DY. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE, PUNE, SWARGATE, PUNE V. DR D Y PATIL UNITECH SOCIETY, PUNE

ITA 1391/PUN/2025

AI Insights

The case involves the DCIT (Exemption) Circle, Pune as the appellant and Dr D Y Patil Unitech Society as the respondent. The dispute centered on the correct interpretation and application of section 11(1)(a) of the Income Tax Act, 1961, concerning the accumulation of income by charitable trusts. The Assessing Officer initially restricted the accumulation to the extent of the actual surplus available after application of income, leading to a reassessment. However, the Ld. Addl / JCIT(A) reversed this decision, allowing the deduction based on gross receipts. The Revenue appealed against this decision, which was upheld by the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783240 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-05-2025
• Other Referred Cases: CIT vs. Rao Charitable Trust, CIT vs. Programme for Community Organization, Maharshi Karve Stree Shikshan Samstha vs. ITO, Dawat Institute of Dawoodi Bohra Community vs. ITO, DIT vs. Raghuvanshi Charitable Trust and Ors., CIT vs. Institute of Banking Personnel Selection
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: NIKHIL S PATHAK
• Keywords: Reassessment proceedings; Depreciation; Charitable institution
• Section: 147; 148; 143(3); 142(1); 11

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.1391/PUN/2025 Assessment year : 2013-14 DCIT (Exemption) Circle, Pune Vs. Dr D Y Patil Unitech Society Flat No.101, Shree Motisagar Apartment, G G Thakkar Road, S No.173A, Pune – 411001 PAN: AABTD1482A (Appellant) (Respondent) Assessee by : Shri Nikhil S Pathak Department by : Shri Amol Khairnar, CIT-DR Date of hearing : 27-10-2025 Date of pronouncement : 04-11-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the Revenue is directed against the order dated 06.03.2025 of the Ld. Addl / JCIT(A)-3, Delhi relating to assessment year 2013- 14. 2. Facts of the case, in brief, are that the assessee is a trust primarily engaged in educational activities. It is also engaged in providing medical ayurvedic services. It filed its return of income on 30.09.2014 declaring total loss at Rs.10,87,42,880/-. The Assessing Officer completed the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 03.03.2015 assessing the total income at Rs.7,04,69,855/- after making disallowance of depreciation amounting to Rs.4,50,27,084/-. Printed from counselvise.com 2 ITA No.1391/PUN/2025 3. Subsequently, the Assessing Officer noted that as per provisions of section 11 of the Act, the assessee is entitled to accumulate income u/s 11(1)(a) of the Act to the extent of 15% for future years, however, such accumulation is permissible only to the extent of availability of surplus. He noticed that in the case of assessee though the surplus available with the assessee was only Rs.81,16,319/-, however, the accumulation u/s 11(1)(a) of the Act had been claimed by the assessee at Rs.7,85,86,174/- which is not as per law. In view of the above, the Assessing Officer, invoking the provisions of section 147 of the Act, reopened the assessment. Accordingly notice u/s 148 of the Act was issued to the assessee on 28.03.2018. 4. The assessee in response to the same filed the return of income on 26.04.2018. The reasons for reopening the assessment were also sought which were provided to the assessee. Subsequently, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee in response to which the AR of the assessee appeared from time to time and filed the requisite details. After considering the submissions filed by the assessee the Assessing Officer restricted the accumulation u/s 11(1)(a) of the Act to the extent of surplus available to the assessee after allowing the expenditure incurred. Thus, the Assessing Officer determined the total income of the assessee at Nil. 5. Before the Ld. Addl / JCIT(A) it was argued that the Assessing Officer while restricting the accumulations u/s 11(1)(a) has relied on the decision of the Mumbai Bench of the Tribunal in the case of Dawat Institute of Dawoodi Bohra Community vs. ITO order dated 30.04.2013. However, the Hon’ble Supreme Printed from counselvise.com 3 ITA No.1391/PUN/2025 Court in the case of CIT vs. Rao Charitable Trust reported in 216 ITR 697 (SC) has held that exemption u/s 11(1)(a) of the Act i.e. 15% is an absolute exemption and the application of section 11(2) of the Act does not extend to nullify the absolute exemption. Similar view has been taken by the Hon’ble Supreme Court in the case of CIT vs. Programme for Community Organization reported in 248 ITR 1 (SC). The decision of the Pune Bench of the Tribunal in the case of Maharshi Karve Stree Shikshan Samstha vs. ITO reported in (2019) 101 taxmann.com 175 (Pune – Trib.) was also brought to the notice of the Ld. Addl / JCIT(A). 6. Based on the submissions and the arguments advanced by the assessee, the Ld. Addl / JCIT(A) directed the Assessing Officer to allow the deduction u/s 11(1)(a) of the Act on 15% of the receipt of the trust and allow the application of income after the remaining amount by observing as under: Printed from counselvise.com 4 ITA No.1391/PUN/2025 7. Aggrieved with such order of the Ld. Addl / JCIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds: 1. On the facts and circumstances of the case, the Ld. CIT(A) erred in allowing deduction u/s. 11(1)(a) of the Income Tax Act, 1961 at 15% of the gross receipts without appreciating that such accumulation is permissible only out of the income remaining after application of income. 2. On the facts and circumstances of the case, the Ld. CIT(A) erred in relying upon the decision of the Hon'ble ITAT, Pune in the case of Maharshi Karve Stree Shikshan Samstha, without appreciating that the decision has not been accepted by the Revenue and an appeal (ITXAL/1047/2019) against the said decision has already been filed before the Hon'ble Bombay High Court. 3. On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that the original assessment had wrongly allowed an excess accumulation of Rs.7,85,85,174/- despite there being an actual surplus available of Rs.81,16,319/- only, which was rightly rectified in the reassessment proceedings. 4. On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that 15% accumulation u/s 11(1)(a) is an absolute exemption without linking it to actual surplus available contrary to the scheme of taxation of charitable trusts under the Act. 5. The appellant craves leave to add, alter or amend any or all the grounds of appeal. 8. The Ld. DR referring to the grounds of appeal submitted that the Ld. Addl / JCIT(A) while deciding the issue in favour of the assessee has relied on the decision of the Pune Bench of the Tribunal in the case of Maharshi Karve Stree Printed from counselvise.com 5 ITA No.1391/PUN/2025 Shikshan Samstha vs. ITO (supra) which has not been accepted by the department and an appeal has been filed before the Hon’ble Bombay High Court which is still pending. Therefore, the order of the Ld. Addl / JCIT(A) be reversed and that of the Assessing Officer be restored. 9. The Ld. Counsel for the assessee on the other hand while supporting the order of the Ld. Addl / JCIT(A) submitted that the issue has been decided by the Ld. Addl / JCIT(A) by following the decisions of the Hon’ble Supreme Court in the case of CIT vs. Rao Charitable Trust (supra), CIT vs. Programme for Community Organization and the decision of the Hon’ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel Selection reported in (2003) 264 ITR 110 (Bom). He submitted that merely because the Revenue has filed an appeal against the order of the Tribunal, however, unless the order is reversed by the Hon’ble High Court, the view of the Tribunal shall prevail. In any case, since the Ld. Addl / JCIT(A) has also relied on the decision of the Pune Bench of the Tribunal which in turn has followed the decision of the Hon’ble Supreme Court, therefore, the same being in order, grounds raised by the Revenue should be dismissed. 10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. Addl / JCIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case following the decision of the Mumbai Bench of the Tribunal in the case of Dawat Institute of Dawoodi Bohra Community vs. ITO (supra) restricted the exemption u/s 11(1)(a) Printed from counselvise.com 6 ITA No.1391/PUN/2025 of the Act from Rs.7,85,86,174/- to Rs.81,16,319/- on the ground that such exemption is available to the assessee only to the extent of surplus revenue after application of the expenditure. We find the Ld. Addl / JCIT(A) directed the Assessing Officer to allow the deduction u/s 11(1)(a) of the Act on 15% of the receipt of the trust and allow the application of income after the remaining amount, the reasons of which have already been reproduced in the preceding paragraphs. While doing so, he relied on the decisions of the Pune Bench of the Tribunal in the case of Maharshi Karve Stree Shikshan Samstha vs. ITO (supra) which in turn has followed the decision of the Hon’ble Delhi High Court in the case of DIT vs. Raghuvanshi Charitable Trust and Ors. reported in (2011) 197 Taxman 170 (Delhi) according to which the exemption u/s 11(1)(a) of the Act i.e. 15% is an absolute exemption and the application of section 11(2) of the Act does not extend to nullify the absolute exemption. Further, the Coordinate Bench of the Tribunal while deciding the issue has also followed the decision of the Hon’ble Supreme Court in the case of CIT vs. Programme for Community Organization (supra) and CIT vs. Rao Charitable Trust (supra). Since the Ld. Addl / JCIT(A) while deciding the issue in favour of the assessee has followed the decision of the Coordinate Bench of the Tribunal which in turn has followed two decisions of the Hon’ble Supreme Court and the decision of Hon’ble Bombay High Court and Hon’ble Delhi High Court, therefore, merely because the Revenue has not accepted the decision of the Pune Bench of the Tribunal in the case of Maharshi Karve Stree Shikshan Samstha vs. ITO (supra) and an appeal has been filed before the Hon’ble Bombay High Court, the same in our opinion cannot be a ground to decide the issue in favour of the Revenue by taking a different view other than the view taken by the Tribunal. Printed from counselvise.com 7 ITA No.1391/PUN/2025 The Ld. DR could not point out any distinguishable features other than the filing of an appeal against the order of the Tribunal which is still pending. Since the order of the Ld. Addl / JCIT(A) is based on the decision of the Coordinate Bench of the Tribunal which in turn has followed various decisions including the decisions of the Hon’ble Supreme Court and the decision of the Hon’ble Bombay High Court and Hon’ble Delhi High Court, therefore, we do not find any infirmity in the order of the Ld. Addl / JCIT(A) directing the Assessing Officer to allow the deduction u/s 11(1)(a) of the Act on 15% of the receipt of the trust and allow the application of income after the remaining amount. The grounds raised by the Revenue are accordingly dismissed. 11. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 4th November, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 4th November, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 8 ITA No.1391/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 03.11.2025 Sr. PS/PS 2 Draft placed before author 04.11.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "