The Asstt. Commissioner of Income-tax, Hoshiarpur V. Carmelite Charitable Society, Hoshiarpur

ITA 136/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8931 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 05-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Source of fund; Deemed to accrue or arise in india; Reasonable cause; Capital expenditure
• Section: 143(3); 12A; 12AA; 154; 11

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.136(ASR)/2014 ASSESSMENT YEAR:2003-04 PAN: AAATC2438G ASSISTANT COMMISSIONER OF INCOME TAX, VS. M/S. CARM ELITE CHARITABLE HOSHIARPUR CIRCLE, HOSHIARPUR. SOCIETY, VPO KAKKO N, HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARSEM LAL, DR RESPONDENT BY:SH. K.V.S.R. KRISHNA, CA DATE OF HEARING: 05/10/2015 DATE OF PRONOUNCEMENT: 01/01/2016 ORDER THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2003-04, TAKING THE FOLLOWING GROUNDS: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN CONDONING THE DELAY IN FURNISHING THE APPEAL WITHOUT APPRECIATING THAT THE ASSESSEES PERSUASION OF ALTERNATIVE REMEDIES WAS N OT A SUFFICIENT AND BONAFIDE CAUSE OF DELAY IN FURNISHIN G THE APPEAL. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE ADDITION O F RS.12,40,475/- HAD BEEN MADE BY THE AO ON GOOD GROU ND BUT ON ERRONEOUS INVOCATION OF THE PROVISIONS OF SECTIO N 11(3)(D) OF THE INCOME TAX ACT, 1961. THE POWER OF THE LD. CIT (A) BEING COTERMINOUS WITH THOSE OF AO., THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE EXPENDITURE OF RS.12,40,475 WAS NOT INCUR RED FOR CHARITABLE PURPOSES. 2. THE ASSESSEE IS A TRUST REGISTERED U/S 12A OF TH E INCOME TAX ACT, 1961 ( IN SHORT, THE ACT), AS A CHARITABLE TRUST. IT IS GOVERNED BY ITS MEMORANDUM AND RULES AND REGULATIONS AND IS ALSO RE GISTERED UNDER ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 2 THE SOCIETIES REGISTRATION ACT. THE ASSESSEE IS HAV ING RELIGIOUS, EDUCATIONAL AND CHARITABLE NATURE OF ACTIVITIES. F OR THE YEAR UNDER CONSIDERATION, IT DECLARED AN INCOME OF RS.20,76,01 0/-, WHICH WAS CLAIMED AS EXEMPT U/S 11 OF THE ACT. 3. THE AO NOTICED THAT THE ASSESSEE HAD INCURRED E XPENSES OF RS.17,31,291/-, DEBITED AS MAINTENANCE EXPENSES O F RELIGIOUS NATURE. OUT OF THESE EXPENSES, THE ASSESSEE WAS FOUND TO H AVE INCURRED EXPENSES OF RS.12,40,475/- ON COMMUNITY CENTRES WHI CH WERE NOT RUN BY THE ASSESSEE TRUST. THESE EXPENSES WERE HELD TO BE EXPENSES INCURRED ON CENTERS OUT OF THE WORKING AREA OF THE ASSESSEE TRUST, SINCE THESE CENTERS WERE UNDER THE CONTROL OF OTHER CHARITABLE TRUSTS. THE AO OPINED THAT BY INCURRING THESE EXPENSES, THE ASSESSEE HAD INFRINGED THE PROVISIONS OF SECTION 11(3)(D) OF THE ACT. IT WAS O BSERVED THAT THE ASSESSEE HAD GIVEN ITS NO OBJECTION TO THE DISALLOWANCE OF E XPENSES TO THE EXTENT OF RS.12,40,475/-. AS SUCH, THE AO TREATED THE AMOUNT OF RS.12,40,475/- AS DEEMED INCOME OF THE ASSESSEE, AS PER THE PROVIS IONS OF SECTION 11(3)(D) OF THE ACT. THE ASSESSMENT WAS THUS COMPL ETED VIDE ORDER DATED 08.06.2005, PASSED U/S 143(3) OF THE ACT. 4. THE ASSESSE FILED A RECTIFICATION APPLICATION D ATED 18.07.2005 BEFORE THE AO. THEREIN, IT WAS SUBMITTED THAT WHILE CALCULATING INCOME AND EXEMPTION U/S 11 OF THE ACT, THE AO HAD CONSIDE RED ONLY THE AMOUNT SPENT/APPLIED ON ACCOUNT OF REVENUE EXPENDIT URE, BUT HAD NOT CONSIDERED AMOUNTS SPENT ON ACCOUNT OF CAPITAL EXPE NDITURE DURING THE YEAR; AND THAT THE ASSESSEE TRUST HAD SPENT AN AMOU NT OF RS.1,86,74,223.05 ON ACCOUNT OF CAPITAL EXPENDITURE , AS PER ITS SCHEDULE OF FIXED ASSETS. 5. VIDE ORDER DATED 28.11.2005, PASSED U/S 154 OF T HE ACT, THE AO REJECTED THE ASSESSEES APPLICATION, HOLDING THAT T HERE WAS NO MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDER. ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 3 6. THE LD. CIT(A), VIDE ORDER DATED 29.11.2006, DIS MISSED THE ASSESSEES APPEAL AGAINST THE AFORESAID ORDER DATED 28.11.2005 PASSED U/S 154 OF THE ACT. 7. MEANWHILE, THE ASSESSEE HAD MOVED ANOTHER RECTIF ICATION APPLICATION DATED 04.05.2006 BEFORE THE AO, CONTEND ING THEREIN, THAT FOR THE ASSESSMENT YEAR 2003-04, AN ADDITION OF RS.12,4 0,475/- HAD BEEN MADE FOR VIOLATION OF THE PROVISIONS OF SECTION 11( 3)(D) OF THE ACT; THAT THE SAID SECTION HAD WRONGLY BEEN INTERPRETED DURING TH E ASSESSMENT PROCEEDINGS; AND THAT THE AO AND THE ASSESSEES COU NSEL HAD SIMPLY TAKEN THAT NO DONATION TO OTHER TRUSTS OR INSTITUTI ONS COULD BE GIVEN AND HENCE, THE ADDITION HAD BEEN MADE BY THE AO, WHEREA S THE EXACT LEGAL POSITION WAS THAT DONATIONS AND CONTRIBUTIONS TO O THER TRUSTS AND INSTITUTIONS COULD NOT BE GIVEN OUT OF ACCUMULATED INCOME. 8. THE ABOVE RECTIFICATION APPLICATION WAS ALSO REJ ECTED BY THE AO VIDE ORDER DATED 23.05.2006, OBSERVING THAT THE ISSUE RA ISED BY THE ASSESSEE WAS A DEBATABLE ONE AND IT COULD NOT BE RECTIFIED U /S 154 OF THE ACT. IT WAS ALSO HELD THAT THERE WAS NO MISTAKE APPARENT F ROM THE RECORD. 9. VIDE ORDER DATED 29.11.2006, THE LD. CIT(A) DISM ISSED THE ASSESSEES APPEAL AGAINST THE AFORESAID ORDER DATED 23.05.2006. 10. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A) ON 03.01.2007. THIS APPEAL WAS AGAINST THE ORIGINAL ASSESSMENT OR DER DATED 08.06.2005. IT WAS BELATED BY ABOUT SEVENTEEN MONTH S. 11. BY VIRTUE OF ORDER DATED 30.01.2009, THE LD. CI T(A) CONDONED THE AFORESAID DELAY IN THE FILING OF THE APPEAL. THE AD DITION MADE BY THE AO U/S 11(3)(D) OF THE ACT WAS DELETED. ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 4 12. THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE I TAT AGAINST THE AFORESAID ORDER DATED 30.01.2009 PASSED BY THE LD. CIT(A). 13. THE ITAT, VIDE ORDER DATED 21.07.2009, RESTORED THE APPEAL TO THE FILE OF THE LD. CIT(A), OBSERVING AS FOLLOWS: THIS APPEAL FILED BY THE REVENUE FOR THE ASSESSMEN T YEAR 2003-04 IS DIRECTED AGAINST THE ORDER DATED 30-1-2009 PASSE D BY THE LEARNED CIT(A), JALANDHAR ON THE FOLLOWING GROUNDS OF APPEA L:- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN CONDONING THE DELAY IN F URNISHING THE APPEAL WITHOUT APPRECIATING THE ASSESSEES PERS UASION OF ALTERNATIVE REMEDIES WAS NOT A SUFFICIENT AND BONAF IDE CAUSE OF DELAY IN FURNISHING THE APPEAL. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE ADDITION O F RS.12,40,375/- HAD BEEN MADE BY THE AO ON GOOD GROU ND BUT ON ERRONEOUS INVOCATION OF THE PROVISIONS OF SECTIO N 11(3)(D) OF THE INCOME TAX ACT, 1961. THE POWER OF THE LD. CIT (A) BEING COTERMINOUS WITH THOSE OF AO, THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE EXPENDITURE OF RS.12,40,735/- WAS NOT INCU RRED FOR CHARITABLE PURPOSES. 3. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AN D DISPOSED OF. 2. THE PRESENT APPEAL FILED BY THE REVENUE AGITATING T HAT THE LEARNED FIRST APPELLATE AUTHORITY HAS WRONGLY CONDO NED THE DELAY OF 17 MONTHS IN FILING THE APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. ACCORDINGLY, THE LEARNED D.R. STATED THAT THE ASSESSEE HAS NOT EXPLAINED THE DELAY IN DETAIL AND HAS ALSO NOT FILED ANY DOCUMENTARY EVIDENCE SUPPORTING THE SAME BUT THE CIT(A) HAS WRONGLY CONDONED THE DELAY OF 17 MONTHS. SECONDLY, THE LEARNED CIT(A) HAS ALSO WRONGLY DELET ED THE ADDITION IN DISPUTE WITHOUT TAKING INTO CONSIDERATI ON THAT THE ASSESSEE DID NOT OBJECT TO THE ADDITION OF RS.12,4 0,275/- UNDER SECTION 11(3)(D) OF THE INCOME TAX ACT IN RES PECT OF THE DONATION MADE BY THE ASSESSEE TRUST TO ANOTHER TRUS T ON A WRONG INTERPRETATION OF THE SECTION. THE LEARNED D .R. STATED THAT WHEN THERE IS A CONSENTED ADDITION MADE BY THE A.O., THE ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 5 ASSESSEE IS DEBARRED FROM FILING THE APPEAL FURTHER TO THE APPELLATE AUTHORITY. HE REQUESTED THAT THE IMPUGNE D ORDER MAY BE CANCELLED AND ORDER OF THE A.O. MAY BE UPHEL D. 3. ON THE CONTRARY, THE LEARNED COUNSEL FOR THE ASSESS EE HAS CONTROVERTED THE ARGUMENTS ADVANCED BY THE LEARNED D.R. AND RELIED UPON THE ORDER PASSED BY THE LEARNED FIRST A PPELLATE AUTHORITY AND STATED THAT THE LEARNED FIRST APPELLA TE AUTHORITY HAS RIGHTLY CONDONED THE DELAY IN DISPUTE BECAUSE THE ASSESSEE REMAINED BUSY IN THE ASSESSMENT PROCEEDING S BY FILING AN APPLICATION UNDER SECTION 154 OF THE INCO ME TAX ACT, 1961 BEFORE THE A.O. HE FURTHER SUBMITTED THAT THE ADDITION OF RS.12,40,475/- HAS RIGHTLY BEEN DELETED BY THE LEAR NED CIT(A). HE REQUESTED THAT THE APPEAL FILED BY THE REVENUE BE DISMISSED. 4. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RELEVANT RECORDS AVAILABLE WITH US. WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS CONDONED THE DELAY OF 17 MONTHS WITHOUT MENTIONING ANY SUFFICIENT REASONS FOR CONDONING THE SAME. EVEN OT HERWISE THE LEARNED FIRST APPELLATE AUTHORITY HAS NOT DISCUSSED ANY EVIDENCE FILED BY THE ASSESSEE, IF ANY, IN SUPPORT OF THE DELAY OF 17 MONTHS. WE ARE NOT UPHOLDING THE IMPUGNED OR DER BUT IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW THAT THE MATTER REQUIRES THOROUGH RE-EXAMINATION AT THE LEVEL OF TH E CIT(A). WE DIRECT HIM TO PASS A DETAILED ORDER ON THE DELAY OF 17 MONTHS IN FILING THE APPEAL BEFORE HIM AND THEN PASS THE O RDER UNDER THE LAW ON THE ISSUE IN DISPUTE. 