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TMI Blog2017 (6) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision, for exercising option in writing under the said Explanation before the expiry of time allowed for furnishing return u/s 139(1) is not mandatory, but directory in nature and must therefore be liberally interpreted to confer exemption u/s 11 and not deny it. 3. Both the lower authorities erred in passing their respective orders without granting Your Appellant adequate opportunity of being heard. The orders passed by them are in contravention of the principles of natural justice and hence, bad in law. 4. The Appellant reserves the right to add to, alter or delete any of the above grounds with permission of Hon'ble Tribunal." 3. Brief facts of the case are as under:- 3.1 In this case, the Assessing Officer noted that assessee has sold immovable property of Rs. 3,55,45,600. However, the assessee has failed to disclose this transaction while filing return of income. The assessee's explanation in this regard is summarized as under:- "The appellant submitted that during the F.Y.2008-2009, it had entered into a lease deed dated 27.01.2009 with M/s.Kabra Associates (lessor) for lease of the property land bearing survey No.124/1A, 124/2, 124/4/2m 124/5A, 125/5A admeasur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be taxed in the A.Y.2011-12 but in the year of actual receipt of the same. Hence the assessee has not taxed the same in A.Y. 2011-12 but will offer the same for taxation in the year of receipt." 3.3 However, the Assessing Officer was not convinced, he held as under:- "The above submission of the assessee is considered but the same cannot be accepted. As per assessee, the assessee has taken land on lease from Kabra Associates and after taking the permission from the required Authorities for establishing and running a school at its own cost, it assigned the right, title and interest in the property to M/s. Super Value Properties Pvt. Ltd. The assessee states that as a result of this assignment, the assessee was to be paid of Rs. 3,55,45,600 by M/s. Super Value Properties Pvt. Ltd. The assessee's statement that it has forgone the consideration of Rs. 3,55,45,600 is not acceptable because nobody can give its right, title and interest in such a precious property to anyone without any consideration. It is an internal arrangement against the interests of the trust. Secondly, the assessee could not explain as to what profit will M/s Super Value Properties Pvt. Ltd. get by constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decided here in under: i. The appellant contended that there is no incident of accrual of income in the year under consideration since as per the addendum to the deed of assignment dated 20.01.2011 the consideration of Rs. 3,55,45,600/- was to be paid by the assignee to the assignor on or before 31.03.2015. In this regard it is mentioned that the original deed of assignment dated 19.01.2011 was signed by M/s. Universal Education Foundation i.e. the appellant (assigner), M/s. Kabra Association (the confirming party) and M/s Super Value Properties (the assignee). This deed was duly registered on 19.01.2011 itself with the Sub-Registrar, Thane-II. In this deed following arrangement regarding payment of Rs. 3,55,45,600/- was made: "now this deed witnesseth that in consideration of the sum of Rs. 3,55,45,600/- (Rupees Three Crore Fifty Five Lakhs Forty Five Thousand Six Hundred only) paid by the Assignee to Assignor (the payment and receipt whereof the Assignor hereby admits and acknowledge and of and from the same and every part whereof doth hereby acquit, release and discharge the Assignee forever), the Assigner with the consent and confirmation of the Confirming Party hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1). No such document has been placed on record before me that any such intimation was given to the AO. Accordingly there is no force in this contention of the appellant which is rejected. iii. In view of the facts of the case and the legal position as discussed above, the findings of the AO are upheld." 3.5 Against the above order, the assessee is in appeal before us. 4. We have heard both the Counsel and perused the records. 4.1 At the outset before us the learned Counsel of the assessee did not contest the assessee's submission before the authorities below that sum of Rs. 3,55,45,600 has not accrued to the assessee as income during the year. Though ground in this regard has been raised as ground no.1 before us, learned Counsel submitted that he shall not be pressing for this ground. However, learned Counsel of the assessee emphasized upon ground no.2 for the proposition that the learned CIT(A) failed to note that the amount of Rs. 3,55,45,600 was not actually received during the year under appeal and that in this circumstance the same should be deemed to be applied towards charitable purposes in terms of clause (2) of Explanation to section 11(1) of the Income-tax Act, 1916 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defer the accrual of the income. All along assessee and the Counsel had been pleading that the said income had not accrued. Authorities below had to refer to Hon'ble Apex Court decision in the case of Sumati Dayal to reject this contention of the assessee. 4.6 When this plea of the assessee totally failed assessee claimed that since the assessee has not received the amount provisions of section 11(1) Explanation 2 should have been applied by the Assessing Officer. It is noted that there was no request in this regard whatsoever before the assessing officer. This has been rightly noted by the learned CIT(A). In this regard we may gainfully refer to the concerned extant provisions, which read as under:- "Section 11(1) (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- [(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely following the previous year in which the income was derived as does not exceed the said amount, may, at the option of the person in receipt of the income [(such option to be exercised before the expiry of the time allowed under sub-section (1) of section 139 for furnishing the return of income, in such form and manner as may be prescribed)] be deemed to be income applied to such purposes during the previous year in which the income was derived; and the income so deemed to have been applied shall not be taken into account in calculating the amount of income applied to such purposes, in the case referred to in sub-clause (i), during the previous year in which the income is received or during the previous year immediately following, as the case may be, and, in the case referred to in sub-clause (ii), during the previous year immediately following the previous year in which the income was derived.] ................. (2) Where eighty-five per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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