M/s. Indian Institute of Engg. Technology, CHENNAI V. DDIT, CHENNAI

MA 219/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8977 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 25-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation; Charitable institution
• Section: 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . , . , BEFORE SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER MISCELLANEOUS PETITION NO S . 219 & 220 / CHNY /20 18 (IN ITA NOS.2092 & 2093/CHNY/2016) ! ! /ASSESSMENT YEARS : 2011-12 & 2012-13 M/S INDIAN INSTITUTE OF ENGG TECHNOLOGY, NO.363, ARCOT ROAD, KODAMBAKKAM, CHENNAI 600 024. VS. THE DY. DIRECTOR OF INCOME- TAX, (EXEMPTIONS)-III, CHENNAI-600 034. [PAN:AAATT 2768 C] ( $ /APPELLANT) ( %&$ /RESPONDENT) $ ' / APPELLANT BY : SHRI R. VIJAYARAGHAVAN , ADVOCATE %&$ ' /RESPONDENT BY : SHRI A.R.V. SREENIVASAN, JCIT ' /DATE OF HEARING : 10.05.2019 ' / DATE OF PRONOUNCEMENT : 28.06.2019 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THESE PETITIONS TO RECALL THIS T RIBUNALS ORDERS IN ITA NOS.2092 & 2093/CHNY/2016 DATED 22.06.2018, PER TAINING TO A.YS. 2011-12 & 2012-13, RESPECTIVELY. MP NOS.219 & 220/CHNY/2018 :- 2 -: 2. THE LD. A.R. SUBMITTED THAT WHILE DISPOSING OF THE ASSESSEES APPEALS FOR THE A.YS. 2011-12 & 2012-13 IN ITA NO S.2092 & 2093/CHNY/2016, THIS TRIBUNAL HAS NOT CONSIDERED I SSUES VIZ., NON ALLOWANCE OF DEPRECIATION, DENIAL OF EXEMPTION U/S. 10(23C)(VI), AMOUNTS DUE FROM ANOTHER CHARITABLE TRUST OR INSTITUTION AND HENCE PLEADED THAT THIS TRIBUNAL MAY RECALL THE ABOVE ORDERS AND CONSIDER THEM AFRESH. THE LD.AR SUBMITTED THAT THIS TRIBUNAL HAS CONCLUDED , INTER ALIA, THAT THE ASSESSEE IS RUNNING THE EDUCATIONAL INSTITUTION FOR THE PURPOSE OF EARNING PROFIT AND HENCE IT IS NOT ENTITLED TO EXEMPTION U/S.10(23 C)(VI), WITHOUT APPRECIATING THE TOTALITY OF FACTS AND THE DECISION OF THE APEX COURT AND THE CBDT CIRCULAR ISSUED ETC, FOR BOTH THESE ASSESSMENT YEARS. AS REG ARDS THE AMOUNTS DUE FROM ANOTHER CHARITABLE INSTITUTION, FOR AY 2012-13, THI S TRIBUNAL HAS MERELY POINTED OUT THAT THE EXCESS AMOUNT WAS RECEIVED AFTER A L ONG GAP AND HENCE DENIAL OF EXEMPTION IS PROPER. THE LD.AR SUBMITTED THAT THE T RIBUNAL HAS NOT SPECIFIED AS TO HOW PROVISIONS OF SEC.11(5)/ 13(1)(C)/ 13(1)(D) HAVE BEEN VIOLATED ETC., AND IN SUPPORT OF HIS STAND RELIED ON CERTAIN CASE LAW S. THEREAFTER, THE LD.AR INVITED OUR ATTENTION TO PARA 10 OF THE IMPUGNED ORDER WHI CH IS EXTRACTED AS UNDER: 10. WE HAVE CONSIDERED ALL OTHER CLAIMS OF THE ASS ESSEE. THE A O HAS DENIED THE CLAIM OF EXEMPTION IN AY 2012-13 , OBS ERVING AS UNDER : 7.2 THE TAXATION OF INCOME IS NOT CONFINED TO THE INCOME DERIVED FROM THE UNITS WHICH OPERATE LIKE A BUSINESS ENTITY. SECTI ON 13(8) PROHIBITS APPLICABILITY OF SECTION 11 & 12 IN RESPECT OF ANY INCOME OF THE TRUST AND IS NOT RESTRICTED TO THE BUSINESS ACTIVITY OF THE TRUST. THEREFORE, THE SURPLUS DERIVED BY THE TRUST IS ENTIRELY BROUGHT TO TAXATION. IN VIEW OF THE FINDINGS RECORDED , SUPRA, THAT THE ASSESSEE IS CARRYING ITS ACTIVITIES AS A PROFITABLE VENTURE , THE A O HEL D THAT THE ASSESSEE IS NOT UNDERTAKING ANY CHARITABLE ACTIVITY WITHIN THE SC OPE OF SECTION 2(15) OF THE MP NOS.219 & 220/CHNY/2018 :- 3 -: ACT. THEREFORE, HE DENIED THE ASSESSEES EXEMPT ION CLAIM U/S 11, SUPRA. IT APPEARS THAT THIS FINDING IS NOT CHALL ENGED BY THE ASSESSEE BEFORE THE LD. CIT (A). WHEN THE ASSESSEES ACTIVITIE S OR THE PURPOSES ARE CONSIDERED AS EXISTING FOR PURPOSES OF PROFIT , I TS CLAIM U/S 11 THAT IT IS EXISTING FOR CHARITABLE PURPOSES WITHIN THE SCOPE OF SE CTION 2 (15) OF THE ACT ALSO FAILS BOTH THE AYS . THUS, WHEN THE ASSESSEE IS NOT ENTITLED FOR THE BENEFIT U/S 11, ALL ITS OTHER CLAIMS U/S 11 ARE NOT ALLOWA BLE AND HENCE THEY BECOME ACADEMIC AND HENCE NOT DEALT WITH. AND SUBMITTED THAT THE TRIBUNAL IS NOT RIGHT IN HOLDING THAT ASSESSEE DI D NOT QUESTION THE DENIAL OF EXEMPTION U/S.11. FOR AY 20 11-12, THE ONLY REASON OR ISSUE FOR THE DENIAL OF EXEMPTION WAS THE AMOUNT OF HONORARIUM PAID. THIS ISSUE WAS ALLOWED BY ITAT FOR THE EARLIER Y EAR. THE AO DID NOT RAISE THE ISSUE OF AMOUNT WITH THE OTHER CHARITABLE I NSTITUTION. HENCE, DENIAL OF EXEMPTION U/S.11/12 FOR AY 2011-12 ON THE GR OUND THAT AMOUNTS WERE DUE FROM ANOTHER CHARITABLE INSTITUTION DOES NOT ARISE FROM THE ASSESSMENT ORDER OF AY 2011-12. FOR BOTH OF THESE ASSESSMENT Y EARS, THE ASSESSEE HAD RAISED THE FOLLOWING GROUNDS, AMONG OTHER GROUNDS @ GROUN D NO.3 TO 3.2 AS UNDER: '3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON THE GROUND THAT DUR ING THE EARLIER YEARS ASSESSEE HAS CLAIMED THE ENTIRE COST OF ASSETS AS A PPLICATION OF INCOME. 3.1 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FO R THE AY 2010-11 IN ITA NO.318/MDS/2014 WHERE THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 3.2 THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF DI RECTOR OF INCOME TAX (EXEMPTIONS) VS. SHRI VILE PARLE KELAVANI MANDAL HA S HELD THAT WHEN ASSESSEE ACQUIRED ASSET FROM INCOME OF TRUST AND THEREAFTER DEPRECIATION WAS CLAIMED ON USE OF SUCH ASSETS, SUCH DEPRECIATION CLAIM WOUL D NOT MEAN DOUBLE DEDUCTION.' 3. SINCE NON-CONSIDERATION OF THE ABOVE GRO UNDS ARE A MISTAKE APPARENT FROM THE RECORD, THEREFORE, THE LD.AR PRAYED THAT THE HON'BLE ITAT MAY BE PLEASED TO RECTIFY THE ORDER DATED 22.06.2018 P ASSED IN ITA NOS.2092 & MP NOS.219 & 220/CHNY/2018 :- 4 -: 2093/2016 AND PASS SUCH ORDERS AS MAY DEEM FIT CO NSIDERING THE ABOVE SUBMISSIONS. 4. PER CONTRA, THE LD.DR TOOK US THROUGH THE RELEVA NT PORTIONS OF THE IMPUGNED ORDERS AND SUBMITTED THAT THIS TRIBUNAL AFTER CONSIDERING THE SUBMISSIONS OF EITHER PARTIES, AFTER CONSIDERING THE MATERIAL ETC., PLACED BY THE ASSESSEE AND ON DUE CONSIDERATION OF THE LAW ON SUCH MATTERS HAS CONCLUDED , INTER ALIA, THAT THE ASSESSEE IS RUNNING THE EDUCATIONAL INSTITUTION FOR THE PURPOSE OF EARNING PROFIT AND H ENCE, IT IS NOT ENTITLED TO EXEMPTION U/S.10(23C)(VI) FOR BOTH THESE ASSESSMENT YEARS. SIMILARLY, FOR AY 2012-13, AS REGARDS THE AMOUNTS DUE FROM AN OTHER INSTITUTION, THIS TRIBUNAL HAS HELD THAT THE IMPUGNED TRANSACTIONS HA VE HAPPENED LONG BACK. THE ASSESSEE HAS RECEIVED THE EXCESS AMOUNT AFTER A LONG GAP. THOUGH, THE RATIONALE IS QUESTIONED AT ASSESSMENT STAGE ITSELF , IT HAS NOT LAID ANY CONTEMPORANEOUS MATERIAL IN SUPPORT OF ITS CONTENT IONS, VIZ., MINUTES BOOK, THE FACTS AND CIRCUMSTANCES, ON WHICH, THE ALLEGED TRANSACTIONS HAPPENED, WHO AND WHEN TOOK THE ALLEGED DECISIONS ETC., BEFOR E THE LOWER AUTHORITIES AND HENCE THEY HAVE REJECTED ASSESSEES CLAIM OF EXEMPTION. BEFORE THE HONBLE TRIBUNAL ALSO, THE ASSESSEE HAS NOT LA ID ANY MATERIAL TO ASSAIL THE FINDINGS RECORDED BY THEM. THEREFORE, THE HONBLE TRIBUNAL DISMISSED THE CORRESPONDING GROUNDS OF THE ASSESSEE ARE D ISMISSED FOR AY 2012-13. ON THE CUMULATIVE FINDINGS AS RECORDED IN PARA 10 OF THE ORDER, THIS TRIBUNAL HELD, INTER ALIA, THAT WHEN THE ASSESSEES ACTI VITIES OR THE PURPOSES ARE MP NOS.219 & 220/CHNY/2018 :- 5 -: CONSIDERED AS EXISTING FOR PURPOSES OF PROFIT, IT S CLAIM U/S.11 THAT IT IS EXISTING FOR CHARITABLE PURPOSES WITHIN THE S COPE OF SECTION 2 (15) OF THE ACT ALSO FAILS FOR BOTH THE AYS. SINCE THE ASSESS EE IS HELD AS NOT ENTITLED FOR THE BENEFIT U/S.11, THE HONBLE TRIBUNAL HELD THAT ALL OTHER CLAIMS MADE U/S.11 ARE NOT ALLOWABLE, THEY BECOME ACADEMIC AND HENCE NOT DEALT WITH. THEREFORE, THE LD.DR SUBMITTED THAT THERE ARE NO MI STAKES IN THE IMPUGNED ORDERS ON THESE ISSUES FOR AY 2012-13 AND HE NCE THE CORRESPONDING GROUNDS OF THE MPS MAY BE DISMISSED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT RECORDS AND THE ORDERS. WE FIND FROM THEM THAT THE ISSUE OF DENIAL OF EXEMPTION U/S.10(23C)(VI) WAS DECIDED AFTER CONSIDERING THE SUBMISSIONS OF EITHER PARTIES AND ON DUE CONSIDERATION OF T HE LAW ON SUCH MATTERS FOR BOTH THE ASSESSMENT YEARS. THE ISSUE OF THE AMOUNT PARKED WITH SISTER CONCERN IN THE ASSESSMENT YEAR 2012-13 ALSO WAS DECIDED AFTER CONSIDERING THE SUBMISSIONS OF EITHER PARTIES AND ON DUE CONSID ERATION OF THE LAW ON SUCH MATTERS . THEREFORE, WE DO NOT FIND ANY ERROR IN THE IMPUGNE D ORDER RELATED TO THE ISSUES IN THE ASSESSMENT YEAR 2012-13. THEREFORE, T HE ASSESSEES MP FOR ASSESSMENT YEAR 2012-13 FAILS AND HENCE DISMISSED. 6. FOR AY 2011-12, THE EXEMPTION U/S.11 WAS D ENIED ONLY FOR THE REASON OR ISSUE THAT HONORARIUM WAS PAID. THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN THE EARLIER YEAR AN D BY FOLLOWING THAT ORDER THIS MP NOS.219 & 220/CHNY/2018 :- 6 -: ISSUE WAS ALLOWED IN THIS YEAR AS WELL IN FAVOUR OF THE ASSESSEE. THE AO DID NOT RAISE THE ISSUE OF AMOUNT PARKED WITH THE OTHER CHARITABLE INSTITUTION IN THIS YEAR. FURTHER, THE AO DID NOT DENY EXEMPTION FOR THE AY 2011- 12 AS WAS MADE IN AY 2012-13, AS EXTRACTED IN PARA 10, SUPRA. THEREFORE, THE DENIAL OF EXEMPTION U/S.11/12 FOR AY 2011-12 IS AN ERROR AND HENCE THE ASSESSEES APPEAL IN RESPECT OF AY 2011-12 ALONE IS RECALLED TO CONSIDER ASSESSEES OTHER CLAIMS U/S 11. THUS, THE ASSESSEES MP FOR ASSESSMENT YEAR 2011-12 ALONE IS ALLOWED TO THIS EX TENT. 7. IN THE RESULT, THE ASSESSEES MP FOR ASSESS MENT YEAR 2011-12 IS ALLOWED TO THE ABOVE EXTENT AND HENCE THE ORDER IN ITA NO.2 092/CHNY/2016 DATED 22.06.2018 IS RECALLED TO CONSIDER THE ASSESSE ES OTHER CLAIMS U/S.11 AND ITS MP FOR ASSESSMENT YEAR 2012-13 IS DISMISSED IN ITA NO.2093/CHNY/2016. THE REGISTRY IS DIRECTED TO POST THE APPEAL IN ITA NO.2092/CHNY/2016 ON 05.09.2019 BEFORE THE REGULAR BENCH AND ALSO ISSUE NOTICES TO BOTH THE PARTIES. ORDER PRONOUNCED ON THE 28 TH DAY OF JUNE, 2019 IN CHENNAI. SD/- SD/- ( . / . . 0 ) (DUVVURU R.L. REDDY) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 28/06/2019 ' % 34 54 /COPY TO: 1. $ /APPELLANT 4. 6 /CIT 2. %&$ /RESPONDENT 5. 4 % /DR 3. 6 ( )/CIT(A) 6. ! /GF