TMI Blog2010 (9) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... e material brought on record by the AO has not been considered by the ld. CIT(A). Ground Nos. 1.1 to 1.4 are in the nature of submissions in support of ground No. 1.1. Ground Nos.2 and 3 are general in nature. 3. The facts of the case are that the assessee filed nil return of income on 1.4.2006 claiming deduction under section 11 of the I.T. Act. The assessee was granted registration under section 12A of the Act as per order dated24-3-2004. The assessee-society is a Sports Association working for the advancement and promotion of games and sports, particularly cricket in the State ofU.P. It was affiliated to the BCCI and was responsible for organizing of the prestigious Cricket tournaments including Ranji Trophy, test matches and One day International in the State ofU.P. 4. The assessee-society has accumulated Rs. 5,05,26,154 as on31-3-2005. A sum of Rs. 50 lacs was set apart and accumulated during the year under section 11(2) of the I.T. Act. The assessee had applied a sum of Rs. 6,80,781 and the balance amount of Rs. 5,48,45,373 was available with it on2nd September, 2005. As per resolution dated 3-9-2005, in the extraordinary General Meeting, it has been resolved that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose and required to be treated as income under section 11(3)( d ) of the Act. 7. The assessee filed detailed reply as per its letter dated 19-9-2008 objecting to the addition of Rs. 5,48,45,373 proposed by the AO as per its notice under section 142(1) dated 30-7-2008. Relying on the case of Aditanar Educational Institution v. Addl. CIT (1997) 224 ITR 310 (SC), the assessee contended that an overall view was required to be taken and hyper-technical view should not be taken while granting the exemption. It was also contended that the funds were transferred to the aforestated company M/s. Uttar Pradesh Cricket Association, which had taken over all the assets, liabilities and had similar objects and functions of the assessee and the funds were therefore transferred by the assessee to another institution engaged in the similar nature of work i.e., conducting and promoting sports in the State of UP. 8. The AO rejected the explanation of the assessee as per decision in para 7.1 of the assessment order dated 10-2-2008 under section 143(3) of the I.T. Act and held that the accumulated funds under section 11(2)of the I.T. Act amounting to Rs. 5,48,45,373 were deemed to be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Bihari Lal Jaiswal v. CIT 84 Taxman 236 and submitted that one arm of law could not be utilized to defeat the purpose of another arm of law and therefore, the transfer of assets to an entity other than a registered society being in violation of provisions of Societies Registration Act could not be given recognition while considering the taxability of income of the assessee under section 11 of the I.T. Act. The ld.D.R. also relied on the decision in the case of Maddi Venkataraman and Co. (P.) Ltd. v. CIT (1998) 229 ITR 534(SC). 11. The ld. Counsel for the assessee reiterated the submissions made before the lower authorities. He also submitted that the provisions of the Income-tax Act are to be liberally construed and the ld.CIT (A) has rightly held that as per the second proviso to section 11(3A) of the Act if the trust or institution, which has invested or deposited its income in accordance with the provisions of section 11(2)( b ) of the Act, is dissolved, the AO may allow application of such income for the purpose referred to in section 11(3)( d ) in the year in which such trust or institution was dissolved. He also pointed out that earlier as per proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second proviso to section 11(3A) of the Act because not only the societies but the institutions are also included for the purpose of transfer of accumulated funds. The contention of the ld. Counsel for the assessee that the provisions of I.T. Act are to be construed liberally while granting the exemption is also considered correct. In any case, the language of the second proviso is very clear to show that the transfer of accumulated funds could be made not only to societies but also to institutions. The company being a charitable institution registered under section 12A of the Act, it cannot be accepted that the transfer of funds accumulated by it to the aforestated Uttar Pradesh Cricket Association was not application of funds as per section 11 of the Act only because the accumulated profits have been transferred in violation of the Societies Registration Act. 13. The decisions relied upon by the ld.D.R. with due respect, are of no help to the Revenue, In the case of Maddi Venkataraman and Co. (P.) Ltd. ( supra ), the Hon'ble Supreme Court was dealing with a case where the assessee had indulged in transactions in violation of the provisions of Foreign Exchange (Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, see no reason to interfere with the decision of the ld.ClT(A). The appeal of the Revenue is, therefore, rejected. C.O.No.58(Luc.)/2009 15. The first ground of cross objections is not pressed, hence rejected. 15A. The second ground of Cross Objections is reproduced below : "2. BECAUSE the deemed addition of Rs. 6,80,781 under the provisions of section 11(3)( b ) of the Income Tax Act, 1961 was not justified either on facts or in law." 16. It is seen on perusal of the order of the ld.CIT(A) that this issue has not been adjudicated by the ld. CIT(A). The assessee, as per ground No. 1 of the appeal before the ld.CIT(A) had specifically challenged the assessment on an income of Rs. 5,55,26,150 as against nil income returned by the assessee but the ld.CIT(A) has adjudicated only on the taxability of Rs. 5,48,45,373 17. Thus, the ground regarding the addition of Rs. 6,80,783 as per provisions of section 11(3)( b ) of the Act challenged by the assessee has remained to be adjudicated by the ld.CIT(A). We, therefore, restore this issue to the file of the ld.CIT(A) for deciding the same after giving proper opportunity to both the sides as per law. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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