M/s Kuchalambal Charities, Bangalore V. Income Tax Officer (Exemptions) Ward-1, Bangalore

MA 77/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2718 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-09-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 26-07-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption
• Section: 11; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “C”, BANGALORE Before Shri George George K, JM & Ms.Padmavathy S, AM MA No.77/Bang/2022 : Asst.Year 2012-2013 (Arising out of ITA No.2528/Bang/2017) M/s.Kuchalambal Charities Rep.by Managing Trustee Smt.C.H.Chandrika No.122, 10 th Main Road Jayanagar Bangalore – 560 011. PAN : AAATK1235B. v. The Income Tax Officer (Exemptions) Ward-1 Bangalore. (Applicant) (Respondent) Applicant by : Sri.Shreehari Kutsa, Advocate Respondent by : Smt.Priyadarshini Baseganni, Addl.CIT-DR Date of Hearing : 23.09.2022 Date of Pronouncement : 23.09.2022 O R D E R Per George George K, JM : This miscellaneous application at the instance of the assessee u/s 254(2) of the I.T.Act read with Rules 34A of the Income Tax Appellate Tribunal Rules, 1963, is seeking to recall the Tribunal order dated 28.03.2022 in ITA No.2528/Bang/2017. 2. The grievance of the assessee for filing the miscellaneous application are two folds. The relevant portion of the miscellaneous application reads as follows:- “2. The Applicant/Appellant submits that this Tribunal has observed the Following in paragraph 7 of the order - `7. We have heard rival submissions and perused the MA No.77/Bang/2022. M/s.Kuchalambal Charities. 2 material on record. The assessee has two kalyana mandapas. One at Jayanagar, Bangalore and other at Chepauk, ITA No.2528/Bang/2017 M/s.Kuchalambal Charities, Chennai. The rent for taking on hire for two days the kalyana mandapa at Jayanagar, Bangalore is Rs.1,20,000 and Rs.8,00,000 for two days at Chepauk, Chennai (the figures as submitted by the assessee for the year 2017). We have perused the Trust deed dated 17.03.1962. The main object of the assessee is to run kalyana mandapa though there are other charitable objects enumerated in other clauses. There is nothing on record to show that the amounts have been spent for the other charitable objects. It was submitted by the learned AR that surplus is utilized for charitable purposes for imparting education, etc. However, the financial statements submitted do not speak so. For the relevant assessment year, the surplus available for application is Rs.96,32,723 (refer page 106 of the paper book). The assessee claims that out of the surplus of Rs.96,32,723, the assessee had expended during the relevant assessment year a sum of Rs.71,90,309 as revenue expenditure for charitable purpose and further sum of Rs.5,36,957 as capital expenditure for charitable purposes. The said claim is not supported by any evidence. The assessee, admittedly, is not running any educational institution, nor the assessee has produced any proof for incurring any expenditure for the charitable purposes.’ 3. The Appellant submits that the above finding is factually incorrect as the paper book compilation at page nos. 108 to 156 contain the details of application made by the Appellant towards charitable purposes and therefore the observation supra is a mistake that is apparent from record and deserves to be corrected in the interest of justice. 4. The Appellant submits that the Tribunal has further observed as under: `7.2 Moreover, the assessee has not been maintaining books of account separately for the business of letting out of Kalyana mandapa. Therefore, even assuming the business is incidental to the attainment of the objects of the trust in absence of separate books of account, the benefit of section 11 of the I. T. Act cannot be granted.’ MA No.77/Bang/2022. M/s.Kuchalambal Charities. 3 5. The Appellant submits that the books of account of the Appellant clearly record the transactions of both the Kalyana Mantapa as well as the charitable activities and therefore the observation that the benefit of section 11 cannot be granted is a mistake apparent on record requiring to be corrected in the interest of justice.” 3. By relying on the above contentions raised, the learned AR submitted that the Tribunal order in ITA No.2528/Bang/ 2017 dated 28.03.2022 needs to be recalled. 4. The learned Departmental Representative, on the other hand, submitted that there is no mistake apparent on record for warranting interference u/s 254(2) of the I.T.Act and submitted that the miscellaneous application needs to be rejected. 5. We have heard rival submissions and perused the material on record. The primary contention is that the assessee had spent surplus available for charitable purposes. In this context, the learned AR referred to the paper book compilation at pages 108 to 156. On perusal of the same, it is clear that the assessee has not directly doing any charitable activities by itself. On the contrary, it had given donations to individuals / institutions. It is claimed that donee’s have spent the amount for charitable purposes. On perusal of financials (refer page 106 of the paper book), it is seen that the net surplus available for application is Rs.96,32,723 and it is claimed that the assessee had expended for charitable purposes on revenue front a sum of Rs.71,90,309 and on capital frond a sum of Rs.5,36,957. From the details given, MA No.77/Bang/2022. M/s.Kuchalambal Charities. 4 which is claimed to be expended for charitable purposes, it is seen that only for a sum of Rs.52,35,017 the assessee has given to certain donation receipts claiming that these amounts are given to certain charitable organizations, individuals as donations. Whereas, the amount claimed to have been expended for charitable purposes is Rs.77,27,266 (both on revenue and capital front). Therefore, the figures are not reconciling. 6. Moreover, even assuming that the assessee had expended the entire surplus for charitable purposes, the Tribunal has given a categorical finding in its order dated 28.03.2022 that the assessee is primarily carrying on the activity of letting out of kalyana mandapa, which is nothing but object of general public utility and the letting out is being done on commercial basis by charging exorbitant amount. Therefore, it was concluded by the Tribunal that the amended provisions to section 2(15) of the I.T.Act has application to the facts of the instant case. The proviso to section 2(15) during the relevant assessment year reads as follows:- “Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year;” MA No.77/Bang/2022. M/s.Kuchalambal Charities. 5 7. On reading the above proviso, it is clear that irrespective the nature or application or retention of the income of such activity, the assessee shall not be entitled to the benefit of exemption u/s 11 of the I.T.Act if the aggregate value of the receipt from such activity exceeds the prescribed amount in the relevant previous year. In the instant case, the assessee’s receipts from letting out the kalyana mandapa, far exceeded amount prescribed in the proviso. Therefore, even assuming that the assessee had given some donations and claimed the same as application of income, the assessee would still be hit by the proviso to section 2(15) of the I.T.Act and would not be entitled to the benefit of exemption u/s 11 of the I.T.Act. It is ordered accordingly. 8. In the result, the miscellaneous application filed by the assessee is dismissed. Order pronounced on this 23 rd day of September, 2022. Sd/- (Padmavathy S) Sd/- (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : September, 2022. Devadas G* Copy to : 1. The Applicant. 2. The Respondent. 3. The CIT(A)-14, Bangalore. 4. The CIT (Exemptions), Bengaluru. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore