M/S KRISHI UPAJ MANDI SAMITI CHHABR, Jaipur V. ITO, BARAN

ITA 190/JPR/2012

• Counselvise Citation: 19023114 RSA 2012
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAGHAV BAJAJ; NIKHIL TOTUKA
• Keywords: Business income; Depreciation; Charitable institution; Benefit of exemption; Capital expenditure
• Section: 234B; 12A; 12AA; 32; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 190 & 191/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2007-08 & 2008-09 KRISHI UPAJ MANDI SAMITI, CHHABRA, DISTRICT- BARAN. CUKE VS. THE I.T.O. BARAN. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABTK 0633 L VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAGHAV BAJAJ (ADV.) & SHRI NIKHIL TOTUKA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK ( ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 04/03/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THE PRESENT APPEALS FILED BY THE ASSESSEE ARE AGAIN ST THE ORDER DATED 29/12/2011 AND 30/12/2011 PASSED BY THE LEARN ED CIT (A), KOTA FOR A.YS. 2007-08 AND 2008-09. THE EFFECTIVE GROUN DS OF APPEALS ARE AS UNDER:- ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 2 GROUNDS IN ITA NO. 190/JP/2012 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) KOTA HAS ERRED IN UPHOLDING THE ADDITION OF RS. 13,82,887/- OUT OF TOTAL PAYMEN T OF RS. 40,56,000/- MADE TO EXECUTIVE ENGINEER, BARAN (RSAMB) HOLDING THE SAME AS ADVANCE GIVEN TO RSAMB FOR CONSTRUCTION OF LINK ROADS. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECATION ON ASSETS BY THE A.O. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN:- I. DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE APPELLANT TO THE EXTENT OF RS. 7,50,059/- AND UPHOLDING THE COMPUTATION OF INCOME BY THE A.O. TO SUCH EXTENT. II. HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 11(2) OF THE INCOME TAX ACT, 1961 AND TO SUCH EXTENT THE ORDER OF THE LEARNED CIT(A), KOTA IS BAD IN LAW. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A, 234B AND 234C. GROUNDS IN ITA NO. 191/JP/2012 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) KOTA IS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 3 THE DISALLOWANCE OF DEPRECATION AMOUNTING TO RS. 1,18,656/-. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A), KOTA HAS ERRED IN :- I. DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE APPELLANT TO THE EXTENT OF RS. 80,05,720/- AND UPHOLDING THE COMPUTATION OF INCOME BY THE A.O. TO SUCH EXTENT. II. HOLDING THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 11(2) OF THE INCOME TAX ACT, 1961 AND TO SUCH EXTENT THE ORDER OF THE LEARNED CIT(A), KOTA IS BAD IN LAW. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A, 234B AND 234C. 2. GROUND NO. 1 IN ASSESSEES APPEAL FOR A.Y. 2007- 08 IS AGAINST CONFIRMING THE ADDITION OF RS. 13,82,887/- OUT OF T OTAL PAYMENT OF RS. 40,56,000/-. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD ADVANCED A SUM OF RS. 40,56,000/- TO XEN BARAN FOR REPAIR, MAINTENANCE AND CONSTRUCTION OF VARIOUS PROJECTS AS PROPOSED BY MANDI SAMITI OUT OF WHICH RS. 26,73,113/- HAD BEEN INCURR ED ON ACCOUNT OF ANNUAL REPAIRS OF LINK ROADS. THE SUPPORTING EVIDENC E/CERTIFICATE FROM CONCERNING EXECUTING AUTHORITY HAS BEEN ENCLOSED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER NOT ALLOWED THIS EXPENDITURE AS AN APPLICATION OF THE FUND FOR THE PURPOSE OF SAMITI ON THE BASIS OF EARLIER YEAR FINDING. THE ASSESSEE S STATUS BEING A ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 4 CHARITABLE INSTITUTION WAS REJECTED BY THE ASSESSING OFFICER, ACCORDINGLY, BENEFIT OF PROVISION OF SECTION 11 OF 12AA OF THE A CT HAD NOT ALLOWED TO THE APPELLANT AND FINALLY INCOME WAS ASSESSED AT RS. 1,54,49,637/- BY MAKING VARIOUS ADDITIONS. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHICH WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THAT PAYMENT TO XEN BARAN, JAIPUR IS FOR OBJECT OF THE SAMITI AS PER THE ACT INFORMING SUCH SAMITI. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED A.R. FOR THE ASSESSEE SUBMITTED AS UNDER:- THE APPELLANT SAMITI, UNDER VARIOUS PROVISIONS OF T HE MARKET ACT, ARE REQUIRED TO INCUR VARIOUS EXPENDITU RES ON REPAIRS, CONSTRUCTION OF LINK ROADS/MISSING ROADS A ND UP GRADATION OF ROADS ETC. THROUGH RSAMB AND VARIOUS GOVERNMENT AGENCIES. THE AMOUNT IS GIVEN BY THE APPE LLANT SAMITI TO XEN, BARAN FOR REPAIR, MAINTENANCE AND CO NSTRUCTION OF VARIOUS PROJECTS. THE APPLICATION OF THE FUND BY THE APPELLANT SAMITI AND ITS OVERALL FUNCTIONS ARE REGULATED BY THE PROVISIONS O F THE MARKET ACT. SECTION 19 OF THE MARKET ACT LAYS DOWN THE PURP OSES FOR ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 5 WHICH THE FUNDS AVAILABLE WITH A MARKET COMMITTEE SHA LL BE EXPENDED. ONE SUCH PURPOSE IS THAT SUCH FUND SHALL BE EXPENDED ON CONSTRUCTION AND REPAIR OF APPROACH ROA DS, CULVERTS AND BRIDGES. THE RELEVANT EXTRACT OF THE SA ID SECTION IS REPRODUCED BELOW FOR REFERENCE: 19. PURPOSES FOR WHICH THE FUND SHALL BE EXPENDED.- SUBJECT TO THE PROVISIONS OF SECTION 18, THE MARKET COMMITTEE FUND SHALL BE EXPENDED FOR THE FOLLOWING PURPOSES, N AMELY:- (1).... (2)...... (S)...... (9A) PROVIDING FACILITIES SUCH AS SHELTER, SHED, PA RKING, ACCOMMODATION, WATER FOR THE PERSONS, DROUGHT CATTLE , VEHICLES AND PACK ANIMALS COMING OR BEING BROUGHT TO THE MAR KET AND ON CONSTRUCTION AND REPAIR OF APPROACH ROAD, CULVER TS AND BRIDGES IN THE MARKET AREA AND FOR SUCH OTHER PURPO SES AS MAY BE SPECIFIED BY THE STATE GOVERNMENT. THE LD. CIT(A), IN THE IMPUGNED APPELLATE ORDER, HA S HELD THAT THE APPELLANT IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE ACT, BEING EXISTING FOR 'ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY'. IT IS HUMBLY SUBMITTED THAT ANY EXPENDITURE INCURRED B Y SUCH TRUST TO ACHIEVE ITS OBJECTIVES SHALL BE TREATED AS EXPENDITURE TOWARDS CHARITABLE PURPOSE. THE APPELLANT SAMITI HAS PAID THE SUM TOWARDS ACHIEVEMENT OF ITS CHARITABLE OBJECTS, H OWEVER, IT DOES NOT CONTROL THE USAGE OF SUCH FUNDS ONCE THE S AME HAVE BEEN PAID TO THE XEN, BARAN WHO IS A GOVERNMENT AUTH ORITY. FURTHER THE APPELLANT SAMITI DOES NOT HOLD THE RIGH T TO CALL BACK THE AMOUNT PAID IN CASE THE SAME ARE NOT APPLIED IN THE RELEVANT ASSESSMENT YEAR. IN LIGHT OF THE DISCUSSIO N ABOVE, IT IS ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 6 HUMBLY SUBMITTED THAT THE TOTAL AMOUNT PAID BY THE APPELLANT SAMITI TO THE XEN. BARAN TOWARDS REPAIR AND CONSTRUC TION OF LINK ROADS SHALL BE TREATED AS AN APPLICATION OF IN COME IN THE RELEVANT ASSESSMENT YEAR IN WHICH SUCH AMOUNT IS PAI D. MOREOVER, IT IS PRUDENT TO MENTION HERE THAT THE LD . CIT(A) IN THE IMPUGNED ORDER(S) REFERRED TO THE JUDGMENT OF T HE HON'BLE HIGH COURT OF RAJASTHAN IN THE MATTER OF KRISHI UPA J MANDI SAMITI, GAJSINGHPUR. THE RELEVANT EXTRACTS OF THE JU DGMENT ARE REPRODUCED BELOW FOR READY REFERENCE: COMMISSIONER OF INCOME TAX V. KRISHI UPAJ MANDI SAM ITI & ORS. (2009 227 CTR (RAJ.) 79 17. IT IS NOT IN DISPUTE THAT THE AMOUNT GIVEN BY THE ASSESSEE TO THE BOARD FOR SPECIFIC PURPOSE ON THE A PPROVAL OF THE PROJECT BY THE STATE GOVERNMENT. THE LEARNED TR IBUNAL HAS RIGHTLY OBSERVED THAT THE AMOUNT GIVEN IS NOT A VOL UNTARY CONTRIBUTION BY THE ASSESSEE BUT TOWARDS THE ACHIEVE MENT OF THE OBJECT SET OUT IN THE ACT FOR WHICH THE ASSESSEE CAME INTO EXISTENCE. IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE ASSESSEE CAN CLAIM THE REFUND OF THE AMOUNT ONCE GI VEN TO THE BOARD SO AS TO EXECUTE AND CARRY OUT THE CONSTRUCTI ON WORK. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED TRIBUNAL HAS RIGHTLY HELD THAT THE AMOUNT WHICH REMA INED UNUTILIZED CANNOT BE TREATED AS ADVANCE WHICH PRES UPPOSES EXISTENCE OF AN ELEMENT OF GETTING THE AMOUNT BACK IN CASE THE TERMS OF THE AGREEMENT ARE NOT COMPLIED WITH. SINCE THE AMOUNT ONCE GIVEN FOR A SPECIFIC CHARITABLE PURPOSE BY THE MARKET COMMITTEE TO THE BOARD IS NOT REFUNDABLE AND THE ASSESSEE IS NOT IN POSITION TO ENSURE THAT THE AMOU NT IS SPENT WITHIN THE SAME YEAR AND ALSO CANNOT CALL BACK THE U NSPENT AMOUNT THEREFORE, SO FAR AS THE ASSESSEE IS CONCERN ED, THE MAKING OF THE PAYMENT TO THE BOARD BY ITSELF HAS TO BE TREATED AS APPLICATION. IN THIS VIEW OF THE MATER, WE ARE IN COMPLETE AGREEMENT WITH THE FINDING ARRIVED AT BY THE LEARNED TRIBUNAL ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 7 RELYING UPON THE DECISION OF THE HON'BLE SUPREME CO URT IN THE MATTER OF CIT V. THANTHI TRUST MANU/SC/2038/1996: (19 99) 156 CTR (SC) 605: (1999) 239 ITR 502 (SC) THAT THE C REDITING OF THE AMOUNT IN THE ACCOUNT OF THE BOARD IS ENOUGH AND THE REVENUE CANNOT INSIST THAT THE AMOUNT SO GIVEN BY T HE ASSESSEE MUST BE SPENT WITHIN A RELEVANT YEAR ONLY. IN OUR CONSIDERED OPINION, THE MARKET COMMITTEE HAVING PUT ITS INCOME TO USE IN CONFORMITY WITH THE PROVISIONS OF T HE ACT OF 1961 FOR CHARITABLE PURPOSE, IT HAS TO BE TREATED A S THE APPLICATION OF THE INCOME FOR THE CHARITABLE PURPOS E IN THE RELEVANT YEAR. IN LIGHT OF THE DISCUSSION ABOVE, IT IS EVIDENT THA T ANY AMOUNT PAID BY THE APPELLANT SAMITI TO THE STATE GOVERNMEN T TOWARDS ACHIEVEMENT OF ITS OBJECTIVES SHALL BE TREATED AS A N APPLICATION OF INCOME' THE CONTENTION OF THE LD. CIT(A) TO TREAT THE SAID AMOUNT AS AN ADVANCE IS IN CONTRADICTION TO THE RUL ING OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE DISCU SSED ABOVE. THE HON'BLE JURISDICTIONAL HIGH COURT HAS CATEGORICA LLY HELD THAT THE AMOUNT WHICH REMAINED UNUTILIZED CANNOT BE TREA TED AS 'ADVANCE' WHICH PRESUPPOSES EXISTENCE OF AN ELEMENT OF GETTING THE AMOUNT BACK IN CASE THE TERMS OF THE AGREEMENT ARE NOT COMPLIED WITH. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS HUMBLY SUB MITTED THAT THE ADDITIONS MADE BY THE LD. CIT(A) ON ACCOUNT OF TREATING THE AMOUNT PAID TO XEN, BARAN AS ADVANCE I S BAD IN LAW AND DESERVES TO BE DELETED. 5. THE LEARNED CIT DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 8 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNE D CIT(A) DOES NOT HAVE POWER TO RESTORE BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER ACCORDING TO THE FINANCE ACT, 2001 W.E.F. 01/06/2001 . WHEREAS THE LEARNED CIT(A) HAS PASSED ORDER IN THIS CASE ON 30/ 12/2011, THEREFORE, THE ORDER OF THE LEARNED CIT(A) IS BASED ON WRONG I NTERPRETATION OF LAW. FURTHER ON MERIT ALSO, THE APPELLANT HAD GIVEN THIS MONEY TO XEN, BARAN FOR REPAIR, MAINTENANCE AND CONSTRUCTION OF V ARIOUS PROJECTS. AS PER SECTION 19 OF THE MARKET ACT REPRODUCED ABOVE, THE APPELLANT IS ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT BEING EXISTING FOR ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE EXPENDITURE IN CURRED BY THE SAMITI TO ACHIEVE ITS OBJECT IS TO BE TREATED AS EXPENDITU RE TOWARDS CHARITABLE PURPOSE. THE APPELLANT SAMITI HAD PAID THE SUM TOWARD S ACHIEVEMENT ITS CHARITABLE OBJECT IT DOES NOT HAVE ANY CONTROL ON USAGES OF SUCH FUND HAD BEEN PAID TO THE XEN, BARAN, WHO IS A GOVERNMEN T AUTHORITY. THE CASE LAW RELIED BY THE APPELLANT I.E. KRISHI UPAJ MA NDI SAMITI, GAJSINGHPUR (SUPRA) IS SQUARELY APPLICABLE IN THE C ASE OF THE ASSESSEE. THEREFORE, THIS GROUND OF ASSESSEES APPEAL IS ALLOWE D. 7. THE SECOND GROUND OF ASSESSEES APPEAL FOR BOTH T HE ASSESSMENT YEARS I.E. A.Y. 2007-08 & 2008-09 ARE AGAINST NOT A LLOWING DEPRECIATION ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 9 ON SHOPS AND GODOWNS RENTED OUT BY THE SAMITI, WHICH HAS BEEN TREATED INCOME FROM HOUSE PROPERTY AND NOT ALLOWING DEPRECIATION BEING DEDUCTION ALLOWED U/S 24 OF THE ACT IN A.Y. 20 07-08 AND 2008-09. THE LEARNED CIT(A) CONFIRMED THIS ADDITION BY OBSERVI NG THAT THE DEPRECIATION IS ALLOWABLE UNDER NORMAL COMMERCIAL P RINCIPLE AND RENT IS TO BE ALSO CONSIDERED AS RECEIPT ON COMMERCIAL PRIN CIPLE WITHOUT GIVING DEDUCTION AS PER SECTION 24 OF THE ACT. 8. THE LEARNED A.R. FOR THE ASSESSEE ARGUED THAT THE LEARNED CIT(A) HAS TREATED RENTAL INCOME AS BUSINESS INCOME IN HIS ORDER, THEREFORE, THE ASSESSEE AUTOMATICALLY ENTITLED TO DEPRECIATION FROM SHOPS/GODOWNS RENTED OUT AS PER NORMAL COMMERCIAL PRINCIPLE OF AC COUNTANCY, IF THE DEPRECIATION IS NOT ALLOWED, WHICH IS ADDED BACK, IT MAY BE TREATED THE APPLICATION OF FUND AND WILL STILL BE ELIGIBLE FOR E XEMPTION U/S 11 OF THE ACT. 9. THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESSI NG OFFICER. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LE ARNED CIT(A) HIMSELF TREATED THE RENTAL INCOME AS INCOME FROM BU SINESS AND PROFESSION, ACCORDINGLY, THE SAMITI IS ENTITLED TO DEPRECIATION U/S 32 OF ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 10 THE ACT. THE BOTH THE GROUNDS OF ASSESSEES APPEALS FOR BOTH THE ASSESSMENT YEARS ARE ALLOWED. 11. THE THIRD GROUND OF THE ASSESSEES APPEALS FOR B OTH THE ASSESSMENT YEARS ARE AGAINST ASSESSING THE SURPLUS AS BUSINESS INCOME AND NOT ALLOWING EXEMPTION U/S 11(2) OF THE ACT IN B OTH THE YEARS. THE LEARNED ASSESSING OFFICER OBSERVED THAT AS PER EARL IER YEAR, THE APPELLANT CLAIMED EXEMPTION U/S 11 OF THE ACT BEING THE VALID REGISTRATION U/S 12AA OF THE ACT ISSUED BY THE LEAR NED CIT(ADMINISTRATION), KOTA ON THE DIRECTION OF THE H ONBLE ITAT, JAIPUR BENCH BUT THE MATTER IS SUBJUDICED BEFORE THE HONB LE RAJASTHAN HIGH COURT AND HAS NOT GOT ITS FINALITY. THEREFORE, HE AS SESSED SURPLUS INCOME AS BUSINESS INCOME AND NOT ALLOWED EXEMPTION U/S 11(2) OF THE ACT. THE LEARNED CIT(A) HELD THAT THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF KUMS, JAISALMER, KUMS GAJSINGHPUR AN D KUMS, SHRIMADHOPUR HAS HELD THAT THE KUMS IS ELIGIBLE FOR REGISTRATION U/S 12A BEING EXISTING FOR ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY. THE ASSESSING OFFICER IS NOT JUSTIFIED TO DENY STATUS O F CHARITABLE INSTITUTION TO THE APPELLANT. THE ASSESSING OFFICER IS ALSO NOT JUSTIFIED IN COMPLETING THE ASSESSMENT WITHOUT GRANTING EXEMPTION U/S 11 AND 12 OF THE ACT, ACCORDINGLY, HE ALLOWED THE APPEAL. AS SUCH, THERE I S NO AGGRIEVED ORDER ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 11 PASSED BY THE LEARNED CIT(A), WHO HAD DELETED THE OB SERVATIONS MADE BY THE ASSESSING OFFICER IN BOTH THE YEARS AND ALLO WED THE GROUNDS OF APPEAL IN FAVOUR OF THE ASSESSEE, THEREFORE, THIS G ROUND OF APPEAL IS DISMISSED IN BOTH THE YEARS. 12. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND I N BOTH THE YEARS, WHICH ARE REPRODUCED AS UNDER:- ADDITIONAL GROUND FOR A.Y. 2007-08 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN DENYING THE EXEMPT ION U/S 11 AND 12 OF THE ACT TO THE APPELLANT ON THE GROUND TH AT THE APPELLANT DID NOT COMPLY WITH THE REQUIREMENTS OF SE CTION 11(2) RELATING TO SUBMISSION OF FORM 10, WITHOUT APPRECIAT ING THE FACT THAT THE INCOME AND EXPENDITURE ACCOUNT AND OTHER R ELEVANT DOCUMENTS WERE AVAILABLE WITH THE LEARNED CIT(A), KO TA TO ESTABLISH THE FACT THAT PROVISIONS OF SECTION 11(2) WERE NOT APPLICABLE ON APPELLANT. ADDITIONAL GROUND FOR A.Y. 2008-09 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A), KOTA HAS ERRED GROSSLY ERRED IN DENY ING THE EXEMPTION U/S 11 AND 12 OF THE ACT TO THE APPELLANT ON THE GROUND THAT THE APPELLANT DID NOT FILE THE PRESCRIB ED FORM 10 FOR ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 12 ACCUMULATION OF INCOME EVEN THOUGH THE APPELLANT SA MITI HAD DULY FILED AND SUBMITTED THE REQUIRED DETAILS IN FO RM 10 BEFORE THE LEARNED A.O. ON 25/09/2008 PRIOR TO FILING THE RETURN OF INCOME AND WHICH FACT WAS MENTIONED BEFORE THE LEARNE D A.O. (VIDE LETTER DATED 27/10/2010 AND ALSO LEARNED CIT( A) (VIDE LETTER DATED 09/11/2011). 13. THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT THE APPELLANT SAMITI HAD APPLIED MORE THAN 85% OF THE INCOME OF T HE RELEVANT ASSESSMENT YEAR TO ACHIEVE THE OBJECT OF THE SAMITI . HE HAS GIVEN DETAILS AS UNDER:- PARTICULARS A.Y. 2006-07 A.Y. 2007-08 A.Y. 2008-09 AMOUNT (IN RS.) TOTAL INCOME AS PER AUDITED INCOME & EXPENDITURE ACCOUNT 2,16,86,122 1,72,54,955 2,25,18,895 EXPENSE AND APPLICATION AS PER RECASTED INCOME & EXPENDITURE ACCOUNT SUBMITTED BEFORE LEARNED CIT(A) LESS: CAPITAL EXPENDITURE 77,84,924 - 15,21,479 LESS: OTHER EXPENSES AND APPLICATION 1,19,44,555 1,65,04,896 1,45,13,175 SURPLUS AS PER RECASTED I&E A/C (B) 19,56,643 7,50,059 64,84,241 EXCESS APPLICATION OF EARLIER YEARS ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 13 LESS: BROUGHT FORWARD LOSSES SET OFF AS PER RETURN OF INCOME 51,15,020 - - LESS: BROUGHT FORWARD DEPRECIATION SET OFF AS PER RETURN OF INCOME 34,38,808 - - SURPLUS AFTER TOTAL APPLICATION (D) (-)65,97,185 7,50,059 64,84,241 PERMISSIBLE ACCUMULATION (@ 15%) 32,52,918 25,88,243 33,77,834 ON THE BASIS OF ABOVE CHART, THE LEARNED ASSESSING OFFICER ARGUED THAT THE SAMITI HAD APPLIED MORE THAN 85% OF TOTAL INCOM E FOR ASSESSMENT YEARS 2006-07 AND 2007-08, HENCE THE PROVISION OF S ECTION 11(2) ARE NOT APPLICABLE ON THE APPELLANT IN THE SAID ASSESSM ENT YEARS. IN A.Y. 2008-09, THE APPELLANT SAMITI WAS ABLE TO APPLY LESS THAN 85% OF TOTAL INCOME TOWARDS CHARITABLE PURPOSES. THE LEARNED CIT(A ) VIDE ORDER DATED 29/12/2011 DISALLOWED THE EXEMPTION U/S 11 OF THE ACT ON THE SOLE CONTENTION THAT THE APPELLANT SAMITI HAD NOT G IVEN ANY NOTICE TO THE LEARNED ASSESSING OFFICER IN PRESCRIBED FORM N O. 10 AND MANNER PRESCRIBED U/S 11(2)(A) OF THE ACT. AS PER SECTION 11(2) (A) AND RULE 17 OF THE INCOME TAX RULES, 1962 STIPULATES THAT THE AS SESSEE SHALL PROVIDE A NOTICE TO THE ASSESSING OFFICER REGARDING THE ACC UMULATION OF SUCH INCOME IN FORM NO. 10 BEFORE EXPIRY OF TIME ALLOWED U/S 139(1) OF THE ACT FOR FURNISHING THE RETURN OF INCOME. THE FINDING GIVE BY THE LEARNED ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 14 CIT(A) IS NOT CORRECT AS THE APPELLANT HAD FILED AND SUBMITTED THE REQUIRED DETAILS IN FORM NO. 10 BEFORE THE LEARNED ASSESSING OFFICER ON 25/09/2008 I.E. PRIOR TO FILING OF RETURN OF INCOME ON 30/09/2008. FURTHER THE LEARNED CIT(A) HAD HIMSELF RECOGNIZED T HE FACT THAT THE INCOME IS ACCUMULATED CARRY FORWARD TO BE APPLIED IN FUTURE YEAR HAS ALSO BEEN DULY STATED IN THE AUDIT REPORT IN FORM N O. 10-B. THEREFORE, HE PRAYED TO ALLOW THE APPEAL IN FAVOUR OF THE ASSES SEE. 14. AT THE OUTSET, THE LEARNED DR VEHEMENTLY SUPPOR TED THE ORDER OF THE LEARNED CIT(A). 15. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS FACT THAT THE ASSESSEE HAD APPLIED TOTAL INCOME FOR THE PURPOSES OF OBJECT OF THE SAMITI MORE THAN 85% IN A.Y. 2007-08 BUT FOR A.Y. 2008-09 THE S AMITI HAD APPLIED LESS THAN 85% OF TOTAL RECEIPT FOR CHARITABLE PURPO SE. THEREFORE, THE APPELLANT HAD FILED FORM NO. 10 BEFORE THE LEARNED ASSESSING OFFICER ON 25/09/2008 I.E. BEFORE THE DUE DATE OF RETURN. THERE FORE, THIS ISSUE IS SET ASIDE TO THE LEARNED CIT(A) TO RECONSIDER THE F ACTS AND PASS ORDER AS PER LAW. ACCORDINGLY, THIS GROUND OF APPEAL IS SE T ASIDE TO THE LEARNED CIT(A). ITA 190 & 191/JP/2012_ KUMS, CHHABRA, BARAN VS. ITO 15 16. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWE D PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 04 TH MARCH, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- KRISHI UPAJ MANDI SAMITI, CHHABRA, DISTRICT- BARAN. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., BARAN. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 190 & 191/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR