ITO, Tuticorin v. M/s. Nirman Trust, Tuticorin

ITA 1626/CHNY/2010 | 2007-2008
Pronouncement Date: 18-03-2011 | Result: Dismissed

Appeal Details

RSA Number 162621714 RSA 2010
Bench Chennai
Appeal Number ITA 1626/CHNY/2010
Duration Of Justice 5 month(s) 18 day(s)
Appellant ITO, Tuticorin
Respondent M/s. Nirman Trust, Tuticorin
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 18-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year 2007-2008
Appeal Filed On 30-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE ACCOUNTANT MEMBER] I.T.A.NO.1626/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ITO WARD I(1) TUTICORN VS M/S NIRMAN TRUST 3-B PERIYANAYAGIPURAM PALAYAMCOTTAI ROAD TUTICORIN (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TAPAS KUMAR DUTTA RESPONDENT BY : SHRI T. BANUSEKHAR O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE FOR ASSESSM ENT YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I MAD URAI DATED 7.7.2010. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE TRUST REGISTERED U/S 12AA OF THE ACT. R ETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 WAS FILED ON 31.10.2007 DE CLARING NIL INCOME BUT WHILE MAKING REGULAR ASSESSMENT THE AS SESSING OFFICER HAS DETERMINED THE TOTAL INCOME OF THE TRUST AT ` 70 54 800/-. IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE-TR UST HAD RECEIVED FUNDS FROM FOREIGN AGENCIES WHICH IT APPLIED TOWARD S IRDP AND ITA 1626/10 :- 2 -: REHABILITATION WORKS. IT WAS ALSO FOUND THAT THE T RUST HAD APPLIED FUNDS FOR THE CONSTRUCTION OF SCHOOL NAMELY GOOD SHEPHER D SCHOOL AND ALSO PURCHASED BUSES FOR THE SCHOOL. THE SCHOOL IS RUN BY SCAD TRUST IN WHICH THE TRUSTEES OF NIRMAN TRUST ARE ALSO TRUSTEE S. THE ONLY OBJECTION OF THE DEPARTMENT IS THAT THE RESPONDENT- TRUST HAS APPLIED ITS DONATIONS IN A SISTER-TRUST IN WHICH THE TRUSTE ES ARE COMMON BUT ADMITTEDLY FOR CHARITABLE PURPOSES. THE LD. CIT(A ) HAS DELETED THE ENTIRE ADDITION AFTER FOLLOWING THE DECISIONS OF TH E HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS RAO BAHADUR CALAVALA CU NNAN CHETTY CHARITIES 135 ITR 485(MDS) AND CIT VS KANNIKA PARA MESHWARI DEVASTHANAM AND CHARITIES 133 ITR 779(MDS). NOW T HE REVENUE IS AGGRIEVED AND HAS SOUGHT SETTING ASIDE OF THE APPEL LATE FINDING ARGUING THAT IN THE CASE OF CIT VS RATTAN TRUST 227 ITR 35 6(SC) THE HON'BLE APEX COURT HAS HELD THAT ANY DIVERSION OF INCOME WO ULD LEAD TO ATTRACTION OF SECTION 13(1)(C) BECAUSE THE TRUST HA S APPLIED THE FUNDS OF THE TRUST IN A CONCERN IN WHICH THEY THEMSELVES ARE INTERESTED. THE LD.DR HAS ALSO RELIED ON THE GROUNDS OF APPEAL. ON THE CONTRARY THE LD.AR OF THE ASSESSEE-TRUST HAS RELIED ON THE ABOVE NOTED DECISIONS OF THE HON'BLE MADRAS HIGH COURT IN WHICH IT HAS BEEN CLEARLY HELD THAT EVEN BY INCURRING EXPENDITURE OF CAPITAL NATURE IF THE OBJECTS OF THE TRUST PROMOTED THE INCOME COULD BE EXEMPT. ITA 1626/10 :- 3 -: 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS IN THE LIGH T OF THE PRECEDENTS RELIED ON BEFORE US WE ARE UNABLE TO AG REE WITH THE LD.DR BECAUSE IT IS NOT A CASE OF DIVERSION OF FUNDS BUT IT IS A CASE OF PURSUING CHARITABLE OBJECTS OF THE TRUST. IN FACT THE HON'BLE SUPREME COURT IN THE CASE OF S.RM.M.CT.M.TIRUPPANI TRUST VS CIT 230 ITR 636 HAS HELD THAT APPLICATION OF INCOME MUST NOT NECESSARILY RESULT I N REVENUE EXPENDITURE. THE CHARITABLE PURPOSE MAY I N A GIVEN CASE REQUIRE FOR PURPOSE OF A CAPITAL ASSET AND WHERE IN COME IS APPLIED FOR PURCHASE OF SUCH A CAPITAL ASSET IT WOULD STILL BE APPLICATION OF INCOME FOR THE CHARITABLE PURPOSE I.E PURCHASE OF A BUILDI NG FOR HOSPITAL. IN THIS CASE APPLICATION OF THE FUNDS WAS TOWARDS PUR CHASE OF A SCHOOL BUS ETC. AND IT IS NOT AT ALL THE CASE OF THE REVEN UE THAT THE FUNDS WERE APPLIED FOR NON-CHARITABLE PURPOSE. IN THE GI VEN FACTS AND CIRCUMSTANCES OF THE CASE WE CANNOT ALLOW THE APPE AL OF THE REVENUE AND DISMISS THE SAME. 4. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DIS MISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.3.2 011 SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 18 TH MARCH 2011 RD COPY TO: APPELLANT /RESPONDENT/CIT(A)/CIT/DR