Addl. C.I.T., Range-1, Aligarh V. Rajkiya Audyogik Kriishi Pradarshani Avam Govt. Industrial Exhibition, Aligarh

ITA 72/AGR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62843 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AVAN KUMAR SINGH F
• Keywords: Business income; Charitable institution
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NOS.72 & 73/AGR/2011 ASSESSMENT YEARS: 2005-06 & 2006-07 RESPECTIVELY ADDL. COMMISSIONER OF INCOME TAX VS. RAJKIYA AUDYOG IK KRISHI PRADARSHANI RANGE-1, ALIGARH. AVAM GOVT. INDUSTRIAL EXHIBI TION, G.T. ROAD, ALIGARH. (PAN: NOT MENTIONED). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI AVAN KUMAR SINGH, F.C.A. DATE OF HEARING : 26.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 31.08.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE TWO APPEALS FILED BY THE REVENUE. ITA NO .72/AGR/2011 IS FILED AGAINST THE ORDER DATED 27.12.2010 PASSED BY THE LD . CIT(A), GHAZIABAD FOR THE A.Y. 2005-06 AND ITA NO.73/AGR/2011 IS FILED AGAINS T THE ORDER DATED 22.11.2010 PASSED BY THE LD. CIT(A), MUZAFFARNAGAR FOR THE A.Y . 2006-07. ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 2 2. COMMON GROUNDS HAVE BEEN RAISED BY THE REVENUE IN BOTH THE APPEALS EXCEPT FOR DIFFERENCE OF AMOUNT INVOLVED. FOR THE PURPOSE OF READY REFERENCE, GROUNDS OF APPEAL IN ITA NO.72/AGR/2011 FOR A.Y. 20 05-06 ARE REPRODUCED AS UNDER:- 1. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.7 9,12,400/-, RELYING ON THE FACT THAT IT WAS REGISTERED U/S 12A, IGNORIN G THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT RELATE D TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT, 1961, 2. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.1,05,550 /- ON ACCOUNT HOLI MILAN AND ROZA IFTAR CELEBRATION, RELYING ON THE FA CT THAT IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE I NCURRED BY THE ASSESSEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT, 1961. 3. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.5,99,690 /- ON ACCOUNT OF EXPENDITURE INCURRED ON NEDA PROJECT, RELYING ON TH E FACT THAT IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE I NCURRED BY THE ASSESSEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT,1961. 4. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.8,69,085 /- ON ACCOUNT OF ATITHI GRAH SAJJA & REPAIR, RELYING ON THE FACT THA T IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT,1961. 5. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.2,00,000 /-- ON ACCOUNT OF POLICE KALYAN NIDHI RELYING ON THE FACT THAT IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE INCURRED BY THE ASSES SEE WAS NOT RELATED ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 3 TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT,1961. 6. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS, CORRECT IN DELETING THE ADDITION OF RS.1,73,29 3/- ON ACCOUNT OF ATITHI SATKAR/HOTEL RELYING ON THE FACT THAT IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE INCURRED BY THE ASSES SEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT,1961. 7. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.6,47,034 /- ON ACCOUNT OF GENERAL REPAIR AND MAINTENANCE, RELYING ON THE FACT THAT IT WAS REGISTERED U /S 12A, IGNORING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT,1961. 8. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.17,75,19 4/- ON ACCOUNT OF EXPENDITURE CLAIMED UNDER LIGHT & SOUND SYSTEM, MUS ICAL NIGHTS KAVI SAMMELAN, GEET AND CULTURAL & OTHER PROGRAMMES, RE LYING ON THE FACT THAT IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT AC T,1961. 9 WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CAS E LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.2L,45,L5 0/- ON ACCOUNT OF DISALLOWANCE OUT OF OTHER EXPENSES, RELYING ON THE FACT THAT IT WAS REGISTERED U/S 12A, IGNORING THAT THE EXPENDITURE I NCURRED BY THE ASSESSEE WAS NOT RELATED TO GENERAL PUBLIC UTILITY AND DOES NOT ENTITLED FOR EXEMPTION U/S 11 OF THE IT ACT, 1961. 10. WHETHER UNDER FACTS AND CIRCUMSTANCES OF THE CA SE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF RS.3,91,729 /- ON ACCOUNT OF TDS CLAIMED AS EXPENDITURE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A GOVERNMENT FLOATED SOCIETY REGISTERED UNDER SOCIETY REGISTRATION ACT, 1860. IT WAS SET UP FOR THE ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 4 PURPOSE OF HOLDING EXHIBITION OF VARIOUS INDUSTRIAL AND AGRICULTURAL EQUIPMENTS, FOR THE PURPOSE OF DEVELOPMENT OF ALIGARH DISTRICT AS W HOLE, ESPECIALLY TO BOOST THE INVENTIONS/PROGRESS MADE BY SMALL SCALE INDUSTRIES AND AGRICULTURAL IMPLEMENTATION AND ALSO TO SHOW CASE THE GROWTH IN THE MEDICAL SCI ENCE, HORTICULTURE, GAMES AND SPORTS AND OTHER FIELDS OF THE DISTRICT. DURING TH E ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN PARKING TRUCKS OF BALU & BADARPUR CONTRACT RECEIPT OF RS.79,11,000/-. THE A.O. WAS OF THE VIE W THAT THIS INCOME IS INCOME FROM BUSINESS. THE INCOME THROUGH RENT ON SHOPS AN D LAND FOR THE PERIOD OTHER THAN EXHIBITION PERIOD WAS ALSO TAKEN AS INCOME FRO M BUSINESS BY THE A.O. THE A.O. WAS ALSO OF THE VIEW THAT THE TITLE OF THE SOC IETY OVER THE LAND WAS NOT CLEARLY EVIDENCED AND HENCE THE INCOME FROM SUCH PROPERTY W AS NOT THE INCOME DERIVED FROM PROPERTY HELD IN TRUST AND HENCE WAS NOT ELIGI BLE FOR EXEMPTION UNDER SECTION 11 & 12 OF THE ACT. THE A.O. HAS ALSO NOTICED THAT FOLLOWING EXPENSES WERE NOT FOUND INCURRED FOR CHARITABLE PURPOSES:- (A) HOLI MILAN AND ROZA IFTAR CELEBRATION EXPENSES RS.1,05,550/- (B) 50% OF (RS.11,99,380/-) THE EXPENDITURE INCURRE D ON NEDA PROJECT RS.5,99,690/-. (C) ATITHI GRAH SAJJA & REPAIR RS.8,69,085/- (D) POLICE KALYAN NIDHI RS.2,00,000/- (E) 50% OF (RS.3,46,586/-) ATITHI SATKAR/HOTEL RS.1 ,73,293/- (F) TH OF (RS.25,91,734/-) OUT OF GENERAL REPAIR AND MAINTENANCE RS.6,47,034/- (G) TDS CLAIMED AS EXPENDITURE RS.3,91,729/- ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 5 (H) 50% OF EXPENDITURE CLAIMED UNDER LIGHT & SOUND SYSTEM (RS.10,94,488/-), MUSICAL NIGHTS KAVI SAMMELAN, GEE T (RS.16,55,600/-) AND CULTURAL & OTHER PROGRAMMES (R S.8,00,300/-) RS.17,75,194/- (I) DISALLOWANCE OUT OF OTHER EXPENSES RS.21,45,150 /- CIT(A) PAGE 3 4. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AS UNDER :- 5.1. GROUNDS OF APPEAL NO.1, 2, 3 & 4 ARE AGAINST DISALLOWANCE OF CLAIM OF EXEMPTION U/S 11 & 12 AND THEREBY MAKING A N ADDITION OF RS.79,11,000/- AND TREATING THE SAME AS BUSINESS IN COME. 5.1(A) ON THIS ISSUE, THE VIEW TAKEN BY CIT(A), MUZ AFFARNAGAR, WHO HAS ALREADY ADJUDICATED APPELLANTS CASE FOR ASSESS MENT YEAR 2006- 07, VIDE ORDER IN APPEAL NO.51/2008-09/ALG DATED 22 .11.2010, IS REPRODUCED HEREUNDER: THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT AND REMAND REPORT OF THE A. O. HAVE BEEN CAREFULLY CONSIDERED. IT IS NOTICED THAT THE APPELLANT HAS F URNISHED COPY OF REGISTRATION GRANTED U/S 12A OF THE ACT BY THE C OMMISSIONER OF INCOME-TAX, AGRA VIDE LETTER F.NO,CIT(TECH)1120( G-360/12- A/99-2000/AGRA DATED 09-10-2000 BY VIRTUE OF WHICH THE APPELLANT WAS ENTITLED FOR CLAIM OF EXEMPTION U/S 1 1 & 12 OF THE I.T. ACT, 1961 WITH EFFECT FROM 01-04-1999. THE A. O. CANNOT SIMPLY OVERRIDE THE ORDER OF THE COMMISSIONER OF IN COME-TAX, AGRA BY POINTING OUT CERTAIN DEFECTS IN THE CONSTIT UTION OF THE SOCIETY AND PROCEED TO DISALLOW THE CLAIM OF EXEMPT ION U/S 11 & 12 OF THE ACT. IT IS PERTINENT TO MENTION HERE THA T THOUGH THE POWER TO CANCEL REGISTRATION FLOWS FROM THE POWER T O REGISTER, BUT THE SAME HAVING NOT BEEN PROVIDED FOR SPECIFICA LLY IN THE PROVISIONS, IT LEAD TO UNNECESSARY LITIGATION. SUB- SECTION (3) HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT, 2004, WIT H EFFECT FROM 1 OCTOBER, 2004 TO PROVIDE FOR SUCH A SITUATION, I T IS PROVIDED THAT IF THE COMMISSIONER OF INCOME-TAX IS SATISFIED THAT THE ACTIVITIES OF ANY TRUST OR INSTITUTION ARE NOT GENU INE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 6 INSTITUTION, HE SHALL, AFTER GIVING REASONABLE OPPO RTUNITY OF BEING HEARD TO THE CONCERNED TRUST OR INSTITUTION, PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION GRANTED UNDE R THE SAID SECTION. THUS WHAT LEAST THE A. O. COULD DO WAS TO REFER THE MATTER TO THE COMMISSIONER OF INCOME-TAX, AGRA IN V IEW OF DISCREPANCIES AS POINTED OUT IN THE ASSESSMENT ORDE R IN RESPECT OF CONSTITUTION OF THE SOCIETY ETC. BUT IT WAS FOR THE COMMISSIONER OF INCOME-TAX, AGRA TO REVIEW THE MATT ER WITH REFERENCE TO DISCREPANCIES POINTED BY THE A. O. THU S, THE A.O. WAS ACTING BEYOND HIS JURISDICTION IN SUO MOTO DENY ING THE CLAIM OF EXEMPTION U/S 11 & 12 OF THE ACT PARTICULA RLY IN LIGHT OF THE FACT THAT THE APPELLANT WAS ENTITLED FOR THE SAME IN VIEW OF REGISTRATION GRANTED U/S 12A OF THE ACT BY THE COMP ETENT AUTHORITY. THE VIEW IS SUPPORTED WITH THE JUDICIAL PRONOUNCEMENT IN THE CASE OF MADHYA PRADESH MADHYAM VS. CIT (2002) 256 ITR 277 (MP.) AS RELIED UPON BY THE APPELLANT. FURTHER, IT REMAINS UNDISPUTED THAT MAIN OBJECTIVE OF THE SOCIETY REMAINS CHARITABLE ACTIVITY WHICH FALLS UND ER THE FOURTH LIMB OF SECTION 2(15) OF THE I.T. ACT AS ADVANCEMEN T OF ANY OTHER OBJECTIVE OF GENERAL PUBLIC UTILITY. THE EXHI BITION IS BEING CONDUCTED SINCE LAST MORE THAN 100 YEARS WHICH CLEA RLY ESTABLISHES ITS UTILITY AND CREDIBILITY FOR GENERAL PUBLIC AT LARGE. ALTHOUGH, IT SEEMS THE FORMAL REGISTRATION U/S 12AA DONE ON 09- 10-2000; THE APPELLANT SOCIETY'S CASES WERE SCRUTIN IZED FOR A.YS. 1989-90, 1990-91 AND 1995-96 AND IT IS OBSERV ED THAT THE APPELLANT SOCIETYS INCOME WAS HELD AS EXEMPT. REGARDING VARIOUS EXPENSES INCURRED BY THE SOCIETY, THE A. O. HAS NOT POINTED OUT ANY VIOLATION OF SECTION 13 OF THE I.T. ACT SO AS TO RENDER ITS REGISTRATION U/S 12A LIABLE FOR CA NCELLATION OR DENY EXEMPTION OF INCOME U/S 11 OF THE I.T. ACT. O N THE OTHER HAND, THE A. O. DISALLOWED THE EXPENSES ONLY ON THE GROUND THAT IN HIS OPINION WERE NOT FOR CHARITABLE PURPOSES. HO WEVER, THE VARIOUS ACTIVITIES OF THE SOCIETY AND THE EXPENSES INCURRED THEREIN ARE INCIDENTAL TO THE MAIN OBJECTIVES OF TH E SOCIETY WHICH IS CLEARLY AS CHARITABLE. THE VIEW IS SUPPORT ED BY THE RULINGS OF THE HON'BLE APEX COURT IN THE CASE OF DH ARMADEEPTI VS. CIT, KERALA (1978) 114 ITR 454 (SC), AS RELIED UPON BY THE APPELLANT AMONGST OTHER JUDICIAL PRONOUNCEMENTS. ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 7 THUS IT IS HELD THAT THE A. O. WAS NOT JUSTIFIED IN NOT ALLOWING CLAIM OF EXEMPTION U/S.11 & 12 OF THE ACT AND HOLD THE APPLICATION OF FUNDS AS NOT BEEN APPLIED FOR CHARIT ABLE PURPOSES. IN VIEW OF THE ABOVE, THE BENEFIT OF REGI STRATION GRANTED U/S 12A IS ALLOWED AND ACCORDINGLY, EXEMPTI ON U/S 11 & 12 IS ALLOWED SUBJECT TO FULFILLMENT OF THE RELEV ANT PROVISIONS OF THESE SECTIONS OF THE ACT. 5.1(B) ON INDEPENDENT CONSIDERATION, I AGREE WITH T HE REASONING GIVEN BY CIT(APPEALS), MUZAFFARNAGAR AND THE SAME REASONI NG IS FOLLOWED AND APPLIED TO THE ISSUE FOR THIS ASSESSMENT YEAR A S WELL. 5.L(C) APART FROM ABOVE, I FEEL LIKE ADDING SOME FU RTHER DISCUSSION HERE. FROM THE FACTS ON RECORD, I AM FULLY SATISFIE D THAT THE SOCIETY'S OBJECTIVES ARE CHARITABLE, AS ITS AIMS ARE TO PROMO TE SMALL SCALE INDUSTRIES, AGRICULTURISTS, ARTISANS ETC., OF NOT O NLY THE ENTIRE DISTRICT BUT ALSO OF THE ENTIRE NATION BY TRYING TO SHOW CAS E THE DEVELOPMENTS AND PROGRAMMES OF THE REGION AS WELL AS THE COUNTRY AS A WHOLE IN VARIOUS FIELDS, ESPECIALLY TOUCHING THE VILLAGES AN D SUBURBAN AREAS AND COMMON MAN IN GENERAL. 5.L(D) THE EXHIBITION IS HAVING A LONG ILLUSTRIOUS PRECEDENCE AND ITS GOOD REPUTATION MUST BE RECKONED AND RECOGNIZED. 5.1(E) THE SOCIETY WAS SET UP FOR THIS ILLUSTRIOUS PRADARSHANI/EXHIBITION WITH GOVERNMENTS FUNDS AND MACHINERY, WHICH FURTHER ADDS TO ITS STATUS AND NON-COMMERCIAL STATUS. 5.L(F) FURTHER, I DO NOT FIND ANY DEFECT IN THE CL AUSES OF MEMORANDUM & ARTICLE OF ASSOCIATION. SPECIAL MENTION MUST BE MADE THAT INCOME OR FUNDS ARE NOT DIVISIBLE AMONGST THE MEMBERS OF T HE TRUST AND NO BENEFITS ARE TO GO TO ANY INDIVIDUAL; THE ENTIRE FU NDS OF ANY SURPLUS GENERATED ARE DOVETAILED 'INTO THE AVOWED OF CHARIT ABLE ACTIVITIES OF THE TRUST. 5.1(G) I HAVE PERSONALLY VERIFIED AND FIND THAT AO IS WRONG IN ASSERTING THAT LEDGER IS NOT MAINTAINED. I HAVE SE EN AND PERUSED THE LEDGER WHICH IS CERTAINLY NOT FABRICATED. THE LEDG ER ENTRIES TALLIES WITH THE VARIOUS ACCOUNTS AND ACCOUNT FOLDERS AND C ASH BOOK BEING MAINTAINED BY THE SOCIETY. THIS LEDGER HAS BEEN PRO DUCED BEFORE ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 8 CIT(A), MUZAFFARNAGAR AS WELL AND BEFORE THE AO DUR ING REMAND PROCEEDINGS FOR A.Y. 2006-07. FURTHER, I AGREE WIT H THE APPELLANTS CONTENTION THAT EVEN ASSUMING THAT LEDGER IS NOT BE ING MAINTAINED; THE OTHER ACCOUNT BOOKS AND REGISTERS/FOLDERS BEING MAI NTAINED, DID NOT LEAD TO ANY CONCLUSION THAT THERE ARE ANY INHERENT DEFECTS IN THE BOOKS OR SYSTEM OF ACCOUNTING. THE AO HAS NOT POINTED OUT ANY SPECIFIC 5.L(H) IN THE ABOVE BACK DROP, THE ACTIVITY OF ALLO WING THE LAND FOR PARKING OF TRUCKS CARRYING SAND AND BADARPUR DURING NON-EXHIBITION PERIOD AND EARNING RENTAL INCOME THERE FROM IS, AT THE MOST, AN INCIDENTAL OR SUPPLEMENTARY ACTIVITY, SUPPLEMENTING TO THE CAUSE OF THE SOCIETY SIMPLY BECAUSE THE ENTIRE RENTAL INCOME GENERATED IS BEING PLOUGHED BACK FOR THE PURPOSES OF THE SOCIETY. VARI OUS CASE LAWS CITED BY THE APPELLANT SUPPORT THE CASE OF THE APPELLANT. SPECIAL RELIANCE IS PLACED ON FOLLOWING JUDGEMENTS: (I) SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION - 121 ITR 1 (SC) (II) TRUSTEES OF VISHA NIMA CHARITY TRUST - 138 ITR 564 (BOMBAY) (III) THANTHI TRUST - 247 ITR 785 (SC) 5.1(I) IN VIEW OF ABOVE DISCUSSION, THE AOS VIEW O F TREATING