TMI Blog2014 (8) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and it is directed against the order passed by Ld. CIT(A)-I, Mumbai dated 30/08/2013 for assessment year 2009-10. Grounds of appeal read as under: 1. (a) On the facts and in the circumstances of the case, the learned assessing officer erred in making addition of ₹ 30,67,680/- as income of the Trust ,which is contrary to the facts and evidence on record the same should be deleted. (b) The learned assessing officer and the CIT(A) failed to appreciate that the amount of development of fund received is not an income of the Trust. (c) The appellant prays that the contribution to the development fund being corpus donation and being exempt uls.11(1) and section 12 of the Act the addition of ₹ 30,67,680/- be deleted. 2. (a) On the facts and in the circumstances of the case, the learned assessing officer and the CIT(A) erred in holding that, there is a breach of section 11(5) read with section 11(2) and therefore, provisions of section 13(1 )(d) of the Act is applicable and therefore , forfeiture of exemption of the section 11 of the Act. (b) The appellant prays that, the appellant has not breached the provisions and conditions required for claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,680/- (development fund) without accounting it in the P L Account and the AO for the reasons discussed in the assessment order added the said amount to the income of the assessee. 4.1 During the course of hearing before us Ld. AR did not agitate the addition made on account of development fund. However, it is his case that entire amount of ₹ 3,00,67,680/- does not belong to the year under consideration as it is an aggregate sum relating to A.Ys 2007-08, 2008-09 and 2009-10. It was submitted that during the year under consideration the addition to the said account is only a sum of ₹ 46,15,180/-. Ld. AR has invited our attention towards details submitted at page 1 of the paper book, which for the sake of convenience is reproduced below: Statement of Development Fund in Institutions As on 31.03.2007 A.Y. 2007-08: Institutions O/p.Bal. Addition Cl. Bl. Remark Shah Anchor Kutchhi Engg. College 0 7825500 7825500 The amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008- 09. Therefore, after hearing both the parties we direct the AO to restrict the addition to a sum of ₹ 46,15,180/- subject to verification of the figures mentioned in the chart reproduced above. This ground of the assessee is partly allowed. 5. Apropos Ground No.2 5, it was submitted by Ld. AR that both these grounds raise a common issue. Therefore, he addressed these grounds in a consolidated manner. During the course of assessment proceedings the AO noticed that assessee had invested a sum of ₹ 75.00 lacs in the funds, which according to AO were not permissible under section 11(5)(2)(b) of the Act. The detail is as under: Fixed Deposit with Canara Rebeco 25,00,000 Fixed Deposit with Tata Motors Ltd. 50,00,000 Therefore, AO referring to the provisions of section 13(1)(d) observed that as there was violation of section 11(5)(2)(b), therefore, the assessee is not eligible for claiming deduction under section 11 of the Act. He required the assessee to explain the same. In absence of explanation to be furnished by the assessee the AO denied exemption to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee placed fixed deposit with Tata Motors Ltd. which is not a permissible entity with whom the fixed deposit could be placed by Charitable Trust. He submitted that such inadvertent omission on the part of the assessee was guided by a mistaken bonafide belief that fixed deposit placed with Tata Motors Ltd. will not be in violation of section 13(1)(d) r.w.s. 11(5) of the Act. He invited out attention towards copy of application form for obtaining fixed deposits from Tata Motors Ltd.( page 29 of the paper book) in which registered trusts are one of the authorized entity who could apply for fixed deposits. He submitted that on such bona-fide reasonable belief the assessee had submitted the application. He also invited our attention to the copies of FDRs which are placed at pages 31 and 32 of the paper book. He further submitted that it is only upon conclusion of the assessment for the year under consideration the assessee came to know that such investment could not be made by the assessee and immediately upon noting so, the fixed Deposits with Tata Motors Ltd. were withdrawn. To substantiate such contention he invited our attention towards pages 33 and 34 of the paper book, wherein th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned assessment has been framed on 30/12/2011 and almost immediately after completion of assessment the assessee has submitted application for redemption of the FDR i.e. on 24/2/2012. All these facts indicate that it could be a bonafide mistake of the assessee and upon becoming aware that such investment is not permissible the assessee submitted papers of redemption of the FDR. Reliance has been placed by Ld. AR on the decision of Delhi High Court in the case of CIT vs. Agrim Charan Foundation (supra). The ratio of the said decision is that if under bonafide belief /mistake a charitable trust makes a deposit with an entity with whom deposits will be in violation of section 11(5) r.w.s. 13(1)(d) of the Act and the Trust upon becoming aware of such violation withdraws the deposit than for such violation exemption u/s.11 cannot be denied to the Trust. This decision of Hon ble Delhi High Court in our humble, is squarely applicable to the facts of the present case as the facts of the present case are also very peculiar upon which the said decision can be applied. It may also be mentioned here that the said decision of Delhi High Court has also been followed in the following cases: 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This explanation is offered in the year 1998. 8. The Delhi High Court on 14.8.2007 has ruled that if the assessee is mis-lead by the mis-representation by those two companies, the asseseee is entitled to claim exemption under Section 11( l)(d) of the Income Tax Act. In this case there was no material before the Assessing Officer to reject the explanation offered the assessee. The assessee was mis-represented by the investee company, In the absence of contra material when the assessee is doing charitable work, the conduct of the assessee shows that it had no intention to flout the provisions of Section 11(5) of the Act. The explanation offered by the assessee disclose that due to inadvertence and on the misrepresentation of the investee company, such investment is made. Therefore, we are of the opinion that the facts and circumstances in Agrim Charan Foundation s case and in the present case are one and the same. In view of the law laid down by the Delhi High Court, we have to set aside all the orders and answer the question of law in favour of the assessee . In view of the above discussion we hold that the act of the assessee in making fixed deposit with Tata Motors Ltd. was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Mumbai Tribunal dated 27/2/2014 in the case of DDIT(E) vs. Aditya Birla Foundation in ITA No.5922/Mum/2012 in respect of A.Y 2009-10, copy of the order was placed on our record. The relevant observation of Tribunal are as under: 2. The assessee is a trust created and registered with Charity Commissioner as well as under section 12A of the Income Tax Act, 1961 (the Act). The activities of the trust are to provide financial assistance to various charitable institutions for medical relief, sports and cultural activities. While computing the income the AO disallowed depreciation under section 11(1) of the Act on the ground that capital expenditure on these assets had been claimed as application of income, therefore, allowing depreciation would amount to claim of double deduction. Before Ld. CIT(A) it was pleaded that such disallowance by the AO is contrary to the decision of Hon ble Bombay High Court in the case of CIT vs. Institute of Banking Personnel, 264 ITR 110 (Bom). Finding force in such claim of the assessee Ld. CIT(A) has deleted the addition of ₹ 3,75,52,814/- on account of depreciation. The department is aggrieved, hence, has filed Ground No.1 to 3 to ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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