DCIT (E) I(1), MUMBAI V. KALYANI CHARITABLE TRUST, MUMBAI

ITA 952/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8053 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-02-2015
• Court: TRIBUNAL
• Department Lawyers: CULLA MUMBAI PAN AAAAKR
• Keywords: Charitable institution; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.952/MUM./2015 ( ASSESSMENT YEAR :2008 - 09 ) DCIT (E) (1), R.NO. 506, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012 . APPELLANT V/S KALYANI CHARITABLE TRUST C/O. RAM COMMUNICATION, J.J. HINDUJA CAMPUS BYCULLA, MUMBAI 400 008 PAN AAAAK3179R . RESPONDENT ASSESSEE BY : SHRI. R.P. MEENA REVENUE BY : SHRI. VIJAY MEHTA CO NO.149/MUM./2016 ( ASSESSMENT YEAR :2008 - 09 ) KALYANI CHARITABLE TRUST C/O. RAM COMMUNICATION, J.J. HINDUJA CAMPUS BYCULLA, MUMBAI 400 008 PAN AAAAK3179R . APPELLANT DCIT (E) (1), R.NO. 506, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012 . RESPONDENT DATE OF HEARING 02.03.2017 DATE OF ORDER 07.03.2017 KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 2 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE REVENUE AND CROSS OF OBJECTION BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LD. CIT - A , DATED 27.11.2014 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. 2. REVENUE APPEAL THE GROUNDS OF APPEAL READ AS UNDER: I . 'THAT ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT (A), ERRED IN RELYING ON THE LEASE AGREEMENT BETWEEN THE ASSESSEE AND THE LESSOR IGNORING THE FACT THAT THE TRANSACTION IS NOT A T ARM'S LENGTH AND IS BETWEEN INTERESTED PARTIES'. II . 'THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A). FAILED TO TAKE IN ACCOUNT THE ADVANCE OF RS .8.68 CRORES TO M/ S KALYANI EDUCATION PVT . LTD. CLAIMED TO' DEPOSIT FOR LEA SED ASSETS' AND PAYMENT OF RS. 1 CRORES AS LEASE RENT AGAINST A PROPERTY OF RS. 31 CRORES WHICH IN ITSELF PROVES THAT THE LEASE DEED IS OF DIVERTING THE FUNDS OF THE ASSESSEE TO ITS INTERESTED CONCERN '. III . 'THE APPELLANT PRAYS THAT THE ORDER OF THE COMMIS SIONER OF INCOME - TAX (APPEALS) - 1 , MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED'. IV . 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NE CESSARY'. KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 3 3. A T THE OUTSET IN THIS CASE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNALS DECISION IN ASSESSEES OWN CASE. 4. FOR THIS PROPOSITION LD. COUNSEL OF THE ASSESSEE REFERRED THA T AFTER DISCUSSING THE ISSUE ON ASSESSEES REPLY THE AO IN PARAGRAPH 5.2 OF HIS ORDER HAS OBSERVED AS UNDER; THE ABOVE REPLY HAS BEEN CONSIDERED IN DETAIL. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE FOR THE REASONS WHICH HAS BEEN DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER OF A.Y. 2010 - 11. THE CONCLUSIVE PART OF THE ASSESSMENT ORDER FOR A.Y. 2010 - 11 IS REPRODUCED UNDER. 5. THEREAFTER THE AO HAS REPRODUCED THE ABOVE OBSERVATIONS AND CONCLUDED AS UNDER IN 5.3 OF HIS ORDER; IN VIEW OF THE ABOVE, THE AMOUNT OF RS.1,00,00,000/ - (PAID DURING THE YEAR) IS CONSIDERED TO HAVE BEEN DIVERTED FOR THE BENEFIT OF THE EXCLUDED PERSONS AND TAXED ACCORDINGLY. FOR THE A.Y. 2010 - 11 THE ASSESSEES APPEAL WAS ALLOWED BY THE CIT - A AND THE DEPARTMENT IS IN SECOND APPEAL BEFORE THE HONBLE TRIBUNAL AND THE ISSUE HAS NOT YE T REACHED ITS FINALITY. 6. THEREAFTER LD. COUNSEL OF THE ASSESSEE REF ERRED TO THE ORDER OF THE LD. CIT - A WHERE IN THE LD. CIT - A HAS FOLLOWED THE EARLIER ORDER OF CIT - A FOR A.Y. 2010 - 11 AS UNDER; FURTH ER IT IS NOTICED THAT THE FACTS ON THIS ISSUE SUCH AS (I) THAT RS. 1 CRORE WAS PAID TO M/S. KALYANI EDUCATION PVT. LTD. TOWARDS DEPOSIT FOR LEASED ASSETS (II) DULY SUPPORTED BY VALID AGREEMENT, (III) THAT LAND BUILDING KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 4 AND OTHER INFRASTRUCTURE ASSETS AR E BEING UTILIZED FOR THE PURPOSE OF ACTIVITIES OF THE APPELLANT HAVE NOT BEEN QUESTIONED OR CONTRADICT TED BY THE A.O. IT IS ALSO ON RECORD THAT THE ELEMENT OF BENEFIT HAS NOT BEEN BROUGHT ON RECORD. UNDER THE CIRCUMSTANCES THERE IS NO REASON TO DEVIATE FR OM THE DECISION OF THE CIT - A IN APPEAL NO. CIT - A - I/IT/E2/(52)/2013 - 14 DATED 08.10.2013 REFERRED AND RELIED BY THE APPELLANT. IN VIEW OF ABOVE GROUND NO. 5,6 AND 7 OF APPEAL ARE ALLOWED. 7. THEREAFTER LD. COUNSEL OF THE ASSESSEE REFERRED TO THE ORDER OF TH IS ITAT IN ASSESSEES OWN CASE IN ITA NO. 198/MUM/2015 F OR ASSESSMENT YEAR 2010 - 11 WHERE THE ORDER OF THE LD. CIT - A FOR ASSESSMENT YEAR 2010 - 11 HAS BEEN AFFIRMED AS UNDER; WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT ASSESSEE IS A CHARITABLE TRUST ENGAGED IN PROMOTION OF EDUCATION AND ALLIED ACTIVITIES. ASSESSEE WAS RUNNING SCHOOL, COLLEGE OF ENGINEERING, PHARMACY, MANAGEMENT ETC., WITH RESPECT TO EACH AND EVERY QUERY OF THE AO, THE CIT(A) HAS DEALT IN GREAT DETAIL AND AFTER GIVING DETAILED FINDING, REACHED TO THE CONCLUSION THAT DEPOSIT OF RS.6,68,00,000 WAS IN PURSUANCE OF VALID LEASE AGREEMENT FOR THE USE OF THE PREMISES AND VARIOUS OTHER FACILITIES AND FIXED ASSET IN NATURE OF BUILDING, GROUND ETC., IN THE PROCESS OF CARRYING OUT EDUCATIONAL ACTIVITIES / CHARITY, THE ASSESSEE HAS USED THE PREMISES AND OTHER LEASED ASSETS FOR ITS PURPOSE AFTER RECORDING DETAILED FINDIN G AT PARA 4.32 - 5.6, THE CIT(A) REACHED KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 5 TO THE CONCLUSION THAT THERE IS NO CASE OF ANY BENEFIT BEING DIVERTED BY THE ASSESSEE TRUST TO THE INTERESTED PERSONS. ACCORDINGLY, DENIAL OF EXEMPTION U/S.11 BY THE AO WAS NOT CORRECT. ACCORDINGLY, THER E IS NO APPLICATION OF SECTION 13 OF IT ACT. DETAILED FINDING RECORDED AT PARA 4.32 TO 5.6 HAS NOT BEEN CONTROVERTED BY DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. THE SAME DO NOT WARRANT ANY INTERFERENCE ON OUR PART. 8. REFERRING TO THE ABOVE LD. COU NSEL PLEADED THAT SINCE IDENTICAL ISSUE HAD BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE THE SAME MAY PLEASE BE FOLLOWED. 9. PER CONTRA LD. DR DID NOT DISPUTE THIS POSITION THAT SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL IN ASSESSEES OWN CASE AS REFERRED ABOVE. 10. C ONSIDERING THE ENTIRE CONSPECTUS OF THE CASE IN LIGHT OF THE SUBMISSIONS AS ABOVE AND PERUSING THE RECORDS WE DO NOT FIND ANY REASON TO DEPART FROM THE TRIBUNALS ORDER AS ABOVE TO WHICH ONE OF US THE JUDICIAL MEMBER WAS A CO - AUTHOR . SINCE IN THE PRESENT CASE LD. CIT HAS FOLLOWED THE LD. CIT - A ORDER WHICH HAS ALREADY BEEN UPHELD BY THE TRIBUNAL, ADHERING THE DOCTRINE OF STARE DECISIS, WE UPHOLD THE ORDER OF LD. CIT - A. IN THE RESULT THIS APPEAL FILED BY THE REV ENUE IS STANDS DISMISSED. ASSESSEES CROSS OBJECTION 11. IN THE CROSS OBJECTION HAS RAISED FOLLOWING GROUNDS. KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 6 I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT - A HAS ERRED IN NOT ADJUDICATING LEGAL GROUND NO. 1,2 AND 8 PERTAINING TO VALIDITY OF REASSESSMENT PROCEEDINGS RAISED BEFORE HIM. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT - A OUGHT TO HAVE HELD THAT REASSESSMENT PROCEEDINGS AND CONSEQUENTIAL ASSESSMENT ORDER DT. 28.03.2014 PASSED BY THE AO U/S. 143(3) R.W.S. 147 OF THE ACT ARE BAD IN LAW. III) THE ASSESSEE CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY AND/OR DELETE ALL OR ANY OF THE FOREGOING CROSS OBJECTION . 12. WE FIND THAT IN THE CROSS OBJECTION THE ASSESSEE HAS RAISED OBJECTION THAT ISSUE AS REGARDS VALIDITY OF RE ASS ESSMENT PROCEEDINGS WERE DULY RAISED BEFORE THE LD. CIT - A, BUT HE HAS NOT ADJUDICATED THE ISSUE. UPON O UR QUERY AS TO WHETHER THE LD. COUNSEL OF THE ASSESSEE SHALL BE PRESSING FOR THIS GROUND IF THE MERITS IS DECIDED IN ASSESSEES FAVOUR, LD. COUNSEL SUBMI TTED THAT IN ORDER TO PROTECT THE ASSESSEES INTEREST HE WISHED TO PURSUE THE SAME. 13. A CCORDINGLY, UP ON CAREFUL CONSIDERATION WE NOTE THAT THE ISSUE OF VALIDITY OF JURISDICTION WAS RAISED BEFORE THE LD. CIT - A WHO HAS NOT ADJUDICATED UPON THE SAME. HENC E IN THE INTEREST OF JUSTICE SINCE THE LD. COUNSEL OF THE ASSESSEE IS INSIS TING UPON ADJUDICATION OF THIS ISSUE WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF LD. CIT - A. THE LD. CIT - A IS DIRECTED TO CONSIDER THE ISSUE OF JURISDICTION/VALIDITY OF REASSESSMENT AS RAISED BY THE ASSESSEE BEFORE HIM. KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 7 IN THE RESULT THE CROSS OBJECTION BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE. KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 8 THE RESULT REVENUES APPEAL STANDS DISMISSED AND THE ASSESSEE IS CROSS OBJECTION STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2017 SD/ - SD/ - RAVISH SOOD SHAMIM YAHIYA JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, DATED: 07.03.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI KALYANI CHARITABLE TRUST ITA NO.952/MUM./2015 & CO. 149 9