P. IYA NADAR CHARITABLE TRUST, SIVAKASI V. ITO, WARD -1 (1), VIRUDHUNAGAR

MA 72/CHNY/2020

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9827 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-11-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-10-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Charitable institution; Benefit of exemption
• Section: 12; 11; 12A; 264; 254(2); 72

Judgement Text

आयकर अपीलीय अिधकरण, ‘डी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI ŵी वी दुगाŊ राव Ɋाियक सद˟ एवं ŵी मंजुनाथा, जी., लेखा सद˟ के समƗ Before Shri V. Durga Rao, Judicial Member & Shri Manjunatha, G., Accountant Member M.P. Nos. 72, 73, 74, 75, 76 & 77/Chny/2020 [Arising out of I.T.A. Nos.3229,3230, 3231, 3232, 3233 & 3234/Chny/2019] Assessment Years: 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17 Shri P. Iya Nadar Charitable Trust, 12A, Chairman Shanmugam Road, Sivakasi 626 123, Tamil Nadu. [PAN:AAATP0852B] Vs. The Income Tax Officer, Ward I(1), Virudhunagar 626 001/ ITO (Exemptions), Madurai. (Petitioner) (ŮȑथŎ/Respondent) M.P. Nos. 78, 79, 80 & 81/Chny/2020 [Arising out of I.T.A. Nos.3235, 3236, 3237 & 3238/Chny/2019] Assessment Years: 2011-12, 2014-15, 2015-16 & 2016-17 Smt. Janakiammal Iya Nadar Charitable Trust, 12A, Chairman Shanmugam Road, Sivakasi 626 123, Tamil Nadu. [PAN:AAATJ0704E] Vs. The Income Tax Officer, Ward I(1), Virudhunagar 626 001/ ITO (Exemptions), Madurai. (Petitioner) (ŮȑथŎ/Respondent) Petitioner by : Shri V. Srikrishnan, CA ŮȑथŎ की ओर से/Respondent by : Shri P. Sajit Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 13.10.2023 घोषणा की तारीख /Date of Pronouncement : 29.11.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: By means of seven Miscellaneous Petitions, the assessee [P. Iya Nadar Charitable Trust] seeks to recall the consolidated order dated M.P. Nos.72-77 & 78-81/Chny/20 2 26.02.2020 passed by the Tribunal in I.T.A. Nos. 3229, 3230, 3231, 3232, 3233 & 3234/Chny/2019] relevant to the assessment years 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17. Similarly, by filing four MPs, the assessee [Janakiammal Ayya Nadar Charitable Trust] seeks to recall the consolidated order dated 26.02.2020 passed by the Tribunal in I.T.A. Nos. 3235 & 3236, 3237 & 3238/Chny/2019] relevant to the assessment years 2011-12, 2014-15, 2015-16 and 2016-17. 2. In the Miscellaneous Petitions, both the assessees have narrated the facts of its case and the mistake apparent on record from the order of the Tribunal dated 26.02.2020 and relevant contents in the miscellaneous petitions filed by the assessees in M.P. Nos. 72 to 77/Chny/2020 and 78 to 81/Chny/2020 are reproduced as under: One of the main ground in this appeal is that" Even after the amendment to section 2(15) the income from property held under Trust i.e. the match manufacturing unit is not income from business (330 ITR page 24). Similarly rental income is income from House property and not business income. Interest on Bank deposit is income from other sources and not income from business as there is no activity in the nature of Trade, commerce or Business. Provisions of section 11(4). " For the purposes of this section" property held under trust" includes a business undertaking so held, and where a claim is made that the income of any such undertaking shall not be included in the total income of the persons in receipt thereof, the Assessing Officer shall have power to determine the income of such undertaking in accordance with the provisions of this Act relating to assessment; and where any income so determined is in excess of the income as shown in the accounts of the undertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes." M.P. Nos.72-77 & 78-81/Chny/20 3 1) Section 11(4) is retained even after the introduction of section 2(15). So it goes without saying that the income from property held under Trust is not taxable. These grounds are not at all considered in the appellate order by this Honourable Tribunal and no decision is given in the Appellate order. So the non consideration of the ground is a mistake apparent on record even after the paper book is filed in which the copy of the settlement deed is enclosed. Moreover permission given to print and affix our Trade mark label on their products will not amount to any activity of rendering any service in relation to manufacture of safety matches. Royalty received, Interest on Bank Deposits received and other miscellaneous income will not fall under the mischief of provisions to sec 2(15) [60 ITR (Trib) Sh.n. 95]. A series of organized activities on commercial lines for profit motive alone can be called 'BUSINESS' (54 ITR (Trib) 616. This was also not considered. Construction of Building to preserve and improve the property held under trust in order to earn income from that to be applied for charitable purpose is also application (86 ITR page 683, 59 ITR page 582, 588, 357 ITR page 560). In order to get the benefit of exemption from tax u/s. 11 of the Act, it is not necessary that the application of income should be such as result in revenue expenditure. Is also not considered. Even when the whole of the capital expenditure may be treated as an application of income towards charitable or religious purposes for the purposes of section 11, the trust may also claim depreciation in respect of the assets used by it for its purposes on the basis of normal commercial principles (264 ITR page 110, 330 ITR page 16). So the cost of construction of building is a valid application of income. This ground is also not considered. Excess amount spent in earlier years 2006-07 3872702/-, 2007-08 637519/- and 2008-09 1223394/- is not at all taken into consideration by the Assessing Officer., If it is also taken into consideration there will be no liability to tax. This ground is also not taken into consideration. Application to larger extent than the available income could be set off against the income of the succeeding year as having already been spent in advance, so that carry forward of the deficit of the earlier year and set off against the surplus of the succeeding year is permissible as held in CIT vs. Institute of Banking (2003) 264 ITR page 110. This ground is also not taken into consideration. Once exclusion contemplated u/s. 11(4A) is not applicable, the exemption has to be allowed as section 11 (1), (2) and (3) becomes applicable even in respect of profits and gains ( (2010) ITR from our reporter at the supreme court page 9). This ground is also not taken into consideration. M.P. Nos.72-77 & 78-81/Chny/20 4 The Assessing officer and the Commissioner of Income Tax (A) Madurai, ought to have held that the income from M/s The South Indian Lucifer Match Works, Sivakasi is income from property held under Trust and not income from business as held in earlier years by various forums since the business was settled along with Trade Mark and Trade Label in favour of the Trust with the stipulation that the Trustees shall carry on the said business and utilize the income there from for the Public Charitable purpose as contained in the Trust Deed. Both of them have not looked into the Trust Deed and Gift deed filed along with the paper book. (Clause 4 and 5 and schedule). The Commissioner of Income Tax (A) Madurai without verifying these deeds filed with him, simply repeated the assessment order. This charitable Trust registered u/s. 12A is regularly assessed to tax and the courts have held that the business is property held under Trust and exemption u/s. 11(4) was granted. This ground is also not at all considered. So once it is proved that income is from business held under Trust the provisions of section 11(4A) will not apply and automatically the provisions of section 1l and 12 of the Act will apply. So the rejection of the set off of earlier year excess utilization is unwarranted and unjustified. This ground is also not at all considered. In the case law referred by the Departmental representative it is clearly stated that Note: Thus, if any property is held under Trust, and such property is a business, the case would fall under section 11(4) and not under section 11(4A). Section 11(4A) would apply only to a case where the business is not held under Trust. Thus there is difference between property or Property held under Trust and business carried on by or on behalf of Trust (Para 8) - SriRam Samaj case reported in (2016) 69 Taxman - com 93 (Chennai Tribunal). It is not known why this common order is passed without furnishing the reasons. Thus the non consideration of these grounds are mistakes apparent on record. We hereby declare that no miscellaneous application under section 254(2) was filed earlier. It is prayed that the connected papers and the paper book filed may kindly be looked into and justice rendered. 3. We have heard both the parties and considered the relevant contents of miscellaneous petitions in light of the order of the Tribunal M.P. Nos.72-77 & 78-81/Chny/20 5 dated 26.02.2020. We find that the sole ground on which the assessee seeks to recall the order of the Tribunal is application of provisions of section 11(4) vis à vis section 11(4A) of the Income Tax Act, 1961 [“Act” in short]. The ld. Counsel for the assessee, referring to the Trust deed and subsequent settlement deed executed by Shri P. Iya Nadar, submitted that the business carried on by the assessee is a property under Trust and not a business carried on by the Trust. Therefore, the assessees’ case squarely falls under section 11(4A) of the Act as there is no activity carried by the assessee in the nature of trade, commerce or business. 4. We find that the Tribunal has considered the arguments of both the sides in light or provisions of section 11 and section 12 of the Act and categorically held that the assessee is carrying business, which is in the nature of trade and commerce, but, not a charity to allow the benefit of exemption under section11 of the Act. In its appeal order, the Tribunal has explained the case with an example and observed that how a case can be considered as property held under Trust, being a business or a business carried on, on behalf of the Trust and finally concluded that the assessees solely carrying on manufacturing match boxes and running Kalyana Mandapam, without there being any actual charity. In our M.P. Nos.72-77 & 78-81/Chny/20 6 considered view, the pleadings of the assessee in the petitions filed under section 254(2) of the Act is nothing but reviewing the decisions already rendered in accordance with law and not a case of mistake apparent on record, which can be rectified/recalled under section 254(2) of the Act. Therefore, we are of the opinion that there is no mistake apparent in the order passed by the Tribunal in both assessees’ case for all the assessment years under consideration. Thus, we dismiss all the Miscellaneous Petitions filed by both assessees’ for all the assessment years. 5. In the result, all the MP filed by the assessees are dismissed. Order pronounced on 29 th November, 2023 at Chennai. Sd/- Sd/- (MANJUNATHA, G.) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 29.11.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.