14. THE LD. CIT(A), VIDE ORDER DATED 13.12.2013 ONC E AGAIN CONDONED THE DELAY IN THE FILING OF THE APPEAL. ON MERITS, T HE ADDITION OF RS.12,40,475/-, MADE BY THE AO U/S 11(3)(D) OF THE ACT, WAS DELETED. 15. IT IS THE AFORESAID ORDER DATED 13.12.2013 PASS ED BY THE LD. CIT(A), WHICH BRINGS THE DEPARTMENT IN APPEAL AGAIN BEFORE THIS BENCH IN THIS SECOND ROUND. 16. THE FIRST ISSUE RAISED BY THE DEPARTMENT BY WAY OF GROUND NO.1 IS THAT THE LD. CIT(A) HAS ERRED IN CONDONING THE DELA Y IN THE FILING OF THE ASSESSEES APPEAL WITHOUT APPRECIATING THAT PURSUI NG ALTERNATIVE ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 6 REMEDIES WAS NOT A SUFFICIENT AND BONA FIDE CAUSE F OR CONDONING SUCH DELAY IN THE FILING OF THE APPEAL. 17. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS CONTENDED THAT THE LAW FAVOURS THE DILIGENT AND IN THE PRESENT CAS E, IF THE ASSESSEE WAS NOT DILIGENT AND WAS LACKADAISICAL IN FILING THE AP PEAL BEFORE THE LD. CIT(A), UNSUCCESSFULLY FILING FRIVOLOUS APPLICATIO N BEFORE THE AO FOR RECTIFICATION OF THE PERFECTLY JUSTIFIED ASSESSMENT ORDER, THIS DEFINITELY WAS NOT A GOOD AND SUFFICIENT CAUSE FOR THE LD. CIT(A) TO HAVE CONDONED THE INORDINATE DELAY OF ALMOST SEVENTEEN MONTHS IN THE FILING OF THE APPEAL. IT HAS BEEN SUBMITTED THAT THE LD. CIT(A) HAS GONE WRONG IN OBSERVING THAT THE TIME TAKEN BY THE ASSESSEE IN PURSUING UNS UCCESSFUL PROCEEDINGS BEFORE THE AO WAS A SUFFICIENT CAUSE FO R NOT FILING THE APPEAL IN TIME. 18. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 19. FURTHER, RELYING ON NICCO CORPORATION LTD. VS . CIT AND OTHERS, 251 ITR 79 (CAL.), IT HAS BEEN CONTENDED THAT THERE IN ALSO, INITIATION OF UNSUCCESSFUL PROCEEDINGS WAS HELD TO CONSTITUTE SU FFICIENT CAUSE PREVENTING THE FILING OF AN APPLICATION FOR REVISI ON IN TIME. RELIANCE IS ALSO PLACED ON SAURASHTRA CEMENT AND CHEMICAL INDU STRIES LTD. VS. CIT, 115 ITR 27 (GUJ.), SAURASHTRA CEMENT AND CH EMICAL INDUSTRIES LTD. VS. CIT, 168 ITR 231 (GUJ.) AND DELHI CLOTH & GENERAL MILLS CO. LTD. VS. CIT, 165 ITR 599 (P&H). 20. I HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD WITH REGARD TO THIS ISSUE. THE ISSUE IS AS TO WHETH ER THE LD. CIT(A) WAS JUSTIFIED IN CONDONING THE DELAY OF ALMOST SEVENTE EN MONTHS IN FILING THE APPEAL WHERE THE ASSESSEE WAS PURSING APPLICATIONS FILED U/S 154 OF THE ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 7 ACT, BY WAY OF UNSUCCESSFUL ALTERNATE REMEDY. IN N ICCO CORPORATION LTD. (SUPRA), AS RIGHTLY CONSIDERED BY THE LD. CIT(A), IT WAS HELD THAT THE DELAY SHOULD BE CONDONED IN A CASE WHERE THE LITIGANT HAS PROCEEDED WITH A PROCEEDING, BONA FIDE UNSUCCESSFULLY AND THE TIME TAKEN FOR THE UNSUCCESSFUL COMPLETION OF THIS PROCEEDING SHOULD B E EXCLUDED. THE LD. CIT(A) FOLLOWED SAURASHTRA CEMENT AND CHEMICALS IN DUSTRIES LTD. VS. CIT 115 ITR 27 (GUJ.). THE DECISIONS IN SAURASHTR A CEMENT AND CHEMICALS INDUSTRIES LTD. VS. CIT, 168 ITR 231 (GU J.) AND DELHI CLOTH & GENERAL MILLS CO. LTD. (SUPRA), ARE TO THE SAME EF FECT. 21. IN LINE WITH THESE DECISIONS, IT IS SEEN THAT I N THE PRESENT CASE, THE ASSESSEE, IN PURSUING THE TWO MISCELLANEOUS APPLICA TIONS FILED BEFORE THE AO, WAS ADVISED BY ITS COUNSEL AND AS SUCH, THE L D. CIT(A) IS CORRECT IN HOLDING THAT THERE WAS REASONABLE CAUSE FOR THE DEL AY INCURRED IN FILING THE APPEAL AGAINST THE ORIGINAL ASSESSMENT ORDER. O THERWISE TOO, IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST KATIJI AND OTHERS, 167 ITR 471 (SC), IT HAS BEEN HELD THAT AN APPEAL SHOULD B E DISPOSED OF ON MERITS FOR MEETING THE ENDS OF JUSTICE. MOREOVER, T HE ASSESSEE CANNOT BE SAID TO STAND TO GAIN ANYTHING BY FILING THE APPEAL AFTER A LONG DELAY. RATHER, BY INTENTIONALLY FILING THE BELATED APPEAL, THE ASSESSEE HAS INVITED THE CONSEQUENCES ARISING THEREFROM, I.E., P ROTRACTED LITIGATION WHICH, AT THE PRESENT STAGE IS IN THE FORM OF THIS SECOND APPEAL IN ITS SECOND ROUND. NOW, OBVIOUSLY, THE ASSESSEE CANNOT BE ATTRIBUTED ANY MALAFIDE INTENTION OR ULTERIOR MOTIVE IN INTENTIONA LLY DELAYING IN THE FILING OF THE APPEAL, IN THE CIRCUMSTANCES. MOREOVER, EVEN LACK OF DUE DILIGENCE CANNOT BE ASCRIBED TO THE ASSESSEE, AS THE ASSESSEE , IN FILING AND PURSUING THE TWO RECTIFICATION APPLICATIONS BEFORE THE AO, ACTED IN GOOD FAITH ON LEGAL ADVISE, WHICH FACT HAS NOT BEEN DISP UTED. SINCE THE ADDITION IN THE ASSESSMENT ORDER WAS BASED ON THE M ISPLACED ADMISSION OF THE ASSESSEE, THE ASSESSEE CANNOT BE SAID TO HA VE ERRED IN FILING THE ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 8 RECTIFICATION APPLICATIONS BEFORE THE AO RATHER THE FILING AN APPEAL BEFORE THE LD. CIT(A), ON LEGAL ADVICE. 22. IN VIEW OF THE ABOVE, FINDING NO MERIT THEREIN, THE GRIEVANCE RAISED BY THE DEPARTMENT BY WAY OF GROUND NO.1 IS REJECTED , UPHOLDING THE LD. CIT(A)S ORDER ON THIS SCORE. 23. SO FAR AS REGARDS GROUND NO.2, THE DEPARTMENT C ONTENDS THAT THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE A O HAD MADE THE ADDITION OF RS.12,40,475/- ON GOOD GROUND, BUT ON E RRONEOUS INVOCATION OF THE PROVISIONS OF SECTION 11(3)(D) OF THE ACT. I T IS CONTENDED THAT SINCE THE POWERS OF THE LD. CIT(A) WERE CO-TERMINUS WITH THOSE OF THE AO, THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE EXPENDITURE OF RS.12,40,475/- HAS NOT BEEN INCURRED FOR CHARITABLE PURPOSES. 24. THE FACTS ARE THAT WHILE CHECKING THE EXPENSES DEBITED UNDER THE HEAD MAINTENANCE EXPENSE OF RELIGIOUS NATURE, THE AO NOTICED THAT THE ASSESSEE HAD INCURRED EXPENSES OF RS.17,31,291/- AN D OUT OF THESE EXPENSES, EXPENSES TO THE EXTENT OF RS.12,40,475/- STOOD INCURRED ON COMMUNITY CENTERS WHICH WERE RUN BY THE ASSESSEE IT SELF, BUT WERE UNDER THE CONTROL OF OTHER CHARITABLE TRUSTS. THE A O OBSERVED THAT WHILE INCURRING THESE EXPENSES, THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 11(3)(D) OF THE ACT. IT WAS OBSERVED THAT T HE ASSESSEE HAD ITSELF GIVEN ITS NO OBJECTION TO THE DISALLOWANCE OF THES E EXPENSES OF RS.12,40,475/-. THE AO TREATED THESE EXPENSES OF RS .12,40,475/- AS DEEMED INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 11(3)(D) OF THE ACT. THE LD. CIT(A) DELETED THIS ADDITION. 25. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HA S ERRED IN DELETING THE ADDITION RIGHTLY MADE BY THE AO AND FOR DOING S O, THE LD. CIT(A) HAS GONE WRONG IN FOLLOWING THE ORDER DATED 30.01.2009 OF HIS PREDECESSOR. IT HAS BEEN SUBMITTED THAT THE LD. CIT(A) HAS ALSO ER RED IN HOLDING THAT ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 9 SECTION 11(3)(D) OF THE ACT HAS NO APPLICATION; THA T THE LD. CIT(A) HAS FURTHER GONE WRONG IN PLACING RELIANCE ON THE FACT THAT SIMILAR EXPENDITURE, AS THE ONE UNDER CONSIDERATION, WAS AL LOWED BY THE AO IN MANY SUBSEQUENT YEARS WHILE COMPLETING THE SCRUTINY ASSESSMENTS; THAT EACH YEAR IS AN INDEPENDENT YEAR; THAT BESIDES, THE FACTS OF THE YEAR UNDER CONSIDERATION ARE ENTIRELY DIFFERENT FROM ALL THOSE YEARS, WHICH HAS NOT BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT(A) ; THAT THE LD. CIT(A) HAS FAILED TO CONSIDER THAT THE EXPENDITURE OF RS.1 2,40,475/- IS RELIGIOUS EXPENDITURE, THE DETAIL WHEREOF HAS BEEN TABULATED IN THE EARLIER FIRST APPELLATE ORDER DATED 30.01.2009 AND REPRODUCED AT PAGES 14-15 OF THE IMPUGNED ORDER; THAT ONCE THE EXPENDITURE IS RELIGI OUS IN NATURE, IT CANNOT, OBVIOUSLY, BE SAID TO BE CHARITABLE EXPEN DITURE AND THE LD. CIT(A) HAS FAILED TO TAKE THIS ASPECT OF THE MATTER INTO ACCOUNT; AND THAT, THEREFORE, THE ORDER UNDER APPEAL ON THIS SCORE IS NOT SUSTAINABLE IN THE EYE OF LAW AND THE SAME BE SET ASIDE AND THE ADDITI ON BE RESTORED. 26. ON THE OTHER HAND, WHILE PLACING STRONG RELIANC E ON THE IMPUGNED ORDER IN THIS REGARD, THE LD. COUNSEL FOR THE ASSES SEE HAS CONTENDED THAT THERE IS NO ERROR IN THE ACTION OF THE LD. CIT(A) I N TAKING INTO ACCOUNT THE EARLIER ORDER DATED 30.01.2009 AND ADOPTING THE REA SONING TAKEN THEREIN BY HIS PREDECESSOR CIT(A). IT HAS BEEN CONTENDED TH AT IT REMAINS UNDISPUTED THAT AS PER THE INCOME AND EXPENDITURE S TATEMENT FURNISHED BY THE ASSESSEE ALONGWITH THE RETURN OF INCOME, THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, FROM ALL SOURCES OF INCOME, AMOUNTED TO RS.1,66,11,541/-. HOWEVER, THE EXPENDIT URE OF RS.12,40,475/- WAS NOT INCURRED OUT OF ANY ACCUMULA TE INCOME. IT HAS BEEN SUBMITTED THAT AS NOTED BY THE AO HIMSELF, TH E AMOUNT OF RS.12,40,475/- WAS INCLUDED AS AMOUNT SPENT AT COMM UNITY CENTRE AND VARANASI ASHRAM FOR THE PURPOSE OF EDUCATION OF THE FATHERS WHO SERVE THE SOCIETY IN VARIOUS SCHOOLS RUN BY IT, AS THE TE ACHERS, SUPERVISORS, PRINCIPALS, ETC. IT HAS BEEN CONTENDED THAT THE AC CEPTANCE OF THE ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 10 ADDITION BY THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS WAS OF NO CONSEQUENCE, SINCE THE ADDITION WAS NOT AT ALL CALL ED FOR, IN VIEW OF THE ABOVE LEGAL POSITION. IT HAS BEEN CONTENDED THAT TH E AO DID NOT RECORD ANY FINDING THAT THE PAYMENTS MADE BY THE ASSESSEE WERE OUT OF THE ACCUMULATION MADE BY THE ASSESSEE U/S 11(2) OF THE ACT AND THAT THE PROVISIONS OF SECTION 11(3)(D) OF THE ACT WERE WRON GLY APPLIED, THERE BEING NO VIOLATION OF THE SAID PROVISIONS AT THE HANDS OF THE ASSESSEE. 27. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CO NTENDED THAT SINCE SIMILAR EXPENDITURE WAS ALLOWED BY THE AO IN MANY S UBSEQUENT YEARS UNDER SCRUTINY ASSESSMENT, UNDER SIMILAR FACTS AND CIRCUMSTANCES, WHICH FACTS HAVE NOT BEEN DEMONSTRATED TO BE DIS-SI MILAR FROM THOSE PRESENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION , THE LD. CIT(A) CANNOT BE SAID TO HAVE COMMITTED ANY ERROR IN TAKI NG THOSE SCRUTINY ASSESSMENT ORDERS FOR SUBSEQUENT YEARS INTO CONSID ERATION. 28. BESIDES, IT HAS ALSO BEEN URGED THAT THE ARGUME NT OF THE DEPARTMENT THAT THE EXPENDITURE WAS OF A RELIGIOUS NATURE AND THAT THEREFORE, IT CANNOT BE SAID THAT IT WAS CHARITABLE , DOES NOT ARISE FROM THE IMPUGNED ORDER; THAT THE AO HAS HIMSELF STATED IN T HE ASSESSMENT ORDER THAT THE AMOUNT WAS GIVEN TO ANOTHER CHARITABLE TRU ST; THAT THEREFORE, THERE IS NO DISPUTE REGARDING THE EXPENDITURE BEING RELIGIOUS IN NATURE; THAT THE AO ACCEPTED THE ASSESSEES APPLICATION OF INCOME; THAT THE ONLY DISPUTE IS REGARDING THE APPLICABILITY OR OTHERWISE OF THE PROVISIONS OF SECTION 11(3)(D) OF THE ACT; AND THAT UNDER SECTION 11(3)(D), WHICH WAS INTRODUCED W.E.F. ASSESSMENT YEAR 2003-04, THE ACC UMULATION IS NOT ALLOWED FOR BEING GIVEN TO ANY OTHER CHARITABLE INS TITUTION, WHICH IS NOT THE CASE HERE, AS IN THE PRESENT CASE, THE DONATION WAS GIVEN OUT OF THE CURRENT INCOME OF THE ASSESSEE, THERE BEING NO ACCU MULATED INCOME OF THE ASSESSEE. ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 11 29. I HAVE HEARD THE PARTIES ON THIS ISSUE IN THE L IGHT OF THE MATERIAL AVAILABLE ON RECORD. THE AO HELD THE AMOUNT OF RS.1 2,40,475/-, EXPANDED BY THE ASSESSEE ON COMMUNITY CENTRES, WHIC H WERE NOT RUN BY THE ASSESSEE TRUST, TO BE THE DEEMED INCOME OF THE ASSESSEE. THE ADDITION WAS MADE BY INVOKING THE PROVISIONS OF SEC TION 11(3)(D) OF THE ACT. NOW, SECTION 11(3)(D) OF THE ACT IS APPLICABLE IN RESPECT OF ANY INCOME REFERRED TO IN SECTION 11(2) OF THE ACT, WHI CH DEALS WITH THE APPLICATION OF ACCUMULATED INCOME OF THE ASSESSEE. SECTION 11(2) READS AS FOLLOWS: (2) WHERE EIGHTY-FIVE PER CENT, OF THE INCOME REFER RED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION (1) READ WI TH THE EXPLANATION TO THAT SUB-SECTION IS NOT APPLIED, OR IS NOT DEEMED T O HAVE BEEN APPLIED, TO CHARITABLE OR RELIGIOUS PURPOSES IN IND IA DURING THE PREVIOUS YEAR BUT IS ACCUMULATED OR SET APART, EITH ER IN WHOLE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN INDIA SUC H INCOME SO ACCUMULATED OR SET APART SHALL NOT BE INCLUDED IN T HE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE I NCOME, PROVIDED THE FOLLOWING CONDITIONS ARE COMPLIED WITH, NAMELY: - (A) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIV EN TO THE ASSESSING OFFICER IN THE PRESCRIBED MANNER, THE PURPOSE FOR W HICH THE INCOME IS BEING ACCUMULATED OR SET APART, WHICH SHALL IN NO CASE EXCEED TEN YEARS; (B) THE MONEY SO ACCUMULATED OR SET APART IS INVES TED OR DEPOSITED IN THE FORMS OF MODE SPECIFIED IN SUB-SECTION (5): PROVIDED THAT IN COMPUTING THE PERIOD OF TEN YEARS REFERRED TO IN CLAUSE (A), THE PERIOD DURING WHICH THE INCOME COUL D NOT BE APPLIED FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR S ET APART, DUE TO AN ORDER OR INJUNCTION OF ANY COURT, SHALL BE EXCLUDED . PROVIDED FURTHER THAT IN RESPECT OF ANY INCOME ACCU MULATED OR SET APART ON AFTER THE IST DAY OF APRIL, 2001, THE PROV ISIONS OF THIS SUB- SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS-TEN YEARS AT BOTH THE PLACES WHERE THEY OCCUR, THE WORDS FIVE YEARS HAD BEEN SUBSTITUTED. EXPLANATION ANY AMOUNT CREDITED OR PAID, OUT OF I NCOME REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECTION (1), REA D WITH THE EXPLANATION TO THAT SUB-SECTION, WHICH IS NOT APPLI ED, BUT IS ACCUMULATED OR SET APART, TO ANY TRUST OR INSTITUTI ON REGISTERED U/S 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (V) OR SUB-CLAUSE (VI) OR SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, SH ALL NOT BE TREATED AS ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 12 APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES, EITHER DURING THE PERIOD OF ACCUMULATION OR THEREAFTER. SECTION 11(3)(D) READ AS UNDER: (3) ANY INCOME REFERRED TO IN SUB-SECTION (2) WHI CH- (A) (B).. (C).. (D) IS CREDITED OR PAID TO ANY TRUST OR INSTITUTION REGISTERED U/S 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVE RSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER ME DICAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (V) OR SUB-CLAUSE (VI) { OR SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, SHA LL BE DEEMED TO BE THE INCOME OF SUCH PERSON OF THE PREVIOUS YEAR IN W HICH IT IS SO APPLIED OR CEASES TO BE SO ACCUMULATED OR SET APART OR CEASES TO REMAIN SO INVESTED OR DEPOSITED OR CREDITED OR PAID OR, AS THE CASE MAY BE, OF THE PREVIOUS YEAR IMMEDIATELY FOLLOWING THE EXPIRTY OF THE PERIOD AFORESAID. 30. THUS, THE VERY OPENING WORDS OF SECTION 11(2) A RE RELEVANT, IN AS MUCH AS THEY MAKE MENTION OF EIGHTY FIVE PERCENT OF THE INCOME REFERRED TO IN SECTION 11(1) (A) (B), AS PER WHICH, THE INCO ME DERIVED FROM THE PROPERTY HELD UNDER TRUST, AS PROVIDED THEREIN, SHA LL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF. BOTH SECTIONS 11(1)(A) AND 11(1)(B) TALK OF APPLICA TION OF INCOME ACCUMULATED OR SET APART FOR APPLICATION FOR CHARIT ABLE OR RELIGIOUS PURPOSES. 31. IN THE PRESENT CASE, IT HAS NOWHERE BEEN THE C ASE OF THE DEPARTMENT THAT THERE WAS ANY ACCUMULATION OR SETTI NG APART OF INCOME BY THE ASSESSEE. IT REMAINS UNDISPUTED THAT THE EXP ENDITURE WAS INCURRED OUT OF THE CURRENT INCOME OF THE ASSESSEE, SINCE IT HAD NOT ACCUMULATED ANY INCOME. IT WAS DULY TAKEN INTO CON SIDERATION BY THE LD. CIT(A) IN PARA 3.2 OF THE ORDER DATED 30.01.2009, W HICH WAS FOLLOWED IN THE IMPUGNED ORDER, THAT THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE SHOWED CURRENT YEARS INCOME ON ACCOUNT OF INTEREST, SCHOOL FEES AND MISCELLANEOUS INCOME. THE EXPENDITURE ON A CCOUNT OF PAYMENT TO OTHER RELIGIOUS INSTITUTIONS OR TRUSTS STOOD DEB ITED AGAINST THE CURRENT ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 13 YEARS INCOME ONLY. THIS REMAINED AND REMAINS UNDIS PUTED. HENCE, THE LD. CIT(A) CANNOT BE SAID TO HAVE COMMITTED ANY ERR OR WHATSOEVER IN ADOPTING THE LINE OF REASONING TAKEN BY THE LD. CIT (A) IN PASSING THE ORDER DATED 30.01.2009, IN FRAMING THE IMPUGNED ORDER. RA THER, IT WOULD NOT BE INAPPROPRIATE TO REPRODUCE HERE THE AFORESAID P ARA 3.2 OF THE ORDER DATED 30.01.2009: 3.2 THE INCOME AND EXPENDITURE ACCOUNT OF THE APPEL LANT SHOWS CURRENT YEARS INCOME ON ACCOUNT OF INTEREST, SCHOO L FEES AND MISC. INCOME. THE EXPENDITURE ON ACCOUNT OF PAYMENT TO OT HER RELIGIOUS INSTITUTIONS OR TRUST IS DEBITED AGAINST THE CURREN T YEARS INCOME ONLY. THUS, IT IS APPARENT THAT THE PAYMENT TO OTH ER TRUST IS OUT OF CURRENT INCOME AND NOT FROM ANY INCOME ACCUMULATED U/S 11(2), NOTED ABOVE, DEALS WITH THE CASES WHERE 85% (75% TI LL AY 2002-03) OF THE INCOME OF THE ELIGIBLE TRUST WAS NOT APPLIED OR WAS NOT DEEMED TO HAVE APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES DURING THE PREVIOUS YEAR BUT WAS ACCUMULATED OR SET APART. IT STATES THAT THE SAME WOULD NOT BE INCLUDED IN THE TOTAL INCOME ON S ATISFACTION OF CERTAIN CONDITIONS. SECTION 11(3)(D), WHICH DEEMS P AYMENTS MADE TO OTHER TRUSTS ETC. AS DEEMED INCOME OF THE ASSESSEE, APPLIES TO INCOME ACCUMULATED U/S 11(2), AND WOULD, THEREFORE, NOT BE APPLICABLE IN RESPECT OF THE CURRENT YEARS PAYMEN T TO ANOTHER RELIGIOUS INSTITUTION. IN PARA 21 OF THE CIRCULAR NO. 8 DATED 27.08.2002, THE CBDT HAS EXPLAINED THE IMPLICATION OF INSERTION OF SECTION 1 1(3)(D) AND THE EXPLANATION INSERTED BELOW SECTION 11(2) OF THE ACT . THIS IS EXTRACTED AS UNDER: 1. RESTRICTION ON THE APPLICATION OF ACCUMULATED INCOME OF THE CHARITABLE OR RELIGIOUS TRUSTS 2.1. THROUGH FINANCE ACT, 2002, AN EXPLANATION HAS BEEN INSERTED BELOW SUB-SECTION (2) OF SECTION 11 SO AS TO PROVIDE THAT ANY AMOUNT PAID OR CREDITED OUT OF INCOME FROM PROPERTY HELD UNDER TRUST REFERRED TO IN CLAUSE(A) OR CLAUSE (B) OF SUB- SECTION (1), READ WITH THE EXPLANATION TO THAT SUB- SECTION, WHICH IS NOT APPLIED, BUT IS ACCUMULATED OR SET APART, TO AN Y TRUST OR INSTITUTION REGISTERED U/S 12AA OR TO ANY FUND OR I NSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (FOR SUB-CLAUSE (VI) OR SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, EITHER DURING THE PERIOD OF ACCUMULATION OR THEREAFTER, SHALL NOT BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES. THUS, PAYMENT TO OTHER TRUSTS AND INSTITUTIONS OUT OF INCOME FROM PROPERTY HELD UNDER TRUST IN THE YEAR OF RECEIPT WILL CONTINUE TO BE TREATED AS APPLICATION OF ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 14 INCOME. HOWEVER, ANY SUCH PAYMENT OUT OF THE ACCUMU LATED INCOME SHALL NOT BE TREATED AS APPLICATION OF INCOME AND W ILL BE TAXED ACCORDINGLY. 21.2 THROUGH FINANCE ACT, 2002, A NEW CLAUSE (D) H AS ALSO BEEN INSERTED IN SUB-SECTION (3) OF SECTION 11 SO AS TO PROVIDE THAT IF ANY INCOME REFERRED TO SUB-SECTION (2) OF THE SAID SECT ION, IS PAID OR CREDITED TO ANY TRUST OR INSTITUTION REGISTERED U/S 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION REFERRED TO IN SUB-CLAUSE (IV) OR (V) OR (VI) OR (VIA) OF CLAUSE ( 23C) OF SECTION 10, SUCH PAYMENT OR CREDIT SHALL BE DEEMED TO BE THE INCOME OF THE PERSON MAKING SUCH PAYMENT OR CREDIT, OF THE PREVIOUS YEAR IN WHICH SUCH PAYMENT OR CREDIT IS MADE. IT HAS BEEN CLARIFIED ABOVE THAT ONLY PAYMENTS OUT OF ACCUMULATED INCOME WOULD NOT BE TREATED AS APPLICATION OF INCOM E OF THE CHARITABLE INSTITUTION AND THAT SUCH PAYMENTS OUT O F ACCUMULATED INCOME WOULD ALONE BE DEEMED TO BE INCOME OF THE TR UST. IN PARA 21.1 OF THIS CIRCULAR, IT HAS BEEN CLARIFIED THAT P AYMENTS TO OTHER TRUSTS AND INSTITUTIONS OUT OF INCOME OF THE CURRE NT INCOME OF THE TRUST WOULD CONTINUE TO BE TREATED AS APPLICATION O F INCOME. THE FACTS IN THE CASE OF THE APPELLANT SHOW THAT THE PAYMENT TO OTHER TRUSTS/INSTITUTIONS WAS OUT OF THE CURRENT INCOME O F THE TRUST. EXPENDITURE HEAD OF THE EXPENSES OF THE INCOME AND EXPENDITURE ACCOUNT. THUS, AS PER THE PROVISIONS OF THE ACT AND AS PER CIRCULAR NO.8 DISCUSSED ABOVE, THE ADDITION MADE BY THE AO W AS UNCALLED FOR. 32. IT WOULD ALSO BE APPROPRIATE TO REITERATE THE CONTENTS OF PARA 21 OF THE CBDT CIRCULAR NO.8 DATED 27.08.2002, EXPLAINING THE IMPLICATION OF SECTION 11(3)(D) AND THE EXPLANATION TO SECTION 11( 2) OF THE ACT. AS PER THIS PARA, INTER-ALIA, PAYMENT TO OTHER TRUSTS AND INSTITUTIONS OUT OF INCOME FROM PROPERTY HELD UNDER TRUST IN THE YEAR O F RECEIPT WILL BE CONTINUED TO BE TREATED AS APPLICATION OF INCOME, B UT ANY SUCH PAYMENT OUT OF ACCUMULATED INCOME SHALL NOT BE TREATED AS A PPLICATION OF INCOME AND WILL BE TAXED ACCORDINGLY. THE STRESS HERE IS ON PAYMENT OUT OF ACCUMULATED INCOME. HOWEVER, AS DISCUSSED, IT REM AINS UNCHALLENGED THAT THE PRESENT ASSESSEE DID NOT HAVE ANY ACCUMULA TED INCOME AND THE PAYMENT WAS MADE OUT OF THE INCOME OF THE CURRENT Y EAR. ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 15 33. FURTHER, THE LD. CIT(A) ALSO TOOK NOTE OF THE F ACT THAT NEITHER IN THE SHOW CAUSE NOTICE, NOR IN THE ASSESSMENT ORDER WAS ANY MENTION MADE OF THE PROVISIONS OF SECTION 11(2) OF THE ACT, BEFO RE INVOKING THE PROVISIONS OF SECTION 11(3)(D). THEREFORE, OBVIOUSL Y, THE AO WRONGLY INVOKED THE PROVISIONS OF SECTION 11(3)(D) WITHOUT BRINGING ON RECORD ANYTHING WITH REGARD TO THE PROVISIONS OF SECTION 1 1(2) OF THE ACT. IN THIS REGARD, THE GROUND TAKEN BY THE DEPARTMENT STATES T HAT THE POWERS OF THE LD. CIT(A) BEING CO-TERMINUS WITH THOSE OF THE AO, THE ERRONEOUS INVOCATION OF THE PROVISIONS OF SECTION 11(3)(D) OF THE AO OUGHT TO HAVE BEEN RECTIFIED BY THE LD. CIT(A), HOLDING THAT THE EXPENDITURE WAS NOT INCURRED FOR CHARITABLE PURPOSES. 34. NOW, FIRSTLY, IF AT ALL, THIS QUESTION OUGHT TO HAVE BEEN RAISED BY THE AO BEFORE THE LD. CIT(A) IN THE FIRST PLACE ITSELF. HOWEVER, AS AVAILABLE FROM ITEM NO.10 AT PAGE 1 OF THE IMPUGNED ORDER, N ONE WAS PRESENT FOR THE DEPARTMENT IN THE PROCEEDINGS BEFORE THE LD. C IT(A). MOREOVER, IT REMAINS UNDISPUTED THAT THE EXPENDITURE WAS INCURRE D FOR THE PURPOSE OF DONATION OF THE FATHERS WHO SERVED IN VARIOUS SCHOO LS RUN BY THE ASSESSEE, AS TEACHERS, SUPERVISORS AND PRINCIPALS, ETC. THE ASSESSEE RUNS SEVERAL EDUCATIONAL SCHOOLS IN PUNJAB UNDER THE NAM E OF MOUNT CARMEL SCHOOL. THE ASSESSEE IS REGISTERED UNDER SECTION 12 A(A) OF THE ACT, BESIDES BEING REGISTERED WITH THE REGISTRAR OF SOCI ETIES, PUNJAB. THE REGISTRATION CONTINUES HITHERTO. THE FACT THAT THE OBJECTS OF THE SOCIETY ARE CHARITABLE STANDS ACCEPTED BY THE DEPARTMENT IN ALL THE SUBSEQUENT YEARS. THE ASSESSEE HAS NOT BEEN SHOWN TO HAVE CARR IED OUT ANY ACTIVITY WHICH IS NOT IN CONSONANCE WITH ITS CHARITABLE OBJE CTS. AS SUCH, THERE IS NO FORCE IN THE ARGUMENT THAT THE EXPENDITURE WAS N OT INCURRED FOR CHARITABLE PURPOSES. THIS ISSUE WAS NEVER RAISED BE FORE THE LD. CIT(A) BY THE AO, THOUGH THE AO HAS A DUAL CAPACITY, I.E., N OT ONLY OF ADJUDICATOR, BUT ALSO OF INVESTIGATOR, AND HE IS A PARTY BEFORE THE LD. CIT(A). BE THAT AS IT MAY, AS DISCUSSED, NO CASE STANDS MADE OUT OF TH E EXPENDITURE HAVING ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 16 NOT BEEN INCURRED BY THE ASSESSEE FOR CHARITABLE PU RPOSES. IT HAS NOT BEEN SHOWN THAT THE PURPOSE OF EDUCATION OF THE FAT HERS, WHO SERVE IN THE VARIOUS SCHOOLS OF THE ASSESSEE AS TEACHERS, SU PERVISORS AND PRINCIPALS, ETC., IS NOT A PURPOSE TOWARDS EDUCATIO N. THE LD. DR HAS REFERRED TO THE CHART/TABLE AT PAGES 14-15 OF THE I MPUGNED ORDER, GIVING DETAILS OF THE EXPENSES. THE THIRD COLUMN THEREIN N ARRATES THE RECIPIENT IN EACH CASE. THE LD. DR CONTENDS THAT THIS NARRAT ION SHOWS THE RECIPIENT TO BE RELIGIOUS COMMUNITY CENTRE, RELIGI OUS ASHRAM AND MONASTERY. THUS, AS PER THE LD. DR, EXPENDITURE HAS BEEN INCURRED TOWARDS RELIGIOUS PURPOSE AND NOT A CHARITABLE ONE. 35. PER-CONTRA, THE LD. COUNSEL FOR THE ASSESSEE HA S CONTENDED THAT THIS ARGUMENT DOES NOT ARISE EITHER FROM THE IMPUGNED OR DER, OR FROM THE AOS ORDER, WHICH STANDS MERGED IN THE IMPUGNED ORD ER. NOW, OBVIOUSLY, THIS ARGUMENT DOES NOT ARISE FORM THE IMPUGNED ORDE R, SINCE THE GROUND ITSELF, I.E., GROUND NO.2, CHALLENGES THAT THOUGH T HE POWERS OF THE LD. CIT(A) ARE CO-TERMINUS WITH THOSE OF THE AO, THE LD . CIT(A) HAS ERRED IN NOT HOLDING THAT THE EXPENDITURE WAS NOT INCURRED F OR CHARITABLE PURPOSES, IN THE INSTANCE OF THE PROVISIONS OF SECT ION 11(3)(D) OF THE ACT HAVING BEEN WRONGLY APPLIED BY THE AO. THAT BEING S O, THIS ARGUMENT IS AVAILABLE TO THE DEPARTMENT AT THIS STAGE. 36. NOW, COMING TO THE ISSUE PER SE, I.E., AS TO WH ETHER THE PAYMENT IS TOWARDS RELIGIOUS PURPOSES AND NOT CHARITABLE PURPO SES, IT IS TO REITERATE THAT IT HAS NOT BEEN DISPUTED THAT THE PAYMENT WAS FOR THE PURPOSE OF THE EDUCATION OF THE FATHERS, WHO SERVE IN VARIOUS SCHOOLS RUN BY THE ASSESSEE, AS TEACHERS, SUPERVISORS AND PRINCIPALS, ETC. BEFORE THE AO, IT WAS BECAUSE OF THE WRONG ADMISSION OF THE ASSESSEE THAT THE ADDITION WAS MADE. THE TWO RECTIFICATION APPLICATIONS FILED BY THE ASSESSEE BEFORE THE AO MET WITH A NEGATIVE FATE QUA THE ASSESSEE, I .E., THEY WERE REJECTED. HOWEVER, THE FACT REMAINS THAT IT HAS NOT BEEN SHOW N THAT THE PAYMENT ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 17 IN QUESTION WAS NOT TOWARDS THE EDUCATION OF THE FA THERS SERVING IN THE SCHOOLS OF THE ASSESSEE. AS SUCH, THE NARRATION IN THE TABLE CONTAINED AT PAGES 14-15 OF THE IMPUGNED ORDER DOES NOT MAKE THE PAYMENT TO BE FOR A RELIGIOUS PURPOSE AND NOT FOR A CHARITABLE ONE. T HIS NARRATION, BY ITSELF, IS NOT DETERMINATIVE OF THE NATURE OF THE E XPENSE, PARTICULARLY WHEN EDUCATION OF THE FATHERS HAS NOT BEEN SHOWN NOT TO BE TOWARDS EDUCATION, WHICH IS A CHARITABLE PURPOSE OF THE ASS ESSEE 37. THEREFORE, THE GRIEVANCE OF THE DEPARTMENT THAT THE LD. CIT(A), HOLDING POWERS CO-TERMINUS WITH THOSE OF THE AO, OU GHT TO HAVE HELD THE EXPENDITURE NOT TO HAVE BEEN INCURRED FOR CHARITABL E PURPOSES, IS FOUND TO BE DEVOID OF FORCE, PARTICULARLY IN THE ABSENCE OF ANY MATERIAL ON RECORD TO PROVE THE EXPENDITURE TO BE TOWARDS ANY R ELIGIOUS PURPOSE. HENCE, GROUND NO.2 IS REJECTED. 38. TO SUM UP, I HOLD THAT THE LD. CIT(A) WAS CORR ECT IN (I) CONDONING THE DELAY INCURRED BY THE ASSESSEE IN FILING ITS AP PEAL AND (II) DELETING THE ADDITION WRONGLY MADE BY THE AO. 39 IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/01/201 6. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 01/01/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. CARMELITE CHARITABLE SOCIETY, VPO KAKKON, HOSHIARPUR. 2. THE ACIT, HOSHIARPUR CIRCLE, HOSHIARPUR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER ITA NO.136(ASR)/2014 ASSESSMENT YEAR: 2003-04 18 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.