M/s Maa Vaishno Education Society, Bhopal V. The ACIT 1(1), Bhopal

ITA 73/IND/2011

• Counselvise Citation: 7322714 RSA 2011
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Keywords: Initiation of penalty proceedings
• Section: 234B; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AAAAM 1946 N I.T.A.NO. 73 /IND/2011 A.Y. : 2006 - 07 MAA VAISHNO EDUCATION SOCIETY, ACIT, 202, GANGA JAMNA COMPLEX, M.P. NAGAR, ZONE-I, BHOPAL. VS 1(1). BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI SUMIT NEMA, ADV. RESPONDENT BY : SHRI KESHAVE SAXENA, CIT DR DATE OF HEARING : 19.04.2012 DATE OF PRONOUNCEMENT : 9 . 5 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 27.5.2011 FOR THE ASSESSMENT YEAR 2 006-07. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE :- -: 2: - 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DENYING THE EXEMPTION U/S 11 & 12 OF THE ACT BY HOLDING THAT BEING INTEREST FREE LOANS GIVEN TO OTHER CHARITABLE SOCIETIES, PROVISIONS OF SECTION 13 ARE APPLICABLE. IT IS SUBMITTED THAT ON THE SAME ISSUE, HON'BLE I.T.A.T. HAS ALLOWED THE APPEAL FOR ASSESSMENT YEAR 2004-05 BUT THE LD. CIT(A) HAS NOT FOLLOWED THE SAME. THE ORDER OF THE CIT(A) HAS BEEN PASSED IN TOTAL DISREGARD TO THE PRINCIPLES OF JUDICIAL DISCI PLINE WHICH REQUIRES THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUB ORDINATE AUTHORITIES. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF RS. 3,04,09,185/- BEING EXCESS OF INCOME OVER EXPENDITURE TREATING THE SAME AS TAXABLE BY HOLDING THAT THE SOCIETY HAS INFRINGED THE PROVISIONS OF SECTION 13 AND THEREBY DISALLOWING THE EXEMPTION AVAILABLE TO THE ASSESSEE U/S 11 & 12 OF THE ACT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT THE SOCI ETY HAS INFRINGED THE PROVISIONS OF SECTION 13 B Y GIVI NG ADVANCES TO OTHER SOCIETIES AND HOLDING THAT BENEFI T HAS BEEN PASSED ON TO THE OTHER SOCIETIES WITHOUT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT APPRECIATING THE FACT THAT IN EARLIER YEARS, THE HON'BLE I.T.A.T. HAS ALLOWED THE APPEAL ON THE SAME GROUND. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CHARGING OF INTEREST U/S 234B AND U/S 234D IS NOT JUSTIFIED. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, INITIATION OF PENALTY PROCEEDINGS U/S 271(1) IS NOT JUSTIFIED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD . AUTHORIZED -: 3: - 3 REPRESENTATIVE PLACED ON RECORD THE ORDER OF I.T.A .T. DATED 27 TH NOVEMBER, 2009 IN THE ASSESSEES OWN CASE AND SUBMITTED THAT GROUNDS RAISED IN THE APPEAL ARE SQU ARELY COVERED BY THE ORDER OF THE COORDINATE BENCH. 4. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORD ERS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FIND FROM RECORD THAT THE ASSESSEE IS A CHARITABLE INSTI TUTION WHICH WAS REGISTERED U/S 12AA OF THE ACT. IT WAS ALSO PR OVIDING EDUCATION BY RUNNING COLLEGES. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER DECLINE THE CLAIM OF DEDUCTION U/SS 11 AND 12 ON THE PLEA THAT THERE WAS INFRINGEMENT OF PROVISIONS OF SECTION 13 ON ACCOUNT OF INTEREST FREE LOAN GIVEN TO FOLLOWING THREE ASSOCIATES :- (A) PYRAMID EDUCATION SOCIETY RS.69,370/- (B) SHAFALI EDUCATION SOCIETY RS.15,75,000/- (C) RKDF EDUCATION SOCIETY RS.4,61,053/- 6. FROM RECORD, WE FIND THAT SHAFALI EDUCATION SOCIETY AND RKDF EDUCATION SOCIETY ARE REGISTERED U/S 12AA, COP Y OF REGISTRATION CERTIFICATE U/S 12AA OF THE ACT WAS PL ACED BEFORE THE ASSESSING OFFICER WHICH ALSO FINDS PLACE IN THE PAPER BOOK. -: 4: - 4 THESE ARE CHARITABLE SOCIETIES ENGAGED IN PROVIDING EDUCATION. SIMILAR LOANS WERE GIVEN BY THE ASSESSEE SOCIETY IN THE ASSESSMENT YEAR 2004-05 AND THE ISSUE OF DECLINE OF CLAIM OF DEDUCTION WAS BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 27 TH NOVEMBER, 2009 DECIDED THE SAME IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER :- THE NEXT GROUND PERTAINS TO DELETING THE ADDITION O F RS.48,136/- ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID TO BANK AND RS.7,25,950/- BEING PROVISION OF INTERE ST ON LOAN GIVEN TO OTHER SOCIETIES. THE STAND OF THE ASSESSEE IS THAT THE LOAN WAS GIVEN TO VARIOUS PART IES WHICH WERE REGISTERED UNDER SECTION 12AA OF THE ACT . SINCE THE SOCIETIES/INSTITUTIONS WERE NOT CARRYING ON ANY ACTIVITY OF PROFIT, IT WAS CLAIMED THAT NO INTE REST WAS CHARGED FROM THEM. HOWEVER, THE LD. DR DEFENDE D THE ASSESSMENT ORDER. UNDER THE AFOREMENTIONED FAC TS AND AFTER CONSIDERING THE RIVAL SUBMISSIONS, ADMITT EDLY NO INTEREST WAS CHARGED AS GIVING OF LOAN DOES NOT VIOLATE SECTION 11(5) OF THE ACT. THE ASSESSEE IS SUPPORTED BY THE DECISIONS IN THE CASES OF DIRECTOR OF INCOME TAX (EXEMPTION) V. ALARIPPU; 244 ITR 358 (DE L); CIT V. CIT V. THANTHI TRUST; 239 ITR 502 AND CIT V. SARLADEVI SARABHAI TRUST NO. 2; 172 ITR 698(GUJ.). THERE IS NO VIOLATION OF SECTION 13(3) OF THE ACT. EVEN IF IT IS PRESUMED THAT IT WAS A DONATION, STILL THE AS SESSEE IS FORTIFIED BY THE DECISIONS IN THE CASES OF CIT V . THANTHI TRUST; 239 ITR 502 (HON'BLE SUPREME COURT);CIT V. SARLADEVI SARABHAI TRUST; 172 ITR 698 (GUJ) AND CIT V. HINDUSTHAN CHARITY TRUST; 139 ITR 913 (CAL). THE STAND OF THE LD. CIT(A) IS AFFIRMED. -: 5: - 5 7. M/S PYRAMID EDUCATION SOCIETY ALTHOUGH NOT REGISTER ED U/S 12AA OF THE ACT BUT WAS A CHARITABLE SOCIETY RE GISTERED WITH THE REGISTRAR OF SOCIETIES UNDER THE M.P. SOCI ETIES REGISTRATION ACT, 1973 HAVING THE SAME OBJECTS OF E DUCATION. THE AMOUNT OF LOAN GIVEN TO IT WAS RS. 69,370/-. T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS APPLIED TH E PROVISIONS OF SECTION 13(3) READ WITH SECTION 13(2) (A) OF THE ACT. FOR APPLYING THE PROVISIONS OF SECTION 13(3) OF THE ACT, SHARE IN PROFIT TO THE EXTENT OF 20% IN THAT CONCERN IS NECE SSARY AND IN CASE OF CHARITABLE SOCIETY UNDER THE M.P. SOCIETIES REGISTRATION ACT, 1973, THERE IS NO ENTITLEMENT TO SHARE PROFIT IN SUCH A SOCIETY. ACCORDINGLY, WE DO NOT FIND ANY INFRINGEM ENT OF THE PROVISIONS OF SECTION 13(3) OF THE ACT FOR GIVING L OAN OF RS.69,370/- TO M/S PYRAMID EDUCATION SOCIETY. WE F IND THAT IN THE EARLIER YEAR 2004-05 THE LOAN OF RS. 5,17,77 5/- WAS GIVEN TO PYRAMID EDUCATION SOCIETY. THE COMMISSION ER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION AND T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS CONFIR MED BY THE TRIBUNAL VIDE ITS ORDER DATED 27 TH NOVEMBER, 2009. -: 6: - 6 8. IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT THE I SSUE WITH REGARD TO GIVING INTEREST FREE LOAN TO THESE T HREE SOCIETIES IS SQUARELY COVERED BY THE DECISION OF THE COORDINA TE BENCH IN THE ASSESSEES OWN CASE AS DISCUSSED ABOVE. ACCORDI NGLY, EXCESS OF INCOME OVER EXPENDITURE IS EXEMPT SINCE T HE ASSESSEE IS REGISTERED U/S 12AA OF THE ACT INSOFAR AS THERE IS NO VIOLATION OF SECTION 13 OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 9TH_MAY , 2012. SD (JOGINDER SINGH) SD ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :9 TH MAY, 2012. DN/-