Income Tax Officer, 5(1), Lucknow V. M/s Foundation For Social Care, Lucknow

ITA 351/LKW/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5161 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-12-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 27-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.351/LKW/2012 A.Y.:2002 - 03 JT.C.I.T., RANGE - 5, LUCKNOW. VS. M/S FOUNDATION FOR SOCIAL CARE, 173/35, B. N. ROAD, AMINABAD, LUCKNOW. PAN:AAATE0332L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI Y. P. SRIVASTAVA, D.R. RESPONDENT BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 19/12/2013 DATE OF PRONOUNCEMENT 2 7 / 1 2 / 2 0 1 3 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - II, LUCKNOW DATED 23/04/2012 FOR ASSESSMENT YEAR 2002 - 2003. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO APPRECIATE THAT THE SURPLUS INCOME OF ONLY UP TO 25% OF TOTAL INCOME CAN BE CLAIMED AS EXEMPTION AS PER SECTION 11(2) OF THE INCOME TAX ACT; 1961 AND THE BALANCE SURPLUS WOULD BE TAXABLE. 2. APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF TH E GROUNDS OF APPEAL, AS STATED ABOVE, AS AND WHEN NEED OF DOING SO ARISES WITH THE PRIOR PERMISSION OF THE HON'BLE COURT. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT( A). HE HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE 2 CASE OF ADDITIONAL COMMISSIONER OF INCOME - TAX VS A.L.N. RAO CHARITABLE TRUST [1995] 216 ITR 697 (SC) . 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE. THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A), AS PER PARA 9 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 9.1 I AM OF THE CONSIDERED VIEW THAT THE IN TERPRETATION OF PROVISION OF SECTION 11 (?) OF THE ACT BY THE ASSESSING OFFICER IS NOT PROPER. THE SAID PROVISION DEALS WITH SURPLUS OVER AND ABOVE 25% OF TOTAL INCOME. THE ASSESSING OFFICER HAS MADE AN INCORRECT INTERPRETATION OF THE PROVISION OF SECTION 11(2) OF THE ACT BY OBSERVING THAT UNDER SECTION 11(2) OF THE ACT, SURPLUS UP TO 25% IS EXEMPT. A PLAIN READING OF SECTION 11(2) OF THE ACT SHOWS THAT WHERE 75% OF THE INCOME IS NOT APPLIED OR IS NOT DEEMED TO HAVE BEEN APPLIED TO CHARITABLE PURPOSES, THE ASSESSEE COULD ACCUMULATE OR SET APART THE SHORT FALL FOR APPLICATION TO SUCH PURPOSES AND THEREUPON INCOME SO ACCUMULATED OR SET APART SHALL NOT GET INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. AS REGARDS APPELLANT'S CLAIM THAT IT HAD FURNISHED NOTICE OF ACCUMULATION ALONG WITH THE RETURN OF INCOME, I FIND THAT THE APPELLANT HAS ADDUCED SEVERAL EVIDENCES TO PROVE THAT THE NOTICE OF ACCUMULATION WAS FILED ALONG WITH THE RETURN OF INCOME AND ALSO BEFORE THE AO WHEN CALLED UPON TO DO SO. MOREOVER, THE ASSESSING OFFICER HAS NO WHERE DISPUTED THE NOTICE OF ACCUMULATION FILED ALONG WITH THE RETURN OF INCOME. THE CLAIM HAS TO BE ACCEPTED IN VIEW OF PRINCIPLE LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF CIT V S. NAGPUR HOTELS OWNERS ASSOCIATION (2001) 247 ITR 201 (SC). I AM, THEREFORE, OF THE OPINION THAT THE SURPLUS OF RS.26,10,033/ - IS COVERED BY THE NOTICE OF ACCUMULATION AS PER FORM NO.10 FURNISHED ALONG WITH THE RETURN OF INCOME. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW EXEMPTION OF RS. 26,10,033/ - ON THE BASIS OF SAID NOTICE OF ACCUMULATION. CONSEQUENTLY, THE GROUNDS OF APPEAL NUMBERS 1, 2, 3 AND 4 ARE ALLOWED. 4.1 FROM THE ABOVE PARA OF THE ORDER OF LEARNED CIT(A), WE FIND THAT A CLEAR F INDING IS GIVEN BY LEARNED CIT(A) THAT THIS IS ASSESSEES CLAIM THAT IT HAD FURNISHED NOTICE OF ACCUMULATION ALONG WITH THE RETURN OF INCOME . HE ALSO GAVE 3 A FINDING THAT THE ASSESSEE HAS ADDUCED SEVERAL EVIDENCES TO PROVE THAT THE NOTICE OF ACCUMULATION W AS FILED ALONG WITH THE RETURN OF INCOME AND ALSO BEFORE THE ASSESSING OFFICER WHEN CALLED UPON TO DO SO. HE HAS ALSO GIVEN A FINDING THAT THE ASSESSING OFFICER HAS NOWHERE DISPUTED THE NOTICE OF ACCUMULATION FILED ALONG WITH THE RETURN OF INCOME. IN THE LIGHT OF THESE FACTS, WHEN WE EXAMINE THE PROVISION OF 11(2) OF THE ACT, WE FIND THAT THE STAND TAKEN BY THE ASSESSING OFFICER IS NOT CORRECT. IN ASSESSMENT ORDER THE ASSESSING OFFICER HAS HELD THAT 25% OF THE TOTAL RECEIPTS OF RS.150.37 LACS IS EXEMPT U/S 11(2) OF THE ACT, NO INTIMATION IS REQUIRED TO BE GIVEN TO THE ASSESSING OFFICER FOR ACCUMULATION UPTO 25% OF THE INCOME AND IF THE ACCUMULATION IS MORE THAN 25% OF THE INCOME THEN INTIMATION IS REQUIRED TO BE GIVEN TO THE ASSESSING OFFICER FOR SUCH HI GHER ACCUMULATION AND IN CASE SUCH INTIMATION IS GIVEN AS PER LAW, THEN EVEN SUCH HIGHER ACCUMULATION IS TO BE CONSIDERED AS EXEMPT. THE FINDING OF LEARNED CIT(A) IS ON THIS LINE ONLY, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN HIS ORDER. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 7 T H D E C E M B E R , 2 0 1 3 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR