DDIT, CHENNAI V. M/s. Sri S Kuppusamy Memorial Educational Trust, Tiruvannamalai

ITA 955/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61284 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 30-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G NANTHAKUMAR JT
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Charitable institution; Benefit of exemption
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER] I.T.A.NO.955/MDS/2012 ASSESSMENT YEAR : 2008-09 THE DEPUTY DIRECTOR OF INCOME TAX EXEMPTIONS III I/C CHENNAI VS M/S SRI S KUPPUSAMY MEMORIAL EDUCATIONAL TRUST 190 CHENGAM ROAD THRIVANNAMALAI 606 601 [PAN AALFS7502G] (APPELLANT) (RESPONDENT) C.O.NO.99/MDS/2012 ASSESSMENT YEAR : 2008-09 M/S SRI S KUPPUSAMY MEMORIAL EDUCATIONAL TRUST 190 CHENGAM ROAD THRIVANNAMALAI 606 601 VS THE DEPUTY DIRECTOR OF INCOME TAX EXEMPTIONS III I/C CHENNAI (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI G.NANTHAKUMAR, JT. CIT ASSESSEE BY : SHRI M. KARUNAKARAN, ADVOCATE DATE OF HEARING : 03-07-2012 DATE OF PRONOUNCEMENT : 06-07-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE CIT(A)-XII, DATED 31.1.2012. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE CIT(A). I.T.A.NO.955/12 C.O.NO. 99/12 :- 2 -: 2. IN ITS APPEAL, THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CONTRARY TO THE LAW AND FACTS OF TH E CASE. 2. THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT TH E ASSESSEE IS ENTITLED TO THE BENEFIT UJS.11 OF THE I NCOME-TAX ACT. 2.1 IT IS SUBMITTED THAT THE DECISION OF THE ITAT R ELIED ON BY THE CIT(A) FOR A.Y 2007-08 IN THE ASSESSEE'S OWN C ASE HAS NOT BECOME FINAL AND AN APPEAL HAS BEEN FILED UJS.260A BEFORE THE HON'BLE HIGH COURT AND PENDING . 2.2 IT IS FURTHER SUBMITTED THAT THE DECISION OF TH E APEX COURT REPORTED IN 230 ITR RELIED UPON BY THE HON'BL E ITAT IN THE CASE OF S.R.M.CT.M.TIRUPPANI TRUST IS NOT APPLICABLE TO THE FACTS OF THIS CASE SINCE THE SAME WAS RENDERED PRIOR TO THE INSERTION OF THE PROVISIONS O F SEC.13(1)(D) IN THE FINANCE ACT. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO THE BE NEFIT OF SECTION 11 OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME ON 30.9.2008 ADMITTING INCOME OF ` 11,23,13,612/-. THE ASSESSING OFFICER FOUND THAT THE ASSESSE-TRUST HAD INVESTED IN M/S SHRIRAM CHITS TAMIL NADU PVT. LTD AN AMOUNT OF ` 5,73,828/- WHICH WAS NOT AN ELIGIBLE MODE OF INVESTMENT U/S 11(5) OF THE ACT. HE I.T.A.NO.955/12 C.O.NO. 99/12 :- 3 -: OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE INVESTMENT IN CHIT FUND CONTINUES AND THE CHIT HAS MATURED ONLY O N 4.2.2008 AND 26.2.2008. ACCORDING TO THE ASSESSING OFFICER, THE RE WAS VIOLATION U/S 13(1)(D) OF THE ACT WHICH HAS CONTINUED DURING THE YEAR AND THEREFORE, EXEMPTION U/S 11 WOULD BE WITHDRAWN AND INCOME OF T HE TRUST WOULD BE BROUGHT TO TAX IN THE STATUS OF AOP. ACCORDING LY, THE ASSESSING OFFICER ASSESSED THE INCOME OF THE ASSESSEE AT ` 3,74,14,732/- AND RAISED A DEMAND OF ` 1,68,39,985/-. 5. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OBSER VING THAT THE TOTAL RECEIPTS DURING THE FINANCIAL YEAR 2007-0 8 WERE ` 11,23,13,612/-. STATUTORILY, THE ASSESSEE WAS REQU IRED TO APPLY TO CHARITABLE PURPOSES 85% THEREOF WHICH AMOUNTS TO ` 9,54,66,570/-. ACCORDING TO THE CIT(A), THE ASSESSEE HAS APPLIED ` 14,04,29,785/- TOWARDS THE OBJECTS OF THE TRUST WHICH COMPRISES OF REVENUE EXPENSES OF ` 6,54,38,661/- AND CAPITAL EXPENSES OF ` 7,49,91,124/-. HE ALSO OBSERVED THAT THE FACTS IN THE PRESENT YEAR OF APPE AL ARE IDENTICAL TO THE FACTS THAT WERE IN ASSESSMENT YEAR 2007-08 WHER EIN THE ADDITIONS MADE ON SIMILAR GROUNDS WERE DELETED BY THE CIT(A) AND WAS CONFIRMED IN FURTHER APPEAL BY THE TRIBUNAL IN ASSE SSEES