BOMBAY SUBURBAN ART AND CRAFT EDUCATION SOCIETY, MUMBAI V. ITO (E) 1(1), MUMBAI

ITA 7126/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1343 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Capital expenditure
• Section: 142(1); 12A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALB BENCH, MUMBAI . . , , , , BEFORE SHRI G.S.PANNU, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.7126/MUM/2014 ( / ASSESSMENT YEAR: 2011-12) BOMBAY SUBURBAN ART AND CRAFT EDUCATION SOCIETY ST. MARTIN ROAD, BANDRA WEST, MUMBAI - 400050 / VS. ITO (E) I (1) PIRAMAL CHAMERS, LALBAUG, MUMBAI ./ ./ PAN/GIR NO. : AAATT0555B ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 29.09.2016 /DATE OF PRONOUNCEMENT: 29.12.2016 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 05.09.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: SHRI SANJAY SAWANT DEPARTMENT BY: SHRI M. RAJAN ITA NO.7126/M/14 A.Y. 2011-12 2 1. THE LOWER AUTHORITIES GROSSLY ERRED IN APPRECIATING THE FACTS AND WRONGLY COMPUTED THE ALLEGED TAXABLE INCOME AT RS.2,05,41,560/- BY THE ASSESSING OFFICER AND RS.1,38,00,629/- BY CIT(A) 1. 2. THEY TOTALLY FAILED TO APPRECIATE THAT AS AGAINST THE INCOME OF RS.6,36,10,397/- THE TRUST HAS APPLIED RS.6,79,05,627/- U/S.11(1)(A) (THUS MORE THAN 85%) AND THERE WAS NO QUESTION OF SEEKING ACCUMULATION U/S.11(2) OF THE IT ACT, 1961. 3. THE LOWER AUTHORITIES FAILED TO APPRECIATION THAT EVEN CAPITAL EXPENDITURE QUALIFIES AS APPLIED ON THE OBJECTS OF THE TRUST U/S.11(1)(A) AND THUS IGNORING THE CAPITAL EXPENDITURE OF RS.1,57,27,460/- INCURRED ON THE OBJECTS OF THE TRUST. 4. THE LOWER AUTHORITIES ERRED IN TREATING AS INCOME THE DONATION BY SPANCO LTD. OF RS.1 CRORE AND NEISA LASER CENTRE OF RS.10 LAKHS ON THE GROUND THAT THERE WAS NO SPECIFIC DIRECTION BY THE DONOR. 5. WITHOUT PREJUDICE TO THE ABOVE AND ASSUMING WITHOUT ADMITTING THAT IT WAS NOT TOWARDS CORPUS, THE LOWER AUTHORITIES OUGHT TO HAVE HELD THAT THE TRUST HAS STILL SPENT / APPLIED MORE THAN 85% OF ITS INCOME AND THUS THERE WAS NO TAXABLE INCOME AS PER S.11(1)(A). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y.2011-12 ON 30.09.2011 ALONG WITH THE INCOME AND EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM NO.10B DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL. THE ASSESSEE TRUST IS REGISTERED AS A CHARITABLE ORGANISATION WITH DIT(E), MUMBAI U/S. 12A OF INCOME OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) VIDE REGISTRATION NO. INS/3823 DATED 15.04.1980. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S.143(2) AND 142(1) OF THE ACT ITA NO.7126/M/14 A.Y. 2011-12 3 ALONG WITH QUESTIONNAIRE WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. THEREAFTER, THE ASSESSMENT WAS COMPLETED BY ASSESSING THE TAXABLE INCOME TO THE TUNE OF RS.2,05,41,560/-. AGGRIEVED BY THIS ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE FEELING AGGRIEVED THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. INFACT, THE LEARNED REPRESENTATIVE OF THE ASSESSEE DID NOT ARGUE THE CASE ON MERIT BUT ARGUED THAT THE ASSESSEES INCOME AND EXPENDITURE ACCOUNTS WERE PREPARED ON THE BASIS OF THE GROSS RECEIPTS AND EXPENDITURE OF THE VARIOUS INSTITUTIONS AND SOCIETY. DEPRECIATION AND OTHER EXPENDITURE WERE NOT CLAIMED AND THE FORM NO.10 HAS WRONGLY BEEN FILED WHICH LEADS TO THE ASSESSMENT WRONG, THEREFORE, THE ASSESSEE SHOULD BE ALLOWED TO FURNISH THE FORM NO.10 IN ACCORDANCE WITH LAW. ON THE OTHER HAND, LEARNED REPRESENTATIVE OF THE DEPARTMENT HAD RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. THE MATTER OF CONTROVERSY, NO DOUBT HAS NOT BEEN ARGUED BY THE LEARNED REPRESENTATIVE OF THE ASSESSEE BUT ON APPRAISAL OF THE STATEMENT SHOWED IN RETURN, IT CAME IN TO THE NOTICE THAT THE ASSESSEES INCOME AND EXPENDITURE ACCOUNT WERE PREPARED ON THE BASIS OF GROSS RECEIPTS AND EXPENDITURE OF THE VARIOUS INSTITUTIONS AND SOCIETY. THE DEPRECIATION THOUGH DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT ITA NO.7126/M/14 A.Y. 2011-12 4 WAS NOT CLAIMED BECAUSE OF FIXED ASSESSED PURCHASED WAS CONSIDERED AS OBLIGATION OF INCOME TO THE CHARITABLE / RELIGIOUS PURPOSE IN INDIA. SINCE FORM NO.10 HAS BEEN FILED ON THE BASIS OF THE GROSS RECEIPTS SEEMS APPARENT WRONG, THEREFORE, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO FURNISH THE FORM NO.10 IN ACCORDANCE WITH LAW. ACCORDINGLY, WITHOUT DECISION UPON THE SAID ISSUES RAISED BY THE ASSESSEE, THE CONTENTION OF THE ASSESSEE IS HEREBY ACCEPTED AND THE FINDING OF THE CIT(A) IS HEREBY ORDERED TO BE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE ASSESSEE TO FURNISHED THE RETURN, THE FORM NO.10 AND OTHER RELEVANT DOCUMENTS AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW AND THEREAFTER REASSESS THE ASSESSMENT OF THE RELEVANT YEAR IN ACCORDANCE WITH LAW. 5. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2016 SD/- SD/- (G.S.PANNU) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 29 TH DECEMBER, 2016 MP ITA NO.7126/M/14 A.Y. 2011-12 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI