TaxTMI 
TaxTMI 
2022 (2) TMI 931
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.... 2. In the present batch of appeals, the appellant/revenue has proposed the following questions of law for consideration of this Court: "(1) Whether Hon'ble Income Tax Appellate Tribunal was correct in the eyes of law, in passing the impugned order, in the facts and circumstances of the present case, ignoring the fact that assessee offered substantial concession in rent to Hamdard Dawakhana in lieu of voluntary and corpus donations in return which is a clear violation of Section 13(2)(b) r.w.s. 13(3) (b) of the Act and hence assessee is not eligible for exemption u/s 11/12 of the Act? (2) Whether Hon'ble Income Tax Appellate Tribunal, in the facts and circumstances of the case was correct in allowing exemption u/s 11 & 12 of the Income Tax Act, 1961 to the Assessee/Respondent herein? (3) Whether the impugned order passed by Hon'ble Income Tax Appellate Tribunal is perverse both on law and facts?" 3. The Assessing Officer, for the Assessment Year 2007-08, had noted that the respondent/assessee had received donation from Hamdard Dawakhana (Wakf) amounting to Rs.9,43,81,000/- (Rupees nine crore, forty-three lakh, eighty-one thousand) and rental income of Rs.46,41,028/- ....
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....8-09 while deciding the appeal of the respondent/assessee for the Assessment Year 2007-08. He submits that the learned ITAT has acted in total disregard of the law that each assessment year is a separate assessment year and that the principle of res judicata is not applicable to the tax proceedings. In this regard, he places reliance on the following judgments: i. M.M. Ipoh & Ors. v. Commissioner of Income Tax, Madras, AIR 1968 SC 317; ii. The Commissioner of Income Tax, West Bengal v. Brijlal Lohia & Mahabir Prasad Kemka, Executors of Late Kanailal Lohia, (1972) 4 SCC 432; iii. Income Tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das, (1964) 52 ITR 335 (SC); and iv. Distributors (Baroda) Pvt. Ltd. v. Union of India & Ors., (1986) 1 SCC 43. 8. The learned counsel for the appellant/revenue further submits that in the present case, the "market rent", as found by the Assessing Officer, had been confronted to the respondent/assessee, however, the respondent/assessee never asked for the source of information nor asked for an opportunity to controvert the same during the assessment proceedings. He submits that in terms of Section 13(1)(c)(ii) of the Act, it was imperative ....
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....he Hamdard Laboratories (India), the property at Asaf Ali Road had been let out to Hamdard Laboratories (India) right since 1981-82 with a periodical increase in the rent. The said Lease Agreement had been accepted by the revenue till the Assessment Year 2007-08. He submits that the property at Chanakyapuri, New Delhi, was not even prepared during the Assessment Year 2008-09 and was lying vacant. 12. The learned senior counsel for the respondent further submits that the enquiries conducted by the Assessing Officer were behind the back of the assessee. He submits that M/s CB Richard Ellis South Asia Private Limited, whose opinion was relied upon by the Assessing Officer, had categorically mentioned in its letter that there is no verified market referral rate and requested the Assessing Officer to conduct an independent enquiry to verify the rates, however, the Assessing Officer did not conduct any such enquiry and simply relied upon the information gathered from websites and such letters. 13. The learned senior counsel for the respondent/assessee further submits that no fault can be found with the learned ITAT placing reliance on the Order of the CIT(A) for the Assessment Year 200....
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....ssions made by the learned counsels for the parties. 18. As noted hereinabove, the questions of law raised by the appellant/revenue in the appeal is on the invocation of Section 13(2)(b) read with Section 13(3)(b) of the Act in the facts of the present case. The said Sections are quoted herein below: "13. Section 11 not to apply in certain cases.-- xxxxx (2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),-- xxxxx (b) if any land, building or other property of the trust or institution is, or continues to be, made available for the use of any person referred to in sub-section (3), for any period during the previous year without charging adequate rent or other compensation; xxxxx (3) The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely:-- xxxxx (b) any person who has made a substantial contribution to the trust or institution, that ....
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....ances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken.' (Hoystead case4, AC pp. 165-66)" 26. Reference was also made to Parashuram Pottery Works Co. Ltd. v. ITO and then it was held: (Radhasoami Satsang case , SCC p. 666, paras 16-17) "16. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be....
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....8, the High Court of Madras observed as under: "In order to apply this provision, it is necessary for the GTO to show that the property is transferred otherwise than for adequate consideration... ... In considering this provision a Full Bench of the Patna High Court in H. P. Banerjee v. CIT [1941] 9 ITR 137 examined the earlier cases regarding the interpretation of the expression "adequate consideration". The distinction between "good consideration" and "adequate consideration" was pointed out and in the judgment of Manohar Lall J., reference was made to some of the earlier authorities on the point. In Tennent v. Tennent [1870] LR 2 Scotch and Divorce Appeal Cases 6, Lord Westbury observed: "But the transaction having been clearly a real one, it is impugned by the appellant on the ground that he parted with the valuable property for a most inadequate consideration. My Lords, it is true that there is an equity which may be founded upon gross inadequacy of consideration. But it can only be where the inadequacy is such as to involve the conclusion that the party either did not understand what he was about or was the victim of some imposition. It is impossible to say that the ina....
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....ise than for adequate consideration. In fact, in the Full Bench judgment of the Patna High Court, it is mentioned by Chief Justice Harries, that the adequacy of consideration is a matter for the parties. (See [1941] 9 ITR 137, 148). The judgment of the Patna High Court has been approved by the Supreme Court in a later decision, Tulsidas Kilachand v. CIT [1961] 42 ITR 1 (sic). Of course it is not enough if a transfer is for "good consideration". It should also be for adequate consideration. Adequate consideration is not necessarily what is ultimately determined by someone else as market value. Learned standing counsel for the Commissioner stressed that the adequacy of the price has to be judged only in the light of the market value of the property transferred and according to him, there is no other yardstick which could be applied to a situation like this. We are unable to agree. We may explain why we disagree with him by taking an example. Supposing an old lady who owns a neighbouring property, wants to part with it to a medical practitioner, so that the medical practitioner would be of immediate assistance to her as and when she needs it and she parts with the property at what th....
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....for less than its market value, then the difference between the market value and the consideration stipulated, shall be deemed to be the gift made by the transferor". Parliament not having made any such provision, it would not be for us to take the market value of the property for determining the adequacy of consideration in all events." 21. In the present case, the learned ITAT has observed that the revenue had failed to bring on record any cogent evidence to show that the rent received by the respondent/assessee, in the facts of the case, was inadequate. It has held that the material collected from the internet as well as the estate agents cannot be termed as a corroborative piece of evidence in this regard. It has further held that the rent received by the respondent/assessee exceeds the valuation adopted by the Municipal Corporation of Delhi for the purpose of levying house tax. The relevant finding of the learned ITAT is reproduced hereinbelow: "12. It could be seen from the letters issued by HSA reality services and CB Richard Ellis South Asia private limited, they have given information available with them and to the best of their knowledge and belief whereas CB Richard ....
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....is of the facts relating to the rent received by the assessee from HLI vis-à-vis the rent under the Delhi Rent Control Act. Without vouchsafing the correctness of the information received from the website and without correlating the information furnished by the property dealers without realities on ground with a specific reference to the property in dispute, it is not open for the Assessing Officer to proceed to make addition, that disturbing the accepted position for about more than two decades. No change of facts and circumstances are brought on record and no independent evidence with a specific relation to the property in dispute is available on record. Merely because the other charitable trust guilty property for accommodation of the person covered under section 13(3) of the Act, such a fact ipso facto does not lead to the addition in the hands of the assessee without first clinching the issue with corroborative piece of evidence. We therefore, hold that there is no justification for addition made by the learned Assessing Officer by invoking the provisions under section 13(2)(b) of the Act read with section 13(3) of the Act and we direct him to delete the same." 22. The....
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....gs of fact recorded by the courts below, which would imply the CIT(A) and the learned ITAT in these appeals, cannot be reopened. Sufficiency or adequacy of the evidence to support a finding is a matter for the decision of the court of facts. 24. The submission of the learned counsel for the appellant/revenue that the learned ITAT has erred in placing reliance on the Order of the learned CIT(A) passed in the Assessment Year 2008-09 while considering the appeal for AY 2007-2008, also cannot be accepted. As noted hereinabove, the learned ITAT was considering a batch of appeals for various assessment years, with some assessment years being decided in favour of the respondent/assessee while some against it, by the learned CIT(A). The learned ITAT agreed with the view taken by the learned CIT(A) for the Assessment Year 2008-09 and, therefore, placed reliance on the said Order of the learned CIT(A) taking reasoning therefrom. The learned ITAT cannot be held to have erred in adopting the said approach. 25. Similarly, the submission of the learned counsel for the appellant that the learned ITAT has failed to disclose the basis on which it arrived at the quantum of the standard rent also c....