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Income Tax Appellate Tribunal, ‘A ’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
O R D E R MANU KUMAR GIRI (Judicial Member) The instant two appeals filed by the assessee are directed against the orders dated 15.11.2021 and 12.11.2021 passed by the National Faceless Appeal Centre (NFAC), Delhi, arising out of the orders passed by the Assessing Officer (hereinafter referred as to as ‘the AO’) i.e; DCIT, Exemptions Circle, Coimbatore u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) dated 15.12.2016 and 26.12.2017 for Assessment Years 2014-15 and 2015-16 respectively.
2. The registry has noted delay of 752 & 755 days in filing the appeals. Ld. Counsel for the assessee has filed affidavit of the trustee who is also the secretary of the trust. The said affidavit is as under: I, Praveen Kumaar, S/o Radhakrishnan, aged 33 years, currently residing at J 338, J Pocket, Sarita Vihar, New Delhi - 110076, hereby solemnly affirm and sincerely state as follows:
I am the Trustee of Prahar Foundation and I am the Secretary of the trust.
I submit that, my mother Smt.S Amrita Sanjeevi and myself were the trustees of the trust from 2014 onwards. I had completed my UG (MBBS) from PSG Institute for Medical Science and Research in 2013 and joined as a trustee immediately in 2014.I was working as Emergency Medical Officer at Sri Ramachandra Medical College, Porur, Chennai from 2015 till 2019 and thereafter, worked as Medical Officer in ACS Medical College till 2020. My mother was the Managing Trustee and I was the Secretary of the trust until her demise in 2021. My brother Mr. Harresh Kuumar was appointed as a trustee in September 2020 and he was thereafter appointed as Managing Trustee of the trust after my mother's demise from February 2021 onwards.
I submit that I am a doctor by profession and had joined SRM Trichy for pursuing MD in Anaesthesia in August 2020 and completed the course only in August 2023. I state that as a Post graduate Medical student I had long working hours. I had to attend o college and lectures and I also had to see patients. The long stressful working hours resulted in very little time and I was unable to handle the affairs of the trust single handedly post my mother's demise. Further, during the period after my mother's demise, the country was also suffering from outbreak of COVID-19 pandemic and all medical professionals were extremely worked out on account of the same. I state that due to extremely demanding hours of my profession I was not able to concentrate on the affairs of the Trust post the demise of my mother. Since I was unable to handle the affairs, my brother was appointed as Managing Trustee from 2021 onwards. Further, after completing MD, I joined for super specialisation in DrNB, Cardiac Anaesthesia at Apollo Hospitals, Indraprastha, New Delhi and have been residing and working in New Delhi till now.
I submit that, prior to my mother's demise, she was taking care of all the affairs of the trust and I was 30years old then and was not aware of the proceedings under the Income Tax Act, 1961 or any other activities of the Trust. The trust had a few employees who were taking care of the day to day operations including income tax matters. I submit that the said employees have also left the trust's employment now. Owing to my professional career, I did not have any interaction with any of the employees. I state that it was to my utter shock that the thin staff of the trust suddenly quit, and we were thrown in a situation to handle all the affairs of the trust single handedly suddenly without any help.
5. I submit that the trust was originally approved by the Council for Architecture for providing college education and it was conducting its course through rented premises. The trust was in the process of construction of its own premises. However, the completion of the construction could not be completed owing to the ill health of my mother and financial constraints, The students who had enrolled in the college had also left the college and enrolled elsewhere and as on date, even the college of the trust is not functional.
I state that my brother had joined the Trust only to handle the affairs one by one and sort out the issues. Unfortunately, within few months of him being appointed as trustee, our mother passed away and he had to take over as Managing Trustee thereafter. I submit that even today, I do not actively participate in the activities of the trust. My brother Mr Harresh Kuumar, who is the present Managing Trustee is now trying to handle all the issues one by One.
7. I state that the delay is on account of my very demanding profession. Further, both my brother and I are very new to the affairs of the trust and we do not have the knowledge or experience in handling an institution like the present trust. I submit that the delay in filing the appeal is neither willful nor wanton and only on account of reasons stated above.
8. It is therefore prayed that this Hon’ble Tribunal may be pleased to condone the delay in filing the appeal for AY 2014-15 and 2015-16 thus render justice.
3. The assessee submits that the delay caused is for sufficient reason and also supported by the affidavit. Considering the reasons given in adjudication.
4. The solitary ground argued by Counsel for assessee in both the appeals is as under: Whether CIT(A) is right in holding the order of AO that assessee trust is not existing solely for the purpose of education therefore, assessee is rightly disqualified for the purpose of claiming exemption u/s 10(23C)(iiiad) of the Act ?
The brief facts leading to the case is that the Assessee is a Charitable Trust and is not registered under section 12AA of the Act. The assessee is also not approved u/s 10(23C)(vi) of the Act. In this A.Y. 2014-15 assessee declared total income at Rs.Nil after claiming the entire income exempt u/s 10(23C)(iiiad) of the Act. The AO framed assessment u/s 143(3) vide order dated 15.12.2016 and determined the total income of the assessee at Rs.21,60,143/- after denying assessee’s claim of exemption u/s10(23C)(iiiad) of the Act to the extent of Rs.8,91,095/-.
6. Aggrieved against the assessment order u/s 143(3) dated 15.12.2016, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, sustained the view of the A.O. and dismissed the appeal of the assessee.
At the outset, Ld. Counsel for the assessee submitted that the issue is covered against the assessee by the co-ordinate bench decision of the Tribunal in assessee’s own case in order dated 15.06.2016 for A.Y.2009-10 and appeal against said order is pending adjudication before the Hon’ble Jurisdictional High Court.
Per Contra, the Ld. Addl. CIT-DR supported the orders of the lower authorities. He also relied upon the co-ordinate bench decision of the Tribunal in assessee’s own case in order dated 15.06.2016 for A.Y.2009-10 and prayed for dismissal of the appeals.
We have heard both sides, perused the materials on record and gone through the orders of authorities below. We have also benefit of going through the order of the co-ordinate bench of Tribunal in assessee’s own case in dated 15.06.2016 for A.Y.2009-10. We are of considered view that the solitary ground in question is already answered by the co-ordinate bench order of Tribunal in assessee’s own case in ITA No.1695/Mds/2012 dated 15.06.2016 for A.Y.2009-10 which is reproduced as under: 5.5 With regard to the claim of exemption under section 10(23) of the income tax the relevant portions of the letter filed by the assessee is reproduced below in verbatim: -- "with reference to the above subject, I would like to submit the following facts. The institution during the year 2008-09 has carried on no other operations other than buying land (or the college which was approved by the AICET and the course of architecture was started during academic year 2009-10. The lands purchased to put of buildings for the college as per AICET norms. Hence the trust has carried on activities only to run the college (i.e.) the activities of the trust was purely for educational purposes. Hence, we would like to claim exemption under section 10 (23c) (ii ad) for the any income that is to be arrived by you by disallowance of corpus collections and also treating certain unsecured loans of the trust has the income of the trust." The assessee has resorted to claim exemption under section 10(23), as an alternative source to claim exemption, when the assessee has left with no option. Having become aware that many of the loan creditors introduced by the assessee have turned hostile and denied having lent money and these credits are likely to be treated as income, the assessee has made attempt to take shelter under section 10(23C) (iii ad) of the Act. The assessee's intentions are clear that, in the likelihood of denial of exemption, they explored the possibilities of getting exemptions elsewhere. In this backdrop, the assessee's plea with reference to the exemption under section 10 (23C) (iiiad) of the Act, has to be seen. 5.6 The assessee trust has become ineligible for claim of deduction under section 11 of the Act, as the registration sought under section 12A of the Act has been rejected by the Commissioner of income tax. On perusal of the assessment order, it is amply clear that while filing the return of income the assessee trust has not made any claim of deduction under section 10(23C) (iiiad) of the Act. As can be seen from the text of the letter dated 20.10.2011 as reproduced hereinabove filed by the AR of the assessee before the Assessing Officer, the assessee has been claiming to be existing solely for educational purposes and not operating for profits. AS Can be seen, any university or educational institution which is solely existing for the purpose of education and not for the purpose of profit, is eligible to claim exemption under this section, if the trust's receipts during the year is less than rupees one crore. The claim made as an afterthought in anticipation of disallowances cannot be unambiguously provided in section 10(23C) (iiiad) that the exemption is available to "any university or other educational institution existing solely for educational purposes and not tor purp0ses of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed". From the details filed it can be seen that the assessee trust has utilised the funds brought in as discussed above only for procurement of lands as admitted by the assessee in its letter dated 20.10.2011. Evidently no other activities were found to have been seen or established. They also have stated that the trust has not commenced any activities. The assessee trust has also filed a copy of the trust deed before the Assessing Officer and on scrutiny of the trust deed, as per Clause 6 of the trust deed there are 42 items listed as objects of the trust and according to the Assessing Officer it is obvious that the trust is certainly not existing solely for the purpose of education, thereby disqualifying itself for the possible claim of exemption under section 10(23C) of the Act.”
Respectfully following the same, we held that the trust is certainly not existing solely for the purpose of education and lower authorities are justified in rejecting assessee’s claim of exemption u/s 10(23C)(iiiad). Therefore, we upheld the impugned orders dated 15.11.2021 and 12.11.2021 and dismiss both the appeals of appellant.
In result, both the appeals filed by the assessee in & 314/CHNY/2024 are dismissed.