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2015 (6) TMI 233 - ITAT DELHI

2015 (6) TMI 233 - ITAT DELHI - TMI - Disallowance of expenses on the basis of ‘Application of Income’ - AO treating the whole of the amount of the grant received from Ford Foundation as income of the assesse - Held that:- We find considerable force in the other argument of the assessee’s counsel i.e. the income should be computed on commercial principles, as we have held that the assessee-society is eligible for exemption under section 11 of the Act and we have also held that the objects of the .....

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d to the assessee. - Decided in favour of assesse for statistical purposes. - ITA No.2550/Del/2008 ITA No. 1920/Del/2011 - Dated:- 19-3-2015 - Shri I.C. Sudhir And Shri B.C. Meena JJ. For the Appellant : Shri P. Damkaunajma, Sr. DR For the Respondent : S/Shri K. Sampath & R. Raja Kumar, ARs ORDER Per I.C. Sudhir: JUDICIAL MEMBER The assessee has questioned First Appellate Order on the following grounds: Ground in ITA No.2550/Del/2008 ( A.Y. 2002-03) : 1. The learned Assessing Officer has err .....

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ne of ₹ 42,641.30, which is bad in law and fact. 5. The learned Assessing Officer has erred in enhancing the taxable income without any valid reasons. ITA No. 1920/Del/2011 (A.Y. 2003-04): 2. The assessee has questioned following action of the authorities below: i) in determining the deficit at ₹ 1,73,140 as against returned deficit of ₹ 12,28,708; ii) in denying exemption claimed under section 11 and 12 of the Income-tax Act, 1961 by wrongly invoking the section 13(1)(c) of th .....

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usly. He pointed out that in the assessment year 2001-02, the ITAT in the appeal preferred by the assessee numbered as ITA No. 4542/Del/2004 vide order dated 221.10.2013 has set aside the matter to the file of the Assessing Officer to compute the income of the assessee in terms of the decisions of in the cases of Nirmal Education Society, 71 ITD 152 (Hyd.), Society for Integrated Development in urban and rural areas - 90 ITD 493. The ITAT has directed the Assessing Officer to recomputed the inco .....

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Officer following its order for assessment year 2001-02 has denied the claimed expenditure. No other issue raised in the above grounds has been pressed. 4. The Learned Sr. DR has placed reliance on the orders of the authorities below. 5. Having gone through the orders of the authorities below as well as the order dated 21.10.2013 of the ITAT rectifying its earlier order dated 30.4.2008 vide MA No.66/Del/2012 for the assessment year 2001-02. We find that the ITAT has decided an identical issue as .....

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sidered by the Bench. 7. The Hyderabad B Bench of the Tribunal in the case of Society for Integrated Development in Urban and Rural Areas (Sidur) vs. DCIT, 90 ITD 493 held as follows. 24. Coming to the second limb of the argument of the learned counsel for the assessee that the entire receipts cannot be taxed, we find that the issue is covered by the judgment of this Bench in Nirmal Agricultural Society s case (supra). In that case, it has been held (as per head note) as under:- "The assess .....

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hen the assessee had been assessed as AOP and deprived of section 11 benefits, the Assessing Officer could assess only net income of the assessee and not gross receipts. As far as the assessee was concerned, construction of houses, reclamation of land , etc. were part of its regular activities. Houses were built on the land of poor agriculturists. The assessee-society had no legal title or right over the land or houses of those villagers/agriculturists who were the beneficiaries. The purpose and .....

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tivities for which the society was formed. Therefore, the money spent by the assessee-society in constructing houses, reclaiming the land, for non-formal education, etc. had to be allowed as deduction in the computation of income. The grants received from foreign donor were for specific purposes. The grants which were for specific purposes did not belong to the assessee society, such grants did not form corpus of the assessee or its income. Those grants were not donations to the assessee so as t .....

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grated with the assessee s normal income or corpus. In the instant case, the assessee was acting as an independent trustee for that grant, just as same trustee could act as a trustee of more than one trust. Tied up amounts need not, therefore, be treated as amounts which were required to be considered for assessment for ascertaining the amount expended or the amount to be accumulated. The assessee should have actually credited the grant in the personal account of the donor and any amount spent a .....

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p grants received from the donor, Bread for the World, will be taken out of the computation of income from the income-side. (2) All the money spent under the tied-up programmes directed by the donor also will be taken out of the computation of income from the expenses-side. (3) Any non-refundable credit balance in the personal account of Bread for the World will be treated as income in the year in which such nonrefundable balance was ascertained. (4) The expenses incurred by the assessee for hou .....

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tta trust. It was clear that the intention of the donor and the donee was to treat the money as capital to be spent for the water supply scheme. The fact that the amount had not been paid over to the State Government and was kept unutilised in the account of the assessee-trust was not relevant. The amount could not be said to be income and could not be included as part of the assessable income of the trust under the provisions of section 12(2). In yet another judgment in the case of Sukhdeo Char .....

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proceedings were not valid and were liable to be quashed. This Bench of the Tribunal in the case of Arya Vysya Abhyudaya Sangham (supra) for assessment year 1998-99, in its order dated 25-6-2002 to which one of us was a party was inclined to uphold the view of the Commissioner (Appeals) in that case by holding in para 15 of that order as follows : Though we find considerable force in the other argument of the assessee s counsel i.e. the income should be computed on commercial principles, as we h .....

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any judgment from any High Court which has dealt at length on this issue and which is in its favour. It is also not clear whether the Revenue has accepted or gone on appeal against the judgment of this Bench in the case of Nirmal Agricultural Society(supra). (Emphasis ours). 8. The Assessing Officer is required to follow the well settled Principles of computation of income mentioned in the above decision. As these arguments of the assessee and the case laws cited on the issue of computation of t .....

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