The ITO, Ward-1(3),, Veraval v. Shri Vrundavan Kelavani Mandal,,

ITA 132/RJT/2011 | 2000-2001
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 13224914 RSA 2011
Assessee PAN AAATV5511F
Bench Rajkot
Appeal Number ITA 132/RJT/2011
Duration Of Justice 7 month(s) 9 day(s)
Appellant The ITO, Ward-1(3),, Veraval
Respondent Shri Vrundavan Kelavani Mandal,,
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-11-2011
Date Of Final Hearing 01-11-2011
Next Hearing Date 01-11-2011
Assessment Year 2000-2001
Appeal Filed On 15-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.132/RJT/2011 (ASSESSMENT YEAR 2000-01) THE ITO WD.1(3) VS SHRI VRINDAVAN KELAVANI MAND AL VERAVAL AT : SUPASI TAL : VERAVAL PAN : AAATV5511F (APPELLANT) (RESPONDENT) DATE OF HEARING : 03-11-2011 DATE OF PRONOUNCEMENT : 25-11-2011 REVENUE BY : SHRI AVINASH KUMAR ASSESSEE BY : SHRI DM RINDANI O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 01-02-2011 PASSED BY THE CIT(A)-XXI RAJKOT FOR THE ASSESSMEN T YEAR 2000-01. 2. BRIEFLY STATED THE FACTS ARE THAT FOR THE ASSES SMENT YEAR UNDER APPEAL THE ASSESSEE FILED ITS RETURN OF INCOME ON 23-11-2006 D ECLARING TOTAL INCOME AT RS. 48 230 IN RESPONSE TO NOTICE U/S 148 OF THE I.T. AC T 1961. THIS TRUST CAME INTO EXISTENCE WITH EFFECT FROM 27-08-1992 AND REGISTERE D WITH THE CHARITY COMMISSIONER JUNAGADH UNDER BPT ACT ON 23-09-1992. THE TRUST HAS FILED APPLICATION U/S 12A(A) OF THE I.T. ACT TO COMMISSIO NER OF INCOME-TAX RAJKOT-III RAJKOT ON 14-08-2003 AFTER A LAPSE OF 11 YEARS. TH E ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) R.W.S. 147 ON 27-12-2006 WHER EIN HE HELD THAT ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN U/SS 11 & 12 OF THE ACT AS IT WAS NOT ITA NO.132/RJT/2011 2 REGISTERED WITH THE COMMISSIONER OF INCOME-TAX THE REFORE IT LOOSES EXEMPTION U/SS 11 & 12 OF THE ACT. THE ASSESSING OFFICER ALS O REJECTED THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT NET INCOME TO BE TA XED IN RESPECT OF CHECK DAM WORK CARRIED ON BY THE ASSESSEE TRUST. HE ACCORDIN GLY COMPUTED THE TAXABLE INCOME AT RS. 14 86 960 AS UNDER: INCOME AS PER INCOME AND EXPENDITURE ACCOUNT RS.16 37 596 LESS:ADMINISTRATIVE EXPENSES RS. 1 50 641 TOTAL INCOME. RS.14 86 955 I.E. RS.14 86 960 3. ON APPEAL BEFORE THE CIT(A) THE ASSESSEE CONTEN DED THAT ASSESSEE TRUST IS DULY REGISTERED U/S 12A(A) SINCE 01-04-2003. IT IS RUNNING A SCHOOL MEDICAL HEALTH CENTRE AND IS ALSO ENGAGED IN PRESERVATION O F WATER RESOURCES BY CONSTRUCTING CHECK DAMS. FOR CHECK DAMS THE ASSESS EE TRUST RECEIVED THE EXPENSES FROM GOVERNMENT IN THE FORM OF GRANT AND I T ALSO RAISED THE BALANCE OF FUND FROM PEOPLE IN THE FORM OF LOKFALA EITHER IN C ASH OR OF LABOUR. IT WAS ALSO POINTED OUT THAT DE FACTO GRANT AND LOKFALA ARE REI MBURSEMENT OF EXPENSES AND WITHOUT THESE EXPENSES THE ASSESSEE WOULD NOT HAVE BEEN ABLE TO CONSTRUCT THE CHECK DAM. THUS THESE EXPENSES ARE NECESSARY TO A RRIVE AT COMMERCIAL INCOME. THESE EXPENSES ARE DIRECT EXPENSES. THERE FORE IN THE ABSENCE OF EXEMPTION U/S 11 WHATEVER SURPLUS IS AVAILABLE AFT ER DEDUCTING THESE EXPENSES CAN ONLY BE TAXED. IN THE IMPUGNED ORDER THE ASSE SSING OFFICER HAS TAXED THE GROSS RECEIPT INSTEAD OF TAXING THE SURPLUS AFTER D EDUCTING THE EXPENSES INCURRED ITA NO.132/RJT/2011 3 FOR CONSTRUCTING CHECK DAMS. IN SUPPORT OF THIS RE LIANCE WAS ALSO PLACED ON THE VARIOUS CASE LAWS. 4. IT WAS ALSO SUBMITTED THAT SIMILAR ISSUE WAS DEC IDED IN FAVOUR OF THE ASSESSEE TRUST IN THE ASSESSMENT YEAR 2001-02 BY TH E LD.CIT(A)-IV RAJKOT AND THE DEPARTMENT HAS NOT FILED SECOND APPEAL AGAINST THE SAME. 5. AFTER CONSIDERING THE AFORESAID SUBMISSION IN TH E IMPUGNED ORDER THE LD.CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO COM PUTE THE INCOME OF THE ASSESSEE TRUST AS BUSINESS CONCERN FOLLOWING RELEVA NT PROVISIONS OF LAW AND ALLOW DIRECT EXPENSES OF RS.14 70 227. THE RELEVAN T PORTION OF THE JUDGMENT IS CONTAINED AT PARAGRAPH 3.4 OF THE IMPUGNED ORDER WH ICH READS AS UNDER: 3.4 I HAVE GONE THROUGH THE FACTS OF THE CASE AND HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AR. ONCE TH E APPELLANT IS HELD NOT TO BE A CHARITABLE INSTITUTION NATURAL LY THE APPELLANT HA TO BE TREATED AS CARRYING N THE BUSINESS. THEREFORE T HE TOTAL INCOME HAS TO BE COMPUTED TREATING THE APPELLANT AS A NORM AL BUSINESS CONCERN. IN THE COMPUTATION OF TOTAL INCOME MADE I N THE ASSESSMENT IF THE RECEIPTS HAVE BEEN TAKEN THEN THE NORMAL RELATABLE EXPENSES HAVE TO BE ALLOWED. IN VIEW OF THE FACTS AND CIRCUMSTANCE OF THE CASE. THE SIMILAR ISSUE WAS IN APPEAL FOR THE ASSESSMENT YEAR 2001-02 IN CASE OF APPELLANT AND CI T APPEAL IV RAJKOT HAS DECIDED THE SAME IN FAVOUR OF APPELLANT WIDE ORDER NO.005/11/2006-07 DT.14/11/2006 THEREFORE I DIREC T THE AO TO COMPUTE THE INCOME OF THE APPELLANT AS BUSINESS CON CERN FOLLOWING THE RELEVANT PROVISIONS OF LAW & ALLOW DIRECT EXPEN SES OF RS.1470227/-. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUND: ITA NO.132/RJT/2011 4 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO COMPUTE THE INCOME OF THE ASSESSEE AS BUSINES S CONCERN FOLLOWING THE RELVANT PROVISIONS OF LAW AND ALLOW T HE DIRECT EXPENSES OF RS.14 70 227/- WITHOUT APPRECIATING THE FACTS BR OUGHT ON RECORD BY THE AO. 6. AT THE TIME OF HEARING BEFORE US ON BEHALF OF T HE REVENUE SHRI AVINASH KUMAR APPEARED AND POINTED OUT THAT IN THE IMPUGNED ORDER THE LD.CIT(A) FAILED TO APPRECIATE THAT ASSESSEE HAS FILED THE RETURN OF INCOME AFTER CLAIMING EXEMPTIONS U/S 11 & 12 OF THE I.T. ACT 1961. ADMI TTEDLY THE TRUST IN QUESTION GOT REGISTRATION WITH EFFECT FROM 01-04-2003. IN THE A SSESSMENT YEAR UNDER APPEAL IT WAS NOT REGISTERED U/S 12A(A) OF THE I.T. ACT 1961 . IN THESE CIRCUMSTANCES THE ASSESSING OFFICER HAS RIGHTLY HELD THAT IT LOOSES E XEMPTION U/S 11 & 12 OF THE ACT. THE ACTIVITY OF ERECTING CHECK DAMS WAS NOT OF COMM ERCIAL NATURE. THEREFORE THE INCOME OF THE ASSESSEE TRUST CANNOT BE COMPUTED IN THE MANNER AS DIRECTED BY THE LD.CIT(A) IN THE IMPUGNED ORDER BY FOLLOWING RELEVANT PROVISIONS OF LAW AND AFTER ALLOWING DIRECT EXPENSES OF RS.14 70 227. HE POINTED OUT THAT THE LD.CIT(A) FAILED TO APPRECIATE THESE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 7. AS AGAINST THE ABOVE SHRI DM RINDANI THE LD.AR APPEARED FOR THE ASSESSEE AND VEHEMENTLY SUPPORTED THE ORDER OF THE CIT(A). HE POINTED OUT THAT IN THE ASSESSMENT YEAR 2001-02 THIS ISSUE IS DECID ED BY THE FIRST APPELLATE AUTHORITY IN ASSESSES FAVOUR AND THE DEPARTMENT HA S NOT PREFERRED A SECOND APPEAL AGAINST THE SAID ORDER DATED 14-11-2006. TH EREFORE ON THIS GROUND ALONE THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR UNDER APPEAL IS NOT MAINTAINABLE. ITA NO.132/RJT/2011 5 7.1 ON MERIT ALSO THE LD.AR POINTED OUT THAT SECTI ONS 11 & 12 CONTEMPLATES COMMERCIAL INCOME AFTER DEDUCTING EXPENSES AND DEPR ECIATION. IN SUPPORT OF THIS RELIANCE WAS PLACED ON THE JUDGMENT OF CIT VS GANGA CHARITY TRUST FUND (1986) 162 IT 612 (GUJ). IN THIS JUDGMENT IT WAS H ELD THAT UNDER SECTION 11 INCOME MUST BE COMPUTED ON COMMERCIAL PRINCIPLES IN COME DERIVED FROM TRUST PROPERTY TO BE APPLIED. 8. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF AUTH ORITIES BELOW. WE FIND CONSIDERABLE FORCE IN THE SUBMISSIONS OF THE LD.COU NSEL OF THE ASSESSEE AND ARE OF THE VIEW THAT APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. FIRSTLY ON THE GROUND THAT THE CONTROVERSY INVOLVED IN THIS APPEAL WAS DECIDED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01. THAT DECISION OF THE LD.CIT(A) IS DULY ACCEPTED BY THE R EVENUE. APART FROM THIS EVEN ON MERIT THE VIEW TAKEN BY LD.CIT(A) IS FAIR AND R EASONABLE AND IN CONFORMITY WITH THE JUDICIAL PRONOUNCEMENTS RELIED BEFORE THE LD.CI T(A) AS ALSO BEFORE US CITED SUPRA. IN THIS VIEW OF THE MATTER WE ARE INCLINED TO UPHOLD THE ORDER OF LD.CIT(A). 9. RESULTANT THE APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER IS PRONOUNCED ON THE DATE MENTIONED HER EINABOVE. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT DT : 25 TH NOVEMBER 2011 PK/- ITA NO.132/RJT/2011 6 COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-XXI AHMEDABAD 4. THE CIT-III RAJKOT 5. THE DR I.T.A.T. RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT