J.C.I.T., Range-1, Aligarh V. Sewa Education Trust, Aligarh

ITA 157/AGR/2013

• Counselvise Citation: 15720314 RSA 2013
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI
• Keywords: Charitable institution; Additional evidence; Reasonable cause; Condonation of delay
• Section: 80G; 10B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 157/AGRA/2013 ASSTT. YEAR : 2006-07 J.C.I.T., RANGE 1, VS. SEWA EDUCATION TRUST, ALIGARH. RAMGHAT ROAD, ALIGARH. (PAN: AAETS 7647 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI PANKAJ GARGH, ADVOCATE DATE OF HEARING : 31.07.2013 DATE OF PRONOUNCEMENT OF ORDER : 02.08.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 04.02.2013 FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS : 1. THE LD. CIT(A), GHAZIABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.9,93,960/- MADE ON ACCO UNT OF THE ASSESSEES FAILURE TO SPEND 85% OF ITS TOTAL INCOME DURING THE FINANCIAL YEAR AND TO APPLY FOR CONDONING THE DELAY U/S. 11(2) OF THE IT ACT, 1961 READ WITH RULE 17 OF THE INCOME TAX RU LES, 1962. 2. THE CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDEN CE REGARDING ADMISSIBILITY OF EXEMPTION U/S. 10(23C)(IIIAD) OF T HE INCOME TAX ACT, 1961, WHEN NO SUCH CLAIM WAS MADE BY THE ASSESSEE D URING THE ASSESSMENT PROCEEDINGS. ITA NO. 157/AGRA/2013 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE DECLARED TOTAL INCOME AT RS. NIL AND THE RETURN WAS ACCOMPANIED BY THE AUDIT ORS REPORT IN FORM NO. 10B ALONG WITH ANNEXURES. THE ASSESSEE SOCIETY IS RUNNI NG A SCHOOL IN THE NAME OF M/S. WISDOM PUBLIC SCHOOL, RAMGHAT ROAD, ALIGARH. THE AO FOUND THAT THE TOTAL INCOME OF THE ASSESSEE SOCIETY DURING THE YEAR UNDE R CONSIDERATION HAS BEEN RS.65,74,356/- AND IT HAS SPENT RS.45,94,241/- ON C HARITABLE ACTIVITIES. THE AO, THEREFORE, FOUND THAT FOR CLAIMING DEDUCTION U/S. 1 1 & 12 OF THE IT ACT, ASSESSEE HAS TO APPLY 85% OF ITS INCOME FOR CHARITIES AS PER SECTION 11(1)(A) AND IN THIS CASE, THE ASSESSEE IS NOT ABLE TO SPEND OR WANTS TO ACCUM ULATE OVER AND ABOVE 15% OF ITS INCOME, THEN IT HAS TO FULFILL THE CONDITIONS AS PR OVIDED IN SECTION 11(2)(D) OF THE IT ACT. THE AO, THEREFORE, FOUND THAT THERE IS A SHORT FALL OF APPLICATION OF INCOME WHICH COMES TO RS.9,93,962/-. THEREFORE, IT IS LIAB LE TO TAX. IT WAS FURTHER FOUND THAT THE ASSESSEE HAS NOT FILED FORM NO. 10 INTIMAT ING THE AO THE INTENTION OF ACCUMULATION AND ITS PURPOSE AS IS EVIDENT FROM THE RETURN OF INCOME. THE ASSESSEE WAS ALSO ASKED TO PRODUCE MINUTES BOOK WHICH REVEAL ED THAT MEETING WAS HELD ON 27.03.2006, BUT NO SPECIFIC RESOLUTION WAS PASSED T O ACCUMULATE THE SURPLUS U/S. 11(2) FOR ANY SPECIFIC PURPOSE. SO THE ACCUMULATION U/S. 11(2) CANNOT BE ALLOWED. THE AO ACCORDINGLY MADE ADDITION OF RS.9,93,960/- A ND COMPUTED THE INCOME ACCORDINGLY. ITA NO. 157/AGRA/2013 3 3. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A ). THE ASSESSEE ALSO RAISED ADDITIONAL GROUND OF APPEAL CLAIMING EXEMPTION U/S. 10(23C) (IIIAD) OF THE IT ACT. THE ASSESSEE SUBMITTED THAT IT IS REGISTERED U/S. 1 2AA AND 80G W.E.F. 01.04.2004. THE AUDIT REPORT WAS FILED ALONG WITH THE RETURN OF INCOME. THE ASSESSEE SOLELY EXISTS FOR EDUCATIONAL PURPOSE AND THERE IS NO OTHE R SOURCE OF INCOME. THE AO MADE ADDITION BECAUSE THE ASSESSEE HAS NOT FILED FO RM NO. 10 INTIMATING THE INTENTION OF ACCUMULATION/SET APART. IT WAS SUBMITT ED THAT IN THE MEETING OF THE TRUSTEES HELD ON 27.03.2006, RESOLUTION WAS PASSED AS PER THE MINUTES OF THE MEETING RECORDED THAT OUT OF SURPLUS OF FINANCIAL Y EAR 2005-06, FDR OF RS.18 LACS FOR ONE YEAR SHOULD BE TAKEN FOR INVESTMENT IN FUTU RE EXPANSION OF EDUCATIONAL INSTITUTION. COPY OF THE RESOLUTION AND MINUTES WER E FILED. THE INVESTMENT IN FDR OF RS.18 LACS WAS ACCORDINGLY MADE WITH PUNJAB NATI ONAL BANK, WHICH IS DULY APPEARING IN THE BALANCE SHEET AS ON 31.03.2006 OF THE ASSESSEE TRUST AND WAS FILED WITH THE RETURN OF INCOME. THE AO VERIFIED THE INVE STMENT BY MAKING SPECIFIC QUERY. COPY OF THE ORDER SHEET WAS FILED. THEREFORE , THE ASSESSEE MADE INVESTMENT IN FDR AS PER MODE PRESCRIBED U/S. 11(5) OF THE IT ACT. THE DETAILS ARE ALSO MENTIONED IN AUDIT REPORT THAT INVESTMENT IS MADE I N THE MANNER LAID DOWN U/S. 11(2)(B) OF THE IT ACT BY CLEARLY MENTIONING AMOUNT DEPOSITED WITH NATIONALIZED BANK, I.E. PUNJAB NATIONAL BANK. FDR WAS TAKEN WITH THE INTENTION OF ITS UTILIZATION FOR EXPANSION OF INSTITUTION, WHICH HAS BEEN UTILIZ ED IN THE SUBSEQUENT ASSESSMENT ITA NO. 157/AGRA/2013 4 YEAR 2007-08 IN CONSTRUCTION OF SCHOOL BUILDING, WH ICH IS EVIDENT FROM THE FACT THAT FDRS WERE GOT MATURED IN THE MONTH OF JUNE AND JULY , 2006 AND BALANCE SHEET WOULD REVEAL THE INVESTMENT MADE IN THE CONSTRUCTIO N OF SCHOOL BUILDING. THUS, THE PURPOSE OF SETTING APART THE SURPLUS AS PER SECTION 11(2) HAS BEEN FULFILLED BY THE ASSESSEE TRUST. IT WAS, THEREFORE, SUBMITTED THAT T HE ONLY GROUND LEFT FOR MAKING ADDITION WAS THAT FORM NO. 10 WAS NOT FILED WITH TH E AO ON TIME. IT WAS SUBMITTED THAT ON 27.06.2008, THE ASSESSEE TRUST ON BEING ADV ISED CAME TO KNOW THAT FORM NO. 10 HAS TO BE FILED, IMMEDIATELY FILED FORM NO. 10 WITH THE AO ON 04.07.2008 ALONG WITH CONDONATION OF DELAY. SEPARATE APPLICATI ON WAS ALSO FILED WITH THE LD. CIT, ALIGARH. COPY OF THE SAME WAS ALSO FILED. IT W AS, THEREFORE, SUBMITTED THAT DUE TO BONA FIDE REASONS, FORM NO. 10 COULD NOT BE FILE D ON TIME. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE GUJRAT HIGH COURT IN T HE CASE OF CIT VS. MAYUR FOUNDATION, 274 ITR 562 AND SUBMITTED THAT THE ISSU E IS SQUARELY COVERED BY THE ABOVE JUDGMENT IN FAVOUR OF THE ASSESSEE. THEREFORE , THERE IS FULL COMPLIANCE OF PROVISIONS OF LAW AND THE ADDITION IS UNJUSTIFIED. 3.1 AS REGARDS THE ADDITIONAL GROUND OF APPEAL, THE ASSESSEE CLAIMED EXEMPTION U/S. 10 (23C)(IIIAD) AND IT WAS SUBMITTED THAT THE ASSESSEE TRUST EXISTS SOLELY FOR EDUCATIONAL PURPOSE, THEREFORE, ENTITLED FOR DEDUCT ION/EXEMPTION UNDER THE ABOVE PROVISIONS, BEING THE AGGREGATE ANNUAL RECEIPTS ARE LESS THAN RS. 1 CRORE. THE ITA NO. 157/AGRA/2013 5 ASSESSEE, THUS, FULFILLED THE REQUIREMENT OF ABOVE PROVISIONS AND THE ADDITIONAL GROUND BEING LEGAL IN NATURE MAY BE ADMITTED. 4. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND THE REMAND REPORT IS NOTED IN THE APPELLATE ORDER, IN WHICH TH E AO REITERATED THE FACTS MENTIONED IN THE ASSESSMENT ORDER. IT WAS ALSO SUBM ITTED THAT THE ASSESSEE FILED BELATED APPLICATION IN FORM NO. 10 WITH CONDONATION OF DELAY AND ADDITIONAL GROUND MAY NOT BE ADMITTED WITH ADDITIONAL EVIDENCE S. THE ASSESSEE IN THE REJOINDER REITERATED THE SAME FACTS. 5. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE AND THE MATERIAL ON RECORD ADMITTED THE ADDITIONAL GROUND AND EVIDEN CES AND DECIDED THE SAME IN FAVOUR OF THE ASSESSEE AND ALSO DELETED THE ADDITIO N ON MERIT. HIS FINDINGS IN PARAS 7 TO 7.3 OF THE APPELLATE ORDER ARE REPRODUCED AS U NDER : 7. AFTER CAREFUL CONSIDERATION OF ALL THE FACTS ON RECORD AND RIVAL SUBMISSIONS AS CONTAINED IN ASSESSMENT ORDER AND IN APPELLANT'S SUBMISSION AND REMAND REPORT, MY OBSERVATIONS/CONCL USIONS ARE AS UNDER:- 7.1. AT THIS JUNCTION, I WILL TAKE UP THE ADDITIONA L GROUND OF APPEAL RAISED BY APPELLANT DURING APPEAL, WHICH IS REGARDING EXEMPTION U/S 10(23C)(IIIAD). THE AO HAS OBJECTED T O ADMISSION OF THIS ADDITIONAL GROUND AND EVIDENCE. HOWEVER, I FIN D THAT THE FACTS AND EVIDENCES REGARDING ASSESSEE'S ASSERTION BEING SQUARELY INCLUDED IN ADDITIONAL ACTIVITY IS ALREADY AVAILABLE ON RECO RD AND HENCE THIS ITA NO. 157/AGRA/2013 6 ADDITIONAL GROUND, WHICH IS OF LEGAL NATURE, GOES T O THE ROOTS OF THE MATTER WITH FACTS AVAILABLE ON RECORD. I FIND THAT THIS GROUND OF APPEAL IS RELEVANT FOR THE ADJUDICATION OF THE APPEAL AND IS ADMISSIBLE AT THIS STAGE. THIS IS FURTHER SUPPORTED BY THE FACT THAT T HE APPELLANT CHOSE TO RAISE THESE ADDITIONAL GROUND ONLY WHEN ITS BONAFID E BELIEF THAT IT IS ENTITLED FOR EXEMPTION BY WAY OF UTILIZATION IN FOR M OF F.D. WAS SOME HOW NEGATED BY THE APPELLANT IN ASSESSMENT; AND TO THAT EXTENT I FIND THIS IS THE REASONABLE CAUSE FOR WHICH THE APPELLAN T DID NOT ADDUCE THIS GROUND OF APPEAL BEFORE A.O. THE A.O. HAS ALSO MENTIONED FINDING THAT THE ASSESSEE'S SOCIETY IS ENGAGED IN A DDITIONAL ACTIVITY. THERE IS NO OTHER SUBSTANTIVE ACTIVITY IN WHICH ASS ESSEE SOCIETY IS ENGAGED AND HENCE IT CAN BE SAID THAT IT IS SQUAREL Y ENGAGED IN ADDITIONAL ACTIVITY. THE A:OS OBJECTION IN POINT NO. 7 OF ITS REMAND RE PORT THAT THE PRESCRIPTION OF UTILIZATION OF 85% OF RECEIPT ALSO APPLIES TO SECTION 10(23C) AND THEREFORE TO THE ASSESSEE; IS AGAIN MIS PLACED BECAUSE SUCH NORM OF UTILIZATION IS NOT APPLICABLE TO SECTI ON 10(23C)(IIIAD) INTO WHICH ASSESSEE'S CASE IS FALLING. I HOLD THAT CONDITIONS OF SECTION 10(23C)(IIIAD) AR E BEING FULFILLED AND HENCE ON THIS GROUND ALSO, THE APPELL ANT IS SQUARELY ENTITLED FOR EXEMPTION OF ITS INCOME FROM TAXATION. THE ADDITIONAL GROUND IS THUS ALLOWED. 7.2. G.O.A.NOS. 1, 2 & 3. THESE GROUNDS OF APPEAL ARE REJECTED HAVING NO SUBS TANCE NOR THESE HAVE BEEN PRESSED AND ARGUED DURING APPEAL. 7.3. G.O.A.NOS. 4, 5,6 & 7. ALL THESE GROUNDS ARE IN RESPECT OF MAIN ISSUE ON A CCOUNT OF WHICH A.O. HAS MADE ADDITION OF RS. 9,93,960/- . TH E ISSUE IN SHORT IS THAT ACCORDING TO A.O. THE ASSESSEE DID NOT UTILIZE 85% OF ITS INCOME (RS. 55,88,202/-), AS PER PROVISIONS OF SECTION 11 SO AS TO BE ENTITLED FOR DEDUCTION AS A TRUST. WHEN CONFRONTED THE ASSES SEE SUBMITTED THAT FUND OF RS. 18 LAC WAS KEPT APART IN F.D. AND IT WA S MENTIONED IN THE COMPUTATION OF INCOME AS WELL AS IN THE BALANCE SHE ET AND ALSO DURING ASSESSMENT PROCEEDINGS, DETAILS AND EVIDENCES WERE GIVEN THAT THIS FUND OF RS. 18 LAC HAD BEEN UTILIZED IN NEXT YEAR. THE A.O. OBJECTED ON THE TECHNICAL GROUND THAT THERE WAS NO PRESCRIBE D INTIMATION U/S ITA NO. 157/AGRA/2013 7 11 (2) GIVEN BY THE ASSESSEE. THE ASSESSEE REALIZIN G THIS TECHNICAL MISTAKE BROUGHT THE INTIMATION INTO PRESCRIBED FORM , BUT IT WAS LATE BY TWO DAYS SINCE THE ASSESSMENT ORDER HAD BEEN FINALI ZED BY THE A.O . I FIND THAT THE REASONING GIVEN BY THE A.O. IS TOO NARROW EVEN ON TECHNICAL GROUNDS, SO AS TO BE FAIR AND JUST. IT IS UN-DISPUTED THAT THE FACT OF RS. 18 LAC KEPT APART IN F.D. WAS MENTI ONED NOT ONLY IN COMPUTATION OF INCOME ( UNDER THE HEAD 'EXPENDITURE ') BUT ALSO IT WAS SPECIFICALLY MENTIONED IN THE AUDITOR'S REPORT PRES CRIBED U/S. 12A(B) ANNEXURE 5 & 6. A.O'S OBJECTION IN THIS REGARD, THA T EVEN IN THE AUDIT REPORT, SUCH ACCUMULATION WAS SPECIFICALLY DENIED V IDE POINT NO.8, IS ALSO MISPLACED BECAUSE A.O. HAS SEEN THE IRRELEVANT PORTION; HE SHOULD HAVE SEEN POINT NO.5 & 6 WHICH WERE RELEVANT FOR THIS PURPOSE AND ACCORDING TO WHICH SUCH ACCUMULATION WAS MENTIO NED; POINT NO. 8 IS RELEVANT ONLY WITH RESPECT TO SECTION 13(3) WH ICH IS NOT APPLICABLE IN THIS CASE. FURTHER IT IS ON RECORD THAT THE PRESCRIBED INTIMAT ION U/S. 11(2) WAS ALSO GIVEN, WHEN ASKED, BUT TECHNICALLY ASSESSM ENT ORDER HAD BEEN FINALIZED BY THAT TIME. THE POINT IS THAT SUCH INTIMATION HAD BEEN PLACED ON RECORD. FURTHER MORE, I FIND THAT CASE LAW OF MAYUR FOUNDAT ION 274 ITR 560 (GUJRAT HIGH COURT) IS SQUARELY APPLICABLE IN FAVOUR OF THE APPELLANT. THUS I HOLD THAT IT WOULD NOT BE FAIR TO DENY THE A SSESSEE THE BENEFIT OF UTILIZATION OF INCOME IN FORM OF F.D. WH ICH WAS THEN UTILIZED IN NEXT YEAR. THIS GROUND OF APPEAL IS ALLOWED. MOR EOVER, THE MAIN GROUND OF APPEAL IS THE ADDITIONAL GROUND OF APPEAL REGARDING EXEMPTION U/S 10(23C) , WHICH HAS ALREADY BEEN ADJU DICATED IN FAVOUR OF ASSESSEE. 6. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT SINCE FORM NO. 10 WAS NOT FILED ON TIME AS PER SECTION 11(2) O F THE IT ACT, THEREFORE, THE ASSESSEE WOULD NOT BE ENTITLED FOR EXEMPTION AND AD DITION IS JUSTIFIED. THE MINUTES ITA NO. 157/AGRA/2013 8 DID NOT REVEAL ANY SPECIFIC RESOLUTION OF ACCUMULAT ION OF SURPLUS FUNDS FOR THE PURPOSE OF USING THE SAME FOR CONSTRUCTION IN THE S UBSEQUENT ASSESSMENT YEAR. THE ASSESSEE DID NOT RAISE ANY ADDITIONAL GROUND AT THE ASSESSMENT STAGE, THEREFORE, THE ADDITIONAL GROUND SHOULD NOT HAVE BEEN ADMITTED BY THE LD. CIT(A). ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO SEVERAL DOCUMENTS IN PAPER BOOK TO SHOW THAT IN THE AUDIT REPORT, THE DETAILS OF ACCUMULATION OF FU ND HAVE BEEN MENTIONED AND FDR IS SHOWN IN THE BALANCE SHEET AND IN THE NEXT YEAR, FDRS WERE GOT MATURED FOR MAKING INVESTMENT IN THE CONSTRUCTION OF THE SCHOOL BUILDING. RESOLUTION WAS PASSED SPECIFICALLY ON 27.03.2006 TO THE EFFECT OF SHOWING INTENTION TO ACCUMULATE FUNDS OF RS.18 LACS TO BE CONVERTED INTO FDRS FOR T HE PURPOSE OF MAKING INVESTMENT IN CONSTRUCTION OF SCHOOL BUILDING. COPY OF THE ORDER SHEET IS ALSO FILED TO SHOW THAT THE AO MADE QUERIES WITH REGARD TO THE INVESTMENT MADE IN THE FDRS WITH PUNJAB NATIONAL BANK, I.E., NATIONALIZED BANK. THE AO AND THE LD. CIT, ALIGARH SHOULD HAVE CONDONED THE DELAY IN FILING TH E FORM NO. 10 BELATEDLY. HE HAS SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE BY THE JUDGMENT OF HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. MA YUR FOUNDATION (SUPRA) AND THAT THE GROUND NO. 2 OF APPEAL OF THE REVENUE IS I NCORRECT AND THAT THE ASSESSEE MADE CORRECT CLAIM OF EXEMPTION U/S. 10(23C)(IIIAD) OF THE IT ACT BECAUSE THE ASSESSEE SOLELY EXISTS FOR EDUCATIONAL PURPOSE, WHI CH HAS NOT BEEN DISPUTED AT THE ITA NO. 157/AGRA/2013 9 ASSESSMENT STAGE. THEREFORE, THE APPEAL OF THE REVE NUE HAS NO MERIT AND THE SAME HAS TO BE DISMISSED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAIL ABLE ON RECORD. HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. MAYUR FOUNDATION, 274 ITR 562 HELD AS UNDER : PROCEEDINGS BEFORE THE TRIBUNAL ARE MEANT TO CORRE CTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. IF THIS BE SO, IT FOLLOWS THAT ASSESSMENT PROCEEDINGS CANNOT BE SAID TO BE COMPLETE BUT ARE P ENDING TILL THE APPEAL IS HEARD AND DISPOSED OF BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL IS GIVEN EFFECT TO, BY THE ASSESSING AUTHO RITY BY COMPUTING THE CORRECT TAX LIABILITY OF AN ASSESSEE. IN OTHER WORD S, WHETHER AN ASSESSEE IS REQUIRED TO PAY TAX OR BECOMES ENTITLED TO A REFUND, WOULD BE ASCERTAINED BY THE ASSESSING AUTHORITY AFTER GIV ING EFFECT TO THE OTHER OF THE TRIBUNAL. THE ASSESSEE WAS A CHARITABLE TRUST, REGISTERED UN DER THE PROVISIONS OF THE BOMBAY PUBLIC TRUSTS ACT, 1950. D URING ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR 1980-81, THE A SSESSEE RECEIVED VOLUNTARY CONTRIBUTIONS AMOUNTING TO RS.2,04,468. T HE DONATIONS WERE TREATED AS 'INCOME' WITHIN THE MEANING OF SECT ION 2(24)(IIA) OF THE INCOME-TAX ACT, 1961, BY THE ASSESSING OFFICER. THE ASSESSEE CONTENDED THAT THE DONATIONS OF RS.1,74,432 AND RS. 9,036 INCLUDED IN THE TOTAL AMOUNT OF DONATIONS WERE TOWARDS THE CORP US OF THE TRUST AND IN SUPPORT OF THE SAID CONTENTION, SUBMITTED CONFIR MATION LETTERS FROM TWO DONORS. THE ASSESSING OFFICER DID NOT ACCEPT TH IS SUBMISSION AND AFTER GRANTING PERMISSIBLE ACCUMULATION OF 25 PER C ENT HELD THE BALANCE AMOUNT OF RS.1,53,351 LIABLE TO TAX IN THE HANDS OF THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE T HE INCOME-TAX APPELLATE TRIBUNAL, AND DURING THE PENDENCY OF THE APPEAL, MOVED AN APPLICATION BEFORE THE COMMISSIONER ON OCTOBER 5, 1 989, ACCOMPANIED BY FORM NO. 10 AND A COPY OF RESOLUTION PASSED BY THE TRUSTEES ON AUGUST 22, 1988, TO THE EFFECT THAT THE DONATIONS MAY BE TREATED AS GENERAL DONATIONS AND THE ASSESSEE BE PE RMITTED TO ITA NO. 157/AGRA/2013 10 ACCUMULATE THE TRUST INCOME UNDER SECTION 11(2) BY CONDONING THE DELAY IN FILING FORM NO. 10. THE RESOLUTION PASSED BY THE TRUSTEES ON AUGUST 22, 1988 STATED THAT A TOTAL SUM OF RS. 5,09 ,000 HAD BEEN SET APART BY THE ASSESSEE-TRUST FOR PURCHASING LAND AND CONSTRUCTING AN ORPHANAGE ON THE SAID LAND. A SUM OF RS. 1,54,000 W AS REQUIRED TO BE UTILISED FOR THE AFORESAID PURPOSE ON OR BEFORE MAR CH 31, 1990. THE COMMISSIONER REJECTED THE ASSESSEE'S APPLICATION. T HE ASSESSEE CHALLENGED THE ORDER OF THE COMMISSIONER BY A WRIT PETITION. THE HIGH COURT DIRECTED THE COMMISSIONER TO RECONSIDER THE M ATTER. THE COMMISSIONER AGAIN REJECTED THE ASSESSEES PETITION ER. THE ASSESSEE THEREUPON FILED AN ADDITIONAL GROUND OF APPEAL BEFO RE THE TRIBUNAL TO THE EFFECT THAT THE TRUST WAS NOT TAXABLE IN VIEW O F THE RESOLUTION OF ACCUMULATION AND THE NOTICE THEREOF TO THE INCOME-T AX OFFICER UNDER SECTION 11(2). THE TRIBUNAL ADMITTED THE ADDITIONAL GROUND. ON THE FACTS THE TRIBUNAL FOUND THAT THE GENUINENESS OF TH E TRUST WAS NOT IN DOUBT; THAT THE TRUST HAD SET APART THE AMOUNT OF D ONATION FOR THE PURPOSE OF PURCHASING LAND AND CONSTRUCTING AN ORPH ANAGE THEREUPON; THAT THE FUNDS RECEIVED BY WAY OF DONATI ONS HAD BEEN KEPT APART IN FIXED DEPOSITS OF NATIONALIZED BANKS; AND THAT THE TRUSTEES OR THE SETTLERS HAD NOT BENEFITED BY THE FAILURE OR DE LAY ON THE PART OF THE TRUST TO GIVE NOTICE OF SUCH ACCUMULATION. ACCORDIN GLY, THE TRIBUNAL HELD THAT THE ASSESSEE-TRUST HAD COMPLIED WITH ALL THE REQUIREMENTS STIPULATED BY THE PROVISIONS OF SECTION 11(2). ON A REFERENCE: HELD, (I) THAT THE ASSESSING AUTHORITY IS EMPOWERE D AND IS DUTY BOUND, TO PASS AN ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL FOR THE PURPOSES OF ASSESSING THE TAX LIABILITY OF AN A SSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE THE TRIB UNAL. IN THESE CIRCUMSTANCES, IT COULD NOT BE CONTENDED ON BEHALF OF THE REVENUE THAT THE ASSESSMENT PROCEEDINGS CAME TO AN END WHEN THE ASSESSMENT ORDER WAS FRAMED. (II) THAT THE TRIBUNAL WAS WELL WITHIN ITS JURISDI CTION TO ENTERTAIN THE NEW GROUND BY WHICH THE ASSESSEE CLAI MED THE BENEFIT UNDER SECTION 11(2) OF THE ACT AND ADJUDICATE THE T AX LIABILITY OF THE ASSESSEE. (III) THAT THE TRIBUNAL WAS CORRECT IN HOLDING THA T THE ASSESSEE WAS ENTITLED TO THE BENEFITS ALLOWABLE UNDER SECTIO N 11(2). ITA NO. 157/AGRA/2013 11 7.1 ITAT, INDORE BENCH IN THE CASE OF ITO VS. SHRI MAHAKAL MANDIR PRABANDH SAMITI, 42 SOT 1 (INDORE)(URO) HELD AS UNDER : IT WAS NOT IN DISPUTE THAT THE ASSESSEE WAS GRANTE D REGISTRATION UNDER SECTION 12AA, THEREFORE, IT WOUL D BE ENTITLED TO THE BENEFIT UNDER SECTIONS 11 AND 12. RULE 17 OF THE INCOME-TAX RULES, 1962 PROVIDES THAT NOTICE UNDER SECTION 11(2) IS TO BE GIVEN TO THE ASSESSING OFFICER IN FORM NO.10 AND SHALL BE DELIVERED BEFORE EXPIRY OF THE T IME ALLOWED UNDER SECTION 139(1) FOR FURNISHING THE RETURN OF INCOME. UNDER THE INCOME- TAX RULES IN RULE 17, IT IS PROVIDED THAT THE DELAY IN FILING THE NOTICE IS CONDONABLE BY THE COMMISSIONER AS IS REQUIRED TO IN CIRCULAR NO.273, DATED 3.6.1980. IN FORM NO. 10, THE ASSESSEE SHALL HAVE TO GIVE THE DETAILS OF THE ACCUMULATED FUNDS FOR CARRYING OUT T HE PURPOSE OF THE TRUST. IT IS, THEREFORE, CLEAR THAT NO TIME-LIMIT I S PROVIDED UNDER SECTION 11(2) FOR FURNISHING FORM NO.10 BEFORE THE ASSESSIN G OFFICER. THE TIME-LIMIT IS PROVIDED IN THE RULES ONLY. SECTION 1 48(1) PROVIDES THAT BEFORE MAKING AN ASSESSMENT OR REASSESSMENT UNDER S ECTION 147, THE ASSESSING OFFICER SHALL SERVE ON THE ASSESSEE A NOT ICE REQUIRING HIM TO FURNISH RETURN OF HIS INCOME WITHIN SUCH PERIOD AS MAY BE PRESCRIBED IN THE NOTICE AND PROPERLY VERIFIED AND THE PROVISI ONS OF THE ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS, IF SUCH RET URN WAS A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139. IN ALL THE ASSESSMENT YEARS UNDER APPEAL, THE ASSESSING OFFICER HAD ISSUE D NOTICE UNDER SECTION 148 DIRECTING THE ASSESSEE TO FURNISH RETUR N OF INCOME IN THE PRESCRIBED FORM. THE ASSESSEE FILED RETURN OF INCOM E UNDER SECTION 148 AND ALSO FILED FORM NO.10 FOR ACCUMULATION OF F UNDS IN THE PRESCRIBED MANNER ALONG WITH THE RETURN OF INCOME. THEREFORE, AS PER SECTION 148(1), THE RETURN OF INCOME FILED ALONG WI TH FORM NO. 10 SHALL BE TREATED AS RETURN SO FILED UNDER SECTION 1 39(1). THE GENUINENESS OF THE PURPOSE OF THE TRUST AND ACCUMUL ATION OF FUNDS OF THE PURPOSE OF THE ASSESSEE AS DISCLOSED IN THE FOR M NO.10 WERE NOT DISPUTED BY THE ASSESSING OFFICER. ITA NO. 157/AGRA/2013 12 IN VIEW OF THE AFORESAID, IT WAS CLEAR THAT THE ASS ESSEE HAD FILED FORM NO.10 ALONG WITH RETURN OF INCOME FILED UNDER SECTION 148 PRIOR TO THE COMPLETION OF THE ASSESSMENT GIVING THE DETA ILS OF THE FUNDS/AMOUNTS TO BE ACCUMULATED. THE DETAILS SUBMIT TED IN THE FORM NO.10 WERE NOT DISPUTED. THE CLAIM OF THE ASSESSEE WAS REJECTED MERELY ON THE REASON THAT FORM NO.10 WAS NOT FILED IN TIME. THE ISSUE WAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE, NO MERIT WAS FOUND IN THE APP EALS OF THE REVENUE AND SAME WERE TO BE DISMISSED. 7.2 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD., 306 ITR 42, CONSIDERING SEVERAL DECISIONS INCLUDING THE DECISION OF SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT, 284 ITR 323, HELD AS UNDER : HELD, DISMISSING THE APPEAL, THAT THERE WAS NO PROHIBITIO N ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITION AL GROUND WHICH ACCORDING TO THE TRIBUNAL AROSE IN THE MATTER AND F OR THE JUST DECISION OF THE CASE. THERE WAS NO INFIRMITY IN THE ORDER OF THE TRIBUNAL. 7.3 HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BAR COUNCIL OF UTTAR PRADESH VS. CIT, 143 ITR 584 HELD THE PROVISIONS OF S. 10(23A) AND S. 11 ARE NOT MUTU ALLY EXCLUSIVE AND THEY CAN HAVE SIMULTANEOUS APPLICATIO N IF THE NECESSARY INGREDIENTS OF THE PROVISIONS ARE MADE OUT. 8 . CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF F INDINGS OF THE LD. CIT(A) AND ABOVE DECISIONS, WE DO NOT FIND ANY MERIT IN TH E DEPARTMENTAL APPEAL. THE ASSESSEE SUBMITTED THE COMPLETE DETAILS BEFORE THE AUTHORITIES BELOW AND MADE A CLAIM THAT IT WAS RUNNING SCHOOL IN THE NAME OF WIS DOM PUBLIC SCHOOL, ALIGARH. ITA NO. 157/AGRA/2013 13 THE ASSESSEE ALSO CLAIMED THAT THE ASSESSEE EXISTS SOLELY FOR EDUCATIONAL PURPOSE. CLAIM OF THE ASSESSEE WAS NOT DISPUTED BY THE AO. I T IS ALSO NOT IN DISPUTE THAT TOTAL RECEIPTS OF THE ASSESSEE IN THE ASSESSMENT YEAR UND ER APPEAL WERE LESS THAN RS. 1 CRORE. THEREFORE, THE CLAIM OF THE ASSESSEE FOR EXE MPTION U/S. 10(23C)(IIIAD) ON ADDITIONAL GROUND WAS CORRECTLY RAISED. THE ISSUE W AS LEGAL IN NATURE, THEREFORE, THE LD. CIT(A) CORRECTLY ADMITTED THE ADDITIONAL GROUND FOR THE PURPOSE OF HEARING. HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BAR COU NCIL OF UTTAR PRADESH VS. CIT (SUPRA) HAS SPECIFICALLY HELD THAT BOTH THE ABOVE P ROVISIONS ARE NOT MUTUALLY EXCLUSIVE AND THEY CAN HAVE SIMULTANEOUS APPLICATIO N IF THE NECESSARY INGREDIENTS OF THE PROVISIONS ARE MADE OUT. THUS, THE ASSESSEE HAS BEEN ABLE TO PROVE THAT APART FROM CLAIMING DEDUCTION U/S. 11 & 12 OF THE IT ACT, THE ASSESSEE WOULD BE ENTITLED FOR EXEMPTION U/S. 10(23C) OF THE IT ACT. THE LD. CIT(A) HAS GIVEN SPECIFIC FINDING THAT THE CONDITIONS OF ABOVE PROVISIONS ARE FULFILLED IN THE CASE OF ASSESSEE. NO ADVERSE MATERIAL IS PRODUCED BEFORE US TO CONTRA DICT THE FINDING OF FACT RECORDED BY THE LD. CIT(A). THEREFORE, THE LD. CIT(A) WAS JU STIFIED IN ADMITTING THE ADDITIONAL GROUNDS OF APPEAL AND DECIDING THE SAME IN FAVOUR OF THE ASSESSEE. WE MAY ALSO NOTE THAT GROUND NO. 2 RAISED BY THE REVEN UE IS DEFECTIVE BECAUSE THE REVENUE DID NOT CHALLENGE ADMISSION OF ADDITIONAL G ROUND OF APPEAL BUT CHALLENGED THE ADMISSION OF ADDITIONAL EVIDENCE, FOR WHICH NO CASE IS MADE OUT BEFORE US. THEREFORE, GROUND NO. 2 OF APPEAL OF THE REVENUE HA S NO MERIT. THE SAME IS ITA NO. 157/AGRA/2013 14 ACCORDINGLY DISMISSED. IN VIEW OF THESE FINDINGS, A DDITION OF RS.9,93,960/- WOULD NOT STAND. ANY HOW, ON GOING THROUGH THE EVIDENCES AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT GROUND NO. 1 IS ALSO SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE GUJRAT HIGH COURT IN THE CA SE OF MAYUR FOUNDATION (SUPRA). THE ASSESSEE HAS PRODUCED SUFFICIENT EVIDE NCES AND MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE MADE FULL COMPLIANCE OF PROV ISIONS OF SECTION 11(2) & (5) OF THE IT ACT BECAUSE RESOLUTION WAS PASSED TO THE EFFECT OF ACCUMULATION OF SURPLUS FUND IN THE ASSESSMENT YEAR UNDER APPEAL BY WAY OF CONVERTING THE AMOUNT INTO FDR WITH NATIONALIZED BANK, WHICH WAS TO BE US ED FOR THE PURPOSE OF CONSTRUCTION OF SCHOOL BUILDING. COPIES OF THE RESO LUTION, BALANCE SHEET AND AUDIT REPORT ARE FILED TO INDICATE THE INTENTION OF THE A SSESSEE TO ACCUMULATE THE FUNDS FOR THE PURPOSE OF MAKING CONSTRUCTION IN THE SUBSEQUEN T ASSESSMENT YEAR. THE ASSESSEE ALSO LATER ON MADE A REQUEST FOR CONDONATI ON OF DELAY IN FILING FORM NO. 10 BELATEDLY BEFORE THE AO AS WELL AS CIT. THEREFOR E, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY WHEN SURPLU S FUNDS WERE ACCUMULATED AND DEPOSITED WITH THE NATIONALIZED BANK, THE DELAY IN FILING FORM NO. 10 SHOULD HAVE BEEN CONDONED BY THE AO AND THE LD. CIT. FURTHER, W HEN THE ASSESSEE EXISTS SOLELY FOR EDUCATIONAL PURPOSES, THEREFORE, ON MERE TECHNI CAL ISSUE, THE AO SHOULD NOT HAVE MADE THE ADDITION AGAINST THE ASSESSEE. CONSID ERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, IN THE LIGHT OF ABOVE DECISION, WE A RE OF THE VIEW THAT THE LD. ITA NO. 157/AGRA/2013 15 CIT(A) CORRECTLY ALLOWED THE CLAIM OF ASSESSEE UNDE R BOTH THE PROVISIONS ABOVE. THERE IS NO MERIT IN THE DEPARTMENTAL APPEAL. THE S AME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY