The Commissioner Of Income Tax-Iii v. Shri. Balaji Society

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO. 1814 OF 2012 The Commissioner of Income Tax-III.v.Shri. Balaji Society. ..Appellant. ..Respondent. Mr. Tajveer Singh for the Appellant.None for the Respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATE : 08TH FEBRUARY, 2013. PC: In this appeal by the revenue for assessment year 2007-08 following questions have been raised for our consideration. a)Whether on the given facts and in the circumstances of the case the order of the Tribunal is correct in directing the Assessing officer to allow the expenditure for development of surrounding area of the temple, holding that it shall qualify for exemption u/s. 11 of the Income Tax Act as the expenditure incurred on construction of temple and proportionate consultancy charges thereof is religious expenditure, it is not related to expenditure on objections of the trust? b)Whether on given facts and in the circumstances of the case the order of the ITAT is correct in holding that the expenditure towards surrounding area of the temple as expenditure for the objects of the Trust without appreciating that the land appurtenant to the temple is part and parcel of the temple and the same is inextricably linked with the temple and the surrounding area does not have any significance of its own independently? c)Whether on the given facts and in the circumstances of the case the order of the Tribunal is correct in deleting addition of Rs.70,97,365/- made on account of retention money which was not payable during the previous year and therefore was not an ascertained liability of the said year? d)Whether on given facts and in the circumstances of the case the order of the Tribunal is correct in not appreciating the fact that the money retained was not utilized or paid during the year and liability to that extent had not crystallized during the year under consideration? 2 (i)So far as questions (a) and (b) are concerned, the basic issue is whether the amounts spent on the surrounding area of the temple would qualify for exemption under Section 11 of the Income Tax Act as being amounts spent towards the object of the Trust. The Assessing Officer disallowed an amount of Rs.34.18 lacs spent on construction of the temple and surrounding area of the temple. This was on the basis that the object of the respondent assessee was spreading of education and learning while construction of temple and developing of its surrounding area would not meet the object of the respondent assessee viz. Education of students. (ii)On appeal, the CIT(A) and the Tribunal on examination of facts held that only Rs.12 lacs (subject to verification of the ASN Assessing officer) out of Rs.34.18 lacs was spent on construction of a temple. The balance amount was spent on the surroundings of a temple. The finding of fact concurrently reached by CIT(A) and the Tribunal was that the surrounding of the temple was so built that various activities for all round development of students like Medication, Yoga, Jogging, Physical exercise etc. was being carried out and this was for the benefit of general public/ students. Therefore, the aforesaid expenditure on the surrounding area of the temple would qualify for exemption under Section 11 of the Income Tax Act. (iii)The decision of the Tribunal upholding the order of the CIT(A) that the expenditure on surrounding area of the temple would qualify for exemption under Section 11 of the Income Tax Act is based on a finding of fact. Thus, we see no reason to entertain question (a)and (b) as proposed. (iii)The decision of the Tribunal upholding the order of the CIT(A) that the expenditure on surrounding area of the temple would qualify for exemption under Section 11 of the Income Tax Act is based on a finding of fact. Thus, we see no reason to entertain question (a)and (b) as proposed. 3(i)So far as question (c) and (d) are concerned, the basic issue is whether the Tribunal was justified in deleting an addition of Rs.70.97 lacs being the retention money withheld from the contractors bills to ensure rectification, if any defects during the course of construction as noticed. The Assessing officer has disallowed the retention money and added the same to the respondent's income as the same was not an amount spent for objects of the trust. (ii) However, the CIT (A) as well as the Tribunal have concluded that once the amount mentioned in the bills raised by the Contractors against the work done is accepted without disputing the same then that amount becomes payable by the respondent assessee. In such a case the entire amount becomes payable. The Tribunal held that the terms of payment relating to retention money allows the assessee to retain certain amount of payment till future date but this would in no way mitigate the liability of the respondent assessee which arises as soon as the bill amount is admitted by the assessee. Thus, the amounts are spent/applied to the objects of the trust and the same is allowable as expenditure. In these circumstances, we see no reason to entertain question (c) and (d). 4)Accordingly, the appeal is dismissed with no order as to costs. (M.S.SANKLECHA, J.) (J.P. DEVADHAR, J.)