M/S JAI JOHAR SEWWA SANSTHAN KANGOLI, JAGDALPUR (CG) V. THE DY. COMMISSIONER OF INCOME TAX 1(1), RAIPUR (CG)

ITA 148/BIL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8568 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G N SINGH
• Assessee Lawyers: R B DOSHI
• Keywords: Charitable institution; Set aside
• Section: 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ./ I.T.A. NO. 148/RPR/2016) ( [ [ / ASSESSMENT YEAR : 2011-12) JAI JOHAR SEWA SANSTHAN KANGOLI OPP. SWASTHA KENDRA, BALAJI NAGAR, DHARAMPURA NO.1, JAGDALPUR, DISTT. BASTAR, JAGDALPUR (CG), PIN: 494001 / VS. DEPUTY COMMISSIONER OF INCOME TAX 1(1), CENTRAL REVENUE BUILDING, CIVIL LINES, RAIPUR (CG) PIN : 492001 ./ ./PAN/GIR NO. : AAAJ9255H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R. B. DOSHI, C.A. / RESPONDENT BY : SHRI G. N . SINGH, DR / DATE OF HEARING 11/08/2021 / DATE OF PRONOUNCEMENT 12/08/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, RAIPUR (CIT(A) IN SHORT), DATED 31.03.2016 ARISING IN THE ASSESSMENT ORDER DATED 28.03.2014 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2011-12. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: ITA NO. 148/RPR/2016 (JAI JOHAR SEWA SANSTHAN KANGOLI VS. DCIT) A.Y. 2011-12 - 2 - 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING ACTION OF ASSESSING OFFICER IN TREATING UNUTILIZED AMOUNT AS ON 31.03.2011 OF RS.1,44,11,003/- OUT OF GRANT RECEIVED FROM ESSAR LIMITED AT THE FAG END OF THE YEAR AS INCOME OF THE SOCIETY FOR THE YEAR UNDER CONSIDERATION WITHOUT CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE PROPERLY AND JUDICIALLY. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING ACTION OF ASSESSING OFFICER IN NOT ALLOWING EXEMPTION U/S 11 MERELY FOR PROCEDURAL DEFAULT, IF ANY, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE PROPERLY AND JUDICIALLY. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE CASE RECORDS. THE CONTROVERSY IN THE PRESENT CASE REVOLVES AROUND THE ENTITLEMENT OF BENEFITS TO THE CHARITABLE TRUST UNDER S.11 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE SOCIETY HAS RECEIVED AN AMOUNT OF RS.2 CRORES FROM ESSAR STEEL LTD. THE AMOUNT WAS HANDED OVER TO THE ASSESSEE UNDER CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVE FOR SPECIFIC PURPOSES OF PROMOTION OF HEALTH/EDUCATION AND LIVELIHOOD GENERATION INCLUDING SKILL DEVELOPMENT FOR LOCAL COMMUNITY TOWARDS THEIR WELFARE. THE AMOUNT HANDED OVER TO THE ASSESSEE WAS THUS NOT TO BE MEANS RETAINED IN THE TRUST BUT TO BE SPENT FOR THE PURPOSES SPECIFIED BY THE DONOR. OUT OF AMOUNT SO RECEIVED UNDER CSR, AN AMOUNT OF RS.55,88,997/- WAS ACTUALLY SPENT DURING THE YEAR FOR THE PURPOSES ASSIGNED IN RESPECT OF SUCH RECEIPT. HOWEVER, THE BALANCE AMOUNT OF RS.1,44,11,003/- COULD NOT BE UTILIZED IN THE F.Y. 2010- 11 CONCERNING A.Y. 2011-12. THE REMAINING AMOUNT WAS HOWEVER UTILIZED IN F.Y. 2011-12. ON THIS PREMISE, AS STATED, THE UNUTILIZED AMOUNT WAS DULY DECLARED IN THE COMPUTATION OF INCOME THAT THE AFORESAID AMOUNT IS DEEMED TO BE APPLIED DURING THE PREVIOUS YEAR (CLAUSE 2 OF EXPLANATION (2) OF SECTION 11(1) OF THE ACT) AND THUS TREATED AS APPLICATION OF INCOME UNDER S.11(1) OF THE ACT. ITA NO. 148/RPR/2016 (JAI JOHAR SEWA SANSTHAN KANGOLI VS. DCIT) A.Y. 2011-12 - 3 - 3.1 THE AO IN THE COURSE OF THE ASSESSMENT CONTROVERTED THE AFORESAID AMOUNT TREATED BY THE ASSESSEE AS ACCUMULATED OR SET APART FOR SPECIFIED PURPOSE AND CLAIMED UNDER S.11(1) OF THE ACT. 3.2 TO SUPPORT ITS CLAIM OF ENTITLEMENT OF DEDUCTION UNDER S.11(1) OF THE ACT, IT IS THE CASE OF THE ASSESSEE THAT IN TERMS OF EXPLANATION 1 TO SECTION 11(1) OF THE ACT, THE ASSESSEE IS ENTITLED IN LAW TO EXTEND THE PERIOD OF APPLICATION OF INCOME FOR SPECIFIED PURPOSES IN THE IMMEDIATELY NEXT FINANCIAL YEAR ALSO. SUCH APPLICATION WILL BE DEEMED AS ADEQUATE COMPLIANCE OF SET APART/APPLICATION OF DONATION ACCUMULATED FOR SPECIFIED PURPOSES. IT IS REITERATED ON BEHALF OF THE ASSESSEE THAT MONEY HAS BEEN ACTUALLY UTILIZED IN THE IMMEDIATE NEXT YEAR AND THEREFORE SUBSTANTIAL COMPLIANCE OF THE LAW HAS BEEN CARRIED OUT DESPITE DEFICIENCY IN NOT MAKING AN EXPRESS WRITTEN COMMUNICATION WITH THE AO TO THIS EFFECT AT THE TIME OF FILING RETURN OF INCOME. THE RETURN OF INCOME READ WITH COMPUTATION OF INCOME CLEARLY DISCLOSES THE INTENT OF THE ASSESSEE TO AVAIL THE BENEFIT UNDER S.11(1) OF THE ACT IN TERMS OF EXPLANATION 1 TO SECTION 11 OF THE ACT. 4. THE REVENUE, ON THE OTHER HAND, CONTENDS THAT ASSESSEE HAS BEEN GROSS NON-COMPLIANT IN AS MUCH AS NEITHER ANY COMMUNICATION HAS BEEN MADE WITH THE AO IN THIS REGARD AS REQUIRED IN LAW NOR ANY FORM HAS BEEN FILED IN THIS REGARD. ON THE CONTRARY, FORM NO.10B HAS BEEN FILED WHICH IS AN AUDIT REPORT UNDER S.12A(B) OF THE ACT. AS PER CLAUSE (3) OF ANNEXURE TO FORM NO.10B, IT CAN BE SEEN THAT THE ASSESSEE SEEKS TO CLAIM DEDUCTION UNDER S.11(2) RATHER THAN 11(1) OF THE ACT. THE REVENUE HAS THUS ALLEGED CHANGE OF STANCE OF THE ASSESSEE FOR THE PURPOSES OF CLAIMING DEDUCTION. IT IS THE CASE OF THE REVENUE THAT IN THE RETURN OF INCOME ALSO, AN APPLICATION FORM EXERCISING OPTION UNDER S.11(1) OF THE ACT IS KEPT BLANK ITA NO. 148/RPR/2016 (JAI JOHAR SEWA SANSTHAN KANGOLI VS. DCIT) A.Y. 2011-12 - 4 - MEANING THEREBY THAT THE ASSESSEE DID NOT CHOOSE TO EXERCISE THE BENEFIT AVAILABLE UNDER S.11(1) OF THE ACT AT THE FIRST INSTANCE. 5. ON APPRAISAL OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LAW PERMITS AVAILABILITY OF DEDUCTION UNDER S.11(1) OF THE ACT WHERE THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THE APPLICATION OF INCOME IN THE IMMEDIATELY SUBSEQUENT FINANCIAL YEAR. INCONSISTENCY IN TAKING SHELTER OF EITHER SECTION 11(1) OR SECTION 11(2) OF THE ACT, IN OUR VIEW, IS NOT FATAL FOR THE PURPOSES OF GRANTING TAX RELIEF TO A CHARITABLE TRUST ENGAGED IN BENEFIT OF PUBLIC AT LARGE. THE SUBSTANTIAL COMPLIANCE OF THE CONDITIONS LAID DOWN IN THE RESPECTIVE PROVISION IS OF OVERRIDING IMPORTANCE. THE ASSESSEE, IN THE INSTANT CASE, CLAIMED THAT, ON FACTS, IT HAS COMPLIED WITH THE PROVISIONS OF SECTION 11(1) OF THE ACT READ WITH EXPLANATION (1)(1)(B) THERETO TOWARDS UTILIZATION OF CSR MONEY RECEIVED AND THUS ENTITLED TO TAX BENEFITS AVAILABLE TO THE CHARITABLE TRUST. 6. IN THIS BACKDROP, WE OBSERVE THAT THE CLAIM TOWARDS ACTUAL APPLICATION OF INCOME IN THE IMMEDIATELY NEXT FINANCIAL YEAR IS A QUESTION OF FACT. THE AFORESAID FACT THUS REQUIRES SUITABLE EXAMINATION AT THE END OF THE AO TO ENABLE HIM TO FORM A VIEW ON ENTITLEMENT OF TAX BENEFITS UNDER S.11 OF THE ACT IN ACCORDANCE WITH LAW AND IN TERMS OF OBSERVATIONS MADE HEREINABOVE. 7. WE ACCORDINGLY CONSIDER IT EXPEDIENT TO SET ASIDE THE FIRST APPELLATE ORDER AND RESTORE THE ISSUE BACK TO THE FILE OF THE AO TO ASCERTAIN ACTUAL UTILIZATION OF DONATION/INCOME RECEIVED FROM ESSAR STEEL LTD. AMOUNTING TO RS.1,44,11,003/- FOR CHARITABLE PURPOSES IN IMMEDIATELY NEXT FINANCIAL YEAR IN TERMS WITH EXPLANATION 1(B) TO SECTION 11(1) OF THE ACT. IN THE EVENT, WHERE THE AO FINDS TO HIS SATISFACTION THAT THE AMOUNT HAS BEEN UTILIZED IN THE NEXT FINANCIAL ITA NO. 148/RPR/2016 (JAI JOHAR SEWA SANSTHAN KANGOLI VS. DCIT) A.Y. 2011-12 - 5 - YEAR AS PLEADED, HE SHALL GRANT THE DEDUCTION TO THE ASSESSEE AS CLAIMED IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, PROPER OPPORTUNITY SHALL BE GRANTED TO THE ASSESSEE TO ASCERTAIN THE RELEVANT FACTS AND THE AO SHALL PASS SPEAKING ORDER. 8. AT THIS STAGE, IN ORDER TO SHUN ANY CONFUSION, IT MAY BE PERTINENT TO CLARIFY THAT DELAY IN FILING THE INTIMATION FOR AVAILING BENEFITS UNDER S.11(1) OF THE ACT FOR A.Y. 2011-12 BEFORE THE CIT(A) VIDE APPLICATION DATED 29.07.2014WOULD NOT VIEWED ADVERSELY. THE AFORESAID INTIMATION SHALL BE TAKEN ON RECORD BY THE AO WHILE DETERMINING THE ISSUE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (PAWAN SINGH) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAIPUR: DATED 12/08/2021 TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, RAIPUR 6. [ / GUARD FILE. BY ORDER , SR. PRIVATE SECRETARY ITAT , RAIPUR (ON TOUR) THIS ORDER PRONOUNCED IN OPEN COURT ON 12/08/2021