RS.79,22,000/- AS TAXABLE BUSINESS INCOME IS OVER R ULED. 5.2. GROUND NO.6 PERTAINS TO VARIOUS DISALLOWANCES MADE BY THE AO. ALL THE DISALLOWANCES MADE BY THE AO OUT OF VARIOUS EXPENSES, AS MENTIONED IN GROUND NO.6, ARE DELETED BECAUSE OF DI SCUSSION ABOVE AND ALSO BECAUSE THE REASONING GIVEN BY THE AO FOR SUCH DISALLOWANCES IS NOT FOUND TENABLE. IT WOULD SUFFIC E TO SAY THAT ALL THESE EXPENSES ARE DIRECTLY TOWARDS ACHIEVING THE O BJECTS OF THE CHARITABLE ACTIVITIES I.E. FOR MAINTAINING AND UTIL IZING THE PROPERTY OF THE TRUST FOR THE ANNUAL EXHIBITION. MOST OF THE DI SALLOWANCES ARE ON ADHOC BASIS WHICH IS ALSO NOT CORRECT. ONCE THE EXPENSES ARE ACCEPTED TO BE MADE FOR THE C HARITABLE PURPOSES AND WHEN NO SPECIFIC DEFECT IN THE BOOKS A ND BILLS AND VOUCHERS HAS BEEN FOUND; ALL THESE EXPENSES ARE TO BE HELD ALLOWABLE BEING UTILIZATION OF THE FUNDS/ INCOME TOWARDS CHAR ITABLE PURPOSES. ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 9 5.2(A) JUST TO CLARIFY FURTHER; I AM SATISFIED WITH THE EXPLANATION GIVEN BY THE APPELLANT IN RESPECT OF NATURE AND PURPOSE O F THESE EXPENSES. THE AOS CONCLUSION THAT ASSESSEE IS ENGAGED IN BUS INESS ACTIVITY IS NEGATED. FURTHER, AOS VIEW THAT THE ASSESSEE HAS APPLIED INCOME FOR THE PURPOSE OF ENTERTAINMENT AND FOR NON-CHARITABLE ACTIVITIES IS ALSO NEGATED. 5.3 REGARDING GROUND OF APPEAL NO.5, THE AO IS DIRE CTED TO VERIFY WHETHER THERE WAS ANY DETERMINED LOSS FOR ASSESSMEN T YEAR 2004-05 AND IF SO, GIVE EFFECT TO THE SAME, AS PER LAW. 5. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF A.O. AND SUBMITTED THAT THE ASSESSEE SOCIETY WAS NOT OWNER O F THE PROPERTY. THEREFORE, THE INCOME FROM STOCK, PARKING OF TRUCKS ETC. WERE NOT THE INCOME DERIVED FROM PROPERTY HELD UNDER THE TRUST. LD. DEPARTMENTAL RE PRESENTATIVE FURTHER SUBMITTED THAT THE CIT(A) WITHOUT APPRECIATING THE FACTS DECI DED THE ISSUE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE FIND ING OF THE CIT(A) HAS MISPLACED. IT WAS ALSO SUBMISSION OF THE LD. DEPAR TMENTAL REPRESENTATIVE THAT VARIOUS EXPENSES LIKE HOLI MILAM, ROZA IFTAR, ATITH I GRAH SAJJA REPAIR, POLICE KALYAN NIDHI AND OTHERS WHICH HAS BEEN NOTED BY THE A.O. ARE NOT RELATED TO EXHIBITION. THEREFORE, THE EXPENSES INCURRED WERE NOT FOR THE CHARITABLE PURPOSE. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE DID NOT INCUR EXPENDITURE FOR THE PURPOSE OF CHARITABLE PURPOSES. LD. DEPARTMENTAL REPRESENTATIVE WHILE CONCLUDING HIS SUBMISSION SUBM ITTED THAT THE CIT(A) DID NOT GIVE HIS FINDING IN RESPECT OF SOCIETY PROPERTY AND IN RESPECT OF EXPENDITURE WHICH ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 10 WAS DISALLOWED BY THE A.O. WHETHER THESE WERE INCUR RED FOR THE PURPOSE OF THE OBJECT OF THE SOCIETY I.E. CHARITABLE PURPOSE. 6. THE LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE A.O. HAS WRONGLY C AME TO THE CONCLUSION THAT THE PROPERTY HELD BY THE SOCIETY MEANS ONLY THE IMMOVAB LE PROPERTY. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT TH E ENTIRE EXPENSES INCURRED WERE FOR CHARITABLE PURPOSES IN ACCORDANCE WITH THE OBJE CT OF THE SOCIETY. THE SOCIETY IS REGISTERED SOCIETY UNDER SOCIETY REGISTRATION ACT, 1860. THE OBJECT OF THE SOCIETY IS TO CONDUCT EXHIBITION OF VARIOUS INDUSTRIAL AND AGRICULTURAL EQUIPMENTS. THE INSTITUTION HEADED BY THE DISTRICT MAGISTRATE, ALIG ARH. THE CONSTITUTION OF THE SOCIETY HAS BEEN WRITTEN ON THE FIRST DAY OF APRIL, 1998. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE PRESIDENT OF THE COMMITTEE IS DISTRICT MAGISTRATE AND THE OFFICER INCHARGE IS ADDITIONAL D ISTRICT MAGISTRATE, ALIGARH. GENERAL SECRETARY OF THE COMMITTEE IS TEHSILDAR. T HE ASSESSEE SOCIETY IS REGISTERED UNDER SECTION 12A OF THE INCOME TAX ACT, 1961. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE A.O. HAS FAILED TO DIFFE RENTIATE BETWEEN THE PRIVATE SOCIETY AND GOVERNMENT/PUBLIC SOCIETY. THE ALIGAR H EXHIBITION IS WHOLLY OWNED, CARRIED & CONTROLLED BY STATE GOVERNMENT AND THE SU PERVISOR IS DISTRICT MAGISTRATE AND NO PUBLIC INTERFERENCE IS INVOLVED THEREIN. IT IS ALSO SUBMISSION OF THE LD. ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 11 AUTHORISED REPRESENTATIVE ARE THAT CASE OF THE ASSE SSEE IN EARLIER YEAR HAS ALSO BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND EXIST ING ASSESSEES CLAIM AS IT IS. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT WHEN T HE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT, THE A.O. HAS NO POWER TO WITHDRAW IT. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT SOCIET Y HAS COMPLIED WITH ALL THE CONDITIONS AS LAID DOWN UNDER SECTION 11 OF THE ACT . 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE NOTICE THAT THE ASSESSEE HAS GRANTED REGISTRATIO N UNDER SECTION 12A/12AA OF THE ACT DATED 09.10.2000 W.E.F. 01.04.99. THIS REGISTR ATION HAS NOT BEEN FOUND CANCELLED. THE OBJECTS OF THE SOCIETY ARE CHARITAB LE AS ITS AIMS AND ACTIVITIES ARE TO PROMOTE SMALL SCALE INDUSTRIES, AGRICULTURISTS, ART ISTS ETC. THE CIT(A) NOTED THAT THE CLAUSES OF MEMORANDUM & ARTICLE OF ASSOCIATION MENT IONS THAT INCOME OR FUNDS ARE NOT DIVISIBLE AMONGST THE MEMBERS OF THE TRUST AND NO BENEFITS ARE TO GO TO ANY INDIVIDUAL, THE ENTIRE FUNDS OR ANY SURPLUS GENERAT ED ARE DOVETAILED INTO THE AVOWED OF CHARITABLE ACTIVITIES OF THE SOCIETY. THE CIT(A ) HAS ALSO NOTED THE FACT THAT THE ENTIRE RENTAL INCOME GENERATED IS BEING PLOUGHED BA CK FOR THE PURPOSES OF THE SOCIETY. THE CIT(A) HAS FOLLOWED HIS PREDECESSORS ORDER FOR A.Y. 