Gujarat State Board of School Text Books, Gandhinagar V. The ACIT.,GNR Circle,, Gandhinagar

ITA 796/AHD/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0597 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K PATEL AR SHRI R I PATEL
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Difference of opinion; Condonation of delay
• Section: 234B; 12AA; 6; 12; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 796/AHD/2010 2006-07 GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS VIDHAYAN, SECTOR-10A GANDHINAGAR PAN: AAATG 4671 P (ASSESSEE) THE ACIT GANDHINAGAR CIRCLE GANDHIANGAR (REVENUE) 2. 1022/AHD/2012 2008-09 ASSESSEE THE DCIT CIR. GANDHIANGAR 3. 1045/AHD/2012 2008-09 REVENUE ASSESSEE ASSESSEE BY : SHRI M.K. PATEL, AR REVENUE BY : SHRI R.I. PATEL, DR / DATE OF HEARING 12/08/2016 / DATE OF PRONOUNCEMENT 21/09/2016 / O R D E R PER SHRI AMARJIT SINGH, ACCOUNTANT MEMBER : OUT OF THESE THREE APPEALS; TWO BY THE ASSESSEE AND ONE BY THE REVENUE ARE DIRECTED AGAINST SEPARATE ORDERS OF TH E COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR (CIT(A) IN SHORT) DATED 31/12/2009 ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 2 - AND 22/02/2012 PERTAINING TO ASSESSMENT YEARS (AYS) 2006-07 & 2008- 09 RESPECTIVELY (FOR AY 2008-09 IS CROSS-APPEALS) . 2. THE APPEALS RELATE TO DIFFERENT ASSESSMENT YE ARS, BUT THE FACTS IN ALL THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT , THEREFORE, FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF ALL THE APPEA LS BY WAY OF A CONSOLIDATED ORDER. 2.1. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN I TA NO.796/AHD/2010, PERTAINING TO A.Y.2006-07 WHEREIN THE FOLLOWING GRO UNDS HAVE BEEN TAKEN BY THE ASSESSEE:- (1) THAT ON FACTS AND IN LAW, THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS) HAS GRIEVOUSLY ERRED IN HOLDING THAT THE ASSESSEE IS RUNNING A BUSINESS UNDERTAKING AND THEREBY APPLYING THE PROVI SIONS OF SECTION 11(4) OF THE ACT. (2) THAT ON FACTS AND IN LAW, THE LEARNED CIT(A) HA S GRIEVOUSLY ERRED IN NOT HOLDING THAT THE ASSESSEE IS ENTITLED TO ACCUMULATE 15% OF ITS GROSS INCOME U/S.11(1)(A) OF THE ACT. (3) THAT, IN THE ALTERNATE, AND WITHOUT PREJUDICE T O ABOVE GROUNDS, IF THE CONTENTION OF ASSESSEE ARE REJECTED THE ASSESSE E BE GIVEN EXEMPTION U/S.11(2) OF THE ACT, AND CLAIM BE PERMITTED TO BE INCREASED U/S.11(2) OF THE ACT. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 3 - (4) THAT THE LEARNED CIT(A) OUGHT TO HAVE DELETED T HE CHARGING OF INTEREST U/S.234A AND 234B OF THE ACT. 3. GROUND NO.1 TO 3 ARE INTER-CONNECTED, THEREFORE, THE SAME ARE DECIDED TOGETHER. 3.1. BRIEF FACTS OF THE CASE ARE THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GRIEVOUSLY ERRED IN HOLDING THAT THE ASSESSEE IS RUNNING A BUSINESS UNDERTAKING AND THEREBY APPLYING THE PROVISIONS OF SECTION 11 (4) OF THE IT ACT. THE CASE WAS SELECT ED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.143(3) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VIDE OR DER DATED 27/11/2008 AND THE TOTAL INCOME WAS DETERMINED AT RS.8,58,43,6 30/-. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO), ASSESSE E CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 31/12/20 09 (IN APPEAL NO.CIT(A)GNR/149/2008-09) PARTLY ALLOWED THE APPEA L OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 3.2. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2006-07 ON 31/12/2006 SHOWING NIL INCOME. THE ASSESSEE IS A TR UST CARRYING ON ACTIVITIES OF PREPARING MANUFACTURING AND DISTRIBU TION OF GUJARAT STATE SCHOOL TEXTBOOKS AND OTHER EDUCATIONAL ACTIVITIES A S PER ITS OBJECTS. THE ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 4 - TRUST DISTRIBUTES ALL TEXT BOOKS AND PUBLICATIONS D IRECTLY TO THE PUBLIC THROUGH WHOLESALE DEALERS AND ALSO SUPPLIES TO THE STATE GOVERNMENT AGENCIES. TRUST IS HOLDING A BUSINESS UNDERTAKING W HICH ENGAGED IN PUBLICATION, PRINTING AND DISTRIBUTION OF SCHOOL TE XT BOOKS AND THE INCOME FROM THE UNDERTAKING WAS CLAIMED TO BE EXEMP T U/S.11 OF THE ACT. THE A.O. WAS OF THE VIEW THAT THE INCOME OF THE ASSESSEE IS ASSESSABLE AS PER THE PROVISIONS CONTAINED UNDER SE CTION 11(4) OF THE ACT. THEREFORE, THE ASSESSING OFFICER ASKED THE ASS ESSEE TO SUBSTANTIATE ITS CLAIM OF EXEMPTION UNDER SECTION 11(1) WITH REF ERENCE TO THE PROVISIONS CONTAINED IN SECTION 11(4) OF THE ACT. T HE ASSESSEE HAS STATED THAT ITS ACTIVITIES OF PREPARING, PRINTING A ND DISTRIBUTION OF SCHOOL TEXTBOOK IS AS PER ONE OF THE OBJECTS OF THE TRUST. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AN D STATED THAT AS PER THE PROVISIONS CONTAINED IN SECTION 11(4) FOR THE P URPOSE OF SECTION 11 PROPERTY HELD UNDER TRUST INCLUDES A BUSINESS UNDER TAKING , AND WHEN A CLAIM IS MADE THAT THE INCOME OF ANY SUCH UNDERTAKI NG SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSON IN THE R ECEIPT THEREOF, THE ASSESSING OFFICER SHALL HAVE POWER TO DETERMINE THE INCOME OF SUCH UNDERTAKING IN ACCORDANCE WITH THE PROVISIONS OF TH IS ACT RELATING TO THE ASSESSMENT AND WHERE AT ANY INCOME SO DETERMINED IS IN EXCESS OF INCOME AS SHOWN IN THE ACCOUNTS OF THE UNDERTAKING, SUCH EXCESS SHALL BE DEEMED TO BE APPLIED FOR THE PURPOSE OTHER THAN CHARITABLE OR ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 5 - RELIGIOUS PURPOSES. IN ORDER TO DETERMINE THE INCOM E FROM BUSINESS THE ASSESSING OFFICER HAS RECONSTRUCTED THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE AS UNDER:- EXPENDITURE AMOUNT INCOME AMOUNT ESTABLISHMENT EXPENSES 3,42,72,134/- SALES 70,32,77,388/- AUDIT & LEGAL FEE 71,630/- MISC.INCOME 15,64,997/- EXPENSES INCLUDING PURCHASES AND OPENING STOCK AS PER SCHEDULE- P 107,42,32,832/- INTEREST ON STAFF ADVANCE 3,01,480/- DEPRECIATION AS PER I.T.ACT AS CLAIMED 31,59,951/- CLOSING STOCK 58,59,67,240/- NET PROFIT 17,93,74,558/- 129,11,11,105/- 129,11,11,105/- 3.3. AFTER DETERMINATION OF NET PROFIT AS STATED A BOVE BY THE ASSESSING OFFICER, HE COMPUTED THE INCOME OF THE TRUST AS UND ER:- NET PROFIT FROM BUSINESS 17,93,74,558/- ADD INTEREST INCOME AS SHOWN 12,30,93,634/- 30,24,68,192/- LESS INCOME APPLIED AS SHOWN IN ANNEXURE-I OF THE REPLY 1,39,58,349/- EXEMPTION CLAIMED U/S.11(2) 15,72,95,988/- ALLOWED TO BE SET 4,53,70,228/- 21,66,24,565/- ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 6 - APART U/S.11(1)(A)@15% TOTAL INCOME 8,58,43,627/- ROUNDED OFF 8,58,43,630/- 3.4. AGAINST THE ORDER OF THE ASSESSING OFFICER T HE ASSESSEE HAS FILED APPEAL BEFORE THE LEARNED CIT(A). THE ASSESSEE STA TED BEFORE THE LD.CIT(A) THAT THE ASSESSEE TRUST HAS BEEN SET UP T O AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENERAL AND PRIMARY, SE CONDARY AND HIGHER SECONDARY EDUCATION IN PARTICULAR IN GUJARAT . IN THIS CONNECTION, THE ASSESSEE HAS REFERRED THE VARIOUS CLAUSES OF T HE MEMORANDUM OF ASSOCIATION IN SUPPORT OF ITS CLAIM BEFORE THE LD C IT(A). THE ASSESSEE ALSO STATED BEFORE THE LEARNED CIT(A) THAT THE GUJA RAT GOVERNMENT IS REPRESENTED ON ITS BOARD AND THE OBJECTS OF THE TRU ST ARE THE SAME AS CARRIED OUT BY THE GOVERNMENT. THE ASSESSEE HAS ME NTIONED BEFORE THE LEARNED CIT(A) THAT IN THE PAST THE ASSESSEE WAS EX EMPTED U/S.10(22) TILL 31/03/2009 AND HAS SUBSEQUENTLY BEEN APPROVED UNDER SECTION 10 (23C)(VI) OF THE ACT BY THE CHIEF COMMISSIONER OF INCOME TAX. THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE A SSESSING OFFICER BY STATING AS UNDER:- 2.21. THEREFORE, IT IS CLEAR THAT THE APPELLANT IS BUYING PAPER, PAYING MONEY FOR MANUSCRIPTS, AND GETTING THE BOOKS PRINTED. THEREFORE, IT IS GETTING THESE BOOKS MARKETED THROU GH DISTRIBUTORS ON THE COMMERCIAL TERMS. THE WAY THE ACCOUNTS ARE BEI NG MAINTAINED ARE PURELY COMMERCIAL IN NATURE AS WELL AS IN SPIRI T AND THE END RESULT IS A NET PROFIT. THOUGH IT IS STATED IN THE OBJECTS THAT APPELLANT ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 7 - HAS TO WORK ON NO PROFIT NO LOSS BASIS, THE ENTIRE PROCESS OF PUBLISHING AND SELLING BOOKS IS RESULTING IN COMMER CIAL PROFITS. THE APPELLANT IS USING ITS OWN CASH SURPLUS IN RUNNING ITS BUSINESS. THEREFORE, WHAT THE APPELLANT IS INVOLVED IN IS IN A BUSINESS OF PUBLISHING AND SELLING BOOKS, THOUGH IT MAY HAVE WE LL-DEFINED CUSTOMERS. THERE IS NO OTHER WAY THE APPELLANTS T HESE ACTIVITIES CAN BE DESCRIBED. THE ENTIRE EDIFICE SETUP THEREFORE T ANTAMOUNT TO BEING A BUSINESS UNDERTAKING. 2.22 HENCE, IN VIEW OF ABOVE FACTS, I HOLD THAT T HE ASSESSING OFFICER HAS BEEN QUITE RIGHT IN COMPUTING THE APPELLANTS I NCOME AS NET INCOME FROM BUSINESS UNDERTAKING. I.E. BEING COVERED BY S ECTION 11(4). AS ALREADY STATED, IN SUCH CIRCUMSTANCES, WE ARE GOING TO TREAT SUCH BUSINESS INCOME AS BEING COVERABLE U/S.11(1), 11(2) , 11(3) AND 11(3A), AS CASE BE, AND NOT COVER SUCH INCOME U/S.11(4A) AS I ALSO HOLD THAT THE BUSINESS OF THE ASSESSEE IS ANCILLARY TO ITS OBJECT S OF PROMOTING EDUCATION, IN ITS VARIOUS FACETS. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BE FORE US, THE LEARNED COUNSEL STATED THAT THE ASSESSEE TRUST IS NOT EXIS TING FOR THE PURPOSE OF PROFIT. IT IS ESTABLISHED TO AID AND PROMOTE ADVANC EMENT OF EDUCATION IN GENERAL AND OF PRIMARY, SECONDARY AND HIGHER SECOND ARY EDUCATION IN PARTICULAR, TO PRODUCE SCHOOL TEXTBOOKS, HANDBOOKS FOR TEACHERS, WORKBOOKS AND OTHER EDUCATIONAL LITERATURE USEFUL F OR FURTHERANCE OF TEACHING OR LEARNING IN EDUCATIONAL INSTITUTIONS. I T IS ALSO STATED THAT THE TRUST ENCOURAGE AND PROCURE EXPERT AUTHORS HAVING K NOWLEDGE AND EXPERIENCE OF MODERN METHODS OF EDUCATION IN DIFFE RENT LANGUAGES, TEXTBOOKS ON VARIOUS SUBJECTS SUITED TO THE REQUIR EMENTS OF THE ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 8 - CURRICULA AND SYLLABI PRESCRIBED BY THE GOVERNMENT OF GUJARAT OR OTHER APPROPRIATE AUTHORITY. THE MEMORANDUM OF ASSOCIATIO N FILED BY THE ASSESSEE IS REPRODUCED AS UNDER:- 4.3 AS PER THE WRITTEN SUBMISSION OF THE AUTHORIZE D REPRESENTATIVE, ON WHICH HE BASED HIS ORAL ARGUMENTS, THE APPELLANT TR UST HAS BEEN SET UP TO AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENE RAL AND PRIMARY, SECONDARY AND HIGHER SECONDARY EDUCATION IN PARTICU LAR IN GUJARAT THE TRUST DOES NOT EXIST FOR THE PURPOSE OF PROFIT. FOR THIS PURPOSE, THE AUTHORIZED REPRESENTATIVE CITED THE VARIOUS CLAUSES OF THE MEMORANDUM OF ASSOCIATION. IT WAS STATED THAT - '4. AS PER MEMORANDUM OF ASSOCIATION, THE MAIN OBJE CTS ARE AS PER CLAUSE NO. (3), THE RELEVANT PART OF CLAUSE (3) IS REPRODU CED HERE IN BELOW FOR READY REFERENCE: '3. THE OBJECTS FOR WHICH THE BOARD IS ESTABLISHED ARE: (A) TO AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENERAL AND OF PRIMARY, SECONDARY AND HIGHER SECONDARY EDUCATION IN PARTICU LAR; (B) TO PRODUCE SCHOOL TEXTBOOKS, HAND B OOKS FOR TEACHERS, WORKBOOKS AND OTHER EDUCATIONAL LITERATURE USEFUL FOR FURTHER ANCE OF TEACHING OR LEARNING IN ( EDUCATIONAL INSTITUTIONS; (C) TO ENCOURAGE AND PROCURE EXPERT AUTHORS HAVING KNOWLEDGE AND EXPERIENCE OF MODERN METHODS OF EDUCATION TO WRITE IN DIFFERENT LANGUAGES, TEXTBOOKS ON VARIOUS SUBJECTS SUITED TO THE REQUIRE MENTS OF THE CURRICULA AND SYLLABI PRESCRIBED BY THE GOVERNMENT OF GUJARAT (HEREINAFTER REFERRED TO AS 'GOVERNMENT') OR OTHER APPROPRIATE AUTHORITY IN THAT BEHALF FOR VARIOUS COURSES OF EDUCATION AND TO APPLY FOR AND O BTAIN APPROVAL OR SANCTION OF GOVERNMENT OR OTHER APPROP RIATE AUTHORITY THERETO; (D) TO PRINT, PUBLISH, STOCK, DISTRIBUTE AND SELL O R ENTER INTO ANY ARRANGEMENT FOR PRINTING, PUBLISHING, STOCKING, DISTRIBUTION AN D SALE OF TEXTBOOKS, APPROVED, SANCTIONED OR ASSIGNED BY THE GOVERNMENT OR OTHER APPROPRIATE, ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 9 - AUTHORITY AND ANY OTHER PUBLICATIONS WHICH THE BOAR D MAY DECIDE TO PUBLISH WITH A VIEW TO MAKING THE SAME AVAILABLE AT AFFAIR AND REASONABLE PRICE I.E. ON NO PROFIT NO LOSS BASIS (E) TO UNDERTAKE AND PROMOTE RESEARCH FOR IMPROVEME NT OF CURRICULA FOR PRIMARY SECONDARY AND HIGHER SECONDARY STAGES OF ED UCATION; ' (F) TO UNDERTAKE AND PROMOTE RESEARCH FOR THE PREPA RATION AND PRODUCTION OF SCHOOL TEXTBOOKS AND BOOKS INTENDED FOR SUPPLEMENTA RY READING AT ALL STAGES OF SCHOOL EDUCATION INDICATED IN CLAUSE (E) ABOVE; (G) TO REGULATE AND FIX PRICES OF THE PUBLICATIONS OF THE BOARD (H) TO ADVISE AND ASSIST THE GOVERNMENT AND OTHER A PPROPRIATE AUTHORITIES IN ALL MATTERS CONCERNING EXPERIMENTAL DEVELOPMENT AND REVISION OF CURRICULA, TEXTBOOKS AND SUPPLEMENTARY READING MATERIAL WHEN C ALLED UPON TO DO SO; (I) TO ASSESS UTILITY OF TEXTBOOKS, TEACHERS' HAND- BOOKS AND OTHER EDUCATIONAL AID AND LITERATURE WHETHER F PRODUCED BY THE B OARD OR NOT; (J) TO UNDERTAKE PRINTING, SALE AND DISTRIBUTION OF BOOKS AND LITERATURE USEFUL OR NECESSARY FOR ADVANCEMENT OF EDUCATION IN ALL IT S BRANCHES; (K) TO ESTABLISH AND MAINTAIN LIBRARIES TO FACILITA TE RESEARCH IN GENERAL AND IN CURRICULA, SYLLABI AND TEXTBOOK PRODUCTION IN PARTI CULAR; (1).................' 5. A PERUSAL OF THE ABOVE OBJECTIVES WOULD CLEARLY SHOW THAT THE BOARD IS RESPONSIBLE FOR UNDERTAKING ALL THE ACTIVITIES RIGH T FROM PROCUREMENT OF EXPERT AUTHORS TO WRITE TEXT BOOKS IN DIFFERENT LANGUAGES ON VARIOUS SUBJECTS SUITED TO THE REQUIREMENTS OF THE CURRICULA AND SYLLABUS PRES CRIBED BY THE GOVERNMENT OF GUJARAT AND THEREAFTER TO PRINT, PUBLISH, STOCK, DISTRIBUTE SCHOOL TEXT BOOKS, HANDBOOK FOR TEACHERS, WORK BOOKS AND OTHER EDUCATI ONAL LITERATURE USEFUL FOR TEACHING OR LEARNING IN EDUCATIONAL INSTITUTIONS AL L ACROSS GUJARAT AT FIXED PRICE REGULATED BY THE BOARD. FROM THE ABOVE, IT CA N BE SEEN THAT THE TRUST IS ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 10 - EXISTING SOLELY AS AN EDUCATIONAL INSTITUTION AND N OT ENGAGED WITH PROFIT MOTIVES IN ANY BUSINESS AS SUCH. 6. CLAUSE (5) OF THE MEMORANDUM OF ASSOCIATION READ S AS UNDER: '5. THE INCOME AND PROPERTY OF THE BOARD HOWSOEVER DERIVED SHALL BE APPLIED ONLY TOWARDS THE PROMOTION OF THE OBJECTS O F THE BOARD AS SET FORTH IN THIS MEMORANDUM OF ASSOCIATION.'' 4.1. THE ASSESSEE HAS REFERRED TO THE DIFFERENT PAGES IN THE PAPER BOOK RELATING TO THE RULES AND REGULATIONS, GENERAL MEETING OF MEMBERS, GOVERNING BODY, PROCEEDINGS OF THE GOVERNI NG BODY, POWERS AND DUTIES OF THE GOVERNING BODY, ACCOUNTS AND AUDI T OF THE TRUST, ORDER UNDER SECTION 12AA OF THE IT ACT 1961 ISSUED BY THE COMMISSIONER OF INCOME TAX, ETC. 4.2. THE LEARNED COUNSEL REFERRED AND RELIED UPON THE CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VS. ASSISTANT CO MMISSIONER OF INCOME TAX OF THE COORDINATE BENCH OF ITAT AHMEDABA D 2011 129 ITD 73/(2010)8 TAXMANN.COM 210 (AHD.). THE LEARNED COUNSEL STATED THAT IN THE ASSESSMENT YEAR 2008-09 THE IDENTICAL I SSUE HAS BEEN DECIDED IN THE FAVOR OF THE ASSESSEE BY THE LEARNED CIT(A). 5. THE LEARNED DR RELIED ON THE ORDER OF LOWER AUT HORITIES. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 11 - 6. WE HEARD BOTH THE PARTIES AND THE PERUSED REL EVANT MATERIAL ON THE RECORD CAREFULLY. WE FIND THAT THE ASSESSEE IS A TRUST REGISTERED UNDER SECTION 12AA OF THE ACT BY THE COMMISSIONER OF INCO ME TAX GANDHINAGAR VIDE ORDER DATED 23RD OF MARCH-2006 WIT H EFFECT FROM JUNE 01.04.1998. THE ASSESSEE WAS DULY REGISTERED U NDER SECTION 12AA OF THE ACT AND CLAIMED DEDUCTION UNDER SECTION 11 OF THE INCOME TAX ACT. WE NOTICED THAT IN THE ASSESSMENT YEAR 2008-09 THE IDENTICAL ISSUE HAS BEEN DECIDED IN THE FAVOR OF TH E ASSESSEE BY THE LEARNED CIT(A). WE ALSO OBSERVED THAT IDENTICAL IS SUE WAS ALSO CONSIDERED IN DETAIL IN THE CASE OF GUJARAT INDUSTR IAL DEVELOPMENT CORPORATION BY THE HON'BLE ITAT AHMEDABAD BENCH C D ATED 03/12/2010 IN ITA NO. 3252/AHD/2009 FOR ASSESSMEN T YEAR 2006- 07. SOME OF THE IMPORTANT OBSERVATION AND CONCLUSIO N OF THE HON'BLE ITAT IN THE ABOVE CITED DECISION OF GUJARAT INDUSTR IAL DEVELOPMENT CORPORATION ARE REPRODUCED AS UNDER:- 5.1 THE FIRST ISSUE ON SIMILAR FACTS WAS CONSIDERE D IN DETAIL IN THE CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION BY TH E HON'BLE ITAT, AHMEDABAD BENCH 'C' DATED 03/12/2010 IN FTA NO.3252 /AHD/2009 FOR A.Y.2006-07. HERE, IT WOULD BE WORTHWHILE TO REPROD UCE SOME OF THE IMPORTANT OBSERVATIONS AND CONCLUSIONS OF THE HON'B LE ITAT: '7.1. IT WAS ARGUED THAT THE ASSESSEE HAD CHALLENGE D THE ORDER OF LEARNED CIT(APPEALS) WHEREIN IT WAS HELD THAT THE I NCOME OF THE ASSESSEE IS ASSESSABLE AS BUSINESS INCOME BY INVOKI NG THE PROVISIONS ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 12 - OF SECTION 11(4) OF THE ACT. IT WAS FURTHER CLARIFI ED THAT IF THE ASSESSEE SUCCEEDS ON THIS MAIN GROUND THAT -THE PROVISIONS OF SECTION 11(4) WERE INAPPLICABLE, THEN THERE WOULD BE NO NECESSITY TO COMPUTE THE INCOME AND, CONSEQUENTLY, THE RELIANCE PLACED BY LE ARNED CIT(APPEALS) ON BOARD'S CIRCULAR BECOMES REDUNDANT. HOWEVER, CONSIDERING THE LEGALITY OF THE ISSUE RAISED BY THE ASSESSEE, THE TRIBUNAL HAS ADMITTED THE ADDITIONAL GROUNDS. THE D ISCUSSION MADE WHILE ACCEPTING THE ADDITIONAL GROUND HAS ALSO REV EALED THAT THE COMPUTATION OF INCOME AS PER THE CBDT CIRCULAR WOUL D ONLY BE RELEVANT IF A FINDING IS GIVEN THAT THE PROVISIONS OF SECTION 11 (4) SHOULD BE APPLICABLE ON THE FACTS OF THE CASE. THER EFORE, CONSIDERING THE OVERALL SITUATION AND THE ARGUMENTS OF BOTH THE SIDES, WE DEEM IT PROPER TO FIRST DECIDE THE APPLICABILITY OF THE PRO VISIONS OF SECTION 11(4) OF THE ACT AND IN THIS MANNER WE SHALL ALSO A DJUDICATE GROUND NO.1 OF THE ASSESSEE. 8.11. THE CRUX OF THE DECISION IS THAT EVEN IF A BU SINESS UNDERTAKING IS A PROPERTY OF THE TRUST BUT IF THE BUSINESS CARRIED O N IS NOT MEANT TO FULFILL THE OBJECTS OF THE TRUST, THEN ALSO SUCH A BUSINESS INCOME IS OUT OF THE EXEMPTION CLAUSE. WE THINK THIS IS THE PURPOSE OF T HE ENACTMENT OF THIS SECTION THAT OUT OF THE SEVERAL PROPERTIES OF A TRU ST, IF THERE IS A PROPERTY HELD BY THE TRUST CARRYING ON BUSINESS WHICH IS FOU ND TO BE NOT FOR THE PURPOSES OF THE CHARITABLE OBJECTS, THEN BY INVOKIN G SECTION 11(4) THAT INCOME CAN BE TAXED. 8.12. FROM THE ABOVE DISCUSSION, IT EVOLVES THAT TH E INCOME DERIVED FROM A BUSINESS UNDERTAKING HELD BY A TRUST IS NOT TO BE GRANTED EXEMPTION ABSOLUTELY AND WITHOUT CONDITION. THIS SE CTION, THUS, PROHIBITS THE EXCLUSION OF THE BUSINESS INCOME THOU GH THERE MAY BE DIFFERENCE OF OPINION ABOUT THE COMPUTATION OF SUCH A BUSINESS INCOME BETWEEN THE TRUSTEE AND THE ASSESSING OFFICER. FOR EXAMPLE, AN ITEM OF EXPENDITURE GENUINELY INCURRED MAY BE HELD BY THE A SSESSING OFFICER AS EXCESSIVE OR CAPITAL IN NATURE AND, HENCE, LIABLE TO BE DISALLOWED. SUCH AN AMOUNT CAN THEREFORE BE CHARGEABLE TO TAX IN THE YEAR OF INCOME FOR WHICH THE COMPUTATION WAS MADE. ON ACCOUNT OF THIS FACT, THIS IS MERELY ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 13 - A MACHINERY SECTION THROUGH WHICH A COMPUTATION IS TO BE MADE IN RESPECT OF THE INCOME WHICH IS EXCESSIVE AND EARNED FROM BUSINESS ACTIVITY AND NOT MEANT FOR THE PURPOSES OF THE TRUS T AND ON THE BASIS OF SUCH A FINDING THE SAME CAN BE DEEMED TO BE A TAXAB LE INCOME. 10. THEREFORE NOW WE HAVE TO EXAMINE WHETHER THE AC TIVITIES OF THIS ASSESSEE CAN BE SAID TO BE GOVERNED BY SECTION 2(15 ) WHEREIN AN EXPRESSION IS 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. THIS EXPRESSION WOULD PRIMA-FACIE INCLUDE ALL OBJECTS WH ICH PROMOTE THE WELFARE OF THE GENERAL, PUBLIC. ONE HAS TO EXAMINE THE PRIMARY PURPOSE AND THE DOMINANT OBJECT FOR WHICH THIS CORP ORATION CAME INTO EXISTENCE. UNDISPUTEDLY IT WAS FORMED TO PROMO TE THE WELFARE OF THE GENERAL PUBLIC. AS FAR AS THIS ASPECT IS CONCER NED, WE HAVE NOTHING MUCH TO ADD BUT TO FOLLOW THE FINDINGS OF HON'BLE SUPREME COURT PRONOUNCED IN ASSESSEE'S OWN CASE(SUPRA) [227 ITR 414]. THE HON'BLE APEX COURT HAS SAID THAT THE APPELLANT WAS CREATED UNDER THE GUJARAT INDUSTRIAL DEVELOPMENT ACT, 1962. THE APPELLANT HAD THE RIGHT TO HOLD PROPERTIES AND THE RIGHT TO S UE AND BE SUED IN ITS OWN NAME. DESCRIBING THE FUNCTIONS OF THE CORPORATION, IT WAS MENTIONED THAT PROPER PLANNING IS ABSOLUTELY NECESS ARY FOR CREATION OF AN INDUSTRIAL AREA. SUCH AS, ROADS, SANITATION, PARK, OTHER AMENITIES, ETC. ARE TO BE PROVIDED IN A PLANNED MAN NER IN AN INDUSTRIAL AREA. AS PER THE HON'BLE APEX COURT, EVE N AN EDUCATIONAL INSTITUTION MAY HAVE TO BE PROVIDED IN SUCH INDUSTR IAL COMPLEX. THEREFORE, DEVELOPMENT OF AN INDUSTRIAL AREA WOULD HAVE ITS DIRECT IMPACT ON THE DEVELOPMENT OR IMPROVEMENT OF THAT PA RT OF THE CITY WHERE SUCH AREAS ARE LOCATED. FINALLY IT WAS HELD T HAT SUCH AUTHORITIES BEING CONSTITUTED BY LAW FOR FACILITATI NG ALL KINDS OF DEVELOPMENT OF CITIES, TOWNS AND VILLAGES FOR PUBLIC PURPOSES, THEREFORE SHOULD NOT BE SUBJECTED TO THE LIABILITY TO PAY INC OME TAX, HENCE, ENTITLED TO EXEMPT FROM TAX U/S 10(20A) OF T HE IT ACT. THE PURPOSE OF CAREFUL READING OF THIS JUDGEMENT IS TO ASCERTAIN THE OBJECTS OF THE TRUST AND ALSO TO VERIFY WHETHER SUC H OBJECTS HAD FALLEN UNDER THE DEFINITION OF SECTION 2(15) OF THE IT ACT . ACCORDING TO US, THERE SHOULD NOT BE ANY DISPUTE OR MISUNDERSTANDING THAT THE OBJECTS ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 14 - OF THIS APPELLANT ARE VERY MUCH COVERED, AS HELD AB OVE, UNDER THE DEFINITION OF SECTION 2(15) OF THE I.T. ACT (EMPHASIS SUPPLIED). 11. AFTER HOLDING THE APPLICABILITY OF SECTION 2(15 ) OF THE IT ACT IN FAVOUR OF THE ASSESSEE, THE NEXT STEP IS TO SEE WHE THER THERE WAS ANY IMPLICATION OR IMPORTANCE OF GRANTING REGISTRATION U/S.I2AA OF THE IT ACT TO THIS ASSESSEE. SECTION 12AA PRESCRIBES THAT WHILE GRANTING REGISTRATION, THE LD. COMMISSIONER HAS TO SATISFY H IMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION. ALSO THE COMMI SSIONER HAS TO EXAMINE THE GENUINENESS OF ITS ACTIVITIES. ONCE UND ISPUTEDLY, REGISTRATION U/S12AA OF THE IT ACT HAS BEEN GRANTED , THEREFORE, IT CAN BE PRESUMED THAT THESE TWO ASPECTS MUST HAVE BEEN,, THOROUGHLY VERIFIED BY THE LD. COMMISSIONER BEFORE GRAFTING TH E REGISTRATION. WE MAY LIKE TO CLARIFY, AT THIS JUNCTURE, THAT MERELY HOLDING SUCH A REGISTRATION CERTIFICATE DOES NOT GRANT A BLANKET E XEMPTION TO A TRUST. THE PROCEDURE OF CALCULATION OF EXEMPTION IN RESPEC T OF INCOME FROM PROPERTY HELD UNDER TRUST IS PRESCRIBED UNDER SECTI ONS 11 & 13 OF THE I.T.ACT. SECTION 11(4) IS, THEREFORE, ONE OF THE PR OCEDURES THROUGH WHICH AN INCOME ARISING FROM THE PROPERTY HELD BY T HE TRUST CAN BE TREATED AS 'A BUSINESS UNDERTAKING' AND INCOME SO DETERMINED IN EXCESS OF THE INCOME SHOWN IN THE ACCOUNTS OF THE U NDERTAKING BE DEEMED TO BE APPLIED 'OTHER THAN CHARITABLE PURPOSES'. THIS IS THE ONLY SECTION WHICH EMPOWERS THE ASSESSING OFFICER T O DETERMINE THE INCOME OF SUCH AN UNDERTAKING. ONE OF THE IMPORTANT ASPECTS IS THAT THE EXCESS INCOME SO COMPUTED SHOULD BORNE OUT OF T HE ACCOUNTS OF THE SAID UNDERTAKING. WHICH MEANS THAT SUCH AN UNDE RTAKING SHOULD HAVE ITS SEPARATE BOOKS OF ACCOUNT THAN THE BOOKS O F ACCOUNT OF THE CHARITABLE INSTITUTION/TRUST IF IT IS ONE OF THE CO NSTITUENT OF THE PROPERTIES HELD BY THE TRUST. THOSE ACCOUNTS ARE, T HUS, SUBJECT TO SCRUTINY BY THE ASSESSING OFFICER FOR THE PURPOSE O F THE INVOCATION OF SECTION 11(4) OF THE I.T.ACT. IF INCOME SO DETERMIN ED ON SCRUTINY OF THOSE INDEPENDENT ACCOUNTS WAS IN EXCESS, THEN THE QUESTION HAD COME UP HOW TO DEAL WITH SUCH AN EXCESS INCOME. TO OVERCOME THIS PROBLEM, THE STATUTE HAS PROVIDED A METHOD IN SECTI ON 11 (4) OF THE I.T.ACT. THE SCOPE AND THE AMBITS OF THIS SECTION A RE, THEREFORE, ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 15 - LIMITED. CONTRARY TO THIS, ADMITTED FACTUAL POSITIO N IS THAT THE ASSESSEE DOES NOT HAVE TWO SETS OF ACCOUNTS AND THE ENTIRE ACTIVITIES OF THE ASSESSEE WAS HELD AS BUSINESS ACTIVITIES. THIS IS THE MAIN CAUSE OF GRIEVANCE THAT THOUGH THE ACTIVITY OF THE ASSESS EE IS TO PROMOTE INDUSTRY FOR THE BENEFIT OF PUBLIC AT LARGE AND THE INCOME SO GENERATED ON LEASING OUT OF THE PLOTS/LAND, THE SAM E HAS ALSO BEEN EXCLUSIVELY UTILIZED FOR THOSE LISTED OBJECTS OF TH E INSTITUTION, THEREFORE, THERE WAS NO SCOPE TO INVOKE SECTION 11( 4) OF THE I.T.ACT. THERE IS NO ALLEGATION OF THE REVENUE DEPARTMENT THAT ANY PART OF THE INCOME OF THE GIDC WAS MISAPPROPRIATED OR EXPLOITED OTHER THAN THE OBJECTS OF THE TRUST. ONLY UNDER A DEEMING PROV ISION IT WAS HELD SO. THE FALLACY ON THE PART OF THE REVENUE IN HOLDI NG SO, AS PER OUR OBSERVATION, IS THAT FIRST IT WAS PRESUMED THAT IT WAS A BUSINESS UNDERTAKING AND THEN UNDER A FICTION THE INCOME WAS DEEMED AS NOT APPLIED FOR PUBLIC BENEFIT. 12. BEFORE WE CONCLUDE LET US SEE WHETHER AT ALL TH ERE WAS AN ELEMENT OF 'BUSINESS' IN THE ACTIVITY OF THIS CORPORATION. THE DEFINITION OF THE TERM ' BUSINESS' AS PER SEC. 2(13) IS AS UNDER:- SECTION 2(13) 'BUSINESS' INCLUDES ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATU RE OF TRADE, COMMERCE OR MANUFACTURE; 13. THE FERVENT ARGUMENT OF LD.CIT DEPARTMENTAL REP RESENTATIVE MR.JINDAL, IN THIS REGARD, WERE THAT THE DEFINITION OF BUSINESS IS VERY WIDE AS DEFINED IN THE ACT AND THIS DEFINITION IS A LSO NOT EXHAUSTIVE. AS PER HIS ARGUMENTS THIS CLAUSE BEING AN INCLUSIVE CLAUSE, THEREFORE, NOT ONLY THE FOUR ITEMS AS ENUMERATED IN THE DEFINI TION, BUT THE OTHER ACTIVITIES IF OF THE LIKE NATURE SHALL ALSO BE RECK ONED IN BUSINESS. THERE IS NO DISPUTE ABOUT THIS PRIMARY ARGUMENT BEC AUSE THE WORD 'BUSINESS' CONNOTES A LARGE IMPORT. THERE ARE SEVER AL DECISIONS ON THE BASIS OF WHICH NOW IT IS SETTLED THAT ANY ACTIV ITY OF COMMERCE AND ANY ADVENTURE IN THE NATURE OF TRADE DOES FALL WITH IN THIS DEFINITION. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 16 - AT PRESENT, THERE IS NO NECESSITY TO EXHAUSTIBLY DE AL WITH THIS DEFINITION AND WE ARE BOUND TO ACCEPT THAT THE ASSE SSEE CAN BE SAID TO BE AN UNDERTAKING WHICH HAS CARRIED OUT AN ADVEN TURE IN THE NATURE OF TRADE. PURCHASE OF LAND AND SALE OF LAND BEING THE PRIMARY ACTIVITY OF THIS ORGANIZATION CAN BE SAID T O BE A BUSINESS ACTIVITY (EMPHASIS SUPPLIED) BUT MERELY BY HOLDING THAT TH E UNDERTAKING IS A 'BUSINESS UNDERTAKING' WHETHER THE PROFITS ARISING THERE FROM CAN BE SUBJECTED TO TAX BY INVOKING SECT ION 11(4) OF THE TT ACT? THIS SECTION SAYS THAT IN RESPECT OF SUCH AN U NDERTAKING WHERE A CLAIM IS MADE THAT THE INCOME ARISING THERE FROM NO T TO BE INCLUDED IN THE TOTAL INCOME, THEN THIS SECTION MUST NOT BE APPLIED. THIS SECTION CAN BE APPLIED WHERE THE ASSESSING OFFICER INVOKES THE POWER TO DETERMINE THE INCOME OF SUCH AN UNDERTAKING AND THE REUPON DETERMINED AN INCOME WHICH IS IN EXCESS OF THE INCO ME AS SHOWN IN THE ACCOUNTS OF THE UNDERTAKING, THEN SUCH EXCESS I NCOME SHALL BE DEEMED TO BE THE INCOME NOT APPLIED FOR THE PURPOSE S OF THE TRUST. WHAT THIS TERM 'EXCESS' CONNOTES IS ALSO TO BE EXAM INED. IN OUR OPINION, IF ON EXAMINATION OF INCOME AND EXPENDITUR E ACCOUNT, IT IS FOUND THAT SOME PART OF THE RECEIPTS ARE NOT UTILIZ ED OR THE EXPENDED TOWARDS THE OBJECT OF THE TRUST, THEN ONLY THAT PAR T CAN BE HELD AS AN EXCESS INCOME AND NATURALLY SUBJECT TO TAX. IT MEAN S THAT THE ASSESSING OFFICER HAS TO EXAMINE THE NATURE OF RECE IPTS AND THE NATURE OF EXPENDITURE AND IF ON THE BASIS OF THAT E XAMINATION, IT IS FOUND THAT A PART OF THEM ARE NOT MEANT FOR THE PUR POSES OF THE CHARITY OR NOT UTILIZED FOR THE OBJECT OF GENERAL P UBLIC UTILITY, THEN SUCH AN EXCESSIVE INCOME OUGHT TO BE HELD TAXABLE A ND, THEREFORE, SUCH AN EXCESS SHALL BE DEEMED TO BE APPLIED TO PUR POSES OTHER THAN CHARITABLE PURPOSES. IN RESPECT OF SUCH AN INCOME T HE UNDERTAKING CANNOT CLAIM THAT THE SAME SHOULD ALSO NOT BE INCLU DED IN THE EXEMPTED TOTAL INCOME. APPLYING THIS TEST ON THE PRESENT SET OF FACTS OF THE CASE, IT IS EVIDENT THAT THOUGH THE ASSESSIN G OFFICER HAS COMPUTED THE PROFITS ON TRANSFER OF LAND OR PLOTS B UT IT WAS NOT THE CASE THAT THE PROFITS SO GENERATED WERE NOT WITHIN THE MAIN PROVISIONS OF SECTION 11 OF THE IT ACT, (EMPHASIS SUPPLIED). EVEN IF THE ASSESSEE HAS EARNED PREMIUM PRICE ON LEASE OF P LOT AND LAND FOR ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 17 - SALE BUT IF THE ENTIRE EXPENDITURE AND THE PROFIT E ARNED THERE FROM WAS EXCLUSIVELY USED FOR THE LAID DOWN OBJECTS THEN TO BE COVERED BY THE MAIN SEC.11. IN THE PRESENT CASE THE UNDISPUTED FAC T WAS THAT THE SAME WAS UTILIZED FOR THE PURPOSES OF THE OBJECT OF THE TRUST. RATHER, IT IS ALSO WORTH TO NOTE THAT THE SURPLUS, IF ANY, REM AINED WITH THE ASSESSEE HAS TO BE INVESTED AS PER THE GUIDELINES A ND THE NORMS SET OUT UNDER GID ACT. THEREFORE, WE ARE OF THE CONSCIE NTIOUS VIEW THAT EVEN IF THIS UNDERTAKING MAY COME WITHIN THE PURVIEW OF 'BUSINESS UNDERTAKING' BUT BEING NO EXCESS INCOME WAS FOUND U TILIZED OTHER THAN FOR THE PURPOSES OF THE OBJECT OF THE TRUST, HENCE, OUT OF THE AMBITS OF THE PROVISION OF SECTION 11(4) OF THE IT ACT. (EMPHASIS SUPPLIED)' 6.1 IT IS ALSO NOTICED THAT DURING THE ASSESSMENT YEAR 2008 2009 THE LEARNED CIT(A) RELIED ON THE CASE OF GUJARAT INDUST RIAL DEVELOPMENT CORPORATION DECIDED BY THE ITAT AHMEDABAD BENCH AN D ALLOWED THE CLAIM OF THE ASSESSEE ON THE IDENTICAL ISSUE. 6.2. AFTER CONSIDERING THE ABOVE FACTS AND LEGAL FINDINGS WE FIND THAT THE PROFITS OF THE BUSINESS UNDERTAKING EARNED BY A SSESSEE IS UTILIZED TOWARDS THE LAID DOWN OBJECTIVE OF THE TRUST COVERE D WITHIN THE MAIN PROVISION OF SECTION 11 OF THE INCOME TAX ACT 1961 . THE UNDERTAKING BY A VIRTUE OF ITS ACTIVITIES COMES IN PURVIEW OF THE BUSINESS UNDERTAKING BUT BEING NO EXCESS INCOME WAS FOUND UT ILIZED OTHER THAN FOR THE PURPOSES OF THE OBJECT OF THE TRUST, HENCE IT IS OUT OF THE AMBITS OF THE PROVISIONS OF SECTION 11(4) OF THE OF THE IT ACT.WE OBSERVED ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 18 - THAT THE CASE OF THE ASSESSEE IS COVERED BY IDENTIC AL ISSUE DECIDED IN THE CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION BY THE COORDINATE BENCH OF HON'BLE ITAT AHMEDABAD. THEREFORE, WE ARE OF THE VIEW THAT EVEN THIS UNDERTAKING MAY COME WITHIN THE PURV IEW OF BUSINESS UNDERTAKING BUT NO EXCESS INCOME WAS FOUND UTILIZED OTHER THAN FOR THE PURPOSE OF THE OBJECT OF THE TRUST, HENCE, OUT OF T HE AMBITS OF THE PROVISION OF SECTION 11(4) OF THE IT ACT. 6.3. THE SECOND GROUND OF THE ASSESSEE THAT IT I S ENTITLED TO ACCUMULATE 15% OF ITS GROSS INCOME UNDER SECTION 1 1(1)(A) OF THE ACT:- 6.4. IN THIS CONNECTION, THE LEARNED COUNSEL STA TED THAT ACCUMULATION OF INCOME AT THE RATE OF 15% U/S 11(1)(A) IS ALLOWA BLE ON GROSS INCOME AND NOT ON NET INCOME. THE LEARNED COUNSEL FILED A PAPER BOOK CONTAINING THE FOLLOWING JUDICIAL ENDORSEMENTS ON WHICH THE RELIANCE WAS PLACED :- 1. 248 ITR 1 (SC) PROGRAM FOR COMMUNITY ORGANIZ ATION 2. 272 ITR (AT) 67 (MUMBAI- SPECIAL BENCH) BAI S ONABAI HIRJI AGIARY TRUST. 3. 163 ITR 832 (MP) PARSI ZORASTRIAN ANJUMAN TRUST MHOW 4. 131 ITD 335 (LUCKNOW) KRISHI UTPADAN MANDLI SAMI TI 5. ITA NO. 664 /BANG/2015-PUBLIC EDUCATION SOCIETY- ORDER DATED 25/08/2015. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 19 - 6.5. THE LEARNED DR RELIED ON THE DECISION OF IT AT BANGALORE AND STATED THAT IDENTICAL ISSUE CAME BEFORE THE HON'BL E ITAT, BANGALORE, IN THE CASE OF SECRETARY, AGRICULTURAL PRODUCE MARK ETING 128 ITD 166,WHERE IT HAS BEEN DECIDED AS UNDER:- 5.2 NOW, COMING TO THE ISSUE OF WHETHER ACCUMULATI ON IS TO BE COMPUTED ON NET INCOME DETERMINED ON COMMERCIAL PRI NCIPLES OR GROSS RECEIPTS. THE VERY ISSUE CAME BEFORE THE HON'BLE IT AT, BANGALORE, RECENTLY IN THE CASE OF SECRETARY, AGRICULTURAL PRO DUCE MARKETING COMMITTEE 128 ITD 166, WHERE IT HAS BEEN DECIDED AS UNDER: 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIALS ON RECORD. THE ASSESSING OFFICER'S COMPUTATION OF INCO ME AVAILABLE FOR ACCUMULATION UNDER SECTION LL(L)(A) IS CORRECT AND IS IN ACCORDANCE WITH LAW. AS RIGHTLY POINTED OUT, FOR AC CUMULATION OF INCOME UNDER SECTION LL(L)(A), IT IS TO BE COMPUTED ON COMMERCIAL PRINCIPLES AND NOT ON GROSS RECEIPTS. THE LEARNED D R HAS RIGHTLY RELIED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF GEM & JEWELLERY EXPORT PROMOTION COUNCIL (SUPRA), WHICH IN TURN, F OLLOWED THE DECISION OF THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF CIT V. RAO BAHADUR CALAVALA CUNNAN CHETTY CHARITIES [1982] 135 ITR 485. THE WORDS USED IN SECTION 11(1)(A) IS 'INCOME' AND NOT GROSS RECEIPTS'. THE DECISION OF THE HON'BLE SUPREME COUR T RELIED ON BY THE ASSESSEE IN THE CASE OF PROGRAMME FOR COMMUNITY ORGANIZATION (SUPRA) IS MISPLACED. THE HON'BLE 1 SU PREME COURT; HAS ONLY HELD THAT EXEMPTION UNDER SECTION 11(1)(A) IS TO BE COMPUTED NOT WITH REFERENCE TO THE INCOME LEFT ' AF TER APPLICATION BUT ON INCOME BEFORE APPLICATION AND NOWHERE IT WAS HELD THAT EXEMPTION IS TO BE COMPUTED WITH REFERENCE TO GROSS RECEIPT. THEREFORE, WE HOLD THAT THE ASSESSING OFFICER IS JU STIFIED IN ALLOWING 15 PER CENT ON RS. 88,29,648 WHICH WORKS OUT TO RS. 13,24,447 AS AGAINST ASSESSEE'S CLAIM OF RS. 14,22,876 (15 PER C ENT ON 94,85,843).' ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 20 - 6.6 WE FIND THAT THE WORDS USED IN SECTION 11(1 )(A) IS INCOME AND NOT GROSS RECEIPTS. THE ABOVE CITED DECISION OF THE ITAT IS ON THE IDENTICAL ISSUE IN WHICH IT HAD BEEN DECIDED THAT INCOME UNDER SECTION 11(1)(A) IT IS TO BE COMPUTED ON A COMMERCIAL PRINC IPLES AND NOT ON GROSS RECEIPTS. SIMILARLY, IN THE CASE OF THE ASSES SEE IN THE ASSESSMENT YEARS 200809 THE LD.CIT(A) DECIDED THE IDENTICAL MATTER ACCORDING TO THE DECISION OF ITAT BANGALORE THAT ACCUMULATI ON OF INCOME AS MANDATED BY SECTION 11(1)(A) IS WITH REFERENCE TO N ET INCOME FROM PROPERTIES HELD UNDER TRUST. IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS THE GROUND OF APPEAL OF THE ASSESSEE THAT ACCUMULATION OF INCOME AT THE RATE OF 15% U/S 11(1)(A) ALLOWABLE O N GROSS INCOME AND NOT ON NET INCOME IS REJECTED. 7. FOURTH GROUND OF APPEAL IS AGAINST CHARGIN G OF INTEREST U/S.234A & 234B OF THE ACT. THIS GROUND IS CONSEQUENTIAL IN N ATURE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AY 2006-07 IS PARTLY ALLOWED. 9. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN IT A NO.1022/AHD/2012 AND REVENUES APPEAL IN ITA NO.104 5/AHD/2012 FOR AY 2008-09. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 21 - 9.1. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- (1) THAT ON FACTS, AND IN LAW, THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN HOLDING THAT THE ACTIVITY OF THE APPELLANT IS A BUSINESS UNDERTAKING WITHIN THE MEANING OF SECTION 11(4) OF THE ACT. (2) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN HOL DING THAT THE ACCUMULATION OF INCOME U/S.11(1)(A) OF THE ACT IS WITH REFERENCE TO NET INCOME AND NOT WITH REFERENCE TO THE GROSS RECEIPT S OF THE APPELLANT. (3) THAT ON FACTS AND IN LAW, THE LEARNED CIT(A) H AS GRIEVOUSLY ERRED N NOT CORRECTLY WORKING OUT THE INCOME OF THE APPELLA NT IN TERMS OF SECTION 11(1)(A) OF THE ACT. (4) THAT THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED I N NOT CONSIDERING THE REVISED FORM NO.10 AND THE PRAYER FOR ACCUMULATION OF INCOME WITHIN THE MEANING OF SECTION 11(2) OF THE ACT, AND THEREB Y, NOT FOLLOWING THE BINDING DECISION OF HONBLE JURISDICTIONAL HIGH COU RT OF GUJARAT. 9.2. GROUND NO.1 FACTS OF THIS ISSUE IS SIMILAR TO THE FACTS CITED SUPRA IN THIS ORDER PERTAINING TO THE AY 2006-07. AS DECIDED SUPRA ON THE IDENTICAL GROUND FOR AY 2006-07 THE CASE OF THE ASSESSEE FOR THE A.Y .2007-08 IS COVERED BY THE CASE OF GUJARAT INDUSTRIAL DEVELOPMENT CORPO RATION DECIDED BY THE HONBLE ITAT AHMEDABAD BENCH C DATED 03/12/2 010 IN ITA NO.3252/AHD/2009 FOR AY 2006-07 WHEREIN IT WAS HELD THAT THE UNDERTAKING MAY COME WITHIN THE PURVIEW OF BUSINES S UNDERTAKING BUT BEING NO EXCESS INCOME WAS FOUND UTILIZED OTHER THA N FOR THE PURPOSE OF ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 22 - THE OBJECT OF THE TRUST, HENCE, OUT OF THE AMBITS O F THE PROVISIONS OF SECTION 11(4) OF THE I.T.ACT. AS DECIDED SUPRA FOR AY 2006-07 ON THE IDENTICAL ISSUE, ON THE SAME REASONING THE GROUND O F APPEAL OF THE ASSESSEE FOR A.Y.2007-08 IS REJECTED. 10. GROUND NOS.2 & 3 THE SIMILAR FACTS IDENTICAL ISSUE HAS BEEN DECIDED FOR AY 2006-07 AS SUPRA IN THE CASE OF THE ASSESSEE AFTER MAKING R ELIANCE ON THE JUDGEMENT OF HONBLE ITAT BANGALORE IN THE CASE OF SECRETARY, AGRICULTURAL PRODUCE MARKETING COMMITTEE (128 ITD 1 66) STATING THAT ACCUMULATION OF INCOME UNDER SECTION 11(1)(A) IS TO BE COMPUTED ON NET INCOME AND NOT GROSS RECEIPTS. ACCORDINGLY, ON T HE IDENTICAL ISSUE FOLLOWING THE SAME REASONING AS DECIDED IN A.Y.200 6-07 THE GROUNDS OF APPEAL OF THE ASSESSEE FOR A.Y.2007-08 IS REJECTED. 11. GROUND NO.4: THE ASSESSEE POINTED OUT THAT THE AO HAS NOT ALLOW ED THE ASSESSEE TO FILE A REVISED FORM NO.10 PERTAINING TO ACCUMULA TED INCOME. THE AO DID NOT ALLOW THE ASSESSEE TO CARRY FORWARD SUCH IN COME U/S.11(2) OF THE ACT. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 23 - 11.1 IN THIS CONNECTION, THE LD.CIT(A) HAS REJEC TED THE CLAIM OF THE ASSESSEE THAT HE IS NOT EMPOWERED TO CONSIDER THE R EVISED PETITION WHICH WOULD ENTAIL CONDONATION OF DELAY. THE LD.CIT(A) H AS FURTHER STATED THAT IN THIS CASE WHETHER THE ENHANCED ACCUMULATED INCOM E IS INVESTED AS SPECIFIED UNDER SECTION 11(5) REQUIRED TO BE EXAMI NED. THE LD.CIT(A) FURTHER HELD THAT FOR CONDONATION OF DELAY THE ASSE SSEE IS FREE TO MOVE THE CONDONATION APPLICATION BEFORE THE ADMN.CIT. THE L D.CIT(A) HAS REFERRED THE DECISIONS OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. MAYUR FOUNDATION (2005) 274 ITR 562 AND THE CAS E OF HONBLE ITAT BANGALORE IN THE CASE OF SECRETARY, AGRICULTURAL PR DOUCE MARKETING COMMITTEE (128 ITD 166) WHICH ARE REPRODUCED AS UND ER:- 5.3 THE NEXT ISSUE IS CONCERNING THE REQUEST FOR C ONSIDERATION AND ALLOWABILITY OF REVISED APPLICATION CLAIMED TO BE F ILED U/S 11(2) RW RULE 17 DURING THE COURSE OF PROCEEDINGS BEFORE THE CTT (A) . THE APPELLANT HAS ARGUED THAT ASSESSMENT PROCEEDINGS ARE PENDING AND ITS REVISED CLAIM SHOULD BE ALLOWABLE PARTICULARLY IN VIEW OF THE DECISION O F THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. MAYUR FOUNDATION [2005] 274 ITR 562. THE VERY ISSUE CAME BEFORE THE HON'BLE ITAT, BANGALORE, RECE NTLY IN THE CASE OF SECRETARY, AGRICULTURAL PRODUCE MARKETING COMMITTEE 128 ITD 166, WHEREIN AFTER CONSIDERING THE DECISION OF THE HON'BLE GUJAR AT HIGH COURT AND DISTINGUISHING IT ON SIMILAR FACTS AS IN THE CASE O F ASSESSEE; IT HAS BEEN DECIDED AS UNDER: '13. AS REGARDS THE ISSUE OF ACCUMULATION OR SET AP ART RS. 8,37,974 UNDER SECTION 11(2), THE BASIS ON WHICH THE CIT(A) ALLOWE D THE APPEAL OF THE ASSESSEE S NOT CLEAR. THE ASSESSEE CLAIMED, IT HAS FILED FORM NO. 10 BELATEDLY AFTER COMPLETION OF THE ASSESSMENT ORDER. THE BOARD VIDE CIRCULAR NO. 273, DATED 3-6-1980, HAD AUTHORIZED THE CIT TO CONDONE T HE DELAY IN FILING FORM NO. 10 WHEN CERTAIN CONDITIONS ARE SATISFIED. THE C IRCULAR READS AS FOLLOWS: ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 24 - 'CHARITABLE AND RELIGIOUS TRUSTS - APPLICATIONS FOR ACCUMULATION OF INCOME UNDER SECTION 11(2) OF THE IT ACT, 1961 - CONDONATI ON OF DELAY - REGARDING - CHARITABLE AND RELIGIOUS TRUSTS ARE ENTITLED TO EXE MPTION FROM INCOME-TAX UNDER SECTIONS 11 TO 13. THESE TRUSTS ARE ALLOWED T O ACCUMULATE OR SET APART INCOME DERIVED BY THEM FROM PROPERTY HELD UNDER TRU ST PROVIDED THEY FULFILL THE CONDITIONS SPELT OUT IN SECTION 11(2) READ WITH RULE 17 OF THE IT RULES, 1962, AND FORM NO. 10. VERY OFTEN TRUSTS ARE NOT ABLE TO FILE THE APPLICAT ION IN FORM NO. 10 WITHIN THE TIME ALLOWED UNDER SECTION 139(1)/139(2) AS EXT ENDED BY THE ITO. THE CENTRAL BOARD OF DIRECT TAXES IS THEN APPROACHED BY THESE TRUSTS FOR CONDONING THE DELAY FOR FILING APPLICATIONS. THE BO ARD BY VIRTUE OF THE POWERS VESTED IN IT UNDER SECTION 119(2)(B) HAS BEE N CONDONING THE DELAY IN INDIVIDUAL CASES AFTER SATISFYING ITSELF THAT CE RTAIN CONDITIONS ARE SATISFIED. WITH A VIEW TO EXPEDITING THE DISPOSAL OF APPLICATI ONS FILED JY TRUSTS FOR CONDONING THE DELAY, THE BOARD HAS PASSED A GENERAL ORDER UNDER SECTION 119(2)(B) BY WHICH THE CS. IT HAVE BEEN AUTHORIZED TO ADMIT BELATED APPLICATIONS UNDER SECTION 11(2) READ WITH RULE 17 OF THE IT RULES, 1962. A COPY OF THIS ORDER IS ENCLOSED. ALL APPLICATIONS FO R CONDONING THE DELAY UNDER SECTION 11(2) WILL HENCEFORTH BE DISPOSED OF BY CLT IN TERMS OF THE ENCLOSED ORDER'. THE FOLLOWING IS THE TEXT OF THE ORDER UNDER SECTIO N 119(2)(B) DATED 3-6-1980, AS REFERRED TO IN CIRCULAR NO. 273: 'IN EXERCISE OF THE POWERS CONFERRED UNDER SECTION 119(2)(B) OF THE INCOME- TAX ACT, 1961 (43 OF 1961), THE CENTRAL BOARD OF DI RECT TAXES HEREBY AUTHORIZES THE COMMISSIONERS OF INCOME-TAX TO ADMIT APPLICATIONS UNDER SECTION 11(2) READ WITH RULE 17 OF THE IT RULES, 19 62, FROM PERSONS DERIVING INCOME FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CH ARITABLE OR RELIGIOUS PURPOSES FOR ACCUMULATION OF SUCH INCOME TO BE APPL IED FOR SUCH PURPOSES IN INDIA WHEN THE AFOREMENTIONED APPLICATIONS ARE FILE D BEYOND THE TIME STIPULATED. COMMISSIONERS OF INCOME-TAX WILL, WHILE ENTERTAINING SUCH APPLICATIONS, SATISFY THEMSELVES THAT THE FOLLOWING CONDITIONS ARE FULFILLED: ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 25 - (A) THAT THE GENUINENESS OF THE TRUST IS NOT IN DOUBT; (B) THAT THE FAILURE TO GIVE NOTICE TO THE INCOME -TAX OFFICER UNDER SECTION 11(2) OF THE ACT AND INVESTMENT OF THE MONEY IN THE PRESCRIBED SECURITIES WAS DUE ONLY TO OVERSIGHT; (C) THAT THE TRUSTEES OR THE SETTLER HAVE NOT BE EN BENEFITED BY SUCH FAILURE DIRECTLY OR INDIRECTLY; (D) THAT THE TRUST AGREES TO DEPOSIT ITS FUNDS IN THE PRESCRIBED SECURITIES PRIOR TO THE ISSUE OF THE GOVERNMENT SANCTION EXTEN DING THE TIME UNDER SECTION 11(2); (E) THAT THE ACCUMULATION OR SETTING APART OF IN COME WAS NECESSARY FOR CARRYING OUT THE OBJECTS OF THE TRUST.' 13.1 THE LEARNED AR HAD STRONGLY RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF MAYUR FOUNDATION (SUPRA). THE FACTS CONSIDERED BY THE GUJARAT HIGH COURT ARE AS FOLLOWS : 'THE ASSESSEE WAS A CHARITABLE TRUST, REGISTERED UN DER THE PROVISIONS OF THE BOMBAY PUBLIC TRUSTS ACT, 1950. DURING ACCOUNTING Y EAR RELEVANT TO THE ASSESSMENT YEAR 1980-81, THE ASSESSEE RECEIVED VOLU NTARY CONTRIBUTIONS AMOUNTING TO RS.2,04,468/-. THE DONATIONS WERE TREA TED AS 'INCOME' WITHIN THE MEANING OF SECTION 2(24) OF THE INCOME-TAX ACT, 1961, BY THE ASSESSING OFFICER. THE ASSESSEE CONTENDED THAT THE DONATIONS OF RS.1,74,432/- AND RS.9,036/- INCLUDED IN THE TOTAL AMOUNT OF DONATION S WERE TOWARDS THE CORPUS OF THE TRUST AND IN SUPPORT OF THE CONTENTION, SUBM ITTED CONFIRMATION LETTERS FROM TWO DONORS. THE ASSESSING OFFICER DID NOT ACCE PT THIS SUBMISSION AND AFTER GRANTING PERMISSIBLE ACCUMULATION OF 25 PER C ENT HELD THE BALANCE AMOUNT OF RS.1,53,351/- LIABLE TO TAX IN THE HANDS OF THE ASSESSEE. THE COMMISSIONER (APPEALS) CONFIRMED THE ORDER. THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE INCOME-TAX APPELLATE TRIBUNAL, AN D DURING THE PENDENCY OF THE APPEAL, MOVED AN APPLICATION BEFORE THE COMMISS IONER ON OCTOBER 5, 1989, ACCOMPANIED BY FORM NO. 10 AND A COPY OF THE RESOLUTION PASSED BY THE TRUSTEES ON AUGUST 22, 1988, TO THE EFFECT THAT THE DONATION MAY BE TREATED AS GENERAL DONATIONS AND THE ASSESSEE BE PERMITTED TO ACCUMULATE THE TRUST INCOME UNDER SECTION 11(2) BY CONDONING THE DELAY I N FILING FORM NO. 10. THE RESOLUTION PASSED BY THE TRUSTEES ON 22-8-1988, STA TED THAT A TOTAL SUM OF RS.5,09,000/- HAD BEEN SET APART BY THE ASSESSEE-TR UST FOR PURCHASING LAND AND CONSTRUCTING AN ORPHANAGE ON THE SAID LAND. A SUM O F RS.1,54,000/- WAS REQUIRED TO BE UTILIZED FOR THE PURPOSE ON OR BEFOR E 31-3-1990. THE ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 26 - COMMISSIONER REJECTED THE ASSESSEE'S APPLICATION. T HE ASSESSEE CHALLENGED THE ORDER OF THE COMMISSIONER BY A WRIT PETITION. T HE HIGH COURT DIRECTED THE COMMISSIONER TO RECONSIDER THE MATTER. THE COMMISSI ONER AGAIN REJECTED THE ASSESSEE'S PETITION. THE ASSESSEE THEREUPON FILED A N ADDITIONAL GROUND OF APPEAL BEFORE THE TRIBUNAL TO THE EFFECT THAT THE T RUST WAS NOT TAXABLE IN VIEW OF THE RESOLUTION OF ACCUMULATION AND THE NOTICE TH EREOF TO THE INCOME-TAX OFFICER UNDER SECTION 11(2). THE TRIBUNAL ADMITTED THE ADDITIONAL GROUND. ON THE FACTS THE TRIBUNAL FOUND THAT THE GENUINENESS O F THE TRUST WAS NOT IN DOUBT; THAT THE TRUST HAD SET APART THE AMOUNT OF DONATION FOR THE PURPOSE OF PURCHASING LAND AND CONSTRUCTING AN ORPHANAGE THERE UPON; THAT THE FUNDS RECEIVED BY WAY OF DONATIONS HAD BEEN KEPT APART IN FIXED DEPOSITS OF NATIONALIZED BANKS; AND THAT THE TRUSTEES OR THE SE TTLERS HAD NOT BENEFITED BY THE FAILURE OR DELAY ON THE PART OF THE TRUST TO GI VE NOTICE OF SUCH ACCUMULATION. ACCORDINGLY, THE TRIBUNAL HELD THAT T HE ASSESSEE-TRUST HAD COMPLIED WITH ALL THE REQUIREMENTS STIPULATED BY TH E PROVISIONS OF SECTION 11(2). 13.2 ON REFERENCE, THE HON'BLE HIGH COURT HELD, (I) THAT THE TRIBUNAL WAS WELL WITHIN ITS JURISDICTION TO ENTERTAIN THE NEW GROUND BY WHICH THE ASSESSEE CLAIMED THE BENEFIT UNDER SECTION 11(2) OF THE ACT AND ADJUDICATE THE TAX LIABILITY OF THE ASSESSEE. (II) THAT THE TRIBUNAL W AS CORRECT IN HOLDING THAT THE ASSESSEE WAS ENTITLED TO THE BENEFITS ALLOWABLE UND ER SECTION 11(2). 13.3 FROM THE ABOVE, IT IS CLEAR; THE ASSESSEE IN T HE CASE OF THE HON'BLE GUJARAT HIGH COURT HAD APPLIED FOR CONDONATION OF D ELAY IN FILING FORM NO. 10. THE ADMINISTRATIVE CIT REJECTED THE APPLICATION OF CONDONATION AND ASSESSEE MOVED TO THE HIGH COURT AND THE HON'BLE HI GH COURT DIRECTED THE CIT TO RECONSIDER AFRESH THE CONDONATION APPLICATIO N. THEREAFTER, ON REJECTION OF THE CONDONATION APPLICATION BY THE CIT, THE ASSE SSEE FILED AN ADDITIONAL GROUND BEFORE THE TRIBUNAL AND THE TRIBUNAL IN THAT CASE FOUND THE FUNDS ACCUMULATED ARE FOR CHARITABLE PURPOSE AND THE AMOU NTS ARE SET APART/ACCUMULATED IN FD IN NATIONALIZED BANK. 13.4 IT IS FOR THE ADMINISTRATIVE CIT TO CONSIDER W HETHER THE CONDITIONS MENTIONED IN CIRCULAR NO. 273, DATED 3-6-1980 IS FU LFILLED OR NOT. WE ARE NOT EMPOWERED TO CONSIDER THE CONDONATION PETITION. MOR EOVER, WHETHER ACCUMULATED INCOME (RS. 8,37,974) IS INVESTED AS SP ECIFIED UNDER SECTION 11(5) ARE MATTERS TO BE EXAMINED. THEREFORE, THE AS SESSEE SHALL BE AT LIBERTY TO ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 27 - MOVE THE CONDONATION APPLICATION BEFORE THE CIT FOR CONDONING THE DELAY IN FILING FORM NO. 10. WITH THESE OBSERVATIONS, WE REV ERSE THE ORDER OF CIT(A). HOWEVER, WE CLARIFY, IF THE DELAY IN FILING FORM NO . 10 IS CONDONED BY THE ADMINISTRATIVE CIT, THIS ORDER OF OURS SHOULD NOT B E AN IMPEDIMENT FOR CLAIMING EXCLUSION FROM THE TOTAL INCOME AS CONTEMP LATED UNDER SECTION 11(2) OF THE ACT.' THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE BA NGALORE UAT, WHICH HAS BEEN DELIVERED ON SIMILAR FACTS, IT IS HELD THA T THE UNDERSIGNED IS NOT EMPOWERED TO CONSIDER THE REVISED PETITION WHICH WO ULD ENTAIL CONDONATION OF DELAY. MOREOVER, IN THE INSTANT CAS E ALSO WHETHER THE ENHANCED ACCUMULATED INCOME IS INVESTED AS SPECIFIE D UNDER SECTION 11(5) ARE MATTERS TO BE EXAMINED. THE APPELLANT IS FREE TO MOVE THE CONDONATION APPLICATION BEFORE THE CIT FOR CONDONIN G THE DELAY IN RESPECT OF REVISED APPLICATION. 11.2 THE LD.COUNSEL CONTENDED THAT THE ASSESSEE SHO ULD BE ALLOWED FOR ACCUMULATION OF INCOME WITHIN THE MEANING OF SECTIO N 11(2) AND HE RELIED ON THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT. ON THE OTHER HAND, THE LD.DR RELIED ON THE ORDER OF THE LD .CIT(A). 12. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE MATERIAL ON RECORD, WE FIND THAT THE ADMINISTRATIVE CIT HAS BEE N AUTHORIZED AS PER CIRCULAR NO.273 ISSUED BY THE CENTRAL BOARD OF DIRE CT TAXES U/S.119(2)(B) DATED 03/06/1980 FOR CONDONATION OF D ELAY IN FILING FORM NO.10. FURTHER, WHETHER ACCUMULATED INCOME IS INVE STED AS SPECIFIED U/S.11(5) ARE MATERS TO BE EXAMINED. . THE LD.CIT( A) FURTHER HELD THAT FOR CONDONATION OF DELAY THE ASSESSEE IS FREE TO MOVE T HE CONDONATION ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 28 - APPLICATION BEFORE THE CIT. IT IS CLEAR FROM THE F ACTS OF THE CASE THAT ASSESSEE HAS NOT MOVED ANY APPLICATION FOR CONDONAT ION OF DELAY TO THE ADMINISTRATIVE CIT. THE ASSESSEE IN THE CASE OF C IT VS. MAYUR FOUNDATION DECIDED BY THE HON'BLE GUJARAT HIGH COUR T HAD APPLIED FOR CONDONATION FOR DELAY IN FILING FORM NO.10 AND THE ADMINISTRATIVE CIT REJECTED THE APPLICATION FOR CONDONATION. IT IS FOR THE ADMINISTRATIVE CIT TO CONSIDER WHETHER THE CONDITIONS MENTIONED IN CIR CULAR NO.273 DATED 3-6-1980 IS FULFILLED OR NOT. 13. WE CONSIDERED THAT THE ASSESSEE IS FREE TO MAK E THE CONDONATION APPLICATION BEFORE THE ADMINISTRATIVE CIT FOR CONDO NING THE DELAY IN FILING THE REVISED APPLICATION CLAIM TO BE FILED U/ S.11(2) OF THE I.T.ACT. THEREFORE, FOR THE END OF JUSTICE, WE SET ASIDE THI S MATTER TO THE FILE OF AO TO AFFORD SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO MOVE THE CONDONATION APPLICATION TO THE ADMINISTRATIVE CIT AND ACCORDING LY DECIDE THIS ISSUE AFRESH. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO.1022/AHD/2012 FOR AY 2008-09 IS PARTLY ALLOWED FOR STATISTICAL P URPOSES. 15. LASTLY, WE TAKE THE REVENUES APPEAL IN ITA NO. 1045/AHD/2012 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUN DS:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN HOLDING THAT THE PROVISIONS OF SECTION 11(4) OF THE I.T.ACT ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE. ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 29 - 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN A LLOWING DEPRECIATION AS PER BOOKS ON HOLDING THAT PROVISIONS OF SECTION 11(4) ARE NOT APPLICABLE IN THIS CASE. 16. IN THESE CASES SINCE BOTH THE PARTIES HAVE A DMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASES ARE IDENTICA L TO THAT OF ITA NO.796/AHD/2010 IN ASSESSEES OWN CASE(SUPRA), WHIC H WE HAVE DECIDED HEREINABOVE FOR A.Y.2006-07, WE THEREFORE FOR THE S IMILAR REASONS STATED HEREINABOVE WHILE DECIDING THE ASSESSEES APPEAL FO R A.Y. 2006-07 IN ITA NO.796/AHD/2010 (SUPRA) AND FOR SIMILAR REASONS DISMISS THE GROUND(S) OF REVENUE. THUS, THE APPEAL OF THE REVE NUE IS DISMISSED. 17. IN THE COMBINED RESULT, ASSESSEES APPEAL IN IT A NO.796/AHD/2010 FOR AY 2006-07 IS PARTLY ALLOWED. ASSESSEES APPEAL IN ITA NO.1022/AHD/2012 FOR AY 2008-09 IS PARTLY AL LOWED FOR STATISTICAL PURPOSES AND REVENUES APPEAL IN ITA NO .1045/AHD/2012 FOR AY 2008-09 IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21 /0 9 /2016 SD/- SD/- ( R.P. TOLANI ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 21/ 09 /2016 .. ,.../ T.C. NAIR, SR. PS ITA NOS.796/AHD /2010, 1022/AHD/2012(ASSESSEE) & 1045/AHD/2012 (REVENUE) GUJ. STATE BOARD OF SCHOOL TEX BOOKS VS. ACIT/DCIT AYS 2006-07, 2008-09 & 2008-09 R ESPECTIVELY - 30 - ! ' / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $%$&' ( / CONCERNED CIT 4. ( ( ) / THE CIT(A)-GANDHINAGAR 5. +,- '&' , &' , % / DR, ITAT, AHMEDABAD 6. -012 / GUARD FILE. / BY ORDER, #+' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 16.8.16 (DICTATION-PAD PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.8.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.21.9.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.9.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER