C.N.N.Educational Trust, CHENNAI V. ITO, Ooty

ITA 2683/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96161 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 09-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-10-2014
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: S SRIDHAR
• Keywords: Reassessment proceedings

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NOS. 2683 & 2684/MDS/2014 / ASSESSMENT YEARS : 2008-09 & 2009-10 M/S. CNN EDUCATIONAL TRUST, 2/47, DR. BASUVAIAH NAGAR, ADASHOLAI, OOTY, THYE NILGIRIS 643 001. PAN AAATC8167G ( /APPELLANT) VS THE INCOME-TAX OFFICER, WARD-I(1), OOTY. ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI A.B. KOLI, JCIT / DATE OF HEARING : 09.09.2015 ! / DATE OF PRONOUNCEMENT : 23.09.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX( APPEALS) - - ITA 2683 & 2684/14 2 DATED 12.08.2014 FOR THE ASSESSMENT YEARS 2008-09 AND 2009- 10. SINCE, THE ISSUES INVOLVED IN THESE APPEALS A RE COMMON, THEY ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPO SED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY COMMON GROUND IN THESE APPEALS IS WITH REGARD TO DISALLOWANCE OF AMOUNT CLAIMED AS ACCUMULATION O F ` 10,43,587/- & ` 5,37,333/- FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY AND AMOUNT CLAIMED AS SE T APART OF ` 59,13,658/- & ` 30,44,888/- FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY U/S.11(2) OF THE I.T. ACT. 3. THE FACTS AS NARRATED FOR THE ASSESSMENT YEAR 20 08-09 ARE THAT THE ASSESSEE IS A TRUST REGISTERED U/S.12A OF THE ACT WITH EFFECT FROM 1.4.2007. IN THE RETURN OF INCOME FILE D FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS CLAIMED T HE INCOME OF ` 69,57,245/- AS EXEMPT. THE ASSESSEE CLAIMED ` 10,43,587/- AS ACCUMULATION @ 15% AND THE REMAINING ` 59,13,658/- AS ACCUMULATED OR SET APART FOR SPECIFIED PURPOSES U/S .11(2) OF THE ACT. ACCORDING TO THE AO, THE ASSESSEE HAS NOT FUL FILLED THE CONDITIONS LAID DOWN U/S.11(1)(A) AS WELL AS 11(B) OF THE ACT. THE AO OBSERVED THAT AS PER SEC.11(1)(A), THE INCOME OF THE TRUST IS - - ITA 2683 & 2684/14 3 EXEMPTED TO THE EXTENT IT IS APPLIED FOR THE PURPOS E OF CHARITY AND WHERE SUCH INCOME IS ACCUMULATED AND SET APART FOR APPLICATION, TO THE EXTENT OF 15% OF THE INCOME. ACCORDING TO T HE AO, THE ASSESSEE HAS APPLIED ONLY 71% OF ITS INCOME FOR CHA RITABLE PURPOSE AND THEREFORE, IS NOT ELIGIBLE FOR ACCUMULA TION OF 15%. ACCORDINGLY, THE AO TREATED THE AMOUNT OF ` 10,43,587/- CLAIMED AS EXEMPT AS INCOME OF THE ASSESSEE. 3.1 FURTHER, THE ASSESSEE CLAIMED THAT AN AMOUNT OF ` 59,13,658/- HAS BEEN SET ASIDE FOR SPECIFIED PURPOS ES U/S.11(1) AND CLAIMED THAT THERE IS NO VIOLATION OF ANY PROVI SIONS. ACCORDING TO THE AO, IT IS MANDATORY FOR THE ASSESS EE TO SPECIFY BY NOTICE IN WRITING TO THE AO, THE PURPOSE FOR WHI CH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PERIOD FO R WHICH THE SAME IS TO BE ACCUMULATED OR SET APART. THE INTIMA TION BY WAY OF FILING OF FORM 10 BEFORE THE DUE DATE HAS NOT BE EN COMPLIED BY THE ASSESSEE, AS THE RETURN ITSELF WAS FILED BEL ATEDLY. AS PER RULE 17 OF IT RULES, IN ORDER TO CLAIM EXEMPTION U/ S.11(2), THE ASSESSEE IS REQUIRED TO FILE THE DETAILS IN FORM 10 , BEFORE THE DUE DATE FOR FILING RETURN U/S.139 OF THE ACT. FIRSTLY , THE ASSESSEE DID NOT FULFILL THESE CONDITIONS AND EVEN IN THE FORM F ILED BELATEDLY THE - - ITA 2683 & 2684/14 4 PURPOSE FOR SETTING APART THE AMOUNT, THE PERIOD ET C. ARE NOT MENTIONED AND THE COLUMNS IN THE FORM FILED ARE LEF T BLANK. FURTHER, AS PER CLAUSE (B) OF SEC.11(2) OF THE ACT, THE MONEY SO ACCUMULATED IS TO BE INVESTED IN THE MODES SPECIFIE D IN SEC.11(5) OF THE ACT. BUT THIS WAS NOT DONE BY THE ASSESSEE. BEING SO, THE DEDUCTIONS CLAIMED BY THE ASSESSEE A S ACCUMULATION BEING 15% AND THE BALANCE AS SET APART ARE NOT ALLOWABLE IN THIS CASE. ACCORDINGLY, THE AO DENIED THE BENEFIT IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. AGA INST THIS, THE ASSESSEE WENT IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS), WHO CONFIRMED THE ORDER OF THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR RELIED ON THE JUDGMENT OF THE DELHI H IGH COURT IN THE CASE OF ASSOCIATION OF CORPORATION & APEX SO CIETIES OF HANDLOOMS V. ADIT (351 ITR 287) AND SUBMITTED THAT EVEN AT THE TIME OF REASSESSMENT PROCEEDINGS, THE ASSESSEE COULD BE FILED FORM 10 BEFORE COMPLETION OF THE ASSESSMENT A ND DUE CREDIT TO BE GIVEN TO FORM-10. ACCORDING TO THE LD . AR, THIS VIEW IS ALSO SUPPORTED BY THE SUPREME COURT IN THE CASE OF CIT V. - - ITA 2683 & 2684/14 5 NAGPUR HOTEL OWNERS ASSOCIATION (247 ITR 201), WHER EIN IT WAS HELD AS UNDER : ON-GOING THROUGH THE ABOVE EXTRACT, WE FIND THAT T HE SUPREME COURT OBSERVED THAT IT WAS NECESSARY THE ASSESSING AUTHORITY MUST HAVE THE INFORMATION UNDER FORM-10 AT THE TIME HE COMPLETES THE ASSESSMENT AND IN ITS ABSENCE IT IS NOT POSSIBLE FOR THE ASSESSING AUTHORITY TO GIVE BENEFIT OF SUCH EXCLUSION. FURTHERMORE, ONCE THE ASSESSMENT IS SO COMPLETED IT WOULD BE FUTILE TO FIND FAULT WITH THE ASSESSING AU THORITY FOR HAVING INCLUDED SUCH INCOME IN THE ASSESSABLE INCOME OF THE ASSESSEE. THE SUPREME COURT HELD CATEGORICALLY THAT WITHOUT THE PARTICULARS OF THIS INCOME AS GIVEN IN FORM-10, THE ASSESSING AUTHORITY CANNOT ENTERTAIN THE CLAIM OF THE ASSESSEE U/S.11 OF THE A CT AND, THEREFORE, COMPLIANCE WITH THE REQUIREMENT OF THE ACT WILL HAVE TO BE AT ANY TIME BEFORE THE ASSESSME NT PROCEEDINGS ARE COMPLETED. THE SUPREME COURT ALSO OBSERVED THAT ANY CLAIM FOR GIVING THE BENEFIT OF S EC.11 ON THE BASIS OF INFORMATION SUPPLIED SUBSEQUENT TOP THE COMPLETION OF ASSESSMENT WOULD MEAN THAT THE ASSESSMENT ORDER WILL HAVE TO BE REOPENED. HE SUPREME COURT NOTICED THAT THE ACT DID NOT CONTEMPLATE SUCH RE-OPENING OF THE ASSESSMENT. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. AS SEEN FROM THE ABOVE, IT IS NECESSARY THAT THE AO MUST HAVE THE INFORMATION UNDER FORM-10 AT THE TIME OF COMPLETION OF THE ASSESSMENT AND IN ITS ABSENCE, IT IS NOT POSSIBLE FOR THE ASSESSING AUTHORITY TO GIVE BENEFI T OF SUCH - - ITA 2683 & 2684/14 6 EXCLUSION. WE ARE COMPLETELY IN AGREEMENT WITH THE ABOVE JUDGMENT. BUT IN THE PRESENT CASE, THOUGH THE ASSE SSEE FILED FORM-10 DURING THE TIME OF ASSESSMENT, SETTING APAR T AMOUNT, THE PERIOD ETC. ARE NOT SHOWN AND THE COLUMNS IN TH E FORM TO BE FILLED ARE LEFT BLANK. THE CONTENTION OF THE LD. A R IS THAT THOUGH THERE WERE DISCREPANCIES IN FORM-10, IT SHOULD BE C ONSIDERED RECTIFIED IN VIEW OF RESOLUTION PASSED. THE RESOLU TION PASSED DOES NOT SHOW THE NAME OF THE ASSESSEE AS WELL AS T HE PERIOD. THUS, THE RESOLUTION IS ALSO DEFECTIVE AND IT IS N OT HAVING ALL THE INFORMATION REQUIRED. FURTHER, IT DID NOT COMPLY W ITH THE REQUIREMENTS OF SEC.11(2) OF THE ACT, WHICH READS A S FOLLOWS : 11(2) [WHERE [EIGHTY-FIVE] PER CENT OF THE INCOM E REFERRED TO IN CLAUSE (A) OR CLAUSE (B) OF SUB-SECT ION (1) READ WITH THE EXPLANATION TO THAT SUB-SECTION IS NO T APPLIED, OR IS NOT DEEMED TO HAVE BEEN APPLIED, TO CHARITABLE OR RELIGIOUS PURPOSES IN INDIA DURING TH E PREVIOUS YEAR BUT IS ACCUMULATED OR SET APART EITHE R IN WHOLE OR IN PART, FOR APPLICATION TO SUCH PURPOSES IN INDIA, SUCH INCOME SO ACCUMULATED OR SET APART SHAL L NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME, PROVIDED TH E FOLLOWING CONDITIONS ARE COMPLIED WITH, NAMELY:--] (A) SUCH PERSON SPECIFIES, BY NOTICE IN WRITING GIV EN TO THE [ASSESSING] OFFICER IN THE PRESCRIBED MANNER, THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART AND THE PERIOD FOR WHICH THE INCOME IS TO BE ACCUMULATED OR SET APART, WHICH SHALL IN NO CASE EXCEED TEN YEARS; - - ITA 2683 & 2684/14 7 (B) THE MONEY SO ACCUMULATED OR SET APART IS INVEST ED OR DEPOSITED IN THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5)] 7. THERE IS NO DISPUTE THAT IT IS MANDATE OF SEC.11 OF THE ACT TO SPECIFY THE PURPOSE AND PERIOD FOR WHICH ACCUMULATION IS SOUGHT FOR. THE ABOVE POSITION WAS UPHELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MCT MUTHIAH CHETTIAR FAMILY TRUST (245 ITR 400), WHEREIN IT WAS HELD AS UNDER: 'THE TRUST IS ALLOWED TO ACCUMULATE ITS INCOME FOR A MAXIMUM PERIOD OF TEN YEARS. THE CONDITION IS THAT THE TRUST SHOULD SPECIFY IN THE PRESCRIBED FORM THE PURPOSE FOR WHICH THE INCOME IS ACCUMULATED OR SET APART. IT IS NOT ENOUGH FOR THE TRUSTEES TO REPEAT THE OBJECTS OF THE TRUST, BUT THEY MUST SPECIFY A PARTICULAR PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED.' 7.1 SIMILAR VIEW WAS ALSO EXPRESSED BY THE HIGH COU RT OF CALCUTTA IN THE CASE OF DIT(E) VS SINGHANIA CHAR ITABLE TRUST (199 ITR I89)(CAL), WHEREIN IT WAS HELD AS UNDER: 'DOUBTLESS, IT IS NOT NECESSARY THAT THE A SSESSEE HAS TO MENTION ONLY ONE SPECIFIC OBJECT. THERE CAN BE SETTING APART AND ACCUMULATION OF INCOME FOR MORE OBJECTS THAN ONE BUT WHATEVER OBJECTS OR PURPOSES MIGHT BE, - - ITA 2683 & 2684/14 8 ASSESSEE MUST SPECIFY IN NOTICE CONCRETE NATURE OF PURPOSES FOR WHICH ACCUMULATION IS BEING MADE. PLURALITY OF THE PURPOSES FOR ACCUMULATION MAY NOT BE PRECLUDED BUT IT MUST DEPEND ON THE EXACT AND PRECISE PURPOSES FOR WHICH THE ACCUMULATION IS INTENDED FOR THE STATUTORY PERIOD OF TEN YEARS. THE GENERATING OF THE OBJECTS OF THE TRUST CANNOT TAKE THE PLACE OF SPECIFICITY OF THE NEED FOR ACCUMULATION. 8. FURTHER, IT IS PERTINENT TO NOTE THAT THE ASSESS EE HAS NOT COMPLIED WITH THE PROVISIONS OF SEC.11(5) OF THE AC T. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, THE ORDERS OF THE LOWER AUTHORITIES AR E JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE. ACCORDINGL Y, WE ARE INCLINED TO DISMISS THE APPEALS FOR THE ASSESSMENT YEARS 2008- 09 AND 2009-10. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE D ISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD OF SEPT., 2015 AT CHENNAI. SD/- SD/- ( '# $%& ' ) ( ' & ( ) ) *+,-..-/-01234-54-6-37 *+,-234-5889-4 :7 % '; /JUDICIAL MEMBER ';<=>>8?2@-2@A1BC14 '% /CHENNAI, D' /DATED, THE 23 RD SEPT., 2015. MPO* - - ITA 2683 & 2684/14 9 'E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I*7 /CIT(A) 4. I /CIT 5. GJ$ K /DR 6. $LM /GF.