M/s Mukat Educational Trust, Patiala V. DCIT-Circle-1(Exemption), Chandigarh

ITA 98/CHANDI/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7447 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 28-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Set aside
• Section: 11; 20

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B, CHANDIGARH BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI R.L. NEGI, JUDICIAL MEMBER . / ITA NO.98/CHD/2020 / ASSESSMENT YEAR : 2015-16 M/S MUKAT EDUCATIONAL TRUST, 8-B, MODEL TOWN, PATIALA. THE D.C.I.T. , CIRCLE-1(EXEMPTIONS), CHANDIGARH. ./PAN NO: AAATM4249D /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ASHWANI KUMAR, CA ' / REVENUE BY : SHRI ASHOK KHANNA, ADDL.CIT % /DATE OF HEARING : 24.08.2021 % /DATE OF PRONOUNCEMENT: 25.08.2021 (HEARING THROUGH WEBEX) /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: THE ABOVE APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-, PATIALA DATED 29.11.2019 RELATING TO AS SESSMENT YEAR 2015-16 PASSED U/S 250(6)) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS ACT. ITA NO.98/CHD/2020 A.Y. 2015-16 PAGE 2 OF 7 2. THE SOLITARY ISSUE IN THE PRESENT APPEAL RELATE S TO DENIAL OF EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE TRUS T ON ACCOUNT OF INCOME FOUND TO HAVE BEEN APPLIED FOR TH E BENEFIT OF THE RELATED PERSONS, AS PER THE PROVISIONS OF SE CTION 13(1)(C) READ WITH SECTION 13(3) OF THE ACT. THE AO FOUND TH E SALARY PAID TO TWO TRUSTEES TO BE NOT COMMENSURATE WITH TH E SERVICES RENDERED BY THEM AND ACCORDINGLY, MADE DISALLOWANCE OF THE SAME AS UNDER: MS.MANDEEP AHLUWALIA PAHWA = RS.9,00,000/- M/S SANDEEP KAUR AHLUWALIA = RS.6,00,000/- 3. WHILE THE SALARY BEING PAID TO MS.MANDEEP AHLUWA LIA PAHWA WAS RS.15 LACS, THE AO FOUND THE SAME TO BE E XCESSIVE TO THE EXTENT OF RS.9 LACS AND DISALLOWED THE SAME, WHILE IN THE CASE OF MS. SANDEEP KAUR AHLUWALIA THE ENTIRE S ALARY PAID OF RS.6 LACS TO HER WAS DISALLOWED, THUS AMOUNTING IN DENIAL OF EXEMPTION U/S 11 OF THE ACT BY APPLYING THE PROV ISIONS OF SECTION 13(1)(C) OF THE ACT, IN ALL TO RS.15 LACS. THE SAME WAS UPHELD BY THE LD. CIT(A) ON ACCOUNT OF LACK OF EVI DENCE DEMONSTRATING SERVICES RENDERED BY THE SAID TRUSTE ES. 4. WE HAVE HEARD BOTH THE PARTIES. ADMITTEDLY, MS.M ANDEEP AHLUWALIA PAHWA IS THE PRESIDENT OF THE TRUST, WHIL E ITA NO.98/CHD/2020 A.Y. 2015-16 PAGE 3 OF 7 MS.SANDEEP KAUR AHLUWALIA IS THE CHAIRPERSON OF THE TRUST. THAT BOTH OF THEM ARE HIGHLY QUALIFIED HAS NOT BEEN DISPUTED BY THE