Sahid Laxman Nayak Charitable Trust, Koraput V. DCIT, Berhampur Circle, Berhampur., Berhampur

ITA 331/CTK/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81457 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 19-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K AJAY KUMAR
• Keywords: Charitable institution
• Section: 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI S.V.MEHROTRA (AM) AND GEORGE MATHAN (JM) S.P. NO.09/CKT/2014 (ARISING OUT OF I.T.A. NO.331/CTK/2014) ASSESSMENT YEAR: 2010-2011 SAHID LAXMAN NAYAK CHARITABLE TRUST, (SAMANTA CHANDRA SEKHAR INSTITUTE OF TECHNOLOGY & MANAGEMENT), NANDAPUR ROAD, SEMILIGUDA, DIST: KORAPUT. PA NO.AADTS 7984 A VS D CIT, BERHAMPUR. APPELLANT RESPONDENT FOR THE APPELLANT: SHRI KAILASH PANIGRAHI FOR THE RESPONDENT: SHRI K.AJAY KUMAR DATE OF HEARING: 20/10/.2014 DATE OF PRONOUNCEMENT: 22 /10/2014 ORDER PER S.V.MEHROTRA, AM THE STAY PETITION FILED BY THE ASSESSEE IS ARISING OUT OF ITA NO.331/CTK/2014 FOR THE ASSESSMENT YEAR 2010-2011. 2. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER DATED 16.5.2014 OF LD CIT(A), BERHAMPUR FOR THE ASSESSMENT YEAR 2010-2011. 3. FIRST, WE TAKE UP THE APPEAL OF THE ASSESEE IN I TA NO.331/CTK/2014. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TR UST FILED ITS RETURN OF INCOME DECLARING NIL INCOME, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE ASSESSING OFFICER HAD ISSUED A SHOW CAUSE NOTICE DATED 22.2.2013, WHICH H AS BEEN REPRODUCED IN THE RETURN OF INCOME (PAGE 2 OF THE ASSESSMENT ORDER). IN RESPON SE TO SHOW CAUSE NOTICE, ASSESSEE FILED ITS REPLY, WHICH HAS ALSO BEEN REPRODUCED AT PAGE 3 OF THE ASSESSMENT ORDER. IN ITS REPLY, ASSESSEE, INTER ALIA, POINTED OUT THAT COPY OF FORM NO-10 NOW FILED (DURING ASSESSMENT 2 S.P. NO.09/CKT/2014 (ARISING OUT OF I.T.A. NO.331/CTK/2014) ASSESSMENT YEAR: 2010-2011 PROCEEDINGS), MAY BE TREATED AS PART OF THE RETURN OF INCOME. THE ASSESSING OFFICER DID NOT ACCEPT FORM NO.10 AND COPY OF RESOLUTION FILED BY T HE ASSESSEE, INTER ALIA, OBSERVING THAT ACCOUNTS OF THE ASSESSEE WERE AUDITED ON 26.9.2010, WHEREAS THE DATE OF DRAWAL OF FORM NO.10 AND RESOLUTION WAS SHOWN AS 22.3.2010 I.E. WE LL BEFORE THE DATE OF AUDIT OF ACCOUNTS. HE OBSERVED THAT PRIOR TO THIS, IT WAS NOT AT ALL POSS IBLE TO FIND OUT THE CORRECT FIGURE OF SURPLUS OR DEFICIT OF ANY ORGANIZATION. BUT IN THIS CASE, THE SURPLUS HAD BEEN WORKED OUT WELL BEFORE THE FINALIZATION OF ACCOUNTS I.E. AUDIT OF THE ACCOUNTS WHICH HAD BEEN MADE ON 26.9.2010. HE, ACCORDINGLY, DETERMINED THE ASSESSED INCOME AT RS.1 ,15,41,310/-, INTER ALIA, OBSERVING AS UNDER: AS STATED EARLIER IN THE FOREGOING PARAGRAPH OF TH IS ORDER THAT THE ASSESSEE HAS SHOWN TOTAL INCOME/RECEIPT OF RS.6,48,89,149/- DURI NG THE YEAR AS PER INCOME & EXPENDITURE ACCOUNT. AS PER THE PROVISIONS OF THE ACT, IT SHOULD HAVE BEEN ACCUMULATED MINIMUM INCOME OF 15% OF RS.6,48,89,149 /-, WHICH SHOULD HAVE BEEN RS.97,33,372/-. BUT IN THE INSTANT CASE, IT H AS ACCUMULATED INCOME AT RS.2,12,74,678/- WHICH IS 32.8% THAT IS 17.8% MORE THAN THE PERMISSIBLE LIMIT. HENCE, THE DIFFERENCE OF RS.1,15,41,306/- (RS.2,12, 74,678 RS.97,33,372) IS TREATED AS THE INCOME OF THE ASSESSEE FOR THE ASSES SMENT YEAR UNDER CONSIDERATION AND TAXED ACCORDINGLY. 5. LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER, INTER ALIA, OBSERVING THAT IN ORDER TO GET EXEMPTION IN RESPECT OF SURPLUS INCOME , ASSESSEE SHOULD HAVE FILED THE FORM NO.10 BEFORE THE DATE OF FILING OF THE RETURN. HE FURTHE R SUBMITTED THAT THERE IS NO PROVISION IN THE STATUTE FOR EXTENDING THIS PERIOD OR CONDONING ANY DELAY IN FILING SUCH FORM. HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT (EXEMP) VS NATIONAL ASSOCIATION OF SOFTWARE AND SERVICE COMPANIES(2012) 345 ITR 362 (D EL). 6. BEING AGGRIEVED WITH THE ORDER OF LD CIT(A), ASS ESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUND OF APPEAL: THAT LD CIT(A) HAS ERRED IN NOT CONSIDERING FORM N O.10 FILED DURING ASSESSMENT PROCEEDINGS AND TAXING THE ACCUMULATED INCOME OVER AND ABOVE 15% OF GROSS RECEIPTS IS NOT CORRECT AND AGAINST LAW. 7. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT FORM NO.10 WAS FILED BEFORE COMPLETION OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT. LD COU NSEL RELIED ON FOLLOWING DECISIONS: 3 S.P. NO.09/CKT/2014 (ARISING OUT OF I.T.A. NO.331/CTK/2014) ASSESSMENT YEAR: 2010-2011 1. CIT VS. NAGPUR HOTEL OWNER ASSOCIATION, 247 I TR 201(SC) 2. CIT VS. MOTI RAM GOPI CHAND CHARITABLE TRUST, 3 60 ITR 598 (ALL) 3. KANDIA DOCK LABOUR BOARD VS ITO, 62 DTR 234. 4. TULSIDAR GOPALJI VS CITG, 207 ITR 368. 5. ASSOCIATION OF CORPORATION AND APEX SOCIETIES OF HANDLOOMS VS ACIT, 351 ITR 287 (ALL). AS REGARDS TO THE DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF DIT VS. NATIONAL ASSOCIATION OF SOFTWARE AND SERVICES COMPANIES, 345 ITR 362(DEL), LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT SAME IS DISTINGUISHABLE BECAUSE THAT RELATES TO 1997 VDIS SCHEME OF A TRUST IN GERMANY WHICH IS NOT RELEVANT TO THE PRESENT CASE A ND AGAINST THE DIRECTIONS ISSUED BY CBDT IN REGARD TO TAX PAYERS INFORMATION SERIES -37 (ASSES SMENT OF CHARITABLE TRUST & INSTITUTION), COPY OF WHICH HAS BEEN FILED WITH WRITTEN SUBMISSIO NS, PLACED ON RECORD). HE FURTHER POINTED OUT THAT THE FUNDS SO ACCUMULATED WERE DEPOSITED IN THE SCHEDULED BANKS AS REQUIRED UNDER THE PROVISIONS OF SECTION 11(5) AND INCOME SO ACCUMULAT ED SET APART WAS SPENT FOR THE PURPOSES MENTIONED IN FORM NO.10 IN THE FINANCIAL YEAR 2010- 2011. 8. LD D.R. RELIED ON THE ORDER OF LD CIT(A) AND SUB MITTED THAT SINCE ASSESSEE HAD NOT FILED FORM NO.10 ALONGWITH RETURN OF INCOME, THEREFORE, I T IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 11 IN RESPECT OF ACCUMULATED INCOME OVER AND ABOVE 15% AS PERMISSIBLE UNDER THE ACT. 9. WE HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED THE RECORD OF THE CASE. IT IS NOT DISPUTED THAT FORM NO.10 WAS FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NAGPUR HOTEL O WNER ASSOCIATION (SUPRA) HAS, INTER ALIA, OBSERVED AS UNDER: IT IS ABUNDANTLY CLEAR FROM THE WORDING OF SUB-SE CTION (2) OF SECTION 11 OF THE INCOME-TAX ACT, 1961, THAT IT IS MANDATORY FOR THE PERSON CLAIMING THE BENEFIT OF SECTION 11 TO INTIMATE TO THE ASSESSING AUTHORITY T HE PARTICULARS REQUIRED, UNDER RULE 17 IN FORM NO.10 OF THE INCOME-TAX RULES, 1962 . IF DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DOES NOT HAVE TH E NECESSARY INFORMATION, THE QUESTION OF EXCLUDING SUCH INCOME FROM ASSESSMENT D OES NOT ARISE AT ALL. AS A MATTER OF FACT, THIS BENEFIT OF EXCLUDING THIS PART ICULAR PART OF THE INCOME FROM 4 S.P. NO.09/CKT/2014 (ARISING OUT OF I.T.A. NO.331/CTK/2014) ASSESSMENT YEAR: 2010-2011 THE NET OF TAXATION ARISES FROM SECTION 11 AND IS S UBJECT TO THE CONDITIONS SPECIFIED THEREIN. THEREFORE, IT IS NECESSARY THAT THE ASSESS ING AUTHORITY MUST HAVE THIS INFORMATION AT THE TIME HE COMPLETES THE ASSESSMENT . IN THE ABSENCE OF ANY SUCH INFORMATION, IT WILL NOT BE POSSIBLE FOR THE ASSESS ING AUTHORITY TO GIVE THE BENEFIT OF SUCH EXCLUSION. EVEN ASSUMING THAT THERE IS NO V ALID LIMITATION PRESCRIBED UNDER THE ACT AND THE RULES, IT IS REASONABLE TO PR ESUME THAT THE INTIMATION REQUIRED UNDER SECTION 11 HAS TO BE FURNISHED BEFOR E THE ASSESSING AUTHORITY COMPLETES THE CONCERNED ASSESSMENT BECAUSE SUCH REQ UIREMENT IS MANDATORY AND WITHOUT THE PARTICULARS OF THIS INCOME THE ASSE SSING AUTHORITY CANNOT ENTERTAIN THE CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE A CT, THEREFORE, COMPLIANCE WITH THE REQUIREMENT OF THE ACT WILL HAVE TO BE ANY TIME BEFORE THE ASSESSMENT PROCEEDINGS. FURTHER, ANY CLAIM FOR GIVING THE BENE FIT OF SECTION 11 ON THE BASIS OF INFORMATION SUPPLIED SUBSEQUENT TO THE COMPLETION O F ASSESSMENT WOULD MEAN THAT THE ASSESSMENT: ORDER WILL HAVE TO BE REOPENED . THE ACT DOES NOT CONTEMPLATE SUCH, REOPENING OF THE ASSESSMENT. 10. FROM THE ABOVE OBSERVATION OF HONBLE SUPREME C OURT, IT IS CLEAR THAT IF THE ASSESSEE HAS FILED FORM NO.10 BEFORE COMPLETION OF ASSESSMEN T PROCEEDINGS, SAME HAS TO BE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER. 11. WE FURTHER FIND THAT CBDT TAKING NOTE OF THE JU DGMENT OF HONBLE SUPREME COURT (SUPRA) HAS, INTER ALIA, OBSERVED AS UNDER: THE ISSUE OF TIME LIMIT FOR GIVING NOTICE WAS CONS IDERED BY HONBLE SUPREME COURT IN THE CASE OF NAGPUR HOTEL OWNERS ASSOCIATIO N. IT WAS HELD THAT SUCH A NOTICE CAN BE GIVEN AT ANY TIME BEFORE THE ASSESSME NT IS MADE. THUS, THE TIME LIMIT UNDER RULE-17 IS DIRECTORY AND NOT MANDATORY IN NATURE. HOWEVER, A NOTICE GIVEN AFTER COMPLETION OF ASSESSMENT WILL NOT SATIS FY THE REQUIREMENT OF SECTION 1192), AS IN SUCH A CASE ALL PARTICULARS RELEVANT F OR COMPUTATION OF INCOME WILL NOT BE AVAILABLE BEFORE THE ASSESSING OFFICER FOR M AKING THE ASSESSMENT. 12. THEREFORE, THE ISSUE BEING COVERED BY THE JUDGM ENT OF HONBLE SUPREME COURT (SUPRA), WE DIRECT THE ASSESSING OFFICER TO TAKE INTO CONSID ERATION FORM NO.10 FILED BY THE ASSESSEE. FOR THE PURPOSES OF VERIFICATION OF COMPLIANCE WITH THE PROVISIONS OF SECTION 11(5), THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5 S.P. NO.09/CKT/2014 (ARISING OUT OF I.T.A. NO.331/CTK/2014) ASSESSMENT YEAR: 2010-2011 14. SINCE, WE HAVE DECIDED THE ASSESSEES APPEAL, T HE STAY PETITION IS RENDERED INFRTUCTOUS AND SAME IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 22 ND OCTOBER, 2014. SD/- SD/- ( GEORGE MATHAN) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, CUTTACK 22 /10/2014 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT: SAHID LAXMAN NAYAK CHARITABLE TRUS T,(SAMANTA CHANDRA SEKHAR INSTITUTE OF TECHNOLOGY & MANAGEMENT), NANDAPUR ROA D, SEMILIGUDA, DIST: KORAPUT 2. THE RESPONDENT: DCIT, BERHAMPUR 3. THE CIT, BHUBANESWAR. 4. THE CIT(A),BERHAMPUR 5. DR, CUTTACK BENCH 6. GUARD FILE. TRUE COPY// BY ORDER