Income Tax Appellate Tribunal - Chennai
Merit International Education ... vs Department Of Income Tax on 12 March, 2012
IN THE INCOME-TAX APPELLATE TRIBUNAL
CHENNAI 'D' BENCH, CHENNAI.
Before Dr. O.K. Narayanan, Vice-President &
Shri Challa Nagendra Prasad, Judicial Member
I.T.A. No. 730/Mds/2011
Assessment Year: 2001-02
The Deputy Director of Income Tax Merit International Education
(Exemption) I, Vs. Foundations, 'Regus Business Centre,
Chennai. Level 6, Chennai Citi Centre,
10/11, Dr. Radhakrishnan Salai,
Chennai 600 004.
[PAN: AAATM1512D]
(Appellant) (Respondent)
Revenue by Shri K.E.B. Rengarajan,
:
Jr. Standing Counsel
Assessee by : Shri S. Sathiyanarayanan, Advocate
Date of Hearing : 12.03.2012
Date of pronouncement : 16.03.2012
ORDER
PER Challa Nagendra Prasad, Judicial Member
This is an appeal filed by the Department against the order of the CIT(A) XII, Chennai dated 17.01.2011 in ITA No.74/2008-09 relevant to the assessment year 2001-02. Shri K.E.B. Rengarajan, Jr. Standing Counsel represented on behalf of the Revenue and Shri S. Sathiyanarayanan, Advocate represented on behalf of the assessee.
2. The main ground in this appeal of the Revenue is against the CIT(A)'s order allowing exemption under section 11 claimed by the assessee. 2 I.T.A. No.730
No.730/M/ 730/M/11 /M/11
3. The Assessing Officer reopened the assessment for the assessment year 2001-02 under section 147 consequent to the assessment made under section 143(3) for the assessment year 2005-06 denying such exemption under section 11 in the assessment year 2005-06 on the ground that the provisions of section 13 are violated.
4. The facts in the present case for the assessment year 2001-02 are that the assessee is a public charitable trust, registered under section 12AA of the Income Tax Act, 1961, running a Hotel Management Academy (Merit International Institute of Technology, Merits Swiss Asian School of Hotel Management and Hostel) in the leased premises obtained from M/s. Merit Resorts Pvt. Ltd., Chennai ("MRPL" in short), M/s. Nilgiri Enterprises, Bangalore and M/s. Prince Palace, Ooty. The rental advances are paid year after year. It was noticed by the Assessing Officer during scrutiny proceedings that the company had obtained loan from Canara Bank by mortgaging the property. The property was subsequently sold by the Bank for default of bank loan.
5. The Assessing Officer, while completing the assessment for the assessment year 2005-06, denied the claim of exemption under section 11 treating the rental advances paid as investment made by the assessee trust out of its surplus fund by invoking the provisions of section 11(5) of the Act. Consequently the assessment for the assessment year 2001-02 was 3 I.T.A. No.730 No.730/M/ 730/M/11 /M/11 reopened and exemption under section 11 was denied by the Assessing Officer while completing the assessment under section 143(3).
6. The CIT(A) decided the issue in favour of the assessee following this Tribunal's order in assessee's own case for the assessment year 2004-05 in I.T.A. No.335/Mds/2010 dated 04.06.2010, wherein the Tribunal decided the issue in favour of the assessee.
7. During the course of hearing, both the parties have agreed that the issue in this appeal is covered by the decision of the Chennai 'D' Bench of the Tribunal in assessee's own case for the assessment year 2005-06 in I.T.A. No. 2271/Mds/2008 dated 19.04.2011 and the Tribunal decided the issue in favour of the assessee, copy of the order is placed on record.
8. We have perused the materials available on record and find that similar issue has been decided by this Tribunal in assessee's own case for the assessment year 2005-06 in I.T.A. No. 2271/Mds/2008 dated 19.04.2011, wherein it was held that the rental advances given by the assessee-trust to MRPL cannot be treated as investment and are in the nature of application of fund only and therefore, the provisions of section 13(1)(d) do not apply to the facts of the assessee's case. Instantly, the Tribunal followed its earlier order in assessee's own case for the assessment year 2004-05 in I.T.A. No. 335/Mds/2010 dated 04.06.2010 in 4 I.T.A. No.730 No.730/M/ 730/M/11 /M/11 coming to the above conclusion. Since there is no change of facts in the present assessment year, respectfully following the above orders of the Tribunal for the assessment years 2004-05 and 2005-06, we uphold the order of the CIT(A) in allowing the exemption under section 11 to the assessee.
9. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 16.03.2012.
Sd/- Sd/- (Dr. O.K. NARAYANAN) (CHALLA NAGENDRA PRASAD) VICE-PRESIDENT JUDICIAL MEMBER Chennai, Dated, the 16.03.2012 Vm/- To: The assessee//A.O./CIT(A)/CIT/D.R.