SHER-E- KASHMIR COLLEGE OF EDUCATION,(UNIT OF) PIR PANCHAL EDUCATION TRUST,JAMMU vs. INCOME TAX OFFICEER WRD-1(3), JAMMU

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ITA 177/ASR/2019Status: DisposedITAT Amritsar26 September 2022AY 2010-115 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 13 of the Act governs Sections 11 and 12, not Section 10. As the AO and CIT(A) did not provide conclusive findings on specific violations of Section 13, the withdrawal of exemption was not in accordance with the law.

What were the facts?

The assessee, a trust, claimed exemption under Section 10(23C)(iiiad) which was disallowed by the AO and CIT(A) for alleged violations of Sections 13(1)(c) and 13(d)(i). The disallowance was based on the utilization of trust property for the benefit of specific persons.

What were the issues?

Whether the disallowance of exemption under Section 10(23C)(iiiad) was justified based on alleged violations of Section 13 provisions, and if the AO and CIT(A) provided adequate findings to support such disallowance.

Which sections of the Income-tax Act were involved?

Section 13(1)(c),Section 13(2)(a),Section 13(2)(b),Section 13(2)(d),Section 13(2)(g)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

For Respondent: Ms. Amanpreet Kaur, Sr.DR
Hearing: 21.09.2022Pronounced: 26.09.2022

ORDER Per:Anikesh Banerjee, JM:

The instant appeal was filed by the assessee against the order of the ld.

Commissioner of Income Tax(Appeals)-1, Amritsar, [in brevity the CIT(A)] bearing appeal no.375/2012-13, date of order 28.12.2018, the order passed u/s 250(6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2010-11.The impugned order was emanated from the order of the Income Tax Officer, Ward- 1(3), Jammu,(in brevity the AO) order passed u/s 143(3) of the Act date of order 19.12.2012.

2.

The brief fact of the case is that the assessee is a trust and exemption was claimed u/s 10(23C) (iiiad) and the said exemption was disallowed by the ld. AO for reason that for violation of section 13(1)(c)(ii) and section 13(d)(i). The exemption available u/s 11 is denied in the reasons that the property of the trust is utilized by the trustee, referred in section 13(2) of the Act. The income of the trust is deemed to be utilized for benefit of the specific person. So, the amount claimed exempted Rs.2,85,122/- is disallowed and added back with the total income of the assessee. Aggrieved assessee filed an appeal before the ld. CIT(A), the ld. CIT(A) upheld the order of the ld. AO.

3.

The ld. Counsel for the assessee vehemently argued and mentioned that the payment of trustee is not related to this year of appeal. The issue is related to earlier years. Same issue was already agitated before the ITAT, Amritsar Bench.

The bench had passed the order bearing to 558/Asr/2011 date of order 13.06.2022. The relevant para of the order is extracted below:

“13. In the present case, the AO while rejecting the exemption claimed by the trust u/s 10(23C) (iiiad) has invoked the provisions of sections 13(1)(c), 13(2)(a), 13(2)(b), 13(2)(d) and 13(2)(g) of the Act. In this connection it is pertinent mention that section 13 starts with the words, ‘Nothing contained in section 11 or section 12 shall operate as to……..’. This shows and makes it clear that the provisions contained in section 13 govern section 11 and section 12 of the Act and not section 10. These provisions are contradictory to each other. Section 13(1)(c) applies to application of income and property to specified persons. Sections 13(2)(a), 13(2)(b), 13(2)(d) and 13(2)(g) govern the provisions of lending, property made available for use, any service is made available and if any income is diverted respectively. The AO and the Ld. CIT(A) has not come to any conclusive finding as to what particular clause has been violated and as to how the same has been violated. In the absence of any such findings by the AO, the withdrawing of exemption was not in accordance with law.

14.

In the above view, we hold that the Ld. CIT (Appeals), was not justified, in confirming the finding of the AO against law, regarding rejecting the exemption claimed of the Assessee Trust under section u/s 10(23C) (iiiad) of the Income-Tax Act, 1961. Accordingly, the order of the CIT (A) is set aside and consequently, the additions made in in to 558/Asr/2011 in respect of the Assessment Years: 2005-06 to 2008-09 are hereby deleted. 15. In the result, the captioned four appeals of the Assessee Trust are allowed.” 4. The ld. Sr. DR only relied on the order of the revenue authorities. No such contrary judgment was placed before the Bench.

5.

We heard the rival submission and relied on the documents available in the record. The Coordinate Bench is already decided the issue in favour of the assessee. The amount paid to trustee is not related to this year of appeal. So, in this memo there is no question of violation of section 13 of the Act. The assessee is an educational trust, and the turnover is below the Rs.1 crore. The assessee is eligible for exemption u/s 10(23C) (iiiad). So, the addition made by the ld. AO amount of Rs.2,85,122/- is liable to be deleted.

6.

In the result, the appeal of the assessee bearing is allowed.

Order pronounced in the open court on 26.09.2022

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