Asmita Resource Centre for Women, Hyd, Secunderabad V. DDIT (Exemptions)-III, Hyd, Hyderabad

ITA 399/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3093 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-02-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SIVAKUMAR MR B KURMI
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA.NO.399/HYD/2015 ASSESSMENT YEAR 2011-2012 ASMITA RESOURCE CENTRE FOR WOMEN, SECUNDERABAD. PAN AAATA4936B VS. DDIT (EXEMPTIONS) - III, HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. V. SIVAKUMAR FOR REVENUE : MR. B. KURMI NAIDU DATE OF HEARING : 0 3 .02.2016 DATE OF PRONOUNCEMENT : 19 .02.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2010- 2011. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSEE HA S NOT COMPLIED WITH THE STATUTORY REQUIREMENT OF SPECIFYI NG THE SPECIFIC PURPOSE FOR ACCUMULATION OF FUNDS IN FORM NO.10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A SOCIETY, REGISTERED UNDER SECTION 12A OF THE ACT VIDE ORDERS DATED 28.03.1993 OF THE COMMISSIONER OF INCO ME TAX, A.P. HYDERABAD. FOR THE RELEVANT A.Y. UNDER CONSIDERATION I.E., A.Y. 2010-2011, ASSESSEE FILED ITS RETURN OF INCOME ON 26.09.2011 CLAIMING EXEMPTION 2 ITA.NO.399/HYD/2015 ASMITA RESOURCE CENTRE FOR WOMEN, SECUNDERABAD. UNDER SECTION 11 OF THE ACT, AND DECLARING A TOTAL INCOME OF RS.NIL. THE RETURN WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT, DETERMINING THE TAX PAYABLE AT RS.NIL. THEREAFTER, THE PROCEEDINGS UNDER SECTIO N 143(3) WERE INITIATED BY ISSUING NOTICES UNDER SECT ION 143(2) DATED 18.09.2012 AND 25.10.2013. DURING THE COURSE OF SCRUTINY, THE A.O. OBSERVED THAT THE SOCI ETY HAS DERIVED CONTRIBUTIONS OF RS.1,48,28,958 DURING THE RELEVANT ASSESSMENT YEAR AND THAT MAJOR RECEIPT OF THE ASSESSEE IS A GRANT I.E., RS.1,37,09,535 FROM VARIO US AGENCIES FOR THE PARTICULAR PROJECT MENTIONED AGAIN ST THE GRANT. THE A.O. OBSERVED THAT THE MAJOR SOURCE OF I NCOME IS THROUGH TIED-UP GRANTS WITH A CONTRACTUAL OBLIGA TION AND THAT THE ASSESSEE HAS NOT SPENT THE AMOUNTS IN THREE CASES AS PER THE CONTRACTUAL OBLIGATION AND THAT TH ERE IS A SURPLUS AMOUNT IN THOSE CASES TOTALING TO RS.24,54, 504. HE OBSERVED THAT THE ASSESSEE HAS FILED FORM NO.10 FOR ACCUMULATION OF RS.22,23,990 STATING THE REASON TO ACCUMULATE SUFFICIENT FUNDS FOR CARRYING OUT THE OB JECTS OF THE ASSOCIATION. THE A.O. OBSERVED THAT THE ASSESS EE HAS NOT MENTIONED THE SPECIFIC PURPOSE IN FORM NO.10 FO R WHICH THE AMOUNTS ARE SOUGHT TO BE ACCUMULATED AND THEREFORE, HE DISALLOWED ASSESSEES CLAIM TO ACCUMU LATE THE SAME AND BROUGHT IT TO TAX. AGGRIEVED BY THE SA ME, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AS FAR AS THIS ISSU E IS CONCERNED AND AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 3 ITA.NO.399/HYD/2015 ASMITA RESOURCE CENTRE FOR WOMEN, SECUNDERABAD. 3. THE LD. COUNSEL FOR THE ASSESSEE, MR. V. SIVA KUMAR, SUBMITTED THAT THE AMOUNTS DISALLOWED BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ARE ALL SURPLU S FUNDS FROM THE TIED-UP GRANTS WHICH COULD NOT BE SPENT BY THE ASSESSEE WITHIN THE RELEVANT PREVIOUS YEAR AND THER EFORE, HAS SOUGHT ACCUMULATION OF THE SAME BY FILING FORM NO.10. HE HAS SUBMITTED THAT THE LD. CIT(A) HAS TAK EN NOTE OF THE FACT THAT THE INCOME OF THE ASSESSEE CO NSISTED OF TIED-UP GRANTS WHICH WERE REQUIRED TO BE UTILISE D FOR THE SPECIFIC PROJECTS AS PER THE SPECIFIC INSTRUCTIONS OF THE DONOR AGENCIES AND THAT SOME OF THESE PROJECTS ARE LONG TERM IN NATURE SPREAD OVER MORE THAN ONE FINANCIAL YEAR NECESSITATING ACCUMULATION OF FUNDS. HOWEVER, THE L D. CIT(A), HAS ERRONEOUSLY UPHELD THE ADDITION BY HOLD ING THAT THE ASSESSEES OBLIGATION IS TO INFORM A.O, TH ROUGH FORM NO.10 OF THE SPECIFIC PURPOSE FOR WHICH THE FU NDS WERE BEING ACCUMULATED. HE HAS DRAWN OUR ATTENTION TO THE PARA-4 OF THE ASSESSMENT ORDER WHERE THE A.O. H AS HIMSELF HAS REPRODUCED THE GRANTS RECEIVED FROM THE ORGANISATIONS AND THE SPECIFIC PROJECTS FOR WHICH T HE GRANTS WERE GIVEN TO THE ASSESSEE. HE HAS SUBMITTED THAT THE A.O. AS WELL AS THE LD. CIT(A) WERE AWARE OF TH E OBJECTS FOR WHICH THE AMOUNT WAS SOUGHT TO BE ACCUMULATED AND THEREFORE, THE ORDER OF THE A.O. AN D THE LD. CIT(A) HAVE TO BE SET ASIDE ON THIS GROUND. 3. THE LD. D.R, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4 ITA.NO.399/HYD/2015 ASMITA RESOURCE CENTRE FOR WOMEN, SECUNDERABAD. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IT IS NOT IN DISPU TE THAT THE AMOUNTS SOUGHT TO BE ACCUMULATED ARE ONLY THE AMOUNT REMAINING UNSPENT FROM THE TIED-UP GRANTS GI VEN FOR A SPECIFIC PURPOSE. THE A.O. AND THE LD. CIT(A) HAVE NOT BROUGHT OUT ANYTHING ON RECORD TO SHOW THAT THE ASSESSEE CAN SPEND THESE AMOUNTS FOR ANY OTHER PURP OSE OR THAT THE ASSESSEE HAS SPENT THE SAME IN SUBSEQUE NT YEARS FOR ANY OTHER PURPOSE. THEREFORE, IN OUR OPIN ION, THE A.O. OUGHT TO HAVE ALLOWED THE ASSESSEE TO ACCUMULA TE THE SURPLUS FUND. IN VIEW OF THE SAME, ASSESSEES A PPEAL IS ALLOWED AND THE ORDERS OF THE A.O. AS WELL AS THE L D. CIT(A) ARE SET ASIDE AND THE A.O. IS DIRECTED TO AL LOW THE ASSESSEE TO ACCUMULATE THE SURPLUS FUNDS. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 19.02.2016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 19 TH FEBRUARY, 2016 VBP/- COPY TO 1. ASMITA RESOURCE CENTRE FOR WOMEN, 10 - 3 - 96, PLOT NO.283, 4 TH FLOOR, STREET NO.6, TEACHERS COLONY, SECUNDERABAD 500 026. 2. DDIT (EXEMPTIONS) - III, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 3. CIT(A) - 9, HYDERABAD. 4. CIT( E ), HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD 6. GUARD FILE