Commissioner Of Income Taxexemption, Kolkata v. Future Education & Researchtrust “Nimphool”

O-86 ITAT/371/2017IA No.GA/2/2017 (Old No.GA/3666/2017) IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE COMMISSIONER OF INCOME TAXEXEMPTION, KOLKATA -Versus- FUTURE EDUCATION & RESEARCHTRUST “NIMPHOOL” Appearance:Mr. Soumen Bhattacharya, Adv....for the appellant. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE SUPRATIM BHATTACHARYA Date : 7[th] September, 2022. The Court : This appeal filed by the revenue underSection 260A of the Income Tax Act, is directed against theorder dated 8[th] February, 2017 passed by the Income TaxAppellate Tribunal, “A” Bench, Kolkata (the Tribunal) inITA No.1031/Kol/2013 and CO No.69/Kol/2013 for theassessment year 2009-10. The revenue has raised the following substantialquestion of law for consideration: (i)Whether on the facts and in the circumstancesof the case the learned Tribunal was justifiedin law to hold that the quantum of income notqualifying for exemption under Section 11 ofthe said Act should be restricted partly to thetune of Rs.11.93 lakhs and not wholly for thepurpose of taxation? We have heard Mr. Soumen Bhattacharya, learnedstanding counsel for the appellant/revenue. None appearsfor the respondent/assessee. On going through the order passed by theCommissioner of Income Tax (Appeals)[CIT(A)] which orderwas affirmed by the learned tribunal, we find that theentire matter is factual. In fact, the CIT(A) and thelearned tribunal had granted partial relief to therespondent/assessee by examining the factual position. Theendeavour of the learned standing counsel for theappellant/revenue is to convince this Court that thelearned tribunal erred in restricting the rejection of theclaim for exemption only to the tune of Rs.11.93 lakhs andnot for the entire sum. In support of his contention thelearned standing counsel for the appellant/revenue has referred to the decision of the Hon’ble Supreme Court inthe case of Director of Income Tax Vs. Bharat DiamondBourse, reported in (2003) 179 CTR SC 225 and has drawn ourattention to paragraph 36 of the said judgment. On goingthrough the said decision, we find that it was renderedconsidering the factual position in the said case and thesaid decision will not render any assistance to the case ofthe revenue before us. On the factual aspect the learnedtribunal has rendered the following finding : “On examination of the order of Authorities Belowand other relevant records, we find that flat was purchasedat Alipore in the financial year 2009-10 on 23.09.2009which was registered in the name of trustee and his wife.The total cost of flat purchased was for Rs.2,25,60,000/-as evident from the indenture of conveyance which is placedon page 7 of the paper book. Further, the same was told inthe financial year 2010-11 dated 08.02.2011 for Rs.2.50crores as evident from the indenture of conveyance which isplaced on record. Thus the benefit of Rs.24.40 lacs wasderived by the trustee and his wife on the sale-purchase ofAlipore property. Admittedly, assessee made investment ofRs.1.10 crores in the purchase of the said property locatedat Alipore. Therefore, in our considered view, the assesseeis entitled for the share of profit to the extent of itsinvestment i.e. Rs.24.40 lacs x 1.10 crores divide byRs.2.25 crores = 11.93 lacs. So this amount of profit hasto be taxed under the IT Act as the provision of Sec.13(1)(c) of the Act as the provisions has been contravenedto this extent on the basis of available facts and circumstances. We also find that there is no dispute withregard to amount of Rs.1.10 crores which was financed bythe trust has come back to the trust. Therefore, the amountof profit to the extent of Rs.11.93 lacs has to be subjectto tax in the relevant year in which the profit wasderived. As such, the assessee will not be eligible forclaiming exemption u/s 11 of the Act for the amount ofprofit of Rs.11.93 lacs but the entire exemption claimed bythe assessee cannot be denied.” circumstances. We also find that there is no dispute withregard to amount of Rs.1.10 crores which was financed bythe trust has come back to the trust. Therefore, the amountof profit to the extent of Rs.11.93 lacs has to be subjectto tax in the relevant year in which the profit wasderived. As such, the assessee will not be eligible forclaiming exemption u/s 11 of the Act for the amount ofprofit of Rs.11.93 lacs but the entire exemption claimed bythe assessee cannot be denied.” The learned tribunal had also taken note of thedecision in the case of CIT Vs. Fr. Mullers CharitableInstitutions, reported in 363 ITR 230 (Kar.) and thedecision in the case of DIT(E) Vs. Sheth Mafatlal GagalbhaiFoundation Trust, reported in (2001) 249 ITR 533 (Bom) andheld that in the event of violation of the provisions ofSection 13(1)(c) of the Act, the amount of benefit appliedto the specified persons will not be eligible for exemptionunder Section 11 and, therefore, the benefit under Section11 of the Act to the extent of Rs 11.93 lakhs was held tobe not available to the assessee in the assessment year2011-12. Thus, the finding having been rendered taking noteof the peculiar facts and situation, we find that there isno substantial question of law arising for consideration inthis appeal. Accordingly, the appeal (ITAT/371/2017) failsand is dismissed. Consequently, the connected application for stay(IA No.GA/2/2017) stands closed. (T.S. SIVAGNANAM, J.) (SUPRATIM BHATTACHARYA, J.) S.Das/