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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SHAILENDRA KUMAR YADAV, JM & SHRI RAJESH KUMAR, AM
सुनवाई की तारीख / Date of Hearing : 13.6.2016 घोषणा की तारीख /Date of Pronouncement:22.06.2016 आदेश / O R D E R PER RAJESH KUMAR, A. M: This is an appeal filed by the revenue challenging the order dated 3.9.2014 of ld.CIT(A)-1, Mumbai, for assessment year 2009-10 by which the AO was directed by the ld.CIT(A) to grant exemption u/s 11(4A) in respect of income under the head Management Development Program and Consultancy charges amounting to Rs.3,70,36,657/-, and income from letting out of halls for marriages amounting to Rs.2,05,05,756/-.
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In the first ground of appeal of the revenue, the revenue is challenging the direction of the ld.CIT(A) to grant exemption u/s 11(4A) of Rs. 3,70,36,657/- in respect of income under the head Management Development Program and Consultancy charges. 2.1 In the second ground, the revenue has challenged the direction by the ld.CIT(A) to the AO regarding grant of exemption u/s 11(1) of the Act in respect of the income from letting out of halls for marriages amounting to Rs.2,05,05,756/- by way of hiring of premises and advertisement rights. The other two grounds are general in nature, therefore, these grounds need no adjudication, therefore, dismissed as infructuous.
Facts in brief are that the assessee is a charitahble trust and granted registration u/s 12A by the Charity Commissioner vide registration No. INS 556 dated 18.8.1977. The case of the assessee selected for scrutiny and statutory notices u/s 143(2) /142(1) dated 15.9.2010 were issued and duly served on assessee. The assessee filed return of income on 30.9.2009 accompanying therewith the income and expenditure account, balance sheet and audit report in form No.10B declaring total income at Rs.NIL. Upon verification of the income and expenditure account during the assessment proceedings, the AO found that the trust to have shown miscellaneous and other income of Rs.7,17,55,042/- comprising of Rs.4,48,89,016/- income from Management development
3 2704/Mum/2014 Programme and Consultancy charges and balance income from hiring of half of Rs.1,81,59,701/- The AO noted that the assessee had shown receipt from Management development Programme and Consultancy charges of Rs.4,48,89,016/- and expenditure on the said income was shown at Rs.78,52,358/-. The AO was of the opinion that it was a systematic and organized activities of the assessee-trust and that it could be called business incidental to the main object of the trust and accordingly added the sum of Rs.3,70,36,657/- to the total income of the assessee as income from business of the assessee. Similarly, the AO observed that the income from letting out of halls for marriages was also a systematic and regular activities of the assessee and has all the feature and characteristics of business and therefore concluded that the said activity cannot be covered under the provisions of section 11(4A) of the trust and/or 11(4) of the Act and added the sum of Rs.2,05,05,756/- to the total income of the assessee by allowing estimated expenses at the rate of 10% amounting to Rs.22,78,417/-. Finally the assessment was framed vide assessment order dated 12.12.2011 passed u/s 143(3) of the Act making various additions to the total income of the assessee including the income from Management development Programme and Consultancy charges amounting to Rs.3,70,36,657/-, Hiring charges of halls of Rs.2,05,05,756/- and assessing the income at Rs.24,34,42,387/-. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority, who following the 4 2704/Mum/2014 Tribunal order in assessee’s own case in (AY-2008-09) order dated 5.10.2012 allowed the appeal of the assessee and granted relief to the assessee by observing and holding as under : “I have carefully considered the submission of the appellant, assessment order and the facts of the case. Considering that the assessment order for the assessment year 2009-10 is based on the same reasons for-additions and under similar facts and circumstances as that of the assessment year 2008-09 and further that the decision of Hon'ble ITAT has confirmed the order of the CIT(A) allowing the appeal of the appellant on all the issues of additions made in assessment year 2008-09, the Grounds of Appeal for AY. 2009-10 remain covered and decided in favour of the appellant. The appeal filed by the Department has been dismissed by the Hon'ble ITAT thereby confirming the decision of CIT (Appeals) vide order No. ITA No. 7106/Mum/2011 dated 05.10.2012. Hence, respectfully following the decision of the Hon'ble ITAT, the grounds of appeal Nos. I, Il, Il, IV are allowed. Ground No. V· and VI of appeal being consequential and in the nature of supporting Grounds are also treated as allowed for statistical purpose.”
Aggrieved by the order of Tribunal in assessee’s own case in dated 05.10.2012, the Revenue preferred Income Tax Appeal before the Hon’ble Jurisdictional High Court bearing ITA No.693 of 2013 and the Hon’ble Jurisdictional High Court vide order dated 23rd March,2015 confirmed the order of the Tribunal by dismissing the appeal of the revenue by holding as under : “5. The Tribunal has held that the "Management and Development Program & Consultancy Charges' is part and parcel of 'Narsee Monjee Institute of Management Studies' which has been set up by the respondent-assessee. The respondent-assessee is a trust and has set up 30 schools and colleges. The Commissioner as also the Tribunal has found that the element of business is missing in conducting management
5 2704/Mum/2014 courses. There may be some surplus generated which itself is applied towards the attainment of the object of the educational institute. The separate books of account cannot be insisted upon because once this programme is part and parcel of the activities undertaken and carried out by the Narsee Moonjee Institute of Management Studies, then the condition precedent set out in sub-section (4A) of section 11 of the I.T. Act is completely satisfied. Such finding of fact cannot be termed as perverse and it is in consonance with the factual aspect regarding activities of the trust and the object that it is seeking to achieve. Similarly, in regard to income from the hiring of the premises and advertisement rights, the said question is also not substantial question of law. Letting out of halls for marriages, sale and advertisement rights has not been found to be a regular activity undertaken as a part of business. The educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then, this cannot be said to be a business which is not incidental to attain the objects of the trust. This being merely an incidental activity and the income derived from it is used for the educational institute and not for any particular person, separate books of account are also maintained, then, this income cannot be brought to tax. This conclusion is also not perverse and given the facts and circumstances which are undisputed.
6. As far as question No.4 is concerned, this Court has repeatedly held that there is nothing like double deduction. When the assessee has acquired an asset from the income of the trust and thereafter the amount that is claimed is the depreciation on the use of the assets, such depreciation claim does not mean double deduction. The deduction earlier claimed is towards towards application of funds of the trust for acquiring assets. The latter is depreciation and it is permissible deduction considering the use of the assets. This has been clarified repeatedly by this Court. If any reference is required then the case of CIT v. Institution of Banking Personnel Selection (IBPS) [2003] 264 ITR 110/131 Taxman 386 (Bom.) is enough.
Going by the law laid down by this Court, we are of the opinion that that even the question No.4 in the paper-book cannot be termed as substantial question of law. The appeal thus has no merits and is dismissed. No order as to costs.”
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Aggrieved by the order of ld.CIT(A), the revenue filed appeal before Mumbai Bench of the Tribunal.
Before us, the ld.AR submitted that the issue raised in this appeal is identical to that of earlier issues as decided by the Ld.CIT(A), confirmed by the Mumbai Bench of the Tribunal and further confirmed by the Hon’ble Jurisdictional High Court in the appeal filed by the revenue against the Tribunal order in assessee’s own case (supra). Therefore, the ld.AR submitted that the issue in the present year also stands covered in favour of the assessee by the above mentioned decisions. The ld. DR could not controvert the submissions of the ld.AR by bringing any contrary material before us.
We have heard both the parties at length on the issues before us. We have also gone through the relevant material placed before us including the decisions of ld.CIT(A), Mumbai Bench of the Tribunal and the decision of the jurisdictional High Court in assessee’s own case. We find from the record available before us on similar facts and circumstances, the issue raised in this appeal stands covered in favour of the assessee. Therefore, we have no hesitation in dismissing the appeal of the revenue.
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