2019 (11) TMI 1831 - AT - Income Tax

Advance payments for land purchase cannot be considered under section 13(1)(d) provisions, loan repayment for charitable purposes constitutes valid income application

ITAT Raipur allowed the assessee's appeal regarding exemption u/s 11. The tribunal held that advance payments for land purchase cannot be considered under ... Exemption u/s 11 - addition by invoking the provisions of section 13(1)(d) - treatment of advance payment for land purchase and the enhancement of income due to a purported double claim of exemption u/s 11(1)(a) - HELD THAT:- Before us, it is assessee’s contention that the advance for purchase of land was given in earlier years i.e. 2011-12, 2012-13 and 2013-14 and in the assessment framed u/s. 143(3) of the Act, the same has been accepted by the Revenue. It is further contention of assessee that for subsequent years also, advance paid by the assessee towards purchase of land has been accepted. The aforesaid contention of assessee has not been controverted by Revenue. Further, before us, the Ld. AR has also relied on the decision cited hereinabove in support of the contention that the advance paid towards purchase of land cannot be considered within the purview of section 13(1)(d) of the Act. These contentions of Ld. AR have not been controverted by Revenue. Considering the totality of the aforesaid facts and more so, when the payment for land has been accepted by the Revenue in earlier years and in subsequent years, a different view in isolation is not called for. Following the principle of consistency, we are of the view that invocation of provisions of section 13(1)(d) of the Act is not called for. Enhancement of income by CIT(A) - contention of Revenue that the Term Loan which was obtained by the assessee in earlier years was claimed as application of money and therefore the claim of repayment of Term Loan as application of income would amount to double claim - HELD THAT:- Before us, the assessee submitted that the Term Loans were restricted as application of income and in support of which he also pointed to the comparative chart placed. The chart placed by the assessee in the Paper Book reveals that the assessee has not claimed the purchase of land from the loans as application of income. Before us, the Revenue has not controverted the submissions made by the assessee. We further find that CBDT in Circular No. 100 dated 24.01.1973 has held that repayment of loan originally taken to fulfill one of the objects was amount to application of income for charitable and religious purposes. CIT(A) was not justified in enhancing the income. We therefore, set aside the order of CIT(A) on this ground. Thus, the ground raised by assessee is allowed. Issues involved:The judgment involves issues related to the assessment of income of a charitable institution under section 12A of the Income-tax Act, 1961 for the assessment year 2014-15, including the treatment of advance payment for land purchase and the enhancement of income due to a purported double claim of exemption u/s 11(1)(a) of the Act.Issue 1 - Advance Payment for Land Purchase:The assessee, a charitable institution, had made an advance payment of Rs. 1,09,00,000 for the purchase of land. The Assessing Officer treated this payment as covered u/s. 13(1)(d)(i) of the Act, bringing it to tax. The CIT(A) upheld this decision, citing discrepancies in the details provided by the assessee regarding the land purchase transaction. However, the ITAT held that since the revenue had accepted similar advance payments in earlier and subsequent years, invoking section 13(1)(d) was not justified. The ITAT allowed the grounds raised by the assessee in this regard.Issue 2 - Enhancement of Income:The CIT(A) disallowed a claim of Rs. 1,13,65,809 towards repayment of a Term Loan, considering it a double claim as the assets acquired from the loan were already allowed as application of income. The ITAT, after considering the submissions made by the assessee and the revenue, found that the repayment of the Term Loan was not a double claim as the assets were not considered as application of income. Referring to relevant decisions and a CBDT circular, the ITAT set aside the CIT(A)'s order on this ground, allowing the appeal of the assessee.In conclusion, the ITAT allowed the appeal of the assessee, setting aside the CIT(A)'s decision regarding the treatment of the advance payment for land purchase and the enhancement of income.