SENGUNTHA MUDALIAR KALYANA MANDAPAM,SALEM vs. ITO, EXEMPTION WARD, SALEM

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER: All the five appeals of the assessee are directed against the orders passed by the Commissioner of Income Tax (Appeals), Salem dated 24.10.2018 & 29.10.2018 and pertains to the assessment years (AYs) 2010-11 to 2014-15.

2 ITA Nos.78 to 82/Chny/2019

ITA No.78/Chny/2019 for Assessment Year 2010-11:

the Assessing Officer reopened assessment beyond the statutory period of

four years. There is not even whisper in the assessment order that there

was negligence on the part of the assessee in disclosing the entire details

for the assessment. Therefore, the reopening of the complete assessment

beyond the period of four years is not justified.

Representative submitted that the assessee has not raised that the issue

of limitation in reopening the assessment either before the AO or before

the Ld. CIT(A) and he has no records to argue the case.

Departmental Representative, this Tribunal is of the considered opinion

that reopening of the assessment beyond the statutory limit of four years

goes to the root of the matter, therefore it is not necessary either for the

assessee or to the Department to raise the issue before this Tribunal.

Even though there was no necessity for raising this issue of limitation, this

Tribunal is expected to record a finding whether the assessment was

reopened within the period of limitation. In this case, the assessee has

3 ITA Nos.78 to 82/Chny/2019 taken a specific ground before this Tribunal as 2.1 saying that the

assessment was reopened u/s. 147 of the Act beyond four years. As

rightly submitted by the Ld. Counsel for the assesee there was not even a

whisper in the assessment order that the assessee failed to disclose the

entire details required for completion of the assessment. It is not in

dispute that the assessment was reopened beyond four years period.

Therefore, this assessment is barred by limitation under proviso to s.147 of

the Act. Therefore, the orders of both the authorities below are set aside

and the appeal of the assessee stands allowed.

No.78/Chny/2019 for Assessment Year 2010-11 stands allowed.

ITA Nos.79, 80, 81 & 82/Chny/2019 for AYs 2011-12 to 2014-15: 6. In ITA No.79/Chnhy/2019 for Assessment year 2011-12 Shri G. Baskar, the Ld. Counsel for the assessee submitted that the assessment was reopened within four years. The return was processed u/s. 143(1) of the Act and there was no order u/s. 143(3) of the Act. Referring to the merit of the case, the Ld. Counsel for the assessee submitted that the assessee is running Kalyana Mandapam. One of the objects of the assessee is to establish and maintain Kalyana Mandapam apart from other objects including establishing and maintenance of cremation ground, donations to the students, recreation etc. On a query from the Bench how running a Kalyana

4 ITA Nos.78 to 82/Chny/2019 Mandapam would be a charitable activity u/s. 2(15) of the Act, the Ld. Counsel for the assessee submitted that the assessee charging very nominal amount from the general public, therefore, it has to be considered as charitable activity. Referring to the issue of depreciation, the Ld. Counsel for the assessee submitted that the assessee is not entitled for depreciation in case exemption was granted u/s. 11 of the Act, if the exemption u/s. 11 of the Act was not granted, the assessee may be entitled for depreciation.

Representative submitted that the main object of the assessee’s Trust is

running Kalyana Mandapam, which cannot not be construed as charitable

activity. Therefore, the assessee is not eligible for exemption u/s. 11 of the

Act. Referring to s. 11(6) of the Act, the Ld. Counsel submitted that the

Supreme Court held that this provision is prospective in nature therefore,

not applicable for earlier assessment years.

Departmental Representative, this Tribunal is of the considered opinion

that establishing and running Kalyana Mandapam is not a charitable

activity. It is purely a commercial activity. Therefore, the assessee is not

entitled for exemption u/s. 11 of the Act. The matter would stand different,

in case establishing Kalyana Mandapam is an ancillary object for securing

5 ITA Nos.78 to 82/Chny/2019 funds to carry out charitable activity. In the case on hand, establishing Kalyana Mandapam is one of the main object. Establishing Kalyana Mandapam being one of the main object may not be a charitable activity. Mere registration of u/s. 12A of the Act may not entitle the assessee to claim exemption. At the best, registration u/s. 12A of the Act is only to identify the entity. The assessee apart from registration u/s. 12A of the Act, has to establish that it is engaged in the chartable activity. Since no charitable activity is carried on by the assessee, this Tribunal is of the considered opinion that the assessee is not eligible for exemption u/s. 11 of the Act. Accordingly, the orders of the lower authorities are confirmed and all the appeals of the assessee are dismissed.

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