KRISHI UPAJ MANDI SAMITI, Jaipur V. ITO, Kota

ITA 54/JPR/2012

• Counselvise Citation: 5423114 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 18-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAGHAV BAJAJ; NIKHIL TOTUKA
• Keywords: Capital asset; Depreciation; Charitable institution; Opportunity of being heard; Retrospective amendment; Additional evidence; Cost of acquisition; Benefit of exemption; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1); 234B; 37(1); 12A; 12AA; 10B; 32; 56; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 54 & 55/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2004-05 & 2008-09 KRISHI UPAJ MANDI SAMITI, BHAMASHAH MANDI, KOTA. CUKE VS. THE I.T.O. WARD 1(2), KOTA. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAALK 0392 B VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI RAGHAV BAJAJ (ADV.) & SHRI NIKHIL TOTUKA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK ( ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 27/02/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THE PRESENT APPEALS FILED BY THE ASSESSEE ARE AGAIN ST THE ORDER DATED 08/11/2011 PASSED BY THE LEARNED CIT (A), KOT A FOR A.YS. 2004- 05 AND 2008-09. THE EFFECTIVE GROUNDS OF APPEALS AR E AS UNDER:- 1) THAT THE ORDER OF LEARNED CIT(A) DATED 08/11/201 1 IS ARBITRARY, PERVERSE AND BAD IN LAW. ITA 54 & 55/JP/2012_ KUMS VS. ITO 2 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A) KOTA IS NOT JUSTIFIED IN UPHOLDING THE DENIAL OF THE BENEFIT OF EXEMPTION U/ S 11 AND 12 OF THE ACT TO THE APPELLANT. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE DENIAL OF THE BENEFIT OF EXEMPTION U/S 11 AND HOLDI NG THAT EXPENDITURE INCURRED ON CONSTRUCTION OF LINK R OAD IS CAPITAL EXPENDITURE AND THEREBY UPHOLDING THE ADDITION OF RS. 32,18,609/-. 4) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE DENIAL OF THE BENEFIT OF EXEMPTION U/S 11 AND THEREBY UPHOLDING THE RECEIPT OF RS. 1,18,39,772/- FROM SHOP/GODOWN ALLOTMENT CHARGES AS INCOME FROM HOUSE PROPERTY. 5) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION CLAIMED OF RS. 5,74,58,572/-. 6) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN CONFIRMING TH E TREATMENT OF BANK INTEREST ON DEPOSIT AMOUNTING TO RS. 37,56,598/- AS INCOME FROM OTHER SOURCES U/S 56 . 7) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE DISALLOWANCE OF INTEREST ON LOAN OF RS. 28,72,038/-. 8) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN UPHOLDING THE LEVY OF INTEREST U/S 234A AND 234B AND 234C. 2. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE O RIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME TAX ITA 54 & 55/JP/2012_ KUMS VS. ITO 3 ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) BY THE I.T.O.. THE ASSESSEE SAMITI HAS FILED ITS RETURN IN RESPONSE TO NOTICE U /S 142(1) OF THE ACT DATED 29/07/2005 AND ASSESSMENT ORDER WAS PASSED ON 26/12/2005 AT THE TOTAL INCOME OF RS. 11,94,10,070/-. DETAILS OF ASSESSED INCOME ARE AS UNDER:- (I) NET INCOME FROM BUSINESS RS. 10,73,65,630/- (II) INCOME FROM PROPERTY GROSS RENT RS. 1,18,39,772/- LESS: DEDUCTION U/S 24 RS. 35,51,931/- NET INCOME FROM HOUSE PROPERTY RS. 82,87,841/- (III) INCOME FROM OTHER SOURCES INTEREST ON DEPOSITS RS. 37,56,598/- (NET INCOME FROM OTHER SOURCES) RS. 37,56,598 /- TOTAL INCOME RS. 11,94,10,069/- ROUNDED OFF RS. 11,94,10,070/- ON THE APPEAL OF THE ASSESSEE, THE LEARNED CIT(A), KOTA HAD HELD THAT INCOME OF THE ASSESSEE WAS NOT EXEMPT U/S 10(20) AND THE ASSESSING OFFICER WAS RIGHT IN TAXING THE INCOME OF THE ASSESS EE AFTER GIVING PROPER OPPORTUNITY. AFTER GIVING EFFECT TO THE CIT(A )S ORDER DATED 06/10/2006 U/S 251, THE TOTAL INCOME WAS ASSESSED AT RS. 10,80,93,529/- IT IS FURTHER STATED THAT THE HONBL E ITAT, JAIPUR BENCH HAD PASSED ITS ORDER DATED 30/04/2007 IN APPEAL NO. ITA 1038/JP/2006 IN THE CASE OF THE ASSESSEE, IN WHICH, THE HONBLE I TAT HAD SET ASIDE ITA 54 & 55/JP/2012_ KUMS VS. ITO 4 THE MATTER TO THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT DE NOVO. THE FINDINGS OF THE HONBLE ITAT ARE AS UNDER:- IN VIEW OF THE ABOVE SUBMISSIONS, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATI ON HAVE ALREADY BEEN HELD BY THE TRIBUNAL IN ABOVE CITED APP EALS AS CHARITABLE INSTITUTION AND REGISTRATION U/S 12A HAS BEEN ORDERED TO BE ALLOWED, THE ORDERS OF THE LOWER AUTHO RITIES ARE SET ASIDE WITH DIRECTION TO THE A.O. TO COMPLETE THE ASSESSMENTS DE NOVO AFTER GRANTING/CONSIDERING THE GRANT OF EXEMPTIONS U/S 11 SUBJECT TO STATUTORY PROVISIONS A ND AFTER CONSIDERING ALL OTHER STATUTORY IMPLICATIONS OF GRA NTING REGISTRATION U/S 12A AND THOSE ASSOCIATED WITH THE PROVISIONS OF SECTION 11, AFTER THE GRANT OF REGIST RATION U/S 12A BY THE RESPECTIVE COMMISSIONER OF INCOME TAX. IT IS NEEDLESS TO MENTION OVER HERE THAT WHILE CONSIDERIN G THE MATTER AFRESH AS DIRECTED ABOVE, THE A.O. WILL AFFOR D ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE APPEALS ARE THUS ALLOWED FOR STATISTICAL PURPOSES. THE LEARNED ASSESSING OFFICER GAVE REASONABLE OPPORT UNITY OF BEING HEARD BEFORE GIVING THE APPEAL EFFECT TO THE ASSESS EE, WHICH WAS AVAILED BY THE APPELLANT. AFTER CONSIDERING THE ASS ESSEES REPLY, THE LEARNED ASSESSING OFFICER HELD THAT THE ASSESSEES CLAIM WAS NOT FOUND SATISFACTORY FOR CLAIMING OF EXEMPTION FOR A.Y. 200 4-05. THE LEARNED ASSESSING OFFICER FURTHER ANALYSED THE BURDEN OF PR OOF, CLAIMED U/S ITA 54 & 55/JP/2012_ KUMS VS. ITO 5 10(20) OF THE ACT ON PAGE NOS. 4 TO 7 OF THE ASSESS MENT ORDER AND ALSO ANALYSED THE LEGAL POSITION ON THIS ISSUE AND HELD THAT REGISTRATION U/S 12AA OF THE ACT HAD BEEN ALLOWED PROTECTIVELY. THE KR ISHI UPAJ MANDI SAMITI, BHAMASHAH MANDI, KOTA WAS CREATED ON 30/1/19 64 AND FILED THE APPLICATION FOR REGISTRATION U/S 12A(A) OF THE ACT ON 15/07/2005 SEEKING REGISTRATION W.E.F. 01/4/2003. THE LEARNED CIT, KOTA REJECTED THE REGISTRATION TO THE SAMITI U/S 12AA OF THE ACT AFTE R PASSING A SPEAKING ORDER. THE ASSESSEE SAMITI MADE APPEAL BEFORE THE HO NBLE ITAT, JAIPUR BENCH, JAIPUR AGAINST THE ORDER OF THE CIT(A) , KOTA. THE ITAT, JAIPUR BENCH HAD DECIDED THE APPEAL IN FAVOUR OF TH E SAMITI AND DIRECTED THE CIT, KOTA TO ALLOW REGISTRATION TO THE S AMITI. THE CIT, KOTA VIDE ITS ORDER DATED 28/01/2008 HAD GRANTED REGISTR ATION TO THE ASSESSEE U/S 12AA OF THE ACT IN COMPLIANCE TO DIREC TION OF THE HONBLE ITAT, JAIPUR BENCH, JAIPUR IN ITS ORDER IN ITA NO. 2 62/JP/2006 DATED 22/12/2006, THE REGISTRATION U/S 12AA OF THE ACT WAS ALLOWED TO THE SAMITI W.E.F. 01/4/2003. THE INCOME TAX DEPARTMENT HA D FILED AN APPEAL BEFORE THE HONBLE RAJASTHAN HIGH COURT AGAI NST THE ORDER OF THE ITAT, JAIPUR BENCH, JAIPUR IN ITS ORDER. FURTHER ON THE DIRECTION OF THE ITAT IN ITS ORDER DATED 31/12/2007 IN M.A. NO. 66/JP /2007, THE CIT, KOTA VIDE HIS ORDER DATED 22/5/2008 HAD GRANTED REG ISTRATION TO THE ITA 54 & 55/JP/2012_ KUMS VS. ITO 6 SAMITI W.E.F. 30/01/1964 I.E. THE DATE OF ITS CREATI ON. THUS, EVEN AFTER REGISTRATION U/S 12AA OF THE ACT HAD BEEN GRANTED T O THE SAMITI WHICH HAS BEEN CHALLENGED BEFORE THE HONBLE RAJASTHAN HI GH COURT AND HAS NOT REACHED ITS FINALITY. THE MAIN CONTENTION BETWEEN REVENUE AND THE SAMITI IS THAT THE SAMITI MADE CONTRIBUTION TO THE MARKET BOARD, WHO HAS BEEN UTILIZING THIS CONTRIBUTION DISCRETIONARY FOR ANY PURPOSE INCLUDING THE NON-CHARITABLE ONE. THE LEARNED ASSESS ING OFFICER HELD THAT THE SAMITI HAD BEEN DIVERTING ITS INCOME OR RE CEIPTS IN THE FORM OF CONTRIBUTION TO THE MARKET DEVELOPMENT BOARD. AS PE R SECTION 13 OF THE INCOME TAX ACT, 1961, THE ASSESSEE CANNOT APPLY ITS INCOME FOR THE DIRECT OR INDIRECT BENEFIT OF THE PERSON CREATING I T, THE CONTRIBUTION TO THE MARKETING BOARD BY THE SAMITI IS INDIRECT BENEF IT GIVEN TO THE FOUNDER/CREATOR. ACCORDINGLY, THE LEARNED ASSESSING OFFICER HELD THAT THE RECEIPT AND CORRESPONDING CLAIM OF DEDUCTION ARE TO BE ASSESSED IN FULFILLING THE CONDITION LAID DOWN IN SECTION 11 TO 13 OF THE ACT. DURING THE YEAR, THE ASSESSEE HAD GIVEN A SUM OF RS. 2,25, 75,908/- AS CONTRIBUTION TO THE MARKETING BOARD, WHICH HAS NOT B EEN ALLOWED BY THE ASSESSING OFFICER U/S 36(I)(XII) OR 37(1) OF THE AC T. THE SAMITI ALSO INCURRED EXPENDITURE ON CONSTRUCTION/REPAIR OF LIN KING ROAD AT RS. 2,48,53,300/-, WHICH IS ALSO AS PER ASSESSING OFFICE R NOT ALLOWABLE U/S ITA 54 & 55/JP/2012_ KUMS VS. ITO 7 36(I)(XII) OF THE ACT. HE FURTHER FOUND THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN RECEIPT FROM SHOP RENT OF RS. 1,18,39,772/-, THE ASSESSEE EXPLAINED BEFORE THE AS SESSING OFFICER THAT THE ALLOTMENT OF SHOPS/GODOWNS MADE TO LICENSE HOLDE R ONLY AND ALLOTMENT CHARGES ARE RECOVERED AS PER POLICY OF MA NDI SAMITI ON MONTHLY BASIS. ACCORDINGLY, HE ASSESSED RENTAL INCO ME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE ALSO CLAIME D DEPRECIATION ON VARIOUS ASSETS AT RS. 5,74,58,572/-. THE LEARNED ASS ESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE BUT THE ASSESSEE WAS NOT ABLE TO GIVE DEPRECIATION CHART TO LAST FOUR YEARS ON THE GROUND THAT SINCE THE MANDI SAMITI HAD COME IN THE PURVIEW OF IT ACT FROM A.Y. 2003-04, THEREFORE, THE RECORDS, WHATEVER PROVIDED I N THE RSAMB ACT, 1961 HAS BEEN MAINTAINED BY THE MANDI SAMITI. IT WAS SUBMITTED BY THE SAMITI THAT UP TO 31/3/2002, THE ASSESSEE WAS CONSID ERED AS LOCAL AUTHORITY AND HAVING INCOME EXEMPTED U/S 10(20) OF THE ACT. ACCORDINGLY, HE HAS NOT ALLOWED DEPRECIATION AT RS. 5,74,58,572/-. FURTHER, THE ASSESSEE HAS DECLARED INTEREST FROM BA NK AT RS. 37,56,598/- AND ALSO DEBITED THE INTEREST ON LOAN A T RS. 28,72,038/- IN INCOME AND EXPENDITURE ACCOUNT BUT AS OBSERVED BY THE ASSESSING OFFICER, NO DETAILS OF INTEREST EXPENSES WERE FILED. THEREFORE, HE ITA 54 & 55/JP/2012_ KUMS VS. ITO 8 DISALLOWED THE ASSESSEES CLAIM AND ASSESSED INTERES T INCOME AS INCOME FROM OTHER SOURCES. AFTER ANALYZING THE ACCOUNTING STANDARD ADOPTED BY THE SAMITI HE ASSESSED NET SURPLUS INCOME AT RS. 10 ,73,65,630/- AND INCOME FROM HOUSE PROPERTY AT RS. 82,87,841/- AND I NCOME FROM OTHER SOURCES AT RS. 37,56,598/-. THUS, TOTAL INCOME OF T HE SAMITI FOR A.Y. 2004-05 WAS ASSESSED AT RS. 11,94,10,070/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE REGISTRATION U/S 12AA OF THE ACT BUT NOT ALLOWED EXEMPTION U/S 11 AND 12 TO THE ASSESSEE. HE ALLOWED CONTRIBUTION MADE TO MARKETING BOARD IN FAVOUR OF THE ASSESSEE. THE EXPENDITURE CL AIMED ON ACCOUNT OF CONSTRUCTION/REPAIR OF LINKING ROAD BY THE SAMITI, WHICH WAS ADDED BY THE ASSESSING OFFICER HAS BEEN PARTLY ALLOWED BY THE CIT(A), KOTA AT RS. 2,16,34,691/- AND CONFIRMED THE ADDITION ON ACCOUNT OF CONSTRUCTION OF MISSING LINKING ROAD AT RS. 34,18,609/-. HE FURTHER HELD THAT ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 AND 12 OF THE ACT AND INCOME OF THE SAMITI IS TO BE CALCULATED ON THE GENERAL PRINCIPLE S OF INCOME TAX ACT. HE FURTHER OBSERVED THAT ONCE THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S 24 ON RENTAL INCOME FROM SHOP/GODOWNS, NO DEPREC IATION CAN BE ALLOWED. ACCORDINGLY, HE DISMISSED THE APPEAL ON THI S GROUND. THE ITA 54 & 55/JP/2012_ KUMS VS. ITO 9 INTEREST INCOME ON DEPOSIT HAS BEEN HELD AS INCOME FROM OTHER SOURCES BY THE LEARNED CIT(A) AND ALSO CONFIRMED THE INTERE ST EXPENSES CLAIMED BY THE ASSESSEE, HAS NOT BEEN ALLOWED THE EXPENSES A GAINST THE INTEREST INCOME. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED A.R. FOR THE ASSESSEE SUBMITTED AS UNDER:- 1. AT THE OUTSET, IT IS HUMBLY SUBMITTED THAT THE R ELEVANT ASSESSMENT YEAR WAS THE INITIAL YEARS IN WHICH THE A PPELLANT SAMITI WAS NOT ELIGIBLE FOR EXEMPTION U/S 10(2) OF T HE ACT. ACCORDINGLY, THE APPELLANT SAMITI WAS UNDER THE BONA FIDE BELIEF THAT THEY WERE COVERED BY THE EXEMPTION PROVI DED U/S 10(2) OF THE ACT AS WAS THE CASE IN ALL PRIOR YE ARS TO BE RELEVANT ASSESSMENT YEAR. HENCE, THE APPELLANT SAMI TI, RELYING ON THE ABOVE, DID NOT GET ITS ACCOUNTS AUDI TED FOR THE RELEVANT FINANCIAL YEAR 2003-04, AS NO SUCH REQ UIREMENT WAS STIPULATED FOR CLAIMING EXEMPTION U/S 10(2). 2. IT IS HUMBLY SUBMITTED THAT THE LEARNED CIT(A), IN HIS APPELLATE ORDER, DID NOT CONCUR WITH THE OBSERVATION S AND ALLEGATIONS OF THE LEARNED A.O.. HOWEVER, THE LEAR NED CIT(A) INQUIRED ABOUT THE AUDIT REPORT FOR THE RELEV ANT ASSESSMENT YEAR. THEREIN, THE APPELLANT SAMITI CLAR IFIED THAT AS IT WAS THE INITIAL YEARS IN WHICH THEY CLAIME D THE EXEMPTION U/S 11, THEY WERE NOT AWARE OF THE OVERALL ITA 54 & 55/JP/2012_ KUMS VS. ITO 10 REQUIREMENTS FOR CLAIMING SUCH EXEMPTION AND HENCE DID NOT GET ITS ACCOUNTS AUDITED. THE LEARNED CIT(A) DENI ED THE EXEMPTION U/S 11 CITING THE NON-AVAILABILITY OF AUD IT REPORT AS THE SOLE REASON FOR THE SAME. 3. IT IS HUMBLY SUBMITTED THAT THE ACCOUNTS OF THE APPELLANT SAMITI FOR THE ASSESSMENT YEAR 2004-05 HAVE BEEN DU LY AUDITED. THE COPIES OF SUCH AUDITED FINANCIAL STATEM ENTS ALONGWITH THE AUDIT REPORT IN FORM 10B DATED 16/07/2 014 ARE SUBMITTED HEREWITH AS ADDITIONAL EVIDENCE. 4. IT IS PRUDENT TOT MENTION HERE THAT THE REQUIREM ENT OF SUBMISSION OF AUDIT REPORT IS A PROCEDURAL REQUIREM ENT. VARIOUS JUDICIAL PRONOUNCEMENTS HAVE BEEN LAID DOWN THE PRINCIPAL THAT A PROCEDURAL PROVISION SHOULD NOT BE CONSTRUED AS MANDATORY IF THE DEFECT IN THE ACT DON E IN PURSUANCE OF IT CAN BE CURED BY PERMITTING THE APPR OPRIATE RECTIFICATION TO BE CARRIED OUT AT A SUBSEQUENT STA GE. HENCE, THE APPELLANT SAMITI HUMBLY REQUESTS THE HON BLE TRIBUNAL TO ALLOW THEM TO RATIFY THE PROCEDURAL DEFEC T BY ACCEPTING THE AUDIT REPORT SUBMITTED. FOR THIS PURP OSE, THE APPELLANT SAMITI PLACES RELIANCE ON THE FOLLOWING JU DICIAL PRONOUNCEMENTS WHICH INVOLVED THE SIMILAR FACTS TO T HE FACTS OF THE APPELLANT SAMITI HEREIN. HE RELIED ON THE FOLLOWING CASE LAWS:- ITA 54 & 55/JP/2012_ KUMS VS. ITO 11 (I) JAWAHAR LAL NEHRU PORT TRUST VS. DEPUTY COMMISSI ONER OF INCOME TAX (2011) 15 TAXMANN.COM 242 (MUM). (II) CALCUTTA MANAGEMENT ASSOCIATION VS. INCOME TAX OFFICER (1992) 42 ITD 62 (CAL.) (III) COMMISSIONER OF INCOME TAX-IV VS. XAVIER KELA VANI MANDAL (P) LTD. (2014) 41 TAXMANN.COM 184 (GUJARAT). (IV) SWAJAN PARIWAR TRUST VS. ASSISTANT DIRECTOR OF I NCOME TAX (EXEMPTION) VS. DONGZATHANG, VICE PRESIDENT (1997 ) 57 TTJ 77 (MUMBAI). (V) COMMISSIONER OF INCOME TAX VS. HARDEODAS AGARWALL A TRUST (1992) 198 ITR 511 (CAL.). THE LEARNED A.R. FOR THE ASSESSEE PRAYED TO ALLOW THE EXEMPTION U/S 11 OF THE ACT TO THE APPELLANT SAMITI. ON THE ISSUE OF DENIAL OF EXPENSES ON CONSTRUCTION OF LINKING ROAD AT RS. 32,18,609, IT I S SUBMITTED THAT THE APPELLANT IS A BODY ESTABLISHED BY THE STATE GOVT. BY THE MARKET ACT. THE OBJECTIVE AS ENUMERATED IN THE MARKET ACT INCLUD ES THE ESTABLISHMENT OF REGULATED MARKET FOR PURCHASE AND SALE OF AGRICULTURAL PRODUCE AND THE PROTECTION OF THE AGRICULTURISTS FR OM BEING EXPLOITED BY THE MIDDLEMEN AND TO ENABLE THEM TO SECURE FAIR RET URN OF THEIR PRODUCE. IN PURSUANCE TO THESE OBJECTIVES, THE APPE LLANT SAMITI IS REQUIRED TO PROVIDE THE FACILITIES TO THE AGRICULTU RISTS NOT ONLY IN THE ITA 54 & 55/JP/2012_ KUMS VS. ITO 12 MARKET AREA BUT ALSO TO ENABLE THEM TO REACH THE MA RKET AREA. THE APPELLANT SAMITI HAS TO LOOK AFTER THE CONDITION OF THE FACILITIES AS ARE AVAILABLE TO THE AGRICULTURISTS LIKE CONNECTION ROA DS, AUCTION PLATFORM, ELECTRICITY, WATER AND SECURITY ARRANGEMENTS IN THE MANDI AREA ETC. AS PER DIRECTION OF THE GOVERNMENT OF RAJASTHAN, SUCH MANDI SAMITI HAS TO TRANSFER CERTAIN AMOUNT TO THE RAJASTHAN STATE AGRI CULTURE MARKETING BOARD FOR MAKING AND UP GRADATION OF ROADS AND SPEC IAL REPAIRS OF THE ROADS IN THE STATE. IN THE CURRENT CASE, THE TOTAL AMOUNT OF RS. 2,48,53,300/- WAS TRANSFERRED TO XEN, RSAMB AND ADMI NISTRATOR RSAMB FOR THE ABOVE PURPOSE. THE SAMITI COVERED U/S 12A OF THE ACT, THEREFORE, THE CAPITAL-REVENUE APPROACH IS NOT APPL ICABLE THEREIN, AS IN SUCH CASE, THE ALLOWABILITY OF ANY EXPENDITURE DEPEN DS SOLELY ON THE PRINCIPLES WHETHER THE SAME IS UTILIZED TOWARDS THE O BJECTIVE OF THE ORGANIZATION. THE LEARNED CIT(A) HAS DENIED THE EXEM PTION U/S 11. IT IS ALTERNATIVELY ARGUED THAT EVEN IF SUCH EXEMPTION IS DENIED TO THE APPELLANT, IT IS A REVENUE EXPENDITURE OF THE SAMIT I. IF THESE EXPENSES IS CLAIMED CAPITAL EXPENDITURE, THE APPELLANT SAMITI D OES NOT HAVE ANY RIGHT OVER THE ROAD CONSTRUCTED, AS A RESULT OF SAI D EXPENDITURE AND THE SAME IS NOT EVEN TREATED AS AN ASSET OF THE APPELLA NT SAMITI. THE ORDER OF THE CIT(A) IS NOT JUSTIFIED ON THIS ISSUE. THE SAI D LINK ROADS ENABLE ITA 54 & 55/JP/2012_ KUMS VS. ITO 13 THE APPELLANT THE APPELLANT SAMITI TO ENSURE EASY A PPROACH OF THE FARMERS WHO ARE THE SELLERS IN THE MARKET ESTABLISH ED BY THE APPELLANT SAMITI. HE FURTHER RELIED ON THE FOLLOWING CASE LAWS: - (I) CIT VS. KARNATAKA FINANCIAL CORPORATION (2010) 326 ITR 355 (KAR). (II) CIT, TRICHUR VS. CO-OPERATIVE SUGGARS LTD. (2009 ) 178 TAXMAN 123 (KER). (III) L.H. SUGAR FACTORY & OIL MILLS (P) LTD. VS. C IT (1980) 4 TAXMAN 5 (SC). (IV) B.K. KHANNA & CO. (P) LTD. VS. CIT (2000) 113 TA XMAN 164 (DELHI). ACCORDINGLY, HE PRAYED TO ALLOW THE EXPENDITURE INCU RRED ON LINKING ROAD AT RS. 32,11,609/-. 4.1 THE LEARNED A.R. FOR THE ASSESSEE FURTHER SUBMIT TED THAT THE SAMITI IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT AND PROVISIONS OF SECTION 14 I.E. BIFURCATION OF THE INCOME UNDER HEA D IS NOT APPLICABLE ON THE APPELLANT. HENCE THE QUESTION UNDER WHICH HEAD T HE INCOME OF THE APPELLANT SAMITI SHALL BE ASSESSED DOES NOT ARISE. THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACT THAT THE RENTAL INCOME RELIED WAS IN FORM OF ALLOTMENT CHARGES, WHICH COMES UNDER THE HEAD BUSINE SS AND PROFESSION, FOR WHICH HE RELIED ON THE DECISION OF T HE HONBLE CALCUTTA ITA 54 & 55/JP/2012_ KUMS VS. ITO 14 HIGH COURT IN THE CASE OF SHAMBHU INVESTMENT (P) LT D. (2001) 168 CTR (CAL.) 237 WHEREIN IT HAS BEEN HELD THAT MAIN INTENT ION OF THE APPELLANT IS TO BE CONSIDERED FOR DECIDING THE HEAD OF INCOME . THIS VIEW HAS BEEN UPHELD BY THE HONBLE APEX COURT IN THE CASE OF SHA MBHU INVESTMENT (P) LTD. (2003) 184 CTR (SC) 91. THE SAMITIS INTENTI ON WAS TO LETTING OUT ANY IMMOVABLE PROPERTY TO EXPLOIT IT BY WAY OF C OMPLEX COMMERCIAL ACTIVITY. THUS, IT COMES UNDER THE HEAD OF BUSINESS AND PROFESSION NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HE FURTH ER RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT VS. KARNATAKA STATE WAREHOUSING CORPORATION (2014) 44 TAXMANN.COM 205 (KARNATAKA). (II) CIT-III VS. VELANKANI INFORMATION SYSTEMS (P) LTD. (2013) 35 TAXMANN.COM 1 (KARNATAKA). (III) HIRANANDANI DEVELOPERS (P) LTD. VS. JCIT (OSD) , RANGE 3(3), MUMBAI. THEREFORE, HE PRAYED TO ALLOW THE EXEMPTION U/S 11 A ND ASSESSED THE INCOME UNDER HEAD OF BUSINESS AND PROFESSION AN D NOT INCOME FROM HOUSE PROPERTY. 4.2 THE LEARNED A.R. FURTHER ARGUED ON DISALLOWANCE O F DEPRECIATION CLAIMED BY THE APPELLANT AT RS. 5,74,58,572/-, THE LEARNED CIT(A) DISALLOWED THE DEPRECIATION ON THE GROUND THAT THE D EDUCTION U/S 24 OF ITA 54 & 55/JP/2012_ KUMS VS. ITO 15 THE ACT HAS BEEN ALLOWED BY THE ASSESSING OFFICER AF TER TREATING THE RECEIPT FROM LETTING OUT THAT SUCH SHOP UNDER THE H EAD INCOME FROM HOUSE PROPERTY AND NOT ALLOWED THE DEPRECIATION U/S 32 OF THE ACT. AS ARGUED IN THE PREVIOUS GROUND OF APPEAL THAT THESE RECEIPTS ARE COVERED UNDER THE HEAD BUSINESS AND PROFESSION AND ACCORDIN GLY, DEPRECIATION IS ALLOWABLE ON IT. THE LEARNED CIT(A) WAS NO RIGHT IN HO LDING THAT THE ASSESSEE COULD NOT PRODUCE ANY DETAIL OF WDV CHART AT THE TIME OF APPELLATE PROCEEDING. THE AR OF THE APPELLANT SAMITI FURNISHED THE DETAILS OF ASSETS WITH WDV. THE REGISTER WAS DULY STAM PED AND SIGNED BY THE SECRETARY OF THE APPELLANT SAMITI. THE SAID D EPRECIATION CHART AND ANNEXURE THEREOF IS FULLY TALLIED WITH THE DETAI LS OF ASSETS MAINTAINED IN THE ASSET REGISTER. THUS, IT IS ARGUED THAT THE APPELLANT SAMITI HAD DULY DISCHARGED ITS ONUS OF ESTABLISHING ITS OWNERSHIP OF THE ASSETS. THE LEARNED AR FURTHER DRAWN OUR ATTENTION ON SECTION 32(2) OF THE ACT AND ARGUED THAT IN PREVIOUS YEARS, THE SAMI TI WAS NOT HAVING ANY PROFITABLE INCOME AS THE ACTIVITY OF THE SAMITI WAS EXEMPTED U/S 10(20) OF THE ACT, THEREFORE, THE LAW ALLOWED THE SAM ITI DEEMED DEPRECIATION FOR THE PREVIOUS YEAR, IN WHICH THE INC OME OF THE SAMITI WAS EXEMPTED. THE ASSETS, WHICH WAS USED BY THE SAMITI WERE OLD AND PUT TO USE IN EARLIER YEAR. YET, THE APPELLANT SAMI TI NEVER CLAIMED ITA 54 & 55/JP/2012_ KUMS VS. ITO 16 DEPRECIATION ON THEM IN SUCH EARLIER YEAR AS THE IN COME OF THE APPELLANT WAS FULLY EXEMPT U/S 10(20) OF THE ACT. THE APPELLANT SAMITI CLAIMED DEPRECIATION IN THE FIRST YEAR AT COST IN THE YEAR UNDER CONSIDERATION. THE AUDITOR HAD SUBMITTED IN NOTE OF ACCOUNTS THAT N O DEPRECATION HAS BEEN CLAIMED ON THE ASSETS OF THE NEW MANDI PREMISES ON THE COST OF THE ASSETS. NO DEPRECIATION ON THE OLD MANDI YARD I S CLAIMED. NO DEPRECIATION ON FURNITURE, FIXTURES, OFFICE EQUIPME NT IS CLAIMED BEING THE COST OF ASSET IS NOT AVAILABLE, FOR WHICH, HE RELIED ON THE DECISION IN THE CASE OF KANDLA PORT TRUST VS. ASST.CIT (2007) 104 ITD 1, 12 (RAJKOT) AND ARGUED THAT THE APPELLANT SAMITI HAS ONLY CLAIM DEPRECIATION OF THE COST OF ASSET IS ASCERTAINABLE. THUS, HE PRAYED TO A LLOW THE DEPRECATION AS CLAIMED IN THE RETURN OF INCOME. 4.3 THE LEARNED CIT(A) TREATED THE BANK INTEREST ON DEPOSITION AMOUNTING TO RS. 37,56,598/- AS INCOME FROM OTHER S OURCES U/S 56 OF THE ACT. IT IS SUBMITTED THAT THE APPELLANT SAMITI EARNED INCOME, INTER ALIA, IN THE FORM OF ALLOTMENT CHARGES, MANDI SHULK ETC. SECTION 18 OF THE MARKET ACT REQUIRES A MARKET COMMITTEE TO DEPOSIT A LL AMOUNTS RECEIVED BY IT INTO A MARKET COMMITTEE FUND AND STIPULATES T HAT ALL EXPENDITURES INCURRED BY THE MARKET COMMITTEE UNDER OR FOR THE P URPOSE OF THE ACT ITA 54 & 55/JP/2012_ KUMS VS. ITO 17 SHALL BE DEFRAYED OUT OF THE SAID FUND. FURTHER SEC TION 19 OF THE MARKET ACT LAYS DOWN THE PURPOSES FOR WHICH SUCH FUND SHALL BE EXPANDED. MOREOVER, THE MARKET COMMITTEE IS REQUIRED TO KEEP THE FUNDS RECEIVED IN A BANK ACCOUNT THAT IS OVERLOOKED BY THE TREASURY OF THE STATE GOVERNMENT. THE INTEREST INCOME IS ALSO UTILIZED BY THE APPELLANT SAMITI FOR THE PURPOSES MENTIONED IN THE MARKET ACT AND AC CORDINGLY, IT SHOULD BE TREATED AS INCOME FROM THE BUSINESS AND PROFESSI ON AS IT HAS DIRECT NEXUS WITH THE BUSINESS OF THE MANDI SAMITI. THEREFOR E, IT IS REQUESTED TO TAX THESE RECEIPTS UNDER THE HEAD INCOME UNDER T HE HEAD BUSINESS AND PROFESSION. 4.4 THE LEARNED CIT(A) HAS ALSO NOT ALLOWED INTEREST EXPENSES ON LOAN OF RS. 28,72,038/-, IT IS PRAYED THAT EVIDENCE REGARDING CLAIM OF INTEREST HAD NOT BEEN SUBMITTED BEFORE THE LOWER AUT HORITY DUE TO LACK OF COORDINATION BETWEEN THE VARIOUS DEPARTMENTS OF MANDI SAMITI AND SHORT OF TIME GIVEN BY THE LEARNED CIT(A) AT THE TI ME OF APPELLATE PROCEEDINGS. THEREFORE, HE ARGUED THAT THE APPLICATI ON FOR ADMITTING ADDITIONAL GROUND SHOULD BE HEARD FIRST AND DECIDED . THE LEARNED AR OF THE APPELLANT EXPLAINED THE REASONS, WHICH WAS OBJEC TED BY THE CIT DR DURING THE COURSE OF HEARING BEFORE THIS BENCH BUT WE FIND SUPPORT IN ITA 54 & 55/JP/2012_ KUMS VS. ITO 18 ASSESSEES CLAIM AND BEING A GOVERNMENT BODY WE ALLO W THE APPLICATION FOR ADMITTING ADDITIONAL EVIDENCE. IT IS FURTHER AR GUED THAT THESE EVIDENCES MAY BE CONSIDERED BY THE HONBLE BENCH AN D ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE. 5. THE LEARNED CIT DR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS BENCH HAS ALREADY ALLOWED THE ASSESSEES REGISTRATION U/S 12AA OF THE ACT, WHICH HAS BEEN CHALLENGED BY THE REVENUE BEFORE THE HONBLE RAJAST HAN HIGH COURT. THEREFORE, WE DO NOT FIND ANY REASON TO INTERVENE IN THE ORDER OF THE COORDINATE BENCH. THE COORDINATE BENCH IN A.Y. 2003- 04, 2006-07 AND 2007-08 HAD CONSIDERED THE APPLICABILITY OF SECTION 11 AS WELL AS DEPRECIATION ISSUED. THE OPERATIVE PORTION OF THE OR DER IS REPRODUCED AS UNDER:- 2.5 WE HAVE HEARD THE PARTIES. THERE IS NO DISPUTE T HAT IF THE EXPENSES ARE INCURRED BY THE SAMITIS ARE FOR THE PU RPOSE OF ACHIEVING THE OBJECTS AS MENTIONED IN RAMP ACT THEN THESE ARE ALLOWABLE. THE ONLY DISPUTE IS IN RESPECT OF DEPRECIATION. THE REVENUE IS CONTENDING THAT DEPRECI ATION SHOULD NOT BE ALLOWED WHILE COMPUTING EXEMPTION U/S 1 1 OF ITA 54 & 55/JP/2012_ KUMS VS. ITO 19 THE ACT BECAUSE THE EXPENSES INCURRED FOR ACQUIRING CAPITAL ASSETS IS TREATED AS ALLOWED. FIRST ONE WILL HAVE TO CONSIDER THE APPLICABILITY OF SECTION 11 OF THE ACT ON THE B ASIS OF APPLICATION OF INCOME FROM THE RECEIPTS. A CHARITAB LE INSTITUTION IS REQUIRED TO APPLY 85% OF THE RECEIPT S. THE CAPITAL EXPENDITURE INCURRED IS TO BE CONSIDERED AS APPLICATION OF INCOME. NOW SECOND STAGE COMES WHEN T HE APPLICATION OF INCOME IS LESS THAN 85% OF THE RECEI PTS THEN THE INCOME FOR THE PURPOSE OF COMPUTATION WILL HAVE TO BE MADE ON THE BASIS OF COMMERCIAL PRINCIPLES AND THE DEPRECIATION IS TO BE ALLOWED. IN THE INSTANT CASE, THE REVENUE HAS NOT RECORDED THE FINDING THAT INCOME AP PLIED IS LESS THAN 85% OF THE RECEIPTS. 21. WE ALSO DRAW ATTENTION TO SECTION 11(1A) WHICH PR OVIDES FOR COMPUTATION OF CAPITAL GAIN ON TRANSFER OF ASSE TS BEING PROPERTY HELD UNDER TRUST. IT IS MENTIONED THAT IN CASE WHOLE OF NET CONSIDERATION IS UTILIZED IN ACQUIRING NEW CAPITAL ASSET THEN NO CAPITAL GAIN OF PART OF NET CONSIDERATION IS UTILIZED FOR ACQUIRING THE NEW CAPI TAL ASSET THEN SO MUCH OF THE CAPITAL GAIN AS IS EQUAL TO THE AMOUNT, ANY, BY WHICH THE AMOUNT SO UTILIZED EXCEEDS THE COS T OF TRANSFERRED ASSET. LET US ILLUSTRATE IT COST OF TRANSFERRED ASSET = RS.100/- NET CONSIDERATION = RS.250/- CONSIDERATION UTILIZED FOR NEW CAPITAL ASSET = RS.125 CAPITAL GAIN = RS.150 ITA 54 & 55/JP/2012_ KUMS VS. ITO 20 22. HENCE RS.25 WHICH IS THE DIFFERENCE BETWEEN THE CONSIDERATION UTILIZED AND OF TRANSFERRED ASSET IS TO BE TREATED AS APPLIED FOR CHARITABLE PURPOSE. THE CAPIT AL ASSET WHILE ACQUIRED WAS ALLOWED AS EXPENDITURE BUT THE SAME HAS NOT BEEN TAKEN ZERO FOR THE PURPOSE OF COMPUTIN G CAPITAL GAIN TO BE TREATED AS APPLIED FOR CHARITABL E PURPOSE. HONBLE BOMBAY HIGH COURT IN THE CASE OF DIRECTOR O F INCOME TAX (EXEMP) V. GIRDHARI LAL SHEWNARAIN TANTA TRUST 199 ITR 215 HELD THAT NO DEDUCTION U/S 80T IS AVAILABLE FOR COMPUTING CAPITAL GAIN IN THE CASE OF TRUST. 23. THE C.B.D.T. VIDE CIRCULAR NO.72 DATED 06.01.72 E XPLAINED AS TO WHY SECTION 11(A) HAS BEEN INSERTED RETROSPECT IVELY BY FINANCE (NO.2) ACT 1971 WITH RETROSPECTIVE EFFECT FROM 01.04.1962. A TRUST CAN CLAIM EXEMPTION PROVIDED A SPECIFIC POSITION OF INCOME IS APPLIED FOR PURPOSES OF THE T RUST. INCOME INCLUDES CAPITAL GAIN AND HENCE TRUST WILL LO SE EXEMPTION IF SUCH INCOME IS NOT APPLIED. THE REQUIRE MENT THAT THE CAPITAL GAIN ARISING TO BE UTILIZED FOR CH ARITABLE PURPOSE WILL HAVE UNINTENDED EFFECT OF PROGRESSIVELY REDUCING THE CORPUS OF THE TRUST AND THE INCOME YIE LDED BY IT. HENCE THE CAPITAL GAIN IS TO BE CONSIDERED AS A PPLIED FOR CHARITABLE PURPOSE IF THE NET CONSIDERATION IS UTIL IZED FOR ACQUIRING ANOTHER CAPITAL ASSET. IF PART OF THE NET CONSIDERATION IS UTILIZED THEN CAPITAL GAIN TO THE EXTENT OF AMOUNT, WHICH IS IN EXCESS OF NEW CAPITAL ASSET AND COST OF ITA 54 & 55/JP/2012_ KUMS VS. ITO 21 CAPITAL ASSET TRANSFERRED, IS TO BE CONSIDERED AS U SED FOR CHARITABLE PURPOSE. BOARD ALSO ADVISED THAT NET CONSIDERATION IN FIXED DEPOSIT WITH BANK FOR A PERIO D OF 6 MONTHS OR ABOVE WOULD BE REGARDED AS UTILIZATION OF THE NET CONSIDERATION FOR ACQUIRING ANOTHER CAPITAL ASS ET WITHIN MEANING OF SECTION 11(1A) OF THE ACT. COST OF THE TRANSFERRED ASSET MEANS THE COST OF ACQUISITION OF THE CAPITAL ASSET. THE NET CONSIDERATION IS NOT REGARDED AS CAPITAL GAIN AND COST OF ACQUISITION OF CAPITAL ASS ET TRANSFERRED IS NOT TREATED AS NIL IF THE ASSET IS A PROPERTY HELD UNDER TRUST. IT IS NOT MENTIONED THAT A CAPITA L ASSET ACQUIRED BY APPLICATION OF INCOME IS TO BE TREATED DIFFERENTLY WHILE ASCERTAINING THE CAPITAL GAIN. HEN CE COST MUST HAVE BEEN TREATED AS APPLICATION OF INCOME BUT THE CAPITAL GAIN IS TO BE ASCERTAINED ON THE BASIS OF N ORMAL COMMERCIAL PRINCIPLES. HENCE IN THE CASE OF TRUST T HE INCOME WHICH IS REQUIRED TO BE CONSIDERED APPLIED IN EXCESS OF 85% RECEIPTS IS TO BE ASCERTAINED ON COMMERCIAL PRINCIPLES AND DEPRECIATION IS TO BE ALLOWED. IN CAS E WITHOUT DEPRECIATION, THE RECEIPTS APPLIED ARE IN EX CESS OF STATUTORY PERCENTAGE THEN ISSUE OF ALLOWABILITY OF DEPRECIATION IS ACADEMIC. IN ABSENCE OF DETAILS NOT FILED BEFORE US, WE ARE UNABLE TO SEE AS IN WHAT CASE OF S AMITI AND IN WHICH YEAR, THE ISSUE OF DEPRECIATION IS ACAD EMIC. ITA 54 & 55/JP/2012_ KUMS VS. ITO 22 7. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND, WHI CH IS REPRODUCED AS UNDER:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A), KOTA HAS ERRED IN DENYING THE BENE FIT OF EXEMPTION U/S 11 AND 12 OF THE ACT TO THE APPELLANT MERELY ON THE BASIS OF NON-SUBMISSION OF AUDIT REPORT IN FORM 10B, WHICH IS A PROCEDURAL REQUIREMENT. 8. AS THE ASSESSEE HAD TAKEN ADDITIONAL GROUND ON N ON-SUBMISSION OF AUDIT REPORT IN FORM NO. 10B, IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE A.R. THAT IT IS A LEGAL GROUND GOING TO THE ROOT OF THE ASSESSMENT AND FIRST APPELLATE PROCEEDING. THERE WAS NO WILLFUL O MISSION OF THE ABOVE GROUND ON FORM OF APPEAL FILED BY THE APPELLA NT, THE SAME MAY BE ADMITTED. 9. AT THE OUTSET, THE LEARNED CIT DR OPPOSED THE AS SESSEES ADDITIONAL GROUND ON THE GROUND THAT THE ASSESSEE H AS NOT CLAIMED BENEFIT OF EXEMPTION U/S 11 OF THE ACT ALONGWITH AUD IT REPORT. THE LEARNED CIT(A) RIGHTLY REJECTED THE EXEMPTION U/S 11 AND 12 OF THE ACT IN ABSENCE OF AUDIT REPORT. SHE FURTHER RELIED ON T HE CASE LAW REFERRED BY THE LEARNED CIT(A) ON PAGE NO. 16 I.E. DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF DIT (EXEMPTION) VS. SPIC EDUCATION ITA 54 & 55/JP/2012_ KUMS VS. ITO 23 FOUNDATION 257 ITR 46 AND THE DECISION OF THE HONBL E CALCUTTA HIGH COURT IN THE CASE OF CIT VS. HARDEODAS AGARWAL 198 ITR 511. 10. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAS GOT AN AUDIT REPORT AFTER THE ORDER OF THE LEARNED CIT(A) ON 16/07/2014 FOR THE YEAR ENDED ON 31/3/2004 FROM M/S SPARK AND ASSOCIAT ES, A C.A. FIRM, INDORE. AS VARIOUS HONBLE HIGH COURTS AS WELL AS BO ARD CIRCULAR, HELD THAT A PROCEDURAL PROVISION COULD NOT BE CONSTITUTE AS MANDATORY IF THE DEFECTS IN THE ACT DONE IN PURSUANCE OF IT CAN BE C URED BY PERMITTING THE PROPER RECTIFICATION TO BE CARRIED OUT AT THE S UBSEQUENT STAGE. THEREFORE, WE ADMIT THE ASSESSEES ADDITIONAL GROUND OF APPEAL, CLAIM ON AUDIT REPORT DATED 16/07/2016 GOT DOWN FROM M/S S PARK ASSOCIATES LATER. THE ASSESSEE HAS SUBMITTED ADDITIONAL EVIDENC E UNDER RULE 29 OF THE INCOME TAX RULES, 1962 IN PAPER BOOK. ACCORDINGL Y, THE ISSUE OF EXEMPTION U/S 11 AND 12 OF THE ACT IS SENT BACK TO THE CIT(A) TO RECONSIDER THE AUDIT REPORT AND DECIDE THE CASE AS PER LAW. IT IS IMPORTANT TO MENTION HERE THAT IT IS NOT DES IRABLE ON THE PART OF THE ASSESSEE IN SUBMITTING OF AUDIT REPORT IN 20 14 FOR THE YEAR ENDED ON 31/3/2004. IT IS ADMINISTRATIVE LAPSE ON THE PAR T OF SECRETARY OF MANDI SAMITI, WHO HAS NOT TAKEN OUT DUE COMPLIANCE O F LAW FOR CLAIMING ITA 54 & 55/JP/2012_ KUMS VS. ITO 24 OF EXEMPTION U/S 10(20) OF THE ACT. BEING A GOVERNM ENT BODY, WE ALLOW THE ADDITIONAL EVIDENCE IN FORM OF AUDIT REPORT IN THE INTEREST OF JUSTICE. BEING A PECULIAR NATURE OF THE CASE, IT WOULD BE PR OPER TO MENTION HERE THAT THESE FINDINGS WOULD NOT BE TAKEN AS PRECEDENC E FOR OTHER YEARS OF THE ASSESSEE AND ALSO FOR OTHER CASES. 11. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWE D FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 27 TH FEBRUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- KRISHI UPAJ MANDI SAMITI, BHAMASHAH MANDI, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 1(2), KOTA.. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 54 & 55/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR