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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI RAJESH KUMAR, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 09.12.2016 passed by the Commissioner of Income Tax (Appeals) -1, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2008- 09.
The assessee has raised the following grounds: -
“I) a) The learned Commissioner of Income-tax (Appeals)-1 erred in upholding the action of the Additional Director of Income- tax(Exemption), Range I. Mumbai (herein after referred as "the Assessing Officer") in making disallowance of a sum of Rs.47,24.000/-. being expenses incurred for proposed conversion of hospital building into school building oil ground that the expenditure incurred by the appellant is not application of income for the object of the appellant. b) The appellant submits that the learned Commissioner of Income-tax (Appeals)- I failed to appreciate that the appellant had incurred the aforesaid expenditure of Rs.47,24,000/- for proposed conversion of hospital building into school building A.Y.2008-09 and the deduction thereof as application towards the objects of the trust could not denied merely because the said project had to be stalled by the appellant. 2) Without prejudice to what is stated above, the appellant submits that the learned Commissioner of Income-tax (Appeals)-1 erred in not directing the Assessing Officer to take an amount of Rs. 12,66,45,692/- as application of income as per of income filed the appellant as against all of Rs.10,16,12,000/-as per assessment order. 3) The appellant submits that the Assessing Officer he directed: I) to delete the disallowance of a sum of Rs.47,24,000/- being expenses incurred for conversion of hospital building into school building as expenditure on the objects of the trust; ii) Without prejudice to what is stated above, the appellant submits that the Assessing Officer be directed to consider amount of Rs.12,66,45,692/- as application of income; and to modify the assessment in accordance with the provisions of the Act. 4) Each of the above grounds of appeal are independent and without prejudice to each other. 5) The appellant craves liberty to add, to alter and/or amend the grounds of appeal as and when given.”
3. The brief facts of the case are that the assessee filed his return of income on 29.09.2008 declaring total income to the tune of Rs. Nil for the A.Y. 2008-09. The return was accompanied by Computation of Income, Audited Income & Expenditure Account and Balance-Sheet. After processing, the return was selected for scrutiny assessment and notices u/s 143(2) & 142(1) of the IT, Act, 1961 were issued and served upon the assessee. The main object of the trust is to establish and administer institutions for advancement of education by providing for imparting and spreading education in Arts, Medicines, Science, etc. The assessee trust was managed by Smt. Sulochanadevi Singhania School at Jekegram, Thane which was a co-educational English medium School, Affiliated to the Council for Indian Certificate of Secondary Educational (ICSE). The A.Y.2008-09 assessee trust was registered u/s 12A vide registration no.1483 dt.4/10/1974 and 80G of the Income Tax Act, 1960 as well as with the Charity Commissioner of Mumbai Vide Registration No. E3099(Bom). On verification, it was found that the assessee claimed certain expenditure incurred on Smt. Sunitidevi Singhania Hospital Trust’s Hospital Trust which was claimed as application of income. The notice was given. The assessee submitted the reply. It was found that the assessee trust hospital building was adjacent to the premises where in the assessee was running a school. The said hospital was closed for years for some reasons. The assessee wanted to use the said hospital building for its purpose to run school. Accordingly, the assessee applied Thane Municipal Corporation (TMC) vide letter dated 23.01.2007. The Thane Municipal Corporation asked to fulfill the following conditions. – (i) Tribunal Party agreement between Raymond Ltd. to Smt. Sunitidevi Singhania Hospital Trust to Smt. Sulochanadevi Singhania School Trust to be submitted before issuing Approval/C.C. (ii) U.L.C. clearance for change of user of educational purpose for land under exemption to be submitted upto O.C. approval.
4. The approval was given subject to the fulfill to above mentioned conditions. The assessee trust announced the admissions in the new premises from new academic year however the same was dropped later on. Thereafter, the conversion of the hospital into school was stopped. The Tri party agreement between parties could not be executed due to Shri Sunitidevi Singhania Hospital Trust. The amount was spent by the assessee trust for the conversion of hospital into school building could not take place. Accordingly, the application of money by trust could not be treated for the purpose of trust activity. The total application of income was of Rs.12,66,45,792/- in which 47.24 lakhs was included for the development of hospital building which was disallowed and added to the income of the A.Y.2008-09 assessee. The total income of the assessee was assessed to the tune of Rs. Nil. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.
We have heard the argument advanced by the Ld. Representative of the parties and perused the record. In the instant case, the assessee has challenged the disallowance of an amount of Rs.47.24 lakhs which was incurred for the conversion of the hospital building into the school trust. The claim of the assessee was rejected on the ground of this fact that no agreement/resolution executed between the hospital trust and school trust was filed before the revenue. The claim of the assessee was also declined on the basis of this fact that the assessee failed to fulfil the conditions of the Municipal Corporation of Thane raised vide letter dated 23.01.2007. CIT(A) was of the view that the difficulty for not fulfilling the conditions of municipal corporation, thane as well as changing the hospital into school was not explained properly. At the time of argument, the Ld. Representative of the assessee has argued that the assessee has moved an application for additional evidence which was liable to be allowed specifically in the circumstances when the documents relied by the assessee were very much relevant to decide the matter of controversy in the interest of justice. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The assessee want to submit the following documents.:-
(i) Tripartie Agreement between Raymond Limited and Smt. Sunitadevi Singhania Hospital Trust and Smt. Sulochnadevi Singhania School Trust dated 05.07.2016. (ii) Order of Charity Commissioner, Maharashtra State, Mumbai dated 15.10.2016.
A.Y.2008-09 (iii) Operation and Management Agreement between Smt. Sunitadevi Singhania Hospital Trust and Smt. Sulochnadevi Singhania School Trust dated 25.11.2016. (iv) School permission from the office of the Deputy director of Education, Mumbai vide letter dated 22.01.2019 (v) Important announcement to parents for information about opening of school academic year dated 25.05.2019.
Since these documents are very necessary to decide the matter of controversy, therefore, we allowed the additional evidence and set aside the finding of the CIT(A) and restored the issue before the AO to decide the matter of controversy afresh in view of the additional evidence adduced by the assessee by giving an opportunity of being heard to the assessee in accordance with law.
ISSUE Nos. 2 & 3 6. Under these issues we noticed that the claim of the assessee was declined on the basis of this fact that the claim of the assessee was not verifiable. Since the assessee is now ready to substantiate his claim by proceeding/explaining the relevant material before the AO, therefore, we set aside the finding of the CIT(A) on these issues and restored the matter of controversy before the AO to decide the matter of controversy afresh by giving an opportunity of being heard to the assessee in accordance with law.