Ita/48/2020 Of The Principal Commissioner Of Income Tax v. Gracy Babu

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.48 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.208 OF 2019 OFI.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX,(CENTRAL), KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: 1GRACY BABU,PADINJAREVEETTIL, PUTHENVEEDU, ADOOR P.O, PATHANAMTHITTA-691 523 2 ADDL.R2FRUDDY BABU THOMAS,IN I.A.NO.1/2022 IN I.T.A.NO.48/2020] PADINJARE VEETTIL, KANNAMKODE, ADOOR P.O., ADOOR, PIN-691523 [ADDL.R2 IS IMPLEADED VIDE ORDER DATED 04/07/2022 3 ADDL.R3 JUDY BABU THOMAS, PADINJARE VEETTIL, KANNAMKODE, ADOOR P.O., ADOOR, PIN-691523. ADDL.R3 IS IMPLEADED VIDE ORDER DATED 04/07/2022 IN I.A.NO.1/2022 IN I.T.A.NO.48/2020 BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITHBY ADV.SMT.TELMA RAJUBY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SRI.P.K.BIJU BY ADV.SMT.EDATHARA VINEETA KRISHNAN THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.46 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.46 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.211 OF 2019 OFI.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL) KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SHRI. JOSE THOMAS PADINJAREVEETTIL , PUTHENVEEDU, ADOOR P.O., PATHANAMTHITTA-691 523. BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITH BY ADV.SMT.TELMA RAJU BY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.47 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.207 OF 2019OF I.T.A.TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SMT. REENA JOSEPADINJAREVEETTIL, PUTHENVEEDU, ADOOR P.O, PATHANAMTHITTA-691523 BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITH BY ADV.SMT.TELMA RAJU BY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.49 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.209 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL),KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SMT.GRACY BABUPADIJAREVEETTIL, PUTHENVEEDU, ADOOR.P.O, PATHANAMTHITTA-691523. BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITHBY ADV.SMT.TELMA RAJUBY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.49 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.209 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL),KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SMT.GRACY BABUPADIJAREVEETTIL, PUTHENVEEDU, ADOOR.P.O, PATHANAMTHITTA-691523. BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITHBY ADV.SMT.TELMA RAJUBY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.51 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.212 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI – 682 011. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SHRI.JOSE THOMASPADINJAREVEETTIL, PUTHENVEEDU, ADOOR P.O. PATHANAMTHITTA 691 523. BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITH BY ADV.SMT.TELMA RAJU BY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.54 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.210 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX,(CENTRAL),KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAXBY ADV.SMT.SUSIE B VARGHESE(K/1300/2019) RESPONDENT/RESPONDENT/ASSESSEE: 1SMT.GRACY BABU,PADINJAREVEETTIL,PUTHENVEEDU, ADOOR.P.O, PATHANAMTHITTA-691523.2ADDL.R2:FRUDDY BABU THOMAS,PADINJARE VEETTIL, KANNAMKODE, ADOOR P.O. ADOOR – PIN 691 523.3ADDL.R3:JUDY BABU THOMAS,PADINJARE VEETTIL, KANNAMKODE, ADOOR P.O. ADOOR – PIN 691 523. ADDL. RESPONDENTS 2 & 3 ARE IMPLEADED AS PER ORDER DATED 03.04.2024 IN I.A.NO.1/2022 IN ITA.NO.54/2020. I.T.A.Noa.48, 46, 47, 49, 51, 54, 55, 56 &68/20 & 6/21 :: 7 :: BY ADV.SRI.ANIL D. NAIR (SR.) BY ADV.SRI.R.SREEJITH BY ADV.SMT.TELMA RAJU BY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAULBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.55 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.210 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX,(CENTRAL),KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.55 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.210 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX,(CENTRAL),KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: 1GRACY BABU,PADINJAREVEETTIL,PUTHENVEEDU, ADOOR.P.O, PATHANAMTHITTA-691523.PADINJAREVEETTIL,PUTHENVEEDU, ADOOR.P.O, PATHANAMTHITTA-691523. 2ADDL.R2:FRUDDY BABU THOMAS,ADOOR – PIN 691 523. PADINJARE VEETTIL, KANNAMKODE, ADOOR P.O. 3ADDL.R3: JUDY BABU THOMAS, PADINJARE VEETTIL, KANNAMKODE, ADOOR P.O. ADOOR – PIN 691 523. ADDL. RESPONDENTS 2 & 3 ARE IMPLEADED AS PER ORDER DATED 03.04.2024 IN I.A.NO.1/2022 IN ITA.NO.55/2020. I.T.A.Noa.48, 46, 47, 49, 51, 54, 55, 56 &68/20 & 6/21 :: 9 :: BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITHBY ADV.SMT.TELMA RAJUBY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.56 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.213 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SHRI. JOSE THOMAS,PADINJAREVEETTIL, PUTHENVEEDU, ADOOR P.O., PATHANAMTHITTA-691523. BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITHBY ADV.SMT.TELMA RAJUBY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.68 OF 2020 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.238 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: SHRI. JOSE THOMASPADINJAREVEETTIL, PUTHENVEEDU, ADOOR P.O., PATHANAMTHITTA -691 523. BY ADV.SRI.ANIL D. NAIR (SR.)BY ADV.SRI.R.SREEJITH BY ADV.SMT.TELMA RAJU BY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.6 OF 2021 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.310 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX BY ADV.SMT.TELMA RAJU BY ADV.SRI.SANGEETH JOSEPH JACOBBY ADV.SMT.CRISTINA ANNA PAUL THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M. WEDNESDAY, THE 3 DAY OF APRIL 2024/14 CHAITHRA, 1946 I.T.A.NO.6 OF 2021 AGAINST THE ORDER DATED 30.09.2019 IN I.T.A.NO.310 OF 2019OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH APPELLANT/APPELLANT/REVENUE: THE PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL), KOCHI. BY ADV.SRI.P.K.RAVINDRANATHA MENON (SR.)BY SRI.JOSE JOSEPH, SC FOR INCOME TAX RESPONDENT/RESPONDENT/ASSESSEE: M/S.CARMEL EDUCATION TRUSTPATHANAMTHITTA 689 711. KOONAMKARA P.O., PERUNAD, RANNI, BY ADV.SRI.N.KRISHNA PRASAD BY ADV.SRI.R.SIVARAMAN BY ADV.SRI.P.SHANES METHAR (K/968/2004)BY ADV.SRI.PUSHPARAJ.K.P (K/1098/2012) THIS INCOME TAX APPEAL HAVING COME UP FOR HEARINGON 25.03.2024 ALONG WITH I.T.A.NO.48 OF 2020 ANDCONNECTED CASES, THE COURT ON 03.04.2024 DELIVERED THEFOLLOWING: I.T.A.Noa.48, 46, 47, 49, 51, 54, 55, 56 &68/20 & 6/21 :: 13 :: 'C.R.' J U D G M E N T Dr. A.K. Jayasankaran Nambiar, J. As all these appeals filed by the Revenue arise out of a commonorder dated 30.09.2019 of the Income Tax Appellate Tribunal[hereinafter referred to as the 'Tribunal'], Cochin Bench, they aretaken up for consideration together and disposed by this commonjudgment. For the sake of convenience, the details of the variousappeals with reference to the assessee and the assessment yearconcerned, as also co-relating it to the appeals that were filed beforethe Tribunal, are provided in tabular form below:- I.T.A.Noa.48, 46, 47, 49, 51, 54, 55, 56 &68/20 & 6/21 :: 14 :: 2. The brief facts necessary for disposal of these appeals areas follows: The Carmel Educational Trust, Adoor was constituted by aregistered trust deed dated 14.08.2001. It is engaged in runningeducational institutions imparting education in the subjects ofEngineering and Management. The 12 trustees of the Trust belong tothree closely related family groups, and their details are as follows: (1)Sri.Babu P. Thomas, his wife Smt.Gracy Babu and their two majorsons.sons. (2)Sri.Jose Thomas, his wife Smt.Reena Jose and their major son and daughter.and daughter. (3)Sri.P.J.Paulose, his wife Smt.Lizzy Paulose and their two major daughters.daughters. Due to difficulties in managing the College, and also due to thepersonal differences, the trustees decided to discontinue the businessand entered into an agreement with the Believers Church on10.03.2009, whereby, all the existing trustees resigned from their trusteeship and simultaneously, new trustees nominated by theBelievers Church were inducted. The agreement between the partiesalso provided for payment of Rs.37.5 crores to the erstwhile trusteesfor settling their liabilities as well as completing certain constructionactivities that had been commenced by them prior to the agreement.The agreement also provided for sale of 55.15 acres of land belongingto some of the erstwhile trustees for a consideration of Rs.12.50crores. Due to difficulties in managing the College, and also due to thepersonal differences, the trustees decided to discontinue the businessand entered into an agreement with the Believers Church on10.03.2009, whereby, all the existing trustees resigned from their trusteeship and simultaneously, new trustees nominated by theBelievers Church were inducted. The agreement between the partiesalso provided for payment of Rs.37.5 crores to the erstwhile trusteesfor settling their liabilities as well as completing certain constructionactivities that had been commenced by them prior to the agreement.The agreement also provided for sale of 55.15 acres of land belongingto some of the erstwhile trustees for a consideration of Rs.12.50crores. 3. A search under Section 132 of the Income Tax Act[hereinafter referred to as the “I.T. Act”] was conducted at theresidence of the Sri.Jose Thomas, Smt.Gracy Babu and Sri.P.J.Pauloseon 04.03.2009 and certain documents were seized. An unsigned draftagreement dated 23.02.2009 was found which indicated that theamount envisaged for settlement of liability was Rs.43.50 crores andthat the value of the rubber estate extending to 55.15 acres of landwas Rs.6.50 crores. Certain other documents relating to feecollection from students in excess of what was fixed by theGovernment, and investment details of trustees etc. were also seized,but those particulars are not of any concern to us in these appeals. 4. Assessments were completed under Section 143(3) readwith Section 153A for the assessment years 2003-04 to 2008-09 and under Section 143(3) for the assessment year 2009-10 in relation tothe persons who were searched, namely, Gracy Babu, Jose Thomasand P.J. Paulose, who were the heads of the respective trusteefamilies. No assessments in consequence to search were made inrelation to other family members who were trustees by invokingprovisions of Section 153C of the I.T. Act. Placing reliance on theseized documents, the Assessing Authority found that the erstwhiletrustees had in fact received approximately Rs.37.5 crores towardsconsideration for relinquishing their trusteeship but they hadcamouflaged these receipts under different heads by showing thereceipt of Rs.14.55 crores towards reimbursement of amounts paid byassessees for clearing outstanding debts and liabilities of the Trust ason the date of the agreement, and also for completing certainongoing constructions that had been undertaken by them. An amountof Rs.12.5 crores was shown as received by way of consideration forsale of approximately 56 acres of rubber plantation to the BelieversChurch. Re: I.T.A.Nos.46/2020, 47/2020, 48/2020, 49/2020, 51/2020: 5. In I.T.A.Nos.46/2020, 48/2020, 49/2020 and 51/2020, thefollowing substantial questions of law have been raised: (i)Whether the trustees of a public charitable trust have a right to trusteeship and if they need to be compensated for relinquishingsuch right ? (ii) Whether the trusteees are entitled to such benefits from the trustother than remuneration for services rendered by them ?other than remuneration for services rendered by them ? (iii) Whether the ITAT was right in law in deleting the addition of theamount received by the trustees as 'income from other sources', inthe light of the view that no trustee is entitled for a right oftrusteeship ?amount received by the trustees as 'income from other sources', inthe light of the view that no trustee is entitled for a right oftrusteeship ? 5. In I.T.A.Nos.46/2020, 48/2020, 49/2020 and 51/2020, thefollowing substantial questions of law have been raised: (i)Whether the trustees of a public charitable trust have a right to trusteeship and if they need to be compensated for relinquishingsuch right ? (ii) Whether the trusteees are entitled to such benefits from the trustother than remuneration for services rendered by them ?other than remuneration for services rendered by them ? (iii) Whether the ITAT was right in law in deleting the addition of theamount received by the trustees as 'income from other sources', inthe light of the view that no trustee is entitled for a right oftrusteeship ?amount received by the trustees as 'income from other sources', inthe light of the view that no trustee is entitled for a right oftrusteeship ? (iv) Whether the trustees can modify the trust deed and signagreements, subsequent to search, as an afterthought, to suittheir needs and use it to their advantage in the guise of taxplanning and is not such a conduct one of absolute lack of trust ?agreements, subsequent to search, as an afterthought, to suittheir needs and use it to their advantage in the guise of taxplanning and is not such a conduct one of absolute lack of trust ? (v) Whether agreements signed subsequent to search have anysanctity, as it had been done as an afterthought to suit the needsof the delinquent assessees and to evade tax ?sanctity, as it had been done as an afterthought to suit the needsof the delinquent assessees and to evade tax ? (vi) Whether mere deduction of tax at source on an amount paid issufficient to establish that alleged service is rendered, in respectof the amount paid ?sufficient to establish that alleged service is rendered, in respectof the amount paid ? (vii) Whether payment made to erstwhile trustees without servicesactually rendered by them, will fall outside the ambit of Sec.13 ?actually rendered by them, will fall outside the ambit of Sec.13 ? (viii)Whether mere book addition in the asset side of the balance sheetis sufficient to prove that asset has actually come into being, evenif the same is not substantiated by bills or vouchers?is sufficient to prove that asset has actually come into being, evenif the same is not substantiated by bills or vouchers? 6. In I.T.A.No.47/2020, the following substantial questions of law have been raised: (i)Whether the trustees of a public charitable trust have a right to trusteeship and if they need to be compensated for relinquishing such right ?trusteeship and if they need to be compensated for relinquishing such right ? (ii) Whether the trusteees are entitled to such benefits from the trustother than remuneration for services rendered by them ?other than remuneration for services rendered by them ? (iii) Whether the ITAT was right in law in deleting the addition of theamount received by the trustees as 'income from other sources', inamount received by the trustees as 'income from other sources', in the light of the view that no trustee is entitled for a right oftrusteeship ? (iv) Whether the trustees can modify the trust deed and signagreements, subsequent to search, as an afterthought, to suittheir needs and use it to their advantage in the guise of taxplanning and is not such a conduct one of absolute lack of trust ?agreements, subsequent to search, as an afterthought, to suittheir needs and use it to their advantage in the guise of taxplanning and is not such a conduct one of absolute lack of trust ? 7. The additions to the income of the trustees by way of excess the light of the view that no trustee is entitled for a right oftrusteeship ? (iv) Whether the trustees can modify the trust deed and signagreements, subsequent to search, as an afterthought, to suittheir needs and use it to their advantage in the guise of taxplanning and is not such a conduct one of absolute lack of trust ?agreements, subsequent to search, as an afterthought, to suittheir needs and use it to their advantage in the guise of taxplanning and is not such a conduct one of absolute lack of trust ? 7. The additions to the income of the trustees by way of excess consideration received for the sale of the rubber plantation was madein relation to Jose Thomas, Gracy Babu and Reena Jose for theassessment years 2009-10 [for all three] and 2010-11 [for JoseThomas and Gracy Babu]. While the Assessing Authority and theFirst Appellate Authority had found that the excess sale considerationreceived by the said assessees was in fact amounts towardsconsideration paid by the Believers Church for their relinquishmentof their trusteeship in the Carmel Educational Trust and was liable tobe assessed in their hands, the Tribunal, in the order impugned inthese appeals, found otherwise. The reasoning of the Tribunal isfound in paragraphs 11.4 to 11.8, which read as follows: “11.4We have heard the rival submissions and perused the record. In thepresent case, there was unsigned Agreement dated 23/02/2009 wherein the saleconsideration was shown at Rs.6.5 crores for sale of rubber plantation. Later asper registered agreement, royed deed, it was changed to Rs.12.5 crores. In otherwords, in draft the sales consideration was at Rs. 15 lakhs per acre. However, inthe deed the sales consideration was shown at Rs 25,40,400/- per acre.Thusthere was different of amount of Rs.15 lakhs per acre. This difference cannot beconsidered as a receipt for sale of agricultural property since a similar propertywas sold by trustees at around Rs.15 lakhs per acre. According to theDepartment, the assessee adopted colourable devices to receive the amount fromBelievers Church by way of inflating the value of rubber estate in the sale deedexecuted by the assesses since the sale of rubber plantation, being agriculturalland is exempted from tax. The Ld..AR made an alternative argument that even ifit is presumed that the consideration was received from Believers Churchwhich was for relinquishment of trusteeship in the Trust wherein these personswere trustees, it is exempted and not taxable in the hands of the trustees. In ouropinion, there is merit in the argument of the Ld. AR that even if it is a capitalreceipt, it is to be treated as consideration for relinquishment of trusteeship inthe Trust and the cost of acquisition is nil and hence, the gainis not taxable on itstransfer. The assesses are life time trustees in Carmel Educational Trust which isa public charitable trust. This Trust was taken over by Believers Church,Thiruvalla vide agreement dated 23/02/2009 and by that agreement all theassets and liabilities of Carmel Educational Trust were transferred to BelieversChurch and the assesses ceased to be the trustees of Carmel Educational Trust.According to the CIT(A), the right of trusteeship is not legally enforceable rightand it cannot be brought into the ambit of definition of "capital asset" and theconsideration received on transfer cannot be treated as 'income from capitalgain'. The CIT(A) treated it as "income from othersources" so as to tax the same.This finding of the CIT(A) is not proper. The assesses herein were holdingtrusteeship in the Carmel Educational Trust which was relinquished in favour oftrustees of Believers Church, and this right is nothing but a capital asset. Hadthe Carmel Educational Trust survived as it is, then they have the right tocontinue as a Trustee throughout their life time. Once it has ceased to exist andrelinquished the right of trusteeship in favour of the new trustees in BelieversChurch, the consideration received for such relinquishment is nothing but acapital receipt and gain on such transaction cannot be considered as “incomefrom other sources”. 11.5 The contention of the Ld. AR is that since there is no cost of acquisition, itis not possible to compute capital gain as section 55(2) of the I.T. Act does notinclude this kind of asset as capital asset. For better understanding, we willexamine the provisions of section 55(2) of the I.T. Act. S. 55 (2) For the purposes of sections 48 and 49, "cost of acquisition",- (a) in relation to a capital asset, being goodwill of a business or a trade mark or brandname associated with a business or a right to manufacture, produce or process anyarticle or thing or right to carry on any business, tenancy rights, stage carnagepermits or loom hours - (i) in the case of acquisition of such asset by the assessee by purchase from aprevious owner, means the amount of the purchase price: and in any other case notbeing a case falling under sub-clauses (i) to (iv) of sub-section (1) of section 49shall betaken to be nil; (aa) in a case where, by virtue of holding a capital asset, being a share or any othersecurity, within the meaning of clause (h) of section 2 of the Securities Contracts(Regulation) Act, 1956 (42 of 1956) (hereafter in this clause referred to as thefinancial asset), the assessee- (A) becomes entitled to subscribe to any additional financial asset; or (B) is allotted any additional financial asset without any payment, then, subject to theprovisions of sub-clauses (i) and (ii) of clause (b) - (i) in relation to the original financial asset, on the basis of which the assesseebecomes entitled to any additional financial asset, means the amount actually paid foracquiring the original financial asset; (ii) in relation to any right to renounce the said entitlement to subscribe to thefinancial asset, when such right is renounced by the assessee in favour of any person, shall be taken to be nil in the case of such assessee; (iii) in relation to the financial asset, to which the assessee has subscribed on the basisof the said entitlement, means the amount actually paid by him for acquiring suchasset; and (B) is allotted any additional financial asset without any payment, then, subject to theprovisions of sub-clauses (i) and (ii) of clause (b) - (i) in relation to the original financial asset, on the basis of which the assesseebecomes entitled to any additional financial asset, means the amount actually paid foracquiring the original financial asset; (ii) in relation to any right to renounce the said entitlement to subscribe to thefinancial asset, when such right is renounced by the assessee in favour of any person, shall be taken to be nil in the case of such assessee; (iii) in relation to the financial asset, to which the assessee has subscribed on the basisof the said entitlement, means the amount actually paid by him for acquiring suchasset; and (iiia) in relation to any financial asset purchased by any person in whose favour theright to subscribe to such asset has been renounced, means the aggregate of theamount of the purchase price paid by him to the person renouncing such right and theamount paid by him to the company or institution, as the case may be, for acquiringsuch financial asset; (ab) in relation to a capital asset, being equity share or share allotted to a shareholderof a recognised stock exchange in India under a scheme for demutilisation orcorporatisation approved by the Securities and Exchange Board of India establishedunder section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992),shall be the cost of acquisition of his original membership of the exchange: Provided that the cost of a capital asset, being trading or clearing rights of therecognised stock exchange acquired by a shareholder who has been allotted equityshare or shares under such scheme of demutualisation or corporatisation, shall bedeemed to be nil; (b) in relation to any other capital asset - (i) where the capital asset become the property of the assessee before the 1" day ofApril, 1981, means the cost of acquisition of the asset to the assessee or the fairmarket value of the asset on the 1 st day of April, 1981, at the option of the assessee; (ii) where the capital asset became the property of the assessee by any of the modesspecified in sub-section (1) of section 49, and the capital asset became the property ofthe previous owner before the 1 day of April, 1981, means the cost of the capital assetto the previous owner or the fair market value of the asset on the 1 day of April, 1981,at the option of the assessee; (iii) where the capital asset became the property of the assessee on the distribution ofthe capital asset of a company on its liquidation and the assessee has been assessed toincome tax under the head "Capital gains" in respect of that asset under section 46,means the fair market value of the asset on the date of distribution; (v) where the capital asset, being a share or a stock of a company, became theproperty of the assessee on - (a) the consolidation and division of all or any of the share capital of the company intoshares of larger amount** ** **” 11.6 A bare reading thereof would indicate how the legislature contemplatesthat come chargeable under head "capital gains" has to be computed. The modeof computation is laid down by section 48, whereas by section 49, the cost withreference to certain modes of acquisition has been set out. For the purposes ofboth sections, the legislature has devised the scheme in section 55 and sub-section (2) thereof clarifies that for the purposes of sections 48 and 49. "cost ofacquisition" in on to a capital asset, being goodwill of a business or a trade markor brand name associated with a business or a right to manufacture, produce orprocess any article or thing or right to carry on any business, tenancy rights,stage carriage permits or loom hours has to be computed. In this case, theassessee stated that nothing of these things would cover the relinquishment oftrusteeship and in the absence of a specific provision, the income shall be takenas Nil. 11.7 In the case of Cadell Weaving Mill Co. (P.) Ltd. (273 ITR 1), the argumentbefore the Supreme Court was arising out of the return of income of theassessee. The amount received by the asessee on surrender of tenancy right,whether liable to capital gains under section 45 of the Income Tax Act, 1961 wasinvolved in that appeal before the Supreme Court. There was a lease agreemententered into in the year 1959 for 50 years, under which, the annual rent was paidby the Lessee to the Lessor. The lease would have continued till 2009. However,during the relevant previous year i.e. in March, 1986, the Assessee surrenderedtenancy rights prematurely and received a sum of 35 lacs. That sum was creditedto the reserve and surplus account, which was disallowed by the AssessingOfficer, holding that it was income from other sources. The assessee appealed tothe Commissioner, who came to the conclusion that the assessee was liable topay tax on capital gains on the amount of Rs.35 lacs after deducting an amountof Rs.7 lacs as cost of acquisition. The Department and assessee challenged thedecision before the Tribunal and the Tribunal relied upon the Judgment of theSupreme Court in the case of CIT v. B.C. Srinivasa Shetty [1981] 128 ITR and theamendment to section 55(2) of the Income Tax Act and held that the assessee didnot incur any cost to acquire the leasehold rights and that if at all any cost hadbeen incurred it was incapable of being ascertained. It was therefore held thatsince the capital gains could not be computed as envisaged in section 48 of theIncome Tax Act, therefore, capital gains earned by the assessee, if any, was notexigible to tax. The Department's Appeal to the High Court was dismissed andthat is how it approached the Hon'ble Supreme Court. In dealing with the rivalcontentions, the Hon'ble Supreme Court held as under: '(8) In 1981 this court in CIT v. B.C. Srinivasa Shetty(1981) 128 ITR 294; (1981) 2SCC 460 held that all transactions encompassed by section 45 must fall within thecomputation provisions of section 48. If the computation as provided undersection 48 could not be applied to a particular transaction, it must be regardedas"never intended by section 45 to be the subject of the charge". In that case, thecourt was considering whether a firm was liable to pay capital gains on the sale ofits goodwill to another firm. The court found that the consideration received forthe sale of goodwill could not be subjected to capital gains because the cost of itsacquisition was inherently incapable of being determined. Pathak J. as hisLordship then was, speaking for the court said (page 300) "what is contemplated is an asset in the acquisition of which it is possible toenvisage a cost. The intent goes to the nature and character of the asset, that it isan asset which possess the inherent quality of being available on the expenditureof money to a person seeking to acquire it. It is immaterial that although the assetbelongs to such a class it may, on the facts of a certain case, be acquired withoutthe payment of money" (9) In other words, an asset which is capable of acquisition at a cost would beIncluded within the provisions pertaining to the head "Capital gains" as opposedwith the acquisition of which no cost at all can be principle propounded in B.C.Srinivasa Shetty (1981) 128 ITR 294 (SC)has been allowed by several High Courtswith reference to Surrender of tenancy rights, the consideration received on (seeamong others Bawa Shiv Charan Singh v. CIT (1984) 149 ITR 29 (Delhi); CIT v.Mangtu Ram Jaipuria (1991) 192 ITR 533 (Cal); CIT v., Joy Ice-Creams (Bangalore)P. Ltd. (1993) 201 ITR 894 (Karn.); CIT v. 987) 165 ITR 386 (AP); CIT v.Markapakula Agamma (1987) Merchandisers P. Ltd. (1990) 182 ITR 107 (Ker.) Inall these decisions, the several High Courts held that if the cost of acquisition oftenancy rights cannot be determined, the consideration received by reason ofsurrender of such tenancy rights could not be subjected to capital gains tax. (10) According to a circular issued by the Central Board of Direct Taxes (CircularNo. 684 dated 10th June, 1994-(1994) 208 ITR (St.) 8 it was to meet the situationcreated by the decision in B.C. Srinivasa Shetty (128 ITR 294) (SC) and the subsequent decisions of the High Court that the Finance Act, 1994, amendedsection 55(2) to provide that the cost of acquisition of, inter alia, a tenancy right.would be taken as nil. By this amendment, the judicial interpretation put oncapital assets for the purposes of the provisions relating to capital gains was met.In other words, the cost of acquisition would be taken as determinable but therate would be nil. (11) The amendment took effect from 1 April, 1995 and accordingly applied, inrelation to the assessment year 1995-96 and subsequent years. But till thatamendment in 1995, and therefore covering the assessment year in question, thelaw as perceived by the Department was that if the cost of acquisition of a capitalasset could not in fact be determined, the transfer of such capital asset would notattract capital gains. The appellant now says that CIT v. B.C. Srinivasa Shetty'scase [1981] 128 ITR 294 (SC) would have no application because a tenancy rightcannot be equated with goodwill. As far as goodwill is concerned, it is impossibleto specify a date on which the acquisition may be said to have taken place. It isbuilt up over a period of time. Diverse factors which cannot be quantified inmonetary terms may go into the building of the goodwill, some tangible someintangible. It is contended that a tenancy right is not a capital asset of such anature that the actual cost on acquisition could not be ascertained as a naturallegal corollary. (12) In A. R. Krishnamurthy v. CIT (1989) 176 ITR 417 this court held that itcannot be said conceptually that there is no cost of acquisition of grant of thelease. It held that the cost of acquisition of leasehold rights can be determined. Inthe present case, however, the Department's stand before the High Court was thatthe cost of acquisition of the tenancy was incapable of being ascertained. In viewof the stand taken by the Department before the High Court, we uphold thedecision of the High Court. (13) In United Commercial Bank Ltd. v. CIT (1957) 32 ITR 688 (SC), it was heldthat the heads of income provided for in the sections of the Indian Income Tax Act,1922 are mutually exclusive and where any item of income falls specifically underone head, it has to be charged under that head and no other. In other words,income derived from different sources falling under a specific head has to becomputed for the purposes of taxation in the manner provided by the appropriatesection and no other. It has been further held by this court in East India Housingand Land Development Trust Ltd. v. CIT (1961) (42 ITR 49) that if the income froma source falls within a specific head, the fact that it may indirectly be covered byanother head will not make the income taxable under the latter head. (See alsoCIT v. Chugandas and Co. (1965) 55 ITR 17 (SC). (14) Section 14 of the Income Tax Act, 1961 as it stood at the relevant timesimilarly provided that "all income shall for the purposes of charge of income taxand computation of total income be classified under six heads of income," namely:- (A)Salaries;(B)Interest on Securities;(B)Interest on Securities; (C)Income from house property; (D)Profits and gains of business or profession; (E)Capital gains; (F)income from other sources unless otherwise, provided in the Act. (15) Section 56 provides for the chargeability of income of every kind which hasnot to be excluded from the total income under the Act, only if it is not chargeableto income-tax under any of the heads specified in section 14, items A to E.Therefore, if the income is included under any one of the heads, it cannot bebrought to tax under the residuary provisions of section 56. (A)Salaries;(B)Interest on Securities;(B)Interest on Securities; (C)Income from house property; (D)Profits and gains of business or profession; (E)Capital gains; (F)income from other sources unless otherwise, provided in the Act. (15) Section 56 provides for the chargeability of income of every kind which hasnot to be excluded from the total income under the Act, only if it is not chargeableto income-tax under any of the heads specified in section 14, items A to E.Therefore, if the income is included under any one of the heads, it cannot bebrought to tax under the residuary provisions of section 56. (16) There is no dispute that a tenancy right is a capital asset the surrender ofwhich would attract section 45 so that the value received would be a capitalreceipt and assessable if at all only under item E of section 14. That being so, it cannot be treated as a casual or non-recurring receipt under section 10(3) and besubjected to tax under section 56. The argument of the appellant that even if theincome cannot be chargeable under section 45, because of the inapplicability ofthe computation provided under section 48, it could still impose tax under theresiduary head is thus unacceptable. If the income cannot be taxed under section45, it cannot be taxed at all. (See S. G. Mercantile Corporation P. Ltd. v. CIT (1972)83 1TR 700 (SC). (17) Furthermore, it would be illogical and against the language of section 56 tohold that everything that is exempted from capital gains by the statute could betaxed as a casual or non-recurring receipt under section 10(3) read with section56. We are fortified in our view by a similar argument being rejected in NalinikantAmbalal Mody v. S.A.L. Narayan Row,CIT (1966) 61 ITR 428 (SC)". 11.8Thus, the conclusion of the Supreme Court is that an asset which iscapable of acquisition at a cost would be included within the provisionspertaining to the head "Capital gains" as opposed to assets in the acquisition ofwhich no cost at all can be conceived. There was no cost of acquisition, whichwas determined and on the basis of which the Assessing Officer could haveproceeded to levy and assess the gains derived as capital gains. Sub-section (2)of section 55 clause (a) having been amended, there is no stipulation withregard, to relinquishment of trusteeship. However, even in the case of tenancyright, the view taken by the Supreme Court, after the provision was substitutedw.e.f. 1st April, 1995, is as above, which is squarely applicable to the assessees'case also. The further argument of the Ld. AR is that the relinquishment oftrusteeship cannot be brought within the tax net though it was capable of beingtransferred. The Supreme Court held that it must be capable of being acquiredat a cost or that has to be ascertainable, then only transfer of capital asset issubject to tax. A specific insertion would therefore be necessary so as toascertain its case for computing the capital gains. Since the assessee had notincurred any cost of acquisition in respect of gain on account of relinquishmentof trusteeship in Carmel Educational Trust, it cannot be brought to tax as capitalgains. Accordingly, we hold that capital receipt accrued to the assessee in AY2009-10 and in that assessment year on relinquishment of trusteeship, whichbeing a capital asset was acquired without any cost of acquisition, the samecannot be brought to tax as held by the Supreme Court in the case of B.C.Srinivasa Shetty (supra). This ground of appeal of the assesses is allowed.” 8. We find ourselves unable to accept the finding of theTribunal that the amounts received by the assessees as considerationfor relinquishment of their trusteeship would qualify as a capitalreceipt for the purpose of the I.T. Act, and further that in the absenceof any statutory provision under the I.T. Act that provides for adetermination of the cost of acquisition of the asset, the capital gainscannot be assessed. A perusal of the trust deed in the instant cases 8. We find ourselves unable to accept the finding of theTribunal that the amounts received by the assessees as considerationfor relinquishment of their trusteeship would qualify as a capitalreceipt for the purpose of the I.T. Act, and further that in the absenceof any statutory provision under the I.T. Act that provides for adetermination of the cost of acquisition of the asset, the capital gainscannot be assessed. A perusal of the trust deed in the instant cases does not indicate that any power was conferred