Sri Raja Rajeshwara Swamy Vari Devasthanam, Hyderabad V. Deputy Director of Income Tax (Exemp)-I, Hyderabad

ITA 986/HYD/2014

• Counselvise Citation: 98622514 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KONDA RAMESH
• Assessee Lawyers: S RAMA RAO
• Keywords: Reassessment proceedings
• Section: 143(3); 12AA; 147; 148; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.986/HYD/2014 ASSESSMENT YEAR 2006-07 SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM VEMULAVADA, KARIMNAGAR DIST.,PAN AAAJS 2826G VS. DDIT (E)-1 HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. KONDA RAMESH DATE OF HEARING : 16 .11.2015 DATE OF PRONOUNCEMENT : 18 .11.2015 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2006-07. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE OR DER OF THE DIT (E) PASSED UNDER SECTION 263 OF THE I.T. AC T, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CHARITABLE AND RELIGIOUS INSTITUTION ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE I.T. ACT AS IT IS REGISTERED UNDER SECTION 12AA OF THE I.T. ACT. THE ASSESSEE TRUST FILED ITS RETURN OF INCOME FOR THE RELEVANT A .Y. ON 26.06.2007 CLAIMING EXEMPTION UNDER SECTION 11 OF T HE I.T. ACT ADMITTING NIL INCOME. THE RETURN WAS PRO CESSED UNDER SECTION 143(1) ON 29.09.2006 ACCEPTING THE 2 ITA.NO.986/HYD/2014 SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM, VEMULAWADA, KARIMNAGAR. RETURNED INCOME. SUBSEQUENTLY, DURING THE ASSESSMEN T PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, T HE ASSESSEE WAS ASKED TO FURNISH THE BOOKS OF ACCOUNT, VOUCHERS FOR EXPENSES AND INFORMATION AS PER THE ANNEXURE I.E., EXTRACTS OF BANK ACCOUNTS, DETAILS O F FDRS ETC. THE BOOKS OF ACCOUNT AND THE INFORMATION FURNI SHED BY THE ASSESSEE WERE EXAMINED AND THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT NIL. SUBSEQUENTLY, THE A.O. OBSERVED THAT THE ASSESSEE HAS APPLIED THE REC EIPTS ONLY TO THE EXTENT OF 78.55% OUT OF THE TOTAL RECEI PTS AND HAS ALSO NOT FILED FORM-10 SO AS TO ACCUMULATE OR S ET APART THE UNUTILIZED RECEIPTS. HE OBSERVED THAT THE UNUTILIZED PORTION OF THE FUNDS WAS ALLOWABLE ONLY TO THE EXTENT OF 15% AND THE BALANCE IS TAXABLE. THEREFORE , HE INITIATED RE-ASSESSMENT PROCEEDINGS UNDER SECTION 1 47 OF THE I.T. ACT BY ISSUING NOTICE UNDER SECTION 148 OF THE I.T. ACT. 3. DURING THE COURSE OF HEARING OF THE RE- ASSESSMENT PROCEEDINGS, THE ASSESSEE TRUST STATED T HAT THE SURPLUS FUNDS ARE KEPT ASIDE AND UTILIZED FOR T HE PURPOSE OF OBJECTIVES OF THE TRUST IN SUBSEQUENT YE ARS. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED FORM-10 VIDE LETTER DATED 21.03.2013 WHEREIN IT IS STATED THAT AN AMOUNT OF RS.2,76,14,9 40 IS TO BE ACCUMULATED. THE A.O., BY FOLLOWING THE DECIS IONS CITED BY THE ASSESSEE, ACCEPTED THAT FORM-10 CAN BE FILED EVEN DURING THE RE-ASSESSMENT PROCEEDINGS. SINCE TH E FORM-10 WAS FILED BEFORE THE CONCLUSION OF THE REOP ENED 3 ITA.NO.986/HYD/2014 SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM, VEMULAWADA, KARIMNAGAR. ASSESSMENT, HE ACCEPTED THE SAME AND ASSESSED THE INCOME AT NIL. 2.1. THE DIT(E), ON PERUSAL OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 147 OF THE I.T. ACT, OBSERVED THAT THE ASSESSEE OUGHT TO H AVE FILED FORM-10 BEFORE CONCLUSION OF THE ASSESSMENT PROCEED INGS UNDER SECTION 143(3) OF THE I.T. ACT. THEREFORE, AC CORDING TO HIM, THE ASSESSMENT ORDER UNDER SECTION 143(3) R EAD WITH SECTION 147 WAS BOTH ERRONEOUS AS WELL AS PREJ UDICIAL TO THE INTEREST OF THE REVENUE. HE THEREFORE, REVIS ED THE ASSESSMENT ORDER AND DIRECTED THE A.O. TO PASS MODIFICATION ORDER DETERMINING THE TOTAL INCOME OF THE ASSESSEE FOR THE SAID A.Y. AT RS.82,97,668. AGGRIEV ED BY THE ORDER UNDER SECTION 263, THE ASSESSEE IS IN APP EAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, MR. S. RAMA RAO, REITERATED THE SUBMISSIONS MADE BY THE ASSESSE E BEFORE THE AUTHORITIES