M/s Khetri Trust, New Delhi v. ITO, New Delhi

ITA NOS. 5569-5571/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NOS. 5569 5570 & 5571/DEL/2010 A.YRS. : 2002-03 2006-07 & 2007-08 M/S KHETRI TRUST C/O M/S PN KHANNA & CO. CA 14-15F CONNAUGHT PLACE NEW DELHI (PAN/GIR: AAATK0565C) VS. INCOME TAX OFFICER (EXEMPTION) WARD-IV NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. PN KHANNA CA DEPARTMENT BY : SH. AMRENDER KUMAR D.R. ORDER ORDER ORDER ORDER PER BENCH PER BENCH PER BENCH PER BENCH THESE APPEALS BY THE ASSESSEE EMANATE OUT OF RESPEC TIVE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). SINC E THE APPEALS WERE HEARD TOGETHER AND THEY ARE BEING CONSOLIDATED AND DISPOSED OF BY THIS COMMON ORDER. 2. THE ISSUE RAISED IS THAT APPELLATE AUTHORITY HAS ERRED IN NOT ALLOWING RELIEF U/S 11 AND 12 OF THE IT ACT. 3. AT THE OUTSET LD. COUNSEL OF THE ASSESSEE PLACE D ON RECORD THE ORDER OF THE ITAT IN ASSESSEES OWN CASE IN ITA NO. 3747 3887 862 AND 2354 FOR ASSESSMENT YEQARS 1001-02 2003-04 2 004-05 AND 2005-06 RESPECTIVELY. IN ALL THESE DECISIONS ASSE SSEE HAS BEEN GRANTED THE BENEFIT OF EXEMPTION U/S 11 AND 12 OF T HE IT ACT. ITA NOS. 5569-5571/DEL/2010 2 3.1 LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HOWEVER HE ACCEPTED THAT IN ASSESSES OWN CASE THE MATTER HAS BEEN DECIDED BY THE TRIBUNAL IN ASSES SEES FAVOUR. 4. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. W E NOTE THAT THE TRIBUNAL IN ITA NO. 2354 FOR A.Y. 2005-06 VIDE ORDE R DATED 13.8.2009 HAS ADJUDICATED THE ISSUE AS UNDER:- 6. WE HAVE CAREFULLY PERUSED THE AFORESAID TRIBUN AL ORDERS PLACED ON RECORD. IN ASSESSMENT YEAR 2001-02 THE TRIBUNAL VIDE ORDER DATED 21.2.2008 HAS DISCUSSED AND DECIDE D THIS ISSUE BY OBSERVING AND HOLDING AS UNDER:- 4. THE ASSESSEE IS IN FURTHER APPEAL. RELIANCE IS PLACED ON THE RECORDS OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1991-92 TO 1998-99 AS PER LIST GIVEN IN THE FIRST PAGE OF THE PAPER BOOK. COPIES OF THESE ORDERS HAVE ALSO BEEN FILED. WE HAVE CAREFULLY PERUSED THESE ORDERS. IN THE ORDERS FOR THE ASSESSMENT YEARS 1991-92 AND 1992-93 THE TRIBUNAL HAS NOT SPECIFICALLY DEALT WITH THE QUESTION OF APPLICATION OF THE INCOME OF THE TRUST FOR CHARITABLE PURPOSES IN INDIA. HOWEVER IN THE ORDER FOR THE ASSESSMENT YEAR 1993-94 DATED 19.2.2002 IN ITA NO. 1359/DEL/1997 ONE OF THE GROUNDS RAISED BY THE ASSESSEE (GROUND NO. 6) WAS THAT THE PROPERTIES AND ACCUMULATIONS COULD NOT BE APPLIED TO CHARITABLE OBJECTS AS THE ISSUE OF ADMINISTRATION WAS YET TO BE GRANTED BY THE HONBLE HIGH COURT AND THEREFORE THE ITA NOS. 5569-5571/DEL/2010 3 APPELLANT SHOULD HAVE BEEN HELD TO HAVE APPLIED AND THE ACCUMULATION FOR APPLICATION SHOULD HAVE BEEN PERMITTED. AFTER NOTICING THIS GROUND THE TRIBUNAL FOLLOWED ITS EARLIER ORDERS FOR THE ASSESSMENT YEAR 1991-92 AND 1992-93 AND ALLOWED THE ASSESSEES APPEAL. IN PARAGRAPH 3 OF THE ORDER OF THE TRIBUNAL IT WAS FURTHER OBSERVED THAT ON BEING CONFRONTED WITH THE EARLIER ORDERS OF THE TRIBUNAL THE DEPARTMENT CONCEDED THAT THE ISSUE OF EXEMPTION UNDER SECTION 11 IS COVERED IN FAVOUR OF THE ASSESSEE. THIS ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1993-94 WAS FOLLOWED BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 1994-95 TO 1996-97 AND 1998-99. IN VIEW OF THES CONSISTENT ORDERS IN ONE OF WHICH THE ASSESSEES GROUND TO THE EFFECT THAT IN VIEW OF THE LITIGATION PENDING BEFORE THE HONBLE HIGH COURT THE INCOME COULD NOT BE APPLIED FOR CHARITABLE PURPOSES AND IT MUST BE TAKEN TO HAVE BEEN ACCUMULATED HAS ALSO BEEN CONSIDERED WE HOLD THAT NOTHWITHSTANDING THE REASON GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER THAT THE ASSESSEE DID NOT APPLY ITS INCOME TO ANY CHARITABLE ACTIVITY IN INDIA DURING THE YEAR THE ASSESSEE WOULD BE ELIGIBLE FOR THE EXEMPTION UNDER SECTION 11. ADMITTEDLY THE FACTS FOR THE YEAR UNDER APPEAL ARE THE SAME IN THE EARLIER ITA NOS. 5569-5571/DEL/2010 4 YEARS WHICH MEANS THAT THE QUESTION OF NON- APPLICATION OF ANY INCOME TO CHARITABLE PURPOSES WAS ALSO PRESENT IN THE EARLIER YEARS THOUGH THAT QUESTION MIGHT NOT HAVE BEEN SPECIFICALLY DEALT WITH IN THE ASSESSMENT OR IN THE APPELLATE ORDERS. WHEN THE FATS ARE THE SAME THE RULE OF CONSISTENCY REQUIRES THAT THE SAME VIEW SHOULD BE TAKEN BY THE TRIBUNAL. FURTHER IT IS REPRESENTED BEFORE US ON BEHALF OF THE ASSESSEE THAT SOME OF THE EARLIER ORDERS OF THE TRIBUNAL ARE PENDING IN APPEAL BEFORE THE HONBLE HIGH COURT. IN ANY CASE THE LAW DOES NOT OBLIGE A PERSON TO DO SOMETHING WHICH IS IMPOSSIBLE. WHEN THE PROBATE MATTER IS PENDING BEFORE THE HONBLE HIGH COURT IT IS NOT POSSIBLE FOR THE TRUST WHICH DERIVED ITS PROPERTIES AND ASSETS UNDER THE WILL OF THE LATE RAJA OF KHETRI TO APPLY THE INCOME FORM THEM TO CHARITABLE PURPOSE IN INDIA NOR IS IT PERMISSIBLE FOR THE TRUST TO DISGORGE THE OFFENDING INVESTMENTS IN THE FORM OF SHARES. THE ASSESSING OFFICER HAS HIMSELF STATED THAT THE INCOME HAS BEEN DEPOSITED IN THE BANK. IN THESE CIRCUMSTANCES THE BETTER SOLUTION WOULD BE TO ALSO HOLD THAT THE INCOME OF THE TRUST IS BEING ACCUMULATED FOR BEING APPLIED TOWARDS CHARITABLE PURPOSES IN INDIA AND THAT THE NECESSARY PERMISSION FOR THE SAME HAS BEEN GIVEN BY THE INCOME TAX AUTHORITIES. FOR THESE ITA NOS. 5569-5571/DEL/2010 5 REASONS AND RESPECTFULLY FOLLOWING THE EARLIER ORDERS OF THE TRIBUNAL WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR THE EXEMPTION UNDER SECTION 11 AND ALLOW THE APPEAL. 7. THE AFORESAID TRIBUNALS ORDER FOR THE ASSESSMEN T YEAR 2001-02 HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2003-04 VIDE ORDER DATED 28.3.2008 IN ITA NO. 3887/DEL/2007. 8. IN THE LIGHT OF THE EARLIER ORDERS OF THE TRIBUN AL IN THE MATTER AND THERE BEING NO CHANGE IN THE FACTS OF THE CASE IN THE PRESENT ASSESSMENT YEAR VIS A VIS THE FA CTS IN THE ASSESSMENT YEAR 2001-02 AND 2003-04 WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 AND 12 O F THE ACT. 9. IN THE RESULT THE INSTANT APPEAL FILED BY THE REVENUE IS DISMISSED. 5. SINCE THE FACTS IN THE PRESENT CASES ARE IDENTIC AL AS REFERRED IN EARLIER YEARS OF THE TRIBUNAL. WE ARE UPHOLDING TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RESPECTFULLY FO LLOWING THE PRECEDENT. ITA NOS. 5569-5571/DEL/2010 6 6. IN THE RESULT ALL THE APPEALS FILED BY THE AS SESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/2/2011. SD/- SD/- [C.L. SETHI] [C.L. SETHI] [C.L. SETHI] [C.L. SETHI] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 18/2/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES