Madhuchampaklal Charitable Trust, Ahmedabad V. The Income Tax Officer, Ward-1 (Exemption), Ahmedabad

ITA 575/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3163 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-02-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 23-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEREVENUE; SHRIV.KMANGLA; WHEREINITHASBEEN
• Assessee Lawyers: SHRIDHRUNALBHATT; FROMTHEINCOME; EXPENDITURE; ITISSEENTHATDURINGTHEYEARTHEASSESSEEHAS

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’SMC’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And MsMADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं ./ITANo.575/AHD/2023 धििाधरणवरध / Asstt.Year:2016-2017 Madhuchampaklal CharitableTrust, Harikunk, OppositeC.NVidyalaya, Ambawadi-380006. PAN:AAATM3257B Vs. IncomeTaxOfficer, Ward1(Exemptions) Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriDhrunalBhatt,AR Revenueby:ShriV.KMangla,Sr.DR सुिवाईकीतारीख/DateofHearing:12/02/2024 घोरणाकीतारीख/DateofPronouncement:03/04/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals),Ahmedabad, arisinginthematterofassessmentorderpassedunders.143(3)oftheIncome TaxAct,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessment Year2016-17. ITAno.575/AHD/2023 A.Y.2016-17 2 2.ThefirstissueraisedbytheassesseeisthattheLd.CIT(A)erredinnot grantingthebenefitprovidedu/s11(2)oftheAct,onthereasoningthattheform 10wasnotfiledalongwiththereturnofincome. 3.Inthepresentcase,theasseseeisatrustandclaimedexemptionu/s11(2) oftheActamountingtoRs.25,22,300/-whichwasdisallowedbytheAOonthe reasoningthatform10whichwasmandatorytoclaimforsuchaccumulationwas filedbelatedly.Thus,theAOaddedthesumofRs.25,22,300/-tothetotalincome oftheassessee. 4.AggrievedassesseepreferredanappealtotheLd.CIT(A)whoalso confirmedtheorderoftheAO. 5.BeingaggrievedbytheorderoftheLd.CIT(A),theasseseeisinappeal beforeus. 6.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to25and contendedthattheform10wasfiledbeforethecompletionoftheassessment andtherefore,theasseseecannotbedeniedforthebenefitprovidedunder section11(2)oftheAct. 7.Ontheotherhand,theLd.DRvehementlysupportedtheorderofthe authoritiesbelow. 8.Wehaveheardtherivalcontentionofboththepartiesandperusedthe materialsavailableonrecord.Admittedly,theform10wasfiledbytheassessee claimingtheexemptionofRs.25,22,300/-u/s11(2)oftheActaftertheduedate ofreturnfilingbutbeforethecompletionoftheassessment.TheHon’bleHigh CourtofGujaratinthecaseofACITv/s.StockExchangeAhmedabadreportedin 25taxmann.com469hasheldthattheassesseeisentitledforthebenefitofu/s ITAno.575/AHD/2023 A.Y.2016-17 3 11oftheActiftheform10isfiledbeforethecompletionoftheassessment.The relevantextractofthejudgmentisreproducedasunder: 8.Fromthefactsandcontentionsnotedhereinabove,thesolequestionthatarisesfor considerationiswhethertheTribunalwasjustifiedinholdingthatthetimelimitprescribedfor filingFormNo.10underrule17oftheRulesreadwithsection11(2)oftheActisdirectory.In thepresentcase,itisanadmittedpositionthattheassesseehadfiledFormNo.10as requiredunderrule17oftheRulesalongwiththerevisedreturnsfiledinrespectofallthe assessmentyearsunderconsideration.Thus,admittedly,theformshadbeensubmitted beforetheassessmentcametobecompleted.Atthisjuncturereferencemaybemadetothe decisionoftheSupremeCourtinthecaseofNagpurHotelOwners'Association(supra)on whichreliancehadbeenplacedbythelearnedcounselfortherevenue,whereinithasbeen heldthus: "6.Itisabundantlyclearfromthewordingsofsub-section(2)ofSection11thatitis mandatoryforthepersonclaimingthebenefitofSection11tointimatetotheassessing authoritytheparticularsrequired,underRule17inForm10oftheAct.Ifduringthe assessmentproceedingstheAssessingOfficerdoesnothavethenecessaryinformation, questionofexcludingsuchincomefromassessmentdoesnotariseatall.Asamatterof fact,thisbenefitofexcludingthisparticularpartoftheincomefromthenetoftaxation arisesfromSection11andissubjecttotheconditionsspecifiedtherein.Therefore,itis necessarythattheassessingauthoritymusthavethisinformationatthetimehe completestheassessment.Intheabsenceofanysuchinformation,itwillnotbe possiblefortheassessingauthoritytogivetheassesseethebenefitofsuchexclusion andoncetheassessmentissocompleted,inouropinion,itwouldbefutiletofindfault withtheassessingauthorityforhavingincludedsuchincomeintheassessableincomeof theassessee.Therefore,evenassumingthatthereisnovalidlimitationprescribedunder theActandtheRuleseventhen,inouropinion,itisreasonabletopresumethatthe intimationrequiredunderSection11hastobefurnishedbeforetheassessingauthority completestheassessmentconcernedbecausesuchrequirementismandatoryand withouttheparticularsofthisincometheassessingauthoritycannotentertaintheclaim oftheassesseeunderSection11oftheAct,therefore,compliancewiththerequirement oftheActwillhavetobeanytimebeforetheassessmentproceedings.Further,any claimforgivingthebenefitofSection11onthebasisofinformationsupplied subsequenttothecompletionofassessmentwouldmeanthattheassessmentorderwill havetobereopened.Inouropinion,theActdoesnotcontemplatesuchreopeningof theassessment.Inthecaseinhanditisevidentfromtherecordsofthecasethatthe respondentdidnotfurnishtherequiredinformationtillaftertheassessmentsforthe relevantyearswerecompleted.Inthelightoftheabove,weareoftheopinionthatthe standoftheRevenuethattheHighCourterredinansweringthefirstquestioninfavour oftheassesseeiscorrect,andwereversethatfindingandanswerthesaidquestionin thenegativeandagainsttheassessee." 9.Examiningthefactsofthepresentcaseinthelightoftheprinciplesenunciatedinthe abovedecision,asnoticedearlier,theassesseefiledFormNo.10underrule17oftheRules atthetimeoffilingrevisedreturnsinrespectofeachoftheassessmentyearsunder consideration.Thus,evidently,therequirementsofsection11(2)oftheActhadbeen compliedwithbeforethecompletionoftheassessments.Therefore,whilecompletingthe assessmentsfortheassessmentyearsunderconsideration,theAssessingOfficerhadthe necessaryinformationinrespectoftheclaimforexemptionundersection11oftheActmade bytheassesseebeforehim.Thus,thisisnotacasewhereinformationinrespectoftheclaim oftheassesseeforgivingbenefitofsection11oftheActwasfurnishedaftertheassessments fortherelevantassessmentyearswerecompleted.Underthecircumstances,thepresent caseissquarelycoveredbytheaforesaiddecisionoftheSupremeCourt.Theassesseewas, ITAno.575/AHD/2023 A.Y.2016-17 4 therefore,entitledtothebenefitofsection11oftheActonthebasisoftheinformation suppliedbyitpriortoframingoftheassessmentorders. 8.1Inviewoftheabove,weholdthattheassesseecannotbedeniedthe benefitofsection11(2)oftheAct,merelyonthereasoningthatform10wasfiled bytheassesseebelatedlyinthegivenfactsandcircumstances.Hence,weset- asidetheorderoftheLd.CIT(A)anddirecttheAOtodeletetheadditionmadeby him.Thus,thegroundofappealoftheassesseeisallowed. 9.ThesecondissueraisedbytheassesseeisthattheLd.CIT(A)erredin confirmingtheorderoftheAOonthereasoningthattheamountaccumulatedin theearlieryear(Rs.15,53,217fortheAY2011-12),hasnotbeenshownasincome undertheprovisionofsection11(3)oftheAct. 10.TheAOduringtheassessmentproceedingsfoundthattheassesseehas accumulatedthesumofRs.15,53,217/-fortheyearending31/03/2011,butthe samewasnotofferedasincomeinthecomputationoftotalincomeintheyear underconsiderationinpursuancetotheprovisionsofsection11(3)oftheAct. However,theassessee,onquestionbytheAO,submittedthattheamount accumulatedintheearlieryearforRs.15,53,217/-hasbeenshownasincomein theincomeandexpenditureaccountinpursuancetoprovisionsofsection11(3)of theAct.Aspertheassessee,outoftotalapplicationoffund,intheyearunder consideration,theamountofRs.28,16,959/-includestheexpenditureincurred outthefundaccumulatedintheearlieryear.Thus,accordingtotheassesseethe amountaccumulatedintheearlieryearwasdulyofferedtotax.However,theAO dis-agreedwiththesubmissionoftheassesseebyobservingasunder: Fromtheincome&Expenditure,itisseenthatduringtheyeartheassesseehas receivedRs.44,54,163/-asrevenuereceipts,outofthesereceiptsasseseehasmade applicationforRs.28,16,959/-at63,243%whichwasbelow85%ofthereceipts. Therefore,assesseecanaccumulateonlyRs.9,69,080/-(85%ofRs.44,54,163comesto Rs.37,86,038-28,16,959)only.However,theasseseehasaccumulatedRs.25,23,000/- duringtheF.Y2015-16relevanttoA.Y2016-17.fromtheabove,itisseenthatthe assesseehasreaccumulatetheamount.TheassesseehasnotutilizedRs.15,53,217/-in lastyear(i.efifthyear)butreaccumulatepartamount.Theassesseehasutilized ITAno.575/AHD/2023 A.Y.2016-17 5 accumulatedamountwithinfiveyearsifnotutilizedthandeemedincomeistobeshownin thesixthyearu/s.11(3)oftheAct. 11.AggrievedassesseepreferredanappealtotheLd.CIT(A)whoconfirmed theorderoftheAObyobservingasunder: Ihavegonethroughthefactsofthecase.Despitetheappellantmentioninga plethoraofcaselaws,whenitcomestomerits,IagreewiththeAOthatonverificationof FormNo.10,itisseenthattheithasnotmentionedanyamountofutilizationofealier year’saccumulation.Therefore,informationfurnishedinFormno.10filedon21.11.2018 doesnotseentobeaccurate. TheappellanthasshownincomeforRs.15,53,217/-directlyintheincome&expenditure A/c.inthelastyearI.efifthyearwhichwasaccumulationofearlieryear’s(31.03.2011)as pertheBalanceSheetofA.Y2016-17. IthereforerefusetointerferewiththeorderoftheAOonthisground. 12.BeingaggrievedbytheorderoftheLd.CIT(A),theassesseeisinappeal beforeus. 13.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to26and reiteratedthecontentionasmadebeforetheAOduringtheassessment proceedings.TheLd.ARtobuttresshisargumenthasalsodrawnourattentionon form10alongwiththeresolutionplacedonpages7to8ofthepaperbook demonstratingthattheamountofRs.25,26,000/-wasaccumulatedundersection 11(2)oftheAct,outofthereceiptpertainingtotheyearindispute.Thus,itwas contendedbytheld.ARthattheamountaccumulatedintheearlieryearhasbeen dulyincurredintheincomeandexpenditureaccount.Thefundhasbeenapplied intheyearunderconsiderationamountingtoRs.28,16,959/-whichalso representstheexpenditureoutoftheaccumulatedfund. 14.Ontheotherhand,theLd.DRvehementlysupportedtheorderofthe authoritiesbelow. 15.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Itisthegrievanceoftherevenuethattheassessee ITAno.575/AHD/2023 A.Y.2016-17 6 hasre-accumulatedthefundwhichwastobetreatedasincomeunderthe provisionofsection11(3)oftheActamountingtoRs.15,53,217/-only.However, thisfindingoftherevenueiscontrarytothefactsavailableonrecord.Forthis purpose,werefertheformNo.10placeonpages7and8ofthepaperbook.The relevantextractoftheformisreproducedasunder: PIYUSHBHAIS.SHAHonbehalfofMADHUCHAMPAKLALCHARITABLETRUST,hereby bringtoyournoticethatithasbeendecidedbyaresolutionpassedbythetrusteeson 15/09/2016(copyenclosed)that,outoftheincomeofthetrustforthepreviousyears(s), anamountofRs.25,23,000/-percentoftheincomeofthetrustsuchsumasitisavailable attheendofthepreviousyears),shouldbeaccumulatedorsetaparttilltheprevious year(s)ending31sthMarch,2021,inordertoenablethetrusteestoaccumulatesufficient fundsforobjectofthetrust. 15.1Fromtheaboveform10,itisclearlyspeltoutthatthefundofRs. 25,23,000/-wasaccumulatedoutofthecurrentyeargrossreceipt.Thus,itcanbe safelyinferredthattheaccumulatedamountintheearlieryearhasnotbeenre- accumulatedintheyearunderconsideration.Inviewoftheabove,wesetaside thefindingsoftheLd.CIT(A)anddirecttheAOtodeletetheadditionmadeby him.Hence,thegroundofappealoftheassesseeisherebyallowed. 16.Intheresult,theappealfiledbytheassesseeisherebyallowed. OrderpronouncedintheCourton03/04/2024atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated03/04/2024 Manish