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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. N. K. Saini, AM And Sh. A. T. Varkey, JM Asstt. Year : 2000-01 Dy. Director of Income Tax(E), Vs Sports Authority of India, Trust Circle-IV, Jawahar Lal Nehru Stadium, New Delhi Lodhi Road, New Delhi (APPELLANT) (RESPONDENT) : Asstt. Year : 2000-01 Dy. Director of Income Tax(E), Vs Sports Authority of India, Trust Circle-IV, Jawahar Lal Nehru Stadium, New Delhi Lodhi Road, New Delhi (APPELLANT) (RESPONDENT) PAN No. AACTS4979C Assessee by : Sh. M. P. Rastogi, Adv. Revenue by : Smt. Sunita Kejriwal, CIT DR Date of Hearing : 23.09.2015 Date of Pronouncement : 30.09.2015 ORDER Per N. K. Saini, AM:
These cross appeals by the department and the assessee are directed against the order dated 01.02.2013 of ld. CIT(A)- XXI, New Delhi.
First we will deal with the appeal of the department in . The only grievance of the department & 2870/Del/2013 2 Sports Authority of India in this appeal relates to the deletion of addition made by the AO on account of rental income amounting to Rs. 6,72,30,455/-.
Facts of the case in brief are that the assessee filed the return of income on 28.03.2002 declaring Nil income. The assessment however was framed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) on 11.11.2003 at an income of Rs. 26,03,64,279/-. Against the said assessment order the assessee preferred an appeal before the ld. CIT(A) who partly allowed the relief to the assessee vide order dated 14.01.2005. Against the said order the assessee preferred an appeal to the ITAT wherein vide order dated 15.04.2010 in & 1587/Del/2008, the matter was set aside to the file of the AO. On the direction of the ITAT, the AO proceeded to frame the assessment and asked the assessee to explain the rental income of Rs. 6,72,30,555/-. In response the assessee submitted as under: “Kind attention of your honour is drawn to para (d) on page 17 of Special Auditor wherein auditor has categorically stated that amount of Rs. 6,26,06,411/- has already been offered as income in the computation of income for A.Y. 2000-01. The amount Rs. 6,72,30,455/- includes this amount of Rs. 6,26,06,411/- (Refer computation of income given in assessment ITA Nos. 2566 & 2870/Del/2013 3 Sports Authority of India order). So again inclusion of above amount of Rs. 6.26 crores in income is unwarranted.”
However, the AO after considering the submissions of the assessee made the impugned addition by observing that the computation of income filed during the course of assessment proceedings did not include this income.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: “Addition of Rs. 6,72,30,555/- was bad in law and on facts of the case of the appellant-society- Ld. AO, while computing income of the assessee-society added a sum of Rs. 6,72,30,555/- on account of rent. Above amount of Rs. 6,72,30,555/- comprises of Rs. 6,26,06,411/- + Rs. 46,24,144/-. Kind attention of your honour is invited to the remarks made by AO in Original assessment (refer paper book page 64) passed u/s 143(3) of the Income Tax Act, 1961 vide orders dated 11.11.2003: “3 iv) The assessee has also admitted that rent income of Rs. 6,27,39,290/- has not been accounted for in the books of account/annual accounts though out of it Rs. 6,26,06,411/- has been shown as income in the computation of income of AY 2000-01 and balance……..’ & 2870/Del/2013 4 Sports Authority of India 3 v) In the computation of income of FY 1999-2000 (AY 2000- 01), amount of Rs. 46,24,144/- has been shown as income on account of rent received for previous years not accounted for”. Above rental incomes have already been disclosed in the computation of income filed with ITD (copy enclosed as annexure 1). Return of income filed with the ITD in form 3A vide acknowledgement receipt dated 28.03.2002 declaring income deductible u/s 11 Rs. 103,46, 89,830/- includes above rental income (copy enclosed as annexure 2). Contention of AO that computation of income filed does not include above income is factually incorrect as the same computation of income was produced before AO during assessment proceedings based on which return of income was filed. In view of the facts stated above, your honour is prayed to kindly delete the unjust additions made by AO while computing income of the appellant-society.”
The ld. CIT(A) after considering the submissions of the assessee observed that the assessee furnished the copy of Income Tax Return showing rental income which has already been disclosed in the computation of income and those details were available at Annexure-I & II of the submission. The ld. CIT(A) deleted the addition by observing that the rental income had already been included in the income shown which had been offered and forming part of rental income, therefore, findings of the AO were totally misconceived.
Now the department is in appeal. The ld. CIT DR submitted that the income was not shown by the assessee in the books of account. It was further submitted that the assessee did not include the rental income & 2870/Del/2013 5 Sports Authority of India in the computation of income. Therefore, the AO made the addition and the ld. CIT(A) was not justified in deleting the said addition.
In his rival submissions the ld. Counsel for the assessee referred to page no. 2 of the assessee’s compilation which is the copy of computation of income for the assessment year under consideration and submitted that the assessee had shown the income from other sources and added the following amounts in the said income:
Income from Other Sources Rupees Voluntary Contributions received during the year 66,34,45,918.00 Other Sources 30,40,13,357.51 Add: 1. Amount receivable on account of rent not accounted for 6,26,06,411.00 2. Amount of rent received for previous years not accounted for 46,24,144.00 37,12,43,912.51 Gross Total Income 1,03,46,89,830.51 Less: Income Exempt u/s 11 as per Audit Report in Form 10B 1,03,46,89,830.51 Total Income Nil
It was submitted that when the assessee itself has included the rental income the addition made by the AO was not justified and the ld. CIT(A) rightly deleted the same.
We have considered the submissions of both the parties and perused the material available on the record. In the instant case, it is noticed that the assessee disclosed the income which was on account of & 2870/Del/2013 6 Sports Authority of India rent receivable and the rent received during the year. Therefore, the AO was not justified in making the impugned addition and the ld. CIT(A) rightly deleted the same. We, do not see any valid ground to interfere with the findings given by the ld. CIT(A). Accordingly, we do not see any merit in this appeal of the department.
Now we will deal with the appeal of the assessee in ITA No. 2870/Del/2013. The only grievance of the assessee in this appeal relates to the sustenance of addition of Rs. 2,22,88,491/- made by the AO on account of grant remaining unspent.
Facts of the case in brief are that the AO during the course of assessment proceedings, asked the assessee to explain as to why grants of Rs. 2,22,88,491/- was not taken in the income as grants directly from corpus. The AO made the addition by observing that no reply/explanation was filed by the assessee.
Being aggrieved the assessee preferred an appeal to the ld. CIT(A) and submitted as under: “Addition of Rs. 2,22,88,491/- was bad in law and on facts of the case of the appellant-society. Kind attention of your honour is invited to the remarks made by AO in original assessment (refer paper book page 70) passed u/s 143(3) of the Income Tax Act, 1961 vide order dated 11.11.2003.
“10. From the income side of the Income & Expenditure Account of the assessee, it is found that out of the grant received from Government of India, sum of Rs. 58,85,314/- and Rs. 1,64,03,177/- have been reduced on account of being shown as fixed assets created. Since assessee is not registered u/s 12A of the IT Act, hence clearly even those amounts taken directly to the corpus A/c will not be allowable. 10.1 For this the assessee was asked vide note sheet entry dated 10.11.2003 as to why this amount of Rs. 2,22,88,491/- be not disallowed and added back to the income of the assessee. The assessee filed his reply vide letter dated 11.1.2003 stating that “the fixed assets created by Sports Authority of India should have been allowed as the assessee has its registration u/s 12A. But since the assessee is unable to produce the copy of the registration”. He further cited various Court decisions in his favour but the facts of these are different from the facts of the assessee’s case. 10.2 The assessee’s claim is not acceptable because he is not eligible for exemption u/s 11 of the Income Tax Act as discussed in paras 5 to 5.3 above and thus the amount of Rs. 58,85,314/- and Rs. 1,64,03,177/- taken directly to the corpus by the assessee is treated as his income and added to his income. From the above it is clear that it is an admitted fact that assessee created assets for an amount of Rs. 58,85,314/- + Rs. 1,64,03,177 (i.e. Rs. 2,22,88,491/-). The charge on the appellant for non-grant of deduction was non-production of registration certificate u/s 12A. Now appellant holds registration u/s 12A vide order dated 27.10.11 of DIT(E), Delhi w.e.f A.Y 2000-01 (refer paper book page 1) Appellant is entitled for deduction of Rs. 2,22,88,491/- and & 2870/Del/2013 8 Sports Authority of India therefore your honour is prayed to grant deduction of Rs. 2,22,88,491/-. Assessee received grants both plan & non-plan from MYAS which are duly recorded in the books of accounts. Out of these grants-non-plan Grants an amount of Rs. 58,85,314/- (refer paper book page 18) was deducted and from Plan Grants an amount of Rs. 1,64,03,177/- (refer paper book page 21) was deducted and transferred to Corpus as Fixed assets were created during the year which can be verified from audited annual accounts of appellant (refer paper book page 27) and therefore these amounts are eligible for deduction from income as the appellant holds registration us/ 12A of the Income Tax Act, 1961.”
The ld. CIT(A) after considering the submissions of the assessee confirmed the addition by observing that unspent grant is the income of recipient.
Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the ld. CIT(A) and further submitted that the assessee utilized the grants and created the assets. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. He also referred to page nos. 8 & 11 of the assessee’s compilation which are the copies of income & expenditure account and submitted that the assessee disclosed in the income & expenditure account, the amounts spent for creating the fixed assets by using the grant received from the Government of India. Therefore, the addition & 2870/Del/2013 9 Sports Authority of India made by the AO was wrong and the ld. CIT(A) was not justified in confirming the same.
In her rival submission the ld. CIT DR supported the orders of authorities below.
We have considered the submission of both the parties and perused the material available on the record. In the present case, it appears that neither the AO nor the ld. CIT(A) had considered the entries mentioned in income and expenditure account by the assessee, in right prospective. We, therefore, deem it appropriate to set aside this issue back to file of the AO for proper verification and to decide afresh in accordance with law after providing due and reasonable opportunity of being herd to the assessee.
In the result, the appeal of the department is dismissed and that of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 30/09/2015)