ASSISTANT COMMISSIONER OF INCOME TAX (E), LUCKNOW V. M/S. PANDIT MADAN SWARUP SHOTRI PUBLIC CHARITABLE TRUST, ALLAHABAD

ITA 8/LKW/2020

AI Insights

The case involves the A.C.I.T. (Exemptions), Lucknow as the appellant and M/s Pandit Madan Swarup Shotri Public Charitable Trust as the respondent. The dispute centers on the assessment year 2013-14, where the Assessing Officer added a surplus amount of Rs. 2,56,89,059 to the income of the trust, which was above 15% of the gross receipts, without a resolution passed by the trustees. The CIT(A) allowed the appeal of the trust, which the Revenue challenged. The Tribunal found that the CIT(A) erred in granting relief under section 10(23C) of the I.T. Act, which was not claimed during the assessment proceedings, and directed a re-evaluation of the addition made.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 43558 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Other Referred Cases: Assam Co. (India) Ltd. CIT [2002] 256 ITR 423
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P.K. KAPOOR
• Assessee Lawyers: SANJEEV KRISHNA SHARMA
• Keywords: Set aside; Charitable institution
• Section: 11; 12AA; 12A; 12; 10(23C)

Judgement Text

"I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘A’, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.8/Lkw/2020 Assessment Year: 2013-14 A.C.I.T. (Exemptions), Lucknow. Vs. M/s Pandit Madan Swarup Shotri Public Charitable Trust, T.C. 46V, 5th Floor, UPSIDC Ltd., Vibhuti Khand, Gomti Nagar, Lucknow. PAN:AAATP6343B (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) This appeal has been filed by the assessee for assessment year 2013- 14 against impugned appellate order dated 24/10/2019 passed by learned Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. (B) In this case, assessment order dated 15/03/2016 was passed u/s 143(3) of the I. T. Act whereby the assessee’s income was computed at Rs.2,56,89,059/-, as against returned income of nil. The relevant portion of the assessment order is reproduced as under: “2. The assessee Trust has been constituted and executed on 02.09.1994 and registered with Dy. Registrar, Moradabad. The assessee has claimed exemption u/s 11 of the Income Tax Act, 1961. It is seen that the Appellant by Shri P. K. Kapoor, C. A. Respondent by Shri Sanjeev Krishna Sharma, Addl. CIT (D.R.) I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 2 society is registered u/s 12AA of the Income Tax Act, 1961 vide order dated 24.02.2014 of the Commissioner of Income Tax, Allahabad. The copy of letter of registration u/s 12AA of the Income Tax Act, 1961 placed on file. 3. In response to query letter dated 25.01.2016 the assessee has been filed revised Computation of income as under :- Total income as per revised Computation of Income Rs. 5,58,22,664/- Add: Accumulation of F.Y. 2010-11 & 2011-12 Rs. 2,27,00,000/- (applied for construction) Total Income Rs. 7,85,22,664/- Amount applied Rs.4,44,60,206/- Surplus Rs. 3,40,62,458/- 15% of total income Rs. 83,73,399/- Excess of 15% of total receipts Rs. 2,56,89,059/- 4. Thus, the assessee has surplus of Rs. 3,40,62,458/-, which is above 15% of the gross receipts. The amount of surplus above 15% is Rs.2,56,89,059/- for which revised Form 10 has been filed on 03.03.2016 by the a assessee without resolution passed by the Trustees/Governing body. Hence, excess of 15% of gross receipt amounting of Rs. 2,56,89,059 is added to the income of the assessee. (Addition: Rs. 2,56,89,059/-) Vide impugned appellate order dated 24/10/2019, the learned CIT(A) allowed the assessee’s appeal. The relevant part of the order of learned CIT(A) is reproduced as under: I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 3 I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 4 I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 5 I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 6 I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 7 (C) The present appeal has been filed by Revenue against the aforesaid impugned appellate order of learned CIT(A). The only ground raised by the assessee is reproduced as under: “1. Learned CIT(A) has erred in law and facts by deleting the addition made of Rs.2,56,89,059/- on account of amount surplus above 15% without appreciating the facts that the assessee trust has itself submitted revised computation and also submit the Form 10 without resolution passed by the Trustee/Government body.” (D) At the time of hearing, the learned Sr. D.R. relied upon the assessment order, relevant portion of which has already been reproduced in foregoing paragraph No.(B) of this order. He also drew our attention to the fact that the assessment order was finalized by the Assessing Officer on the basis of revised computation of income submitted by the assessee during the assessment proceedings. He also contended that the assessee submitted Form-10 without resolution passed by the trustees/Government bodies. He submitted that the assessment order having been completed on the basis of return of income and revised computation of income filed by the assessee, the assessee could have no grievance against it and the learned CIT(A) erred in allowing the assessee’s appeal. (E) The learned A.R. for the assessee submitted that the Chief Commissioner of Income Tax had passed order dated 14/11/2014 for assessment year 2005-06 granting the assessee approval u/s 10(23C) of the I. T. Act. He also drew our attention to CBDT Circular No.7/2010 [F.No.197/21/2010-I. T. Act-I] dated 27/10/2010, clarified that in the case I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 8 of approvals granted u/s 10(23C) on or after 01/12/2006, the approval would be one time approval which would be valid till it was withdrawn. On the basis of this circular, the learned A.R. for the assessee contended that the approval was valid for assessment year 2013-14, to which this appeal pertains. Therefore, he contended, that there was no error on the part of the learned CIT(A) in granting relief to the assessee u/s 10(23C) of the I. T. Act. He also relied on the decision of Hon'ble Gauhati High Court in the case of Assam Co. (India) Ltd. CIT [2002] 256 ITR 423. (E.1) Learned D.R., in rejoinder, submitted that in the return of income and during the assessment proceedings, the assessee had not claimed relief u/s 10(23C) of the Act and had instead claimed relief u/s 11 read with section 12A of the Act. After completion of the assessment proceedings, the assessee cannot go back in time and claim benefit u/s 10(23C) instead of benefit u/s 11 read with section 12A of the Act. (F) We have heard both sides. We have perused the materials on record. We find that the approval was granted to the assessee u/s 10(23C) of the Act by Chief Commissioner of Income Tax, Allahabad for assessment year 2005-06, vide order dated 14/11/2014. Further, in view of the aforesaid circular by CBDT, dated 27/10/2010, the approval was valid to the assessee u/s 10(23C) of the Act for the assessment year under consideration. Moreover, the assessment order was passed on 15/03/2016, which was well after the aforesaid date of 14/11/2014. During assessment proceedings, the assessee had also filed revised computation of income in response to query letter dated 25/01/2016; which is obviously well after the aforesaid date of 14/11/2014. It is obvious therefore, that although the approval u/s 10(23C) was valid, the assessee took a conscious decision to avail of benefit u/s 11 read with section 12 of the Act, instead of claiming the benefit u/s I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 9 10(23C) of the Act. Therefore, there is no justifiable reason for the assessee to change its stand after completion of assessment proceedings which were finalized on the basis of revised computation of income filed by the assessee. In view of the foregoing, it is held that the learned CIT(A) erred in granting benefit to the assessee u/s 10(23C) of the Act which was not even claimed by the assessee during assessment proceedings. Further, the learned CIT(A) accepted the assessee’s contention that at best the addition could have been made only to the extent of Rs.29,89,040/- and not Rs.2,56,89,059/- (as per assessment order) without any verification of this claim of the assessee at the Assessing Officer’s end. It would have been proper for the learned CIT(A) to have this contention of the assessee verified at the end of the Assessing Officer, and to take a proper view in accordance with law thereafter. (F.1) Accordingly, we set aside the impugned appellate order 24/10/2019 of learned CIT(A) and restore the issue regarding quantification of addition to the file of the Assessing Officer with the direction to recompute the addition in accordance with law after providing reasonable opportunity to the assessee. The Assessing Officer, while giving effect to this order, will verify the assessee’s claim that at best the addition could have been made only to the extent of Rs.29,89,040/- and will arrive at proper quantification of addition in accordance with law having due regard to the relevant facts and circumstances. (G) In the result, the appeal of the assessee is partly allowed for statistical purposes. (Order pronounced in the open court on 07/02/2025) Sd/. Sd/. (KUL BHARAT) (ANADEE NATH MISSHRA) Vice President Accountant Member Dated:08/02/2025 *Singh I.T.A. No.8/Lkw/2020 Assessment Year:2013-14 10 Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. D.R. ITAT, Lucknow Asstt. Registrar "