OWN CASE IN ASSESSMENT YEAR 2007-08 IN I.T.A.NO.76/MDS/2011, DA TED 24.6.2011. THE CIT(A), FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE I.T.A.NO.955/12 C.O.NO. 99/12 :- 4 -: IN ASSESSMENT YEAR 2007-08, DELETED THE ADDITION B Y OBSERVING AS UNDER: THE FACTS OF THE A.Y. 2007-08 ARE ALSO IDENTICAL. I N FACT, THE CONTRIBUTION TO SRIRAM CHITS STARTED IN THE EARLIER YEARS AND CONTINUED IN TO THE CURRENT A.Y.2008-09. SIMILARLY, THE ASSESSEE IN THE A.Y.200 7 -08 ALSO APPLIED MORE THAN 100% OF THE INCOME FOR THE PURPOSES OF THE OBJECTIVES OF THE TRUST. ON THE SE IDENTICAL FACTS, THE HON'BLE BENCH OF ITAT, CHENNA I HELD THAT SINCE THE ASSESSEE HAD ALREADY APPLIED MORE THAN 100% OF THE INCOME FOR THE OBJECTIVES OF THE ASSESSEE, THE INVESTMENTS IN SRIRAM CHITS CAN NOT BE CONSIDERED AS A VIOLATION U/S.13( L)(D) R.W.S 11(5) OF THE ACT AND HENCE ELIGIBLE FOR EXEMPTION OF INCOME U/S 11 OF THE ACT. THE RELEVANT PORTION OF JUDGMENT IS AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE FACTS IN THE PRESENT CASE SHOWS THAT THE ASSESSING OFFICER HAD DENIED THE ASSESSEE THE BENEFIT OF EXEMPTION U/S.11 ON THE GROUND THAT THE ASSESSEE HAD INVESTED RS.5, 73,828/ - IN SHRIRAM CHITS TAMILNADU PVT. LTD. IT WAS ALSO NOTICED THAT THE ASSESSEE'S APPLICATION FOR THE CHARITABLE PURPOSE IS MORE THAN THE TOTAL RECEIPTS. ONCE THE APPLICATION IS MORE THAN THE TOTAL RECEIPTS, THE ASSESSEE WOULD BE ENTITLED TO THE BENEFITS OF EXEMPTION U/ S 11 OF THE ACT. THIS VIEW OF OURS FINDS SUPPORT FROM THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF S.R.M. M. CT. M. TIRUPPANI TRUST, REFERRED TO ABOVE AS ALSO THE DECISION OF THE LUCLCNOW BENCH OF THIS TRIBUNAL IN THE CASE OF KRISHI UTPADAN MANDI SAMITI, JALAUN & ORS., REFERRED TO SUPRA. IN THE CIRCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SECTION 11 IS UPHELD AND THE FINDING OF THE LEARNED CIT(A) IN HOLDING THAT THE INVESTMENT IN M/ S. SHRIRAM CHITS TAMILNADU PVT. LTD. IS IN VIOLATION OF THE PROVISIONS OF SECTION 13 OF THE ACT STANDS CANCELLED. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER IS DIRECTED TO GRANT THE ASSESSEE THE BENEFIT OF EXEMPTION UNDER SECTION 11 IN RESPECT OF THE TOTAL INCOME OF THE ASSESSEE. IN THE I.T.A.NO.955/12 C.O.NO. 99/12 :- 5 -: CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE STANDS ALLOWED.' IN VIEW OF THE ABOVE DISCUSSIONS AND RESPECTFULLY FOLLOWING THE DECISION OF ITAT IN THE ASSESSEE'S OW N CASE FOR A.Y.2007 -08, I HOLD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN HOLDING THAT THE SAID INVESTMENTS IN SRIRAM CHITS IS A VIOLATION U/S 13(1 )(D) R.W.S 11(5) OF THE ACT AND DISALLOWING THE EXEMPTIO N OF INCOME U/S 11 OF THE ACT TO THE ASSESSE. HENCE THE ASSESSING OFFICER IS DIRECTED TO ALLOW EXEMPTIO N U/S 11 OF THE ACT TO THE ASSESSEE FOR THE A.Y 2008- 09. 6. AT THE TIME OF THE HEARING, THE D.R VERY FAIRLY CON CEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08. 7. THE A.R OF THE ASSESSEE , ON THE OTHER HAND, SUPPOR TED THE ORDER OF THE CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND TH AT THE D.R HAS VERY FAIRLY CONCEDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2007-08. HENCE, WE DISMISS THE GRO UNDS OF APPEAL OF THE REVENUE. 9. SINCE THERE IS NO GRIEVANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), THE CROSS OBJECTION AS FILED BY THE ASSESSEE IS INFRUCTUOUS AND HENCE, DISMISSED. I.T.A.NO.955/12 C.O.NO. 99/12 :- 6 -: 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSE BOTH ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 06 TH OF JULY , 2012, AT CHENNAI. SD/- SD/- (V. DURGA RAO) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 06 TH JULY, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR