TMI Blog2022 (12) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... n, it cannot be said that the assessee had failed to disclose all material facts fully and truly required for the assessment. Therefore, we are of the opinion that there is no negligence on the part of the assessee in furnishing the required details for completing the original assessment. Being so, by placing the decision of coordinate bench in the case of Kochaniyan Unnithan and Anr[ 2019 (3) TMI 2001 - ITAT COCHIN] we quash the assessment for assessment year 2008-09 and 2009-10. Receipt of corpus donation - A.Y. 2010-11 - In this case, the original assessment has been completed u/s 143(3) of the Act on 27.3.20123. Later, it was found that there was a difference between opening and closing balance of the general fund amounting to Rs.64.22 lakhs, which has not been verified in the assessment order made u/s 143(3) of the Act. For that reason, the AO has reopened the assessment by issuing notice u/s 148 and added back the difference in general fund which had been claimed by assessee as corpus donation. In our opinion, all the material already available on record at the time of completion of original assessment and there was no material to come to the conclusion that income esca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Educational Society [ 2018 (4) TMI 1622 - SC ORDER] has decided the similar issue, wherein held any excess expenditure incurred by trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking section 11 - In view of the above, we allow the ground taken by the assessee. - ITA Nos.88 to 91/Cochin/2022 - - - Dated:- 14-9-2022 - Shri Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Sri Surendranath Rao, A.R. For the Respondent : Smt. J.M. Jamuna Devi, Sr. D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: All these appeals by assessee are directed against different orders of Ld. CIT(A) for the assessment years 2008-09, 2009-10, 2010-11 2013-14. The first common ground in first 3 appeals is with regard to reopening of assessment. 2. In the assessment year 2008-09 2009-10, assessment was reopened after 4 years from the end of relevant assessment years. The Ld. A.R. submitted that the reason recorded in the assessment years 2008-09 2009-10 is as follows:- The WDV of the assets as on 31.03.2004 stood at Rs.10.57 crores. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 50) (Delhi HC) b) Titanor Components Vs. ACIT (343 ITR 183) (Bombay HC) c) Principal CIT-II Vs. L T Ltd. (113 Taxmann.com 48) (SC) 5. He also submitted that the re-assessment proceedings have not emanated from any new material coming to light. a) CIT, Cochin Vs. Malayala Manorama Co. Ltd. (410 ITR 423)(Kerala HC) b) CIT Vs. Kelvinator India Ltd. (320 ITR 561)(SC) 6. The Ld. D.R. relied on the order of Ld. CIT(A) and submitted that the reasons for reopening as mentioned by the assessing officer in the assessment order was also duly examined by him. The assessee had two units namely Jubilee Mission Medical College and Jubilee Mission Nursing College. Though these independent units came into existence in the year 2003, the assessee decided to merge these two units and filed revised returns for assessment years 2004-05 to 2006-07 on 19th March 2007 by revising the claim of depreciation. By then, the assessment for A.Y. 2004-05 had already been completed and the revised return filed was infructuous. Therefore, the higher depreciation claim on the basis of infructuous revised return was not in order for that year or subsequent assessment years including the instant ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been completed u/s 143(3) of the Act on 27.3.2013. The A.O. recorded the reasons for reopening the assessment as follows:- The assessment was originally completed in this case on 27.03.2013. The Assessing Officer issued a notice u/s 148 on 21.07.2014. The assessee had filed the original return and the assessment was duly completed u/s 143(3). The AO in the reasons recorded has stated as follows: In the Return of income for the AY 2009-10 filed on 30.09.3009, the amount shown in the Balance sheet as on 31.03.2009 under the head General fund was Rs.19,55,90,575/-However, in the Return of income filed for AY 2010-11, the opening balance under the same head as on 01.-04.2009 was shown as Rs.20,20,12/986/- resulting in a overnight increase of Rs.64,22,411/-. Since Income chargeable to tax amounting to Rs.62,44,411/- has escaped assessment within the meaning of section 147 of the Income Tax Act 1961, the notice u/s 148 was issued. 9. The contention of the Ld. A.R. is that the reasons recorded very clearly show that, the only material that the AO has relied on, to make the addition is the audited Balance sheet. Profit Loss account and the annexures. These materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .com 136 (Kerala) (2018) in which the Court has decided that power conferred under section 147 of the Act is not one of review. 9.3 The Ld. A.R. also referred the decision of the Kerala High Court in the case of IBS Software Services (P) Limited Vs Union of India (W.P.(C).No.27373 of 2011 (V)) dated 20.03.15 in which the Court decided that if the necessary and basic documents are already before the AO and in case the AO had not gone into those details, then it is the default of the officer and not the assessee and hence reassessment is not valid. The fact in the instant case is similar to the facts in this decision of the Jurisdictional High Court. Reassessment must be based on reasons recorded and these reasons recorded has to emanate from some material coming to the notice of Assessing Officer after the original assessment. Taking a different view based on the same materials is nothing but a change of opinion, and is not authorised by s.147 of the Act. This view is now confirmed by the decision of the Delhi High court in CIT Vs Kelvinator of India Ltd ( 256 ITRI)(Del) which was affirmed by the Apex court in CIT VS Kelvinator of India Ltd (320 ITR 561)(SC). Hence, the Ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion' as an in-built test to check abuse of power by the Assessing Officer . 10. On the other hand, the Ld. D.R. submitted that in this case assessment under section 143(3) of the Act was completed on 27.03.2013. Subsequently it was noticed by the Assessing Officer that there was a difference between opening and closing balance of the general fund amounting to Rs.64.22 lakhs, which had not been verified in the assessment order made under section 143(3) of the Act. The assessing officer reopened the case under section 147 of the Act after recording reasons to believe that income had escaped assessment and after necessary approval, issued notice under section 148 of the Act. In the reassessment, which was completed on 23rd March 2016, the Assessing Officer added back the difference of Rs 64.22 lakh in the General Fund which had been claimed by the assessee as Corpus donation after observing that there was no evidence to show that there was a specific direction from the donors. The assessing officer further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 1st April, 1989, section 147 of the Act, reads as under: 147. Income escaping assessment If the Assessing Officer, for reasons to be recorded by him in writing, is of the opinion that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). 5. After the Amending Act, 1989, section 147 reads as under: 147. Income escaping assessment If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied and shortfall from the same was to be taxed. 14. The Ld. A.R. has relied upon Circular number 5P(LXX-6) dated 19th June 1968 of CBDT as well as Hon ble Supreme Court decision in the case of CIT vs Programme for Community Organization (248 ITR1) in support of its claim. However, it is clear that the Circular as well as the Hon ble Supreme Court decision has been misinterpreted by the assessee. The assessee is running a hospital and has regular earnings such as sale of medicines received from the patients etc., which form part of the gross receipt. The income needs to be computed on commercial principles by reducing various expenses; otherwise 15% of the gross receipts as intended by the assessee would not give the correct picture. The Hon ble Supreme Court decision has examined whether accumulation should be a percentage of gross donation received on net income after application out of such donation. In a concern such as a hospital the receipts like sale of medicine etc. are not donations but the net income is required to be computed first on the basis of commercial principles. Hence, Ld. CIT(A) decided that the arguments put forth by the assessee is without any merit an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25): taking into consideration all the facts and the circumstances, the situation needs no disturbances of any kind. For the above reasons, we answer question no.1 to the effect that the assessee is entitled to exemption of 25% on Rs. 2,57,376/- and not on Rs. 87,010/- (here Rs. 2,57,376 is the gross income and Rs. 87,010/- is the surplus after application. iii) CIT vs Programme for Community Organization reported in 248 ITR 1/166 CTR 401 (SC) The revenue went on appeal before the Supreme Court against the judgment of the Hon ble Kerala High Court mentioned above. The Hon ble Supreme Court confirmed the view of the Hon ble High Court and held (166 CTR 401 (at page 401): having regard to the plain language of the above provisions, it is clear that charitable or religious trust is entitled to accumulate twenty five per cent of the income derived from property held under Trust. For the present purposes, the donations the assessee received, in the sum of Rs. 2,57,376/- would constitute its property and it is entitled to accumulate twenty five percent there out. It is unclear on what basis the revenue contended that it was entitled to accumulate only twenty five pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, the surplus was only Rs. 92,71,940/-. Therefore, there is no need to file Form 10 before the AO nor for any investment as mentioned u/s 11(5) of the Act, since the entire excess would be within 15% of the income accumulated as per Sec. 11(1)(a) of the Act. Hence, in the light of the various judicial pronouncements, and CBDT circular cited supra, we hold that CIT is not justified in invoking his revisionary jurisdiction u/s 263 of the Act and the same is quashed. It is ordered accordingly. 16.1 In view of the above judgement of coordinate bench, we allow the claim of the assessee and ground No.2 is allowed. 17. Ground No.3 of the appeal is reproduced as under:- 1. The Commissioner of Income Tax (Appeals) is not justified in treating Rs.38,68,753/- as voluntary contributions and not corpus donations. The Commissioner of Income Tax (Appeals) should have accepted that the amounts received were corpus donations and the appellant was not liable to apply 85% of the same towards the objects of the trust. The AO should have appreciated that the full details of the donors have been filed by the, appellant as called for. Moreover, there is no requirement in law that the dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furtherance of their education, for medical treatment, etc. 20. At the time of hearing, no argument has put-forth on this issue. Accordingly, this ground of appeal of the assessee is dismissed. 21. Ground No.5 of the appeal of the assessee is reproduced as below:- The Commissioner of Income Tax (Appeals) should have known that the excess application of the appellant over85% of the gross receipts during the earlier years was eligible to be carried forward and set off during this year against the gross receipts. The appellant had excess application relating to the earlier years to be carried forward and set off during the year. 22. Facts of the issue are that the assessee has made a claim that excess of application of earlier years needs to be set off in this assessment year. It has claimed that in the preceding assessment year, it had excess application which should be set off against current years receipts. The assessee s claim regarding brought forward amount of deficit or excess of the application of earlier years is not correct as such excess application could be sourced out of:- a) Accumulated amounts of earlier years, b) Corpus donations, or c) Loan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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