Haryana State Agricultural Marketing Board, Panchkula V. DCIT, Panchkula

ITA 230/CHANDI/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5144 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 23-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANDER KANTA
• Assessee Lawyers: HARISH NAYAR
• Keywords: Capital asset; Business income; Charitable institution; Capital expenditure
• Section: 143(3); 12AA; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.230/CHD/2012 (ASSESSMENT YEAR : 2004-05) & ITA NO.158/CHD/2013 (ASSESSMENT YEAR : 2004-05) HAYANA STATE AGRICULTURAL VS. THE D.C.I.T., MARKETING BOARD, PANCHKULA CIRCLE, PANCHKULA. PANCHKULA. PAN: AAALH0016R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARISH NAYAR, ADV. RESPONDENT BY : SMT.CHANDERKANTA, ADDL.CIT DR DATE OF HEARING : 20.03.2018 DATE OF PRONOUNCEMENT : 23.03.2018 ORDER PER ANNAPURNA GUPTA, A.M. : BOTH THE ABOVE APPEALS HAVE BEEN FILED BY THE SAME ASSESSEE CHALLENGING SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS), PANCHKULA IN QUANTUM PROCEEDINGS AND IN PENALTY PROCEEDINGS DATE D 2.12.2011 AND 5.12.2012 RESPECTIVELY RELATING TO ASSESSMENT YEAR 2004-05. WE SHALL FIRST BE DEALING WITH THE QUANTUM APPEAL IN ITA NO.230/CHD/2012. ITA NO.230/CHD/2012: A.Y 2004-05 2. THE SOLE ISSUE IN THE PRESENT APPEAL PERTAINS TO DETERMINING THE TAXABLE INCOME OF THE ASSESSEE WHIC H HAS 2 CLAIMED EXEMPTION AS A CHARITABLE TRUST U/S 11 OF THE ACT, ON ACCOUNT OF NON-APPLICATION OF ITS INCOME UPTO TH E STATUTORILY PRESCRIBED LIMIT OF 85% OF THE INCOME A S SPECIFIED U/S 11(1)(A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). AT THE OUTSET, IT MAY BE POINTED OUT THAT THIS ISS UE HAS COME UP BEFORE US IN THE SECOND ROUND. THE BRIEF FA CTS OF THE CASE ARE THAT THE ASSESSEE BEING A CHARITABLE ORGANIZATION REGISTERED U/S 12AA OF THE ACT, HAD FI LED RETURN FOR THE IMPUGNED ASSESSMENT YEAR CLAIMING EXEMPTION U/S 11 OF THE ACT. ORIGINAL ASSESSMENT W AS FRAMED U/S 143(3) OF THE ACT AT AN INCOME OF RS.11,03,11,164/- WHICH WAS REDUCED TO RS.17,31,089 /- BY THE CIT(APPEALS). BOTH THE ASSESSEE AND THE REVENU E WENT IN APPEAL BEFORE THE I.T.A.T. AGAINST THE ORDER OF THE CIT(APPEALS) AND THE HON'BLE I.T.A.T. DISMISSED THE APPEAL OF THE REVENUE WHILE IN THE CASE OF THE ASSESSEES APPEAL, THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSI NG OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE THAT EVEN WHEN THE DISPUTED INCOMES ARE LIABLE TO BE ASSESSED AS NORMA L INCOME, THE APPLICATION OF INCOME TO THE EXTENT OF 85% AND ABOVE IS STILL TO BE EXAMINED AND EXEMPTION OF INCO ME DETERMINED ACCORDINGLY. THE ASSESSING OFFICER IN TH E SECOND ROUND BEFORE IT, AFTER VERIFICATION OF THE CLAIM OF THE APPLICATION OF 85% OF THE INCOME OF THE ASSESSEE FO R CHARITABLE PURPOSES, DETERMINED THE SHORTFALL IN SU CH 3 APPLICATION TO THE EXTENT OF RS.83,45,989/- AND ADD ED BACK THE SAME OF THE INCOME OF THE ASSESSEE. 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHO ENHANCED THE SHORTFALL IN THE APPLICATION OF INCOME TO RS.1,53,72,368/- BY NOT TR EATING THE INCOME TAX PAID OF EARLIER YEARS AS APPLICATION OF INCOME. THE CALCULATION OF THE SHORTFALL AT PARA 4. 8 OF THE ORDER IS AS UNDER: PARTICULARS AMOUNT (RS.) 1) RECEIPT RECEIPT & PAYMENT STATEMENT FILED DURING APPEAL INCLUDING CONTRIBUTION FROM MCS RENT INTEREST RECOVERED AND OTHER MISC. RECEIPTS, SALE OF TENDER FORMS AND ENLISTMENT FEE OF CONTRACTORS 51,81,19,610/- 2) 85% OF ABOVE 44,04,01,668/- 3) INCOME APPLIED FOR THE OBJECTIVES EXCLUDING INCOME FOR TAX OF PREVIOUS YEARS 42,50,29,300/- 4) SHORTFALL IN THE APPLICATION OF INCOME (2-3) 1,53,72,368/- 4. AGGRIEVED BY THE SAME, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING EFFECTIVE G ROUNDS OF APPEAL: 2. THAT THE CIT(A) HAS ERRED BOTH ON FACTS AND LAW IN MAKING ENHANCEMENT OF INCOME BY RS. 15372368 ON THE GROUND THAT THE APPELLANT HAD NOT COMPLIED WITH THE CONDITIONS LAID DOWN UNDER SECTION 11(2) REQUIRING THE ASSESSEE TO APPLY THE INCOME DURING THE YEAR UNDER QUESTION OR ACCUMULATE THE SAME FOR NEXT FIVE YEARS. THE CIT(A) HAS ERRED IN ADOPTING INCORRECT FIGURE OF AMOUNT ACTUALLY UTILIZED DURING THE YEAR AT RS.425029300 INSTEAD OF RS.436945097 WHICH HAS ACTUALLY BEEN UTILIZED DURING THE YEAR UNDER QUESTION. 4 IT IS PRAYED THAT SUITABLE DIRECTIONS IN THE MATTER MAY BE GIVEN TO THE AO/ CIT(A) FOR RECALCULATING THE AMOUNT UTILIZED OUT OF THE TOTAL INCOME TOWARDS OBJECTIVES OF THE INSTITUTION. 3. THAT THE CIT(A) HAS ERRED BOTH ON FACTS AND LAW IN NOT CONSIDERING THE SUM OF RS.76645786 PAID AS INCOME TAX AS UTILIZATION OF INCOME TOWARDS THE OBJECTIVE BY THE APPELLANT. IT IS PRAYED THAT THE ACTION OF THE CIT IN NOT CONSIDERING THE AMOUNT OF RS.76645786 PAID AS INCOME TAX AS UTILIZATION TOWARDS OBJECTIVES MAY BE ORDERED TO BE QUASHED AND NECESSARY DIRECTIONS IN THE MATTER MAY BE GIVEN TO RECALCULATE THE INCOME A S PER PROVISIONS OF THE ACT. 4. THAT THE CIT(A) HAS ERRED BOTH ON FACTS AND LAW IN NOT CONSIDERING THE SUM OF RS.3218001 AS UTILIZAT ION OF INCOME TOWARDS THE OBJECTS BY THE APPELLANT WHICH WAS VALIDLY AND DULY SPENT BY THE APPELLANT ON ACQUISITION OF CAPITAL ASSETS. THE ACTION OF THE CIT(A )IN NOT CONSIDERING THE CAPITAL EXPENDITURE AS UTILIZAT ION TOWARDS OBJECTIVES FOR WHICH THE ASSESSEE WAS SET UP IS INCORRECT, UNJUST, NOT IN CONSONANCE OF LAW. IT IS PRAYED THAT THE ACTION OF THE CIT IN NOT CONSIDERING THE AMOUNT OF RS.3218001 PAID AS INCOME TAX AS UTILIZATION TOWARDS OBJECTIVES MAY BE ORDERED TO BE QUASHED AND NECESSARY DIRECTIONS IN THE MATTER MAY BE GIVEN TO RECALCULATE THE INCOME A S PER PROVISIONS OF THE ACT. 5. THAT THE ACTION OF THE LD. CIT(A) IN NOT QUASHIN G THE ACTION OF AO OF REJECTING FORM NO.10 FILED BY TH E APPELLANT TO GIVE NOTICE OF ACCUMULATION IN RESPECT O F UNSPENT AMOUNT FOR WHICH OPTION OF ACCUMULATIONS UNDER SECTION 11(2) OF INCOME TAX ACT WAS EXERCISED IS UNJUST AND UNWARRANTED. IT IS PRAYED THAT THE NECESSARY DIRECTIONS MAY BE GIVEN TO THE C!T(APPEALS)/AO FOR TAKING INTO CONSIDERATION THE NOTICE GIVEN UNDER SECTION 11(2) OF THE INCOME TAX ACT 1961 AND ALLOW RELIEF ACCORDINGLY. 