Appeal details
Counselvise Citation
36022514 RSA 2009
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 8 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-11-2012
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
06-06-2012
Assessment Year
2005-2006
Appeal Filed On
12-03-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO .360/HYD/09 ASST. YEAR 2005-06 DDIT(E)-II, HYDERABAD. V/S. SRI GOWTHAM ACADEMY OF GENERAL AND TECHNICAL EDUCATION, HYDERABAD. PAN:AADTS 7203 S (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : SHRI V. SHIV KUMAR DATE OF HEARING 24.9.2012 DATE OF PRONOUNCEMENT 16-11-2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THE REVENUE HAS FILED THIS APPEAL BEING AGGRIEVED B Y THE ORDER PASSED BY THE CIT (A) IN DELETING THE ADDITION OF RS.5 0,10,597/- AND HOLDING THAT ASSESSEES INCOME IS EXEMPT U/S 11 AND 12 OF THE ACT. 2. BRIEFLY THE FACTS OF THE ISSUE THE ASSESSEE IS A SOCIETY R EGISTERED UNDER THE SOCIETIES REGISTRATION ACT. IT IS ALSO REGIS TERED AS A CHARITABLE TRUST U/S 12AA OF THE ACT FOR THE PURPOSE OF AVAILING EXEMPTION U/S 11 OF THE ACT. FOR THE IMPUGNED ASSESSMEN T YEAR, THE ASSESSEE FILED ITS INCOME DECLARING NIL INCOME AFTER CLAIMIN G EXEMPTION U/S 11 OF THE ACT. IN COURSE OF THE ASSESSMENT PROCEEDINGS, THE ITA NO.360 OF 2009 SRI GOWTHAM ACADEMY OF GEN ERAL AND TECHNICAL EDUCATION, HYD. 2 ASSESSING OFFICER WAS OF THE VIEW THAT AS PER CBDT CIRCULAR NO.5P DATED 19-6-1968 THE MINIMUM APPLICATION OF INCOME FOR CHARITABLE PURPOSE SHOULD BE WITH REFERENCE TO THE SURPLUS OF THE A SSESSEE. SINCE FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE REPORTED A SURPLUS OF RS.58,94,819/-, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EX PLAIN AS TO WHY THE EXEMPTION U/S 11 SHOULD NOT BE GIVEN I N REFERENCE TO THE SURPLUS AMOUNT OF RS.58,94,819/-. AS OBSERVED BY THE ASSESSI NG OFFICER IN THE ASSESSMENT ORDER SINCE THE ASSESSEE DID NOT SUB MIT ANY OBJECTION TO THE AFORESAID PROPOSITION OF THE ASSESSING O FFICER, HE COMPLETED THE ASSESSMENT VIDE ORDER DATED 28-12-2007 BY ALLOWING EXEMPTION FOR AN AMOUNT RS.8,84,223/- BEING 15% OF THE SURPLUS SHOWN BY THE ASSESSEE AND DETERMINED TAXABLE INCOME AT RS.50,10,597/-. THE ASSESSEE BEING AGGRIEVED BY THE ASSE SSMENT ORDER, FILED AN APPEAL BEFORE THE CIT (A). 3. IN COURSE OF HEARING BEFORE THE CIT (A), IT WAS CONT ENDED ON BEHALF OF THE ASSESSEE THAT CIRCULAR NO.5P DATED 16-9-196 8 IS NOT APPLICABLE TO THE ASSESSEE AS THE ASSESSEE IS NEITHER BUSINESS UNDERTAKING NOR IT IS CARRYING ON ANY BUSINESS. IT WAS SU BMITTED BY THE ASSESSEE THAT AS PER SECTION 11(1)(A) THE INCOME DERIVED F ROM THE PROPERTY HELD BY THE TRUST TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED FOR CHARITABLE PURPOSE SHALL NOT BE INCLUDED IN THE TOT AL INCOME OF THE PREVIOUS YEAR. FURTHER 15% OF THE INCOME OF THE YEAR COULD BE ACCUMULATED OR SET APART. IT WAS FURTHER SUBMITTED THAT THE EXPRESSION INCOME AS REFERRED IN CLAUSE (A) OF SECTION 11(1) WOU LD MEAN THE GROSS INCOME RECEIVED DURING THE YEAR AND NOT THE NET INCOME. THE ASSESSEE REFERRING TO THE STATEMENT OF UTILIZATION FILED ALONG WITH RETURN OF INCOME SUBMITTED THAT IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD APPLIED RS.10,50,56,452/- TOWARDS ITS OBJECTS AS AGAI NST THE GROSS ITA NO.360 OF 2009 SRI GOWTHAM ACADEMY OF GEN ERAL AND TECHNICAL EDUCATION, HYD. 3 INCOME OF RS.7,37,45,565/- EARNED DURING THE ASSESSMENT Y EAR 2005- 06. THEREFORE, THE COMPUTATION OF TAXABLE INCOME MAD E BY THE ASSESSING OFFICER IS TOTALLY UNJUSTIFIED. IN SUPPORT OF T HE CONTENTION, THE ASSESSEE RELIED ON A DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V/S. PROGRAMME FOR COMMUNITY ORGANIZATION (248 ITR 1). THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E AND EXAMINING THE MATERIAL ON RECORD, ACCEPTED THE ASSESSEES CO NTENTION THAT CIRCULAR 5P DATED 19-6-1968 IS NOT APPLICABLE TO THE ASSESSEE AS THE ASSESSEE IS NEITHER CARRYING ON ANY BUSINESS NOR IT IS A BUSINESS UNDERTAKING. THE CIT (A) FOLLOWING THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF PROGRAMME FOR COMMUNITY ORGANIZA TION ((SUPRA)) ALSO HELD THAT AS THE ASSESSEE IS ENTITLED TO ACCUMULATE 15 % OF ITS INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST, TH E ASSESSING OFFICER IS NOT CORRECT IN CONSIDERING THE SURPLUS OF RS.58, 94,820/- FOR ALLOWING 15% THEREON TOWARDS EXEMPTION U/S 11(1)(A) A ND WORKING OUT THE TAXABLE INCOME AT RS.50,10,597/-. THE CIT (A) FI NALLY CAME TO THE CONCLUSION THAT SINCE THE ASSESSEE HAS SPENT MORE THAN 85% OF ITS INCOME DURING THE YEAR FOR PURSUING ITS OBJECTS IT IS E NTITLED FOR EXEMPTION U/S 11 AND 12 OF THE ACT. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT AS THE ASSESSEE DID NOT COMPLY WITH THE NOTICE OF THE ASSESSING OFF ICER, HE HAS NO OTHER OPTION BUT TO COMPLETE THE ASSESSMENT BY DETER MINING THE TAXABLE INCOME ON THE BASIS OF AVAILABLE RECORD. THE L EARNED DEPARTMENTAL REPRESENTATIVE ALSO RELIED UPON THE CLARI FICATION ISSUED BY THE BOARD WITH REGARD TO THE CIRCULAR NO.5P(LXX)-6 O F 1968. ITA NO.360 OF 2009 SRI GOWTHAM ACADEMY OF GEN ERAL AND TECHNICAL EDUCATION, HYD. 4 5. THE LEARNED AR REFERRING TO THE STATEMENT OF UTIL IZATION SUBMITTED THAT THE TOTAL APPLICATION OF FUND FOR CHARITABLE P URPOSE DURING THE IMPUGNED ASSESSMENT YEAR IS TO THE TUNE OF RS.10,50,56,45 2/- WHEREAS THE INCOME DURING THE YEAR IS RS.7,37,45,565/-. THERE FORE, THE ASSESSEE HAS SPENT MORE THAN 85% OF ITS INCOME TOWARDS CHARITABLE PURPOSE WHICH ENTITLES IT TO AVAIL EXEMPTION U/S 11 OF THE ACT. THE LEARNED AR SUBMITTED THAT THE CBDT CIRCULAR NO.5P DATED 19-6-1968 HAS NO APPLICATION TO THE ASSESSEE. THE LEARNED AR SUBMIT TED THAT THE EXEMPTION U/S 11(A) IS TO BE ALLOWED IF 85% OF THE IN COME HAS BEEN UTILISED FOR CHARITABLE PURPOSE AND THE ASSESSEE IS ALSO PE RMITTED TO ACCUMULATE 15% OUT OF THE INCOME WITHOUT HAVING TO PA Y TAX. THE LEARNED AR SUBMITTED THAT THE BENEFIT OF ACCUMULATION SHOULD BE CALCULATED WITH REFERENCE TO GROSS INCOME OF THE CHARITABL E INSTITUTION AND NOT WITH REFERENCE TO THE TOTAL INCOME. IN SUPPOR T OF SUCH CONTENTION, THE LEARNED AR RELIED UPON THE FOLLOWING DECISIONS:- I) CIT V/S. PROGRAMMED FOR COMMUNITY ORGANIZATION (248 ITR 1) (SC) II) KRISHI UTPADAN MANDI SAMITHI V/S. DCIT (12 TAXMAN .CO M 249 LUCKNOW) III) BAI SONABAI HIRJI AGIARY TRUST V/S. ITO (93 ITD MUM S B) IV) CIT V/S. BIRLA JANAHIT TRUST (73 TAXMAN 465) (CAL) V) CIT V/S. HEH THE NIZAMS SUPPLEMENTAL RELIGIOUS TRUST (127 ITR 378) 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. FOR GETTING EXEMPTION UNDER S.11 OF THE ACT , THE FIRST CONDITION THAT HAS TO BE FULFILLED IS THAT THE TRUST MUST HAVE S PENT 85% OF ITS ITA NO.360 OF 2009 SRI GOWTHAM ACADEMY OF GEN ERAL AND TECHNICAL EDUCATION, HYD. 5 INCOME TOWARDS THE OBJECTS OF THE TRUST. IT IS EVIDENT F ROM THE ASSESSMENT ORDER THAT THOUGH THE ASSESSING OFFICER ISSUED A NOTICE TO THE ASSESSEE IN THIS BEHALF, THE ASSESSEE NEVER COMPLIED TO THAT NOTICE, WHICH COMPELLED THE ASSESSING OFFICER TO COMPLETE THE ASSESSMEN T IN THE MANNER HE DID, ON THE BASIS OF RECORD AVAILABLE WI TH HIM. THE ASSESSEE FURNISHED ITS EXPLANATIONS ONLY BEFORE THE CIT(A) AT THE TIME OF HEARING OF APPEAL, WHICH FACTS WERE NEVER BEFORE THE ASSESSING OFFICER. HOWEVER, IT IS THE ASSESSING OFFICER, WHO HAS TO EXAMINE WHETHER THE ASSESSEE HAS APPLIED ITS INCOME FOR CHARITABLE PURPOSE IN CONSONANCE WITH THE PROVISIONS OF S.11 OF THE ACT. AS TH E ASSESSEE DID NOT COMPLY TO THE NOTICE OF THE ASSESSING OFFICER, THE REL EVANT FACTS COULD NOT BE PROPERLY EXAMINED BY THE ASSESSING OFFICER. THE ASSESSEE IS REQUIRED TO SUBMIT ALL THE DETAILS BEFORE THE ASSESSING OFFICER FOR ENABLING HIM TO DETERMINE THE ENTITLEMENT OF THE ASSE SSEE FOR EXEMPTION UNDER S.11 OF THE ACT. THEREFORE, CONSIDERIN G THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONSIDER IT JUST A ND PROPER TO REMIT THE MATTER BACK TO THE ASSESSING OFFICER FOR FRE SH DETERMINATION OF THE ISSUE. THE ASSESSING OFFICER SHALL LOO K INTO THE APPLICATION OF INCOME BY THE ASSESSEE. IF IT IS FOUND THA T THE ASSESSEE HAS APPLIED ITS INCOME FOR CHARITABLE PURPOSES IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, THEN EXEMPTION UNDER S.11 CAN B E GRANTED TO THE ASSESSEE. THE ASSESSING OFFICER SHALL DETERMINE THE INCOME AFT ER CONSIDERING ALL THE MATERIALS PLACED BEFORE HIM BY THE ASSESSEE, AND KEEPING IN VIEW THE RATIO OF THE DECISIONS THAT MAY BE RELIED UPON BY THE ASSESSEE. ITA NO.360 OF 2009 SRI GOWTHAM ACADEMY OF GEN ERAL AND TECHNICAL EDUCATION, HYD. 6 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 16-11-2012. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 16 TH NOVEMBER,, 2012 COPY FORWARDED TO: 1. DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS)-2, HYDERABAD . 2. 3 SRI GOWTHAM ACADEMY OF GENERAL AND TECHNICAL EDUCATION, 3- 6-198, SRIMUKH COMPLEX, HIMAYATNAGAR, HYDERABAD. COMMISSIONER OF INCOME-TAX(APPEALS) IV, HYDERABAD. 4 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. JMR *
