TMI Blog2018 (11) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the ordinary and plain meaning of the aforesaid provision, the assessee is entitled to claim exemption of income to the extent it is applied for charitable purpose. Of–course, the provisions of section 11 is subject to the conditions / exceptions provided under section 13 of the Act. However, in the present case, there is no allegation by the Assessing Officer that the assessee has violated any of the conditions of section 13 of the Act. That being the case, the contention of learned Departmental Representative that assessee’s claim of exemption under section 11 of the Act has to be disallowed entirely is not acceptable. violation of section 13(1)(d) of the Act will not lead to denial of exemption under section 11 of the Act on the total income of the assessee. Denial of exemption under section 11 of the Act should be limited to the amount disallowed under section 13(2)(b) of the Act. Thus assessee’s claim of exemption under section 11 of the Act is allowable to the extent assessee has applied such income for charitable purposes. For claim of exemption under section 10(23) the assessee’s application for issuance of notification under section 10(23) of the Act for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals). Disallowance of ₹ 2 lakh out of foreign travel expenses - Held that:- As could be seen from the impugned order of the learned Commissioner (Appeals), after perusing the material on record, he was convinced that there was a definite purpose for which all the foreign visits were undertaken by the concerned persons. In view of such finding of the learned Commissioner (Appeals), there is no need for ad–hoc disallowance of ₹ 2 lakh out of the expenditure claimed. Accordingly, we delete the disallowance made. Disallowance of entertainment expenses - Held that:- As could be seen, as per assessee’s own admission, these expenses were incurred towards food, wine and gift for Government officials and other persons. The assessee has not furnished any evidence in support of such expenditure. Even, by very nature the expenditure claimed, in our view, is not allowable. Accordingly, we uphold the disallowance made by the Departmental Authorities. Extend the benefit of section 11(2) of the Act with regard to the additions / disallowances confirmed by the appellate authority - Held that:- Assessing Officer did not consider assessee’s claim under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejudice, the assessee also claimed exemption under section 11 of the Act. In course of assessment proceedings, the Assessing Officer rejected assessee s claim of exemption under section 10(23) of the Act. Further, as regards assessee s claim of exemption under section 11 of the Act, on verifying the accounts and other details filed by the assessee he found that the assessee has claimed various expenditures. After calling for necessary details and verifying them, the Assessing Officer found that the travelling expenses of office bearers amounting toRs. 8,93,990, have not been spent towards the object of the Trust, hence, he disallowed the said expenditure. As regards travelling expenditure of ₹ 70,83,062, incurred for persons other than office bearers, the Assessing Officer disallowed an amount of ₹ 40 lakh stating that in the absence of proper documentary evidence, genuineness of claim of expenditure could not be verified. Further, the Assessing Officer observed that the assessee has shown expenditure incurred of ₹ 7,88,750 towards purchase of tickets for different international matches. He found that the tickets purchased were offered to the President, Treasurer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee s claim of exemption under section 11 of the Act alleging that income / fund were not applied towards the object of the Trust. Challenging the disallowances made as well as denial of exemption under section 11 of the Act, the assessee preferred appeal before the learned Commissioner (Appeals). In the course of appellate proceedings, the assessee advanced detailed argument not only in support of expenditure claimed but also contesting the denial of claim of exemption under section 11 of the Act. 5. The learned Commissioner (Appeals) on the basis of submissions made by the assessee and the material placed before him, called for a remand report from the Assessing Officer. After considering the remand report of the Assessing Officer in the context of submissions made by the assessee as well as facts and material on record, the learned Commissioner (Appeals) found that as regards travelling expenditure, the Assessing Officer has made adverse comment with regard to Shri P.M. Rungta s visit to New Delhi. Accordingly, he sustained the disallowance of travelling expenditure of office bearers to that extent only. As regards the disallowance of ₹ 40 lakh on account of travelling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng his earlier orders on the issue, deleted the disallowance made by the Assessing Officer. Having held so, the next issue which came up for consideration of learned Commissioner (Appeals) was whether by virtue of the disallowance of expenditure sustained by him, assessee s claim of expenditure of section 11 of the Act can be rejected. The learned Commissioner (Appeals) after referring to the provisions of section 11 of the Act, as well as certain judicial precedents held that only the income which is not applied to charitable purposes in India is not covered by section 11 of the Act. Accordingly, he held that the income to the extent applied towards achieving charitable object of the trust is eligible for exemption under section 11(1)(a) of the Act. While doing so, he observed that assessee s claim of exemption under section 11 of the Act can be denied only under the circumstances enumerated in section 13 of the Act. He observed, since, there is no allegation by the Assessing Officer that the assessee has breached any of the conditions laid down under section 13 or under section 12 of the Act, assessee s claim of exemption under section 11 of the Act cannot be denied. Thus, he all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one to Delhi to meet Revenue officials in connection with the renewal application filed under section 10(23) of the Act. He submitted that Shri Rungta was a former treasurer and was not an office bearer of the assessee at the time of his visit to Delhi. He submitted that these are normal expenditures which have to be incurred for the purpose of the trust. He submitted that as per the provisions of section 11(1)(a) of the Act, income of the assessee has to be applied and not the receipts. He submitted, even assuming that a part of the income was not applied towards