Income Tax Appellate Tribunal - Rajkot
Shree Maliya Kadva Patel Seva Samaj,, ... vs The Income Tax Officer, Ward-1(3),, ... on 20 March, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAJKOT BENCH, RAJKOT
BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER
(through web-based video conferencing platform)
MA No. 11/Rjt/2022
(Arising out of ITA No. 187/Rjt/2016)
Assessment Year : 2011-12
Shree Maliya Kadva Patel Seva Vs.
Samaj Income-tax Officer,
At - Maliya Hatina, Ward 1(3),
Dist. Junagadh 362245 Veraval
PAN : AAETS 6716 P
(Applicant) (Respondent)
Assessee by : Shri S.N. Divatia, AR
Revenue by : Shri Ashish Kumar Pandey, Sr DR
सुनवाईक तारीख/Date of Hearing : 08.03.2024
घोषणा क तारीख / Date of Pronouncement: 20.03.2024
आदेश/O R D E R
PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER:
The present Miscellaneous Application is directed at the instance of the assessee for recall of the order dated 29.06.2022 passed by the Tribunal in ITA No. 187/Rjt/2016 for Assessment Year 2011-12.
2. The contents of the Miscellaneous Application filed by the assessee are reproduced hereunder :-
"1. The applicant above named submits this Misc. application u/s. 254(2) of the IT Act 1961 (for short "the Act") for rectification of the order of the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot passed on 29-06-2022 whereby the appeal of the applicant has been dismissed.
2. The applicant submits that being aggrieved and dissatisfied with the order passed u/s 250(6) of the Act on 01-03-2016 by CIT (A)-3, Rajkot it had preferred an appeal before the Appellate Tribunal wherein the applicant had challenged the disallowance of exemption u/s 11 and in the alternative, exclusion of corpus donations received by it.2 MA No. 11/Rjt/2022
Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12
3. The aforesaid appeal has been dismissed by holding that Kadva Patel was a caste and Sec. 13 (1)(b) was applicable in view of the trust being for mixed purposes.
4. The applicant submits with utmost respect that there is a mistake apparent on under :- record in respect of both the aforesaid grounds of appeal as under:
4.1 So far as the alternative ground relating to the corpus donation concerned, the applicant submits that the perusal of the order of the Tribunal indicate that the aforesaid contention has not been considered or dealt with so that it requires to be adjudicated.
4.2 The applicant further states that while dealing with the ground relating to the denial of exemption u/s.11 r.w.s 13(1)(b) of the Act is concerned, the Hon'ble Tribunal has held that the applicant trust was created for the benefit of a particular caste - Kadva Patel so as to be hit by the provisions of sec.
13(1)(b) resulting into denial of claim of exemption u/s.11. The applicant submits with utmost respect that when the benefit of exemption u/s.11(1) was allowed and sec. 13(1)(b) was held as inapplicable in case of Leuva Patel in view of the decision in case of Leuva Patel Nutan Kelvani Mandal vs ITO(12 ITD 276) (AHD), the same benefit was admissible in case of the present applicant trust in view of the Kadva Patel being other side of the coin.
4.3 The applicant submits that the provisions of sec. 13(1)(b) would be applicable if the trust is created or established for the benefit of any particular religious community or caste. Now, even going by the reasoning advanced by Hon'ble Tribunal, Kadva Patel cannot be said to be religious caste, so as to apply this sub-section. There is no finding in the entire order that Kadva Patel is a religious caste, more particularly in para- 20 and 21.
4.4 So far as the reliance placed by the Hon'ble Tribunal on the decision in case of CIT vs Dawoodi Bohara Jamat (364 ITR 031 SC) is concerned, the following ratio of the Hon'ble apex court requires to be taken into consideration before holding that sec.13(1)(b) was applicable to the applicant trust.
"46. Such trust with composite objects would not be expelled out of the purview of sec. 13(1)(b) per se. Section requires it to be establish that such charitable purpose is not for the benefit of a particular religious community or caste. That is to say it needs to be examined whether such religious/charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the community and for society at large."3 MA No. 11/Rjt/2022
Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12 4.5 Now, even going by the conclusion reached by Hon'ble tribunal the perusal of the objects and purposes of the applicant trust clearly demonstrate that the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The objects as stated by Hon'ble Tribunal channel the benefits to any community, Kadva Patidar and thus would be outside the purview of sec. 13(1)(b) of the Act.
4.6 It is respectfully submitted tht during the course of hearing of the appeal it was contended that the sale of fixed asset giving rise to the capital gain was an encumbered property so that the sale could not be affected unless the said encumbrance was cleared. Therefore, the amount of sale consideration in respect of clearance of said encumbrance constituted diversion of income at source so as to qualify for deduction out of gross sale consideration and the same cannot amount to an application of income. There being a pre-existing obligation on account of encumbrance, there was diversion of income. It is submitted with utmost respect that none of the aforesaid contentions have been dealt with while passing the order by Hon'ble Tribunal which constitutes a mistake apparent on record.
5. The applicant submits that this application is being made now which is within 6 months of the coming to know of this order by the applicant so that it may not be treated as delayed or in the alternative this application is being moved under Rule-24 of ITAT rules.
6. Needless to say for this act of kindness, the applicant as in duty bound shall forever pray and remain grateful."
Vide the impugned application, the assessee seeks rectification in the order of the ITAT passed in the case of the assessee upholding the order of the ld. CIT(A) denying claim of exemption of its income u/s 11 of the Act on account of invocation of Section 13(1)(b) of the Act.
3. The ITAT in its order agreed with the findings of the ld. CIT(A) that the provisions of Section 13(1)(b) of the Act were applicable in the present case since it found two objects of the trust catering for the benefit of a particular caste i.e. Kadva Patel Caste, and accordingly held that the assessee was not entitled to exemption of its income applied for the said objects u/s 11 of the Act.
4 MA No. 11/Rjt/2022Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12
4. Vide this Miscellaneous Application, the assessee has pointed out certain mistakes apparent on record with respect to the grounds of appeal raised.
5. In paragraph No. 4.1 of the application, the assessee states that the alternative ground relating to corpus donation had not been considered or dealt with and, therefore, needs to be adjudicated. Ld. Counsel for the assessee contended that the alternative ground raised by the assessee of its income being computed as per the normal provisions of the Act on account of rejection of claim of exemption under Section 11 of the Act and the corpus donations being capital in nature to be excluded for the purpose of computing income assessable to tax as per the normal provisions being not dealt with by the ITAT, the order needs to be recalled for the said purpose. we agree with the same. Paragraph No.4 of the order notes the alternative arguments made by the ld. Counsel for the assessee before us as under:-
"4. Alternatively, arguments were also made against assessment of income made after denying benefit of exemption, which were to the following effect:
a) That only income computed as per normal provisions of the Act could be assessed to tax on denial of benefit of exemption and not the gross receipts.
b) That Corpus donations received by the assessee towards Building Construction Fund, being capital in nature, needed to be excluded for the purposes of computing income assessable to tax as per normal provisions of the Act.
Various case laws were relied upon."
6. Surely, these arguments have not been considered and dealt with by the ITAT. Therefore, for the limited purpose of adjudicating these alternative arguments/grounds noted in paragraph No.4 of the ITAT's order as reproduced above, the appeal is recalled 5 MA No. 11/Rjt/2022 Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12
7. In paragraph Nos.4.2 and 4.3 of its application, the assessee has pointed out the mistake in the order of the ITAT to the effect that
(i) the ITAT's finding that the assessee-trust was created for the benefit of a particular caste, i.e. Kadva Patel, was incorrect since it was pointed out to the ITAT that in the case of Leuva Patel, the ITAT in its decision in Leuva Patel Nutan Kelvani Mandal Vs. ITO, 12 ITD 276 (Ahd), had held the provisions of Section 13(1)(b) inapplicable and the assessee in the said case, therefore, entitled to exemption of all its income in terms of Section 11 of the Act.
(ii) there is no finding in the order of the ITAT that Kadva Patel is a religious caste so as to invoke Section 13(1)(b) of the Act.
8. Both the above contentions of the ld. Counsel for the assessee, we find, are devoid of merit. With respect to the contention of the ld. Counsel for the assessee that there is no finding by the ITAT in its entire order that Kadva Patel is a religious caste, this mistake pointed out by the assessee appears to be contrary to the fact stated by the assessee itself in paragraph No.4.2 of its application that the ITAT had held the applicant-trust has created for the benefit of a particular caste Kadva Patel. Even otherwise, we have noted that the ITAT exhaustively dealt with this aspect from paragraph Nos. 12 to 20 of the order dealing with the aspect of whether the Kadva Patel constituted a religious community or caste and found categorically at paragraph no.20 of the order that it constituted a caste for the purpose of Section 13(1)(b) of the Act. Further, the contention of the ld. Counsel for the assessee that with regards to the decision of the ITAT in Leuva Patel Nutan Kelvani Mandal (supra), we find, is also devoid of merit since the ITAT has considered the said decision in its order and distinguished at paragraph No. 6 MA No. 11/Rjt/2022 Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12 24 of the order. Therefore, both the mistakes pointed out by the assessee at paragraph Nos. 4.2 and 4.3 of the order, we find, are of no consequence.
9. Coming to paragraph No.4.4 of its application, the assessee has pointed out that the ITAT has failed to consider paragraph No.46 of the order of the Hon'ble Apex Court in the case of CIT Vs. Dawoodi Bohara Jamat, 364 ITR 31 (SC), regarding the consideration to be taken before holding that Section 13(1)(b) was applicable to the assessee-trust. The relevant paragraph No.46 of the order is as under:-
"46. Such trusts with composite objects would not be expelled out of the purview of Section 13(1)(b) per se. The Section requires it to be established that such charitable purpose is not for the benefit of a particular religious community or caste. That is to say, it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large. (Sole Trustee, Loka Shikshana Trust v. CIT, [1975] 101 ITR 234 (SC)). The section of community sought to be benefited must be either sufficiently defined or identifiable by a common quality of a public or impersonal nature. (Andhra Chamber of Commerce (supra)."
10. Thereafter, in paragraph No. 4.5 of its application, the assessee has stated that since as per the findings of the ITAT itself not all the objects of the trust were for the benefit of a particular religious community or caste but only two of the objects fulfilled this criteria, therefore, going by the order of the Hon'ble Apex Court at paragraph No.46 in the case of Dawoodi Bohara Jamat (surpa), the provisions of Section 13(1)(b) of the Act were not applicable in the present case.
11. We have perused the relevant paragraph No. 46 of the Hon'ble Apex Court decision in the case of Dawoodi Bohara Jamat (supra) and it appears that the contention of the assessee before us is that the Hon'ble Apex Court has, in the said decision, held that only when all the objects of a trust are 7 MA No. 11/Rjt/2022 Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12 found to be for the benefit of particular religious community or caste, the provisions of Section 13(1)(b) will be invoked. We are unable to agree with this interpretation of the assessee regarding the decision of the Hon'ble Apex Court. All that the said decision holds is that what is needed to be examined while invoking Section 13(1)(b) of the Act is whether its activities benefit a particular religious community or class or serves across the community and for society at large. In the impugned case, we find that the ITAT has held that all incomes applied by the assessee-trust for the benefit of Kadva Patel community in terms of first two objects of the trust are not entitled to exemption in terms of Section 13(1)(b) of the Act. This finding of the ITAT is in consonance and in accordance with the decision of the Hon'ble Apex Court in the case of Dawoodi Bohara Jamat (supra), more particularly paragraph No. 46, as pointed out by the assessee before us. Therefore, the mistake pointed out by the assessee at paragraph Nos. 4.4 & 4.5 of its application is also found to be devoid of any merit.
12. At paragraph No. 4.6 of its application, the assessee has contended that one of the contentions raised before the ITAT in appeal was not considered and dealt with by it. Paragraph No. 4.6 of the application is reproduced as under:-
"4.6 It is respectfully submitted that during the course of hearing of the appeal it was contended that the sale of fixed asset giving rise to the capital gain was an encumbered property so that the sale could not be affected unless the said encumbrance was cleared. Therefore, the amount of sale consideration in respect of clearance of said encumbrance constituted diversion of income at source so as to qualify for deduction out of gross sale consideration and the same cannot amount to an application of income. There being a pre-existing obligation on account of encumbrance, there was diversion of income. It is submitted with utmost respect that none of the aforesaid contentions have been dealt with while passing the order by Hon'ble Tribunal which constitutes a mistake apparent on record."8 MA No. 11/Rjt/2022
Shree Maliya Kadva Patel Seva Samaj Vs. ITO AY : 2011-12
13. We have gone through the order of the ITAT and find no such argument raised by the assessee before it noted in the order. This plea also does not emanate from the grounds raised by the assessee in its appeal. Therefore rectification with respect to non-adjudication of the above plea of the assessee by the ITAT is rejected.
14. In view of the above, the order of the ITAT is recalled for dealing with the contentions which were not originally dealt with by the ITAT in its order passed on 29.06.2022, i.e.
a) That only income computed as per normal provisions of the Act could be assessed to tax on denial of benefit of exemption and not the gross receipts.
b) That Corpus donations received by the assessee towards Building Construction Fund, being capital in nature, needed to be excluded for the purposes of computing income assessable to tax as per normal provisions of the Act.
15. Therefore, for the limited purpose of adjudicating these aforesaid two contentions of the assessee, the appeal is recalled and directed to fix for hearing on 2nd April, 2024.
16. The Miscellaneous Application of the assessee is disposed of in above terms.
Order pronounced in the open Court on 20/03/2024 at Ahmedabad.
Sd/- Sd/-
(T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 20/03/2024
**bt
9
MA No. 11/Rjt/2022
Shree Maliya Kadva Patel Seva Samaj Vs. ITO
AY : 2011-12
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील)/ The CIT(A)-
5. िवभागीय ितिनिधअिधकरण अपीलीय आयकर ,/DR,ITAT, Rajkot,
6. गाड फाईल /Guard file.
आदेशानुसार/ BY ORDER, TRUE COPY सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण ITAT, Rajkot
1. Date of dictation ...18.03.2024........
1. Date on which the typed draft is placed before the Dictating Member :..... 18.03.2024..........
2. Other Member......18.03.2024..................
3. Date on which the approved draft comes to the Sr.P.S./P.S...19.03.2024...
4. Date on which the fair order is placed before the Dictating Member for pronouncement...20.03.2024...
5. Date on which the fair order comes back to the Sr.P.S./P.S......20.03.2024.............
6. Date on which the file goes to the Bench Clerk...20.03.2024.............
7. Date on which the file goes to the Head Clerk.......
8. The date on which the file goes to the Assistant Registrar for signature on the order............
9. Date of Despatch of the Order..................