Income Tax Appellate Tribunal - Chennai
Dcit (Exemptions) Chennai Circle, ... vs M/S Sivananda Saraswathi ... on 6 February, 2019
आयकर अपील य अ धकरण, 'ए' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं ी एस. जयरामन, लेखा सद य केसम$
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI S. JAYARAMAN, ACCOUNTANT MEMBER
आयकर अपील सं./ITA Nos.1823 & 1824/Chny/2018
नधा&रण वष& /Assessment Years : 2011-12 & 2012-13
M/s Sivananda Saraswathi
The Deputy Commissioner of Sevashramam,
Income Tax (Exemptions), v. No.20, Kambar Street,
Chennai Circle, East Tambaram,
Chennai - 600 034. Chennai - 600 059.
PAN : AAATS 0160 K
(अपीलाथ*/Appellant) (+,यथ*/Respondent)
अपीलाथ* क- ओर से / Appellant by : Shri AR.V. Sreenivasan, JCIT
+,यथ* क- ओर से / Respondent by : Shri P. Rajasekharan, FCA
सन
ु वाई क- तार ख / Date of Hearing : 08.01.2019
घोषणा क- तार ख / Date of Pronouncement : 06.02.2019
आदे श /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
Both the appeals of the Revenue are directed against the common order passed by the Commissioner of Income Tax (Appeals) - 17, Chennai, dated 16.03.2018 and pertain to assessment years 2011-12 and 2012-13.
2 I.T.A. Nos.1823 & 1824/Chny/18
2. Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee is a registered charitable institution under Section 12A of the Income-tax Act, 1961 (in short 'the Act'). During the assessment years under consideration, according to the Ld. D.R., the Assessing Officer found that the accumulated income for the assessment year 2005-06 to the extent of ₹1,66,12,363/- was not spent even after expiry of five years, therefore, the Assessing Officer disallowed the claim of the assessee. Referring to Section 11(3) of the Act, the Ld. D.R. submitted that the accumulated income has to be spent within the specified period. Referring to Section 11(2)(a) of the Act, the Ld. D.R. submitted that the assessee is expected to spend the accumulated money within the period not exceeding five years. Since the five years period expired, according to the Ld. D.R., the CIT(Appeals) is not justified in allowing the claim of the assessee. Referring to the order of this Tribunal in the assessee's own case for assessment year 2010-11, the Ld. D.R. submitted that this Tribunal reversed the order of the CIT(Appeals) for the assessment year 2010-11 since the accumulated amount was not spent within a period of five years. The CIT(Appeals), however, placed his reliance on the order of the CIT(Appeals) for the assessment year 2010-11 after it was reversed by this Tribunal. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in 3 I.T.A. Nos.1823 & 1824/Chny/18 following the order of his predecessor which was reversed by this Tribunal.
3. On the contrary, Shri P. Rajasekharan, the Ld. representative for the assessee, submitted that the accumulated fund could not be spent within the period of five years as provided in Section 11(2)(a) of the Act since there was a Court order by the Madras High Court. Placing reliance on the order of the Madras High Court in W.P. No.666 of 2011 and M.P. No.1 of 2011, a copy of which is filed before this Tribunal, the Ld. representative submitted that the assessee accumulated the funds from the assessment year 2005-06 for construction of a school building. In fact, 5.71 acres of land was taken on lease for 30 years from Chennai Metropolitan Development Authority from 01.04.1989. Before expiry of lease period, according to the Ld. representative, Chennai Metropolitan Development Authority increased the lease rent arbitrarily. The Chennai Metropolitan Development Authority has also claimed arrears of ₹11 lakhs and also initiated proceeding for eviction. According to the Ld. representative, this proceeding was challenged before the High Court in Writ Petition and the High Court stayed the proceeding of Chennai Metropolitan Development Authority. When the said Writ Petition in W.P.No.666 of 2011 was pending for final disposal, the Chennai Metropolitan Development Authority initiated proceeding for vacating the premises. Therefore, according to the Ld. representative, the proceeding 4 I.T.A. Nos.1823 & 1824/Chny/18 of CMDA was challenged before the High Court in W.P. No.21668 of 2015. The Madras High Court restrained the Chennai Metropolitan Development Authority from proceeding until further orders. Therefore, according to the Ld. representative, in view of interim orders passed by the Madras High Court, the assessee could not put up the construction in the land which was taken on lease from Chennai Metropolitan Development Authority. Admittedly, according to the Ld. representative, the funds were accumulated only for construction of school building. Because of the proceeding initiated by the CMDA and the interim order passed by the Madras High Court, the assessee could not utilize the fund for construction of building.
4. Placing reliance in proviso to Section 11(2) of the Act, the Ld. representative for the assessee submitted that while computing the period of five years referred to in sub-clause (a) of Section 11(2) of the Act, the period during which the income could not be applied for the purpose for which it is so accumulated due to an order or injunction of any court shall be excluded. Now even though the property was taken on lease from Chennai Metropolitan Development Authority, according to the Ld. representative, due to exorbitant hike of the lease rent by the CMDA and subsequent proceeding to evict the assessee-trust from the said land, the assessee was forced to approach the High Court by way of two Writ Petitions. According to the Ld. representative, the Madras High 5 I.T.A. Nos.1823 & 1824/Chny/18 Court by way of interim order restrained the Chennai Metropolitan Development Authority from proceeding further in the matter. In view of these proceedings by the Chennai Metropolitan Development Authority and Writ Petitions before the High Court, the assessee could not apply the accumulated funds for construction of building for which it was accumulated. Therefore, according to the Ld. representative, the period of proceedings right from the proceeding initiated by the Chennai Metropolitan Development Authority and the Writ Petitions before the Madras High Court has to be excluded. According to the Ld. representative, the two Writ Petitions are still pending before the High Court for adjudication. According to the Ld. representative, the earlier Bench of this Tribunal, while considering the appeal of the Revenue for assessment year 2010-11, had not taken into consideration the provisions of Section 11(2) of the Act and interim orders passed by the Madras High Court. Even though the Tribunal reversed the order of the CIT(Appeals) for the assessment year 2010-11, according to the Ld. representative, the fact remains that because of interim order passed by the High Court, consequent to the proceeding initiated by Chennai Metropolitan Development Authority, the accumulated funds could not be applied. This fact was not considered by the earlier Bench of this Tribunal, therefore, the order of this Tribunal for assessment year 2010- 11 may not be applicable to the facts of the case. Hence, according to 6 I.T.A. Nos.1823 & 1824/Chny/18 the Ld. representative, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer.
5. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee could not utilize the accumulated funds for construction of school building for which it was admittedly accumulated. The claim of the Revenue is that the five years period as provided in Section 11(2)(a) of the Act has expired, therefore, the assessee cannot claim any exemption under Section 11 of the Act. For the assessment year 2010-11, a Division Bench of this Tribunal found that the accumulated funds was not utilised within five years, therefore, a similar order of the CIT(Appeals) was reversed and the exemption claimed by the assessee was denied. The assessee now claims that the proceeding initiated by the Chennai Metropolitan Development Authority and the consequential Writ Petitions pending before the High Court were not considered by the Division Bench of this Tribunal while reversing the order of the CIT(Appeals) for assessment year 2010-11. Moreover, the Division Bench of this Tribunal for assessment year 2010-11 had not considered the proviso to Section 11(2) of the Act.
6. We have carefully gone through the proviso to Section 11(2) of the Act. This proviso very clearly says that the period taken by an order 7 I.T.A. Nos.1823 & 1824/Chny/18 or injunction of any court shall be excluded while computing the period of five years for the purpose of utilization of accumulated funds. If we consider the lease rent enhanced by the CMDA and the consequential Writ Petitions filed in the year 2011 and 2015 and the order of injunction restraining the CMDA from proceeding further with regard to land in question clearly shows that the assessee could not utilize the funds in view of proceeding initiated by CMDA and subsequent orders passed by the Madras High Court, therefore, the proviso to Section 11(2) of the Act would come into operation. In other words, if we exclude the period taken with regard to the proceeding initiated by the CMDA and consequential Writ Petitions filed before the Madras High Court, then the period of five years has not been expired. Even now, admittedly, the writ proceedings were pending before the Madras High Court. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(Appeals). This Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. Hence, the same is confirmed for the reasons stated above.
7. In the result, both the appeals filed by the Revenue stand dismissed.
8 I.T.A. Nos.1823 & 1824/Chny/18
Order pronounced in the court on 6th February, 2019 at Chennai.
sd/- sd/-
(एस. जयरामन) (एन.आर.एस. गणेशन)
(S. Jayaraman) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
4दनांक/Dated, the 6th February, 2019.
Kri.
आदे श क- + त5ल6प अ7े6षत/Copy to:
1. अपीलाथ*/Appellant 2. +,यथ*/Respondent
3. आयकर आयु8त (अपील)/CIT(A)-17, Chennai-34
4. CIT (Exemptions), Chennai 5. 6वभागीय + त न ध/DR 6. गाड& फाईल/GF.