2006-07 IN ASSESSEES OWN CASE WHEREIN IT WAS STATED THAT THE A.O. CANNOT SIMPLY OVERRIDE THE ORDER OF CIT, AGRA BY POINTING OUT CERTAIN DEFECTS IN CONSTITUTION OF THE SOCIETY ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 12 AND PROCEED TO DISALLOW THE CLAIM OF EXEMPTION U/S 11 & 12 OF THE ACT. ACTION OF THE A.O. WAS BEYOND JURISDICTION. IT HAS ALSO BEEN NOTICED IN THAT ORDER THAT THE SOCIETY WAS ALLOWED REGISTRATION UNDER SECTION 12A/ 12AA OF THE ACT DATED 9 TH OCTOBER, 2000 AND THE ASSESSEES CASES WERE SCRUTIN IZED FOR THE A.YS. 1989-90, 1990-91 & 1995-96 WHEREIN IT WAS HELD THAT INCOME O F THE SOCIETY WAS EXEMPT. AS REGARDS THE CONTENTION OF THE LD. AUTHORISED REP RESENTATIVE REGARDING SOCIETYS PROPERTY, WE AGREE WITH THE CONTENTION OF THE LD. A UTHORISED REPRESENTATIVE THAT PROPERTY WORD USED IN SECTION 11 IS A TERM OF WID EST IMPORT, AND SUBJECT TO ANY LIMITATION OR QUALIFICATION WHICH THE CONTEXT MIGHT REQUIRE, IT SIGNIFIES EVERY POSSIBLE INTEREST WHICH A PERSON CAN ACQUIRE, HOLD AND ENJOY. BUSINESS WOULD UNDOUBTEDLY BE PROPERTY, UNLESS THERE IS SOMETHIN G TO THE CONTRARY IN THE ENACTMENT. THERE IS NOTHING IN THE LANGUAGE OF SEC TION 11 WHICH RESTRICTS IN ANY MANNER THE NORMAL AND ACCEPTED MEANING OF THE WORD PROPERTY. IN THIS REGARD, WE MAY REFER THE JUDGMENT OF APEX COURT IN THE CASE OF J.K. TRUST VS. CIT, 32 ITR 535 (SC). HONBLE BOMBAY HIGH COURT IN THE CASE OF A.J. PATEL VS. CIT, 97 ITR 683 (BOM) HELD THAT THE RIGHT TO EXPLOIT SPACE ON E ITHER SIDE OF AN OVERBRIDGE FOR ADVERTISEMENTS IS A PROPERTY. IN THE LIGHT OF TH E ABOVE DISCUSSION, WE DO NOT FIND ANY SUBSTANCE IN THE SUBMISSIONS OF THE LD. DEPARTM ENTAL REPRESENTATIVE, THEREFORE, THE SAME IS DISMISSED. ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 13 8. AS REGARDS THE OBJECTION OF THE LD. DEPARTMENTAL REPRESENTATIVE IN RESPECT OF DISALLOWANCE OF EXPENDITURE, WE NOTICE THAT THE CIT (A) HAS RIGHTLY HELD THAT THE A.O. HIMSELF ACCEPTED THOSE EXPENSES INCURRED FOR T HE PURPOSES OF THE OBJECT OF THE SOCIETY AS HE MADE ADHOC DISALLOWANCE IN PART. THE CIT(A) AFTER VERIFYING THE FACTS SATISFIED THAT EXPENSES WERE INCURRED FOR CHA RITABLE PURPOSES IN ACCORDANCE WITH THE OBJECT OF THE SOCIETY. 9. IN THE LIGHT OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE ORDER OF THE CIT(A) IS, THEREFO RE, CONFIRMED. 10. AS STATED ABOVE THAT SINCE THE FACTS OF THE CAS E FOR A.Y. 2006-07 ARE IDENTICAL TO THE CASE FOR A.Y. 2005-06 OF WHICH DET AILED DISCUSSION HAS BEEN MADE ABOVE, IN THE LIGHT OF THE SAME, ORDER OF THE CIT(A ) FOR A.Y. 2006-07 IS ALSO CONFIRMED. 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* ITA NOS.72 & 73/AGR/2011 A.YS. 2005-06 & 2006-07. 14 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY