TMI Blog2010 (9) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... artment by : Shri Vivek Mishra, CIT(DR) Assessee by : Shri Amit Shukla, Advocate ORDER Per B.R. Kaushik, Accountant Member : This appeal has been filed by the Department against the order dated 14-5-2009 of the ld.CIT(A). 2. Ground No. 1.1 of appeal is against the decision of the ld.CIT(A) in deleting the addition of Rs. 5,48,45,373 made by the AO under section 11(3)(d) on account of deemed income. It has been claimed that the 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 dated 24-3-2004. The assessee-society is a Sports Association working for the advancement and promotion of games and sports, particularly cricket in the State of U.P. It was affiliated to the BCCI and was responsible for organizing of the prestigious Cricket tournaments including Ranji Trophy, test matches and One d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee of the previous year in which the amount was credited or paid. The AO held that in view of circular no. 8 of 2002 dated 27-8-2002 of the C.B.D.T. explaining the provisions of section 11(3)(d) of the Act, inserted by Finance Act, 2002 with effect from 1-4-2003,the payment of Rs. 5,48,45,373 to aforestated Uttar Pradesh Cricket Association could not be considered as application of income of the assesses for charitable purpose 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 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee-society has transferred all its assets and liabilities to newly formed company M/s. U.P.Cricket Association, which was not registered as per the provisions of the Societies Registration Act and therefore, the transfer of assets and liabilities was made to an entity other than a duly registered society and the provisions of Societies' Registration Act were violated. The ld.D.R. also relied on the decision in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of the society to the company Uttar Pradesh Cricket Association, who had taken over all its assets, liabilities and functions. The submission of the ld.D.R. that the transfer was in violation of the provisions of Societies Registration Act is also not correct because the Societies Registration Act has not forbidden any such transfer and In any case, the scope of transfer has been extended by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds should not be given judicial recognition being in contravention of the provisions of the Societies Registration Act because the Income-tax Act, 1961 has clearly provided that the accumulated profits to another institution are not liable to be taxed if the other conditions are fulfilled. The Revenue has not placed any material before us to prove that other conditions were not fulfilled. We, 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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