TMI Blog2016 (6) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view, the assessee-trust is entitled for the benefit of accumulation of funds u/s 11(2) of the Act to the tune of ₹ 1,89,10,525/- as claimed by the assessee-trust. - Decided in favour of assessee - I.T.A. No. 2150/Mum/2015 - - - Dated:- 31-5-2016 - Shri Saktijit Dey, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri Arvind V. Sonde Shri S.K. Mutsaddi For the Revenue : Shri Ritesh Misra ( D.R. ) ORDER Per Ramit Kochar, Accountant Member This appeal, filed by the assessee-trust, being ITA No. 2150/Mum/2015, is directed against the order dated 07-01-2015 passed by learned Commissioner of Income Tax (Appeals)- 1, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2010-11, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 25-03-2013 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income Tax Act,1961(Hereinafter called the Act ). 2. The grounds of appeal raised by the assessee-trust in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) read as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(2) of the Act, it was observed by the A.O. that the assessee-trust has claimed accumulation u/s 11(2) of the Act for ₹ 1,89,10,525/- during the previous year relevant to the assessment year. It was further seen by the AO that Resolution passed by the assessee-trust dated 24th September, 2010 enclosed with the Form No. 10 reads as under:- It is resolved that amount of ₹ 1,89,10,525/ the excess of income over the expenditure for the year ending 31.03.2010 be carried forward for future project. It was observed by the A.O. that the accumulation u/s 11(2) of the Act is sought to be made for various general purposes and no specific and concrete projects are contemplated for utilization of these accumulated funds but the purpose of accumulation is vague. Moreover, no specific fund is created in the books of account setting aside these funds for a specific project. The A.O. relied on the ratio of decision in the case of DIT (E) v. Trustees of Singhania Charitable Trust, (1993)199 ITR 819(Calcutta HC) wherein the Hon ble Calcutta High Court held that the accumulation is permissible only if detailed specific purpose for accumulation is specified by the taxpayer-tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Resolution for the purposes has been passed on 24th September, 2010 that is after the end of the financial year. Hence, the A.O. denied the benefit of accumulation u/s 11(2) of the Act to the assessee-trust for not being for definite and concrete purposes and taxed the amount of ₹ 1,89,10,525/- as income of the assessee-trust vide assessment orders dated 25/03/2013 passed u/s 143(3) of the Act. 5. Aggrieved by the assessment orders dated 25/03/2013 of the A.O. passed u/s 143(3) of the Act , the assessee-trust filed its first appeal before the learned CIT(A). 6. Before the learned CIT(A) the assessee-trust submitted that Form No. 10 was filed by the assessee-trust belatedly before the A.O during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act. A copy of the Resolution along with the Form No. 10 seeking accumulation of ₹ 1,89,10,525/- was also filed before the learned CIT(A). The assessee-trust submitted that it was in the process of building a multi-specialty hospital and educational institution in the field of medicine in the plot of land owned at Jogeshwari and the monies in question were accumulated in respect of this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-trust alternatively contended that ₹ 2 crores received on account of settlement of dispute is a capital receipt and is not liable for taxation. The assessee-trust submitted on this issue as under:- The assessee trust while withdrawing the appeal has also filed an affidavit dated 12.01.2010 to that effect with the Addl. Commissioner, Konkan Division. The copy of the said Affidavit filed by the assessee before the Addl. CIT of Konkan Division, withdrawing the case is placed at Pages 63 to 70 of the compilation and it is pertinent to note that such type of receipt, abinitio, is a non taxable capital receipt under Income-tax Act, 1961. As such, it should have been transferred to corpus account. However, the accounting treatment should not be a decisive factor in determining the taxability of such receipt in the hands of the assessee. The learned CIT(A) considered the replies of the assessee-trust and held that the assessee-trust has admittedly treated the amount of ₹ 2 crores as its income during the year and that is how it has claimed for its further accumulation of the amount u/s 11(2) of the Act . The amount was received on account of sale/surrender of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with English translation which is placed in the file. Later on the advice of the advocate , and after negotiations of the assessee-trust with Om Vishal Nagar Co-operative Housing Society Ltd. , the assessee-trust has withdrawn the appeal and filed affidavit to withdraw its claim as well litigation with respect to the Nala plot of land allotted by Collector in favour of Om Vishal Nagar Cooperative Housing Society Limited, in lieu there-of compensation of ₹ 2,00,00,000/- was received by the assessee-trust from the said Om Vishal Nagar Co-operative Housing Society Ltd. and the assessee-trust decided to accumulate the money for future project in compliance with the provisions of Section 11(2) of the Act. A Resolution was passed on 24th September, 2010 (copy placed at paper book page No. 72) wherein it was decided to accumulate money for future projects. It was the say of the learned counsel for the assessee-trust that form 10 was not filed with the Return of income filed u/s 139(4A) of the Act before the expiry of the time limit prescribed u/s 139(1) of the Act as stipulated under Rule 17 of Income Tax Rules, 1962 , while the said Form No 10 was duly filed later before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re completion of the assessment and hence it should be admitted. The ld. Counsel further relied upon the decision in the case of CIT v. Hotel and Restaurant Association, [2003] 261 ITR 190 (Del) to contend that the accumulation is for the purposes of trust and there is no need to specify the purposes of the accumulation which can be for the objects of the assessee-trust. It was also the contention of the assessee-trust s counsel that if two views are possible, then view favorable to the tax-payer is to be followed as held by Hon ble Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC). It was also contended that it is held by several decisions of the Hon ble Courts that Form no 10 can be filed for the first time even before the Tribunal. The learned Counsel for the assessee-trust also relied upon the decision in the case of DIT v. Mitsui Co. Environmental, (2008) 303 ITR111(Delhi HC) whereby the Hon ble Delhi High Court duly considered the judgment of Hon ble Calcutta High Court in the case of DIT(E) v. Trustees of Singhania Charitable Trust(supra) . The assessee-trust also relied upon the decision in the case of Bhartiya Kalyan Pratisthan v. DIT(E), (2007)299 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-trust for which project report is submitted by the assesssee-trust and is placed in paper book page 76-102. The assesseetrust has also contended that the accumulation of funds u/s 11(2) of the Act of ₹ 1,89,10,525/- has been done in accordance with the object clause of the assessee-trust and setting up hospitals , dispensaries, health centres , giving medical assistance is one of the objects of the assessee-trust specified in the Trust Deed which is placed in paper book page 106-114.It is also observed that Urban Development Department , Mumbai has under the Maharashtra Regional and Town Planning Act,1966 has accorded approval for earmarking the land owned by the assessee-trust for Hospital and Medical Educational Institution vide notification dated 08-12-2008 by de-reserving the said land from No Development Zone . In view of the decision of Hon ble Delhi High Court in the case of CIT v. Hotel and Restaurant Association, (2003) 261 ITR 190(Del. HC) the contention of the assessee-trust was that the assessee-trust is entitled for the benefit of accumulation of funds u/s 11(2) of the Act for fulfillment of objects as specified in its trust deed and specific purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our considered view and in the light of the above cited judicial precedents which could not be controverted by the learned DR and more so in the decision of the DIT v. Mitsui Co. Environmental, (2008) 303 ITR111(Delhi HC) whereby the Hon ble Delhi High Court duly considered the judgment of Hon ble Calcutta High Court in the case of DIT(E) v. Trustees of Singhania Charitable Trust(supra) relied upon by the Revenue, the assessee-trust in our considered view is entitled for the benefit of accumulation of funds u/s.11(2) of the Act to the tune of ₹ 1,89,10,525/- being excess of income over expenditure towards the proposes of setting up of hospital project at Jogeshwari although the purposes specified in the Resolution is for future projects but the same need to be read in the conjunction with and in the light of the hospital project which was underway and was being set up by the assessee-trust on the touchstone of preponderance of probabilities, that the non-submission of Form 10 along with return of income as required under Rule 17 of Income Tax Ruls,1962 is duly addressed by the assessee-trust by filing the form no 10 before the conclusion of the assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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