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Income Tax - Case Laws
Showing 1 to 20 of 748 Records
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2016 (3) TMI 1475 - ITAT LUCKNOW
Addition u/s 68 - unsecured loans raised by the assessee - loan which was received prior to the start of the previous year - CIT(A) deleted addition - HELD THAT:- A categorical finding has been given by CIT(A) that there is no cash credit received during the present year and all the loans were received prior to 01/04/2008. This finding of CIT(A) could not be controverted by Learned D. R. of the Revenue. Hence, we find no reason to interfere in the order of CIT(A) because no addition can be made u/s 68 of the Act in respect of any loan which was received prior to the start of the previous year relevant to present assessment year. Accordingly, this ground is rejected.
Addition u/s 41(1) - Addition of amount appearing in the books of accounts of the assessee against sundry creditors since the assessee could not substantiate these credits - CIT(A) deleted addition - HELD THAT:- It cannot be said that there is any liability which has ceased to exist, thus we find no reason to interfere in the order of learned CIT(A) and accordingly reject ground No. 2 of the Revenue.
Disallowance of expenses - expenses not wholly necessarily and exclusively related to own business - CIT(A) deleted addition - HELD THAT:- CIT(A) has examined each and every item of expense in detail and the disallowance was deleted by him on the basis of his categorical finding that all the expenses are fully, necessarily and exclusively related to assessee’s business and the same are allowable expenses except small portion which is already disallowed by him and these findings of CIT(A) could not be controverted by Learned D. R. of the Revenue. Hence, we find no reason to interfere in the order of CIT(A).
Appeal of the Revenue stands dismissed.
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2016 (3) TMI 1474 - ITAT DELHI
Penalty u/s 271(1)(c) - disallowance being 10% of miscellaneous expenses, repair & maintenance etc. being unverifiable in nature and disallowance being loss on sale of asset which was debited to profit & loss account - bonafide mistake - HELD THAT:- Assessee as brought to the knowledge of the AO that the loss on sale of fixed asset was reflected in Schedule 18 of the audited accounts. We also note that while computing the depreciation under the Act, the gross sale consideration was reduced and the depreciation has been claimed at the reduced WDV. However, due to clerical mistake, the said amount was omitted in the computation. We find that in the copy of the Income-tax computation, the said disallowance had been mentioned but inadvertently the amount was omitted.
We further note that in the balance sheet at col. No.18 of Other Expenses was shown as Loss on sale of fixed assets however, in the computation in the head ‘Loss on sale / discard of assets, the amount was not reflected. We also find that even during the course of assessment proceedings, all the information relating to the sale of asset had been furnished and the bonafide mistake that was made was accepted and the said amount was offered for taxation. We note that it is also not a case wherein the said amount was reflected under wrong head or concealed but the same was duly reflected in the audited accounts.
We find that there is no deliberate attempt on the part of the assessee either to conceal income or to file inaccurate particulars of income. The assessee at the time of assessment proceedings has given all the details before the completion of the assessment proceedings. His explanation given to the AO has not been found to be false. We also find support from the decision of Price Waterhouse Coopers (P) Ltd.[2012 (9) TMI 775 - SUPREME COURT] held that the claim of the assessee could not be regarded either as “false” or not “bonafide” so as to conclude that assessee has furnished inaccurate particulars of income. Therefore, we set aside the orders of the authorities below and allow the appeal of the assessee. Assessee appeal allowed.
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2016 (3) TMI 1473 - ITAT MUMBAI
Taxability of income in India - receipts taxable as royalty within the meaning of section 9(1) (vi)of the Act as well as Article-12 of the Indo-US DTAA - amount received from the Indian entities - HELD THAT:- As decided by ITAT A.Y.s 2004- 05 to 2006-07 [2014 (11) TMI 432 - ITAT MUMBAI] expressions “Royalty” and “Fees for included services” have been given distinct meaning in the Indo US treaty. We have already noticed that the tax authorities were not able to come to a conclusion as to whether the consideration received by the assessee company would fall within the meaning of “Royalty” or “Fees for included services”, even though there are plethora of case laws explaining both the terms.
Hence, we are of the view that the tax authorities have not examined the impugned issue in proper perspective, i.e., the matter has not been examined in the context of Indo-US treaty by considering the meaning of various terms used therein. As stated earlier, the meaning to be ascribed to various terms used in the treaty has been the bone of contention in various case laws and we notice that the tax authorities have not considered the applicable case laws. Impugned matter requires fresh examination at the end of the assessing officer. We, restore the matter to the file of the AO for fresh adjudication. - Ground Nos. 1 to 3 are allowed in favour of the assessee in part.
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2016 (3) TMI 1471 - BOMBAY HIGH COURT
Extension of stay on recovery by Tribunal - stay being in excess of 365 days - validity of stay on disputed demand granted earlier in respect of the appeals pending before it in exercise of power u/s 254(2A) - grievance of the Revenue is that it is without jurisdiction as the extension of the stay results in stay being in excess of 365 days, therefore, in clear breach of the third proviso to Section 254(2A) - HELD THAT:- The stay granted by the impugned orders is for a period of six months from its date i.e. 17th July, 2015 and 11th September, 2015. Thus, in the present facts, the impugned orders have exhausted its life and are no longer in force. Thus, the challenge to the impugned order is purely academic. Therefore, we see no reason to entertain the Petitions.
The issue as mentioned herein above, is no longer res integra so far as this Court is concerned in view of the decision of this Court in CIT v/s. Tata Teleservices (Maharashtra) Ltd. [2015 (12) TMI 1507 - BOMBAY HIGH COURT], wherein this Court following the earlier decision of this Court in Narang Overseas (P) Ltd. v/s. ITAT [2007 (7) TMI 5 - BOMBAY HIGH COURT] and CIT v/s. Ronak Industries [2010 (11) TMI 461 - BOMBAY HIGH COURT] held that even after substitution of the third proviso to Section 254(2A) of the Act, the Tribunal would have power to extend the stay beyond a period of 365 days as provided therein. Petition dismissed.
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2016 (3) TMI 1470 - ITAT JODHPUR
Disallowance of the benefit u/s 80P(2) (d) - CIT(A) allowed deductio2014 (9) TMI 1280 - ITAT JODHPUR]n - HELD THAT:- As it is noticed that the learned CIT (A) has followed judicial discipline by deleting the disallowance by following the decision of the co-ordinate Bench of this Tribunal in assessee’s own case for the immediately preceding year [2014 (9) TMI 1280 - ITAT JODHPUR] and as the Revenue has not been able to show any distinguishable facts, we are of the view that the finding of the learned CIT (A) is on right footing and does not call for any interference. As a result ground No.1 in both the Revenue’s appeal stands dismissed.
Leave encashment claimed u/s 43B - CIT (A) has deleted the same by applying the proviso to Section 43B of the Act as the said amount had been paid before the due date applicable for filing the return of income under Sub Section (1) of Section 139 of the Act in respect of the previous year in which the liability to pay such sum was incurred. The Revenue has not been able to dislodge this finding of the learned CIT (A) and consequently we are of the view that the findings of the learned CIT (A) on these issues are also on right footing and do not call for any interference.
Both the appeal of the Revenue stands dismissed.
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2016 (3) TMI 1469 - ITAT JAIPUR
Exemption u/s 11 - assessee is not entitled to claim of such exemption which was not made in the return - HELD THAT:- As observed that the assessee society is registered u/s 12A of the Act and enjoys its benefits. In our considered view the ld. CIT(A) being an appellate authority ought to have considered the assessee's claim which was purely legal in nature and the reservation as contemplated in the Goetze India Ltd. [2006 (3) TMI 75 - SUPREME COURT] is applicable to AO and not to the appellate authority.
We are of the view that assessee's claim should have been considered and appropriate relief in accordance with law may be provided. We set aside the matter to the file of the AO to consider the assessee's claim afresh by providing adequate opportunity of being heard. If some compliance is further required, the assessee may be allowed to make the same and decide the grounds of appeal in accordance with law. Thus the appeal of the assessee is allowed for statistical purposes.
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2016 (3) TMI 1468 - ITAT MUMBAI
Disallowance of interest - advances granted for acquiring development rights in relation to land situated at Bhandup - interest charged @ 12% on the aggregate loan - as per AO since there is no business during the relevant previous year and the only receipt declared by the assessee is interest on debentures and assessee has advanced interest free loan to Ackruti City Ltd - HELD THAT:- We are of the considered opinion that the disallowance of interest, if any, is to be restricted to the amount of advance actually given by the assessee and should not be in reference to the expenditure incurred for the registration and stamp duty charges for registration of development agreement. We further found that since the advance was granted on 31.12.2009 as per the ‘development agreement’ therefore, the period covered during the year under consideration is only w.e.f 31.12.09 i.e. for 3 months accordingly, the AO is directed to compute the disallowance of interest only on the actual amount of advance and only for the period of three months w.e.f. 31.12.09 to 31.03.10. AO is directed accordingly.
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2016 (3) TMI 1465 - ITAT RANCHI
Addition of prior period expenses - In the absence of any supporting evidence/documents, the expenses AO made the addition - CIT(A) deleted the addition - HELD THAT:- The assessee is a public sector undertaking and it has got a vast organization. In its system of account when expenditures are not reported or identified upto the close of the year are subsequently accounted for under prior period expenses. This system of accounting has been regularly followed and the Department has not disputed about this in the past. We also agree with the contention that the AO has clearly erred in drawing adverse inference that these expenditures were not covered by actuarial valuation.
AO's plea that supporting evidences have not been produced is also not cogent as rightly contended by the ld. counsel for the assessee, the particulars supporting against expenditures are duly attached with the concerned vouchers. It is not the case of the Assessing Officer that any voucher of the assessee company has been found to be lacking credibility. We also note that ITAT, Ranchi Bench, in assessee’s own case [2013 (5) TMI 858 - ITAT RANCHI] had upheld the assessee’s claim of prior period expenditure for assessment year 2007-08. Decided in favour of assessee.
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2016 (3) TMI 1460 - ITAT DELHI
Reopening of assessment u/s 147 - addition u/s 68 - unexplained cash deposits - HELD THAT:- As modus operandi of the transaction is that the moment the cash is deposited immediately the cheques are issued in favour of the somebody. Mostly the name appears of Milap Automotive Pvt. Ltd. - we reject the contention of the assessee that there is no live link between the reasons and the information received.
The assertion of Assessee that on receipt of the information from another AO, AO has simply jumped to the conclusion that the deposit is unaccounted income of the assessee. For this our view is that the moment any person of little bit of common sense looks at this account with the income earning employment of the assessee he will jump to same conclusion. Therefore we upheld that reopening of assessment is validly initiated. Therefore ground no 1 of the appeal is dismissed.
Addition u/s 68 - As it is evident that u/s 133(6) letters have been issued by the AO to them and out of them few responded. This might have happened because of short time available during the remand proceedings and death of Shri Dinesh Prasad who was the main person collecting money from other parties. As the AO himself has stated that the assessee may not be the real owner of the sum so deposited, therefore in the interest of justice we set aside all three appeals back to the file of AO for verification of the details filed and also to enquire from the beneficiaries of the sum received from the bank account of the assessee. Verification from the bank also may be conducted for the companies in which the assessee has made investment. In view of this all the three appeals are set aside to the file of AO to make assessment de novo. Appeal filed by the assessee is allowed for statistical purposes.
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2016 (3) TMI 1459 - ITAT BANGALORE
TP Adjustment - DRP directing the TPO/AO to provide freight subsidy where the figure of freight subsidy is not separately available in the annual report of the assessee company - HELD THAT:- We are not in agreement with the findings of the TPO, in view of the fact that in para-20 schedule to the notes of account of the annual report of global green, it is clearly mentioned that transportation outward expenses are net of freight subsidy. As further observed that by the DRP in such circumstances, in the absence of any contradictory evidence, it cannot be presumed that the freight subsidy has not been reduced from the operating cost and therefore, in the absence of information even though adjustment is not possible, but in such circumstances, for uniform comparability, the freight subsidy in the case of the assessee company has to be considered as operating in nature. The AO is accordingly, directed to consider the said subsidy as part of operating revenue.
Working capital adjustment - As reliance has been placed by the assessee are of the view that the working capital adjustment needs to be allowed. AO is accordingly, directed to allow the working capital adjustment.
Decided against revenue.
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2016 (3) TMI 1458 - ITAT CHENNAI
Deduction u/s 80IA - AO disallowed deduction as Department has filed SLP before the Hon’ble Supreme Court challenging the decision of Velayudhaswamy Spinning Mills P. Ltd. [2012 (10) TMI 1125 - SC ORDER] - HELD THAT:- As decided in Velayudhaswamy Spinning Mills & Others [2010 (3) TMI 860 - MADRAS HIGH COURT] eligible business were the only source of income during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee.
Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business, once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplate to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created - no infirmity in the order passed by the ld. CIT(A) and accordingly, the appeal filed by the Revenue is dismissed.
Nature of receipt - carbon credit - revenue or capital receipt - HELD THAT:- We find that the issue of carbon credits receipts has been considered by the Coordinate Bench of the Tribunal in the case of My Home Power Ltd. [2012 (11) TMI 288 - ITAT HYDERABAD] and held that these receipts are capital receipts. We hold that the carbon credits receipts are capital in nature. So far as case law relied on by the DR in the case of Apollo Tyres Ltd. [2014 (1) TMI 33 - ITAT COCHIN] is concerned, once there is a judgment of is bounden duty of the Tribunal to follow the judgment of the High Court. We find no infirmity in the order passed by ld. CIT(A). Thus, the ground raised by the Revenue for both the assessment years are dismissed.
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2016 (3) TMI 1457 - ITAT JAIPUR
Attribution of income - receipt of arbitration award and interest thereon - allowability of expenses related to award - whether expenses incurred should have been allowed & only net income ought to have been taxed? - HELD THAT:- On verification of computation, it is found that payment of (vi) running bills, principal amount and thereon interest from 01/6/1993 to 31/5/1999 and balance payment (unmeasured work), principal amount and interest thereon from November, 1993 to 31/5/1999 , the Arbitrator has allowed principal amount of Rs. 1,36,983/- and thereafter interest at Rs. 1,80,818/-, thus, total amount has been worked by the Arbitrator at Rs. 3,17,801/-, remaining amount pertained to refund of security deposit of Rs. 76,210/- and interest thereon from November, 1993 to 31/5/1999 Rs. 95,025/- and litigation expenses of Rs. 30,000/-.
Since the identical issue decided by the Coordinate Bench for A.Y. 2006-07 has already been challenged before the Hon'ble Jurisdictional High Court and the Hon'ble High Court has also framed question of law in the case of assessee which is pending for disposal. Assessee’s appeal is allowed for statistical purposes only.
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2016 (3) TMI 1454 - ITAT DELHI
Penalty u/s 271B - AO estimated the assessee’s sales outside books of account - no books of account were maintained by the assessee - AO applying estimated profit rate of 5% on such sales - HELD THAT:- Hon’ble Gauhati High Court in Suraj Mal Parasuram Todi [1996 (8) TMI 102 - GAUHATI HIGH COURT] has held that where no books of account are maintained, penalty should be imposed for non-maintenance of books of account u/s 271A and no penalty can be imposed u/s 271B for violation of section 44AB requiring audit of accounts.
Thus Penalty u/s 271B ought not to have been levied because the assessee admittedly did not maintain any books of account as has been recorded in the assessment order itself. We, therefore, order for the deletion of penalty.
Penalty u/s 271(1)(c) - estimation of income at 5% on estimated sales - Delhi High Court in CIT vs. Aero Traders P. Ltd. [2010 (1) TMI 32 - DELHI HIGH COURT] has upheld the view taken by the Tribunal in deleting penalty u/s 271(1)(c) which was imposed on the basis of addition made by the AO on estimated profit.
Thus it is clear that the penalty so confirmed in the instant case cannot be sustained because it was imposed by the AO on the estimate of income made by him. We, therefore, order for the deletion of penalty.
Assessee appeal allowed.
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2016 (3) TMI 1452 - ITAT AHMEDABAD
Rectification of mistake u/s 154 - Addition u/s.80E - incurring interest expense on the loan taken for the purpose of education for himself/herself or for their relatives - AO has observed that the education loan was taken by the married major son of the assessee, and therefore, cannot claim interest u/s 80E - HELD THAT:- The power of rectification under section 154 can be exercised only when the mistake, which is sought to be rectified, is an obvious patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions.
In the present case, before carrying out rectification as suggested by the AO one has to decide the nature of loan, who has taken the loan etc. It will require long drawn process of hearing. It is a debatable question. The assessee annexed form no.16 along with her return and shown the deduction under section 80E. This step must have been taken by the designated employer or by the assessee after due consideration of section 80E and loan documentation. Such stand can be dispelled after perusal of the loan documents and other details. It cannot be a subject matter of proceedings under section 154. Appeal of the assessee allowed.
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2016 (3) TMI 1449 - ITAT DELHI
Addition u/s 68 - unsecured loans/deposits - HELD THAT:- We find that the issue in question is covered in favour of the assessee and against the Revenue by the decision in the case Vijay Conductors India Pvt.Ltd [2015 (9) TMI 1519 - DELHI HIGH COURT] wherein had upheld the order of the Tribunal Settlement Commission and determined the income of Mr. S.K. Gupta without making any addition for unexplained cash credit. During the course of assessment Proceedings of the intermediary companies, including the Respondent Assessees, AO sought directions from the ACIT u/s 144-A. Additional CIT passed an order in which after discussing the facts he inter alia directed that it would be in the best interest of the Revenue to tax these transactions in the hands of beneficiaries and Mr. S.K. Gupta "without making any additions on this account in the hands of conduit entities". The said orders of the Settlement Commission or of the Additional CIT were binding on the AO.
It is not in dispute that the Assessees are the conduit entities and not the beneficiaries. Consequently, the order of the ITAT deleting the addition u/s 68 in their hands does not suffer from any legal infirmity.
Respectfully following the decision in the case of PRO CIT vs. Vijay Conductors India Pvt.Ltd. and other cases [2015 (9) TMI 1519 - DELHI HIGH COURT] we delete the addition and allow the claim of the assessee.
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2016 (3) TMI 1448 - SC ORDER
Penalty u/s 271(1)(c) - assessment order was made u/s 153C/143(3) considering the revised return - HC held Tribunal while dismissing the appeal filed by the assessee has dealt in its order, in detail every aspect, including the factual aspect of the matter - HELD THAT:- Petitioner submits that in respect of the same impugned order of the Tribunal, the High Court has issued notice in the connected matter.
It is open to the petitioner to point out the same before the High Court by way of filing an application for review.
The special leave petition is disposed of accordingly with liberty as above.
It is made clear that we have not considered the special leave petition on merits.
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2016 (3) TMI 1447 - ITAT AMRITSAR
Exemption u/s 11 denied - registration of the Society u/s 12A(a) cancelled - HELD THAT:- We find that the Hon’ble Tribunal [2015 (9) TMI 1550 - ITAT AMRITSAR] has cancelled the order of CIT by which he had cancelled the registration u/s 12A(a) of the Act, therefore, the basis on which the exemption u/s 11 has been denied does not survive. In view of the above, we are in agreement with argument of learned AR that after restoration of registration by Hon'ble Tribual, the assessee is eligible for exemption u/s 11. Appeal filed by assessee is allowed.
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2016 (3) TMI 1445 - ITAT KOLKATA
Revision u/s 263 by CIT - Excess manufacturing cost claimed by the assessee - HELD THAT:- We find that no adverse inference with regard to melting loss of 72 kgs. can be drawn. Hence, this issue cannot be subject matter of revision proceedings u/s 263 of the Act. We further observed that the manufacturing costs, i.e wages, packing material and testing, refining charges & melting loss were genuine and incurred for business purposes. It is not the case of CIT that any of these expenses were found by to be bogus or sham. The only observation in this regard is that the expenses were excessive. In the earlier paragraphs we have already explained that the manufacturing costs were not excessive. Rather the costs incurred compared favourable with the ‘making charges’ recovered from related party. We have thus fully substantiated the genuineness and reasonableness of manufacturing costs incurred by the assessee. The direct costs and making charges incurred by the assessee were reasonable and even the prices charged from the related party were commensurate with the costs incurred by the assessee. Hence, the direction given by CIT for making addition on account of excess manufacturing cost is therefore vacated.
Sales made to related parties at lower prices - Addition u/s 40A(a)(2) - Similar disallowance was deleted by the Gujarat High Court in the case of CIT v. Indu Nissan Oxo Chemical Industries Ltd. [2015 (2) TMI 818 - GUJARAT HIGH COURT] .wherein the disallowance made u/s. 40A(2)B) in respect of payments made to the directors were deleted by the High Court, observing that the recipient of payments was taxed at maximum rate and therefore there was no avoidance or evasion of taxes as envisaged u/s 40A(20(b) of the Act. In view of the above, we are of the view that CIT was wrong in invoking provisions of Sec. 40A(a)(2) and doubting the sales made by the assessee to its sister concern, M/s Anjali Jewellers. Hence, on this issue revision cannot be made by CIT u/s 263 of the Act.
Loss of gold incurred by the company in the course of manufacture of jewellery - After considering the details & documents for AYs 2011-12 & 2012-13, more specifically the quantitative details of gold and jewellery manufactured, the AO accepted the reasonableness of melting loss of 5.28% and 4.81% in AYs 2011-12 & 2012-13 and no adverse inference was drawn. Even, the melting loss of 4.81% incurred in AY 2012-13 was not disputed by the Assessing Officer. The above facts show that the Department while framing the assessments u/s. 143(3) of the Act for the immediately preceding AY 2009-10 and subsequent AYs 2011-12 & 2012-13 accepted the melting loss of 5% in the assessee’s line of business. In the circumstances, we are of the view that CIT’s observations with regard to the melting loss of gold of 72 kgs. being excessive in AY 2010-11 and the directions given to examine the same is unjustified and contrary to the jurisdictional facts of the case. Hence, the same are quashed.
Certain bills held to be bogus - It shall be appreciated that M/s Anjali Estate & Developers had credited contractual income and offered profit to tax at normal tax rates. These jurisdictional facts further prove that there was no tax avoidance arrangement or siphoning of profits. Both the assessee and M/s Anjali Estate & Developers were taxed at normal tax rates. Moreover, the assessee did not claim deduction of the impugned bill bearing number 006aEd/0-11 in the relevant FY 2009-10 but had deferred it and carried forward to the next year. On the other hand, M/s Anjali Estate 7 Developers had accounted the bill as contractual income of FY 2009-10 and paid tax at normal tax rates on its annual income. It is therefore not a case where the assessee had booked higher repairs & maintenance costs to avoid taxes and/or siphoned off profits to sister concern. The revision order of CIT that repairs & maintenance charges were being paid in order to avoid tax was factually incorrect, and without any cogent basis or material. Accordingly, we cancel the directions of CIT in this regard. Hence, this issues of assessee is allowed.
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2016 (3) TMI 1444 - ITAT LUCKNOW
Addition of Additional Conveyance Allowance - HELD THAT:- We find that the first issue about additional conveyance allowance granted to DO of LIC is covered in favour of the assessee by this tribunal orderin the case of S. N. Mishra [1998 (12) TMI 111 - ITAT JABALPUR] this issue is covered in favour of the assessee.
Addition on account of expenses incurred for the business of LIC to the extent of 40% of Incentive Bonus received from LIC - Instead of 40% as claimed by the assessee, deduction can be allowed to the extent of 30% of incentive bonus if it is found that the assessee has been able to establish that to that extent, actual expenses were incurred for increase of the business of LIC. Neither the A.O. nor the learned DR of the revenue could point out that any expenses out of Rs. 13,41,092.94 is not incurred for increase of the business of LIC. Under these facts, by respectfully following this judgment of T. K. Ginarajan [2013 (8) TMI 261 - SUPREME COURT] we hold that to the extent of 30% of incentive bonus which comes to Rs. 921,736/- should be allowed as deduction from Incentive bonus as against deduction of Rs. 12,28,982/- claimed by the assessee on account of expenses incurred for the business of LIC to the extent of 40% of Incentive Bonus Rs. 30,72,453/- received from LIC. This issue is decided partly in favour of the assessee.
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2016 (3) TMI 1443 - ITAT CHENNAI
Revision u/s 263 by CIT - wrongfull allowance of exemption u/s 11 by AO - rental receipt from kalyana mandapam was understated in the return of income and it was falsely classified as corpus donation for the purpose of claiming exemption u/s 11 - as per CIT while letting out the community hall, the trust used to collect major portion of the rent as corpus donation and used to collect a minimum amount as rent, referring to the proviso to sec. 2(15) legislature took away certain activities of general public utility outside the purview of charity u/s 2(15) of the Act by inserting two provisos to sec. 2(15) - as per assessee he has utilized the entire money received on letting out of community hall for charitable activity, therefore, the AO has rightly allowed the claim of the assessee.
HELD THAT:- When the AO has not examined the utilization of rent for charitable activity, this Tribunal is of the considered opinion that utilization of the income of the assessee-trust for charitable activity needs to be examined year by year for allowing the claim of the assessee u/s 11 - CIT(E) also has not examined the utilization of the fund for charitable purposes.
CIT(E) proceeded as if the proviso to sec. 2(15) of the Act would make the assessee-trust not eligible for exemption u/s 11 of the Act. This Tribunal is of the considered opinion that proviso to sec. 2(15) is applicable in respect of the trust whose object is advancement of any other general public utility.
In the case before us, it is not the object of the trust to advance any public utility service. The main object as per the trust deed is to establish educational and medical institution and also providing scholarship to the needy people. Therefore, proviso to sec. 2(15) may not be applicable at all.
This Tribunal is of the considered opinion that the matter needs to be reexamined by the Assessing Officer in the light of the material available on record with regard to utilization of the income for charitable activity. Accordingly, while confirming the exercise of jurisdiction by the CIT(E), the Assessing Officer is directed to examine the utilization of the income of the assessee-trust in the light of the material available on record including the tax evasion petitions said to be received and thereafter decide the claim of exemption u/s 11, in accordance with law after giving a reasonable opportunity to the assessee - Appeal of the assessee is partly allowed
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