REVENUE. THEIR QUALIFICATIONS AS SUBMITTED T O THE REVENUE AUTHORITIES BELOW AND WHICH HAS NOT BEEN CONTRADICTED BY THE REVENUE IS AS UNDER: MRS. MANDEEP AHLUWALIA MRS. MANDEEP AHLUWALIA PAHWA IS A HIGHLY EDUCATED TRUSTEE OF MUKAT EDUCATIONAL TRUST WITH B.COM HONOU RS FROM NARSEEMONJEECOLLEGE(L995), UNIVERSITY OF MUMBAI AND MBA -- FINANCE FROM UNIVERSITY OF MANCHESTER (U.K)( 1995- 1997) WITH SPECIALIZATION IN FINANCE FROM VANDERBILT UNIV ERSITY, TENNESSEE, USA. FURTHER SHE IS CERTIFIED FOR GLOBAL ENTREPRENEURS HIP PROGRAMME FROM COLUMBIA BUSINESS SCHOOL. MRS. SANDEEP KAUR AHLUWALIA, CHAIRPERSON MUKAT EDUCATIONAL TRUST MRS. SANDEEP KAUR AHLUWALIA, CHAIRPERSON MUKAT EDUCATIONAL TRUST IS A POST GRADUATE IN HISTORY FRO M GOVT. MOHINDRA COLLEGE, PATIALA. BEING A VERY BRILL IANT STUDENT SHE DID HER EDUCATION WITH AN EXCELLENT REC ORD AND DID HER POST GRADUATION AT THE AGE OF 20 YEARS. THEREAFTER, SHE STARTED HER CARRIER AS A LECTURER W ITH GOVT. OF PUNJAB AT GOVT. WOMEN'S COLLEGE, PATIALA. THIS JOB SHE RESIGNED AFTER HER MARRIAGE. 5. THAT BOTH OF THEM INHERITED THIS POSITION IN THE TRUST ON THE PASSING AWAY OF THEIR RESPECTIVE FATHERS WHO WE RE THE FOUNDER TRUSTEES AND CHAIRMAN OF THE TRUST. IN THE CASE OF MS.MANDEEP AHLUWALIA PAHWA ON THE PASSING WAY OF HE R FATHER SHRI RAJINDER SINGH AHLUWALIA IN 2004 AND IN THE CA SE OF MS.SANDEEP KAUR AHLUWALIA ON THE PASSING AWAY OF HE R FATHER SHRI GURCHARAN SINGH IN 1997. IT IS ALSO NOT DENIED THAT SINCE ITA NO.98/CHD/2020 A.Y. 2015-16 PAGE 4 OF 7 THEN THE ASSESSEE TRUST HAS PROGRESSED FROM STRENG TH TO STRENGTH, HAVING 3300 STUDENTS AND 220 TEACHING AN D NON- TEACHING STAFF AT PRESENT AS COMPARED TO 1000 STUDE NTS IN 2004 WHEN MS.MANDEEP AHLUWALIA PAHWA TOOK OVER AND MUCH LESS WHEN MS.SANDEEP KAUR AHLUWALIA TOOK OVER IN 19 97 AND ALSO THE FACT THAT NEW BLOCKS WERE CONSTRUCTED IN T HE SCHOOL AND NEW EDUCATIONAL COLLEGES WERE STARTED IN 2006 A T RAJPURA IN THE NAME OF SHRI RAJINDER SINGH MEMORIAL COLLEGE OF EDUCATION. THAT MS.SANDEEP KAUR AHLUWALIA WAS AN EDUCATIONIST HAVING WORKED AS A LECTURER EARLIER IN GOVERNMENT WOMEN COLLEGE, PATIALA, IS ALSO NOT DENI ED. 6. IN THIS BACKGROUND OF FACTS WHERE THE CURRENT TR USTEES HAD STEPPED IN THE SHOES OF THEIR FOUNDER TRUSTEE F ATHERS AND TOOK THE TRUST FROM STRENGTH TO STRENGTH SINCE THEN , ON THE STRENGTH OF THEIR HIGHLY EDUCATED BACKGROUND AND WO RK EXPERIENCE, THE FINDING OF THE REVENUE THAT THE FAC T OF THEIR HAVING RENDERED SERVICES NEEDED TO BE ESTABLISHED W ITH DOCUMENTARY EVIDENCES, WE CANNOT AGREE WITH. THE CIRCUMSTANTIAL AND SURROUNDING EVIDENCE AS HAS BEEN DISCUSSED ABOVE BY US ARE SUFFICIENT TO DEMONSTRATE THAT IT IS ON ACCOUNT OF THEIR ROLE AS PRESIDENT AND CHAIRMAN OF THE TRUST AND WITH THEIR EDUCATIONAL BACKGROUND AND EXP ERIENCE THE TRUST HAS GONE TO STRENGTH TO STRENGTH. THERE I S NO DENIAL ITA NO.98/CHD/2020 A.Y. 2015-16 PAGE 5 OF 7 THAT THE OVERALL MANAGEMENT OF THE TRUST RESTS WITH THE TRUSTEES, CHAIRMAN AND PRESIDENT OF THE TRUST, IT I S DEFINITELY NOT LEFT TO THE EMPLOYEES WHO ARE EMPLOYED TO CARRY OUT DAY- TO-DAY DUTIES AND THE FACT THAT THE TRUST HAS ADVAN CED IN THE PAST YEARS SINCE THE TWO TRUSTEES TOOK OVER, CLEARL Y DEMONSTRATES THE AMOUNT OF WORK AND INVOLVEMENT OF TWO TRUSTEES IN THE TRUST. THEREFORE, FINDING OF THE RE VENUE THAT IN THE ABSENCE OF ANY EVIDENCE DEMONSTRATING THAT THE TRUSTEES HAD RENDERED SERVICES TO THE TRUST, THE SALARY PAID TO THEM HAS TANTAMOUNTED TO UNDUE BENEFIT BEING GIVEN TO THEM, WE FIND IS NOT IN CONSONANCE WITH THE FACTS OF THE CASE AND IS REJECTED. 7. MOREOVER WE FIND THAT THE BASIS ADOPTED BY THE R EVENUE AUTHORITIES FOR QUANTIFYING THE UNDUE BENEFIT GIVE N TO THE AFORESAID TRUSTEES, BY COMPARING WITH THE SALARY PAID TO EMPLOYEES OF THE TRUST I.E. THE MEMBERS AND OTHER W ORKING STAFF, IS UNREASONABLE. THE QUALITY OF WORK RENDER ED BY THE MANAGEMENT OF THE TRUST ON ONE HAND, WHICH INCLUDES THE TWO TRUSTEES, AND THAT BY THE EMPLOYEES OF THE TRUST, W HO ARE INVOLVED ONLY IN EXECUTION OF THE DECISIONS TAKEN B Y THE MANAGEMENT AND OTHER DAY-TO-DAY ACTIVITIES, IS TOTA LLY DIFFERENT AND THERE CAN BE NO COMPARISON BETWEEN TH E TWO. THEREFORE, THE BASIS ADOPTED FOR DETERMINING THE UN DUE BENEFIT TO THE TWO TRUSTEES IS ALSO NOT FOUND TO BE CORREC T. ITA NO.98/CHD/2020 A.Y. 2015-16 PAGE 6 OF 7 8. IN VIEW OF THE ABOVE, WE HOLD THAT THERE IS NO B ASIS FOR HOLDING THAT RS.15 LACS OF SALARY PAID TO THE TRUST EES WAS BY WAY OF UNDUE BENEFIT GIVEN TO THEM AND THE DENIAL O F EXEMPTION U/S 11 OF THE ACT TO THE SAID EXTENT/AMO UNT OF RS.15 LACS IS, THEREFORE, SET ASIDE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 25 TH AUGUST, 2021. SD/- SD/- (R.L. NEGI) (ANNAPURNA GUPTA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED: 25 TH AUGUST, 2021 * * +, -, / COPY OF THE ORDER FORWARDED TO : / THE APPELLANT / THE RESPONDENT # . / CIT # . ( )/ THE CIT(A) ,/0 1 , % 1 , 23405 / DR, ITAT, CHANDIGARH 04 / GUARD FILE # / BY ORDER, / ASSISTANT REGISTRAR ITA NO.98/CHD/2020 A.Y. 2015-16 PAGE 7 OF 7