9911796707
TMI Blog2012 (12) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by 6 grounds vide Revised grounds dated 5.12.2006. 2.2 Accordingly after taking note of the fact that ld. CIT DR had no objection to the substitution of Revised grounds for the original grounds raised by the assessee the substitution is allowed and the parties before the Bench were heard on the said grounds. The revised grounds in ITA 1144/Del/2005 read as under: 1. The Ld. CIT(A) has erred in law and on facts in upholding the addition made by the AO of Rs. 1,76,89,280/- as alleged income. 2. The Ld. CIT(A) has erred in law and on facts in not appreciating that the assessee never had the right to receive any alleged interest income of Rs. 1,76,89,200/-. Also there should be an award of the Arbitrator and also Rule of the Court allowing the award. Nothing had happened of this kind in this case. 3. Under the contract between the assessee and the Bihar Government dated 5.3.1997 the State Government has to advance Rs. 40 crores which was kept as FDR in Syndicate Bank and was covered by a lien as security for Bank Guarantee by the bank to the Government of Bihar for Rs. 40 crores. Under the circumstances of facts and legal position no income has accrued or arisen as income to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income. 2.2. That the CIT(A) erred on facts and in law in not appreciating that since the bank had lien on the amount of FDs and interest accrued thereon as security against the bank guarantee provided by the bank to the Government of Bihar, the interest on the FDs could not be treated as income of the appellant, nor the interest, the same neither having accrued nor received by the appellant. 3. Alternatively and without prejudice, the CIT(A) erred on facts and in law in not giving direction to the AO to consider form 10 filed by the appellant during the assessment proceedings to allow the benefit of accumulation of income. 3.1. That the CIT(A) erred on facts and in law in not appreciating that the requirement of filing form 10 along with the return of income is directory and not mandatory. 3.2. That the CIT(A) erred on facts and in law in holding that no application has been filed by the appellant before CBDT for condonation of delay in filing Form 10." 3.2. It is seen that the issue addressed in the above 3 appeals vide ground no.2, 2.1 and 2.2 is identical to ground no.1 in ITA 1144/Del/2005 and the said appeal namely ITA 1144/Del/2006 it was a common stand of the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A (a) of the Income Tax Act 1961. By applying the provisions of section 11 and 12 of Act, it was seen that the assessee has declared its income at NIL. 5.2. The AO, from the details filed and the books of accounts produced before it, observed that it reveals that the Society during the accounting period had received bank interest on FDR amounting to Rs. 9,80,81,363/- which had not been shown as its income. 5.3. The AO required the assessee to explain why this interest income should not be taken as the income of the Society. The AO observed that assessee had taken the entire amount of interest of Rs. 9,80,81,363/- directly in the balance sheet as liability under the head "loans and advances" showing as interest on fixed deposits under lien against the Bank Guarantee. 5.4. The assessee stated that as per the Interest Act, 1978, the right to make a demand for the interest vests only if a notice was served and the same expires three years from the date the right to receive interest accrues. As such it was contended that as on 31.3.2001, the right to make a demand existed with the Government of Bihar. It was also agitated that on 5.2.2001, the Government of Bihar, vide their state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Income Tax Act under section 12A and qualifies for exemption u/s 11 and 12 of the Act. It was emphasized that the assessee is a body nurtured and nourished by the Ministry of Textile, Government of India and having it's office at Handloom Pavilion, Near Gate No. 2, Pragati Maidan, Bhairon Marg, New Delhi. The office bearers it was stated as would be evident from Memorandum of Association are all government officers mostly IAS officers who are administering the work of Handloom in various places. It was elaborated that the assessee coordinates in the matter of encouraging development of handloom production in the country as a body functioning as a conduit pipe between the users and the manufacturers. The users were claimed to be government Organizations like Railways, Defence and other departments of Central Government in the country. It was argued that producers of handloom products through out the country get the benefit of their services as the availability of the products and quantity are located by the assessee from its Member Organisations located in various places in the country and it arranges for the production and supply of handloom products through these agencies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trator. 7.4.5. It was submitted that the assessee furnished a Bank Guarantee through its banker namely the Syndicate Bank, I.P. Estate Branch, New Delhi on 5.3.97. 7.5. It was stated that in September, 1997 a dispute arose between the parties as there was delay in making payments for supplies by the Government of Bihar. It was stated that as against the total supplies of handloom Sarees/Dhotis worth Rs. 35.98 crores the assessee received payment of only 7.96 crores. The allegation from the other side was also made apparently on the basis of newspaper reports that the sarees and dhotis supplied had been made on powerlooms and not on handlooms. It was further stated on behalf of the assessee that in order to wriggle out of the contract an order was passed by the Chief Secretary, Govt. of Bihar and communicated through Director Handlooms, Government of Bihar dated 23.9.1997 whereby the Syndicate Bank, New Delhi was directed to invoke the Bank Guarantee and remit Rs. 40 crores to the Govt. of Bihar. It was stated that in view of the above facts the assessee had filed the Writ petition before the Hon'ble Delhi High Court seeking to restrain the invocation of the Bank Guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Govt. of Bihar for execution of the contract and the assessee is only a trustee. Therefore the principle as well as the interest has to be paid to the Govt. of Bihar. 7.12. It was further stated that since the issues were subjudice before the Sole Arbitrator and the "virus" of tax can be attracted only when the interest income belongs to the assessee. On account of these facts, it was stated the assessee has reflected the sum of Rs. 9.80 crores as a liability. 7.13. Accordingly it is submitted that the question of application of funds can arise only if the income belongs to the assesee. Since the said amount is not the income in the hands of the assessee as such it was stated cannot be taxed as on the date it cannot be said to belong to the assessee. It is only when the income can be stated to belong to the assessee can the assessee apply this towards its object. 7.14. It was reiterated that the FDRs were prematurely encashed on 16.12.2000 and this fact was informed to the assessee through letter dated 18.12.2000 by the Syndicate Bank. As such it was requested that it may be appreciated that no sum has arisen out of the FDRs as income, which the assessee is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Land Development Trust Ltd. reported in 161 ITR 524 (SC) Reliance was also placed upon the following judgments :- 243 ITR 451 (Ker.), 238 ITR 740 (Cal.), 177 ITR 414 (Ker.), 161 ITR 524 (SC), 157 ITR 711 (Ker.) 7.17. It was re-iterated that FDRs under lien against the Bank Guarantee granted by the bankers were encashed and taken away by the Govt. of Bihar way back in December 2000 itself. The Bank Guarantee was revoked by the Govt. of Bihar. As the FDR's were prematurely enchased there was no right to receive any dues arising out of the FDRs which have been so encashed and taken away by the Bihar Government. 7.18. The alternate argument was put forth if it is to be held as assesssee's income then the liability towards payment of interest on the advance to the Govt. of Bihar which has been claimed by the person advancing the money is an application of funds and such liability for payment of interest if reckoned as application of funds which as per claim of the Govt. of Bihar is to the extent of Rs. 35.48 crores would completely "digest" the total interest of Rs. 9.80 crores and there would be no income liable for any tax. When considered from this point of view, the sum of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 1860 vide Registration dated 28.6.1984 and also registered u/s 12A (a) of Income Tax Act 1961 thereby claiming exemption u/s 11 and 12 of the Income Tax Act 1961. The Society was constituted by the Development Commissioner, Handlooms, . Ministry of Textiles, Govt. of India and the membership is opened to State/National level Apex Cooperatives and Corporations. Memorandum of Association along with Rules and Regulations of the Society and list of members are enclosed in the paper book. On the perusal of the list it may be noted that State Handloom Corporations, Weavers Cooperative Societies, State Cooperatives are the members. The Chairman and the ViceLChairman of the Society are the Development Commissioner and Additional Development Commissioner for Handlooms, Udhyog Bhawan, Ministry of Textiles, Govt. of India. The appeal ITA NO.1144/Del/05 relates to A.Y. 2001-02 against order u/s 143(3). The only ground of appeal relates to addition by the AO. as alleged income of the Society sum of RS.1,76,89,280/-. The brief facts are: 1. On 5.3.1997 assessee entered into contract with Govt. of Bihar for supply of dhotis and sarees to the families living below the poverty line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .9.2000 upheld the order passed by the single judge and returned the petition to the appellant for being presented in appropriate Court i.e. the Court who had the jurisdiction to the entertain the petition of the assessee (in this case is Patna High Court). 10. The Govt. of Bihar immediately instructed the Syndicate Bank to release the Bank Guarantee of Rs 40-crores. The Syndicate Bank vide letter dated 18.12.2000 (paper book page no.29 & 30) intimated the assessee that on 16.12.2000, it has liquidated pre-maturely all the FDRs held as security i.e. 28.5 crores plus 9.8 crores as interest earned over the years and repaid to 'Bihar Govt. the sum of Rs.4O crores on 16.12.2000. 11. The amount of Rs. 4O crores was reflected in the accounts under the sub head Loans & advances (schedule-8) under the main head current liabilities and provision for the year ended 31st March 1998, 31st March 1999 and 31st March 2000. 12. The interest on the said fixed deposits which were held as lien against the Bank Guarantee were also reflected under sub-head Loans & advances (schedule-8) under the main head current liabilities and provisions in the Balance sheet. This is because the assessee was holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in his capacity as owner of the income. Neither advance received can be treated as income nor the accrual out of such advance can be subjected as assessee's income. 20. Under the provisions of sec. 11 and 12 the income derived from property held. under trust and voluntary contributions received are taken as part of the total income. Neither the advance received of Rs.40-crores from Bihar Govt. nor the interest income by holding the said sum as FDRs can be said to be income derived from the property held under trust as the advance cannot be termed as property of the assessee Society. 21. The income would accrue and arise to the assessee only when the transaction is completed between the parties. Section 219 of the Indian Contract Act, also provide that in the absence of any special contract, payment for the performance of an Act is not due to the agent unless the completion of such Act (page 39 of E.D. Sasson). 22. List of case laws to support the case of the assessee is enclosed separately. 23. Without prejudice, the assessee submits that if the interest is treated as part of the total income of the assessee, then the AO. should consider application filed in Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores odd had been kept in FDRs and the remaining funds were transferred to the saving bank account. The Ld. D.R. submitted that the interest earned in the savings bank account where smaller amount of the funds were parked for shorter durations the assessee has earned interest and the said interest has been treated by the assessee as its own income. It was her contention that on the contrary on the interest earned from the FDR for reasons best known to the assessee it is being claimed that it belongs to the Bihar Government. This claim it was reiterated is only before the Tax Authorities as before the sole arbitrator the assessee is contending that the bank guarantee has been wrongfully invoked. 11.3 It was her vehement contention that this dual stand of the assessee shows that the claim before the Tax Authorities has no legs to stand on. A perusal of the paper book pages 139 to 154 for the years under consideration, it was stated would bear out these facts as would be evident from page 138 of the paper book clause v) & vi) as per schedule 17 Notes to the accounts. "Sch.17 : Notes to the Accounts Clause iv) The bank is charging 1% bank commission on the bank guarantee of Rs. 40.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... native prayer advanced on behalf of the assessee it was submitted by the ld.A.R. that the occasion to file a declaration in form no.10 u/s 11(2) along with the return did not arise as all along, it has been the assessee's claim that the said income does not belong to the assessee, thus the occasion to file the said form, along with the return did not arise. It was also his argument that the issue on merits is contested as such the alternate argument ought to have been considered. Findings. 13. We have heard the rival submissions and perused the material available on record and taken into consideration the decisions relied upon by the parties before the Bench. In the light of the above facts and arguments considering ground no.1 in ITA 1441/Del/2005 along with the supportive grounds we are of the view that it would be appropriate to refer to the Agreement dated 5.3.1997 entered into by the assessee with the State of Bihar, copy of which is placed at pages 10-15 of the paper book. The next document which needs to be considered is order dated 23.9.1997 of Chief Secretary, Govt. of Bihar placed at pages 20-23 of the paper book along with the accompanying letters from Director, Handlo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be unconditional and from nationalized banks the validity of which was either 9 months from the date of purchase order or for 60 days after the receipt of entire supply. 13.4.1. For ready reference clause 1, clause 7 and 13 are reproduced hereunder from pages 12 and 14 of the paper book. "Clause 1: Advance to be paid The Government of Bihar has agreed to advance a sum of Rs.40 crores to ACASH for commencing the execution of the contract. aCASH has agreed to give a Bank Guarantee for Rs.40 crores against this advance. "Clause 7: Payment Terms The tender schedule (Part B) vide Clause no.7 has stated that the successful tenderer will be required to furnish security amount at the rate of 5% of the value of the total order placed less the amount of earnest money, in the form of bank draft or National saving certificate, Fixed deposit certificate pledged to the Director, Handloom and Sericulture, Govt. of Bihar, Patna or in the form of bank guarantee on any nationalized bank within a period of 14 days from the date of acceptance of the tender. In the event of the failure of the tenderer to furnish the requisite security, the amount of earnest money shall stand forfeited and vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank guarantees may be revoked on the basis of mutually consent of parties." The disputes and differences arising out in relation to the said agreement save and except any dispute or difference regarding quality and quantity of goods supplied at the time of delivery were to be referred to the sole arbitration of the Secretary, Ministry of Textiles, Govt. of India, Udyog Bhavan, New Delhi as per Clause 16. On perusal of paper book pages 16 and 17 would show that it contains the copy of bank guarantee dt. 5.3.1997 by Syndicate Bank for Rs.40 crores on the request of the assessee i.e. ACACH which was given against the advance of Rs.40 crores received from Govt. of Bihar, Dept. of Industries Directorate of Handlooms and Seri Culture for due fulfillment by the contractor i.e. the assessee on the terms and conditions contained in the said agreement. 13.4.2. Paper book page numbers 21 to 23 it is seen is an order of Chief Secretary, Bihar dt. 15.9.1997 whereby the said authority orders that the Bank Guarantee be invoked under Clause 13 of the contract and Directorate of Handlooms, Govt. of Bihar was directed to take necessary action accordingly. 13.4.3. A perusal of the said order sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only a violation of contract but according to the Additional Advocate General also raised substantial questions about the methodology of operation. 13.4.7. Relying upon a press release issued by the ACASH the Addl. Advocate General stated that ACASH had retained Rs. 28.31 crores in their own accounts as such it can be stated that ACASH has not distributed the money to the Weavers Society for purchasing yarn and for payment of wages as per commitments in the meetings dt. 22.8.1996 and 3rd December, 1996 on the basis of which interest free advances were made. The arguments on behalf of ACASH that payments were due from government was stated to be not a valid argument as payment had been withheld on account of the fact that the terms of Performance Guarantee from ACASH had not been complied with and the fact that power loom product instead of handloom product was provided. It was also agitated by the Addl.Director General in case ACASH is aggrieved with the decision the proper forum would be to approach the Arbitrator. 13.4.8. A careful perusal of the said order further bears out the fact that on behalf of ACASH through its lawyers it was contended that the Government of Bihar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 of the contract it was stated that sufficient reasons must exist to invoke the guarantee. The contract was stated to be still alive as such the bank guarantee it was stated cannot be invoked. Clause 14 was also relied upon so as to contend that it provides for mutual negotiations which had never taken place. 13.4.11. Considering the submissions certain queries were put to ACASH in regard to the enquiry which may have been conducted to find out the truth of the newspaper report. The assessee responded that they have ordered an enquiry whose report is awaited but their own enquiry report indicated that only handloom products have been supplied. The assessee was also required to specifically answer its position vis-a-vis performance guarantee. The assessee's response was considered to be not a satisfactory reply. 13.4.12. The Additional Advocate General in reply on the other hand stated that Bihar Govt. has given Rs.40 crores as advance and Rs. 7.96 crores as payments where as the total value of supply according to ACASH is for Rs.35 crores. Six organizations whose samples were tested it was contended have supplied goods worth Rs.15 crores He also reiterated the earlier points t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the report of the Textile Commissioner is still awaited. ACACH, may make this report available to the Industries dept. Govt. of Bihar as and when received. However, there is enough evidence on record to arrive at a prima facie conclusion that powerloom products have been supplied instead of handloom products. In view of the above, I am satisfied that sufficient grounds exist for invoking the bank guarantee under clause 13 of the contract. It is hereby ordered that the bank guarantee be invoked under clause 13 of the contract. Director (Handloom), Govt. of Bihar is directed to take necessary action accordingly." 13.5. The record shows that acting on the above order Director, Handlooms, State of Bihar sent a letter dt. 23.9.1997 to the assessee's bank invoking the bank guarantee and demanded Rs.40 crores through bankers cheque. The assessee approached the Hon'ble High Court of Delhi twice to stay the invocation of the Bank Guarantee unsuccessfully. 13.6. Considering the facts as available on record and discussed hereinabove we find ourselves unable to agree with the contention of the ld.A.R. that on the basis of above the facts and background that the interest arising from the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion also the ownership of the goods under lien pass only at the time the event contemplated does not occur and the party in whose favour the lien has been created can under law claim ownership on the goods/asset as the party has failed to perform the contracted terms. Thus when the FDRs were maintained ownership vested completely with the assessee even if the assessee unilaterally binds itself by way of executing lien, the ownership passes on 16.12.2000 which future development will not impact the taxability. 13.7. Accordingly for the reasons given hereinabove the concurrent finding of the authorities below on facts cannot be faulted with. The arguments that assessee was under a bonafide belief that maintaining FDRs from these funds and holding them as lien for the State of Bihar in terms of the requirements of the Agreement does not impact the taxability of the amount; Ignorance of law in tax matters cannot be accepted. The bonafide of the assessee in holding that FDRs in lien towards the obligation under the contract in favour of State of Bihar are of no relevance in the present proceedings. No doubt the object of the Society is laudable the society may also have an argument th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned by the company. 13.8.3. Their Lordships held that the transferees obtained under the deed of assignment and transfer executed by the S company in their favour was an income bearing asset consisting of the office of managing agents, the managing agency agreement and all the rights and benefits as such managing agents under the agreement and no part of the consideration paid by the transferees to the S company could be allocated as a receipt of income by reason of their contribution towards the earning of the commission in the shape of services rendered by them as managing agents of the U company for the broken period. What the transferees obtained under the deed of assignment and transfer was the expectancy of earning a commission in the event of the condition precedent by way of complete performance of the obligation of the managing agency under the managing agency agreement being fulfilled and a debt arising in favour of the managing agents at the end of the stated period of service contingent on the ascertainment of net profits as a result of the working of the U company during the calendar year. 13.8.4. In the facts of the present case it is seen it has no relevance as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the issue of enhanced compensation was disputed and the assessee was allowed to withdraw the said amount only on furnishing a security bond for refunding the amount in the event of the appeal being allowed. In these circumstances it was held that the amount did not accrue to the assessee as there was no absolute right to receive the amount at that stage. In the facts of the present proceeding it is an undisputed fact that the FDRs have been maintained by the assessee from the funds advanced to the assessee by the State of Bihar to be further advanced to State Handloom Organisations for meeting their expenses of yarn and wages. The action of the assessee to maintain a portion of Rs.40 crores advanced in F.D. till a weaver Society is identified and also to offer the very same FDs as a surety to State of Bihar argued to be a violation of the terms of the contract by the CIT, D.R. relying on the Order of the Chief Secretary or contrary to the negotiated terms of the contract will not impact the fact that the origin of the funds and stated purpose of the advance of the funds was solely to facilitate the performance of the contract. The interest earned by the assessee on these fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded and it is only the balance that would require an examination for finding out whether the assessee has complied with the rule of accumulation. Accordingly, the income from the properties held under trust will have to be arrived at in the normal commercial manner without reference to the provisions which are attracted by S.14, and 25 per cent thereof will have to be ascertained, and, if the assessee has accumulated more than 25 per cent, the consequences contemplated in S.11 will have to follow." (emphasized by the Bench) 13.9.1. The finding of the CIT(A) and the AO which we have upheld are in fact supported by the above judgement. 13.10. Reliance has also been placed upon the judgement of Hon'ble High Court in the case of CIT vs. Trustees of HEH the Nizams Supplement reliance Endowment Trust 127 ITR 378 (AP) wherein at page 386 it has been observed that for the purposes of Schedule 11 (1)(a), it is the books of the trust which have to be taken into account in determining the income and expenditure of the trust. A perusal of the said judgement shows that it considers facts peculiar to its own. For ready reference the relevant extract from the head note is reproduced hereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts it was held that it was not a case where mere date of payment was deferred but in fact the right to receive the sum was in jeopardy and the right was said to have accrued to the assessee when the said award was affirmed by the High Court and the determining date was held to be the decision rendered by the High Court. 13.11.1. In the facts of the present case it is seen that no order of any High Court or of the sole Arbitrator is available on record which has either been called upon to consider or has considered that the said sum does not belong to the assessee. Further no forum is seized of the question whether the sum was advanced belong to the assessee for a specific purpose in terms of the contract belong to assessee or not what is in dispute is whether maintaining FDRs of Rs. 28.11 lakhs from the advanced funds is violation of the terms of the contract or not which issue is not to be adjudicated upon by us in the present proceedings. Apart from that there is a further dispute namely that over and above the requirement of maintaining the Bank Guarantee of Rs.40 crores which according to the State of Bihar was never provided by the assessee from its own funds but was pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real income had accrued to the assessee in respect of those enhanced charges wherein after multiplicity of litigation by the assessee therein and the consumers of the electricity and the intervention of the Secretary to the Govt. of Gujarat Industries, Mines and Power dept. wherein the Hon'ble High Court and the Hon'ble Apex Court had considered the issues at various times before them in regard to disposal of various suits before trial court. Since the said hypothetical income as per the books of accounts of the assessee was being treated as assessee's income the Hon'ble Apex Court held that the Tribunal has rightly held that the claim at the increased rates as made by the assessee company on the basis of which necessary entries were made represented only hypothetical income and the amounts in question brought to the tax by the A.O. did not represent income which really accrued to the assessee company. 13.12.1. In the facts of the present case there is no hypothetical income considered by the department specific amount of interest has been earned on the FDR amounting to Rs. 1,76,89,280/- and there is no document on the basis of which it can be said that it does not belong to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for 2001-02 having been selected for scrutiny the issue of interest earned on FDRs was examined by the A.O. and the addition made by him was confirmed by the CIT(A). In view of the fact that it was the same issue for the assessment years under consideration the AO initiated action u/s 147 of the Income Tax Act for taxing the interest income of Rs. 2,10,46,133/-; Rs. 2,41,82,691/- and Rs. 3,51,63,259/- respectively the said issue when challenged before the CIT(A) was rejected on the ground that since the earlier returns filed for the A.Ys were only processed u/s 143(1A) as such it was not a case of change of opinion on the same set of facts the contention that reasons were not provided to the assessee was also dismissed on the ground that the assessee has not shown any evidence that despite the request the reasons for action u/s 147 were not provided by the A.O. The CIT(A) held that in each of these years that it appeared to be a case where reasons were not provided to the appellant simply because no such request has been made before the A.O. 16.2. Arguments of the Parties:- Aggrieved by this the assessee is in appeal before the Tribunal. The ld.A.R. contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Accounting Standard-9 for Revenue recognition does not help the assessee's case in any manner whatsoever. The facts and circumstances being identical, ground no.2 raised by the assessee in each of the 3 remaining appeals is also rejected. 18. The third surviving issue addressed in the remaining three appeals i.e. ITA 1676 to 1678/De/2006 vide ground no.3 is that the (a) CIT(A) erred in not directing the AO to consider Form no.10 filed by the assessee during the assessment proceedings to allow the benefit of accumulation; (b) CIT(A) erred in not appreciating that the requirement to file Form no.10 along with the return is directory and not mandatory; (c ) CIT(A) erred in facts in holding that no application has been filed by the assessee before CBDT for condonation of delay in filing Form 10. 18.1. Facts:- A perusal of the record shows that before the CIT(A) it was contended that in the course of the assessment proceedings the assessee has filed Form no.10 for accumulation of profits and since the A.O. did not mention anything about this application the A.O. was required to offer his comments before the CIT(A). The A.O's response vide letter dt. 27.2.2006 in A.Y. 2000-2001 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out is beneficial to the assessee and the assessee fully satisfies the conditions laid down in the afore mentioned Board's Circular to enjoy the benefit despite belated filing of form no.10. The judgements of various Courts relied upon before the A.O. in the remand proceedings were relied upon again. Reliance was palced upon Sun Engineering Works Pvt.Ltd. 198 ITR 297 for the meaning of the terms as considered therein of "assessed" or "reassessed" the escaped income. Reliance was also placed upon Apogee International Ltd. Vs UOI 220 ITR 248 (Delhi) and CIT vs. Punjab National Bank 249 ITR 763(Delhi) for the proposition that of intimation u/s 143(1) does not amount to assessment and thus since no regular assessment was framed prior to the issue of notice u/s 14 of the entire issue was open before the A.O. Reliance was further placed upon K.Govindan & Sons vs CIT 247 ITR 192 for the proposition that the assessment made for the first time u/s 147 is a regular assessment. 18.1.3. Findings under challenge:- Considering these arguments the CIT(A) as per page 36 came to the following conclusion. "As regards the alternate plea taken by the appellant as per ground no.6, it is notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the assessee should be allowed to get the benefit of accumulation u/s 11(2) as even if it is held that the income belongs to the assessee the same results in NIL income. The department it was argued should not be allowed to outrightly reject the claim of the assessee. It was argued that the application for seeking accumulation can be filed by the assessee during the course of the assessment proceedings/ as well as the appellate proceedings. In support of the said claim reliance was placed upon CIT vs. Mayur Foundation 274 ITR 562 (Gujarat). Reliance was also placed upon Circular no.100 (F.No. 195/1/72-IT(A-I) dated 24.1.1973 which has been taken into consideration by various judicial pronouncements. Reliance was placed upon:- CIT vs. Cutchi Memon Union (1985) 155 ITR 51 (Kar.) CIT vs. Ramchandra Poddar Charitable Trust (1987) 164 ITR 666 (Cal.) ITO vs. K.Ravindranathan Nair (1992) 41 ITD 462 (Coch.Trib.) 18.4. Ld.D.R. on the other hand contended that on facts CIT(A) is justified to reject the claim. 18.5. Findings:- We have heard the submissions advanced by the parties before the Bench and taken into consideration the material available on record. We first proceed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandigarh Diocese Society (2009) 318 ITR 96 (P&H) DIT vs. Mitsui & Co. Environmental Trust (2007) 211 CTR (Del) 352 DIT(E) vs. Daulat Ram Education Society (2005) 278 ITR 260 (Del) Bharat Kalyan Pratisthan vs. DIT DIT(E) vs. Mamta Health Institute for Mother & Choldren. Cotton Textiles Export Promotion Council vs ITO (2008) 20 SOT 187 (Mum) 18.5.2. Accordingly it is seen that the statutes and the provisions read along with the Board's Circular contemplate that the delay is condonable in certain circumstances. Before us ld.A.R. has also relied upon the judgement in the case of CIT vs Mayur Foundation which also supports the argument. However on facts it is seen that no such application has been filed by the assessee for condoning the delay before the Commissioner. As such the occasion to consider and thereafter accept/reject the same did not arise. 18.5.3. Accordingly to the extent that reliance is placed upon circular no.273 dt. 3.6.1980 the argument of the assessee cannot be faulted. Read with Rule 17 of the Income Tax Rules it is seen that the power to condoned the delay is available with Commissioner. However the occasion to exercise the power can only arise if appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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