M/s Society of Sisters of Holy Cross, Bangalore V. DDIT, Bangalore

ITA 970/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9507 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 17-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure

Judgement Text

ITA.970/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBERS AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.970/BANG/2015 (ASSESSMENT YEAR : 2011-12) M/S. SOCIETY OF SISTERS OF HOLY CROSS, ST. JSEPH POST, BANNERGHATTA ROAD, BENGALURU 560 082 .. APPELLANT PAN : AABTS1502N V. DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION), CIRCLE -17(2), BANGALORE .. RESPONDENT ASSESSEE BY : SHRI. NARENDRA SHARMA, ADVOCATE REVENUE BY : SMT. PRISCILLA SINGSIT, CIT - I HEARD ON : 25.07.2016 PRONOUNCED ON : 05.08.2016 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) 14, LPU, BENGALURU, FOR THE ASSESSMENT YEA R 2011-12. 02. THE ASSESSEE IS A PUBLIC RELIGIOUS CUM PUBLIC C HARITABLE INSTITUTION, REGISTERED AS A SOCIETY ORIGINALLY UND ER THE MYSORE REGISTRATION ACT, 1960 AND SUBSEQUENTLY UNDER THE K ARNATAKA SOCIETIES ACT, 1960. IT CARRIES ON VARIOUS ACTIVIT IES INVOLVING RELIEF OF ITA.970/BANG/2015 PAGE - 2 THE POOR, RURAL HEALTH PROJECTS AND MULTI-VARIED CH ARITABLE ACTIVITIES, SPREAD OVER THE REMOTE VILLAGES OF KARNATAKA, ANDHR A PRADESH, KERALA, GOA AND ORISSA. MEMBERS ARE INVOLVED IN SO CIAL WORK, HEALTH AND EDUCATION. ASSESSEE HAS HOLY CROSS HOSPITAL I N CHIKMAGALUR, NIDADAVOLE, KAMAGERE AND HOLY CROSS HEALTH CENTRE AT BELUR, HOLY CROSS SCHOOL OF NURSING AT KAMAGERE, ETC., ASSESSE E CLAIMED RS.2,04,21,421/- I.E., 15% OF THE GROSS RECEIPTS OF RS.13,61,42,808/- AS A DEDUCTION U/S.11(1)(A) OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT). IN THE ASSESSMENT MADE, AO INTERALIA HELD THAT IN CASE OF EDUCATIONAL INSTITUTIONS, ASSESSEE HAS TO BEAR THE REVENUE EXPENDITURE FOR EARNING THE INCOME AND INCOME IN TR UE SENSE WOULD BE GROSS RECEIPTS MINUS REVENUE EXPENDITURE AND ON SUCH VIEW HE RESTRICTED THE ACCUMULATION U/S.11(1)(A) OF THE ACT , TO RS.96,83,607/- . 03. ON APPEAL THE CIT (A) IN HER ORDER INTER ALIA H ELD THAT TO THE EXTENT THE ASSESSEE RECEIVES DONATION, THE ACCUMULA TION FROM SUCH RECEIPTS ARE TO BE TREATED IN TERMS OF HONBLE APEX COURTS DECISION IN THE CASE OF CIT V. PROGRAMME FOR COMMUNITY ORGANISA TION [248 ITR 1]. WITH REGARD TO THE APPROVED ACTIVITIES FOR WHI CH IT CHARGES A CONSIDERATION OR FEE FOR THE SERVICE PROVIDED BY AN APPROVED HOSPITAL RUN BY IT IN CHICKMAGALUR DISTRICT, CHAMARAJNAGAR, HASSAN, WEST ITA.970/BANG/2015 PAGE - 3 GODAVARI AND THE SCHOOL OF NURSING AND VARIOUS COMM UNITY COLLEGES ETC., EVEN IF RECEIPTS ARE FIXED AT NON-COMMERCIAL RATES (SUBJECT TO VERIFICATION AND RECORDING CLEARLY BY THE AO_, IT C OULD BE EARNED ONLY THROUGH INCURRING OPERATIONAL EXPENSES RELATING TO SALARY, MEDICINE PURCHASE, ACADEMIC MATERIAL, MAINTENANCE ETC., FOR THESE ACTIVITIES. THEREFORE SHE DIRECTED THE AO TO ALLOW 15% DEDUCTIO N IN TERMS OF NET RECEIPTS. 04. AGAINST THAT ORDER ASSESSEE PREFERRED APPEAL BE FORE THE TRIBUNAL. ITS EFFECTIVE GROUNDS OF APPEAL IS EXTRA CTED HERE UNDER : 2, THE LEARNED CIT (A) IS NOT JUSTIFIED IN UPHOLDI NG, IN PRINCIPLE, THE ACTION OF THE LEARNED A.O. IN COMPU TING THE ACCUMULATION OF INCOME U/S.11(1)(A) OF THE ACT, AT 15% OF THE NET INCOME FROM PROPERTY HELD UNDER TRUST AFTER DEDUCTING REVENUE EXPENDITURE INCURRED BY THE APPEL LANT AS AGAINST A SUM OF RS.2,04,21,421/- CLAIMED BY THE AP PELLANT ON THE BASIS OF THE GROSS INCOME FROM PROPERTY HELD UNDER TRUST UNDER THE FACTS AND IN THE CIRCUMSTANCES OF T HE APPELLANTS CASE. 05. BEFORE US LD. COUNSEL FOR THE ASSESSEE STRONGLY ASSAILING THE ORDER OF THE LOWER AUTHORITIES, RELIED ON THE DECIS ION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE JYOTHI SEV A SOCIETY OF BANGALORE V. DCIT (EX) [ITA.366/BANG/2015, DT.30.09 .2015]. 06. PER CONTRA THE LD. DR STRONGLY SUPPORTED THE OR DER OF THE LOWER AUTHORITIES. ITA.970/BANG/2015 PAGE - 4 07. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. COORDINATE BENCH OF THE TRIBUNAL IN ITS ORDER IN TH E CASE OF THE JYOTHI SEVA SOCIETY OF BANGALORE (SUPRA), TOOK COGNISANCE OF THE SPECIAL BENCH DECISION OF THE MUMBAI TRIBUNAL IN THE CASE O F BAI SONABAI HIRJI AGIARY TRUST V. ITO [93 ITD 0070], WHICH RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PROGRAMME FOR COMMUNITY ORGANISATION (SUPRA), HONBLE KERALA HIGH COURT DEC ISION IN141 CTR (KER) 502, AND 228 ITR 620, HONBLE MADHYA PRADESH HIGH COURT DECISION IN PARSI ZORASTRIAN ANJUMAN TRUST V. CIT, AND HELD THAT THE INCOME AVAILABLE TO THE ASSESSEE BEFORE IT WAS APPL IED, WAS REQUIRED TO BE EXCLUDED FOR PURPOSE OF TAKING THE AMOUNT TO BE ACCUMMULATED. RELYING ON THE ABOVE HIGH COURT AND SPECIAL BENCH D ECISIONS, THE COORDINATE BENCH IN THE JYOTHI SEVA SOCIETY OF BANG ALORE (SUPRA) HELD THAT THE ACCUMULATION U/S.11(1)(A) OF THE ACT, SHOULD BE ALLOWED AS CLAIMED BY THE ASSESSEE. FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE SET ASIDE THE ORDER OF CI T (A). 08. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON ___ DAY OF AU GUST, 2016. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (S. JAYA RAMAN) JUDICIAL MEMBER ACCOUNTA NT MEMBER MCN* ITA.970/BANG/2015 PAGE - 5 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR