TMI Blog2018 (6) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore must be rejected. The interest earned on fixed deposit with banks complying with the provisions of Section 11 (5) is exempt and the proviso to Section 2( 15) has no application to the facts of the assessee's case. - Decided in favour of assessee. - ITA No.6706/M/2016 And ITA No.6565/M/2016 - - - Dated:- 22-6-2018 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Assessee : Shri S.M. Kapoor, A.R. For The Revenue : Shri V. Justin, D.R. ORDER Per Rajesh Kumar, Accountant Member: The above titled appeals one by the assessee and the other by the Revenue have been preferred against the order dated 16.08.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13. ITA No.6565/M/2016 (Revenue s appeal) 2. The various grounds raised by the Revenue are as under: 1. Whether, on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was right in directing the A.O to delete the addi tion, ignoring the ratio laid down by the Hon'ble Bombay High Cour t in the case of CIT v/s common Ef f luent Treatment Plant(Than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Counsel submitted that the ld. CIT(A) has rightly reversed the order of AO on this ground. The Ld. A.R. submitted that the issue is directly covered in favour of the assessee by the decision of the co-ordinate bench of the Tribunal in assessee s own case in ITA No.4843/M/2012 for A.Y. 2009-10 vide order dated 29.02.2016. The Ld. A.R. prayed before the Bench that in view of the said decision of the co-ordinate Bench the appeal of the Revenue be dismissed. 4. The Ld. D.R. appears to be fairly agreed to the contentions and arguments of the assessee. 5. We have heard the rival contentions of both the parties and perused the material on record including the decision cited by the Ld. A.R. A perusal of the order of the co-ordinate bench of the Tribunal in assessee s own case in ITA No.4843/M/2012 for A.Y. 2009-10 (supra) reveals that the issue has been decided by the Tribunal in favour of the assessee. The operative part whereof is as under: 12. We found that the AO has taxed interest income on the following three reasonings :- (i) the proviso to Section 2( 15) applies, (ii) the registration under Section 12A has been withdrawn by the OIT (E), and (iii) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as an entity carrying on charitable purposes concerned and in fact, under Section 13(1)( d)(ii), if the funds of a trust or institutions is invested in assets other than those specified in Section 11(5), the exemption under Sections 11 to 13 would be withdrawn. It is therefore not only inexplicable, but absurd as to why the Assessing Officer has taken the stand that interest received from deposits in banks falls foul of the proviso to Section 2(15). It is to be noted that all the other activities and income streams received by the assessee have been held to be not taxable by the Assessing Officer himself in making his order dated 30th December, 2012 on the grounds of mutuality and the only amount which has been assessed to tax as income of the assessee is income from interest of ₹ 2,17,92,167. Thus according to the AO compliance by a entity set up for charitable purpose with the provisions of section 11 (5) of the Act would result in its status of 'charitable purposes' being denied on account of the proviso to section 2( 15) of the Act. The direct consequence of such an interpretation would be that an otherwise charitable institution' would lose its st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the proviso as it cannot be said to be engaged in any activity which is in the nature of trade, commerce or business. 15. The second objection of AO was that the registration u/s.12A has been withdrawn by the DIT(E). At the time at which the Assessment Order was passed viz. 30th December, 2011, that fact was correct. However, the order withdrawing the registration under section 12A has been cancelled by the Tribunal and the Appeal of the assessee has been allowed by the Tribunal vide its order dated 30th May, 2012. Therefore, the second reason given by the Assessing Officer that the registration has been withdrawn is no longer valid as the registration, withdrawn by DIT(E) has been cancelled by the Tribunal vide its order dated 30-5-2012. Thus, the objection taken by the AO for declining of registration for exemption has been withdrawn has no legs to stand in view of the decision of the Tribunal in assessee s own case in ITA No.311/Mum/2012, dated 30-5-2012, wherein the order passed by DIT(E) u/s.12A(3) of the Act cancelling registration granted u/s.12AA was set aside and appeal of the assessee was allowed. 16. The last objection of AO was that decision of Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the decision of the co-ordinate Bench and maintaining the consistency with the earlier year, dismiss the appeal of the Revenue by upholding the order of Ld. CIT(A). ITA No.6706/M/2016 (assessee s appeal) 7. The ground raised by the assessee is as under: The learned CIT(Appeals) has erred in law and on the facts of the case in not allowing deduction of capital expenditure of ₹ 2,18,50,357/- 8. The only issue raised by the assessee is against the order of Ld. CIT(A) upholding the order of AO in not allowing the deduction of capital expenditure of ₹ 2,18,50,357/-. 9. The Ld. A.R., at the outset, drew our attention to para 5.2(iv) of the appellate order and stated that the issue raised in this ground of appeal has not been adjudicated by the Ld. CIT(A) and dismissed the appeal by observing that the same does not arise from the assessment order. The Ld. A.R. submitted before us that the assessee is entitled to the deduction of capital expenditure of ₹ 2,18,50,357/- and by relying on certain case laws as placed in the paper book and shown to the Bench during the course of hearing requested that the issue be restored to the file of the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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