TMI Blog2014 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that the assessee failed to utilise the amount within the period allowed u/s. 11(2) of the Act and assessee filed details of its utilization – the issue of accumulation and utilisation of the amount accumulated is to be remitted back to the AO for verification of the details – Decided partly in favour of Assessee. - ITA No. 1067,1068,1069/H/13 & SA No. 121,122,123/Hyd/2013 - - - Dated:- 30-6-2014 - B Ramakotaiah And Asha Vijayaraghavan, JJ. For the Appellant : Sri A V Raghuram For the Respondent : Smt Esther N Hangal ORDER:- PER : Asha Vijayaraghavan The above appeals and Stay Applications (SAs), by the assessee, are directed against the common order of CIT(A)-IV, Hyderabad date 8.4.2013 for A.Ys. 2007-08 to 2009-10. Since the issues involved are common and the assessee being same, both the SAs and appeals are clubbed and heard together and are disposed of by this common order for the sake of convenience. Firstly we will take up the appeals of the assessee. 2. Brief facts of the case are that the assessee trust had filed its return of income declaring nil income while claiming exemption u/s. 11 of Income-tax Act, 1961 for all the three assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er giving rent for the premises. The CIT(A) held at para 6.7 of her order as follows: 6.7 What is of relevance to the present appeals is the decision with regard to the sec. 11(4A) amended w.e.f. 1.4.1992. The court held in this regard as under: Clearly, the scope of sub-section (4A) is more beneficial to a trust or institution than was the scope of sub-section (4A) as originally enacted. In fact, it seems to us that the substituted subsection (4A) gives a trust or institution a greater benefit than was given by section 13(1)(bb). As it stands, all that it requires for the business income of a trust or institution to be exempt is that the business should be incidental to the attainment of objectives of the trust or institution. A business whose income is utilised by the trust or the institution for the purposes of achieving the objectives of the trust or the institution is, surely, a business which is incidental to the attainment of the objectives of the trust. In any event, if there be any ambiguity in the language employed, the provision must be construed in a manner that benefits the assessee. The trust, therefore, is entitled to the benefit of section 11 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 for A.Y. for A.Y. 2009-10 as part of total income of the assessee. 11. The AR submitted that the AO had failed to appreciate that there cannot be two different funds though the accumulation appears separately in the Balance Sheets, that if after meeting 85% of this year's receipts, the assessee had a surplus, it could spend it for the purposes for which earlier years funds are accumulated, that it was not necessary that the deposits made out of accumulated funds should be drawn and spent and that, therefore, there was no infirmity in the manner in which the assessee had spent the surplus out of the current year's income and claimed it to be out of accumulated funds. 12. The CIT(A) held that the AO had shown that the accumulated amounts have not been applied at all and if the assessee's claim were to be accepted it would lead to a shortfall in the application of current year's income. The CIT(A) did agree with the view of the A.R. that the AO should have given time to the assessee to file application for accumulating this year's surplus instead of bringing to tax such accumulated surplus. The CIT(A) noted that the provisions of the Act with regard to fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the assessment made u/s. 143(3) when there has been no response to notice u/s. 148 is not valid. It was submitted that the CIT(A) erred in holding that the assessment is protected by the provisions of Sec. 292BB though the same is made without there being a valid return of income. The CIT(A) failed to appreciate the fact that for making any assessment u/s. 143(3), there should be a valid return of income and the provisions of Sec. 292- BB is only meant to validate an assessment made by issuance of notice u/s. 143(2) belatedly when not questioned immediately and not this type of assessment which is made without a valid return of income. 19. The AR submitted with respect of 'Deep Mela' that the CIT(A) erred in holding that the Mela organized by the assessee to raise funds is business activity and further erred in having a narrow view to support such view, that the funds raised from such Mela are not used to the full extent failing to appreciate the fact that having such surplus is being taken care by the provisions of Incometax Act and further that the Society is required to accumulate funds to built infra structure for running the educational institutions. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully utilised the profit from 'Deep Mela' for attainment of objects of the assessee trust and, therefore, the assessee has not fulfilled the condition u/s. 11(4A) of the Act and hence the profit from 'Deep Mela' is to be brought to tax. 25. It is also submitted by the DR that the assessee has also not utilised the accumulated amount within the previous year and it is also found that the assessee has not shown such utilisation in the subsequent year. Hence the DR stated that the provisions of subsection (3) of section 11 come into force. As per clause (c) of subsection (3) of section 11 if the accumulated amount is not utilised during the period referred in clause (a) of subsection (2), or in the year immediately following the expiry of the period, the income shall be deemed to be the income of the previous year in which it ceases to be accumulated. 26. We have heard both the parties. At the outset, we are of the opinion that activity of organising 'Deep Mela' is not a commercial activity. What is prohibited under the Act is carrying on business and not generating income in furtherance of its objects. The assessee was to generate income to finance its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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