5. IN GROUND NOS.2 & 3 RAISED BEFORE US, THE ASSESS EE HAS CHALLENGED/CONTESTED THE DETERMINATION OF SHORTFALL IN APPLICATION OF INCOME OF THE ASSESSEE TO THE EXTEN T OF RS.1,53,72,368/-, BY THE CIT(APPEALS), ON TWO GROUN DS; 5 A) BY INCORRECTLY ADOPTING THE FIGURE OF AMOUNT ACTUALLY UTILIZED DURING THE YEAR AT RS.42,50,29,30 0/- INSTEAD OF RS.43,69,45,097/- AND; B) BY NOT TREATING THE INCOME TAX PAID OF PREVIOUS YEARS AMOUNTING TO RS.7,66,45,786/- AS APPLICATION/UTILIZATION OF INCOME FOR THE YEAR. 6. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT AS P ER THE FIGURES OF INCOME OF THE ASSESSEE AND ITS UTILIZATI ON DURING THE YEAR SUBMITTED TO THE LOWER AUTHORITIES AND WHI CH HAVE BEEN ACCEPTED AND CONSIDERED BY THE LOWER AUTHORIT IES FOR THE PURPOSE OF CALCULATING 85% APPLICATION OF INCOM E BY THE ASSESSEE, THE APPLICATION OF INCOME EXCLUDING INCOM E TAX PAID OF PREVIOUS YEARS AMOUNTED TO RS.43,69,45,097/ -. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE CALCULATION SUBMITTED TO THE CIT(APPEALS) IN THIS R EGARD, PLACED AT PAPER BOOK NO.7 AND WHICH IS REPRODUCED A S UNDER: ------------------ -------------- -------------- PARTICULARS ANNEXURE AMOUNT(RS.) --------------------------- ------------------ -- -------------- RECEIPT REVENUE HEAD I CONTRIBUTION FROM M.CS 448846458.65 RENT 5174790.00 INTEREST RECOVERED 61772654.81 OTHER MISC. RECEIPTS 594618.00 ------------------- 516388521.46 CAPITAL HEAD SALE OF TENDER FORMS II 982809.00 ENLISTMENT FEES OF CONTRACTRS III 748280.00 ------------------- 518119610.46 ------------------- 6 PAYMENT REVENUE HEAD SALARY GENERAL ESTABLISHMENT IV 226784951.00 SALARY WORKS ESTABLISHMENT V 137486923.00 TRAVELLING ALLOWANCE VI 6342931.00 CONTINGENCIES RECURRING VII 20193798.02 MISC. EXPENDITURE VIII 21798077.00 INCOME TAX IX 24338417.00 INCOME TAX PREVIOUS YEAR X 76645786.00 ------------------- 513590883.02 ------------------- 7. THE LD. COUNSEL FOR ASSESSEE ALSO DREW AT TO THE CALCULATION OF THE CIT(APPEALS) AT PARA 4.8 OF THE ORDER AS UNDER: PARTICULARS AMOUNT (RS.) 1) RECEIPT RECEIPT & PAYMENT STATEMENT FILED DURING APPEAL INCLUDING CONTRIBUTION FROM MCS RENT INTEREST RECOVERED AND OTHER MISC. RECEIPTS, SALE OF TENDER FORMS AND ENLISTMENT FEE OF CONTRACTORS 51,81,19,610/- 2) 85% OF ABOVE 44,04,01,668/- 3) INCOME APPLIED FOR THE OBJECTIVES EXCLUDING INCOME FOR TAX OF PREVIOUS YEARS 42,50,29,300/- 4) SHORTFALL IN THE APPLICATION OF INCOME (2-3) 1,5 3,72,368/- 8. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT TH E TOTAL RECEIPTS OF THE ASSESSEE AMOUNTED TO RS.51.81 CRORE S AS PER THE ABOVE CALCULATION WHICH WAS THE SAME FIGURE ADO PTED BY THE CIT(APPEALS). THE LD. COUNSEL FOR ASSESSEE TH EREAFTER POINTED OUT THAT CONSIDERING THE DETAIL SUBMITTED B Y THE ASSESSEE AND EXCLUDING THEREFROM THE INCOME TAX PAI D OF EARLIER YEARS AMOUNTING TO RS.7.66 CRORES, WHICH IS THE ONLY ITEM WHICH HAS BEEN EXCLUDED BY THE CIT(APPEALS) FR OM THE 7 APPLICATION OF INCOME, THE RESULTANT APPLICATION CO MES TO RS.43.69 CRORES AS UNDER: TOTAL PAYMENT REFLECTED BY ASSESSEE RS.51.35 CRORES LESS:INCOME TAX PAID OF EARLIER YEARS RS. 7.66 CRORES NOT ALLOWED AS APPLICATION BY CIT(A) BALANCE APPLICATION ALLOWED BY CIT(A) RS.43.69 CRORES 9. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT T HE LD.CIT(APPEALS), ON THE OTHER HAND, HAS GIVEN BENEF IT OF ONLY OF RS.42.50 CRORES FOR NO APPARENT REASON. TH E LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THIS WAS AN ERR OR ON THE PART OF THE CIT(APPEALS) AND APPLICATION OF INC OME TO THIS EXTENT NEEDED TO BE CORRECTED AND REDUCED FROM THE SHORTFALL OF RS.1.53 CRORES CALCULATED BY THE LD.CIT(APPEALS). THE LD. COUNSEL FOR ASSESSEE FURT HER POINTED OUT THAT WHILE LEVYING THE PENALTY U/S 271( 1) FOR THE IMPUGNED YEAR, CORRECTION TO THIS EFFECT HAD BE EN GRANTED BY THE ASSESSING OFFICER, WHO HAD GIVEN THE BENEFIT OF UTILIZATION TO THE EXTENT OF RS.43.69 CRORES. T HE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE PENA LTY ORDER PASSED U/S 271(1)(C) AT PARA 4.1 WHEREIN THE CALCUL ATION OF PENALTY WAS WORKED OUT BY THE ASSESSING OFFICER AS UNDER: 4.1. THE APPELLANT IS NOT ELIGIBLE FOR CREDIT OF I NCOME TAX OF PREVIOUS YEARS CLAIMED AT RS.7, 66,45,786/- AS LAST ITEM IN THE TABLE (SUPRA). THE APPELLANT HAS TO APPLY 85% OF THE RECEIPTS OF CURRE NT YEAR AS UNDER. FOLLOWING PICTURE EMERGES AFTER EXCLUDING INCOME TA X OF PREVIOUS YEARS FROM PAYMENTS:- I) RECEIPTS AS PER TABLE ABOVE 51,63,88,521/- (EXCLUDING RECEIPTS UNDER CAPITAL HEAD ON ACCOUNT OF SALE OF TENDER FORMS + ENLISTMENT FEE) II) 85% OF RECEIPTS AT (I) 43,89,30,243/- 8 III) PAYMENTS AS PER TABLE (SUPRA) 51,35,90,883/- IV) LESS : INCOME TAX OF PREVIOUS YEARS 7,66,45,786/- V) BALANCE APPLICATION 43,69,45,097/- ( SHORTFALL II - V) [43,89,30,243-43,69,45,097] = 19,85,146/- ADD : UTILIZATION TOWARDS CAPITAL 3 2, 18, 001/ : TOTAL SHORTFALL RS.52,03,147/- LD COUNSEL FOR THE ASSESSEE THEREFORE SOUGHT RELIE F ON ACCOUNT OF THE PURPORTED MISTAKE MADE BY THE CIT(A) . 10. THE LD. COUNSEL FOR ASSESSEE THEREAFTER STATED THAT THE LD.CIT(APPEALS) HAD ERRED IN NOT GRANTING BENEFIT O F THE INCOME TAX PAID OF EARLIER YEARS AMOUNTING TO RS.7. 66 CRORES AS APPLICATION OF INCOME FOR THE YEAR. THE L D. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE ORDE R OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR O F INCOME TAX (EXEMPTIONS) VS. NATIONAL ASSOCIATION OF SOFTWA RE & SERVICES COMPANIES REPORTED IN 345 ITR 362 AND POIN TED OUT THEREFROM THAT THE HON'BLE HIGH COURT ON AN IDE NTICAL ISSUE HAD HELD THAT THE TAXES PAID ARE TO BE TREATE D AS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. 11. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 12. WE HAVE HEARD THE RIVAL CONTENTIONS CAREFULLY A ND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. AS ST ATED ABOVE, THE DISPUTE BEFORE US IS VIS--VIS CALCULATI ON OF SHORTFALL OF 85% OF THE APPLICATION OF INCOME FOR T HE PURPOSE OF CLAIMING EXEMPTION U/S 11 OF THE ACT WHEREIN THE SAME 9 HAS BEEN DETERMINED IN THE PRESENT CASE TO THE EXTE NT OF RS.1.53 CRORES. 13. AS FOR THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE LD.CIT(A) HAS ERRONEOUSLY TAKEN T HE FIGURE OF APPLICATION OF INCOME, EXCLUDING TAXES PAID OF E ARLIER YEARS ,AT RS.42.50 CRORES AS AGAINST THE ACTUAL FIG URE OF 43.69 CRORES, WE FIND MERIT IN THE SAME. THE LD.COU NSEL FOR THE ASSESSEE HAS DEMONSTRATED THE SAID FACTS FROM T HE DOCUMENTS WHICH WERE THERE BEFORE THE LOWER AUTHORI TIES ALSO AND THE LD.DR HAS NOT CONTROVERTED THE SAME ,N OR HAS BEEN ABLE TO GIVE ANY EXPLANATION FOR THE SAID DIS CREPANCY. MOREOVER, AS POINTED OUT BY THE LD. COUNSEL FOR ASS ESSEE EVEN THE ASSESSING OFFICER WHILE LEVYING PENALTY HA D TREATED THE APPLICATION TO THE EXTENT OF RS.43.69 CRORES ON LY. WE, THEREFORE, AGREE WITH THE LD. COUNSEL FOR ASSESSEE THAT THE ACTUAL UTILIZATION OF INCOME EXCLUDING INCOME TAX P AID OF EARLIER YEARS SHOULD BE TAKEN AT RS.43.69 CRORES AS AGAINST RS.42.50 CRORES TAKEN BY THE LD.CIT(APPEALS) AND DI RECT THAT THE SHORTFALL IN APPLICATION OF INCOME TO THE EXTENT OF 85% OF THE RECEIPTS BE REDUCED TO THIS EXTENT. 14. AS FAR THE BENEFIT FOR INCOME TAX PAID FOR EARL IER YEARS FOR THE PURPOSE OF TREATING AS APPLICATION OF INCOM E OF THE CURRENT YEAR, WE ARE IN AGREEMENT WITH THE CONTENTI ON OF THE LD. COUNSEL FOR ASSESSEE THAT THE SAME OUGHT TO BE TREATED AS APPLICATION OF INCOME OF THE CURRENT YEAR. IT IS WELL SETTLED THAT FOR THE PURPOSE CALCULATING THE APPLICATION/UTILIZATION OF INCOME FOR THE PURPOSE G RANTING 10 EXEMPTION U/S 11 OF THE ACT, IT IS THE COMMERCIAL P ROFIT WHICH HAS TO BE TAKEN INTO CONSIDERATION AND THE IN COME NEED NOT TO BE CALCULATED AS PER THE PROVISIONS OF THE ACT. THEREFORE, THERE IS NO REASON AT ALL FOR NOT TREATI NG THE TAX PAID OF EARLIER YEARS AS APPLICATION INCOME OF THE IMPUGNED YEAR. THE RELIANCE PLACED BY THE LD. COUNSEL FOR A SSESSEE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF NATIONAL ASSOCIATION OF SOFTWARE & SERVICES COMP ANIES (SUPRA) IS APT, WHEREIN THE HON'BLE HIGH COURT ON A N IDENTICAL ISSUE HAS HELD THAT THERE IS CONSENSUS OF JUDICIAL VIEW ON THE QUESTION WHETHER THE PAYMENT OF TAXES C AN BE CONSIDERED AS A PROPER DEDUCTION WHILE DETERMINING THE INCOME AVAILABLE TO A TRUST FOR APPLICATION TO CHAR ITABLE PURPOSE AS REQUIRED BY SECTION 11(A) OF THE ACT. T HE HON'BLE HIGH COURT HAS HELD THAT THE WORD INCOME USED IN SECTION 11(1)(A) MUST NOT BE ASSIGNED THE SAME MEAN ING AS IN SECTION 2(45) OF THE ACT, WHICH HAS BEEN ACCEPTE D BY THE DEPARTMENT ALSO VIDE A CIRCULAR ISSUED BY THE CBDT AND PAYMENT OF TAXES ARE TO BE DEDUCTED BEFORE ARRIVING AT THE COMMERCIAL INCOME OF THE ASSESSEE TRUST I.E. AVAILA BLE FOR APPLICATION OF INCOME. THE RELEVANT FINDINGS OF TH E HON'BLE HIGH COURT AT PARA 12 OF ITS ORDER ARE AS UNDER: 12. THUS, IT APPEARS THAT THERE IS A CONSENSUS OF JU DICIAL VIEW ON THE QUESTION WHETHER PAYMENT OF TAXES CAN BE CON SIDERED AS A PROPER DEDUCTION WHILE DETERMINING THE INCOME AVAILABLE TO A TRUST FOR APPLICATION TO CHARITABLE PURPOSES AS REQUIRED BY SECTION 11(1)(A) OF THE ACT. THE QUESTION IS NOT WHETH ER TAXES ARE ALLOWABLE WHILE COMPUTING THE BUSINESS INCOME OF AN ASSESSEE UNDER THE PROVISIONS OF THE ACT. THE QUESTI ON IS WHETHER THE WORD 'INCOME' USED IN SECTION 11(1)(A) OF THE ACT MUST BE ASSIGNED THE SAME MEANING AS THE WORDS 'TOT AL INCOME' AS DEFINED IN SECTION 2(45) OF THE ACT. THE CB DT ITSELF 11 HAS OPINED IN THE CIRCULAR CITED ABOVE THAT IT WOULD B E INCORRECT TO ASSIGN TO THE WORD 'INCOME' USED IN SE CTION 11(1)(A) THE SAME MEANING AS 'HAS BEEN STATUTORILY A SSIGNED TO THE EXPRESSION 'TOTAL INCOME' UNDER SECTION 2(45) OF THE ACT. HAVING REGARD TO THE AUTHORITIES NOTICED ABOVE AND K EEPING IN VIEW THE FACT THAT THE LONG-SETTLED POSITION, WHICH HAS ALSO BEEN ACCEPTED BY THE CBDT, SHOULD NOT BE UPSET, PARTIC ULARLY WHERE THE STATUTE WHICH WE ARE DEALING WITH IS AN ALL INDIA STATUTE, WE EXPRESS OUR AGREEMENT WITH THE JUDICIAL TRE ND AND HOLD THAT THE PAYMENT OF TAXES UNDER THE VDIS IS TO BE DEDUCTED BEFORE ARRIVING AT THE COMMERCIAL INCOME OF THE ASSESSEE-TRUST THAT IS AVAILABLE FOR APPLICATION TO CH ARITABLE PURPOSES. WE ARE THUS IN AGREEMENT WITH THE VIEW TAKE N BY THE TRIBUNAL ON THIS POINT. 15. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT OF TAX PAID OF EARLIE R YEARS AS APPLICATION OF INCOME FOR THE YEAR AMOUNTING TO RS. 7.66 CRORES. 16. IN VIEW OF OUR AFORESAID FINDINGS THE ENTIRE SH ORTFALL IN APPLICATION OF INCOME TO THE EXTENT OF 85% OF THE I NCOME FOR CLAIMING EXEMPTION U/S 11 OF THE ACT AND AMOUNTING TO RS 1,53,72,368/- IS WIPED OFF .THUS WE HOLD THAT THE A SSESSEE IS ENTITLED TO EXEMPTION OF ITS ENTIRE INCOME U/S 1 1 OF THE ACT AND THE ADDITION MADE TO THE SAME TO THE EXTENT OF RS. 1,53,72,368/- IS DELETED. GROUND NOS. 2 AND 3 RAIS ED BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 17. GROUND NOS. 4 & 5 RAISED BY THE ASSESSEE WERE N OT PRESSED BEFORE US AND, THEREFORE, THE SAME ARE TREA TED AS DISMISSED. 18. IN EFFECT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 12 ITA NO.158/CHD/2013: 19. IN THE PRESENT APPEAL, THE ASSESSEE HAS CHALLEN GED THE ACTION OF THE LD.CIT(APPEALS) IN CONFIRMING THE PEN ALTY LEVIED ON ACCOUNT OF AN ADDITION MADE IN QUANTUM PROCEEDINGS ON ACCOUNT OF NON-APPLICATION OF INCOME TO THE EXTENT OF 85% THEREOF. SINCE THE ENTIRE ADDITION M ADE IN THIS REGARD HAS BEEN DELETED BY US VIDE OUR ORDER P ASSED IN QUANTUM PROCEEDINGS ABOVE IN ITA NO.230/CHD/2012 AT PARA 11, THE PENALTY NO LONGER SURVIVES AND THE APP EAL OF THE ASSESSEE, THEREFORE, STANDS ALLOWED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.230/CHD/2012 IS PARTLY ALLOWED AND THE APPEAL OF THE ASSESSEE IN ITA NO.158/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD MARCH, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)S 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH