Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 73022 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 year(s) 1 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-02-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
09-01-2014
Assessment Year
2005-2006
Appeal Filed On
01-01-2009
Judgement Text
, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. !./ I.T.A. NO.14/AHD/2009 A.Y. 2005-06 2. !./ I.T.A. NO.84/AHD/2010 A.Y. 2006-07 MEHSANA DISTRICT EDUCATION FOUNDATION C/O. GANPAT VIDHYANAGAR AT: KHERVA,MEHSANA / VS. THE INCOME-TAX OFFICER WARD-2 MEHSANA & !./'( !./ PAN/GIR NO. : AAATM 3228 M ( &) / // / APPELLANT ) .. ( *+&) / RESPONDENT ) &) , / APPELLANT BY : SHRI SUNIL H.TALATI, A.R. *+&) - , / RESPONDENT BY : SHRI O.P. BATHEJA, SR.D.R. ' . - $/ / / / / DATE OF HEARING : 09/01/2014 012 - $/ / DATE OF PRONOUNCEMENT : 21/02/2014 3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE ORDERS OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS )-GANDHINAGAR (CIT(A) FOR SHORT) DATED 06/10/2008 & 15/10/2009 PERTAINING TO ASSESSMENT YEARS 2005-06 (IN RESPECT OF QUANTUM PR OCEEDINGS) & 2006- 07 (IN RESPECT OF PENALTY PROCEEDINGS) RESPECTIVELY . SINCE THESE APPEALS PERTAIN TO THE SAME ASSESSEE, THESE WERE HEARD TOGE THER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 2 - 2. FIRST, WE TAKE UP THE APPEAL FOR AY 2005-06, I.E . ITA NO.14/AHD/2009. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) PRESEN TS THIS APPEAL AGAINST THE SAME ON THE FOLLOWING AMONGST OT HER GROUNDS. 1. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN LAW A ND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS.29,72,382/- BEING PURCHASE OF LAND AND ARCHITECTS FEES PAID BY THE TRUST BY NOT CONSIDERING AND APPRECIATING THE FACT THAT THE SAID AMOUNT IS A N APPLICATION OF THE INCOME OF THE OBJECTS/PURPOSES OF THE TRUST. THE SAME SHOULD HAVE BEEN ALLOWED AS DEDUCTION WHILE COMPUTI NG THE TOTAL INCOME OF THE TRUST. IT IS SUBMITTED THAT EXPENDIT URE INCURRED OF RS.29,72,382/- BE ALLOWED AS A DEDUCTION/AS APPLICA TION OF THE INCOME OF THE TRUST WHILE COMPUTING AND DETERMINING THE TOTAL INCOME OF THE ASSESSEE TRUST. 2. THE LEARNED C.I.T.(APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING AND THUS ALLOWING TO INCREASE THE INC OME OF THE TRUST BY RS.31,66,000/- IN RESPECT OF BUILDING MAI NTENANCE. IT IS SUBMITTED THAT THE SAID AMOUNT HAS ALREADY BEEN CON SIDERED BY THE APPELLANT IN ITS COMPUTATION OF TOTAL INCOME AN D ANY OTHER TREATMENT AMOUNTS TO TAXING THE SAME INCOME TWICE. IT IS SUBMITTED THAT THE ADDITION BE DELETED. IN ANY EVE NT THE APPELLANT SUBMITS THAT THE ADDITION MADE OF RS.31,66,000/- IS INCORRECT AND ILLEGAL BOTH ON FACTS AND ON LAW AND THE SAME BE DE LETED. 3. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIR MING THE DISALLOWANCE OF RS.14,76,341/- AND RS.6,00,804/- AS CAPITAL EXPENDITURE AD NOT AS EXPENDITURE INCURRED FOR THE OBJECTS/PURPOSES OF THE TRUST. IT IS SUBMITTED THA T THE SAID EXPENDITURE ARE APPLICATION OF THE INCOME OF THE TR UST AND THE SAME BE ALLOWED ACCORDINGLY. 4. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONFIR MING THE ADDITION OF RS.1,25,000/- RECEIVED ON ACCOUNT OF SA LE OF TRACTOR WITHOUT FOLLOWING / APPRECIATING THE PRINCIPLES OF ACCOUNTING. IT IS SUBMITTED THAT THE ADDITION MADE BY THE ASSESSIN G OFFICER AND CONFIRMED BY LEARNED C.I.T.(APPEALS) IS INCORRECT O N FACTS AND ILLEGAL ON LAW AND THE SAME BE DELETED. IT IS SUBM ITTED THAT THE ASSESSEE HAS ALREADY CONSIDERED THE SAME AS INCOME IN ITS ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 3 - ACCOUNTS AND CONFIRMATION OF THE ADDITION BY THE LE ARNED C.I.T.(APPEALS) RESULTED IN DOUBLE ADDITION, WHICH REQUIRES TO BE DELETED. 5. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN CONSID ERING THE NET INCOME OF THE TRUST AT RS.43,40,953/- FOR THE PURPO SE OF CLAIMING/GRANTING EXEMPTION U/S.11(2) OF THE INCOME TAX ACT. IT IS SUBMITTED THAT THE ASSESSEE TRUST IS ENTITLED TO THE ACCUMULATION OF INCOME AND ACCORDINGLY DEDUCTION FR OM THE TOTAL INCOME ACCORDING TO THE APPLICATION MADE AS P ROVIDED I INCOME TAX ACT. IT IS SUBMITTED THAT SURPLUS TO TH E EXTENT OF APPLICATION MADE FOR ACCUMULATION OF INCOME U/S.11( 2) BE ALLOWED NOW. 6. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT TR UST SUBMITS THAT THE INCOME OF THE APPELLANT TRUST BE COMPUTED ACCOR DING TO THE PROVISIONS OF SEC.11 READ WITH SEC. 12 AND 13 CORRE CTLY AND ADDITIONS AND DISALLOWANCES MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE C.I.T.(APPEALS) BE SET ASIDE AND I NCOME AS COMPUTED BY THE APPELLANT BE DETERMINED AS CORRECT INCOME OF THE APPELLANT TRUST. 7. THE ORDER PASSED BY THE LEARNED C.I.T.(APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. I T IS SUBMITTED THAT THE SAME BE HELD SO NOW. 8. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. 3. OUT OF EIGHT GROUNDS OF THIS APPEAL, GROUND NOS. 3 & 4 ARE NOT PRESSED BY THE LD.COUNSEL FOR THE ASSESSEE AND, THE REFORE, THE SAME ARE DISMISSED AS NOT PRESSED. GROUND OS.7 & 8 ARE GENE RAL IN NATURE NEED NO INDEPENDENT ADJUDICATION. 4. FIRST GROUND IS AGAINST CONFIRMATION OF DISALLOW ANCE OF RS.29,72,382/- BEING PURCHASE OF LAND AND ARCHITECT S FEES PAID BY THE ASSESSEE-TRUST. ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 4 - 4.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 22/11/2007, THEREBY THE ASSESSING OFFICER(AO) MADE DISALLOWANCE OF RS.29,72,382/- IN RESPECT OF LAND PURCHASED AND ARCHITECT FEES. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE APPEAL. 5. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAD PURCHASED THE LAND AND HAD MADE PAYMENTS IN EARLIER YEARS FOR THE SAID PURCHASE TOTALING TO RS.23,13,433/- IN 1998. BESID ES THAT THE TRUST HAS ALSO PAID SEPARATELY FOR TUBE WELL AND FOR THE GROW N CORPS ON THE LAND, THUS TOTALLING TO RS.29,72,382/- FROM TIME TO TIME IN EARLIER YEARS. IT IS SUBMITTED THAT THESE AMOUNTS WERE SHOWN AS ADVANCES IN THE BOOKS OF ACCOUNTS AND HAD NEVER CLAIMED AS EXPENDITURE OR AS APPLICATION OF INCOME OF THE TRUST IN ANY OF THE EARLIER YEARS. I T WAS ONLY IN THIS YEAR THE TRUSTEES DECIDED TO FINALIZE THE DEAL AND BY RE SOLUTION DATED 26/03/2005 TRANSFERRED THE ADVANCES TO THE CAPITAL ASSET ACCOUNT. HE SUBMITTED THAT SUCH CAPITAL EXPENDITURE IS AN APPLI CATION OF INCOME AND HAS TO BE ALLOWED AS DEDUCTION WHILE DETERMINING TH E INCOME OF THE TRUST. THE AO DID NOT ALLOW THE SAME AND CIT(A) AL SO RELYING ON THE FINDING OF THE AO HELD THAT THE TRUST HAS NOT INCUR RED ANY EXPENDITURE DURING THIS YEAR, THE EARLIER YEAR ADVANCES PAID AR E ONLY CAPITALIZED. HE SUBMITTED THAT THE EXPENDITURE INCURRED IN EARLIER YEARS ARE NOT IN DISPUTE. THE EXPENDITURE WERE SHOWN AS ADVANCES ARE NOT IN D ISPUTE. RESOLUTION ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 5 - OF THE TRUST ARE NOT DOUBTED. HE THEREFORE SUBMIT TED THAT UNDER THESE FACTS, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DISALLOWING THE EXPENDITURE INCURRED BY THE ASSESSEE AS APPLICATION OF THE ICOME. 5.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE ITSELF HAS C APITALIZED THE EXPENDITURE INCURRED IN EARLIER YEARS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS REJECTED THE CLAIM O N THE BASIS THAT THERE HAS BEEN NO LAYING OUT OF EXPENDITURE DURING THE YE AR FOR THE PURPOSES OF PURCHASE OF LAND AND IN ITS ACCOUNTS, THE APPELLANT CONTINUES TO TREAT ITS TRANSACTION STILL AN ADVANCE AND, THEREFORE, WHATEV ER HAS BEEN PAID TO THE GOVERNMENT/FARMERS THE TRANSACTION HAS NOT REACHED FINALITY. IN THIS CONTEXT, THE LD.CIT(A) FOUND DIFFICULT TO TREAT THE RESOLUTION PASSED BY GOVERNING COMMITTEE OF THE TRUST TO TREAT CERTAIN O UTSTANDING EXPENSES AS CRYSTALLIZING THE APPLICATION OF THE INCOME, SIN CE EITHER THE EXPENDITURE WAS INCURRED DURING THE YEAR NOR SUCH A FACT IS ACK NOWLEDGED ACCOUNTANCY-WISE IN ITS BOOKS. 6.1. ON THE CONTRARY, THE CONTENTION OF THE ASSESSE E-TRUST IS THAT IN THE YEAR UNDER CONSIDERATION, THE TRUSTEES DECIDED TO F INALIZE THE DEAL AND BY RESOLUTION DATED 26/03/2005 TRANSFERRED THE ADVANCE S TO THE CAPITAL ASSET ACCOUNT. ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 6 - 6.2. WE HAVE GIVE OUR THOUGHTFUL CONSIDERATION TO T HE RIVAL CONTENTIONS. THE ADMITTED POSITION REMAINS THAT THE ASSESSEE HAD MADE PAYMENT AND SHOWN IT AS ADVANCES AND ALSO PAID SEPARATELY FOR T UBE-WELL AND THE GROWN CROPS ON THE LAND. THE ASSESSEE HAS PLACED ON RECORD THE COPY OF RESOLUTION DATED 26/03/2005. AS PER THIS RESOLUTIO N, AN AMOUNT OF RS.17,93,750/- WAS DEPOSITED IN THE GOVERNMENT TREA SURY, A SUM OF RS.2 LACS WERE PAID AS ADVANCES TO THE FARMERS AND A SUM OF RS.3,19,683/- WAS PAID AS ADVANCES FOR THE CROPS ON THE LAND UNDER PO SSESSION. NO SALE- DEED HAS BEEN PLACED ON RECORD TO VERIFY THE CONTEN TION OF THE ASSESSEE- TRUST. THEREFORE, THIS ISSUE IS REMITTED BACK TO T HE FILE OF THE LD.CIT(A) TO VERIFY WHETHER THE ASSESSEE HAD MADE PAYMENT TO THE FARMERS AS CONTENDED AND ALSO VERIFY THE AGREEMENT/SALE-DEED, IF ANY, EXECUTED BY THE ASSESSEE-TRUST AND DECIDE THIS ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FURNISH THE RELEVANT DE TAILS BEFORE THE LD.CIT(A) FOR VERIFICATION. THUS, THIS GROUND OF A SSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 7. SECOND GROUND IS AGAINST THE CONFIRMATION OF ADD ITION OF RS.31,66,000/- IN RESPECT OF BUILDING MAINTENANCE. 7.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE BUILDING MAINTENANCE CHARGES ARE THE TRANSFER OF MONIES FROM INDIVIDUAL INSTITUTIONS TO THE MAIN TRUST. HE SUBMITTED THAT THE LD.CIT(A) HELD THAT IT IS A TRITE LAW THAT ONE CANNOT EARN FROM ONESELF. IT IS SUBMITTED THAT BOTH AO AND CIT(A) HAD NOT APPRECIATED THE FACT THAT IN EARLIER YEARS AS WELL AS IN THIS Y EAR THE TRUST HAS SHOWN ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 7 - BUILDING MAINTENANCE INCOME RECEIVED BY THE TRUST F ROM TRUST MANAGED INSTITUTIONS LIKE COLLEGE, SCHOOL, HOSTEL, ETC. TH E INCOME HAS BEEN SHOWN IN THE ACCOUNTS OF THE TRUST WHERE AS IDENTIC AL AMOUNT OF EXPENDITURE WAS SHOWN BY THE SCHOOL, COLLEGE, HOSTE L, ETC. THE EFFECT OF THE ABOVE ENTRIES IN THE BOOK OF THE TRUST AND TRUS T MANAGED INSTITUTIONS AMOUNTS TO RS.NIL, HENCE THIS IS NOTIONAL ENTRIES P ASSED BY THE TRUST TO ARRIVE AT CORRECT AMOUNT OF DEFICIT/SURPLUS OF THE TRUST MANAGED INSTITUTION. THE TRUST HAS NOT SHOWN EXCESS INCOME /EXPENDITURE FOR MAKING ANY HIGHER CLAIM. THE LEARNED AO AS ALSO DE LETED INCOME FROM HOUSE PROPERTY AND HAS REDUCED EXPENDITURE OF THE I DENTICAL AMOUNT FROM THE EXPENDITURE OF TRUST MANAGED INSTITUTION. 7.2. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO INFIRMITY IN T HE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE I S THAT THE LD.AO AND LD.CIT(A) HAD NOT APPRECIATED THE FACT THAT IN EARL IER YEARS AS WELL AS IN THIS YEAR THE TRUST HAS SHOWN BUILDING MAINTENANCE INCOME RECEIVED BY THE TRUST FROM TRUST MANAGED INSTITUTIONS LIKE COLL EGE, SCHOOL, HOSTEL, ETC. THE INCOME HAS BEEN SHOWN IN THE ACCOUNTS OF THE TR UST WHERE AS IDENTICAL AMOUNT OF EXPENDITURE WAS SHOWN BY THE SC HOOL, COLLEGE, HOSTEL, ETC. THE EFFECT OF THE ABOVE ENTRIES IN T HE BOOK OF THE TRUST AND TRUST MANAGED INSTITUTIONS AMOUNTS TO RS.NIL, HENCE THIS IS NOTIONAL ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 8 - ENTRIES PASSED BY THE TRUST TO ARRIVE AT CORRECT AM OUNT OF DEFICIT/SURPLUS OF THE TRUST MANAGED INSTITUTION. 8.1. AFTER CONSIDERING THE TOTALITY OF THE FACTS, W E ARE OF THE CONSIDERED VIEW THAT IN THE INTEREST OF JUSTICE, THIS ISSUE SH OULD BE REMITTED BACK TO THE FILE OF THE LD.CIT(A) TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW FOR THE LIMITED PURPOSE TO VERIFY WHETHER EFFECT OF SUCH ACCOUNTING ENTRIES RESULT INTO RS.NIL OR NOT. THUS, THIS GROUND OF AS SESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 9. NOW, WE TAKE UP THE GROUND NOS.5 & 6 WHICH ARE I NTER-CONNECTED AND ARE AGAINST THE CONSIDERATION OF THE NET INCOME OF THE TRUST AT RS.43,40,953/- FOR THE PURPOSE OF CLAIMING/GRANTING EXEMPTION U/S.11(2) OF THE INCOME TAX ACT. 9.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE-TRUST IS ENTITLED TO THE ACCUMULATION OF INCOME AND ACCORDIN GLY DEDUCTION FROM THE TOTAL INCOME ACCORDING TO THE APPLICATION MADE AS PROVIDED IN INCOME TAX ACT. IT IS SUBMITTED THAT SURPLUS TO TH E EXTENT OF APPLICATION MADE FOR ACCUMULATION OF INCOME U/S.11(2) OF THE AC T BE ALLOWED NOW. IT IS SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE THAT THE AO HAS HELD THAT ON THE BASIS OF THE ASSESSMENT ORDER, VARIOUS ADDIT IONS ARE MADE AND THE TOTAL INCOME IS RS.1,02,07,738/- AGAINST WHICH APPL ICATION FOR CLAIMING EXEMPTION U/S.11(2) IS ONLY RS.43,40,953/-. THE AO OBSERVED THAT EVEN THIS AMOUNT OF SURPLUS ACCUMULATION HAS NOT BEEN ME NTIONED IN FORM NO.10B AND AUDITED REPORT AND, THEREFORE, EXEMPTION HAS BEEN DENIED. HE SUBMITTED THAT THE ASSESSEE HAD FILED AUDIT REPO RT FOR THE YEAR ENDING 31/03/2005. BY PASSING APPROPRIATE RESOLUTION, THE APPLICATION FOR ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 9 - ACCUMULATION OF INCOME OF THE TRUST TO THE EXTENT O F RS.5 CRORES INCLUDING THE ENTIRE INCOME OF AY 2005-06 HAS BEEN FILED. HE DREW OUR ATTENTION TOWARDS PAGE NOS.6 TO 29 AND PAGE NOS.9 TO 17 OF THE PAPER- BOOK. HE SUBMITTED THAT NOTWITHSTANDING THIS, ONCE THE ADDITIONS WERE MADE, THE AUDITOR FILED A REVISED 10B REPORT ASKING FOR THE ENTIRE ACCUMULATION OF NCOME AS ASSESSED AT RS.1,02,09,743 /- AND, IN THIS REGARD, HE DREW OUR ATTENTION TOWARDS PAGE NOS.58 T O 63 OF THE PAPER- BOOK. THE ASSESSEE-TRUST HAS CLEARLY APPLIED THE I NCOME OF THE TRUST NOT ONLY FOR AY 2005-06 BUT FOR SUBSEQUENT YEAR TO THE EXTENT OF RS.5 CRORES TO BE ACCUMULATED AND THE TRUST IS HAVING VARIOUS E DUCATIONAL INSTITUTIONS. HE DREW OUR ATTENTION TOWARDS PAGE NOS.32 TO 34 OF THE PAPER-BOOK. HE SUBMITTED THAT AS SUCH WHATEVER IS THE INCOME EITHE R AS PER BOOKS, EITHER AS PER RETURN OF INCOME OR EITHER AS PER ASSESSMENT ORDER HAD BEEN DECIDED AND IN FACT HAVE BEEN ACCUMULATED. HE SUBM ITTED THAT THE ENTIRE ACCUMULATED INCOME ARE INVESTED IN FIXED DEPOSIT RE CEIPTS AS ENVISAGED U/S.11 OF THE ACT. HE SUBMITTED THAT THE AO AND CI T(A) HAVE NOT APPRECIATED THE NOTICE OF THE TRUST FULFILLING THE PRESCRIBED CONDITIONS FOR ACCUMULATION OF INCOME. HE RELIED ON THE DECISION( S) OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF C IT VS. GUJARAT OIL AND ALLIED INDUSTRIES REPORTED AT (201 ITR 325) AND THE DECISION IN THE CASE OF CIT VS. MAYUR FOUNDATION REPORTED AT 274 ITR 562 IN SUPPORT OF THE CONTENTION THAT ACCUMULATION OF INCOME WHEN THE TRU ST IS A VALID TRUST MUST BE ALLOWED IF THE NOTICE OF ACCUMULATION WAS F ILED BEFORE THE INCOME TAX OFFICER. HE SUBMITTED THAT THE ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENTS OF SECTION 11(2) OF THE ACT. EVEN IF THE INCOME IS ENHANCED IN ASSESSMENT ORDER IN APPEAL, EFFECTIVELY THE ENTIRE INCOME OF ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 10 - THE TRUST HAS BEEN ACCUMULATED, THERE IS NO BREACH OR VIOLATION OF SECTION 11(2) AND IN VIEW OF THE SAME THE ENTIRE INCOME OF THE TRUST BE HELD EXEMPT. 9.2. ON THE CONTRARY, LD.SR.DR HAS SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO IN FIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAS OBSERVED THAT THE ASSESSEE VIDE APPLICATION DATED 31/03/2005 IN FORM NO.10 ALONG WITH THE RETURN OF I NCOME IN WHICH THE SAID SURPLUS AMOUNT OF RS.43,40,953/- HAS NOT BEEN MENTIONED. HOWEVER, THE AUDITOR IN HIS AUDIT REPORT IN FORM 10 B HAS STATED THIS AMOUNT OF RS.43,40,953/- TO BE ACCUMULATED U/S.11(2 ) OF THE ACT. THE CONTENTION OF THE ASSESSEE IS THAT THE REVISED AUDI T REPORT WAS SUBMITTED BY THE AUDITOR OF THE ASSESSEE AND RESOLUTION WAS P ASSED BY THE TRUST FOR ACCUMULATION OF INCOME OF THE TRUST TO THE EXTENT O F RS.5 CRORES. AT PAGE NO.6 OF THE PAPER-BOOK A NOTICE ADDRESSED TO THE IT O, WARD-2, MEHSANA IS ENCLOSED, WHEREIN IT IS SUBMITTED THAT OUT OF T HE INCOME OF THE TRUST/INSTITUTION/ASSOCIATION FOR THE PREVIOUS YEAR (S), RELEVANT TO THE ASSESSMENT YEAR 2005-06 AND SUBSEQUENT 5 PREVIOUS Y EARS AN AMOUNT OF RS.5 CRORES PER CENT OF THE INCOME OF THE TRUST/IN STITUTION/ASSOCIATION SUCH SUM AS IS AVAILABLE AT THE END OF THE PREVIOUS YEAR(S) SHOULD BE ACCUMULATED OR SET APART TILL THE PREVIOUS YEAR(S) ENDING 31/03/2010. ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 11 - 10.1. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CI T(A) WAS NOT JUSTIFIED IN REJECTING THIS SUBMISSION OF THE ASSESSEE, HENCE WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND RESTORE THE SAME FOR FRESH DECISION IN THE LIGHT OF THE DECISIONS OF HONBLE JURISDICTIONA L HIGH COURT RENDERED IN THE CASE OF CIT VS. GUJARAT OIL & ALLIED INDUSTR IES (SUPRA) AND CIT VS. MAYUR FOUNDATION(SUPRA). THUS, BOTH THESE GROUNDS OF ASSESSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 11. NOW, WE TAKE UP THE ASSESSEES APPEAL FOR AY 20 06-07, I.E. ITA NO.84/AHD/2010. THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS OF APPEAL:- YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR, CONFIRMING THE PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, PRESEN TS THIS APPEAL AGAINST THE SAME ON THE FOLLOWING AMONGST OTHER GRO UNDS. 1. THE LEARNED C.I.T.(APPEALS) HAS ERRED IN CONFIR MING THE PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT OF RS.5,98,523/ - + 54,594/-, I.E. TOTALING TO RS.6,53,117/-. IT IS SUBMITTED THAT ON THE FACTS AD CIRCUMSTANCES OF THE CASE THE ASSESSEE HAS NEITHER CONCEALED INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN VIEW OF THIS PENALTY CONFIRMED TO THE TURN OF RS.6,53,117/- IS BAD IN LA W, CONTRARY TO THE FACTS AD DESERVES TO BE DELETED. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE MIGHT HAVE SHOWN THE I NCOME FROM HOUSE PROPERTY BEING NOTIONAL INCOME, WITH A DESIRE TO CL AIM 15% DEDUCTION U/S.11(1)(A) OF THE I.T.ACT. IT IS SUBMITTED THAT RETURN OF INCOME AND STATEMENT AND DETAILS FILED DO TO BEAR SUCH APPREHE NSION OR IMAGINATION AND CONSEQUENTIAL FINDINGS OF CIT(APPEALS). IT IS SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS NOT AT ALL APPRECIATED THE FACTS ABOUT THE TRUE AND CORRECT DISCLOSURE OF INCOME OF RS.39,90,155/- APPROPRIATELY DISCLOSED BY THE APPELLANT. IN VIEW OF THIS, IT IS SUBMITTED THAT CONFIRMING THE PENALTY U/S.271(1)(C) HOLDING THAT T HE ASSESSEE HAS ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 12 - FURNISHED INACCURATE PARTICULARS IS NOT CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND THE SAME BE DELETED. 3. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMIN G THE PENALTY ON RS.54,594/- BEING MISTAKE INADVERTENTLY OCCURRED WH ILE COMPUTING THE INCOME ON THE BASIS OF INTER-TRANSFER OF ASSETS/FUN DS BETWEEN EDUCATIONAL INSTITUTIONS OWNED AND MANAGED BY THE T RUST. IT IS SUBMITTED THAT BOOKS OF ACCOUNTS ARE AUDITED AND FI NAL INCOME OF THE TRUST IS NIL AS PER RETURN AND AS PER ORDER. IN VI EW OF THIS, THERE IS NO JUSTIFICATION IN HOLDING THAT THE ASSESSEE HAD DELI BERATELY CONCEALED THE INCOME OF RS.54,594/-. IN VIEW OF THIS THE PENALT Y CONFIRMED TO THIS EXTENT U/S.271(1)(C) ALSO BE DELETED. 4. THE ORDER PASSED BY THE LEARNED CIT(APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 5. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND/O R TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. 11.1. FIRST GROUND IS AGAINST THE CONFIRMATION OF T HE PENALTY U/S.271(1)(C) BY THE CIT(A). THE LD.CIT(A) IN PARA -2 OF HIS ORDER RECORDED THAT THE PENALTY WAS LEVIED ON TWO ADDITIO NS; NAMELY, BUILDING MAINTENANCE CHARGE AND CAPITALIZED EXPENDITURE. 11.2 THE CONTENTION OF THE ASSESSEE IS THAT THE TRU ST HAS RECEIVED BUILDING MAINTENANCE INCOME FROM THE TRUST MANAGEME NT INSTITUTIONS LIKE COLLEGE, SCHOOL, HOSTEL, ETC. AND INCOME HAS BEEN S HOWN IN THE ACCOUNTS OF THE TRUST WHERE AS IDENTICAL AMOUNT OF EXPENDITU RE WAS SHOWN BY THE COLLEGE, SCHOOL, HOSTEL, ETC. THE EFFECT OF THE AB OVE ENTRIES IN THE BOOK OF THE TRUST AND TRUST MANAGED INSTITUTIONS AMOUNTS TO RS.NIL, HENCE THIS IS NOTIONAL ENTRIES. ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 13 - 11.3. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THIS ISSUE IS IDENTICAL AS RAISED IN ASSESSEES APPEAL FOR THE AY 2005-06(SUPRA), WHEREIN WE HAVE RESTORED THE ISS UE BACK TO THE FILE OF LD,.CIT(A) TO VERIFY WHETHER EFFECT OF SUCH ACC OUNTING ENTRIES RESULT INTO RS.NIL OR NOT. THEREFORE, THE ORDER OF LD.CI T(A) IS HEREBY SET ASIDE AND THE APPEAL IS RESTORED BACK FOR FRESH DECISION, AFTER DECISION ON THE ISSUE IN QUANTUM APPEAL PERTAINING TO AY 2005-2006. THUS, GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. AS A RESULT, ASSE SSEES APPEAL FOR AY 2006-07 IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 13. IN THE COMBINED RESULT, ASSESSEES APPEAL FOR A Y 2005-06 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ASSESSE ES APPEAL FOR AY 2006-07 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21/ 02 /2014 6/.., .../ T.C. NAIR, SR. PS ITA NOS.14 & 84 /AHD/2010 MEHSANA DISTRICT EDUCATION FOUNDATION VS. ITO ASST.YEARS 2005-06 & 2006-07 - 14 - 3 - *$7 872$ 3 - *$7 872$ 3 - *$7 872$ 3 - *$7 872$/ COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. !! $ '9 / CONCERNED CIT 4. '9() / THE CIT(A)-GANDHINAGAR 5. 7 #: *$ , , / DR, ITAT, AHMEDABAD 6. :;< =. / GUARD FILE. 3' 3' 3' 3' / BY ORDER, +7$ *$ //TRUE COPY// > >> >/ // / !' !' !' !' ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 4.2.14 (DICTATION-PAD 23-PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 5.2.14/18.2.14 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.21.2.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.2.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER
Other Referred Cases
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1:1 Consultation on Legal Requirements
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1:1 Consultation on Business Valuations
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1:1 Consultation on Salary Structuring
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Income Tax Act 2025
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No Objection Letter for Use of Property – Partnership Firm
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