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2022 (7) TMI 896 - AT - Income TaxExemption right u/s 11 & 12 - assessee society is registered u/s 12A - Addition u/s 69 - undisclosed income/Investment - AO in the order passed u/s 143(3) made an addition on the ground that the assessee failed to apply 85% of its income towards charitable purposes as mandated by section 11 - HELD THAT:- We find the in the case of DIT (E) vs. Raunaq Education Foundation [2007 (4) TMI 61 - HIGH COURT, DELHI] has decided somewhat similar issue as to whether the assessee who is entitled to exemption u/s 10(22) can claim the benefit thereof for the purpose of income deemed to be chargeable to tax u/s 68 - In that case, the Assessing Officer held that the undisclosed income could not be exempted u/s 10(22) of the Act and the CIT (A) upheld the view taken by the AO. Tribunal considered the provisions of section 4 & 5 of the Act r.w.s. 2(24) and 2(45) as well as section 10(22) of the Act and came to the conclusion that the use of word ‘income’ in sub-section (22) of section 10 of the Act is wide enough to include deemed income u/s 68. Since the revised balance sheet, duly signed by the auditors filed by the assessee has not been rejected and the balance sheet shows loans given to inter societies and the ledger a/c clearly shows the amount as advance for Nandigama land, therefore, addition of the same u/s 69 in our opinion, cannot be made. It has been held in various decisions that section 69 of the I.T. Act does not apply to transactions recorded in the books of account. The various decisions relied on by the learned Counsel for the assessee to the above proposition support his case. We therefore, hold that the addition u/s 69 cannot be made since the amount is already recorded in the books of account. Even otherwise also, it is an admitted fact that the assessee society is registered u/s 12A of the I.T. Act and the benefit of deduction u/s 11 denied by the Assessing Officer has been restored by the CIT (A) by holding that the assessee has spent more than 85% of its gross receipts towards its object and is entitled to the benefit of exemption u/s 11 and the Revenue is not in appeal before the Tribunal. Therefore, once the assessee society is eligible for benefit u/s 11 no addition u/s 68 & 69 can be made since additional income will be treated as deemed income entitled to exemption u/s 11/12/12A of the I.T. Act. We find the Hon'ble Delhi High Court in the case of DIT (E) vs. Raunaq Education Foundation [2007 (4) TMI 61 - HIGH COURT, DELHI] has decided somewhat similar issue as to whether the assessee who is entitled to exemption u/s 10(22) of the I.T. Act, 1961 can claim the benefit thereof for the purpose of income deemed to be chargeable to tax u/s 68 - In that case, the AO held that the undisclosed income could not be exempted u/s 10(22) and the CIT (A) upheld the view taken by the AO. Tribunal considered the provisions of section 4 & 5 of the Act rws 2(24) and 2(45) as well as section 10(22) of the Act and came to the conclusion that the use of word ‘income’ in sub-section (22) of section 10 of the Act is wide enough to include deemed income u/s 68. Addition u/s 68 and 69 will be treated as deemed income eligible for benefit u/s 11 of the I.T. Act. In this view of the matter, the learned CIT (A), in our opinion, is not justified in sustaining the addition made by the Assessing Officer u/s 69 of the I.T. Act as unexplained investment in Nandigama land by invoking the provisions of section 69 of the I.T. Act. Accordingly, the order of the learned CIT (A) is set aside and the Assessing Officer is directed to delete the addition. The grounds raised by the assessee are accordingly allowed.
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