BELOW, WHILE THE LD. D.R, MR . KONDA RAMESH, RELIED ON THE ORDER OF THE DIT(E) PASSED UN DER SECTION 263 OF THE I.T. ACT. 4. HAVING REGARD TO THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE WAS UNDISPUTEDLY ELIGIBLE FOR EXEMPTION OF ITS INCOME U NDER SECTION 11 OF THE I.T. ACT. ACCORDING TO SECTION 11 (2) OF THE I.T. ACT, THE ASSESSEE IS REQUIRED TO APPLY 85% OF ITS INCOME IN INDIA DURING THE RELEVANT ASSESSMENT YEAR AND ONLY BALANCE OF 15% IS ALLOWED TO BE SET APART TO B E SPENT 4 ITA.NO.986/HYD/2014 SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM, VEMULAWADA, KARIMNAGAR. IN THE SUBSEQUENT ASSESSMENT YEAR. IF THE ASSESSEE WANTED TO SET APART OR ACCUMULATE ANY FURTHER SUM EXCEEDING 15% OF ITS INCOME FOR THE RELEVANT FINANC IAL YEAR, THE ASSESSEE WAS REQUIRED TO FILE FORM-10 AND SEEK PERMISSION OF THE A.O. FOR SUCH ACCUMULATION UNDER RULE- 17 OF THE INCOME TAX RULES. IT IS NOT IN DISPUTE TH AT THE ASSESSEE DID NOT FILE FORM-10 ALONG WITH THE RETURN OF INCOME OR DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT. IT IS FURTHER SEEN THAT FOR THE VERY SAME REASON, THE A.O. HAS REOPENED THE ASSESSM ENT UNDER SECTION 147 OF THE I.T. ACT AND AFTER TAKING NOTE OF THE FACT THAT ASSESSEE HAS FILED FORM-10 DURING THE REOPENED ASSESSMENT PROCEEDINGS, THE A.O. HAS ACCEP TED THE SAME AND PERMITTED THE ASSESSEE TO ACCUMULATE T HE FUNDS. ACCORDING TO THE DIT(E), FORM-10 SHOULD HAVE BEEN FILED DURING THE ASSESSMENT PROCEEDINGS UNDER SECTI ON 143(3) AND NOT DURING THE ASSESSMENT PROCEEDINGS UN DER SECTION 143(3) READ WITH SECTION 147 OF THE I.T. AC T. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSE SSEE AND AS FOLLOWED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 147, THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NA GPUR HOTEL OWNERS ASSOCIATION (2001) 247 ITR 201 (SC) H AS HELD THAT FORM-10 CAN ALSO BE FILED DURING THE PEND ENCY OF THE ASSESSMENT PROCEEDINGS. THIS DECISION WAS AL SO FOLLOWED BY THE COORDINATE BENCHES OF THIS TRIBUNAL AT MUMBAI IN THE CASES OF M/S. BOMBAY PRESIDENCY CLUB VS. ITO, MUMBAI IN ITA.NO.7244/MUM/2010 AND CHETNA VS. ITO, MUMBAI IN ITA.NO.5713/MUM/2010. 5 ITA.NO.986/HYD/2014 SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM, VEMULAWADA, KARIMNAGAR. 5. NOW THE ONLY QUESTION IS WHETHER THE FORM NO.10 CAN BE FILED DURING THE RE-ASSESSMENT PROCEED INGS ALSO. THE DEFINITION OF ASSESSMENT UNDER SECTION 2(8) ITSELF DEFINES ASSESSMENT INCLUDES RE-ASSESSMENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF ASSOCIA TION OF CORPORATION & APEX SOCIETIES OF HANDLOMS VS. ASST. DIT (2013) 30 TAXMANN.COM 22/213 TAXMAN 15 (DELHI) HAS HELD THAT FORM NO.10 COULD BE FURNISHED BY THE ASSE SSEE TRUST FOR THE PURPOSES OF SECTION 11(2) I.E., FOR ACCUMULATION OF INCOME, DURING REASSESSMENT PROCEEDINGS. THEREFORE, IN OUR OPINION, THE DIT(E) HAS MISDIRECTED HIMSELF TO HOLD THAT FORM-10 SHOULD BE FILED ONLY DURING THE ASSESSMENT PROCEEDINGS UNDER SECTIO N 143(3) OF THE I.T. ACT. THEREFORE, NO ERROR HAS COM MITTED BY THE A.O. IN ACCEPTING FORM-10B DURING THE RE- ASSESSMENT PROCEEDINGS. HENCE, THE ASSESSMENT ORDER IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF TH E REVENUE. THE ORDER OF THE DIT(E) UNDER SECTION 263 IS ACCORDINGLY QUASHED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2015. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 18 TH NOVEMBER, 2015 VBP/- 6 ITA.NO.986/HYD/2014 SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM, VEMULAWADA, KARIMNAGAR. COPY TO : 1. SRI RAJA RAJESHWARA SWAMY VARI DEVASTHANAM, VEMULAWADA, KARIMNAGAR. C/O. MR. S. RAMA RAO, ADVOCATE, 102, SHRIYAS ELEGANCE, H.NO.36-643, STRE ET NO.9, HIMAYATNAGAR, HYDERABAD 029. 2. THE DEPUTY DIRECTOR OF I NCOME T AX (EXEMPTIONS) - 1 , HYDERABAD. 3. DIRECTOR OF INCOME TAX (EXEMPTIONS) , HYDERABAD 4 . ADIT(E) - 1, HYDERABAD 5 . D.R. ITAT A BENCH, HYDERABAD. 6 . GUARD FILE