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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)-7, Ahmedabad (‘CIT(A)’ in short), dated 28.02.2018 arising in the assessment order dated 26.12.2016 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) in the assessment year 2014-15.
C.O. No. 72/Ahd/2019 [DCIT vs. Friends of WWB India] A.Y. 2014-15 - 2 -
The assessee has also filed cross objection in the Revenue’s appeal as captioned above.
The ground of appeal raised by the Revenue reads as under:-
1. The Ld. CIT(A) has erred in law and on facts in granting the benefit of exemption u/s. 11 & 12 of the Act to the assessee ignoring the facts that the activity of the assessee was in the form of advancement of general public utility and not relief of poor as defined in section 2(15). 2. The revenue craves over leave to add, alter, amend, modify substitute, delete and/or rescind all or any Grounds of Appeal on or before the final hearing, in necessity so arises.
The assessee has also raised the Cross Objection which reads as under:-
1. In any event, if the learned AO’s order is upheld, cross objector submits that 1.1 The donation received should be considered as capital in nature and should not be considered as income of the cross objector and should to be included while calculating the income of the trust as per the normal provisions of the Act treating it as income u/s. 56 of the Act. It is submitted that it be so held now. 1.2 Write back of provision for doubtful loans and advances for Rs. 31,93,929 should also be reduced from income of the cross objector.
When the matter was called for hearing the Ld. AR for the assessee pointed out that identical issue came up in assessee’s own case in along with Cross Objection No. 48/Ahd/2018 in A.Y. 2010-11 order dated 29.03.2019.
The Ld. DR relied upon the order of the AO but failed to controvert the averments made on behalf of the assessee that the issue is covered.
C.O. No. 72/Ahd/2019 [DCIT vs. Friends of WWB India] A.Y. 2014-15 - 3 -
The Co-ordinate Bench in A.Y. 2010-11 in has dealt with the grievances of the Revenue as under:-
“ITA No. 1549/Ahd/2017 (Revenue’s Appeal):- 3. The grounds of appeal raised by the Revenue as under:-
1) The Ld. CIT(A) has erred in law and on facts in allowing the payment of Rs. 5 crores made to IFGI holding it to be not covered by section 40A(2)(a) of the Act and treating it as allowable expenditure. 2) The Ld. CIT(A) has erred in law and on facts in granting the benefit of exemption u/s.11 & 12 of the Act to the assessee ignoring the fact that the activity of the assessee was in the form of advancement of general public utility and not relief of poor as defined in section 2(15).
4. Briefly stated, the assessee is a trust registered under Bombay trust Act, 1950 and a society registered the Societies Registration Act, 1860. The assessee is stated to be registered as charitable trust under S.12A of the Act. During year under consideration, the AO in the course of assessment under s. 143(3) r.w.s. 147 of the Act denied the benefit of exemption under s. ll & 12 of the Act on the ground that registration of the Trust was withdrawn from AY 2009-10 onwards. The income of the Trust was accordingly computed as per the normal provisions of the Act in the year under consideration. The AO inter alia disallowed corpus donation given by the assessee to Indian Foundation for Inclusion Growth (IFIG) pegged at Rs.5Crore. It was observed by the AO that the donation was given to a related person covered under s.40A(2)(a) of the Act and also alleged that this money was siphoned off from the Trust. The AO finally assessed the taxable income of the assessee at Rs. 9, 35, 24.850/-.
5. Aggrieved, the assessee preferred the appeal before the CIT(A).
6. On reappraisal of the submissions and evidences placed on record, the CIT(A) found that the registration granted to the assessee Trust under S.12A of the Act cannot be dislodged. The CIT(A) also found merit in the eligibility of claim of deduction towards corpus donation by the assessee to IFIG. The cancellation of registration under s.12AA(3) of the Act was accordingly modified and restored C.O. No. 72/Ahd/2019 [DCIT vs. Friends of WWB India] A.Y. 2014-15 - 4 - and the benefit of exemption under s. 11 & 12 of the Act was granted to the assessee holding that the activities of the Trust are charitable activities for the purposes of Section 2(15) of the Act. The corpus donation was also considered as application of income as being given as donation to another charitable trust.
7. The Revenue has agitated the aforesaid reliefs granted by the CIT(A) before the Tribunal.
8. The learned AR for the assessee in the Revenue's appeal submitted that the challenge of the Revenue are twofold; firstly, the cancellation of registration of the assessee as charitable trust has been wrongly revoked and secondly, the CIT(A) has wrongly granted relief to the assessee towards corpus donation to IFIG as application of income for the purposes of Section 11 of the Act. The learned AR submitted that as regards first contention of the Revenue, the issue has already been adjudicated in favour of the assessee by the co- ordinate bench of the ITAT in order dated 14.08.2015 concerning AY 2009-10. As per the aforesaid order, the co-ordinate bench has restored the certificate granted under S.12A by holding that activities are being carried out as per objects of the Trust and therefore, the reason to deny the benefit of exemption under s. 11 of the Act as no longer valid and do not survive any more. Adverting to second aspect, the learned AR contended that similar donation of Rs.45 Crores given to IFIG were treated as application of income and the provisions of Section 11(1)(a) of the Act was held to be met out by the donor trust by the co-ordinate bench of Tribunal in AY 2011-12 in ITA No.l927/Ahd/2016 order dated 09.03.2017. Similar view has been again taken in assessee's own case in AY 2012-13 in ITA No.1608/Ahd/2017. The learned AR therefore submitted that the second grievance of the Revenue also has no legal foundation and therefore appeal of the Revenue requires to be dismissed on both counts.
The learned AR thereafter referred to its grounds of cross objection and fairly submitted that he does not seek to press Ground Nos. 1 & 2 of its cross objection concerning the validity re- assessment under s.147 of the Act. The learned AR further pointed out that Ground No. 3 is also rendered infructuous as the deduction claimed is available on merits in view of the decision of the co- ordinate bench in other assessment years and consequently, the cross objection of the assessee does not call for any substantive adjudication.
The learned DR relied upon the order of the AO and offered no comment in elaboration.
We have carefully considered the rival submissions. As narrated on behalf of the assessee noted above, the grievances of the Revenue have been addressed in negative by the co-ordinate bench of C.O. No. 72/Ahd/2019 [DCIT vs. Friends of WWB India] A.Y. 2014-15 - 5 - Tribunal in other assessment years on similar facts. Therefore, we do not see any reason to interfere with the order of the CIT(A) which in conformity with the subsisting order of the ITAT.
In the result, appeal of the Revenue is dismissed. 13. In view of the submissions made on behalf of the assessee, cross objection of the assessee is also dismissed. 14. In the combined result, appeal of the Revenue as well as cross objection of the assessee, both are dismissed.”
In parity, appeal of the Revenue as well as the Cross Objection of the assessee, both are dismissed.
9. In the combined result, appeal of the Revenue as well as Cross Objection of the assessee, both are dismissed.
This Order pronounced in Open Court on 23/07/2019
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 23/07/2019 TRUE COPY TANMAY आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।