The Dy.DIT.,(Exemp), Ahmedabad V. Shree Kamlam Pandit Deendayal Bhavan, Ahmedabad

ITA 860/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80425 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: S N DIVETIA
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.860/AHD/2013 [ASSTT.YEAR 2009-2010] DY.DCIT (EXEMPTION) AHMEDABAD. /VS. SHREE KAMLAM PANDIT DEENDAYAL BHAVAN J.P. CHOEK, KHANPUR, AHMEDABAD 380 001. PAN : AAETS 4375 C ( (( ( -. -. -. -. / APPELLANT) ( (( ( /0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 ) / REVENUE BY : SHRI ROOPCHAND, SR.DR 4& 1 2 ) / ASSESSEE BY : SHRI S.N. DIVETIA 5 1 &(* / DATE OF HEARING : 2 ND SEPTEMBER, 2014 678 1 &(* / DATE OF PRONOUNCEMENT : 17.10.2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSTT.YEAR 2009-2010 IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), AHMEDABAD, DATED 16.1.2013. 2. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE AS UNDER: I. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.5,34,96,200/- BEING APPLICATION OF INCOME FOR ACQUISITION OF LAND. ITA NO.860/AHD/2013 -2- II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS A PPLIED ITS INCOME FOR SOLE PURPOSE OF ACQUISITION OF LAND AND NO ACTI VITIES IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE-TRUST WERE UNDERTAKEN B Y THE ASSESSEE. HE SUBMITTED THAT THE DISALLOWANCE OF RS.5.34 CRORES B EING APPLICATION OF INCOME FOR ACQUISITION OF LAND WAS RIGHTLY MADE BY THE AO. HE SUBMITTED THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY SUBSTANTIA L ACTIVITY OF CHARITABLE NATURE, AND HAS MADE INVESTMENT IN PURCHASE OF LAND FOR THE PAST SIX CONTINUOUS YEARS. HE RELIED ON THE ORDER OF THE AO . 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN THE SUBSEQUENT YEARS, THE ASSESSEE HAS CONSTRUCTED TWO BUILDINGS A ND ONE IS LET OUT TO A POLITICAL PARTY AND OTHER ONE IS A DISCOURSE HALL AT KOBA, NEAR GANDHINAGAR, AND IS USED AS SUCH. HE SUBMITTED TH AT THE ASSESSEE HAS PURCHASED IMMOVABLE PROPERTIES IN OTHER THREE CITIE S OF GUJARAT VIZ. SURAT, KHEDA AND JAMNAGAR. THE ASSESSEE-TRUST IS REGISTER ED UNDER SECTION 12AA OF THE ACT BY THE DIT (EXEMPTION). HE RELIED ON TH E DECISION IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. ETERNAL SC IENCE OF MAN'S SOCIETY, 290 ITR 535 (DELHI ) AND ITAT, AMRISTAR BR ANCH IN ITO VS. M/S.GURU NANAK EDUCATIONAL TRUST, ITA NO.396(ASR)/2 012 DTD.12.12.2012 IN SUPPORT OF HIS ARGUMENTS. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CASE OF THE REVENUE IS THAT OVER A PERIOD OF TIME THE PURCHASE OF LAND HAS BECOME THE PRIMARY ACTIVITY OF THE ASSESSEE-TRUST, AND THERE IS NO APP LICATION OF INCOME TOWARDS THE MAIN OBJECTS OF THE TRUST, AS IS EVIDENT FROM I TS INCOME AND ITA NO.860/AHD/2013 -3- EXPENDITURE ACCOUNT OF THE ASSESSEE. WE FIND THAT THE PURCHASE OF IMMOVABLE PROPERTY IS ALSO AN APPLICATION OF INCOME OF THE ASSESSEE- TRUST. HOWEVER, THE ASSESSEE HAS TO ESTABLISH BY LEADING E VIDENCE THAT THE IMMOVABLE PROPERTY ACQUIRED BY IT WAS WITH SOLE OBJ ECT OF PUTTING THE SAME INTO USE TOWARDS THE MAIN OBJECTS OF THE ASSES SEE-TRUST. NO SUCH EVIDENCE SEEMS TO HAVE BEEN BROUGHT ON RECORD BY TH E ASSESSEE IN THIS CASE. MERE CONSTRUCTION OF TWO BUILDINGS AND PURCH ASE OF IMMOVABLE PROPERTIES IN DIFFERENT CITIES OF GUJARAT DOES NOT ESTABLISH THAT THE ASSESSEES INTENTION IS TO APPLY ITS INCOME TOWARDS THE MAIN OBJECTS OF THE ASSESSEE-TRUST. A PERUSAL OF THE INCOME AND EXPEND ITURE ACCOUNT OF THE ASSESSEE SHOWS THAT A VERY LITTLE OR INSIGNIFICANT AMOUNTS HAVE BEEN SPENT BY THE ASSESSEE FOR THE CHARITABLE PURPOSE. THE AS SESSEE HAS LET OUT ONE BUILDING TO A POLITICAL PARTY AND HAS CLAIMED THAT OTHER BUILDING IS BEING USED AS DISCOURSE HALL. THE ONUS IS ON THE ASSES SEE TO ESTABLISH THAT THE ACTIVITIES OF THE TRUST UNDERTAKEN BY IT WERE IN CO NSONANCE WITH THE MAIN OBJECTS OF THE ASSESSEE-TRUST AND WERE CHARITABLE I N NATURE. IN REPLY TO A SPECIFIC QUERY BY THE BENCH, THE ASSESSEE COULD NOT EXPLAIN AS TO HOW THE LECTURES DELIVERED AT THE DISCOURSE HALL WERE IN FURTHERANCE OF THE OBJECTS OF THE ASSESSEE-TRUST AND WERE CHARITABLE I N NATURE, AND WHAT WERE, EXACTLY, THE ACTIVITIES OF THE ASSESSEE-TRUST DURIN G THE RELEVANT PERIOD OR IN THE PRECEDING OR SUBSEQUENT YEARS. IN THESE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDER OF THE REVENUE AUTHORITIES TO THE FILE OF THE AO WITH DIRECTION TO PASS DE NOVO ASSESSMENT ORDER IN ACCORDANCE WITH LAW AFTER PROV IDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND THE ASSESSEE SHALL BE AT LIBERTY TO LEAD ANY EVIDENCE TO PROVE ITS CASE T HAT ITS ACTIVITIES WERE IN FURTHERANCE OF THE MAIN OBJECTS OF THE ASSESSEE-TRU ST AND WERE CHARITABLE IN NATURE. THE AO IS DIRECTED TO RECORD A SPECIFIC FI NDING ON THIS ISSUE IN ITA NO.860/AHD/2013 -4- LIGHT OF OUR OBSERVATIONS CONTAINED IN THIS ORDER T HAT WHETHER THE ACTIVITIES OF THE TRUST WERE IN FURTHERANCE OF THE MAIN OBJECT S OF THE TRUST AND WHETHER THEY WERE CHARITABLE IN NATURE. HE SHALL A LSO RECORD A FINDING THAT WHAT WERE THE NATURE OF THE DISCOURSES HELD DURING THE RELEVANT PERIOD OR IN THE SUBSEQUENT YEARS, AND WHETHER THEY FALL IN THE AMBIT OF WORD CHARITABLE IN NATURE. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD