BHARTIYA SHIKSHA SAMITI PURVI UTTAR PRADESH, Allahabad V. ASS. COMMISSIONER(CPC), BANGALORE

ITA 09/ALLD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3913 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 07-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N C AGRAWAL
• Keywords: Charitable institution; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD (SMC) BENCH, ALLAHABAD (THROUGH VIRTUAL COURT) BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A. NO.09/ALLD/2018 ASSESSMENT YEAR: 2013-14 BHARTIYA SHIKSHA SAMITI PURVI UTTAR PRADESH, 35A, JWALA DEVI PARISHAR, TASHKENT MARG, CIVIL LINES, ALLAHABAD [PAN: AAAAB6821F] VS ASST.COMMISSIONER (CPC), BANGALORE (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI N.C.AGRAWAL, CA FOR REVENUE : SHRI A.K.SINGH, SR.DR DATE OF HEARING : 03-11-2020 DATE OF PRONOUNCEMENT : 04-11-2020 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 20-09-2017 OF THE COMMISSIONER OF INCOME TAX(APPEALS)-ALLAHABAD FOR THE AY.2013-14. IN THIS A PPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1.BECAUSE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE FOR A SUM OF RS. 2,15,216/-. 2. BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE 'AMOUNT ACCUMULATED OR SET APART/FINALLY SET APART FOR APPLICATION TO CHARITABLE OR RELIGIOUS PURPOSE TO THE EXTENT IT DO ES NOT EXCEED 15 PERCENT' AT RS. 9,16,315/- AS AGAINST RS. 11,31,351 /-. 3. BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DEDUCTION OF RS.14,34,775/- FROM TOTAL RECEIPTS TO CALCULATE 15% WHICH COULD BE ACCUMULATED OR SET APART. ITA NO.09 /ALLD/2018 :- 2 -: 4. BECAUSE CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DECIDING GROUND NO.3 BEFORE HIM. 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY T O LAW, FACTS AND PRINCIPLES OF NATURAL JUSTICE. 2. THE ONLY ISSUE ARISES IN THIS APPEAL OF ASSESSEE IS REGARDING ADJUSTMENT OF RS.2,15,216/- WAS MADE WHILE PROCESSING THE RETURN OF INCOME ON ACCOUNT OF RE-COM PUTATION OF QUANTUM, EQUIVALENT TO 15% OF THE INCOME DERIVED B Y THE ASSESSEE U/S.11(1)(A) OF THE INCOME TAX ACT [ACT]. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED U/S.14 3(1) OF THE ACT ON 09-11-2014 BY THE CENTRAL PROCESSING CENTRE (CPC ), WHEREBY AN ADJUSTMENT OF RS.2,15,216/- WAS MADE. THE SAID ADJUSTMENT WAS MADE IN THE PROCEEDINGS U/S.143(1) OF THE ACT BY RE-COMPUTING THE AMOUNT OF 15% ALLOWED U/S.11(1)(A) OF THE ACT. THE ASSESSEE HAS CLAIMED THE AMOUNT ACCUMULATED O R SET APART TO THE TUNE OF RS.11,31,351/- U/S.11(1)(A) OF TH E ACT, WHICH IS COMPUTED ON THE GROSS RECEIPTS OF RS.75,42, 343/-. AGAINST THIS AMOUNT OF RS.11,31,351/-, THE CPC HAS WORK ED OUT A SUM OF RS.9,16,135/- AS AN AMOUNT ALLOWABLE U/S.11(1)(A) OF THE ACT, EQUIVALENT TO 15% OF THE GROSS RECEIPTS. IT APPEARS THAT THE DIFFERENCE IN THE SAID AMOUNT IS DUE TO THE REASON THAT ASSESSEE HAS ALSO EXERCISED ITS OPTION U/S. 11(1) R.W. CLAUSE-2(1) OF EXPLANATION-I TO SECTION 11(1) OF THE ACT AS THE SUM OF RS.14,34,775/- WAS SET APART BY THE ASSESSEE DUE TO NON-RECEIPT OF THE SAID AMOUNT DURING THE YEAR. THUS , THE SAID AMOUNT OF ACCUMULATION AND OPTION EXERCISED BY THE ASSESSEE WAS REDUCED FROM THE GROSS RECEIPTS WHILE CO MPUTING 15% ACCUMULATION U/S.11(1)(A) OF THE ACT. THE ASSESS EE ITA NO.09 /ALLD/2018 :- 3 -: CHALLENGED THIS ADJUSTMENT OF RS.2,15,216/- BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE THE TRIBUNAL, THE LD.AR OF THE ASSESSEE HAS SUBMITTED THAT THIS IS ONLY A MISTAKE IN COMPUTING THE AMO UNT OF ACCUMULATION AS PERMITTED U/S.11(1)(A) OF THE ACT B EING 15% OF THE INCOME OF THE TRUST, WHICH IS DEEMED AS APPLIED FOR CHARTABLE PURPOSE. HE HAS FURTHER SUBMITTED THAT WHILE COMPUTING SUCH AMOUNT OF ACCUMULATION, NOT EXCEEDING 15 % ONLY, THE INCOME DERIVED BY THE ASSESSEE-TRUST HAS TO BE TAKEN INTO ACCOUNT AND NOT THE ACTUAL RECEIPT OF INCOME DURI NG THE YEAR UNDER CONSIDERATION. THEREFORE, THE ADJUSTMENT MAD E WHILE PROCESSING THE RETURN OF INCOME IS UNJUSTIFIED AND LIABLE TO BE DELETED. 4. ON THE OTHER HAND, LD.DR HAS SUBMITTED THAT THE PROVISIONS OF SECTION 11(1) OF THE ACT STIPULATES THAT CER TAIN INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF INCOME AND THEREFORE THE RECEIPT OF INCOME DURING THE YEAR IS RELEVANT FOR C OMPUTING THE RELAXATION OF 15% AS PROVIDED U/S.11(1)(A) OF THE ACT. HE HAS POINTED OUT THAT SINCE THE ASSESSEE HAS NOT RECEIVED A SUM OF RS.14,34,775/- AND EXERCISED THE OPTION U/S.11(1) READ WITH EXPLANATION-I, THEREFORE, THE SAID AMOUNT WHICH WAS SE T APART ON THE GROUND OF NON-RECEIPT OF THE SAME DURING THE PR EVIOUS YEAR IS REQUIRED TO BE REDUCED FROM THE TOTAL RECEIPTS FOR COMPUTATION OF 15% AS PROVIDED U/S.11(1)(A) OF THE ACT. HE HAS RELIED UPON THE IMPUGNED ORDER OF THE CIT(A) AND SUBMITTED THAT THE CIT(A) HAS RIGHTLY CONSIDERED THE TOTAL ITA NO.09 /ALLD/2018 :- 4 -: RECEIPT FOR CALCULATING 15% AT RS.61,07,568/- INSTEAD OF RS.75,42,343/-. 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S THE RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THERE IS NO DISPUTE REGARDING TOTAL INCOME DERIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AT RS.75,42,343/-. IT IS ALSO NOT I N DISPUTE THAT THE ASSESSEE HAS APPLIED A SUM OF RS.49,76,217/- FOR CHARITABLE PURPOSE DURING THE YEAR UNDER CONSIDERATIO N AND ALSO EXERCISED ITS OPTION FOR SETTING APART A SUM OF RS.14,34,775/- ON ACCOUNT OF NON-RECEIPT OF SAID INCO ME DURING THE PREVIOUS YEAR RELEVANT THE ASSESSMENT YEAR UNDER CONSIDERATION. AFTER EXERCISING THIS OPTION, THE BALANCE AMOUNT IS WITHIN THE LIMIT OF 15% OF INCOME AS ALLOWABLE U /S.11(1)(A) OF THE ACT. THUS, TO THE EXTENT OF ACCUMULATION OR SET APAR T NOT EXCEEDING 15% OF THE INCOME AS PROVIDED U/S.11(1)(A) OF THE ACT, THE SAME IS ELIGIBLE FOR EXEMPTION U/S.11 OF THE A CT. FURTHER, AS PER EXPLANATION-I TO SECTION 11(1) OF THE ACT, THE TRUST IS FURTHER ALLOWED TO DEFER THE APPLICATION OF INC OME WHICH IS EVEN FALLING SHORT OF 85% OF THE INCOME DERI VED FROM THE YEAR IF THE ASSESSEE HAS EXERCISED AN OPTION BEFOR E THE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT. IN THE CASE ON HAND, THE ASSESSEE HAS DULY EXERCISED THE SAID OPTI ON WHICH IS ALSO ACCEPTED BY THE DEPARTMENT AND THE AMOUN T WHICH WAS SET APART AS PER EXPLANATION-I WAS REDUCED F ROM THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST. IT IS PERTINENT TO NOTE THAT ONCE THE INCOME OF TRUST IS CONSIDE RED AS THE INCOME RECEIVED AS WELL AS ACCRUED, THEN, AT THE TIM E OF ALLOWING THE RELAXATION OF APPLICATION OF THE SAID I NCOME ITA NO.09 /ALLD/2018 :- 5 -: U/S.11(1)(A) OF THE ACT, A DIFFERENT PARAMETER CANNOT BE APPLIED. THE LD.DR HAS GIVEN MUCH STRESS ON THE TER M RECEIPT AS APPEARING IN SECTION 11(1) OF THE ACT, HOWEVER, THE SAID TERM RECEIPT OF INCOME IS ONLY IN THE CONTEXT OF THE PERSON WHO IS IN RECEIPT AND NOT IN THE CONTEXT OF INCOME DER IVED FROM THE PROPERTY HELD UNDER THE TRUST. THEREFORE, THE INCO ME DERIVED FROM THE PROPERTY HELD UNDER THE TRUST REMAINS THE SAME FOR COMPUTING THE BENEFITS AS PROVIDED U/S.11 OF THE I.T.ACT. HENCE, THE COMPUTATION OF THE QUANTUM OF 15% OF THE INCOME DERIVED SHOULD BE ON THE BASIS OF THE INCOME A S DECLARED BY THE ASSESSEE, WHICH IS CONSIDERED FOR AL L OTHER PURPOSES. A DIFFERENT MEANING OF INCOME DERIVED FRO M PROPERTY CAN BE GIVEN FOR THE PURPOSE OF CALCULATING THE RELAX ATION OF ACCUMULATION OR SET APART EQUIVALENT TO 15% OF SUCH IN COME. HENCE, THE ADJUSTMENT MADE WHILE PROCESSING THE RETUR N OF INCOME IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SE CTION 11(1) OF THE ACT AND THE SAME IS LIABLE TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH NOVEMBER, 2020 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER ALLAHABAD, DATED: 04-11-2020 TNMM ITA NO.09 /ALLD/2018 :- 6 -: COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT 6. GUARD FILE TRUE COPY BY ORDER (ITAT, ALLAHABAD)