M/s. The GRD Trust, Coimbatore V. Addl. CIT, Coimbatore

ITA 72/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77248 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 09-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2013
• Court: TRIBUNAL
• Assessee Lawyers: J BALACHANDER SHRI T N B
• Keywords: Rectification of order; Charitable institution; Retrospective amendment; Bonafide mistake
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 72/MDS/2013 / ASSESSMENT YEAR : 2009-10 M/S.THE GRD TRUST CHARITABLE TRUST BY ITS MANAGING TRUSTEE DR. D.PADMANABAN, KALAIKATHIR BUILDINGS, 963, AVANASHI ROAD, COIMBATORE641 037. [PAN: AAATT 1480 B] ( !% /APPELLANT) VS ADDL. COMMISSIONER OF INCOME TAX, RANGE-I, 63 RACE COURSE ROAD, COIMBATORE ( &'!% /RESPONDENT) / APPELLANT BY : SHRI J.BALACHANDER, ADVOCATE / RESPONDENT BY : SHRI T.N.BETGERI, JCIT / DATE OF HEARING : 09-04-2014 ! / DATE OF PRONOUNCEMENT : 28-04-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNIN G THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMBATORE DATED 09-11-2012 RELEVANT TO THE ASSESSMENT YEAR (A Y) 2009-10. THE APPEAL HAS BEEN FILED WITH A DELAY OF THREE DAY S. THE LD.AR OF THE ASSESSEE HAS EXPLAINED THE REASONS FOR DELAY IN FILING OF THE I.T.A. NO. 72/MDS/2013 2 APPEAL. WE ARE SATISFIED THAT THE DELAY IN FILING OF THE APPEAL WAS UN-INTENTIONAL. THE DELAY OF THREE DAYS IN FILING OF THE APPEAL IS CONDONED. THE APPEAL IS ADMITTED TO BE HEARD ON ME RITS. 2. THE ASSESSEE IS A TRUST REGISTERED U/S.12A OF TH E INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY. 2009-10 ON 26-08-2 009. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTIC E U/S.143(2) WAS ISSUED TO THE ASSESSEE ON 30-08-2010. DURING T HE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT DURING THE PERIOD RELEVANT TO THE YEAR UNDER CONSIDERATION , THE ASSESSEE PURCHASED CERTAIN IMMOVEABLE PROPERTIES. OUT OF TH E SIX PROPERTIES PURCHASED, THE SALE DEEDS OF FOUR PROPER TIES WERE EXECUTED IN THE NAME OF DR.PADMANABAN, MANAGING DIR ECTOR, GRD TRUST. THE ASSESSING OFFICER HELD THAT THE INV ESTMENTS IN IMMOVEABLE PROPERTIES TO THE TUNE OF ` 4,92,35,000/- WERE MADE FROM THE FUNDS OF THE TRUST. HOWEVER, THE PROPERTIE S WERE PURCHASED IN THE INDIVIDUAL NAME IN VIOLATION OF TH E PROVISIONS OF SECTION 13(1)(C)(II) OF THE ACT. THE ASSESSING OFF ICER ACCORDINGLY ASSESSED THE INCOME OF THE ASSESSEE IN THE STATUS O F ASSOCIATION OF PERSONS [AOP]. I.T.A. NO. 72/MDS/2013 3 AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30-12 -2011, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER UPHELD THE FINDING S OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE A SSESSEE. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF THE AUTHORITIES BELOW. 3. SHRI J.BALACHANDER, APPEARING ON BEHALF OF THE A SSESSEE SUBMITTED THAT DURING THE PERIOD RELEVANT TO THE AY .2009-10, THE ASSESSEE PURCHASED FOUR PROPERTIES THROUGH REGISTER ED SALE DEED ON VARIOUS DATES. THE ASSESSEE IS A PUBLIC CHARITA BLE TRUST ENGAGED IN PROVIDING EDUCATION. THE PROPERTIES-IN- QUESTION WERE PURCHASED FOR THE CONSTRUCTION OF EDUCATIONAL INSTI TUTIONS. DURING THE COURSE OF EXECUTION OF THE SALE DEEDS INADVERTE NTLY, THE NAME OF MANAGING TRUSTEE DR.PADMANABAN WAS MENTIONED IN THE SALE DEEDS INSTEAD OF THE NAME OF THE TRUST. THE PAYMEN TS FOR THE PURCHASE OF THE PROPERTIES WERE MADE FROM THE FUNDS OF THE TRUST. THE PROPERTIES WERE SHOWN IN THE BALANCE SHEET OF T HE TRUSTS. THEREFORE, THERE WAS NO QUESTION OF PURCHASING PROP ERTIES FROM THE FUNDS OF TRUST FOR THE BENEFIT OF ANY INDIVIDUAL. THE FACT THAT THE NAME OF THE MANAGING TRUSTEE WAS MENTIONED