NO T DEAL WITH RENT BUT RATHER WITH SALARY AND OTHER ALLOWANCES. HE ALS O SUBMITTED THAT THE ASSESSEE HAD TAKEN ON LEASE TWO PROPERTIES VIZ. ONE AT 18-TEG BAHADUR ROAD, DEHRADUN AND THE OTHER AT 322/ 2 BALBIR ROAD, DEHRADUN BUT THE LD. AO HAD MIXED UP THE CLAU SES OF THE TWO LEASE DEEDS. HE DREW OUR ATTENTION TO THE TWO LEASE DEEDS PLACED IN THE PAPER BOOK HAD ALSO SUBMITTED THAT TH E ENHANCED RENT WAS IN TERMS OF BOARD RESOLUTION AS WELL AS LE ASE DEEDS DULY EXECUTED IN THIS REGARD. THE LD. AUTHORISED REPRESE NTATIVE ALSO PLACED COPY OF CHART DEPICTING YEAR-WISE RENT PAID AS WELL AS DEPICTING THE PER SQUARE FEET RATE IN THIS REGARD A ND SUBMITTED ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 6 THAT THE SQUARE FEET RATE WAS AT PAR WITH THE MARKE T RATE PER SQUARE FEET OF THAT PARTICULAR AREA. IT WAS ALSO SU BMITTED THAT ALL THE THREE APPEALS COULD BE RESTORED TO THE FILE OF THE AO WITH THE DIRECTION TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE SAME BEFORE THE AO. 4.0 IN RESPONSE, THE LD. SR. DEPARTMENTAL REPRESENT ATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT (A) A ND ALSO PLACED RELIANCE ON THE FINDINGS OF THE AO. THE LD. SR. DEP ARTMENTAL REPRESENTATIVE, HOWEVER, HAD NO OBJECTION TO THE IS SUE BEING RESTORED TO THE FILE OF THE AO. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE IMPUGNED ORDERS SHOWS THAT ALL THE DOCUMENTS RELEVANT TO THE ISSUE OF RENT WERE NOT BEFORE THE AO AND EVEN THE LD. CIT (A), HA S DISMISSED THE APPEALS WITHOUT ACTUALLY CONSIDERING THE DETAIL ED SUBMISSIONS MADE BY THE ASSESSEE IN THIS REGARD AND WHICH ARE PART OF THE RECORD. AS BOTH THE PARTIES BEFORE US H AVE AGREED, WE DEEM IT FIT TO RESTORE THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER FOR ALL THE THREE YEARS IN APPEAL BEFORE US TO BE D ETERMINED AFRESH AFTER GIVING THE ASSESSEE DUE OPPORTUNITY TO PRESEN T ITS CASE. WE ALSO DIRECT THE ASSESSEE TO FURNISH ALL THE DOCUMEN TARY EVIDENCES ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 7 AND EXPLANATIONS ON WHICH IT SEEKS TO PLACE RELIANC E WHENEVER IT IS CALLED UPON BY AO TO DO SO FAILING WITH THE AO S HALL BE AT LIBERTY TO PROCEED AS PER LAW. 6.0 IN THE FINAL RESULT, ALL THE THREE APPEALS OF T HE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2018. SD/- SD/- (G.D.AGRAWAL) (SUDHANSHU SRIVAS TAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 30 TH OCTOBER, 2018 COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR ITA NO. 6770-72/DEL/2013 (RIVERDALE HIGH SCHOOL SOCIETY) 8 DATE OF DICTATION 29.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 29.10.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 30.10.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 30.10.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 30.10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 30.10.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER