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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: HON’BLE SHRI PAWAN SINGH, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Bench 1. The grievance of assessee trust, in all the appeals for AYs 2009-10 to 2012-13 stem from the fact that the assessee, in the opinion of -453/Mum/2018 Heggade Seva Sangh Assessment Years: 2009-10 2012-13 learned Assessing Officer, was hit by the proviso to Section 2(15) of the Income Tax Act,1961 and therefore, not entitled for exemption u/s 11 as available to a charitable trust. The assessment for all the years was framed by way of separate orders passed on same date i.e. 31/03/2015.
During assessment proceedings for AY 2009-10, it transpired that the assessee was letting out property for marriages and other functions. Though the assessee submitted that it was not doing any business activity but utilizing the premises for social activities, however, the said plea was rejected in view of the fact that total income from hall booking amounted to Rs.10.44 Lacs during the year and the perusal of Income & Expenditure made it clear that the assessee was doing regular activities in the nature of business by way of letting out its hall for marriages and other functions. The assessee, in the opinion of Ld. AO, was systematically generating its income though these activities in a business-like manner. Since the aggerate receipts, on this account, exceeded the monetary limit as prescribed in proviso to Section 2(15), invoking the same, the exemption u/s 11 was denied to the assessee and the income was treated as business income. The donations received in the earmarked funds was added to the total income of the assessee. Another addition of Rs.1.78 Lacs was made on account of bogus generator expenditure paid in cash. Finally, the assessee was denied exemption u/s 11 and the income was determined at Rs.31.61 Lacs while framing assessment u/s 143(3) r.w.s. 147 on 31/03/2015.
The Ld. CIT(A) noted that no money was spent for the objects of the trust during the year and the only activity being carried during the year was letting out of the hall. The assessee was held to be primarily -453/Mum/2018 Heggade Seva Sangh Assessment Years: 2009-10 2012-13 engaged in the business of letting out of auditorium and therefore, clearly hit by proviso to Section 2(15). Resultantly, the assessment was confirmed vide order dated 04/10/2017, which has given rise to present appeal before us.
The assessee has raised following Grounds of appeal along with Appeal Form No.36: - Being aggrieved by the order of the Income Tax officer (exemption) dated 04/10/2017, the assessee begs to prefer this appeal on the following grounds. 1) The learned Assessing officer is not justified in denying exemption under section 11 to the assessee u/s 13(8) of the Income Tax Act, 1961; 2) The learned assessing officer is erred in adding the collection of building fund of Rs. 28,08,182/- and education fund Rs.1,41,247/- which were earmarked for construction of building fund and educational purpose. The said earmarked funds have been capitalized in the Balance Sheet and are represented by assets. The receipts cannot be treated as revenue receipts; 3) Learned Assessing officer erred in treating the amount incurred towards installation cost of generator of Rs 1,78,000/- as unexplained investment. 4)The learned assessing officer is not justified in adding the difference of Rs.16500/- it has been stated that the amount has been accounted for in the A.Y. 2010-11.
However, Ld. Authorized Representative for Assessee (AR) pleaded for admission of additional grounds as well as additional evidences to support the plea that the activity of letting out business premises was incidental to the objects of the trust. It has been pleaded that required details could not be submitted by assessee during assessment proceedings for want of proper representation in the matter. Our attention has also been drawn to the fact that auditorium was given either free of charge or at confessional rate and therefore, the said activity was charitable in nature. The hall was stated to be let out so as to meet the cost of furnishing the hall. The additional ground raised before us read as under: - 1) The Hon. CIT(A) and the Ld.AO failed to appreciate the fact that the Appellant was required to first pay off the liabilities incurred for furnishing the hall. -453/Mum/2018 Heggade Seva Sangh Assessment Years: 2009-10 2012-13 2) The Hon. CIT(A) and the Ld.AO were not justified in denying the exemption by ignoring the fact that the hall was given free of charge or at a concessional rate, clearly established the basic intention of the appellant that they were carrying on Charitable Activity.
In support of additional grounds, additional evidences have also been placed on record. The Ld. DR opposed admission of additional ground / evidences, at this stage.
After careful consideration, it is noted that the assessee trust was registered since 1999 and claiming as well as allowed exemption as Charitable Trust since then. Prima facie, there is no change in activities being carried out by the assessee. The only reason to deny the exemption was newly inserted proviso to Section 2(15) which would deny exemption beyond certain threshold monetary limit. Keeping in view these facts and submissions made by Ld. AR, we are of the considered opinion that additional grounds raised
before us and additional evidencs being submitted by assessee would be vital to adjudge assessee’s claim and shall have bearing not only in this year but also in subsequent years. It is also noted that even if the exemption was to be denied to the assessee, Ld. CIT(A) has not dealt with item-wise additions made by Ld. AO during assessment proceedings and simply confirmed the assessment by resorting to proviso to Section 2(15). We are of the opinion that even if the exemption was to be denied, the income was to be computed in accordance with law. Therefore, on the given facts and circumstances, we are inclined to admit the additional grounds as well as additional evidences. Hence, by setting-aside impugned order, we direct Ld. AO to reframe assessment de novo. The -453/Mum/2018 Heggade Seva Sangh Assessment Years: 2009-10 2012-13 matter stand restored back to the file of Ld. AO for re-adjudication, keeping all issues open, with a direction to the assessee to substantiate his claim. Needles to add that adequate opportunity of being heard shall be granted to the assessee. It is made clear that if the exemption was to be denied to the assessee, the income shall be computed in accordance with the provisions of law. Resultantly, the appeal may be treated as allowed for statistical purposes.
6. Facts are pari-materia the same in AYs 2010-11 to 2012-13 wherein the assessee has been denied exemption in, more or less, similar manner as well as on similar reasoning. The assessee is before us with similar grounds of appeal as well as additional grounds of appeal / evidences. Hence, the matter of assessment of all these 3 years also stand restored back to the file of Ld.AO for adjudication de novo on similar lines.
7. All the appeals may be treated as allowed for statistical purposes. Order pronounced in the open court on 03rd October, 2019.
Sd/- Sd/- (Pawan Singh) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 03/10/2019 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. -453/Mum/2018 Heggade Seva Sangh Assessment Years: 2009-10 2012-13