TMI Blog2021 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred for objects of the trust. Transfer of two plots of land and alleged capital gains resulting thereon - We find that in the original assessment, the case was selected under limited scrutiny . One such point of examination under limited scrutiny was mismatch in income / capital gain on sale of land or building . The ld. AO had duly questioned the assessee in the original assessment proceedings regarding the same vide notice u/s.142(1). As specifically pointed to the ld. AO by the assessee that, as assessee has received only advance against sale of land, the advance receipt of ₹ 71 Crores has been shown as liability in balance sheet as on 31/03/2015. It was also pointed out that the purchasers of the said property had deducted tax at source u/s.194IA while making payment of advance. Accordingly, the said amount is reflected in Form 26AS of the assessee. By this process, the assessee had explained the mismatch between the entry in Form 26AS and the income of the assessee. Later, vide letter dated 23/05/2017, the assessee enclosed a detailed note exclusively on receipt of advance pursuant to a specific query raised by the ld. AO during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessee. - ITA No.1918/Mum/2020 (Assessment Year :2015-16) - - - Dated:- 30-8-2021 - SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER Assessee by: Shri J.D. Mistry Revenue by: Shri Rahul Raman ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.1918/Mum/2020 for A.Y.2015-16 preferred by the order against the revision order of the ld. Commissioner of Income Tax(Exemptions), Mumbai u/s.263 of the Act dated 20/03/2020 for the A.Y.2015-16. 2. The assessee has raised the several grounds before us challenging the validity of revisionary jurisdiction u/s.263 of the Act by the ld. PCIT both on technical ground as well as on merits. 3. We have heard the rival submissions and perused the materials available on record. The assessee is a Public Charitable Trust registered with Charity Commissioner, Mumbai and also registered u/s 12A of the Act dated 01.03.1974. The trust runs a school named The J.N. Petit Technical High School, which is located in Pune. It is a Government recognized School. Apart from the primary activity of providing Education, the Trust also provides Medical Aid and Relief to the Poor. The return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried out by the ld. AO in the original assessment proceedings itself in detail and the very basis of ld. PCIT s show-cause notice for invoking revisionary jurisdiction u/s.263 of the Act is devoid of merit. The assessee submitted necessary evidences in support of its contentions that relevant enquiries were already carried out by the ld. AO. The ld. PCIT however ignored the submissions of the assessee and held that the ld. AO had not carried out any enquiries with regard to the issues pointed out in the show-cause notice and concluded that the order passed by the ld. AO was erroneous in as much as it is prejudicial to the interest of the revenue. Accordingly, he set aside the order of the ld. AO by invoking revision jurisdiction u/s.263 of the Act. 3.3. The short point that arises for our consideration in the instant appeal is as to whether the ld. PCIT has validly invoked revision jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case. The primary facts that are narrated in para 3 hereinabove remain undisputed and hence the same are not reiterated herein for the sake of brevity. The main argument of the ld. AR is that relevant and sufficient enquirie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.19 Crores. The details of the total expenditure of objects of the trust are as under:- A) Religious - ₹ 5,31,255/- b) Educational - ₹ 9,19,39,199/- c) Medical relief - ₹ 36,07,051/- d) Relief of Poverty - ₹ 26,41,400/- e) Other Charitable Objects - ₹ 46,20,000/- ================ Total ₹ 10,33,38,905/- ================ 3.5. The assessee also furnished the break-up of educational expenses of ₹ 9,19,39,199/- as under:- SCHEDULE J - EDUCATION EXPENSES Rs. Rs. Donation for Education 2,52,64,805 Boarding Expenses 53,44,916 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Late payment Charges of PT 24,000 Legal Professional Fees 1,685 Magazine Periodicals 3,30,981 Medical Expenses 7,376 Mediclaim Insurance 5,56,171 Motor Car Expenses 1,89,483 Motor Car Insurance 29,303 Printing, Stationery Postage 17,49,447 Security Charges 22,53,306 Telephone Expenses 1,17,815 Water Charges 1,22,530 1,14,70,452 9,19,39,199 3.5. The educational expenses totalling to ₹ 9.19 Crores includes donation for education of ₹ 2.52 crores and salaries /exgratia of ₹ 4.31 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed before us as under:- Sr. No Date of transfer from Bank of India (Mumbai Main Branch) M. G. Road, Fort - Account No.00l 10100006 149 Amount transferred Rs. Page Number of Paper Book Date of Receipt by transferee Bank Name of the transferee Bank Account Number Amount Receipt Page number of paper Book 1. 19th May, 2014 10,00,000 241 20th May,2014 State Bank of India 11045079320 10,00,000 229 2. 22nd May, 2014 20,00,000 241 3rd June, 2014 State Bank of India 11045085801 20,00,000 229 3. 23rd June, 2014 15,00,000 242 24th June,2014 State Bank India 11045085801 15,00,000 229 4. 21st Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils filed from time to time together with the supporting evidences, was indeed satisfied with the replies given thereon and had taken a plausible view in the matter and assessment completed accordingly u/s.143(3) of the Act. While this is so, in our considered opinion, it is incorrect on the part of the ld. PCIT to conclude that no enquiries were carried out by the ld. AO with regard to the impugned issue. In these facts and circumstances, we have no hesitation in quashing the revision order passed u/s.263 of the Act by the ld. PCIT on the issue of expenditure incurred for objects of the trust amounting to ₹ 10.33 Crores. 3.9. With regard to transfer of two plots of land and alleged capital gains resulting thereon, we find that in the original assessment, the case was selected under limited scrutiny . One such point of examination under limited scrutiny was mismatch in income / capital gain on sale of land or building . The ld. AO had duly questioned the assessee in the original assessment proceedings regarding the same vide notice u/s.142(1) of the Act date 22/01/2017. We find that assessee had given a preliminary reply on 09/03/2017 giving the details of receipt of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of the consent terms is already on record. 4) Subsequent to the execution of the consent terms, the permission of the Charity Commissioner, was applied for and obtained on 22nd June,2016. A copy of the Order of the Charity Commissioner is also on record. In view of the provisions of section 36 of the Bombay Public Trusts Act, 1950 the transaction cannot be completed without the permission of the Charity Commissioner and hence the conveyance has been executed only subsequent to the receipt of the permission of the Charity Commissioner. It is for this reason that the amount received from the Purchasers is reflected as advance in the books of the assessee Trust for Assessment Year 2015-16. 5) In case of another property also leased in 1951 and which is completely encroached by slum dwellers, the assessee Trust had agreed to sell the said property in terms of the Agreement dated 3rd March, 2008. Subsequent to the execution of the said Agreement with Hilla Builders Private Limited, an application was made to the Charity Commissioner u/s.36(1)(a) of the Bombay Public Trusts Act, 1950 for prior permission to sell the said Property. However, due to certain objections, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Larger Property in favour of various sub-lessees. The said sub-lessees in turn constructed several buildings and structures on the Larger Property. The said Sub- lessees, and over a period of time, their assignees constructed premises, sold them on ownership basis and formed co-operative societies. Note submitted to A.O. Pages 227 and 228 3. In the premises aforesaid the Larger Property came to be completely encumbered with thousands of occupants thereon. In fact, a portion of the Larger Property admeasuring 6640 sq. mts. ('the Slum Portion') was notified as a slum under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971. Note submitted to A.O. Pages 227 and 228 Also Charity Commissioner's Order Dated 18/02/2012 at Pages 70 and 71 4. Pursuant to an application made by the Assessee Trust, the Joint Charity Commissioner, Maharashtra State Mumbai, vide his Order dated 18th February 2012 sanctioned the sale of the Slum Portion. Under the said Order of the Joint Charity Commissioner the Assessee Trust had the option to accept t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in for the total consideration of ₹ 65 crores Order dated 22/06/2016 of Charity Commissioner Pages 90 to 96 3.11. We find that though the remaining property is in possession of 41 Lessees/sub-lessees/their purported assignees, the purchase of the reversionary rights in respect of the Remaining Property is only by the said 6 Defendants. In other words, the said 6 Defendants stepped into the shoes of the Plaintiff i.e. the assessee trust and agreed to become the owners of the Remaining Property. Needless to add, the assessee was neither expected nor could hand over the possession to the said 6 Defendants. We find that the main crux of the argument of the ld. AR is that no sale of immovable property belonging to a public charitable trust could be made without obtaining prior sanction of the charity commissioner in accordance with Section 36(1) of the Maharashtra Public Trusts Act, 1950. Since the sanction of the Charity Commissioner in the instant case was obtained only on 22/06/2016, there cannot be any taxable event in the form of capital gains that could arise to the assessee trust in A.Y.2015-16. The alternative argument advanced by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of the Registration and other Related Laws (Amendment) Act 2001 and if such documents are not registered on or after such commencement then they shall have no effect for the purposes of the said Section 53A. (emphasis supplied). 3.14 In the present case, the agreement i.e the Consent Terms is not registered and hence the doctrine of part performance cannot be applied and consequently section 2(47)(v) of the Act cannot be made applicable. Reliance in this regard has been rightly placed by the ld. AR on the decision of Hon ble Supreme Court in the case of CIT vs. Balbir Singh Maini reported in 251 Taxman 202 (SC). We find that the ld. AR also placed reliance on the decision of Hon ble Jurisdictional High Court in the case of Madhukar Sunderlal Sheth and Others vs. S.K. Laul and Others reported in 198 ITR 594 (Bom), wherein, in the context of acquisition proceedings of immovable property by Central Government under erstwhile Chapter XXC of the Act, it was categorically held that the property belonging to a public trust cannot be validly sold without the permission of Charity Commissioner. Hence, such an agreement of sale cannot be acted upon by the Income Tax authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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