TMI Blog2016 (1) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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.12A(a) of the I.T. Act, 1961 was also granted by the CIT-1, Pune on 02-03-1992. The trust has also been granted registration u/s.80G. The Trust has also applied for renewal of 80G registration under I.T. Act, 1961 on 02-09- 2004. Notice u/s.148 was served on the assessee on 31-03-2006 after recording reasons. However, no return was filed within the stipulated time. On 02-08-2006 notice u/s.142(1) was issued for filing the return of income and the assessee was directed to appear on 29-08-2006 for 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 exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that there was no need for maintaining the details of identity and address of such donor contributing to the development fund. 5.1 The AO noted that the assessee trust has not identified even any of the alleged volunteers, who have been appointed or authorized to collect the donations in rural areas nor the villages or places 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, in denomination of ₹ 5/- to ₹ 1,000/- and considering that the average donation per person would be ₹ 50/- which will require contributions from about 41,400 persons to collect ₹ 20.70 lakhs and about 4000 volunteers and as many villages to approach and collect from 100 villagers. According to the AO where more than 50% of the rural popu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 held that the trust is not genuine and its income and expenditure are also not genuine. He, therefore, held that the receipts claimed to be from donations has to be treated as income and he disallowed the expenditure. Thus, the AO made addition of ₹ 20,70,000/- shown by the assessee as voluntary contribution and he disallowed expenditure of ₹ 8,05,300/-. In effect he made addition of ₹ 28,75,300/- to the returned loss of ₹ 17,62,800/-. 8. Before CIT(A) the assessee apart 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invalid in law and hence, the reasst. should have been declared null and void. 2] The learned CIT(A) erred in holding that the donations received by the assessee of ₹ 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 an income of the assessee since the assessee was entitled to exemption u/s.11 3] The learned CIT(A) erred in holding that the assessee was not entitled to claim exemption u/s.11 since Form No. 10 was not filed by the assessee along with the return. 3.1] The learned CIT(A) failed to appreciate that simply because the assessee had not filed Form No. 10 along with the return, there was no reason to deny the exemption u/s.11 particularly because the assessee had filed the Form No. 10 in the appellate proceedings. 3.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s.68 and since the amount has already been granted as received by the assessee trust, there is no question of any addition of the same amount being made once again. However, since the source of the funds has not been established to be from voluntary contributions (Donations) the amount will not be eligible for exemption u/s.11 and 12. 16. Referring to the decision of the Tribunal in assessee s own case vide ITA No.857PN/2011 order dated 31-12-2012 for A.Y. 2006-07 he submitted that the Tribunal has held that such donation cannot be treated as corpus donation. 17. He submitted that since 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 decision of Hon ble Gujarat High Court in the case of CIT Vs. Mayur Foundation reported in 274 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us. The 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 vide ITA No.857/PN/2011 and the Tribunal vide order dated 31-12-2012 has held that such donations cannot be considered as corpus donations. However, it has been held that exemption u/s.11 is allowable on such donations. The relevant observation of the Tribunal at para 11.1 and 11.2 read as under : 11.1 After hearing both the sides we find the above grounds are identical to the Ground of appeal No.2 to 2.2 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 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. We find the AO treated the application in Form No.10 for accumulation u/s.11(2) as not valid because it was filed late and not along with the return of income and further it was filed before him and not before the CIT. We find the learned CIT(A) upheld the action of the AO on the ground that the Form No.10 was not filed by the assessee along with the return of income. Further, it was accompanied by a resolution dated 03-05-2007 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 during assessment proceedings opined that such donation will be treated as revenue receipt, the assessee filed Form No.10 during the assessment proceedings. It is also the submission of the learned counsel for the assessee that Form No.10 filed before the complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 continuation of assessment proceedings and hence, even during such pendency Form No.10 can be filed which may be considered while computing income under the Act. For this purpose, reliance was placed on the decision of Gujarat High Court in the case of CIT VS. Mayur Foundation 92005) 194 CTR (Guj) 197 : (2005) 274 ITR 562 (Guj). 5. We are in agreement with the submissions of learned counsel for assessee. The assessee could not envisaged that application for registration under s.10(23C)(vi) would be delayed. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordings of sub-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 10 of the Act. 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 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 assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable 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 intimatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 was justified in considering a new ground by the assessee claiming benefit under section 11 of the Act during the course of the appeal. As rightly urged by the learned counsel for the assessee, in the present case, the assessee stands on an even stronger footing inasmuch as the particulars in Form No.10 under rule 17 of the Rules had been furnished alongwith the revised return before the assessment came to be completed. 11. In the light of the above discussion, it is not possible to state that there 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 the CIT(A) on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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