Income Tax Officer-2(1), Lucknow V. Humane Welfare & Upliftment Charitable Trust, Lucknow

ITA 723/LKW/2013

• Counselvise Citation: 72323714 RSA 2013
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: K R RASTOGI
• Keywords: Charitable institution; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 723/LKW/2013 ASSESSMENT YEAR: 2010 - 11 INCOME TAX OFFICER 2(1) LUCKNOW V. HUMAN WELFARE & UPLIFTMENT CHARITABLE TRUST R - 42, SANJAY GANDHI PURAM LUCKNOW PAN /PAN : AAATH2675J (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. R. K. RAM, D.R. RESPONDENT BY: SHRI. K. R. RASTOGI, ADVOCATE DATE OF HEARING: 23 09 2014 DATE OF PRONOUNCEMENT: 15 1 0 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) ON A SOLITARY GROUND THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN NOT APPRECIATING THE FACT THAT THE LAND IN QUESTI ON HAD ALREADY BEEN DECLARED AS POND VIDE S.D.M. NAWABGANJ, BARABANKIS ORDER DATED 22.7.1970 AND THE ASSESSEE HAS WILLFULLY/ILLEGALLY ENTERED THE S AID LAND, FIRST IN THE NAME OF SETTLER AND THEREAFTER IN THE NAME OF HUMAN WELFARE TRUST AND SOLD THE SAID T RUST PROPERTY BY EXECUTING THREE SALE DEEDS AMOUNTING TO RS.35 LAKHS. 2 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE - TRUST HAS SOLD THE LAND ACQUIRED FROM THE SETTLER THROUGH TRUST DEED IN FAVOUR OF FAIRDEAL GROUP OF COMPANIES BY EXECUT ING THREE SALE DEEDS DATED 21.12.2009 AGAINST A TOTAL SALE CONSIDERATION OF RS.35 LAKHS. AN ORDER DATED 27.1.2010 WAS PASSED BY THE DY. DISTRICT MAGISTRATE, NAWABGANJ, PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : BARABANKI IN THE CASE OF GOVT. VS. HUMAN WELFARE & UPLIFTMENT CHARITABLE TRUST CANCELL I NG THE TRANSFER OF THE AFORESAID AGRICULTURAL LAND WHICH WAS ILLEGALLY ENTERED IN THE LAND RECORDS FIRSTLY IN THE NAME OF SETTLER AND THEREAFTER IN THE NAME OF THE ASSESSEE - TRUST, HAVING RELIED UPON THE REPORT OF THE TAHSILDAR, BARABANKI. IN COMPLIANCE OF THE ORDER DATED 27.1.2010, THE GRAM SAMAJ CANCELLED THE NAME OF THE TRUST IN THE KHTAUNI AND THE SAID LAND IS ENTERED AS TALAB IN THE LAND RECORDS. THE ASSESSE E HAS SUBMITTED THAT THE LOSS O N SALE OF LAND AMOUNTING TO RS.8,65,326/ - AS SHOWN IN THE INCOME & EXPENDITURE ACCOUNT FOR THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11 WOULD BECOME NIL, SINCE NO VALID SALE HAS TAKEN PLACE DUE TO JUDICIAL ORDER PASSED BY THE COURT OF DY. DISTRICT MAGISTRATE, NAWABGANJ, BARABANKI. BEING NOT CONVINCED WITH THE EXPL ANATIONS OF THE ASSESSEE, THE ASSESSING OFFICER TREATED THE RECEIPT OF RS.35 LAKHS AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE ABSENCE OF ANY SATISFACTORY REPLY FROM THE ASSESSEE ABOUT THE UTILIZATION OF RECEIPT OF RS.35 LAK HS. 3 . AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT RECEIPT OF RS.35 LAKHS WAS DULY CREDITED IN THE BANK ACCOUNT OF THE TRUST AND SINCE THE IMPUGNED AMOUNT IS CAPITAL RECEIPT AND ITS SOURCE IS EXPLAINED, THE SAME CANN OT BE TREATED AS INCOME OF THE TRUST. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE JUDGMENTS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAHARA INVESTMENT INDIA LIMITED, 266 ITR 641 AND CI T VS. SAHARA INDIA SAVINGS AND INVESTMENT CORPORATION LIMITED, 264 ITR 646. THE LD. CIT(A) RE - EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE AFORESAID JUDGMENTS AND CAME TO THE CONCLUSION THAT IN THE LIGHT OF CANCELLATION OF THE ALLOTMENT OF LAND IN FAVOUR OF THE ASSESSEE, THE AMOUNT OF RS.35 LAKHS HAS BEEN KEPT AS CUSTODIAN BY THE APPELLANT TRUST AND IS LIABLE TO BE REFUNDED AS THE PURCHASER HAS BEEN DEPRIVED OF THE WHOLE OF AGRICULTURAL LAND ON ACCOUNT OF DEFECT IN THE TITLE OF THE APPELLANT TRUS T. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : SINCE THE AMOUNT OF THE SUM OF RS.35 LAKHS DOES NOT CONSTITUTE S INCOME DERIVED FROM PROPERTY HELD UNDER THE TRUST, THERE IS NO NEED TO APPLY IT FOR THE CHARITABLE PURPOSES AS PER THE AIMS AND OBJECTS MENTIONED IN THE TRUST DEED TO CLAIM EXEMPTION. ACC ORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED BY THE LD. CIT(A). 4 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT THOUGH THE ASSESSEE HAS RECEIVED A SUM OF RS.35 LAKHS AS SALE CONSIDERATION ON A CCOUNT OF SALE OF LAND HELD BY IT, BUT ON CANCELLATION OF THE ORIGINAL ALLOTMENT IN FAVOUR OF THE SETTLER , THE AMOUNT RECEIVED BY THE ASSESSEE MAY NOT BE A SALE CONSIDERATION BUT IT WOULD CERTAINLY BE THE INCOME FROM OTHER SOURCES AND BE TAXABLE IN THE HAN DS OF THE ASSESSEE. BESIDES, HE HAS ALSO PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 5 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT SINCE THE AMOUNT HAS NOT BEEN RECEIVED ON ACCOUNT OF PROPERTY HELD BY THE ASSESSEE, I T CANNOT BE AN INCOME OF THE ASSESSEE FOR ITS APPLICATION FOR CHARITABLE PURPOSES. SINCE THE ENTIRE SALE TRANSACTION HAS BECOME NULL AND VOID ON ACCOUNT OF DEFECT IN THE TITLE OF THE LAND DUE TO CANCELLATION OF THE ALLOTMENT, THE ASSESSEE HAS BECOME A CUS TODIAN OF THE AMOUNT RECEIVED AND THE ASSESSEE WOULD BE LIABLE TO REFUND THE SAME TO THE PURCHASER. THEREFORE, THIS AMOUNT CANNOT BE ASSESSED IN THE HANDS OF THE ASSESSEE. 6 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT UND ISPUTEDLY THE ALLOTMENT OF LAND ORIGINALLY IN FAVOUR OF THE SETTLER WHO LATER ON TRANSFERRED THE SAME TO THE ASSESSEE - TRUST, WAS CANCELLED BY THE DY. DISTRICT MAGISTRATE VIDE HIS ORDER DATED 27.1.2010. CONSEQUENT THERETO, THE GRAM SAMAJ CANCELLED THE NAME OF THE TRUST IN THE KHATAUNI OF THE SAID LAND AND ENTERED AS TALAB IN THE LAND RECORDS. THE ASSESSEE HAS RECEIVED THE SAID AMOUNT ON EXECUTION OF SALE DEED ON 21.12.2009. THEREAFTER ON CAN CELLATION OF ALLOTMENT OF THE LAND, THE SALE DEED EXECUTED IN FAVOUR OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : FAIRDEAL LEASING PRIVATE LIMITED GROUP OF COMPANIES WOULD BECOME NULL AND VOID, AS THE TITLE OF THE AGRICULTURAL LAND COULD NOT BE TRANSFERRED IN THE NAME OF THE PURCHASER. UNDER THES E CIRCUMSTANCES, THE ASSESSEE TRUST WOULD BE LIABLE TO REFUND THE SALE CONSIDERATION RECEIVED FROM THE PURCHASER. IN THAT SITUATION, THE ASSESSEE - TRUST WOULD ONLY BECOME A CUSTODIAN OF THE AMOUNT RECEIVED FROM THE PURCHASER ON ACCOUNT OF SALE OF THE AGRIC ULTURAL LAND, AS HELD BY THE LD. CIT(A). THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE ON ACCOUNT OF SALE OF AGRICULTURAL LAND CANNOT BE HELD TO BE THE INCOME OF THE ASSESSEE EITHER DERIVED FROM THE PROPERTY HELD BY THE TRUST OR AS AN INCOME FROM OTHER S OURCES. WE, THEREFORE, FIND OURSELVES IN AGREEMENT WITH THE ORDER OF THE LD. CIT(A) , WHO HAS RIGHTLY ADJUDICATED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. ACCORDINGLY WE CONFIRM THE SAME. 7 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH OCTOBER , 2014 JJ: 2909 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )