CIT-I, CHANDIGARH vs. M/S SIMLA CHANDIGARH DIOCESE SOCIETY, SEC 19A CHD

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ITA/631/2009HC Punjab & HaryanaPHHC01084760200919 November 2009Author: MR. JUSTICE M.S. SULLAR,MR. JUSTICE SATISH KUMAR MITTAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law raised in the present appeal had already been decided against the Revenue in previous appeals. Specifically, the Court referred to ITA No.566 of 2008 (Commissioner of Income Tax-I, Chandigarh vs. M/s Simla Chandigarh Diocese Society, Catholic Church, Sector 19-A, Chandigarh) and ITA No.939 of 2008 (Commissioner of Income Tax-II, Chandigarh vs. M/s Sarvhitkari Educational Society, Sector 21-B and now Sector 42, Chandigarh). By extension, the Tribunal's findings on the exemption under Section 11(1)(a) versus 11(1)(d), the taxability of interest income, miscellaneous income, registration fees, building fund, and rent received were upheld. The reasoning for the previous decisions, which are implicitly adopted here, would have addressed the specific arguments regarding the nature of the income and its application for charitable purposes. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Chandigarh, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated March 30, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal pertains to the Assessment Year 2005-2006 and concerns the assessee, M/s Simla Chandigarh Diocese Society, Catholic Church, Sector 19-A, Chandigarh. The dispute involves the eligibility of income exemptions under Section 11(1)(a) versus Section 11(1)(d) of the Income Tax Act, the taxability of interest income, and the treatment of miscellaneous income, registration fees, building fund receipts, and rent received. The ITAT had sustained the order of the Commissioner of Income Tax (Appeals) (CIT(A)) in deleting certain additions made by the Assessing Officer.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was correct in law in sustaining the CIT(A)'s order, holding the assessee entitled to exemption under Section 11(1)(a) of the Income Tax Act, as opposed to exemption under Section 11(1)(d) as computed by the Assessing Officer? 2. Whether the Tribunal was correct in law in deleting the addition of Rs.37,89,983/-, concluding that interest income is not 'income from other sources' but part of accumulated funds, especially when it is considered 'income from other sources' and used for profit until utilized? 3. Whether the Tribunal was correct in law in sustaining the CIT(A)'s order deleting additions of Rs.11,691/- (Misc. Income), Rs.1,39,775/- (registration fee), and Rs.16,92,450/- (building fund), which are neither donations nor voluntary contributions and fall outside Section 11(1)(d), thus taxable as 'income from other sources'? 4. Whether the Tribunal was correct in law in sustaining the CIT(A)'s order deleting the addition of Rs.29,43,990/- on account of rent received? Contentions: The Revenue argued that interest income is 'income from other sources' and not part of accumulated funds if used for profit. It also contended that miscellaneous income, registration fees, building fund receipts, and rent received are taxable as 'income from other sources' and do not fall under Section 11(1)(d). The assessee's contentions are not explicitly recorded, but the ITAT's order, sustained by the High Court, implies the assessee argued for the applicability of Section 11(1)(a) and that the disputed incomes were either part of accumulated funds or otherwise exempt under Section 11. The Revenue acknowledged that these questions of law had been answered against the Revenue in previous appeals (ITA No.566 of 2008 and ITA No.939 of 2008).

Which sections of the Income-tax Act were involved?

Section 260-A,Section 11(1)(a),Section 11(1)(d)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

I.T.A.No.631 of 2009 Date of Decision:-19.11.2009 Commissioner of Income Tax-I, Chandigarh ---Appellant

Versus M/s Simla Chandigarh Diocese Society, Catholic Church, Sector 19-A, Chandigarh

---Respondent

CORAM:- HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE MEHINDER SINGH SULLAR Present:- Mrs.Urvashi Dhugga, Advocate for the appellant. SATISH KUMAR MITTAL, J. (ORAL) The revenue has filed the instant appeal under section 260-A of the Income Tax Act, 1961 against the order dated 30.3.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh in ITA No.24/CHD/2009 for the Assessment Year 2005-2006 raising the following substantial questions of law:-

1.

Whether on the facts and in the circumstances of the case the Hon'ble Tribunal was correct in law in sustaining the order of the ld.CIT (A), holding that the assessee is entitled to benefits of exemption of income under section 11(1)(a) of the Income Tax Act as against exemption of income u/s 11 (1)(d) as computed by the Assessing Officer?

2.

Whether the Hon'ble Tribunal was correct in law in deleting the addition of Rs.37,89,983/- and in coming to the conclusion that interest income is not 'income from other sources' and therefore part & parcel of accumulated funds,

especially when the 'interest income is income from other sources' and the same is not applied for fund purpose but for profit on funds till the same are utilized?

3.

Whether on the facts and in the circumstances of the case the Hon'ble Tribunal was correct in law in sustaining the order of the ld.CIT (A), in deleting the addition of Rs.11,691/- on account of Misc.Income, Rs.1,39,775/- on account of registration fee and Rs.16,92,450/- on account of building fund which are neither donations nor voluntary contributions and fall outside the ambit of Section 11(1)(d) of the Income Tax Act and are to be taxed as 'income from other sources'?

4.

Whether on the facts and in the circumstances of the case the Hon'ble Tribunal was correct in law in sustaining the order of the ld.CIT (A), in deleting the addition of Rs.29,43,990/- made on account of rent received? Learned counsel for the Revenue very fairly states that the aforesaid questions of law have already been answered against the Revenue in ITA No.566 of 2008 titled Commissioner of Income Tax-I, Chandigarh vs. M/s Simla Chandigarh Diocese Society, Catholic Church, Sector 19-A, Chandigarh and ITA No.939 of 2008 titled Commissioner of Income Tax-II, Chandigarh vs. M/s Sarvhitkari Educational Society, Sector 21-B and now Sector 42, Chandigarh. In view of the above, this appeal is dismissed. (Satish Kumar Mittal)

Judge (Mehinder Singh Sullar) 19.11.2009 Judge AS

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