ACIT, New Delhi v. M/s. Social Centre for Rural Initiative and Advancement, Haryana

ITA 4136/DEL/2009 | 2005-2006
Pronouncement Date: 10-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 413620114 RSA 2009
Assessee PAN AAATS3859H
Bench Delhi
Appeal Number ITA 4136/DEL/2009
Duration Of Justice 6 month(s) 20 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Social Centre for Rural Initiative and Advancement, Haryana
Appeal Type Income Tax Appeal
Pronouncement Date 10-05-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 10-05-2010
Date Of Final Hearing 10-05-2010
Next Hearing Date 10-05-2010
Assessment Year 2005-2006
Appeal Filed On 21-10-2009
Judgment Text
I.T.A. NO. 308 4136/DEL/2009 1/10 IN THE INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH G BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI A K GARODIA ACCOUTANT MEMBER ITA NO. 308 4136 /DEL/2009 (ASSESSMENT YEAR 205-06) ACIT REWARI CIRCLE VS. M/S. SOCIAL CENTRE OF RUR AL REWARI INITIATIVE AND ADVANCEMENT KHORI CENTRE KHORI REWARI (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAATS3859H APPELLANT BY: SHRI KAANAN KAPUR ADV. RESPONDENT BY: SHRI NIKHIL CHAUDHARY SR. DR ORDER PER A. K. GARODIA AM: 1. BOTH THESE APPEALS HAVE BEEN PREFERRED BY THE RE VENUE WHICH ARE DIRECTED AGAINST THE TWO ASSESSMENT ORDER S OF CIT(A) ROHTAK DATED 26.11.2008 AND 21.08.2009 FOR ASSESSMENT YEAR 2005-06. THE FIRST APPEAL HAS ARIS EN OUT OF THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF 26.12.2007 WHEREAS 2 ND APPEAL HAS ARISEN OUT OF THE ORDER PASSED BY THE A.O. U/S 154 ON 24.10.20 08. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO. 308 4136/DEL/2009 2/10 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE ARISE N OUT OF THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT I.E. I.T.A. NO. 308/DEL/2009. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER: 1)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN THE LAW AND FACTS IN DELETING T HE ADDITION OF RS.63 78 403/- MADE ON ACCOUNT OF ALLEG ED SURPLUS ON THE GROUND THAT THE APPELLANTS CASE COV ERS UNDER SECTION (11)(1)(D) OF THE I.T. AND NOT U/S 11 (2) OF THE I T ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF HE CASE THE CIT(A) HAS ERRED IN THE LAW AND FACTS IN DELETING T HE ADDITION OF RS.6 46 674/- MADE ON ACCOUNT OF PROFIT MOTIVE COMMERCIAL ACTIVITIES WITHOUT GIVING ANY REASON. 3. REGARDING GROUND NO.1 OF THE APPEAL THE BRIEF F ACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT UTILIZED 85% OF THE TOTAL RECEIPT/FUND AVAILABLE. IN PARA 3 OF HE ASSESSMENT ORDER IT IS NOTED BY THE A.O. THAT AS P ER THE AUDIT REPORT IT IS REVEALED THAT A TOTAL RECEIPT/F UNDS AVAILABLE FOR UTILIZATION WAS RS.1 19 05 960/- AND THE ASSESSEE SOCIETY HAS UTILIZED RS.57 69 625/- DURING THE PRESENT YEAR WHICH IS LESS THAN THE LIMIT PRESCRIBE D UNDER THE PROVISIONS OF LAW. IT WAS ALSO NOTED BY THE A.O. THAT HE ASSESSEE HAS NOT INTIMATED THE A.O. IN FORM 10 WITHIN THE TIME PRESCRIBED U/S 11(2) OF THE I. T. ACT FOR ACCUMULATION OF FUNDS IN EXCESS OF PRESCRIB ED I.T.A. NO. 308 4136/DEL/2009 3/10 PER CETNAGE OF 15%. ON THIS BASIS THE A.O. HAS MA DE ADDITION OF SURPLUS AMOUNT OF RS.63 78 403/-. AGGRIEVED THE ASSESSEE MADE APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THIS ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FI ND THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) AS PER PARA 3.1 OF HIS ORDER WHICH IS REPRODUCED BELOW : THE ISSUE INVOLVED AND THE SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CONSIDERED. THE NATURE OF THE ACTIVITY AND THE FUNDS BEING RECEIVED BY IT IS AS P ER NOTED BY THE A.O. IN PARA 2 OF THE ASSESSMENT ORDER . BESIDES THAT THE PAPERS FURNISHED BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING APP EAL PROCEEDINGS CLEARLY SHOW THAT HE FUNDING INSTITUTIO NS HAD SPECIFICALLY MENTIONED THE PURPOSE FOR WHICH TH E GRANTS WERE BEING GIVEN TO THE APPELLANT THE AMOUN TS WERE NOT GIVEN AS DONATIONS TO FORM PART OF THE COR PUS OF THE SOCIETY. A COPY OF THE DETAILS OF GRANT AND THE PURPOSE OF THE UTILIZATION OF THESE GRANTS IS ENCLO SED WITH THIS ORDER AS ANNEXURE A. IN VIEW OF THE AFOR ESAID THE APPELLANTS CASE COMES UNDER SECTION 11(1)(D) O F THE I. T. ACT AND IT IS NOT REQUIRED TO FULFILL THE REQ UIREMENT OF SECTION 11(2) I.E. THE UTILIZATION OF 85% OF THE AMOUNTS RECEIVED. IN VIEW OF THE AFORESAID THE ADD ITION MADE BY THE A.O. IS DELETED AND THE GROUNDS OF APPE AL NOS. 1 & 2 ARE ALLOWED. I.T.A. NO. 308 4136/DEL/2009 4/10 5. WE FIND THAT SPECIFIC FINDING WAS GIVEN BY THE LD . CIT(A) THAT THE FUNDING INSTITUTIONS HAD SPECIFICAL LY MENTIONED THE PURPOSE FOR WHICH THE GRANT WERE BEI NG GIVEN TO THE ASSESSEE. THIS FINDING WAS ALSO GIVEN BY THE LD. CIT(A) THAT THE AMOUNTS WERE GIVEN AS DONAT ION TO FORM PART OF CORPUS OF THE SOCIETY. IT IS HELD BY THE LD. CIT(A) THAT IN THE LIGHT OF THESE FATS THE ASS ESSEES CASE IS COVERED UNDER SECTION 11(1)(D) OF THE I. T. ACT AND IT IS NOT REQUIRED TO FULFILL THE REQUIREMENT O F SECTION 11(2) I.E. UTILIZATION OF 85% OF THE AMOUNT OF RECEIPT AND TO GIVE INTIMATION IF SUCH UTILIZATION IS LESS THAN 85%. AS PER THE PROVISIONS OF SECTION 11(1)(D ) VOLUNTARY CONTRIBUTION MADE WITH A SPECIFIC DIRECTI ON THAT THEY SHALL FORM PART OF CORPUS OF THE TRUST OR INSTITUTION CANNOT BE ADDED AS INCOME OF THE ASSESS EE IN THE RELEVANT YEAR OF RECEIPT. WE ARE OF THE CONSIDE RED OPINION THAT WHEN SOME GRANT GIVEN TO THE ASSESSEE IS FOR A SPECIFIC PURPOSE THE SAME HAS TO BE UTILIZED FOR THAT PURPOSE AND ONLY FOR THIS REASON THAT UTILIZAT ION WAS NOT COMPLETE IN THE PRESENT YEAR ITSELF ADDITION C ANNOT BE MADE. THE PROVISIONS OF SECTION 11(2) ARE APPLICABLE WITH REGARD TO INCOME REFERRED IN CLAUSE (A) AND CLAUSE (B) OF SUB-SECTION (1) OF SECTION 11 OF THE I. T. ACT. CLAUSE (A) AND CLAUSE (B) OF SECTION 11(1) ARE WITH REGARD TO INCOME DERIVED FROM PROPERTY HELD UN DER I.T.A. NO. 308 4136/DEL/2009 5/10 TRUST WHEREAS IN THE PRESENT CASE THE INCOME IN DIS PUTE IS NOT AN INCOME DERIVED FORM PROPERTY HELD UNDER T RUST BUT WITH REGARD TO VOLUNTARY CONTRIBUTION BY THE FU NDING AGENCIES FOR SOME SPECIFIC PURPOSES AND HENCE ONLY THING IS TO BE SEEN IS WHETHER SUCH GRANT FOR SPECI FIC PURPOSE WAS UTILIZED BY THE ASSESSEE FOR SUCH PURPO SE OR NOT. THIS IS NOT THE ALLEGATION OF THE A.O. IN THE PRESENT THAT THESE GRANTS WERE NOT UTILIZED BY THE ASSESSEE FOR THE PURPOSE FOR WHICH THESE GRANTS WERE GIVEN BY TH E FUNDING INSTITUTIONS. THE OBJECTING OF THE A.O. IS THAT OUT OF THE TOTAL GRANT OF RS.119.05 LACS THE ASSES SEE HAS UTILIZED ONLY RS.57.69 LACS AND THE AMOUNT REMAINED UNUTILIZED AT THE END OF THE PRESENT YEAR IS IN EXC ESS OF 15% AND FOR SUCH EXCESS ACCUMULATION OF FUND NO INTIMATION HAS BEEN GIVEN BY THE ASSESSEE TO THE A. O. IN THE PRESCRIBED FORM NO.10 AS REQUIRED U/S 11(2) OF THE ACT. WE HAVE NOTED THAT THE PROVISIONS OF SECTION 1 1(2) ARE APPLICABLE WITH REGARD TO CLAUSE (A) & (B) OF S ECTION 11(1) OF THE ACT WHICH ARE REGARDING INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST WHEREAS IN THE PRESENT CASE THESE GRANTS RECEIVED FROM VARIOUS FU NDING INSTITUTIONS CANNOT BE SAID TO BE THE INCOME DERIVE D FORM PROPERTY HELD UNDER THE TRUST AND HENCE IN OUR CONSIDERED OPINION THE PROVISIONS OF SECTION 11(2) OF THE ACT ARE NOT APPLICABLE. LD. D.R. COULD NOT I.T.A. NO. 308 4136/DEL/2009 6/10 CONTROVERT THIS FINDING OF LD. CIT(A) THAT ALL THES E GRANTS OF RS.119.05 LACS WERE PROVIDED BY VARIOUS FUNDING INSTITUTIONS FOR SOME SPECIFIC PURPOSES WHI CH ARE NOTED BY HIM IN ANNEXURE A OF HIS ORDER AND H ENCE WE ARE OF THE CONSIDERED OPINION THAT NO INTERFEREN CE IS CALLED FOR IN THE ORDER OF LD. CIT(A) IN THE PRESEN T CASE ON THIS ISSUE. WE THEREFORE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THE GROUND NO.1 OF THE REVENUES APPEAL IS REJECTED. 6. NOW WE TAKE UP GROUND NO. 2 OF THE REVENUES AP PEAL. THE FACTS WITH REGARD TO THIS GROUND ARE THAT IT IS NOTED BY THE A.O. IN PARA 4 OF ASSESSMENT ORDER THAT THE ASSESSEE SOCIETY HAS RAISED LOAN FROM RASHTRIYA MAH ILA KOSH AND OTHER INSTITUTIONS @ 8% AND HAS ADVANCED T HE SAME ON LOAN @ 12% UNDER MICRO FINANCE SERVICES (MFS) AND HAS EARNED A PROFIT OF RS.6 46 774/- IN T HE SHAPE OF SERVICE CHARGES. THE A.O. WAS OF THE OPIN ION THAT THIS ACTIVITY OF THE ASSESSEE IS NOT CONSIDERE D AS A CHARITABLE ACTIVITY AS THE LOAN HAS BEEN ADVANCED A T A HIGHER RATE WITH THE OBJECT OF EARNING PROFIT. BY MAKING THIS OBSERVATION THE A.O. MADE ADDITION OF RS.6 46 674/-. BEING AGGRIEVED ASSESSEE CARRIED T HE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THIS ADDITION ON THE BASIS THAT THERE IS NO PROFIT MOTIV E INVOLVED IN THE UTILIZATION OF GRANT FOR THE PURPOS E FOR I.T.A. NO. 308 4136/DEL/2009 7/10 WHICH THESE ARE GIVEN BY THE VARIOUS GOVERNMENTS. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. D .R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). 7. WE FIND THAT THIS GROUND OF ASSESSEE WAS ALLOWED BY THE LD. CIT(A) BY STATING THAT THERE IS NO PROFIT MOTIV E INVOLVED IN UTILIZING THE GRANT FOR THE PURPOSE FOR WHICH THESE ARE GIVEN BY VARIOUS GOVERNMENTS WITHOUT MENTIONING ANYTHING REGARDING THE BASIS OF HIS DECI SION. NOTHING HAS BEEN STATED BY THE LD. CIT(A) REGARDING WHAT WAS THE GRANT GIVEN TO THE ASSESSEE BY THE GOVERNMENT FOR THE PURPOSE OF ADVANCING LOANS UNDER MFS AND WHAT WAS THE TERMS AND CONDITIONS OF SUCH GRANT AND WHETHER THE ASSESSEE WAS FREE TO CHARGE INTEREST @12% AS AGAINST 8% BEING PAID BY THE ASSES SEE ON ACCOUNT OF LOAN RAISED FROM RASHTRIYA MAHILA KOS H AND OTHER INSTITUTIONS AS STATED BY THE A.O. IN PAR A 4 OF ASSESSMENT ORDER. THE A.O. HAS STATED IN THIS PARA THAT THESE LOANS WERE ADVANCED OUT OF THE AMOUNT RAISED AS LOAN FROM RASHTRIYA MAHILA KOSH AND OTHER INSTITUTI ONS WHEREAS LD. CIT(A) HAS STATED THAT THESE LOANS WERE ADVANCED AS UTILIZATION OF GRANT FOR THE PURPOSE FO R WHICH THESE ERE GIVEN BY VARIOUS GOVERNMENTS. BECAUSE OF THIS CONTRADICTORY STAND TAKEN BY THE LD . CIT(A) AS AGAINST THE FACTS NOTED BY THE A.O. AND T HAT I.T.A. NO. 308 4136/DEL/2009 8/10 TOO WITHOUT INDICATING ANY BASIS WE FEEL THAT THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE. WE FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECISION AND HENCE WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK T O HIS FILE FOR A FRESH DECISION. HE SHOULD BRING ON RECO RD ALL MATERIAL FACTS IN THIS CONNECTION AND SHOULD PASS A SPEAKING ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. THE SECOND GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. NOW WE TAKE UP THE 2 ND APPEAL ARISING OUT OF THE ORDER PASSED BY THE A.O. U/S 154 OF THE ACT DATED 24.10.2 008 I.E. APPEAL IN I.T.A. NO. 4136/DEL/2009. THE GROUN D RAISED BY THE REVENUE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN TREATING T HE ORDER OF THE A.O. PASSED U/S 154 DATED 24.10.2008 A S INFRUCTUOUS WHEN APPEAL IS PENDING BEFORE THE HONB LE ITAT AGAINST THE ORDER OF LD. CIT(A) OF I.T.A. NO. 192/RWR/07-08 DATED 26.11.2008 VIDE WHICH A.O. WAS DIRECTED TO GRANT EXEMPTION U/S 11 OF THE I. T. ACT 1961 TO THE ASSESSEE. 10. LD. D.R. SUPPORTED THE ORDER PASSED BY THE A.O. U/S 154 WHEREAS IT IS SUBMITTED BY THE LD. A.R. THAT SINCE THE I.T.A. NO. 308 4136/DEL/2009 9/10 MERIT OF THE ISSUE IS ALSO INVOLVED IN THE REVENUE S APPEAL AGAINST THE ASSESSMENT ORDER U/S 143(3) THI S APPEAL OF THE REVENUE IS TO BE TREATED AS INFRUCTUO US. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THE REQUEST WAS MADE BY THE ASSESSEE FOR RECTIFICATION U/S 154 OF THE ASSESSMENT ORDER WITH REGARD TO NOT ALLOWING EXEMPTION U/S 11 WHICH WAS NOT ALLOWED BY THE A.O. ON THE BASIS THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENT OF SECTION 11(2) OF THE ACT. THIS VERY ISSUE IS INVOLVED IN GROUND 1 OF THE REVENUES APPEAL IN I.T.A. NO. 308/DEL/2009 WHICH H AS BEEN DECIDED BY US IN FAVOUR OF THE ASSESSEE AT PAR A 5 ABOVE AND HENCE THIS GROUND OF REVENUES APPEAL IN I.T.A. NO. 4136/DEL/2009 HAS BECOME INFRUCTUOUS AND ACCORDINGLY REJECTED AS INFRUCTUOUS. IN THE RESUL T THIS APPEAL OF THE REVENUE IS DISMISSED AS INFRUCTUOUS. 12. IN THE RESULT THE APPEAL OF THE REVENUE IN I.T .A. NO. 4136/DEL/2009 IS DISMISSED AS INFRUCTUOUS WHEREAS APPEAL IN I.T.A. NO. 308/DEL/2009 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 10 TH MAY 2010. SD./- SD./- (A. D. JAIN) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:10 TH MAY 2010 SP. I.T.A. NO. 308 4136/DEL/2009 10/10 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR ITAT NEW DELHI