TMI Blog2014 (9) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... hold these findings of the Ld.CIT(A) and dismiss this ground. Accepting audit report in Form no.10B - assessee had, instead of filing Form No.10B, filed an audit report in form no.10BB, before the Assessing Officer - Held that:- Case of CIT vs. Trehan Enterprises [1999 (8) TMI 8 - JAMMU AND KASHMIR HIGH COURT] held that the requirement in question was merely directory and not mandatory. In any event all the details and audit report in some other form were already before the AO. We uphold this finding of the Ld.Commissioner of Income Tax (Appeals) that he has the power to admit audit report in form no.10B as in this case the Ld.AO has failed to bring to the notice of the assessee that there was a difficulty in the audit report filed in Form 10BB before him.- decided against revenue Computation of taxable income of the appellant - short fall in the application of 85% of the income - Held that:- CIT (A) is right in holding that the society is entitled to exemption u/s 11(1) in respect of the capital gains arising from the sale of Dhorka land. In fact this land was purchased for educational activities. This is evident from the various evidences filed by the assessee in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7,38,81,711/-. In the return of income, the assessee claimed exemption of income u/s 10(23C)(vi) of the Act. However, the assessee s approval u/s 10(23C)(vi) was rejected by the CCIT, Panchkula for Assessment Year 2007-08 vide order dt. 29.9.2008. Hence, the assessee was not eligible for exemption u/s 10(23C) of the Act. The Assessing Officer proposed to add the unspent amount of ₹ 7,38,81,711/- to the income of the assessee. The assessee alternatively claimed exemption u/s 11(1) of the Act. The Assessing Officer rejected the claim since the required report in Form no.10B was not furnished along with the return of income. The gross receipts of SEAS included profit of ₹ 8,44,78,458/- on sale of land at Village Dhorka, Gurgaon. On the issue of taxability of the above profit, the assessee raised the contention that the amount was set apart for utilization in future for specified purpose and a report in Form no.10 was filed along with the return of income. However, since the purpose of utilization was not mentioned in Form no.10, the Assessing Officer has considered the entire profit for taxation by denying the benefit of section 11(1A) of the Act. After allowing deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw in holding that the filing of Form No. 10BB is substantive compliance of Rule 17B and filing of Form No. lOB, principally when the requirement of giving particulars under Rule 17B and giving particulars in From No. lOB are entirely different from that of Form No. 10BB corresponding Rule. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in treating the land held by Society at Dhorka (Gurgaon) as a property held wholly for charitable purposes within the meaning of section l1(lA)(a) of the Act and thereby treating the sale consideration thereof as income received for charitable purposes and eligible for accumulation u/s 11(2), ignoring the fact that the said land was neither ever used for any charitable activities/purposes nor was ever any intention of the society to use such land for charitable purposes particularly because the said land was an industrial land which was subsequently sold on hefty profit of ₹ 8,44 Crore and during holding of land no effort such as change of land use (CLU), permission to open school or educational institute was made by society to use the property for educational purposes. 6. That the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld.CIT(Appeals) granted relief to the assessee by holding that: (a) there is no dispute that the assessee Society is registered u/s 12AA of the Income Tax Act by the order of the Ld.CIT, Faridabad dt. 13.3.2003. Hence it is a charitable society; (b) the assessee society also enjoyed exemption u/s 10 (23)(C)(vi) of the Act as per approval granted by the Chief Commissioner of Income Tax, Haryana Region, Panchkula vide order dt. 26.2.2007 for the Assessment Year 2002-03, 2004-05. This exemption was extended for the Assessment Year 2005-06. The assessee s application for extension of the exemption for the Assessment Year 2006-07, 2007-08 was rejected by the CCIT, Panchkula. The assessee approached the Hon ble High Court of Punjab Haryana. The Hon ble High Court vide order dt. 10.2.2009 upheld the order of CCIT on the ground that there was a delay in filing of the applications before the CCIT and such delay was rightly not condoned. The CCIT in his rejection order recorded that there is non utilization of land solely for the purpose of education. (c). As the Assessing Officer denied exemption u/s 10(23 C)(vi), the assessee claimed exemption u/s 11(1) of the Act. Such claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver form has to be the basis of decision. Hence we uphold these findings of the Ld.CIT(A) and dismiss this ground. In the result ground no.2 is dismissed. 7. Ground nos. 3 and 4 are on the issue of Ld.CIT(Appeals) accepting audit report in Form no.10B. Admittedly audit report in Form 10B was filed before the Ld.CIT(Appeals). The assessee had, instead of filing Form No.10B, filed an audit report in form no.10BB, before the Assessing Officer. The audited accounts along with the statements annexed giving necessary particulars were filed along with the audit report in Form no.10BB, before the Assessing Officer. The Ld.CIT(Appeals) relying on the decisions in the case of CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust, reported in 195 ITR 825(Cal.) and CIT vs. Devradhan Madhavlal Genda Trust, reported in 230 ITR 714 (MP), CIT vs. Trehan Enterprises reported in 248 ITR 333 (J K) held that the requirement in question was merely directory and not mandatory. In any event all the details and audit report in some other form were already before the AO. We uphold this finding of the Ld.Commissioner of Income Tax (Appeals) that he has the power to admit audit report in form no.10B as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society recorded that this land at Dhorka is likely to be acquired as it was in the Industrial Zone, in view of the Gurgoan Master Plan and hence it should be disposed off at the earliest and the money received should be re-invested in purchase of another land which is suitable for education al institution and a vocational institute, within the vicinity of Gurgaon after obtaining necessary CLU. The profit on the sale of land was ₹ 8,44,78,458-00. 11. The issue that is before us is the computation of exempt income U/s 11(1). 11.1. The Hon ble Calcutta High court in the case of CIT Vs Eastern Charitable Trust reported in 206 ITR 152 held as follows. The Definition of income contained in Sec.2 (24) includes capital gains. Hence the option exercisable by a charitable trust with regard to income under the provisions of Sec.11(1) can also be exercised in respect of capital gains provided it is exercised in writing before the expiry of the time allowed u/s 139(1) for furnishing the return. By reason of the exercise of the option the assesses would be entitled to the benefit of sec11(1 A). In our view, by reason of the option exercised under the Explanation to se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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