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2016 (1) TMI 600 - ITAT PUNE

2016 (1) TMI 600 - ITAT PUNE - TMI - Benefit of exemption u/s.11 denied - non submission of Form No.10 along with return of income - Held that:- As decided in CIT Vs. Mayur Foundation [2004 (12) TMI 48 - GUJARAT High Court] audit report in Form 10CCB can be filed during appeal proceedings as the same are continuation of assessment proceedings. Since the assessee in the instant case has filed Form 10 before CIT(A) which is continuation of assessment proceedings, i.e. in other words has filed the .....

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ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 20-12-2013 of the CIT(A) Central, Pune relating to Assessment Year 1999-2000. 2. Facts of the case, in brief, are that the assessee is a registered trust having its registered office at Bharati Vidyapeeth Bhawan, LBS Road, Pune. It is registered under the Societies Registration Act, 1960 on 01-10-1988 and under Bombay Trust Act, 1950 on 21-11-1988 with the Charity Commissioner, Pune. Registration u/s .....

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r the assessment purpose which was also not complied with. Subsequently, the case was transferred and fresh notice u/s.142(1) was issued by the new Assessing Officer. Finally the return of income was filed on 13-12-2006 declaring loss of ₹ 17,62,802/- after claiming exemption of ₹ 28,25,578/- as exemption u/s.11 of the I.T. Act. 3. During the course of assessment proceedings the AO noted that although the assessee has filed the return of income for the impugned assessment year, howev .....

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trust has total funds of ₹ 1,32,37,720/- as on 31-03-1999 after expenditure over all the earlier years for the objects of the trust. The income and expenditure account for the year shows that the total revenue expenditure on the establishment and running of the trust is merely ₹ 20,278/- which includes audit fees of ₹ 500/- and contribution fees ₹ 17,447/-. During the relevant previous year, the trust has claimed to have spent ₹ 8,05,300/- on objects of the trust w .....

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ted that the assessee has claimed to have received voluntary contributions in cash amounting to ₹ 20.75 lakhs. It was explained that these donations are collected with a specific direction by the donees as part of the development funds and these amounts are collected through volunteers of the trust. It was stated that these volunteers are provided with printed coupons in denomination ranging from ₹ 5/- to ₹ 1000/-. The collected cash amounts from the rural areas are handed over .....

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s from where the donations have been collected is identified. There are no activities carried out by the assessee trust whereby large number of rural population would gather for such activities and will be in a position to pay such donation to the volunteers after understanding the objects and activities of the trust. The trust has not made any arrangement for the donors to make offerings. The AO further noted that even if it is presumed that the donations have been received against the coupons, .....

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The collections could not be called voluntary or with a direction to be towards the development fund. The assessee trust has not shown any expenses in its books towards the printing of such coupons with pre-printed direction for the development fund or produced such bills/vouchers evidencing the expenditure. He, therefore, held that the transactions are not genuine. The AO referred to the search action u/s.132 on 20-07-2005 carried out in the case of Shri R.K. Shinde, Accounts Manger of Bharati .....

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ived by him as admission commission from time to time. He had further admitted in his reply to Question No.7 that the total amount might have accumulated in addition to the regular fees of ₹ 2 crores and according to his knowledge that amount might have been deposited in the bank in building fund account or trust account. 7. The AO further observed that the other circumstantial evidences indicated that Bharati Vidyapeeth is not making charity or educational service but makes profit by givi .....

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expenditure in connection to the objects of the trust. From the various details furnished by the assessee, he observed that assessee had given ₹ 2,95,300/- to Shri Shripatrao Kadam College for giving awards to students. An amount of ₹ 5 lakhs has been shown as medical relief to certain individuals. He observed that those expenses are not directly connected to the objects of the assessee trust. The various other expenditure claimed by the assessee trust was disbelieved by the AO who .....

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from challenging the above two additions challenged the validity of reopening of assessment u/s.147 through additional ground. The assessee had also taken the second additional ground which relates to the requirement of filing of Form No.10 and the third additional ground pertain to a loan stated to have been given to Bharati Vidyapeeth, Pune. 9. So far as the validity of assessment u/s.147 is concerned the Ld.CIT(A) upheld the action of the AO. The Ld. Counsel for the assessee during the hearin .....

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se of Hastimal Sancheti Research Foundation vide ITA No.225/PN/2008 order dated 26-03-2010 for A.Y. 2004-05. It was argued that as there was no assessment u/s.143(3) in this case and action u/s.148 was the only assessment, there was no occasion to submit Form No.10 in any other proceedings. It was argued that when the AO decided to tax the coupon donations as the income of the assessee that the question of filing Form No.10 arose since otherwise the assessee trust s income for the year was NIL a .....

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ons cited by the assessee that Form No.10 can be filed before the CIT(A) or any authority other than the AO. He accordingly rejected the claim of assessee trust that Form No.10 can be filed before the appellate authorities and accordingly rejected the benefit of accumulation of income to the assessee. The Ld.CIT(A) also rejected the contention of the assessee that the donations received amounting ₹ 20,70,000/- were towards the corpus of the trust and therefore are exempt u/s.11 and 12 of t .....

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f ₹ 20,70,000/- were not entitled to exemption u/s 11 and 12. 2.1] The learned CIT(A) failed to appreciate that the assessee had received voluntary donations towards the corpus of the trust and hence, the total amount of donations received were exempt U/S 11(1)(d) and accordingly, no addition was warranted. 2.2] Without prejudice to the above grounds, the assessee submits that even if the donations received are not treated as towards the corpus of the trust, the same could not be taxed as .....

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e proceedings. 3.2] The learned CIT(A) erred in not appreciating that in the original return filed by the assessee, there was no income which was to be accumulated and hence, the assessee had not filed Form No. 10 along with the return and as the same was filed in appellate proceedings, the exemption u/s.11 should have been allowed. 4] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 13. The Ld. Counsel for the assessee did not press Ground of appeal .....

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h was conducted on Mr. Shinde, the case of the assessee was reopened. He submitted that the registration granted earlier u/s.12A of the I.T. Act has not been withdrawn. Therefore, the assessee, when filed the return, treated the coupon donations received from the public as corpus donation. He submitted that as per provisions of section 11 the assessee has to spend 85% of the income for charitable purposes. Only when such expenditure is less than 85% of the total receipts, the assessee is require .....

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Ld.CIT(A) without appreciating the facts properly held that Form 10 cannot be submitted in appeal proceedings. Further, according to him, Bharati Vidyapeeth being a leading educational institution, has collected huge donations in the guise of capitation fee. He accordingly held that such coupon donations will not be eligible for exemption u/s.11. He further held that although the AO has not made addition u/s.68 and since the amount has already been granted as received by the assessee trust, ther .....

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nce the assessee trust is not in education, therefore, collecting capitation fee is not possible. As regards the finding of the CIT(A) that Form 10 cannot be filed during appeal proceedings the Ld. Counsel for the assessee drew the attention of the Bench to the order of the Tribunal cited (Supra) and submitted that the Tribunal after considering various decisions has allowed the exemption u/s.11 which was earlier denied on account belated filing of Form 10 by the assessee. 18. Referring to the d .....

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ity by computing correct tax liability of an assessee. In other words where the assessee is required to pay tax or becomes entitled to, a refund would be ascertained by the assessing authority after giving effect to the order of the Tribunal. 19. Referring to the decision of the Pune Bench of the Tribunal in the case of M/s. Mateshwari Developers Vs. ITO and vice versa vide consolidated order dated 30-01-2015 for A.Yrs. 2005-06 and 2006-07 he submitted that the Tribunal in the said decision has .....

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s. Further, nowhere it is mentioned that Form 10 can be filed before appeal proceedings. The Tribunal has not stated so. He accordingly submitted that the order of the CIT(A) being in accordance with law should be upheld and the grounds raised by the assessee should be dismissed. 21. The Ld. Counsel for the assessee in his rejoinder referred to copies of few donation receipts and submitted that the bonafideness of the donations should not be doubted. Referring to the copy of the order of the Tri .....

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only dispute that requires our adjudication in the various grounds of appeal is regarding the denial of exemption u/s.11 and 12 to the donations received by the assessee amounting to ₹ 20,70,000/- and the admissibility of Form 10 filed before the CIT(A) instead of filing the same before the AO along with return of income. 23. So far as the coupon donation of ₹ 20,70,000/- is concerned, we find an identical issue had come up before the Tribunal in assessee s own case for A.Y. 2006-07 .....

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ide our order of even date have discussed the issue and held as under : 19. We have considered the rival arguments made by both the sides, perused the orders of the AO & CIT(A) and the Paper Book filed on behalf of the assessee. Since the coupon donation receipts do not contain the complete address of the donors, the name of the recipient on behalf of the Trust and there is no written direction by the donor to treat the donation towards corpus of the Trust, therefore, we are of the considere .....

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y difference. We, therefore, hold that exemption u/s.11 is allowable on such donations. The grounds by the assessee are decided accordingly. 11.2 Since facts of the present case are identical to the facts of the case cited above, therefore, following the same ratio, the above grounds by the assessee are allowed. 24. Since in the instant case also the coupon donations do not give the complete details of the donors nor there any direction to treat such donations as towards any particular purposes/ .....

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to 4.6 by the assessee relates to denial of exemption u/s.11 on account of belated filing of Form No.10 by the assessee. 8.1 After hearing both the sides we find the above grounds are identical to Grounds of appeal No.3 to 3.6 in the case of Patangrao Kadam Pratishthan vide ITA No.289/PN/2011 for A.Y. 2006-07. We, vide our order of even date have allowed the claim of the assessee by holding as under : 12. We have considered the rival arguments made by both the sides, perused the orders of the A .....

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for application of income and the resolution should have been passed before the due date for filing the return of income. He further observed that the assessee has filed such Form No.10 during reassessment proceedings. Distinguishing the various decisions he upheld the action of the AO. It is the submission of the learned counsel for the assessee that the assessee had filed the return of income claiming the coupons donation as corpus donation not chargeable to tax. It was only when the AO durin .....

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ub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required, under rule 17 in Form No. 10 of the Rules. If during the assessment proceedings, the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from .....

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e income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules even then, in our opinion, it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income, the assessing authority cannot entertain the claim of the assessee under section 11 of the Act, therefore, .....

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thorities, exemption under ss.11 and 12 was claimed. However, since it was not foreseen that the exemption under alternate provision was required to be claimed, in respect of surplus, the assessee could not file Form No.10 for accumulation of surplus income which will result into taxability of surplus fund after exhausting the exemption available under ss.11 and 12 of the Act. Learned counsel for the assessee has submitted that the assessment proceedings pending before the Tribunal is continuati .....

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d. Thus, the assessee was required to make alternate claim under ss.11 and 12 of the Act. As held by Hon ble Gujarat High Court in the case of Mayur Foundation (Supra), assessment proceedings are complete when appeal against order of assessment is decided by the Tribunal. Various courts have time and again held that though filing of Form No.10 is mandatory to claim exemption under ss. 11 and 12 of the Act, the same can be filed at any time during the pendency of assessment proceedings. If so fil .....

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agree with the findings of the CIT(A) that the assessee was not permitted to file Form No.10 in the reassessment proceedings and that the decision of Hon ble Supreme Court in the case of Nagpur Hotel Owner s Association is not applicable in the facts of the present case. This view of ours derives support from the decision of Hon ble Gujarat High Court in the case of ACIT Vs. Stock Exchange of Ahmadabad wherein the Hon ble High Court, after considering the decision of Hon ble Supreme Court in th .....

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prescribed for filing Form No.10 under rule 17 of the Rules read with section 11(2) of the Act is directory. In the present case, it is an admitted position that the assessee had filed Form No.10 as required under rule 17 of the Rules alongwith the revised returns filed in respect of all the assessment years under consideration. Thus, admittedly, the forms had been submitted before the assessment came to be completed. At this juncture reference may be made to the decision of the Supreme Court i .....

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cer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the asse .....

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authority completes the assessment concerned because such requirement is mandatory and without the particulars of this income the assessing authority cannot entertain the claim of the assessee under Section 11 of the Act, therefore, compliance with the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of Section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessme .....

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inding and answer the said question in the negative and against the assessee. 9. Examining the facts of the present case in the light of the principles enunciated in the above decision, as noticed earlier, the assessee filed Form No.10 under rule 17 of the Rules at the time of filing revised returns in respect of each of the assessment years under consideration. Thus, evidently, the requirements of section 11(2) of the Act had been complied with before the completion of the assessments. Therefor .....

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covered by the aforesaid decision of the Supreme Court. The assessee was, therefore, entitled to the benefit of section 11 of the Act on the basis of the information supplied by it prior to framing of the assessment orders. 10. It may also be noted that this court in the case of C.I.T. v. Mayur Foundation (supra) has held that the assessment proceedings cannot be said to be complete and are pending till the appeal is heard and disposed of by the Tribunal and accordingly held that the Tribunal wa .....

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re is any legal infirmity in the impugned order of the Tribunal in holding that rule 17 of the Rules is directory in nature and in holding that the assessee had duly complied with the requirements of subsection (2) of section 11 of the Act. 12.4 In the light of the above discussion we are of the considered opinion that since the Form No.10 was filed prior to completion of assessment, therefore, the assessee is entitled to benefit of section 11 of the I.T. Act. We therefore set aside the order of .....

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