charitable purpose, still exemption claimed under section 11 of the Act cannot be disallowed fully but assessee s claim of exemption under section 11 of the Act, has to be disallowed in respect of the expenditure disallowed. He submitted, there cannot be a blanket disallowance of exemption claimed under section 11 of the Act, as the assessee has fulfilled the conditions of section 11 of the Act. The dispute is only with regard to the quantum of exemption allowable under section 11 of the Act. He submitted, when there is no allegation by the Assessing Officer that the assessee has violated any of the conditions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and plain meaning of the aforesaid provision, the assessee is entitled to claim exemption of income to the extent it is applied for charitable purpose. Of course, the provisions of section 11 is subject to the conditions / exceptions provided under section 13 of the Act. However, in the present case, there is no allegation by the Assessing Officer that the assessee has violated any of the conditions of section 13 of the Act. That being the case, the contention of learned Departmental Representative that assessee s claim of exemption under section 11 of the Act has to be disallowed entirely is not acceptable. Thus, in this regard, we agree with the decision of the learned Commissioner (Appeals). Having held so, it is now necessary for us to deal with the decisions relied upon by both the parties. In case of Bharat Diamond Bourse (supra), there is specific allegation by the Department that the assessee has advanced loan of ₹ 70 lakh to the founder of the institution, thereby, violating provision of section 13 of the Act. However, there is no such fact involved in the case of the assessee. Similarly, in case of Agappa Child Centre (supra), there is specific allegation of violati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year also, though, the assessee had filed an application for issuance of notification under section 10(23) of the Act, however, assessee s application remained un disposed. During the assessment proceedings, the Assessing Officer while examining assessee s claim of exemption under section 10(23) of the Act, observed that the assessee has not fulfilled any of the conditions of the said provision. Accordingly, he rejected assessee s claim of exemption under section 10(23) of the Act. The assessee challenged the aforesaid decision before the first appellate authority. 12. The learned Commissioner (Appeals) noticing that assessee s application for issuance of notification under section 10(23) of the Act is still pending before the appropriate authority, held that the Assessing Officer was not justified in making adverse comment with regard to assessee s claim of exemption under section 10(23) of the Act. 13. The learned Sr. Counsel for the assessee submitted, assessee s application for issuance of notification under section 10(23) of the Act for the impugned assessment year is still pending before the appropriate authority. Thus, he submitted, a direction may be given to the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, he disallowed an amount of ₹ 1,44,690, representing travel expenses of Shri P.M. Rungta. 17. The learned Sr. Counsel for the assessee refuting the allegations of the Departmental Authorities submitted that all the details / evidences relating to Shri P.M. Rungta s visit to Delhi were submitted before the Assessing Officer. He submitted, Shri Rungta, was an office bearer earlier and not in the impugned assessment year. He submitted, Shri Rungta was sent to Delhi for the specific purpose of pursuing assessee s application made under section 10(23) of the Act before the CBDT. In this context, he drew our attention to the facts narrated in the statement of facts filed before the learned Commissioner (Appeals). Thus, he submitted, the disallowance of expenditure is not justified. 18. The learned Departmental Representative relied upon the finding of the learned Commissioner (Appeals). 19. We have considered rival submissions and perused materials on record. As could be seen from the facts on record, before the Assessing Officer, though, the assessee stated that Shri P.M. Rungta, has gone to Delhi to pursue the application filed under section 10(23) of the Act befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the remand report, the Assessing Officer has observed that the assessee had furnished a statement showing the denomination of tickets purchased with supporting evidence. However, the Assessing Officer had observed that the name of persons of officials whom the tickets were given were not furnished. The learned Commissioner (Appeals), though, was of the view that looking at the wide range of assessee s operation, a very small amount had been spent for purchase of tickets, however, he has disallowed 50% out of the expenditure claimed. Thus, when in the course of remand proceedings, the assessee furnished the details of tickets purchased with supporting evidence and the learned Commissioner (Appeals) has also given a factual finding that the amount spent by the assessee for purchase of tickets is very small having regard to the operations of the assessee, in our view, the expenditure claimed by the assessee should be allowed in full. Accordingly, we delete the disallowance sustained by the learned Commissioner (Appeals). 26. In ground no.4, the assessee has challenged confirmation of disallowance of ₹ 2 lakh out of foreign travel expenses. 27. As could be seen from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner (Appeals) has directed the Assessing Officer to allow the benefit of accumulation under section 11(2) of the Act if the assessee has claimed such benefit in the prescribed manner. In view of the aforesaid direction, we do not find the need for any further direction to the Assessing Officer. Suffice to say, the Assessing Officer must consider assessee s claim of benefit of section 11(2) of the Act subject to fulfillment of all the conditions of the said provisions. With the aforesaid observations, this ground is allowed for statistical purposes. 35. In the result, assessee s appeal is allowed for statistical purposes. ITA no.7066/Mum./2005 Assessee s Appeal A.Y. 1999 2000 36. The aforesaid appeal arises out of the order passed by the Assessing Officer while giving effect to the directions of the learned Commissioner (Appeals) for the impugned assessment year. 37. In view of our decision in ITA no.1443/Mum./2005 and ITA no. 9272/Mum./2004, specific adjudication of this appeal is not required. The appeal having become infructuous is hereby dismissed. 38. In the result, assessee s appeal is dismissed. ITA no.2244/Mum./2005 Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
