DDIT (E), New Delhi v. Ram KRishan Kulwant Rai Charitable Trust, New Delhi

ITA 1375/DEL/2009 | 2005-2006
Pronouncement Date: 01-04-2010 | Result: Dismissed

Appeal Details

RSA Number 137520114 RSA 2009
Bench Delhi
Appeal Number ITA 1375/DEL/2009
Duration Of Justice 11 month(s) 22 day(s)
Appellant DDIT (E), New Delhi
Respondent Ram KRishan Kulwant Rai Charitable Trust, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 01-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 01-04-2010
Date Of Final Hearing 01-04-2010
Next Hearing Date 01-04-2010
Assessment Year 2005-2006
Appeal Filed On 09-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI I.P.BANSAL JM AND SHRI R.C.SHARMA AM ITA NO.1375/DEL/2009 ASSESSMENT YEAR : 2005-06 DY.DIRECTOR OF INCOME TAX (E) INV.CIR.-II NEW DELHI. VS. RAM KRISHAN KULWANT RAI CHARITABLE TRUST RAI SCHOOL COMPLEX 3 LODHI INSTITUTIONAL AREA LODHI ROAD NEW DELHI 110 003. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK KUMAR PANDEY CIT-DR. RESPONDENT BY : SHRI AJAY VOHRA ADVOCATE AND SHRI AVDHESH BANSAL CA. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 16.1.2009 FOR THE AY 2005-06 WHEREIN REVENUE IS AG GRIEVED FOR ALLOWING BENEFIT OF EXEMPTION U/S 11 & 12 OF THE IT ACT. FOLLOWING EFFECTIVE GROUND HAS BEEN TAKEN BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD.CIT(A) HAS ERRED IN ALLOWING BENEFIT OF EXEMPTION U/S 11 & 12 OF INCOME TAX ACT 1961 TO THE ASSESSEE IGNORING THE FACT THAT TH E DONATIONS OF RS.1 89 00 000/- WAS MADE TO THE TRUST NAMELY RAM K RISHAN & SONS CHARITABLE TRUST IN LIEU OF TRANSFER OF A RUNNING E DUCATION UNIT. THUS IT WAS NOT A VOLUNTARY DONATION. 2. AT THE OUTSET LEARNED AR PLACED ON RECORD THE O RDER OF THE ITAT IN ASSESSEES OWN CASE FOR THE AY 2003-04 & 2004-05 O RDER DATED 3.7.2009 WHEREIN SIMILAR ISSUE WAS DEALT WITH BY THE TRIBUNA L. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT EXACTLY SIMILA R ISSUE WAS DEALT WITH BY THE TRIBUNAL IN THE APPEAL FILED BY THE REVENUE AND VID E ORDER DATED 3.7.2009 THE 2 APPEALS OF THE REVENUE IN BOTH THE YEARS WERE DISMI SSED AFTER HAVING THE FOLLOWING OBSERVATION:- WE HAVE CAREFULLY CONSIDERED THE ISSUE IN VIEW OF THE ORDERS OF THE LOWER AUTHORITIES MATERIAL PLACED ON RECORD AND TH E RIVAL SUBMISSIONS. IN OUR CONSIDERED OPINION THE ASSESSE E TRUST HAS BEEN REGISTERED 12A OF THE I.T. ACT AND IN CASE THE REVE NUE WAS OF THE OPINION THAT NO GENUINE CHARITABLE ACTIVITY WAS BEI NG CARRIED OUT BY IT AND THE TRUST WAS ONLY A DEVICE FOR EVADING THE PAYMENT OF INCOME TAX THE DEPARTMENT SHOULD HAVE WITHDRAWN ITS REGIS TRATION GRANTED U/S 12A OF THE I.T. ACT. SINCE NO SUCH ACTION WAS TAKEN OR CONTEMPLATED BY THE REVENUE WE ARE IN AGREEMENT WI TH THE LEARNED CIT(A) THAT ONCE THE TRUST WAS REGISTERED AS A CHAR ITABLE INSTITUTION AS PER 12A OF THE I.T. ACT THE ASSESSING OFFICER W AS NOT COMPETENT TO QUESTION THE GENUINENESS OF THE TRUST. IT HAS BEEN HELD IN THE CASE OF C.I.T. VS. SURAT CI TY GUMKHANA (2008) 300 ITR 214 (SUPREME COURT) RELIED UPON BY T HE LEARNED COUNSEL THAT THE REGISTRATION OF A TRUST U/S 12A O F THE INCOME TAX ACT 1961 ONCE DONE IS A FAIT ACCOMPLI AND THE ASS ESSING OFFICER CANNOT THEREAFTER MAKE FURTHER PROBE INTO THE OBJEC TS OF TRUST. WITH DUE RESPECT IT IS ALSO OBSERVED THAT THE DECI SION IN THE CASE OF C.I.T. VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGG. EDUCATION SOCIETY (SUPRA) RELIED UPON BY THE LEARNED DR IS OF NO HELP TO THE REVENUE BECAUSE IN THAT CASE THE DECISION OF THAT L EARNED CIT(A) IS REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT WAS UPHELD BY THE HONBLE HIGH COURT OF UTTARAKHAND WHE REAS IN THE CASE OF ASSESSEE REGISTRATION HAS BEEN GRANTED TO T HE ASSESSEE TRUST U/S 12A OF THE I.T. ACT AND THE ASSESSING OFFICER HAS H ELD THAT THE ACTIVITY OF THE TRUST WERE NOT CHARITABLE. THEREFO RE THE ACTION OF THE ASSESSING OFFICER CANNOT BE SUSTAINED IN VIEW OF TH E DECISION IN THE CASE OF C.I.T. VS. SURAT CITY GYMKHANA (SUPRA). IT IS ALSO SEEN THAT AS PER ASSESSMENT ORDER DATED 04.12.2006 U/S 143(3) OF THE I.T. ACT COPY OF WHICH HAS BEEN FILE D ON RECORD BY THE LEARNED COUNSEL THE ASSESSING OFFICER HAS ALLOWED EXEMPTION U/S 11 OF THE ACT TO THE RKSCT FOR ASSESSMENT YEAR 2003-04 . IT IS ALSO SEEN THAT THE DONATIONS OF RS.4 43 37 505/- HAVE BE EN ACCOUNTED FOR BY RKSCT IN ITS RELEVANT BOOKS OF ACCOUNT. THE SUB MISSION OF THE LEARNED COUNSEL IS THEREFORE CONSIDERED CORRECT IN SO FAR AS HE CONTENDED THAT EVEN IF THE INCOME OF THE EDUCATIONA L INSTITUTION IS CONSIDERED IN THE HANDS OF RKSCT NO PREJUDICE IS C AUSED TO THE 3 REVENUE AND TRANSACTIONS IN QUESTION CANNOT BE CONS IDERED A DEVICE TO DEFRAUD THE REVENUE IN VIEW OF THE DECISION OF T HE HONBLE APEX COURT IN THE CASE OF UOI VS. AZADI BACHAO ANDOLAN A ND ANOTHER (SUPRA). IT IS HOWEVER SEEN THAT THE REVENUE AS PER GROUND NO.2 OF ITS APPEAL HAS CONTENDED THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S 11 & 12 OF THE I.T. ACT IN VIEW OF VIOLATION OF PROVIS IONS OF SECTION 13(1)(C) OF THE I.T. ACT. IT IS SEEN THAT THE ASSE SSING OFFICER HAD OBSERVED THAT THE TRUSTEES OF BOTH THE TRUSTS ARE C OMMON AND ARE ALSO MEMBERS OF THE SAME FAMILY. THE ASSESSING OFFICER HAS HOWEVER NOT HELD THAT THE DONATION OF RS.4 43 37 505/- CANN OT BE CONSIDERED ELIGIBLE FOR EXEMPTION U/S 11 OF THE I.T. ACT FOR V IOLATION OF PROVISIONS OF SECTION 13(1(C) OF THE I.T. ACT AND H AS MADE THE ADDITION ONLY FOR THE REASONS GIVEN AT PARA 4 OF HI S ORDER WHICH ARE REPRODUCED BELOW:- IN THIS CASE THE ACTIVITIES ARE HELD TO BE NOT CHA RITABLE WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME TAX ACT FROM THE NATURE OF ACCOUNTS AND TRANSACTIONS AND AS SUCH THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT. THE LEARNED CIT(A) HAS ALSO NOT CONSIDERED THIS ASP ECT IN HIS IMPUGNED ORDER. THUS THE ISSUE RAISED IN GROUND N O.2 OF THE APPEAL OF THE REVENUE DOES NOT ARISE OUT OF THE ORDERS OF THE LOWER AUTHORITIES AND CANNOT BE ADJUDICATED BY US AT THIS STAGE. THIS GROUND OF APPEAL IS THEREFORE REJECTED. IT IS ALSO SEEN THAT THE LEARNED CIT(A) HAS ADMITTE D ADDITIONAL EVIDENCE AS PER DISCUSSION IN PARA 2.13 OF THIS IMP UGNED ORDER. THE ADDITIONAL EVIDENCE BEING THE COPIES OF RESOLUTIONS WERE FORWARDED BY THE LEARNED CIT(A) TO THE ASSESSING OFFICER WHO OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE AS PER HIS LETTER DT. 11.09.06 FOR THE REASONS THAT THE ASSESSEE WAS GIVEN PROPER OPPORTUN ITY TO FILE THE COPIES OF RESOLUTIONS PASSED BY THE TRUST DURING TH E YEAR UNDER ASSESSMENT BUT THE ASSESSEE FAILED TO FILE THE SAM E DESPITE PROPER OPPORTUNITY GIVEN TO IT AND THE CONTENTION OF THE A SSESSEE THAT IT WAS PREVENTED BY THE ASSESSING OFFICER FROM SUBMITTING THE AFORESAID DOCUMENT DURING THE COURSE OF ASSESSMENT PROCEEDING S WAS NOT CORRECT. THE LEARNED CIT(A) SEEMS TO HAVE OVER RUL ED THE OBJECTION OF THE ASSESSING OFFICER AND CONSIDERED THE COPIES OF RESOLUTIONS FOR COMING TO THE CONCLUSION THAT THE TRANSACTIONS BETW EEN THE ASSESSEE TRUST AND RKSCT WERE WITHIN THE FOUR CORNERS OF LAW WITHOUT GIVING THE ASSESSING OFFICER AN OPPORTUNITY TO EXAMINE THE ADDITIONAL 4 EVIDENCE. HOWEVER THE REVENUE AHS NOT TAKEN ANY S PECIFIC GROUND OBJECTING TO THE ADMISSION OF ADDITIONAL EVIDENCE A ND/OR NOT GIVING OPPORTUNITY TO THE ASSESSING OFFICER FOR EXAMINING THE SAME. IT IS ALSO OBSERVED THAT EVEN IF THE ADDITIONAL EVIDENCE IS IGNORED THE CLAIM OF THE ASSESSEE THAT THE ASSESSING OFFICER WA S NOT FREE TO QUESTION /THE CHARITABLE NATURE OF ACTIVITIES OF TH E TRUST BECAUSE REGISTRATION HAS /BEEN GRANTED TO THE ASSESSEE TRUS T IS FOUND CORRECT IN VIEW OF DECISION IN THE CASE OF ACIT VS. SURAT C ITY GUIMKHANA (SUPRA). IN VIEW OF THE FOREGOING DISCUSSION WE ARE OF THE C ONSIDERED OPINION THAT THE DECISION OF THE LEARNED CIT(A) IN DELETING THE ADDITION IN QUESTION AND ALLOWING THE APPEAL OF THE ASSESSEE RE QUIRES NO INTERFERENCE. THE APPEAL OF THE DEPARTMENT IS ACCO RDINGLY DISMISSED. 3. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE IN PARI-MATERIA RESPECTFULLY FOLLOWING THE ORDER OF T HE TRIBUNAL IN ASSESSEES OWN CASE AS STATED ABOVE THE APPEAL OF THE REVENUE IS DISMISSED. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.04.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR 5