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TMI Blog2025 (4) TMI 1552X X X X Extracts X X X X X X X X Extracts X X X X ..... t 1. Investment made in M/s. Metronation Chennai Television Pvt Ltd Rs. 19,75,00,000/- 2. Corpus donation made to M/s Aditnar Educational Institution Rs. 19,35,00,000/- and 3. Advance tax payment as application of income Rs. 40,83,40,689/- 4. The Commissioner of Income Tax (Exemptions) had erred in not following the order passed by the Income Tax Appellate Tribunal in the Appellant's own case for Assessment Year 2009-10 to 2012-13 (ITA Nos.1532,1533 &1534/CHNY/2015 & 2720/CHNY/2017), the decision of Madras High Court in the Appellants own case reported in T.C.A No.822 of 2018, order dated 29.10.2020 and the Supreme Court decision in the Appellant's own case reported in 247 ITR 785 (2001). 5. The Commissioner of Income Tax (Exemptions) had erred in not considering the fact that the business was held under trust as per provisions of section 11(4) of Income Tax Act 1961 as decided by the Madras High Court in the Appellant's own case reported in T.C.A No.822 of 2018, order dated 29.10.2020. 6. For these and other grounds that may be urged at the time of hearing, the appeal may be allowed." 3. The brief facts of the case are that, the assessee is a registered tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Advance tax of Rs. Rs. 40,83,40,689; (iii) Investment made in M/s. Metronation Chennai Television Pvt Ltd. in violation of provision of section 13(1)(c) & (d) of the Act- Rs. 19,75,00,000/-. 5.1 The ld.AR briefed the detailed facts of the trust which was created on 28/06/1961. Application for registration u/s. 12A(a) was made on 20/07/1973. - Registration was granted u/s 12A(a) on 30/06/1989. - The DIT(E) Issued SCN u/s 12AA (3) and the registration was cancelled on 08/12/2011 w.e.f. 01/04/2009. - The trust filed an appeal before the ITAT and the appeal was dismissed. - Thereafter, the trust filed the TC(A) and the Hon'ble Madras High Court held in favour of the assessee vide [2020] 121 taxmann.com 119 (Madras). - Against the MDS HC decision, the revenue filed a SLP and the case is admitted and is pending before the SC as on date. 5.2 The Ld.AR submitted that any issue relating to computation of the application of income is not free from doubt. More than one view is possible at the threshold stage; Viz: The ITAT, Bangalore order in the case of HMV Educational Cultural & Social Trust vs ITO(E) in ITA No.9/Bang/2023 dt. 23.03.2023 (refer Pgs. 200-207 of the Paper Book) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legs to stand. The Ld.AR further argued that on merits of the case that the CIT in the impugned order u/s. 263, seeks to cancel the exemption u/s. 11 for A.Y.2018- 19. 5.5 Firstly, the Corpus donation by Thanthi to Aditanar Educational Institution - Rs. 19,7158,098/-. Regarding the Corpus donation said to have been made by the assessee in the year of account in favour of M/s.Aditanar Educational Institution, the ld.AR submitted, factually no letter was filed by the assessee trust to the effect indicating that the corpus donation was made to M/s. Aditanar Educational Institution. It is not known how the ld.CIT(E) has observed that the appellant has made any corpus donation as such in the year of account in favour of M/s. Aditanar Educational Institution. 5.5.1 The trust in its reply to the notice issued u/s. 142(1) sent by the AO on 20.11.2020 (Refer pg. 26,27 & 28 of the Paper Book) has not indicated/ mentioned in the statutory format sent by the AO under Section 142(1) that any letter is brought on record /sent indicating any corpus donation made to Aditanar Educational Institution in the year of account. (Refer pgs. 32 & 33 of the Paper Book), the assessee has replied to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice or error has occurred on the facts of the case. 5.2.3 The third and last issue was violation of Sec 13(1) (c)/13(1)(d) Rs. 19,75,00,000/- in A.Y.2018-19 (A.Y.2017-18 of Rs. 33.90 Crores referred to but no addition proposed). The Ld.AR submitted that the amount paid to Metronation Chennai Television P. Ltd, in the reply filed by the assessee before the AO, it is clearly stated that the amount was given for expansion of the "business held under trust" and is not violative of Section 13(1)(c)/ 13(1)(d), as there is no investment or loan given by the assessee trust to get a direct or indirect benefit since, one of the trustees hold shares at 99 percent in that company. This is an academic issue since the amount was spent to purchase equipment etc., to further the "business held under the trust" which is the "property held under trust" and the amounts earned by the assessee there from has been spent on educational purposes as is being done from the other amounts in the past. Further, the ld.AR stated that in the earlier assessment years viz. 2009-10, 2010-11, 2011-12 & 2012-13, this very issue of amount paid to M/s. Metronation Chennai Television P. Ltd was raised by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, the Revenue Department issues advertisements, mails, SMS etc.to the adverse effect when the advance tax is not paid by the assessee on the due date for each year and also mentioning that interest and penalty will be levied for any failure to do so. The mere fact that the Assessee paid advance tax in excess than what is needed to be paid cannot be used against the Assessee/ Appellant as if the said event of payment of advance tax causes loss of revenue. iv. Regarding the application of Section 13(1)(c) in respect of the amount paid to M/s. Metronation Chennai Television P. Ltd., is not justified in law since the revenue stand in the earlier years has been decided in favour of the Assessee by the common order passed by the ITAT in ITA Nos.1532, 1533 & 1534/CHNY/2015 and ITA No.2720/CHNY/ 2015 for the A.Ys.2009-10, 2010-11, 2011-12 & 2012-13- M/s. The Thanthi Trust vs. The JCIT (OSD) (E), dt.08.07.2022. 6. Per contra, the ld.DR supported the order of the ld.CIT(E). He submitted that the AO has not examined the entire details of corpus donations, advance tax and amount paid to M/s. Metronation Chennai Television P. Ltd., and the same has resulted the assessment order e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said judgment held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. 7.2 It was further observed that when the Assessing Officer adopts one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Ld. CIT does not agree, it cannot be treated as an order prejudicial to the interest of the revenue unless the view taken by the Assessing Officer is unsustainable in law. Keeping the aforesaid legal principles in mind when we apply the same to the facts of the present case, we note that the AO during the assessment proceedings has asked specific queries seeking the details (Page No.26 - 28 of Paper book) of all the three issues, now raised by the ld.PCIT in the impugned order u/s. 263 of the Act. 1. Investment made in M/s. Metronation Chennai Television Pvt Ltd Rs. 19,75,00,000/- (Sl.No.11 of notice U/s.142(1) annexure) 2. Corpus donation made to M/s. Aditnar Educational Institution Rs. 19,35,00,000/- and (Sl.No.7 of notice U/s.142(1) annexure) 3. Advance tax payment as app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors of the above company. Further, one of the trustee viz., M/s Educational Trustee Co. Private Limited is holding more than 99% of the shares of M/s Metronation Chennai Television P Ltd. A show- cause was issued on 06.11.2019 as to why this investments should not be construed as violations u/s 13(1)(c) & (d) of the IT Act. The assessee vide its reply dated 29.11.2019 had contended that Section 13(1)(c) & (d) is not applicable in assessee's case but however the assessee had requested that the taxation should be confined to the violated portion of income earned through such transaction. The contentions of the assessee is not tenable. The investment has been effected during the year under consideration and suffers violation under both sections 13(1)(c) & 13(1)(d). If the said sum continues to be invested in subsequent years, the income arising out of such income is taxable at MMR. Since the provisions of Section 2(15) is invoked in assessee's case for the detailed discussion above, the taxing of this portion at MMR makes no difference in taxation. However, in the event of any possible relief in the appellant forum against invoking of Section 2(15) arises, this addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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