IN THE S ALE DEEDS IS BONAFIDE MISTAKE. IT WAS SUBMITTED BEFORE THE ASSE SSING OFFICER I.T.A. NO. 72/MDS/2013 4 THAT NECESSARY STEPS ARE BEING CARRIED TO RECTIFY T HE MISTAKE. BUT THE ASSESSING OFFICER ASSESSED THE INCOME OF THE AS SESSEE IN THE STATUS OF AOP AND DENIED THE BENEFITS OF SECTION 11 OF THE INCOME TAX ACT. THE LD.COUNSEL FURTHER SUBMITTED THAT A P ERUSAL OF THE IMPUGNED ORDER SHOWS, THAT THE FACT THAT THE PETITI ON FOR RECTIFICATION OF MISTAKE IN THE TITLE DEEDS HAS BEE N FILED BEFORE THE PRINCIPAL DISTRICT JUDGE, THENI WAS BROUGHT TO THE NOTICE OF CIT(APPEALS). HOWEVER, THE CIT(APPEALS) REJECTED T HE CONTENTIONS OF THE ASSESSEE AND UPHELD THE FINDINGS OF ASSESSING OFFICER. 4. ON THE OTHER HAND, SHRI T.N.BETGERI, APPEARING O N BEHALF OF THE REVENUE SUBMITTED THAT THE ASSESSEE HAD FILED P ETITION U/S.7 OF THE CHARITABLE AND RELIGIOUS ACT, 1920 IN THE COURT OF PRINCIPAL DISTRICT JUDGE, THENI FOR RECTIFICATION OF THE TITL E IN THE SALE DEEDS. THE SAID PETITION IS NOT MAINTAINABLE BEFORE THE CI VIL COURT. THEREFORE, THE ORDER OF THE CIVIL COURT RECTIFYING THE MISTAKE WILL HAVE NO IMPLICATION ON THE PROCEEDINGS UNDER THE PR OVISIONS OF INCOME TAX ACT. 5. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW AS WELL AS THE ORDER OF THE PRINCIPAL DISTRICT JUDGE, THENI IN TRUST I.T.A. NO. 72/MDS/2013 5 O.P.NO.1/12 DT.29-01-2013 PERUSED. THE ONLY ISSUE IN APPEAL IS: WHETHER THE ASSESSEE IN VIOLATION OF SECTION 13(1)( C)(II) OF THE ACT HAS UTILIZED THE FUNDS OF THE TRUST FOR THE BENEFIT OF ITS TRUSTEE? THE ASSESSEE HAS PURCHASED FOUR PROPERTIES VIDE REG ISTERED SALE DEED AS PER THE DETAILS HERE UNDER: S.NO. DOCUMENT REGISTRATION NO. DATE OF REGISTRATION AMOUNT ( ` ) 1. SALE DEED NO.1334/2008 16-04-2008 20,00,000/- 2. SALE DEED NO.1651/2008 06-06-2008 2,10,00,000/- 3. SALE DEED NO.3566/2008 10-12-2008 93,00,000/- 4. SALE DEED NO.3127/2008 15-12-2008 1,69,35,000/- TOTAL: 4,92,35,000/- THE AFORESAID PROPERTIES WERE PURCHASED FROM THE FU NDS OF THE TRUST. WHILE EXECUTING SALE DEEDS, INSTEAD OF THE N AME OF ASSESSEE-TRUST, THE NAME OF DR.PADMANABAN, MANAGING TRUSTEE WAS MENTIONED IN THE SALE DEEDS. THE ASSETS SO PUR CHASED WERE REFLECTED IN THE BALANCE SHEET OF THE TRUST FOR THE FINANCIAL YEAR ENDING 31-03-2009. AFTER REALIZING THE MISTAKE, TH E ASSESSEE FILED PETITION U/S.7 OF THE CHARITABLE AND RELIGIOUS ACT, 1920, IN THE COURT OF PRINCIPAL DISTRICT JUDGE, THENI TO TRANSPO SE THE NAME OF THE TRUST IN PLACE OF DR.PADMANABAN IN THE ABOVE SA ID SALE DEEDS. THE PRINCIPAL DISTRICT JUDGE, THENI VIDE ORDER DT. 29-01-2013, ALLOWED THE PETITION AND GRANTED THE RELIEF AS SOUG HT. THE SCHEDULED PROPERTIES WERE HELD TO BE IN THE NAME OF TRUST WITH I.T.A. NO. 72/MDS/2013 6 RETROSPECTIVE EFFECT I.E., THE DATE OF EXECUTION OF SALE DEED. IN VIEW OF THE ORDER OF CIVIL COURT DT.29-01-2013, WE HOLD THAT THERE IS NO VIOLATION OF SECTION 13(1)(C)(II) OF THE ACT. SINC E THE PROPERTIES NOW STAND TRANSFERRED IN THE NAME OF THE ASSESSEE FROM RETROSPECTIVE EFFECT I.E., THE DATE OF PURCHASE, THE ASSESSEE IS ENTITLED FOR THE BENEFIT U/S.11 OF THE ACT. THE ASSESSEE IS ALSO EN TITLED TO OTHER CONSEQUENTIAL BENEFITS ARISING FROM THE RECTIFICATI ON OF TITLE. THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF THE A SSESSEE IS ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON MONDAY, THE 28TH APRIL, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIKAS AWA STHY) ( . . . ) ( ! ) '#$ / VICE PRESIDENT % &' / JUDICIAL MEMBER (% /CHENNAI, )& /DATED: 28 TH APRIL, 2014 TNMM &* +,-, /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. ./0 /CIT(A) 4. . /CIT 5. ,12 3 /DR 6. 245 /GF